Note 1 - Basis of Presentation and Accounting Policies

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

The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial statements and do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.  However, the information furnished reflects all adjustments, consisting only of normal recurring items which are, in the opinion of management, necessary in order to make the consolidated condensed financial statements not misleading.  It is suggested that these consolidated condensed financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2017.2018.

In May 2014, the FASB issued ASU No. 2014-09: “Revenue from Contracts with Customers (Topic 606)”. This guidance was issued to clarify the principles for recognizing revenue and develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards (“IFRS”). In addition, in August 2015, the FASB issued ASU No. 2015-14: “Revenue from Contracts with Customers (Topic 606).  This update was issued to defer the effective date of ASU No. 2014-09 by one year.  Therefore, the effective date of ASU No. 2014-09 is for annual reporting periods beginning after December 15, 2017.  Based on management’s assessment of ASU No. 2014-09, management does not expect that ASU No. 2014-09 will have a material impact on the Company’s consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09: “Compensation – Stock Compensation (Topic 718)” which is intended to improve employee share-based payment accounting.  This ASU identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows.  The guidance is effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods.  Early adoption is permitted.  Management has determined that ASU No. 2016-09 will not have a material impact on the Company’s consolidated financial statements.  The Company does not currently have excess tax benefits or deficiencies from stock compensation expense.  The Company adopted ASU No. 2016-09 on October 1, 2017.

On October 1, 2018, the FASB issuedCompany adopted ASU 2016-15: “Statement2014-09, Revenue from Contracts with Customers (Topic 606), using the modified retrospective transition method.  Management determined that there was no cumulative effect adjustment to the consolidated financial statements and the adoption of Cash Flows (Topic 230)the standard did not require any adjustments to the consolidated financial statements for prior periods.  Under the guidance of the standard, revenue is recognized at the time a good or service is transferred to a 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; however, returns are historically insignificant.

The Company acquired the net assets of Fulton Technologies, Inc. (“Fulton”) and Mill City Communications, Inc. (“Mill City”), wireless infrastructure services businesses, on January 4, 2019 (See Note 3 – ClassificationAcquisition).  These companies’ services primarily consist of Certain Cash Receiptsinstalling and Cash Payments.”  This ASU addresses eight specific cash flow issues withdecommissioning equipment on cell towers and small cell sites.  The purchase orders for wireless infrastructure services are primarily completed over three to seven business days.  Under the objectiveguidance of reducing the existing diversitystandard, revenue is recognized over time.

The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in practice.exchange for its products, repair services or wireless infrastructure services.  The amendmentsfollowing steps are applied in this ASUdetermining the amount and timing of revenue recognition:

The Company’s principal revenues are effective for fiscal years beginning after December 15, 2017,from Wireless services, sales of Telco and interim periods within those fiscal years.  Early adoption is permitted.  Based on management’s initial assessmentCable TV equipment, Telco recycled equipment, and Cable TV repair services.  Sales are primarily to customers in the United States.  International sales are made by the Telco and Cable TV segments to customers in Central America, South America and, to a substantially lesser extent, other international regions that utilize the same technology which totaled approximately $1.8 million and $3.7 million in the six months ended March 31, 2019 and 2018, respectively.

The Company’s customers include wireless carriers, wireless equipment providers, multiple system operators, resellers and direct sales to end-user customers.  Sales to the Company’s largest customer totaled approximately 7% of ASU No. 2016-15,consolidated revenues.

With the cash flows associated with guaranteed payments for acquisition of businesses will be reported as a financing activityFulton, the timing of revenue recognition results in contract assets and contract liabilities.  Generally, billing occurs subsequent to revenue recognition, resulting in contract assets.  However, we sometimes receive advances or deposits from our customers before revenue is recognized, resulting in contract liabilities.  Contract assets and contract liabilities are included in Unbilled revenue and Accrued expenses, respectively, in the Statement of Cash Flows, as opposed to an investing activity where it is currently reported.Consolidated Condensed Balance Sheets.  At March 31, 2019 contract assets were $1.4 million.

