Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Jun. 30, 2015 | Jul. 31, 2015 | |
Entity Registrant Name | ADDVANTAGE TECHNOLOGIES GROUP INC | |
Entity Central Index Key | 874,292 | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Entity Common Stock, Shares Outstanding (in shares) | 10,073,121 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Consolidated Condensed Balance
Consolidated Condensed Balance Sheets (Current period unaudited) - USD ($) | Jun. 30, 2015 | Sep. 30, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 4,638,741 | $ 5,286,097 |
Accounts receivable, net of allowance for doubtful accounts of $200,000 | 5,799,626 | 6,393,580 |
Income tax refund receivable | 7,180 | 220,104 |
Inventories, net of allowance for excess and obsolete inventory of $2,606,628 and $2,156,628, respectively | 24,497,418 | 22,780,523 |
Prepaid expenses | 153,823 | 174,873 |
Deferred income taxes | 1,581,000 | 1,416,000 |
Total current assets | 36,677,788 | 36,271,177 |
Property and equipment, at cost: | ||
Land and buildings | 7,264,753 | 7,208,679 |
Machinery and equipment | 3,394,996 | 3,244,153 |
Leasehold improvements | 145,737 | 206,393 |
Total property and equipment, at cost | 10,805,486 | 10,659,225 |
Less accumulated depreciation | (4,491,107) | (4,191,516) |
Net property and equipment | 6,314,379 | 6,467,709 |
Intangibles, net of accumulated amortization | 6,005,924 | 6,625,278 |
Goodwill | 3,910,089 | 3,910,089 |
Other assets | 131,428 | 131,428 |
Total assets | 53,039,608 | 53,405,681 |
Current liabilities: | ||
Accounts payable | 2,755,394 | 2,880,761 |
Accrued expenses | 1,660,203 | 1,809,878 |
Notes payable – current portion | 866,507 | 845,845 |
Other current liabilities | 971,350 | 983,269 |
Total current liabilities | 6,253,454 | 6,519,753 |
Notes payable, less current portion | 4,587,138 | 5,240,066 |
Deferred income taxes | 252,000 | 267,000 |
Other liabilities | 1,042,480 | 1,942,889 |
Shareholders’ equity: | ||
Common stock, $.01 par value; 30,000,000 shares authorized; 10,573,779 and 10,541,864 shares issued, respectively; and 10,073,121 and 10,041,206 shares outstanding, respectively | 105,738 | 105,419 |
Paid in capital | (5,131,949) | (5,312,881) |
Retained earnings | 46,930,761 | 45,643,449 |
Total shareholders’ equity before treasury stock | 41,904,550 | 40,435,987 |
Less: Treasury stock, 500,658 shares, at cost | (1,000,014) | (1,000,014) |
Total shareholders’ equity | 40,904,536 | 39,435,973 |
Total liabilities and shareholders’ equity | $ 53,039,608 | $ 53,405,681 |
Consolidated Condensed Balance3
Consolidated Condensed Balance Sheets (Current period unaudited) (Parentheticals) - USD ($) | Jun. 30, 2015 | Sep. 30, 2014 |
Accounts receivable, allowance | $ 200,000 | $ 200,000 |
Allowance for excess and obsolete inventory | $ 2,606,628 | $ 2,156,628 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 30,000,000 | 30,000,000 |
Common stock, shares issued (in shares) | 10,573,779 | 10,541,864 |
Common stock, shares outstanding (in shares) | 10,073,121 | 10,041,206 |
Treasury stock, shares (in shares) | 500,658 | 500,658 |
Consolidated Condensed Statemen
Consolidated Condensed Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Sales | $ 11,902,391 | $ 9,323,158 | $ 34,106,088 | $ 23,756,707 |
Cost of sales | 7,757,784 | 6,103,103 | 21,886,166 | 16,442,257 |
Gross profit | 4,144,607 | 3,220,055 | 12,219,922 | 7,314,450 |
Operating, selling, general and administrative expenses | 3,202,402 | 2,898,216 | 10,081,016 | 7,187,512 |
Operating income | 942,205 | 321,839 | 2,138,906 | 126,938 |
Interest expense | 71,071 | 100,113 | 235,594 | 131,107 |
Income (loss) before provision for income taxes | 871,134 | 221,726 | 1,903,312 | (4,169) |
Provision (benefit) for income taxes | 234,000 | 44,000 | 616,000 | (44,000) |
Income from continuing operations | $ 637,134 | 177,726 | $ 1,287,312 | 39,831 |
Discontinued operations: | ||||
Loss from discontinued operations, net of tax | (2,135) | (36,211) | ||
Loss on sale of discontinued operations, net of tax | (73,393) | (629,835) | ||
Discontinued operations, net of tax | (75,528) | (666,046) | ||
Net income (loss) | $ 637,134 | $ 102,198 | $ 1,287,312 | $ (626,215) |
Basic | ||||
Continuing operations (in dollars per share) | $ 0.06 | $ 0.02 | $ 0.13 | |
