Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Dec. 31, 2015 | Jan. 31, 2016 | |
Entity Registrant Name | ADDVANTAGE TECHNOLOGIES GROUP INC | |
Entity Central Index Key | 874,292 | |
Trading Symbol | aey | |
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) | 10,071,361 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2015 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Consolidated Condensed Balance
Consolidated Condensed Balance Sheets (Unaudited) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
Assets | ||
Cash and cash equivalents | $ 6,711,341 | $ 6,110,986 |
Accounts receivable, net of allowance for doubtful accounts of $250,000 | 3,968,551 | $ 4,286,377 |
Income tax receivable | 13,998 | |
Inventories, net of allowance for excess and obsolete inventory of $2,906,628 and $2,756,628, respectively | 22,991,872 | $ 23,600,996 |
Prepaid expenses | 115,652 | 153,454 |
Deferred income taxes | 1,774,000 | 1,776,000 |
Total current assets | 35,575,414 | 35,927,813 |
Property and equipment, at cost: | ||
Land and buildings | 7,218,678 | 7,218,678 |
Machinery and equipment | 3,551,539 | 3,415,164 |
Leasehold improvements | 151,957 | 151,957 |
Total property and equipment, at cost | 10,922,174 | 10,785,799 |
Less: Accumulated depreciation | (4,679,976) | (4,584,796) |
Net property and equipment | 6,242,198 | 6,201,003 |
Intangibles, net of accumulated amortization | 5,593,022 | 5,799,473 |
Goodwill | 3,910,089 | 3,910,089 |
Other assets | 134,678 | 134,678 |
Total assets | 51,455,401 | 51,973,056 |
Current liabilities: | ||
Accounts payable | 1,870,759 | 1,784,482 |
Accrued expenses | $ 1,003,544 | 1,358,681 |
Income tax payable | 122,492 | |
Notes payable – current portion | $ 880,999 | 873,752 |
Other current liabilities | 992,838 | 982,094 |
Total current liabilities | 4,748,140 | 5,121,501 |
Notes payable, less current portion | 4,142,894 | 4,366,130 |
Deferred income taxes | 286,000 | 286,000 |
Other liabilities | 1,085,930 | 1,064,717 |
Total liabilities | 10,262,964 | 10,838,348 |
Shareholders’ equity: | ||
Common stock, $.01 par value; 30,000,000 shares authorized; 10,572,019 and 10,564,221 shares issued, respectively; 10,071,361 and 10,063,563 shares outstanding, respectively | 105,720 | 105,642 |
Paid in capital | (5,078,612) | (5,112,269) |
Retained earnings | 47,165,343 | 47,141,349 |
Total shareholders’ equity before treasury stock | 42,192,451 | 42,134,722 |
Less: Treasury stock, 500,658 shares, at cost | (1,000,014) | (1,000,014) |
Total shareholders’ equity | 41,192,437 | 41,134,708 |
Total liabilities and shareholders’ equity | $ 51,455,401 | $ 51,973,056 |
Consolidated Condensed Balance3
Consolidated Condensed Balance Sheets (Unaudited) (Parentheticals) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
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) | 10,572,019 | 10,564,221 |
Common stock, shares outstanding (in shares) | 10,071,361 | 10,063,563 |
Treasury stock, shares (in shares) | 500,658 | 500,658 |
Accounts receivable, allowance for doubtful accounts | $ 250,000 | $ 250,000 |
Allowance for excess and obsolete inventory | $ 2,906,628 | $ 2,756,628 |
Consolidated Condensed Statemen
Consolidated Condensed Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Sales | $ 8,249,668 | $ 10,837,158 |
Cost of sales | 5,484,288 | 7,005,355 |
Gross profit | 2,765,380 | 3,831,803 |
Operating, selling, general and administrative expenses | 2,668,625 | 3,075,459 |
Income from operations | 96,755 | 756,344 |
Interest expense | 67,761 | 85,421 |
Income before provision for income taxes | 28,994 | 670,923 |
Provision for income taxes | 5,000 | 255,000 |
Net income | $ 23,994 | $ 415,923 |
Earnings per share: | ||
Basic (in dollars per share) | $ 0 | $ 0.04 |
Diluted (in dollars per share) | $ 0 | $ 0.04 |
Shares used in per share calculation: | ||
Basic (in shares) | 10,069,139 | 10,041,206 |
Diluted (in shares) | 10,069,139 | 10,044,619 |
Consolidated Condensed Stateme5