On December 27, 2018, the FASB issued ASU 2017-04: “Intangibles – Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment.”  This ASU eliminates the second step in the goodwill impairment test which requires an entityCompany entered into a purchase agreement to determine the implied fair value of the reporting unit’s goodwill.  Instead, an entity should recognize an impairment loss if the carrying valueacquire substantially all of the net assets assignedof Fulton and Mill City.  These companies provide turn-key wireless infrastructure services for wireless carriers, contractors supporting the wireless carriers, and equipment manufacturers.  These services primarily consist of installing and decommissioning equipment on cell towers and small cell sites.  This agreement closed on January 4, 2019.  This acquisition is part of the overall growth strategy that will further diversify the Company into the broader telecommunications industry by providing wireless infrastructure services to the reporting unit exceedswireless telecommunications market.

Certain prior period amounts have been reclassified to conform to the current year presentation.  These reclassifications had no effect on previously reported resultsThe acquired intangible asset of operations or retained earnings.approximately $0.2 million consists of customer relationships.

Note 24 – Sale and Leaseback of Assets

Note 7 – Inventories

New inventory includes products purchased from the manufacturers plus “surplus-new”, which are unused products purchased from other distributors or multiple system operators.  Refurbished inventory includes factory refurbished, Company refurbished and used products.  Generally, the Company does not refurbish its used inventory until there is a sale of that product or to keep a certain quantity on hand.

The Company regularly reviews the Cable TV segment inventory quantities on hand, and an adjustment to cost is recognized 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.  The Company recorded charges a write-off of inventory of $0.1 million

in the Cable TV segment.  The Cable TV segment to allowhas an allowance for excess and obsolete inventory which increasedof $4.1 million at March 31, 2019.

In the cost of sales $0.2 million during the threesix months ended DecemberMarch 31, 20172019 and 2016.

Note 59 – Notes Payable and Line of Credit

On May 31, 2018, the Company entered into a forbearance agreement with BOKF, NA dba Bank of Oklahoma (“Lender”) relating to the Company’s Amended and Restated Revolving Credit and Term Loan Agreement (“Credit and Term Loan Agreement”) with.

Under the forbearance agreement, which is Amendment Ten to the Credit and Term Loan Agreement, Lender agreed to delete the fixed charge ratio covenant from the Credit and Term Loan Agreement and to forbear from exercising its primary financial lender. 

Revolving credit and term loans created under the Credit and Term Loan Agreement arewere collateralized by inventory, accounts receivable, equipment and fixtures, general intangibles and a mortgage on certain property.  Among other financial covenants, the Credit and Term Loan Agreement providesprovided that the Company maintain a fixed charge coverage ratio (net cash flow to total fixed charges) of not less than 1.25 to 1.0 and a leverage ratio (total funded debt to EBITDA) of not more than 2.50 to 1.0.  Both financial covenants are determined quarterly.  At December 31, 2017, we were in compliance with our financial covenants.

The Company hashad two term loans outstanding under the Credit and Term Loan Agreement.  The first outstanding term loan hashad an outstanding balance of $0.7$0.6 million at December 31, 2017 and iswas due on November 30, 2021,October 31, 2018, with monthly principal payments of $15,334 plus accrued interest.  The interest rate iswas the prevailing 30-day LIBOR rate plus 1.4% (2.78%(3.66% at DecemberOctober 31, 2017) and is reset monthly.2018).

The second outstanding term loan hashad an outstanding balance of $2.4$1.5 million at December 31, 2017 and iswas due October 14, 2019,31, 2018, with monthly principal and interest payments of $118,809.  The interest rate on the term loan iswas a fixed interest rate of 4.40%.

On December 6, 2017,During the first quarter of 2019, the Company extinguished oneits two outstanding term loans under the forbearance agreement by paying the outstanding balances of $2.1 million, and extinguished its previous term loansline of credit under the forbearance agreement by paying the outstanding balance of $2.7 million plus a prepayment penalty of $25,000.$0.5 million.