Discontinued operations (in dollars per share) | (0.01) | $ (0.07) | ||
Net income (loss) (in dollars per share) | $ 0.06 | 0.01 | $ 0.13 | $ (0.06) |
Diluted | ||||
Continuing operations (in dollars per share) | $ 0.06 | 0.02 | $ 0.13 | |
Discontinued operations (in dollars per share) | (0.01) | $ (0.07) | ||
Net income (loss) (in dollars per share) | $ 0.06 | $ 0.01 | $ 0.13 | $ (0.06) |
Shares used in per share calculation: | ||||
Basic (in shares) | 10,073,121 | 10,041,206 | 10,055,390 | 10,014,839 |
Diluted (in shares) | 10,073,121 | 10,087,115 | 10,055,390 | 10,051,242 |
Consolidated Condensed Stateme5
Consolidated Condensed Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Operating Activities | ||
Net income (loss) | $ 1,287,312 | $ (626,215) |
Net loss from discontinued operations | (666,046) | |
Net income from continuing operations | $ 1,287,312 | 39,831 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation | 299,591 | 258,796 |
Amortization | 619,354 | 322,983 |
Provision for excess and obsolete inventories | 450,000 | 451,351 |
Deferred income tax benefit | (180,000) | (148,000) |
Share based compensation expense | 184,751 | 134,643 |
Changes in assets and liabilities: | ||
Accounts receivable | 593,954 | 213,205 |
Income tax refund receivable | 212,924 | (295,122) |
Inventories, net | (2,166,895) | (3,201,256) |
Prepaid expenses | 17,550 | (502) |
Accounts payable | (125,367) | 270,233 |
Accrued expenses | (62,003) | 52,706 |
Net cash provided by (used in) operating activities – continuing operations | $ 1,131,171 | (1,901,132) |
Net cash provided by operating activities – discontinued operations | 272,372 | |
Net cash provided by (used in) operating activities | $ 1,131,171 | (1,628,760) |
Investing Activities | ||
Acquisition of business, net of cash acquired | $ (9,630,647) | |
Guaranteed payments for acquisition of business | $ (1,000,000) | |
Additions to land and buildings | (56,074) | |
Additions to machinery and equipment | $ (90,187) | $ (29,658) |
Proceeds from sale of discontinued operations | 2,000,000 | |
Net cash used in investing activities | $ (1,146,261) | (7,660,305) |
Financing Activities | ||
Proceeds on notes payable | 5,000,000 | |
Payments on notes payable | $ (632,266) | (197,966) |
Net cash provided by (used in) financing activities | (632,266) | 4,802,034 |
Net decrease in cash and cash equivalents | (647,356) | (4,487,031) |
Cash and cash equivalents at beginning of period | 5,286,097 | 8,476,725 |
Cash and cash equivalents at end of period | 4,638,741 | 3,989,694 |
Supplemental cash flow information: | ||
Cash paid for interest | 156,098 | 80,319 |
Cash paid for income taxes | $ 600,000 | 32,000 |
Supplemental noncash investing activities: | ||
Deferred guaranteed payments for acquisition of business | (2,744,338) | |
Other receivable related to proceeds from sale of asset held for sale | $ 1,413,001 |
Note 1 - Basis of Presentation
Note 1 - Basis of Presentation and Accounting Policies | 9 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | Note 1 - Basis of Presentation and Accounting Policies Basis of presentation 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”). Intercompany balances and transactions have been eliminated in consolidation. The Company’s reportable segments are 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, 2014. Recently Issued Accounting Standards 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”). The guidance is currently effective for the fiscal year and interim periods beginning October 1, 2017. However, on July 9, 2015, the FASB voted to approve a one-year deferral of the effective date. Management is evaluating the impact that ASU No. 2014-09 will have on the Company’s consolidated financial statements. |
Note 2 - Inventories
Note 2 - Inventories | 9 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