Consolidated Condensed Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Operating Activities | ||
Net income | $ 23,994 | $ 415,923 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 95,180 | 98,808 |
Amortization | 206,451 | 206,452 |
Provision for excess and obsolete inventories | 150,000 | 150,000 |
Deferred income tax provision (benefit) | 2,000 | (63,000) |
Share based compensation expense | 45,013 | 62,028 |
Changes in assets and liabilities: | ||
Accounts receivable | 425,783 | 1,313,950 |
Income tax receivable\payable | (136,490) | 220,104 |
Inventories, net | 475,224 | (489,469) |
Prepaid expenses | 26,524 | 20,798 |
Accounts payable | 28,320 | (336,837) |
Accrued expenses | (323,180) | (83,034) |
Net cash provided by operating activities | 1,018,819 | $ 1,515,723 |
Investing Activities | ||
Acquisition of net operating assets | (178,000) | |
Additions to machinery and equipment | (24,475) | $ (63,601) |
Net cash used in investing activities | (202,475) | (63,601) |
Financing Activities | ||
Payments on notes payable | (215,989) | (209,038) |
Net cash used in financing activities | (215,989) | (209,038) |
Net increase in cash and cash equivalents | 600,355 | 1,243,084 |
Cash and cash equivalents at beginning of period | 6,110,986 | 5,286,097 |
Cash and cash equivalents at end of period | 6,711,341 | 6,529,181 |
Supplemental cash flow information: | ||
Cash paid for interest | 46,393 | $ 53,957 |
Cash paid for income taxes | $ 142,200 |
Note 1 - Summary of Significant
Note 1 - Summary of Significant Accounting Policies | 3 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Significant Accounting Policies [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, 2015. Recently Issued Accounting Standards In September 2015, the FASB issued ASU No. 2015-16: “Business Combinations (Topic 805)”. This guidance was issued to amend existing guidance related to measurement period adjustments associated with a business combination. The new standard requires the Company to recognize measurement period adjustments in the reporting period in which the adjustments are determined, including any cumulative charge to earnings in the current period. The amendment removes the requirement to adjust prior period financial statements for these measurement period adjustments. The guidance is effective for annual period beginning after December 15, 2015 and early adoption is permitted. Management is evaluating the impact that ASU No. 2015-16 will have on the Company’s consolidated financial statements. |
Note 2 - Acquisition
Note 2 - Acquisition | 3 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Mergers, Acquisitions and Dispositions Disclosures [Text Block] | Note 2 – Acquisition On December 31, 2015, the Company acquired the net operating assets of Advantage Solutions, LLC in Kingsport, Tennessee. This new location for the Cable TV segment will provide cable television equipment repair services in the region as well as expand the Company’s Cable TV equipment sales opportunities. The purchase price was allocated to the major categories of assets and liabilities based on their estimated fair values at the acquisition date. The following table summarizes the preliminary purchase price allocation: Assets acquired: Accounts receivable $ 107,957 Repair inventory 16,100 Fixed assets - equipment 111,900 Liabilities assumed: Current liabilities (57,957 ) Net assets acquired $ 178,000 |
Note 3 - Inventories
Note 3 - Inventories | 3 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Inventory Disclosure [Text Block] | Note 3 – Inventories Inventories at December 31, 2015 and September 30, 2015 are as follows: December 31, 2015 September 30, 2015 New: Cable TV $ 15,447,377 $ 16,255,487 Refurbished: Cable TV 3,846,451 3,676,132 Telco 6,604,672 6,426,005 Allowance for excess and obsolete inventory (2,906,628 ) (2,756,628 ) $ 22,991,872 $ 23,600,996 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 in the Cable TV segment to allow for obsolete inventory, which increased the cost of sales during the three months ended December 31, 2015, and 2014, by approximately $0.2 million. For the Telco segment, any obsolete and excess telecommunications inventory is processed through its recycling program when it is identified. |