LineSince the Company extinguished all of Credit

FASB ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a consistent framework for measuring fair value and establishes a fair value hierarchy based on the observability of inputs used to measure fair value.  The three levels of the fair value hierarchy are as follows:

Basic earnings per share are based on the sum of the average number of common shares outstanding and issuable, restricted and deferred shares.  Diluted earnings per share include any dilutive effect of stock options and restricted stock.  In computing the diluted weighted average shares, the average share price for the period is used in determining the number of shares assumed to be reacquired under the treasury stock method from the exercise of options.

The table below includes information related to stock options that were outstanding at the end of each respective three-month periodthree and six month periods ended DecemberMarch 31, but have been excluded from the computation of weighted-average stock

options for dilutive securities due tobecause their effect would be anti-dilutive.  The stock options were anti-dilutive because the optionCompany had a net loss for the periods presented.  Additionally, for certain stock options, the exercise price exceedingexceeded the average market price per share of our common stock for the three and six months ended DecemberMarch 31, or their effect would be anti-dilutive.2019 and 2018.

The 2015 Incentive Stock Plan (the “Plan”) provides for awards of stock options and restricted stock to officers, directors, key employees and consultants.  Under the Plan, option prices will be set by the Compensation Committee and may not be less than the fair market value of the stock on the grant date.

All share-based payments to employees, including grants of employee stock options, are recognized in the financial statements based on their grant date fair value over the requisite service period.  Compensation expense for share-based awards is included in the operating, selling, general and administrative expense section of the Company’s consolidated condensed statements of income.operations.

Stock options are valued at the date of the award, which does not precede the approval date, and compensation cost is recognized on a straight-line basis over the vesting period.  Stock options granted to employees generally become exercisable over a three, four or five-year period from the date of grant and generally expire ten years after the date of grant.  Stock options granted to the Board of Directors generally become exercisable on the date of grant and generally expire ten years after the grant.

NoThe Company granted 330,000 nonqualified stock options were granted for the threesix months ended DecemberMarch 31, 2017.2019.  The Company estimates the fair value of the options granted using the Black-Scholes option valuation model.  The Company estimates the expected term of options granted based on the historical grants and exercises of the Company’s options.  The Company estimates the volatility of its common stock at the date of the grant based on both the historical volatility as well as the implied volatility on its common stock.  The Company bases the risk-free rate that is used in the Black-Scholes option valuation model on the implied yield in effect at the time of the option grant on U.S. Treasury zero-coupon issues with equivalent expected term.  The Company has never paid cash dividends on its common stock and

does not anticipate paying cash dividends in the foreseeable future.  Consequently, the Company uses an expected dividend yield of zero in the Black-Scholes option valuation model.  The Company amortizes the resulting fair value of the options ratably over the vesting period of the awards.  The Company uses historical data to estimaterecognizes forfeitures as they occur.

The estimated fair value at date of grant for stock options utilizing the pre-vestingBlack-Scholes option forfeituresvaluation model and records share-based expense onlythe assumptions that were used in the Black-Scholes option valuation model for those awards thatthe six months ended March 31, 2019 are expected to vest.as follows:

The Company records compensation expense over the vesting term of the related options.  At DecemberMarch 31, 2017,2019, compensation costs related to these unvested stock options not yet recognized in the consolidated condensed statements of operations was $62,657.$94,999.

The Company granted restricted stock in October 2018 to its Chairman of the Board of Directors totaling 55,147 shares, which were valued at market value on the date of grant.  The shares will vest 20% per year with the first installment vesting on the first anniversary of the grant date.  The Company granted restricted stock in March 20172018 to its Board of Directors and a Company officer totaling 58,00980,150 shares, which were valued at market value on the date of grant.  The shares are being held by the Company for 12 months and will be delivered to the directors at the end of the 12 month holding period.  The fair value of these shares at issuance totaled $105,000, which is being amortized over the 12 month holding period as compensation expense.  The unamortized portion of the restricted stock is included in prepaid expenses on the Company’s consolidated condensed balance sheets.