Inventory Disclosure [Text Block] | Note 2 – Inventories Inventories at June 30, 2015 and September 30, 2014 are as follows: June 30, 2015 September 30, 2014 New: Cable TV $ 16,706,317 $ 16,949,713 Refurbished: Cable TV 3,732,385 3,982,140 Telco 6,665,344 4,005,298 Allowance for excess and obsolete inventory (2,606,628 ) (2,156,628 ) $ 24,497,418 $ 22,780,523 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 Television 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 in the Cable Television segment to allow for obsolete inventory, which increased the cost of sales during the nine months ended June 30, 2015, and 2014, by approximately $0.5 million. For the Telco segment, any obsolete and excess telecommunications inventory is processed through its recycling program when it is identified. |
Note 3 - Intangible Assets
Note 3 - Intangible Assets | 9 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
Intangible Assets Disclosure [Text Block] | Note 3 – Intangible Assets Intangible 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 intangible assets with their associated accumulated amortization amounts at June 30, 2015 and September 30, 2014 are as follows: June 30, 2015 Gross Accumulated Amortization Net Intangible assets: Customer relationships – 10 years $ 4,257,000 $ (567,599 ) $ 3,689,401 Technology – 7 years 1,303,000 (248,189 ) 1,054,811 Trade name – 10 years 1,293,000 (172,400 ) 1,120,600 Non-compete agreements – 3 years 254,000 (112,888 ) 141,112 Total intangible assets $ 7,107,000 $ (1,101,076 ) $ 6,005,924 September 30, 2014 Gross Accumulated Amortization Net Intangible assets: Customer relationships – 10 years $ 4,257,000 $ (248,325 ) $ 4,008,675 Technology – 7 years 1,303,000 (108,583 ) 1,194,417 Trade name – 10 years 1,293,000 (75,425 ) 1,217,575 Non-compete agreements – 3 years 254,000 (49,389 ) 204,611 Total intangible assets $ 7,107,000 $ (481,722 ) $ 6,625,278 |
Note 4 - Notes Payable and Line
Note 4 - Notes Payable and Line of Credit | 9 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
Debt Disclosure [Text Block] | Note 4 – Notes Payable and Line of Credit Notes Payable The Company has an Amended and Restated Revolving Credit and Term Loan Agreement (“Credit and Term Loan Agreement”). At June 30, 2015, the Company has two term loans outstanding under the Credit and Term Loan Agreement. The first outstanding term loan has an outstanding balance of $1.2 million at June 30, 2015 and is due on November 20, 2021, with monthly principal payments of $15,334 plus accrued interest. The interest rate is the prevailing 30-day LIBOR rate plus 1.4% (1.58% at June 30, 2015) and is reset monthly. This term loan is collateralized by inventory, accounts receivable, equipment and fixtures and general intangibles. The second outstanding term loan has an outstanding balance of $4.2 million at June 30, 2015 and is due March 4, 2019, with monthly principal and interest payments of $68,505, with the balance due at maturity. It is a five year term loan with a seven year amortization payment schedule with a fixed interest rate of 4.07%. This term loan is collateralized by inventory, accounts receivable, equipment and fixtures and general intangibles. Capital Lease Obligations The Company has two capital lease obligations related to machinery and equipment totaling $48 thousand at June 30, 2015 with monthly principal and interest payments of $2,069. The capital lease obligations are due on June 20, 2017 and September 20, 2017. Line of Credit The Company has a $7.0 million Revolving Line of Credit (“Line of Credit”) under the Credit and Term Loan Agreement. At June 30, 2015, the Company had no balance outstanding under the Line of Credit. The Line of Credit requires quarterly interest payments based on the prevailing 30-day LIBOR rate plus 2.75% (2.91% at June 30, 2015), and the interest rate is reset monthly. Any future borrowings under the Line of Credit are due on November 27, 2015. Future borrowings under the Line of Credit are limited to the lesser of $7.0 million or the net balance of 80% of qualified accounts receivable plus 50% of qualified inventory. Under these limitations, the Company’s total available Line of Credit borrowing base was $7.0 million at June 30, 2015. Among other financial covenants, the Line of Credit agreement provides that the Company maintain a fixed charge ratio of coverage (EBITDA to total fixed charges) of not less than 1.25 to 1.0, determined quarterly. The Line of Credit is collateralized by inventory, accounts receivable, equipment and fixtures and general intangibles. Fair Value of Debt FASB ASC 820, Fair Value Measurements and Disclosures, ● Level 1 – Quoted prices for identical assets in active markets or liabilities that we have the ability to access. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. ● Level 2 – Inputs are other than quoted prices in active markets included in Level 1 that are either directly or indirectly observable. These inputs are either directly observable in the marketplace or indirectly observable through corroboration with market data for substantially the full contractual term of the asset or liability being measured. ● Level 3 – Inputs that are not observable for which there is little, if any, market activity for the asset or liability being measured. These inputs reflect management’s best estimate of the assumptions market participants would use in determining fair value. The Company has determined the carrying value of its variable-rate term loan approximates its fair value since the interest rate fluctuates periodically based on a floating interest rate. The Company has determined the fair value of its fixed-rate term loan utilizing the Level 2 hierarchy as the fair value can be estimated from broker quotes corroborated by other market data. These broker quotes are based on observable market interest rates at which loans with similar terms and maturities could currently be executed. The Company then estimated the fair value of the fixed-rate term loan using cash flows discounted at the current market interest rate obtained. The fair value of the Company’s fixed rate loan was $4.1 million as of June 30, 2015. |
Note 5 - Earnings per Share
Note 5 - Earnings per Share | 9 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
Earnings Per Share [Text Block] | Note 5 – Earnings Per Share 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 stock 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. Basic and diluted earnings per share for the three and nine months ended June 30, 2015 and 2014 are: Three Months Ended June 30, Nine Months Ended June 30, 2015 2014 2015 2014 Income from continuing operations $ 637,134 $ 177,726 $ 1,287,312 $ 39,831 Discontinued operations, net of tax − (75,528 ) − (666,046 ) Net income (loss) attributable to common shareholders $ 637,134 $ 102,198 $ 1,287,312 $ (626,215 ) Basic weighted average shares 10,073,121 10,041,206 10,055,390 10,014,839 Effect of dilutive securities: Stock options − 45,909 − 36,403 Diluted weighted average shares 10,073,121 10,087,115 10,055,390 10,051,242 Earnings (loss) per common share: Basic Continuing operations $ 0.06 $ 0.02 $ 0.13 $ − Discontinued operations − (0.01 ) − (0.07 ) Net income (loss) $ 0.06 $ 0.01 $ 0.13 $ (0.06 ) Diluted Continuing operations $ 0.06 $ 0.02 $ 0.13 $ − Discontinued operations − (0.01 ) − (0.07 ) Net income (loss) $ 0.06 $ 0.01 $ 0.13 $ (0.06 ) |
Note 6 - Stock Option Plan
Note 6 - Stock Option Plan | 9 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | Note 6 – Stock Option Plan Plan Information At the annual meeting of shareholders in March 2015, the shareholders approved the 2015 Incentive Stock Plan (the “Plan”). The Plan provides for awards of stock options and restricted stock to officers, directors, key employees and consultants. The Plan provides an additional 500,000 shares of common stock available for issuance in addition to those stock awards that were outstanding under the previous incentive stock plan. 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. At June 30, 2015, 1,100,591 shares of common stock were reserved for stock award grants under the Plan. Of these reserved shares, 500,000 shares were available for future grants. Stock Options 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 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. A summary of the status of the Company's stock options at June 30, 2015 and changes during the nine months then ended is presented below: Shares Wtd. Avg. Ex. Price Outstanding at September 30, 2014 560,000 $ 2.96 Granted − − Exercised − − Expired (15,000 ) $ 4.62 Forfeited − − Outstanding at June 30, 2015 545,000 $ 2.91 Exercisable at June 30, 2015 311,667 $ 2.94 No nonqualified stock options were granted for the nine months ended June 30, 2015. 