Note 4 - Intangible Assets
Note 4 - Intangible Assets | 3 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Intangible Assets Disclosure [Text Block] | Note 4 – 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 December 31, 2015 and September 30, 2015 are as follows: December 31, 2015 Gross Accumulated Amortization Net Intangible assets: Customer relationships – 10 years $ 4,257,000 $ (780,447 ) $ 3,476,553 Technology – 7 years 1,303,000 (341,261 ) 961,739 Trade name – 10 years 1,293,000 (237,049 ) 1,055,951 Non-compete agreements – 3 years 254,000 (155,221 ) 98,779 Total intangible assets $ 7,107,000 $ (1,513,978 ) $ 5,593,022 September 30, 2015 Gross Accumulated Amortization Net Intangible assets: Customer relationships – 10 years $ 4,257,000 $ (674,023 ) $ 3,582,977 Technology – 7 years 1,303,000 (294,725 ) 1,008,275 Trade name – 10 years 1,293,000 (204,724 ) 1,088,276 Non-compete agreements – 3 years 254,000 (134,055 ) 119,945 Total intangible assets $ 7,107,000 $ (1,307,527 ) $ 5,799,473 |
Note 5 - Notes Payable and Line
Note 5 - Notes Payable and Line of Credit | 3 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Debt Disclosure [Text Block] | Note 5 – 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”) with its primary financial lender. At December 31, 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 $1.1 million at December 31, 2015 and is due on November 30, 2021, with monthly principal payments of $15,334 plus accrued interest. The interest rate is the prevailing 30-day LIBOR rate plus 1.4% (1.64% at December 31, 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 $3.9 million at December 31, 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 $37 thousand at December 31, 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 December 31, 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 December 31, 2015), and the interest rate is reset monthly. Any future borrowings under the Line of Credit are due on March 31, 2017. 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 December 31, 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 $3.9 million as of December 31, 2015. |
Note 6 - Earnings Per Share
Note 6 - Earnings Per Share | 3 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Earnings Per Share [Text Block] | Note 6 – 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 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. Basic and diluted earnings per share for the three months ended December 31, 2015 and 2014 are: Three Months Ended December 31, 2015 2014 Net income attributable to common shareholders $ 23,994 $ 415,923 Basic weighted average shares 10,069,139 10,041,206 Effect of dilutive securities: Stock options − 3,413 Diluted weighted average shares 10,069,139 10,044,619 Earnings per common share: Basic $ 0.00 $ 0.04 Diluted $ 0.00 $ 0.04 The table below includes information related to stock options that were outstanding at the end of each respective three-month period ended December 31, but have been excluded from the computation of weighted-average stock options for dilutive securities due to the option exercise price exceeding the average market price per share of our common stock for the three months ended December 31, or their effect would be anti-dilutive. Three Months Ended December 31, 2015 2014 Stock options excluded 535,000 310,000 Weighted average exercise price of stock options $ 2.88 $ 3.37 Average market price of common stock $ 2.19 $ 2.48 |
Note 7 - Stock Option Plan