Note 812 – Segment Reporting

The Company is reporting its financial performance based on its external reporting segments: Cable Television, Telecommunications and Telecommunications.Wireless Infrastructure Services.  These reportable segments are described below.

The Company’s Cable TV segment sells new, surplus and re-manufactured cable television equipment throughout North America, Central America, South America and, to a substantially lesser extent, other international regions that utilize the same technology.  In addition, this segment repairs cable television equipment for various cable companies.

Special Note on Forward-Looking Statements

Certain statements in Management's Discussion and Analysis (“MD&A”), other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements generally are identified by the words “estimates,” “projects,” “believes,” “plans,” “intends,” “will likely result,” and similar expressions.  Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. These statements are subject to a number of risks, uncertainties and developments beyond our control or foresight, including changes in the trends of the cable television industry, changes in the trends of the telecommunications industry, changes in our supplier agreements, technological developments, changes in the general economic environment, generally, the growth or formation of competitors, changes in governmental regulation or taxation, changes in our personnel and other such factors.  Our actual results, performance or achievements may differ significantly from the results, performance or achievementachievements 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.

Overview

The following MD&A is intended to help the reader understand the results of operations, financial condition, and cash flows of the Company.  MD&A is provided as a supplement to, and should be read in conjunction with the information presented elsewhere in this quarterly report on Form 10-Q and with the information presented in our annual report on Form 10-K for the year ended September 30, 2017,2018, which includes our audited consolidated financial statements and the accompanying notes to the consolidated financial statements.

The Company is reporting its financial performance based on its external reporting segments: Cable Television, Telecommunications and Telecommunications.Wireless Infrastructure Services.  These reportable segments are described below.

The Company’s Cable TV segment sells new, surplus and re-manufactured cable television equipment throughout North America, Central America and South America.  In addition, this segment also repairs cable television equipment for various cable companies.

On December 27, 2018, we entered into a purchase agreement to acquire substantially all of the net assets of Fulton and Mill City.  We closed on this transaction on January 4, 2019 for $1.3 million in cash.  The Company’s Telco segment sells newpurchase allows us to enter into the wireless communication services business, which is poised for significant growth with the advent of 5G technology.  This acquisition is part of the overall growth strategy that will further grow and useddiversify the Company into the broader telecommunications networking equipment,industry by providing wireless infrastructure services, which will continue to experience significant growth.

Fulton operates out of two primary locations.  Fulton North, which is based just outside of Chicago in Roselle, Illinois, operates across the northern states including both central officeIllinois, Iowa and Minnesota.  Fulton Southwest is based in Dallas, Texas and operates throughout Texas and neighboring states.  As part of the asset purchase, we also acquired Mill City, which is based in Fridley, Minnesota.  Subsequent to March 31, 2019, we decided to market and sell the assets of the Mill City operation and focus the company’s operations on its two large metropolitan locations.  Fulton’s coverage of Chicago, Dallas, Houston, San Antonio and Austin allow it to participate in a collection of top wireless markets in the nation.

One of the key attractions of acquiring Fulton is that it had existing contracts and customer premiserelationships.  Fulton is an approved vendor with the four major U.S. wireless carriers, leading communication tower companies, national integrators, and major equipment manufacturers.  The acquisition allowed us to enter the wireless communication space quickly and cost effectively.  The customer contracts that Fulton has eliminated a key barrier for us to enter this industry due to the required experience and safety qualifications necessary to obtain the contracts.

This new facility will allow Triton to expand its refurbishment operation and new equipment sales by adding additional products and manufacturers.  We are also increasing our focus on the brokerage business and internet sales to include additional online resources for distribution of our products.  We believe that once we have moved into the new facility, Triton will be positioned to expand its product offering to its customer base of telecommunications providers, enterpriseexisting customers and resellers located primarilywill grow its sales and marketing capabilities to capture additional market share and customers.  We expect that Triton’s revenues and operating results will improve as the result of these changes.