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 estimate the pre-vesting option forfeitures and records share-based expense only for those awards that are expected to vest. Compensation expense related to unvested stock options recorded for the nine months ended June 30, 2015 is as follows: Nine Months Ended June 30, 2015 Fiscal year 2012 grant $ 24,783 Fiscal year 2014 grant $ 81,468 The Company records compensation expense over the vesting term of the related options. At June 30, 2015, compensation costs related to these unvested stock options not yet recognized in the consolidated condensed statements of operations was $119,288. Restricted Stock The Company granted restricted stock in March 2015 to its Board of Directors totaling 31,915 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 upon issuance totaled $75,000 and is being amortized over the 12 month holding period as compensation expense. The Company granted restricted stock in April of 2014 to certain employees totaling 23,676 shares, which were valued at market value on the date of grant. The shares have a holding restriction, which will expire in equal annual installments of 7,892 shares over three years starting in April 2015. The fair value of these shares upon issuance totaled $76,000 and is being amortized over the respective one, two and three year holding periods as compensation expense. The unamortized portion of the restricted stock is included in prepaid expenses on the Company’s consolidated condensed balance sheets. |
Note 7 - Segment Reporting
Note 7 - Segment Reporting | 9 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
Segment Reporting Disclosure [Text Block] | Note 7 – Segment Reporting The Company is reporting its financial performance based on its external reporting segments: Cable Television and Telecommunications. These reportable segments are described below. Cable Television (“Cable TV”) 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 also repairs cable television equipment for various cable companies. Telecommunications (“Telco”) The Company’s Telco segment sells certified used telecommunications networking equipment from a broad range of manufacturers to customers primarily in North America as well as other international regions. In addition, this segment also offers its customers decommissioning services for surplus and obsolete equipment, which it in turn processes through its recycling program. The Company evaluates performance and allocates its resources based on operating income. The accounting policies of its reportable segments are the same as those described in the summary of significant accounting policies. Segment assets consist primarily of cash and cash equivalents, accounts receivable, inventory, property, plant and equipment, goodwill and intangible assets. Three Months Ended Nine Months Ended June 30, 2015 June 30, 2014 June 30, 2015 June 30, 2014 Sales Cable TV $ 6,752,224 $ 6,506,763 $ 19,377,515 $ 19,874,687 Telco 5,235,317 2,816,395 15,085,388 3,882,020 Intercompany (85,150 ) − (356,815 ) − Total sales $ 11,902,391 $ 9,323,158 $ 34,106,088 $ 23,756,707 Gross profit Cable TV $ 2,367,221 $ 1,903,435 $ 6,189,705 $ 5,619,323 Telco 1,777,386 1,316,620 6,030,217 1,695,127 Total gross profit $ 4,144,607 $ 3,220,055 $ 12,219,922 $ 7,314,450 Operating income Cable TV $ 846,372 $ 385,309 $ 1,813,022 $ 867,762 Telco 95,833 (63,470 ) 325,884 (740,824 ) Total operating income $ 942,205 $ 321,839 $ 2,138,906 $ 126,938 June 30, 2015 September 30, 2014 Segment assets Cable TV $ 27,265,152 $ 29,241,335 Telco 19,010,305 17,781,114 Non-allocated 6,764,151 6,383,232 Total assets $ 53,039,608 $ 53,405,681 |
Significant Accounting Policies
Significant Accounting Policies (Policies) | 9 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Basis of Accounting, Policy [Policy Text Block] | Basis of presentation 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”). Intercompany balances and transactions have been eliminated in consolidation. The Company’s reportable segments are 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, 2014. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recently Issued Accounting Standards 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”). The guidance is currently effective for the fiscal year and interim periods beginning October 1, 2017. However, on July 9, 2015, the FASB voted to approve a one-year deferral of the effective date. Management is evaluating the impact that ASU No. 2014-09 will have on the Company’s consolidated financial statements. |