Note 7 - Stock Option Plan | 3 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | Note 7 – Stock Option Plan Plan Information 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. At December 31, 2015, 1,100,415 shares of common stock were reserved for stock award grants under the Plan. Of these reserved shares, 532,085 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 December 31, 2015 and changes during the three months then ended is presented below: Shares Wtd. Avg. Ex. Price Outstanding at September 30, 2015 535,000 $ 2.88 Granted – – Exercised – – Expired − − Forfeited – – Outstanding at December 31, 2015 535,000 $ 2.88 Exercisable at December 31, 2015 301,667 $ 2.88 No nonqualified stock options were granted for the three months ended December 31, 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 three months ended December 31, 2015 is as follows: Three Months Ended December 31, 2015 Fiscal year 2012 grant $ 4,354 Fiscal year 2014 grant $ 11,881 The Company records compensation expense over the vesting term of the related options. At December 31, 2015, compensation costs related to these unvested stock options not yet recognized in the consolidated condensed statements of income was $67,636. Restricted Stock The Company granted restricted stock in December 2015 and October 2015 to two new Directors totaling 3,333 and 4,465 shares, respectively which were valued at market value on the date of the grants. The holding restriction on these shares will expire the first week of March 2016. The fair value of the shares issued December 2015 and October 2015 totaled $7,500 and $10,000, respectively and is being amortized over the holding period as compensation expense. The Company granted restricted stock in March 2015 to its Board of Directors totaling 25,532 shares, net of forfeited shares of 6,383 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 $60,000 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 8 - Segment Reporting
Note 8 - Segment Reporting | 3 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Segment Reporting Disclosure [Text Block] | Note 8 – 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 primarily sells certified used telecommunications networking equipment from a broad range of manufacturers to customers primarily in North America. In addition, this segment is a reseller of new telecommunications equipment from certain manufacturers. Also, this segment offers its customers decommissioning services for surplus and obsolete equipment, which it in turn processes through its recycling services. 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 and equipment, goodwill and intangible assets. Three Months Ended December 31, 2015 December 31, 2014 Sales Cable TV $ 5,004,998 $ 6,833,020 Telco 3,317,730 4,036,293 Intersegment (73,060 ) (32,155 ) Total sales $ 8,249,668 $ 10,837,158 Gross profit Cable TV $ 1,579,272 $ 2,034,845 Telco 1,186,108 1,796,958 Total gross profit $ 2,765,380 $ 3,831,803 Operating income (loss) Cable TV $ 116,841 $ 618,811 Telco (20,086 ) 137,533 Total operating income $ 96,755 $ 756,344 December 31, 2015 September 30, 2015 Segment assets Cable TV $ 25,351,232 $ 26,494,430 Telco 17,301,559 17,094,713 Non-allocated 8,802,610 8,383,913 Total assets $ 51,455,401 $ 51,973,056 |
Significant Accounting Policies
Significant Accounting Policies (Policies) | 3 Months Ended |
Dec. 31, 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, 2015. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recently Issued Accounting Standards In September 2015, the FASB issued ASU No. 2015-16: “Business Combinations (Topic 805)”. This guidance was issued to amend existing guidance related to measurement period adjustments associated with a business combination. The new standard requires the Company to recognize measurement period adjustments in the reporting period in which the adjustments are determined, including any cumulative charge to earnings in the current period. The amendment removes the requirement to adjust prior period financial statements for these measurement period adjustments. The guidance is effective for annual period beginning after December 15, 2015 and early adoption is permitted. Management is evaluating the impact that ASU No. 2015-16 will have on the Company’s consolidated financial statements. |
Note 2 - Acquisition (Tables)
Note 2 - Acquisition (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Notes Tables | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block] | Assets acquired: Accounts receivable $ 107,957 Repair inventory 16,100 Fixed assets - equipment 111,900 Liabilities assumed: Current liabilities (57,957 ) Net assets acquired $ 178,000 |
Note 3 - Inventories (Tables)
Note 3 - Inventories (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Notes Tables | |
Schedule of Inventory, Current [Table Text Block] | December 31, 2015 September 30, 2015 New: Cable TV $ 15,447,377 $ 16,255,487 Refurbished: Cable TV 3,846,451 3,676,132 Telco 6,604,672 6,426,005 Allowance for excess and obsolete inventory (2,906,628 ) (2,756,628 ) $ 22,991,872 $ 23,600,996 |
Note 4 - Intangible Assets (Tab
Note 4 - Intangible Assets (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Notes Tables | |
Schedule of Intangible Assets and Goodwill [Table Text Block] | December 31, 2015 Gross Accumulated Amortization Net Intangible assets: Customer relationships – 10 years $ 4,257,000 $ (780,447 ) $ 3,476,553 Technology – 7 years 1,303,000 (341,261 ) 961,739 Trade name – 10 years 1,293,000 (237,049 ) 1,055,951 Non-compete agreements – 3 years 254,000 (155,221 ) 98,779 Total intangible assets $ 7,107,000 $ (1,513,978 ) $ 5,593,022 September 30, 2015 Gross Accumulated Amortization Net Intangible assets: Customer relationships – 10 years $ 4,257,000 $ (674,023 ) $ 3,582,977 Technology – 7 years 1,303,000 (294,725 ) 1,008,275 Trade name – 10 years 1,293,000 (204,724 ) 1,088,276 Non-compete agreements – 3 years 254,000 (134,055 ) 119,945 Total intangible assets $ 7,107,000 $ (1,307,527 ) $ 5,799,473 |
Note 6 - Earnings Per Share (Ta
Note 6 - Earnings Per Share (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Notes Tables | |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | Three Months Ended December 31, 2015 2014 Net income attributable to common shareholders $ 23,994 $ 415,923 Basic weighted average shares 10,069,139 10,041,206 Effect of dilutive securities: Stock options − 3,413 Diluted weighted average shares 10,069,139 10,044,619 Earnings per common share: Basic $ 0.00 $ 0.04 Diluted $ 0.00 $ 0.04 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] | Three Months Ended December 31, 2015 2014 Stock options excluded 535,000 310,000 Weighted average exercise price of stock options $ 2.88 $ 3.37 Average market price of common stock $ 2.19 $ 2.48 |
Note 7 - Stock Option Plan (Tab
Note 7 - Stock Option Plan (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Restricted Stock [Member] | |
Notes Tables | |
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block] | Three Months Ended December 31, 2015 Fiscal year 2012 grant $ 4,354 Fiscal year 2014 grant $ 11,881 |
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | Shares Wtd. Avg. Ex. Price Outstanding at September 30, 2015 535,000 $ 2.88 Granted – – Exercised – – Expired − − Forfeited – – Outstanding at December 31, 2015 535,000 $ 2.88 Exercisable at December 31, 2015 301,667 $ 2.88 |
Note 8 - Segment Reporting (Tab
Note 8 - Segment Reporting (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Notes Tables | |
Schedule of Segment Reporting Information, by Segment [Table Text Block] | Three Months Ended December 31, 2015 December 31, 2014 Sales Cable TV $ 5,004,998 $ 6,833,020 Telco 3,317,730 4,036,293 Intersegment (73,060 ) (32,155 ) Total sales $ 8,249,668 $ 10,837,158 Gross profit Cable TV $ 1,579,272 $ 2,034,845 Telco 1,186,108 1,796,958 Total gross profit $ 2,765,380 $ 3,831,803 Operating income (loss) Cable TV $ 116,841 $ 618,811 Telco (20,086 ) 137,533 Total operating income $ 96,755 $ 756,344 December 31, 2015 September 30, 2015 Segment assets Cable TV $ 25,351,232 $ 26,494,430 Telco 17,301,559 17,094,713 Non-allocated 8,802,610 8,383,913 Total assets $ 51,455,401 $ 51,973,056 |
Note 2 - Fair Value of Assets A
Note 2 - Fair Value of Assets Acquired and Liabilities Assumed (Details) - Advantage Solutions, LLC [Member] | Dec. 31, 2015USD ($) |
Accounts receivable | $ 107,957 |
Repair inventory | 16,100 |
Fixed assets - equipment | 111,900 |
Current liabilities | (57,957) |
Net assets acquired | $ 178,000 |
Note 3 - Inventories (Details T
Note 3 - Inventories (Details Textual) - USD ($) | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Inventory Write-down | $ 150,000 | $ 150,000 |
Note 3 - Inventories (Details)
Note 3 - Inventories (Details) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
Cable TV | $ 15,447,377 | $ 16,255,487 |
Cable TV | 3,846,451 | 3,676,132 |
Telco | 6,604,672 | 6,426,005 |
Allowance for excess and obsolete inventory | (2,906,628) | (2,756,628) |
$ 22,991,872 | $ 23,600,996 |
Note 4 - Intangible Assets (Det
Note 4 - Intangible Assets (Details Textual) | 3 Months Ended |
Dec. 31, 2015 | |
Minimum [Member] | |
Finite-Lived Intangible Asset, Useful Life | 3 years |
Maximum [Member] | |
Finite-Lived Intangible Asset, Useful Life | 10 years |
Note 4 - Intangible Assets (D25
Note 4 - Intangible Assets (Details) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
Customer Relationships [Member] | ||
Gross | $ 4,257,000 | $ 4,257,000 |
Accumulated Amortization | (780,447) | (674,023) |
Net | 3,476,553 | 3,582,977 |
Technology-Based Intangible Assets [Member] | ||
Gross | 1,303,000 | 1,303,000 |
Accumulated Amortization | (341,261) | (294,725) |
Net | 961,739 | 1,008,275 |
Trade Names [Member] | ||
Gross | 1,293,000 | 1,293,000 |
Accumulated Amortization | (237,049) | (204,724) |
Net | 1,055,951 | 1,088,276 |
Noncompete Agreements [Member] | ||
Gross | 254,000 | 254,000 |
Accumulated Amortization | (155,221) | (134,055) |
Net | 98,779 | 119,945 |
Gross | 7,107,000 | 7,107,000 |
Accumulated Amortization | (1,513,978) | (1,307,527) |
Net | $ 5,593,022 | $ 5,799,473 |
Note 4 - Intangible Assets (D26
Note 4 - Intangible Assets (Details) (Parentheticals) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2015 | Sep. 30, 2015 | |
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 5 - Notes Payable and Li27
Note 5 - Notes Payable and Line of Credit (Details Textual) | 3 Months Ended |
Dec. 31, 2015USD ($) | |
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 | $ 1,100,000 |
Debt Instrument, Periodic Payment, Principal | $ 15,334 |
Debt Instrument, Interest Rate, Effective Percentage | 1.64% |
Term Loan 2 [Member] | |
Loans Payable | $ 3,900,000 |
Debt Instrument, Periodic Payment, Principal | $ 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 | $ 3,900,000 |
Capital Lease Obligations [Member] | |
Debt Instrument, Periodic Payment, Principal | 2,069 |
Capital Lease Obligations | $ 37,000 |
Note 6 - Basic and Diluted Earn
Note 6 - Basic and Diluted Earnings Per Share (Details) - USD ($) | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Net income attributable to common shareholders | $ 23,994 | $ 415,923 |
Basic (in shares) | 10,069,139 | 10,041,206 |
Stock options (in shares) | 0 | 3,413 |
Diluted weighted average shares (in shares) | 10,069,139 | 10,044,619 |
Basic (in dollars per share) | $ 0 | $ 0.04 |
Diluted (in dollars per share) | $ 0 | $ 0.04 |
Note 6 - Anti-dilutive Securiti
Note 6 - Anti-dilutive Securities (Details) - $ / shares | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Stock options excluded (in shares) | 535,000 | 310,000 |
Weighted average exercise price of stock options (in dollars per share) | $ 2.88 | $ 3.37 |
Average market price of common stock (in dollars per share) | $ 2.19 | $ 2.48 |
Note 7 - Stock Option Plan (Det
Note 7 - Stock Option Plan (Details Textual) - USD ($) | Apr. 30, 2014 | Dec. 31, 2015 | Oct. 31, 2015 | Mar. 31, 2015 | Dec. 31, 2015 |
Minimum [Member] | Employees [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years | ||||
Minimum [Member] | Certain Employees [Member] | |||||
Restricted Stock Holding Period | 1 year | ||||
Maximum [Member] | Employees [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 5 years | ||||
Maximum [Member] | Certain Employees [Member] | |||||
Restricted Stock Holding Period | 3 years | ||||
Employees [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 4 years | ||||
Stock Options Expiration Period | 10 years | ||||
Certain Employees [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years | ||||
Restricted Stock Holding Period | 2 years | ||||
Stock Issued During Period, Shares, Restricted Stock Award, Gross | 23,676 | ||||
Fair Value Of Restricted Shares Upon Issuance | $ 76,000 | ||||
Holding Restriction, Annual Expiration of Restricted Stock | 7,892 | ||||
Board Of Directors [Member] | |||||
Restricted Stock Holding Period | 1 year | ||||
Stock Options Expiration Period | 10 years | ||||
Stock Issued During Period, Shares, Restricted Stock Award, Gross | 3,333 | 4,465 | |||
Fair Value Of Restricted Shares Upon Issuance | $ 7,500 | $ 10,000 | $ 60,000 | $ 7,500 | |
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures | 25,532 | ||||
Stock Issued During Period, Shares, Restricted Stock Award, Forfeited | 6,383 | ||||
The 2015 Incentive Stock Plan [Member] | |||||
Common Stock, Capital Shares Reserved for Future Issuance | 1,100,415 | 1,100,415 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 532,085 | 532,085 | |||
Nonqualified Stock Options [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0.00% | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 0 | ||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $ 67,636 | $ 67,636 |
Note 7 - Summary of the Status
Note 7 - Summary of the Status of the Company's Stock Options (Details) | 3 Months Ended |
Dec. 31, 2015$ / sharesshares | |
Outstanding at September 30, 2015 (in shares) | shares | 535,000 |
Outstanding at September 30, 2015 (in dollars per share) | $ / shares | $ 2.88 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | shares | 0 |
Granted (in dollars per share) | $ / shares | $ 0 |
Exercised (in shares) | shares | 0 |
Exercised (in dollars per share) | $ / shares | $ 0 |
Forfeited (in shares) | shares | 0 |
Forfeited (in dollars per share) | $ / shares | $ 0 |
Outstanding at December 31, 2015 (in shares) | shares | 535,000 |
Outstanding at December 31, 2015 (in dollars per share) | $ / shares | $ 2.88 |
Exercisable at December 31, 2015 (in shares) | shares | 301,667 |
Exercisable at December 31, 2015 (in dollars per share) | $ / shares | $ 2.88 |
Note 7 - Compensation Expense R
Note 7 - Compensation Expense Related to Restricted Stock (Details) - Restricted Stock [Member] | 3 Months Ended |
Dec. 31, 2015USD ($) | |
Fiscal Year 2012 Grant [Member] | |
Restricted stock compensation expense | $ 4,354 |
Fiscal Year 2014 Grant [Member] | |
Restricted stock compensation expense | $ 11,881 |
Note 8 - Segment Reporting Info
Note 8 - Segment Reporting Information (Details) - USD ($) | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Operating Segments [Member] | Cable TV [Member] | ||
Sales | $ 5,004,998 | $ 6,833,020 |
Gross profit | 1,579,272 | 2,034,845 |
Operating income (loss) | 116,841 | 618,811 |
Segment assets | 25,351,232 | 26,494,430 |
Operating Segments [Member] | Telco [Member] | ||
Sales | 3,317,730 | 4,036,293 |
Gross profit | 1,186,108 | 1,796,958 |
Operating income (loss) | (20,086) | 137,533 |
Segment assets | 17,301,559 | 17,094,713 |
Intersegment Eliminations [Member] | ||
Sales | (73,060) | (32,155) |
Segment Reconciling Items [Member] | ||
Segment assets | 8,802,610 | 8,383,913 |
Sales | 8,249,668 | 10,837,158 |
Gross profit | 2,765,380 | 3,831,803 |
Operating income (loss) | 96,755 | 756,344 |
Segment assets | $ 51,455,401 | $ 51,973,056 |