In December 2018, we entered into an agreement for the sale of our Cable TV businesses to a company controlled by David Chymiak for $10.3 million, subject to working capital adjustments.  This sale is subject to shareholder approval, and in North America.  In addition, this segment offers its customers decommissioning services for surplusApril 2019, we distributed a proxy statement to our stockholders, which announced a special meeting of stockholders on May 29, 2019 to vote on the proposed sale of the Cable TV businesses to Leveling 8 Inc., which is controlled by Mr. Chymiak.  If the sale is approved by the stockholders, we anticipate that we will receive approximately $3.9 million in cash at closing, which includes the funds received from the Sedalia, Missouri building sale of $1.35 million, and obsolete equipment, which it in turn processes through its recycling program.a $6.4 million promissory note payable over five years that is personally guaranteed by Mr. Chymiak.

Consolidated sales increased $0.2$5.7 million before the impact of intercompany sales, or 2%48%, to $12.3$17.3 million for the three months ended DecemberMarch 31, 20172019 from $12.1$11.6 million for the three months ended DecemberMarch 31, 2016.2018.  The increase in sales was in the Wireless segment of $4.25 million and the Telco segment of $1.0$1.7 million, partially offset by a decrease in the Cable TV segment of $0.8$0.2 million.  Consolidated gross profit increased $0.3 million, or 7%, to $3.6 million for the three months ended March 31, 2019 from $3.3 million for the same period last year.  The increase in gross profit was in the Wireless segment and Telco segment of $0.1 million and $0.4 million, respectively, partially offset by a decrease in the Cable TV segment of $0.2 million.

Consolidated sales increased $4.6 million before the impact of intercompany sales, or 19%, to $28.5 million for the six months ended March 31, 2019 from $23.9 million for the six months ended March 31, 2018.  The increase in sales was in the Wireless segment and Telco segment of $4.2 million and $2.0 million, respectively, partially offset by a decrease in the Cable TV segment of $1.6 million.  Consolidated gross profit decreased $0.6$0.3 million, or 16%5%, to $3.4$6.4 million for the threesix months ended

Consolidated operating, selling, general and administrative expenses include all personnel costs, which include fringe benefits, insurance and business taxes, as well as occupancy, communication and professional services, among other less significant cost categories.  Operating, selling, general and administrative expenses remained flat at $3.6increased $1.5 million, or 21%, to $8.6 million for the threesix months ended DecemberMarch 31, 2017 compared to2019 from $7.1 million for the same period last year.  This increase in expenses was due to an increasethe Wireless segment, Telco segment, and Cable segment of $1.2 million, $0.1 million and $0.2 million, respectively.

Other income and expense primarily consists of activity related to our investment in YKTG Solutions, including equity earnings (losses).  Equity earnings for the Telco segment, offset bysix months ended March 31, 2019 were $0.1 million and equity losses were $0.3 million for the six months ended March 31, 2018.  The equity losses for the six months ended March 31, 2018 consisted primarily of a decrease inlegal settlement with a subcontractor on the Cable TV segmentYKTG Solutions wireless cell tower decommissioning project and the associated legal expenses.

Other expense of $0.1 million.$40 thousand is related to our factoring arrangement with our Wireless segment.

Interest expense remained flat at $0.1 milliondecreased $100 thousand to $40 thousand for the threesix months ended DecemberMarch 31, 2017 and 2016.2019 from $140 thousand for the same period last year primarily related lower interest expense from paying off our two term loans in November 2018.