Note 2 - Inventories (Tables)
Note 2 - Inventories (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Notes Tables | |
Schedule of Inventory, Current [Table Text Block] | June 30, 2015 September 30, 2014 New: Cable TV $ 16,706,317 $ 16,949,713 Refurbished: Cable TV 3,732,385 3,982,140 Telco 6,665,344 4,005,298 Allowance for excess and obsolete inventory (2,606,628 ) (2,156,628 ) $ 24,497,418 $ 22,780,523 |
Note 3 - Intangible Assets (Tab
Note 3 - Intangible Assets (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Notes Tables | |
Schedule of Intangible Assets and Goodwill [Table Text Block] | June 30, 2015 Gross Accumulated Amortization Net Intangible assets: Customer relationships – 10 years $ 4,257,000 $ (567,599 ) $ 3,689,401 Technology – 7 years 1,303,000 (248,189 ) 1,054,811 Trade name – 10 years 1,293,000 (172,400 ) 1,120,600 Non-compete agreements – 3 years 254,000 (112,888 ) 141,112 Total intangible assets $ 7,107,000 $ (1,101,076 ) $ 6,005,924 September 30, 2014 Gross Accumulated Amortization Net Intangible assets: Customer relationships – 10 years $ 4,257,000 $ (248,325 ) $ 4,008,675 Technology – 7 years 1,303,000 (108,583 ) 1,194,417 Trade name – 10 years 1,293,000 (75,425 ) 1,217,575 Non-compete agreements – 3 years 254,000 (49,389 ) 204,611 Total intangible assets $ 7,107,000 $ (481,722 ) $ 6,625,278 |
Note 5 - Earnings per Share (Ta
Note 5 - Earnings per Share (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Notes Tables | |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | Three Months Ended June 30, Nine Months Ended June 30, 2015 2014 2015 2014 Income from continuing operations $ 637,134 $ 177,726 $ 1,287,312 $ 39,831 Discontinued operations, net of tax − (75,528 ) − (666,046 ) Net income (loss) attributable to common shareholders $ 637,134 $ 102,198 $ 1,287,312 $ (626,215 ) Basic weighted average shares 10,073,121 10,041,206 10,055,390 10,014,839 Effect of dilutive securities: Stock options − 45,909 − 36,403 Diluted weighted average shares 10,073,121 10,087,115 10,055,390 10,051,242 Earnings (loss) per common share: Basic Continuing operations $ 0.06 $ 0.02 $ 0.13 $ − Discontinued operations − (0.01 ) − (0.07 ) Net income (loss) $ 0.06 $ 0.01 $ 0.13 $ (0.06 ) Diluted Continuing operations $ 0.06 $ 0.02 $ 0.13 $ − Discontinued operations − (0.01 ) − (0.07 ) Net income (loss) $ 0.06 $ 0.01 $ 0.13 $ (0.06 ) |
Note 6 - Stock Option Plan (Tab
Note 6 - Stock Option Plan (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Notes Tables | |
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | Shares Wtd. Avg. Ex. Price Outstanding at September 30, 2014 560,000 $ 2.96 Granted − − Exercised − − Expired (15,000 ) $ 4.62 Forfeited − − Outstanding at June 30, 2015 545,000 $ 2.91 Exercisable at June 30, 2015 311,667 $ 2.94 |
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block] | Nine Months Ended June 30, 2015 Fiscal year 2012 grant $ 24,783 Fiscal year 2014 grant $ 81,468 |
Note 7 - Segment Reporting (Tab
Note 7 - Segment Reporting (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Notes Tables | |
Schedule of Segment Reporting Information, by Segment [Table Text Block] | Three Months Ended Nine Months Ended June 30, 2015 June 30, 2014 June 30, 2015 June 30, 2014 Sales Cable TV $ 6,752,224 $ 6,506,763 $ 19,377,515 $ 19,874,687 Telco 5,235,317 2,816,395 15,085,388 3,882,020 Intercompany (85,150 ) − (356,815 ) − Total sales $ 11,902,391 $ 9,323,158 $ 34,106,088 $ 23,756,707 Gross profit Cable TV $ 2,367,221 $ 1,903,435 $ 6,189,705 $ 5,619,323 Telco 1,777,386 1,316,620 6,030,217 1,695,127 Total gross profit $ 4,144,607 $ 3,220,055 $ 12,219,922 $ 7,314,450 Operating income Cable TV $ 846,372 $ 385,309 $ 1,813,022 $ 867,762 Telco 95,833 (63,470 ) 325,884 (740,824 ) Total operating income $ 942,205 $ 321,839 $ 2,138,906 $ 126,938 |
Reconciliation of Assets from Segment to Consolidated [Table Text Block] | June 30, 2015 September 30, 2014 Segment assets Cable TV $ 27,265,152 $ 29,241,335 Telco 19,010,305 17,781,114 Non-allocated 6,764,151 6,383,232 Total assets $ 53,039,608 $ 53,405,681 |
Note 2 - Inventories (Details T
Note 2 - Inventories (Details Textual) - USD ($) | 9 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Inventory Write-down | $ 450,000 | $ 451,351 |
Note 2 - Schedule of Inventorie
Note 2 - Schedule of Inventories (Details) - USD ($) | Jun. 30, 2015 | Sep. 30, 2014 |
New: | ||
Cable TV | $ 16,706,317 | $ 16,949,713 |
Refurbished: | ||
Cable TV | 3,732,385 | 3,982,140 |
Telco | 6,665,344 | 4,005,298 |
Allowance for excess and obsolete inventory | (2,606,628) | (2,156,628) |
$ 24,497,418 | $ 22,780,523 |
Note 3 - Intangible Assets (Det
Note 3 - Intangible Assets (Details Textual) | 9 Months Ended |
Jun. 30, 2015 | |
Minimum [Member] | |
Finite-Lived Intangible Asset, Useful Life | 3 years |
Maximum [Member] | |
Finite-Lived Intangible Asset, Useful Life | 10 years |
Note 3 - Intangible Assets - Sc
Note 3 - Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Sep. 30, 2014 |
Customer Relationships [Member] | ||
Gross | $ 4,257,000 | $ 4,257,000 |
Accumulated Amortization | (567,599) | (248,325) |
Net | 3,689,401 | 4,008,675 |
Technology-Based Intangible Assets [Member] | ||
Gross | 1,303,000 | 1,303,000 |
Accumulated Amortization | (248,189) | (108,583) |
Net | 1,054,811 | 1,194,417 |
Trade Names [Member] | ||
Gross | 1,293,000 | 1,293,000 |
Accumulated Amortization | (172,400) | (75,425) |
Net | 1,120,600 | 1,217,575 |
Noncompete Agreements [Member] | ||
Gross | 254,000 | 254,000 |
Accumulated Amortization | (112,888) | (49,389) |
Net | 141,112 | 204,611 |
Gross | 7,107,000 | 7,107,000 |
Accumulated Amortization | (1,101,076) | (481,722) |
Net | $ 6,005,924 | $ 6,625,278 |
Note 3 - Intangible Assets - 23
Note 3 - Intangible Assets - Schedule of Intangible Assets (Details) (Parentheticals) | 9 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Sep. 30, 2014 | |
Customer Relationships [Member] | ||
Finite-Lived Intangible Asset, Useful Life | 10 years | 10 years |
Technology-Based Intangible Assets [Member] | ||
Finite-Lived Intangible Asset, Useful Life | 7 years | 7 years |
Trade Names [Member] | ||
Finite-Lived Intangible Asset, Useful Life | 10 years | 10 years |
Noncompete Agreements [Member] | ||
Finite-Lived Intangible Asset, Useful Life | 3 years | 3 years |
Note 4 - Notes Payable and Li24
Note 4 - Notes Payable and Line of Credit (Details Textual) - Jun. 30, 2015 | USD ($) |
Line of Credit [Member] | London Interbank Offered Rate (LIBOR) [Member] | |
Debt Instrument, Basis Spread on Variable Rate | 2.75% |
Line of Credit [Member] | |
Long-term Line of Credit | $ 0 |
Debt Instrument, Interest Rate, Effective Percentage | 2.91% |
Line of Credit Facility, Maximum Borrowing Capacity | $ 7,000,000 |
Percentage Of Qualified Accounts Receivable Used In Determination Of Maximum Borrowing Capacity Of Line Of Credit | 80.00% |
Percentage Of Qualified Inventory Used In Determination Of Maximum Borrowing Capacity Of Line Of Credit | 50.00% |
Line of Credit Facility, Current Borrowing Capacity | $ 7,000,000 |
Fixed Charge Coverage Ratio | 1.25 |
Term Loan 1 [Member] | London Interbank Offered Rate (LIBOR) [Member] | |
Debt Instrument, Basis Spread on Variable Rate | 1.40% |
Term Loan 1 [Member] | |
Loans Payable | $ 1,200,000 |
Debt Instrument, Periodic Payment | $ 15,334 |
Debt Instrument, Interest Rate, Effective Percentage | 1.58% |
Term Loan 2 [Member] | |
Loans Payable | $ 4,200,000 |
Debt Instrument, Periodic Payment | $ 68,505 |
Debt Instrument, Term | 5 years |
Debt Instrument Amortization Term | 7 years |
Debt Instrument, Interest Rate, Stated Percentage | 4.07% |
Debt Instrument, Fair Value Disclosure | $ 4,100,000 |
Capital Lease Obligations [Member] | |
Debt Instrument, Periodic Payment | 2,069 |
Capital Lease Obligations | $ 48,000 |
Note 5 - Basic and Diluted Earn
Note 5 - Basic and Diluted Earnings Per Share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income from continuing operations | $ 637,134 | $ 177,726 | $ 1,287,312 | $ 39,831 |
Discontinued operations, net of tax | (75,528) | (666,046) | ||
Net income (loss) attributable to common shareholders | $ 637,134 | $ 102,198 | $ 1,287,312 | $ (626,215) |
Basic (in shares) | 10,073,121 | 10,041,206 | 10,055,390 | 10,014,839 |
Effect of dilutive securities: | ||||
Stock options (in shares) | 45,909 | 36,403 | ||
Diluted weighted average shares (in shares) | 10,073,121 | 10,087,115 | 10,055,390 | 10,051,242 |
Basic | ||||
Continuing operations (in dollars per share) | $ 0.06 | $ 0.02 | $ 0.13 | |
Discontinued operations (in dollars per share) | (0.01) | $ (0.07) | ||
Net income (loss) (in dollars per share) | $ 0.06 | 0.01 | $ 0.13 | $ (0.06) |
Diluted | ||||
Continuing operations (in dollars per share) | $ 0.06 | 0.02 | $ 0.13 | |
Discontinued operations (in dollars per share) | (0.01) | $ (0.07) | ||
Net income (loss) (in dollars per share) | $ 0.06 | $ 0.01 | $ 0.13 | $ (0.06) |
Note 6 - Stock Option Plan (Det
Note 6 - Stock Option Plan (Details Textual) - USD ($) | 1 Months Ended | 9 Months Ended | |
Mar. 31, 2015 | Apr. 30, 2014 | Jun. 30, 2015 | |
Nonqualified Stock Options [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 0 | ||
Employees [Member] | Minimum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years | ||
Employees [Member] | Maximum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 5 years | ||
Employees [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 4 years | ||
Stock Options Expiration Period | 10 years | ||
Board Of Directors [Member] | |||
Stock Options Expiration Period | 10 years | ||
Stock Issued During Period, Shares, Restricted Stock Award, Gross | 31,915 | ||
Restricted Stock Holding Period | 1 year | ||
Certain Employees [Member] | |||
Stock Issued During Period, Shares, Restricted Stock Award, Gross | 23,676 | ||
Restricted Stock Holding Period | 3 years | ||
Fair Value Of Restricted Shares Upon Issuance | $ 76,000 | ||
Holding Restriction, Annual Expiration of Restricted Stock | 7,892 | ||
The 2015 Incentive Stock Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized | 500,000 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0.00% | ||
Common Stock, Capital Shares Reserved for Future Issuance | 1,100,591 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 500,000 | ||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $ 119,288 | ||
Fair Value Of Restricted Shares Upon Issuance | $ 75,000 |
Note 6 - Summary of Status of t
Note 6 - Summary of Status of the Company's Stock Options (Details) - Jun. 30, 2015 - $ / shares | Total |
Outstanding (in shares) | 560,000 |
Outstanding (in dollars per share) | $ 2.96 |
Expired (in shares) | (15,000) |
Expired (in dollars per share) | $ 4.62 |
Outstanding (in shares) | 545,000 |
Outstanding (in dollars per share) | $ 2.91 |
Exercisable at June 30, 2015 (in shares) | 311,667 |
Exercisable at June 30, 2015 (in dollars per share) | $ 2.94 |
Note 6 - Compensation Expense R
Note 6 - Compensation Expense Related to Restricted Stock (Details) - Employee Stock Option [Member] | 9 Months Ended |
Jun. 30, 2015USD ($) | |
Fiscal Year 2012 Grant [Member] | |
Compensation expense | $ 24,783 |
Fiscal Year 2014 Grant [Member] | |
Compensation expense | $ 81,468 |
Note 7 - Segment Reporting Info
Note 7 - Segment Reporting Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Operating Segments [Member] | Cable TV [Member] | ||||
Sales | $ 6,752,224 | $ 6,506,763 | $ 19,377,515 | $ 19,874,687 |
Gross profit | 2,367,221 | 1,903,435 | 6,189,705 | 5,619,323 |
Operating income | 846,372 | 385,309 | 1,813,022 | 867,762 |
Operating Segments [Member] | Telco [Member] | ||||
Sales | 5,235,317 | 2,816,395 | 15,085,388 | 3,882,020 |
Gross profit | 1,777,386 | 1,316,620 | 6,030,217 | 1,695,127 |
Operating income | 95,833 | $ (63,470) | 325,884 | $ (740,824) |
Intersegment Eliminations [Member] | ||||
Sales | (85,150) | (356,815) | ||
Sales | 11,902,391 | $ 9,323,158 | 34,106,088 | $ 23,756,707 |
Gross profit | 4,144,607 | 3,220,055 | 12,219,922 | 7,314,450 |
Operating income | $ 942,205 | $ 321,839 | $ 2,138,906 | $ 126,938 |
Note 7 - Segment Reporting - Se
Note 7 - Segment Reporting - Segment Assets (Details) - USD ($) | Jun. 30, 2015 | Sep. 30, 2014 |
Cable TV [Member] | Operating Segments [Member] | ||
Segment assets | $ 27,265,152 | $ 29,241,335 |
Telco [Member] | Operating Segments [Member] | ||
Segment assets | 19,010,305 | 17,781,114 |
Intersegment Eliminations [Member] | ||
Segment assets | 6,764,151 | 6,383,232 |
Segment assets | $ 53,039,608 | $ 53,405,681 |