The provision for income taxes was $0.3$0.1 million for the threesix months ended DecemberMarch 31, 20172019, from a provision for income taxes of $0.1$0.2 million for the threesix months ended DecemberMarch 31, 2016.2018.  The increase in the tax provision was due primarily to the Tax Cuts and Jobs Act enacted on December 22, 2017.  One ofvaluation allowance netting the provisions of this legislation was to reduce the corporate income tax rates effective beginning January 1, 2018.  As a result of the reduced corporate income tax rate, the Company remeasured its deferred tax balances at the reduced corporate income tax rate, which resulted in income tax expense of $0.4 million.  The Company estimates that its effective income tax rateassets to zero for the remaining quarters of fiscal year 2018 will be approximately 27% as a result of the legislation.six months ended March 31, 2019, offset by income taxes payable to certain tax jurisdictions.

SalesRevenues for the Cable TVWireless segment decreased $0.8 million to $5.8were $4.2 million for the threesix months ended DecemberMarch 31, 2017 from $6.6 million2019 and zero for the same period last year.  The decrease in sales was due to a decrease in refurbished equipment sales and repair service revenue of $0.5 million each, partially offset by an increase in new equipment revenue of $0.2 million.  The decrease in the refurbished equipment sales was due primarily to an overall decrease in demand for the three months ended December 31, 2017year as compared to last year. The decrease in repair service revenue was due primarily to the loss of a significant repair customer in the quarter.  As a result of this loss, the Company has closed twoacquisition of its repair facilitiesFulton and laid off personnel at its remaining repair facilities.

Operating, selling, general and administrative expenses decreased $0.1 million to $1.4were $1.2 million for the threesix months ended DecemberMarch 31, 2017 from $1.52019.  These expenses included $0.2 million forof acquisition costs in connection with the same period last year.acquisition of Fulton and Mill City as well as integration expenses of $0.3 million.

Sales for the Telco segment increased $1.0$2.0 million to $6.5$15.5 million for the threesix months ended DecemberMarch 31, 20172019 from $5.5$13.5 million for the same period last year.  The increase in sales for the Telco segment was due to an increase in equipment sales andof $2.3 million, partially offset by a decrease in recycling revenue of $0.7 million and $0.3 million, respectively.million.  The increase in Telco equipment sales was primarily due to Triton Datacom, which offset the continued lower equipment sales from Nave Communications.  The Company is continuing to address the lower equipmentincreased sales at Nave Communications by restructuring and expanding its sales force, targeting a broader end-user customer base, increasing its salesTriton Datacom of $1.7 million and $0.6 million, respectively.  The decrease in recycling revenue was due primarily to higher revenue in the prior year due to the reseller market and expanding the capacitytiming of its recycling program.shipments.

Gross margin was 34%25% for the threesix months ended DecemberMarch 31, 20172019 and 29%30% for the threesix months ended DecemberMarch 31, 2016.2018. The increasedecrease in gross margin was due primarily to higherlower gross margins from equipment sales to end-user customers andprimarily resulting from an increase in sales of new equipment which generally yields lower margins than used equipment sales.  In addition, our margin was also impacted by lower margins from our recycling program.program as a result of lower revenues to cover our fixed costs.  The lower revenues from the recycling program for the six months ended March 31, 2019 decreased gross profit by $0.4 million due to the fixed costs incurred within this product line.

Operating, selling, general and administrative expenses increased $0.1 million to $2.2$4.5 million for the threesix months ended DecemberMarch 31, 20172019 from $2.1$4.4 for the same period last year.  This increase was due primarily to advertising and promotion expenses.

Operating, selling, general and administrative expenses increased $0.2 million to $2.8 million for the six months ended March 31, 2019 from $2.6 million for the same period last year.  This increase was due primarily to earn-outlease payments for facility rentals (See Note 4 – Sale and Leaseback of Assets) of $0.2 million and professional services expenses related toof $0.2 million associated with the Triton Miami, Inc. acquisitionproposed sale of the Cable TV business, partially offset by reduced payroll expenses of $0.1 million.

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 excludes 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, as calculated below, 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.

A reconciliation by segment of operating income (loss) to Adjusted EBITDA follows: