Cover
Cover - shares | 3 Months Ended | |
Dec. 31, 2021 | Feb. 11, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Dec. 31, 2021 | |
Document Transition Report | false | |
Entity File Number | 1-10799 | |
Entity Registrant Name | ADDvantage Technologies Group, Inc. | |
Entity Incorporation, State or Country Code | OK | |
Entity Tax Identification Number | 73-1351610 | |
Entity Address, Address Line One | 1430 Bradley Lane, Suite 196 | |
Entity Address, City or Town | Carrollton | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75007 | |
City Area Code | (918) | |
Local Phone Number | 251-9121 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 13,029,127 | |
Entity Central Index Key | 0000874292 | |
Current Fiscal Year End Date | --09-30 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Dec. 31, 2021 | Sep. 30, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 1,837 | $ 2,608 |
Restricted cash | 581 | 334 |
Accounts receivable, net of allowances of $250 | 6,469 | 7,013 |
Unbilled revenue | 2,219 | 2,488 |
Inventories, net of allowances of 3,567 and 3,476, respectively | 5,653 | 5,922 |
Prepaid expenses and other current assets | 1,371 | 1,431 |
Total current assets | 18,130 | 19,796 |
Property and equipment, at cost: | ||
Machinery and equipment | 5,354 | 4,973 |
Leasehold improvements | 821 | 813 |
Total property and equipment, at cost | 6,175 | 5,786 |
Less: Accumulated depreciation | (2,558) | (2,293) |
Net property and equipment | 3,617 | 3,493 |
Right-of-use lease assets | 2,466 | 2,730 |
Intangibles, net of accumulated amortization | 1,027 | 1,107 |
Goodwill | 58 | 58 |
Other assets | 128 | 128 |
Total assets | 25,426 | 27,312 |
Current liabilities: | ||
Accounts payable | 6,812 | 7,044 |
Accrued expenses | 1,184 | 1,581 |
Deferred revenue | 207 | 168 |
Bank line of credit | 2,050 | 2,050 |
Right-of-use lease obligations, current | 1,177 | 1,198 |
Finance lease obligations, current | 652 | 582 |
Other current liabilities | 706 | 692 |
Total current liabilities | 12,788 | 13,315 |
Right-of-use lease obligations, long-term | 1,839 | 2,141 |
Finance lease obligations, long-term | 1,484 | 1,429 |
Total liabilities | 16,111 | 16,885 |
Shareholders’ equity: | ||
Common stock, $0.01 par value; 30,000,000 shares authorized; 13,041,127 shares issued and outstanding, and 12,610,229 shares issued and outstanding, respectively | 130 | 126 |
Paid in capital | 335 | (578) |
Retained earnings | 8,850 | 10,879 |
Total shareholders’ equity | 9,315 | 10,427 |
Total liabilities and shareholders’ equity | $ 25,426 | $ 27,312 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) $ in Thousands | Dec. 31, 2021 | Sep. 30, 2021 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 250 | $ 250 |
Inventory valuation reserves | $ 3,567 | $ 3,476 |
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) | 13,041,127 | 12,610,229 |
Common stock, shares outstanding (in shares) | 13,041,127 | 12,610,229 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | ||
Sales | $ 18,690 | $ 12,749 |
Cost of sales | 14,059 | 9,120 |
Gross profit | 4,631 | 3,629 |
Operating expenses | 2,500 | 2,047 |
Selling, general and administrative expenses | 3,688 | 3,215 |
Depreciation and amortization expense | 345 | 281 |
Loss from operations | (1,902) | (1,914) |
Other income (expense): | ||
Interest income | 0 | 48 |
Other income (expense) | (72) | (19) |
Interest expense | (55) | (68) |
Other income (expense), net | (127) | (39) |
Loss before income taxes | (2,029) | (1,953) |
Income tax benefit | 0 | 0 |
Net loss | $ (2,029) | $ (1,953) |
Loss per share: | ||
Basic (in dollars per share) | $ (0.16) | $ (0.16) |
Diluted (in dollars per share) | $ (0.16) | $ (0.16) |
Shares used in per share calculation: | ||
Basic (in shares) | 12,683,312 | 12,149,778 |
Diluted (in shares) | 12,683,312 | 12,149,778 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | Common Stock | Paid-in Capital | Retained Earnings |
Beginning Balance (in shares) at Sep. 30, 2020 | 11,822,009 | |||
Beginning Balance at Sep. 30, 2020 | $ 14,933 | $ 118 | $ (2,567) | $ 17,382 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net loss | (1,953) | (1,953) | ||
Common stock issuance (in shares) | 238,194 | |||
Common stock issuance | 879 | $ 3 | 876 | |
Restricted stock issuance (in shares) | 306,390 | |||
Restricted stock issuance | 0 | $ 3 | (3) | |
Amortization of stock-based compensation | 315 | 315 | ||
Ending Balance (in shares) at Dec. 31, 2020 | 12,366,593 | |||
Ending Balance at Dec. 31, 2020 | 14,174 | $ 124 | (1,379) | 15,429 |
Beginning Balance (in shares) at Sep. 30, 2021 | 12,610,229 | |||
Beginning Balance at Sep. 30, 2021 | 10,427 | $ 126 | (578) | 10,879 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net loss | (2,029) | (2,029) | ||
Common stock issuance (in shares) | 320,787 | |||
Common stock issuance | 636 | $ 3 | 633 | |
Restricted stock issuance (in shares) | 110,111 | |||
Restricted stock issuance | 0 | $ 1 | (1) | |
Amortization of stock-based compensation | 281 | 281 | ||
Ending Balance (in shares) at Dec. 31, 2021 | 13,041,127 | |||
Ending Balance at Dec. 31, 2021 | $ 9,315 | $ 130 | $ 335 | $ 8,850 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Operating Activities: | ||
Net loss | $ (2,029) | $ (1,953) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 265 | 201 |
Amortization | 80 | 80 |
Non cash amortization of right-of-use asset and liability | (51) | (52) |
Provision for excess and obsolete inventories | 91 | 0 |
Share based compensation expense | 281 | 315 |
Gain on disposal of property and equipment | 0 | (10) |
Changes in assets and liabilities: | ||
Accounts receivable | 544 | (842) |
Unbilled revenue | 269 | (562) |
Income tax receivable\payable | 0 | 35 |
Inventories | 179 | (626) |
Prepaid expenses and other current assets | 59 | (112) |
Accounts payable | (232) | 56 |
Accrued expenses and other liabilities | (384) | (250) |
Deferred revenue | 39 | 13 |
Net cash used in operating activities | (889) | (3,707) |
Investing Activities: | ||
Proceeds from promissory note receivable | 0 | 1,505 |
Purchases of property and equipment | (116) | (74) |
Disposals of property and equipment | 0 | 26 |
Net cash (used in) provided by investing activities | (116) | 1,457 |
Financing Activities: | ||
Payments on financing lease obligations | (155) | (86) |
Payments on notes payable | 0 | (1,249) |
Proceeds from sale of common stock | 636 | 878 |
Net cash provided by (used in) financing activities | 481 | (457) |
Net decrease in cash, cash equivalents and restricted cash | (524) | (2,707) |
Cash, cash equivalents and restricted cash at beginning of period | 2,942 | 8,373 |
Cash, cash equivalents and restricted cash at end of period | $ 2,418 | $ 5,666 |
Basis of Presentation and Accou
Basis of Presentation and Accounting Policies | 3 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Accounting Policies | Basis of Presentation and Accounting Policies Basis of presentation The consolidated financial statements include the accounts of ADDvantage Technologies Group, Inc. and its subsidiaries, all of which are wholly owned (collectively, the “Company”). Intercompany balances and transactions have been eliminated in consolidation. The Company’s reportable segments are Wireless Infrastructure Services (“Wireless”) and Telecommunications (“Telco”). The accompanying unaudited consolidated 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, which are, in the opinion of management, necessary in order to make the unaudited consolidated financial statements not misleading. The Company’s business is subject to seasonal variations due to weather in the geographic areas where services are performed, as well as calendar events and national holidays. Therefore, the results of operations for the three months ended December 31, 2021 and 2020, are not necessarily indicative of the results to be expected for the full fiscal year. These unaudited consolidated financial statements should 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, 2021. Recently Issued Accounting Standards In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13: “Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments.” This ASU requires entities to measure all expected credit losses for most financial assets held at the reporting date based on an expected loss model which includes historical experience, current conditions, and reasonable and supportable forecasts. Upon adoption, entities will use forward-looking information to better form their credit loss estimates. This ASU also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. On November 15, 2019, the FASB delayed the effective date of the standard for companies that qualify under smaller reporting company reporting rules. As amended, the effective date of ASC Topic 326 was delayed until fiscal years beginning after December 15, 2022 for SEC filers that are eligible to be smaller reporting companies under the Securities and Exchange Commission definition. We are currently in the process of evaluating this new standard update, however we do not anticipate the adoption will have a material impact on our results. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition The Company’s principal sales are from Wireless services, sales of Telco equipment and Telco recycled equipment, primarily in the United States. Sales to international customers in Central and South America totaled approximately $1.1 million and $0.3 million for the three months ended December 31, 2021 and 2020, respectively. The Company’s customers include wireless carriers, wireless equipment providers, multiple system operators, resellers and direct sales to end-user customers. Sales to two customers which individually accounted for 10% or greater of the Company's revenue totaled approximately 37% and 29% of consolidated revenues for the three months ended December 31, 2021 and 2020, respectively. Our sales by type were as follows, in thousands: Three Months Ended December 31, 2021 2020 Wireless services sales $ 7,119 $ 5,246 Telco equipment sales 11,424 7,275 Telco repair sales 11 6 Telco recycle sales 136 222 Total sales $ 18,690 $ 12,749 Contract assets and contract liabilities are included in Unbilled revenue and Deferred revenue, respectively, in the consolidated balance sheets. At December 31, 2021 and September 30, 2021, contract assets were $2.2 million and $2.5 million, respectively, and contract liabilities were $0.2 million and $0.2 million, respectively. The Company recognized the entire $0.2 million of contract revenue during the three months ended December 31, 2021 related to contract liabilities recorded in Deferred revenue at September 30, 2021. |
Accounts Receivable Agreements
Accounts Receivable Agreements | 3 Months Ended |
Dec. 31, 2021 | |
Receivables [Abstract] | |
Accounts Receivable Agreements | Accounts Receivable Agreements The Company’s Fulton segment renewed its $4.5 million accounts receivable purchase facility (“Existing Facility”) with its primary financial lender, secured by the subsidiary’s accounts receivable excluding a major customer. This credit facility was increased by $0.5 million in connection with the renewal. In connection with the renewal, the lender originated a new accounts receivable purchase facility (“New Facility”) with a total capacity of $8.5 million secured by receivables of a major customer that previously was collateralized under the Existing Facility. Under both facilities, the lender advances the Company 90% of sold receivables and establishes a reserve of 10% of the sold receivables until the Company collects the sold receivables. Under the Existing Facility, the lender charges a fee of 1.6% of sold receivables, and under the New Facility the lender charges a fee of 1.5% of sold receivables. Both facilities have a fixed charge coverage ratio of 1.25x to be tested quarterly. Both the Existing Facility and the New Facility mature on December 17, 2022. At December 31, 2021, the lender has a reserve against the sold receivables of $0.6 million, which is reflected as restricted cash. For the receivables sold under the agreement with recourse, the agreement addresses events and conditions which may obligate the Company to immediately repay the institution the outstanding purchase price of the receivables sold. The total amount of receivables uncollected by the institution was $4.3 million at December 31, 2021 for which there is a limit of $13.0 million. Although the sale of receivables is with recourse, the Company did not record a recourse obligation at December 31, 2021 as the Company concluded that the sold receivables are collectible. For the three months ended December 31, 2021 and 2020, the Company received proceeds from the sold receivables under all of the various agreements of $7.8 million and $5.0 million, respectively, and included the proceeds in net cash used in operating activities in the consolidated statements of cash flows. The Company recorded costs of $0.1 million and $43 thousand for the three months ended December 31, 2021 and 2020, respectively, in other expense in the consolidated statements of operations. |
Inventories
Inventories | 3 Months Ended |
Dec. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories, which are all within the Telco segment, at December 31, 2021 and September 30, 2021 are as follows, in thousands: December 31, 2021 September 30, 2021 New equipment $ 1,396 $ 1,295 Refurbished and used equipment 7,824 8,103 Allowance for excess and obsolete inventory (3,567) (3,476) Total inventories, net $ 5,653 $ 5,922 |
Intangible Assets
Intangible Assets | 3 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the asset’s carrying amount may not be recoverable. The Company groups assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows. If the undiscounted future cash flows do not indicate the carrying amount of the asset is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds its fair value based on discounted cash flow analysis or appraisals. Intangible assets with their associated accumulated amortization and impairment at December 31, 2021 and September 30, 2021 are as follows, in thousands: December 31, 2021 Intangible assets: Gross Accumulated Amortization Net Customer relationships – 10 years $ 3,155 $ (2,807) $ 348 Trade name – 10 years 2,122 (1,443) 679 Total intangible assets $ 5,277 $ (4,250) $ 1,027 September 30, 2021 Intangible assets: Gross Accumulated Net Customer relationships – 10 years $ 3,155 $ (2,780) $ 375 Trade name – 10 years 2,122 (1,390) 732 Total intangible assets $ 5,277 $ (4,170) $ 1,107 |
Debt
Debt | 3 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Debt | Debt Credit Agreement On December 28, 2021, the Company renewed its credit facility for its Nave and Triton subsidiaries with its primary financial lender by entering into a Business Loan Agreement and various ancillary debt and collateral agreements. The renewed Nave and Triton credit facility is for a maximum of $3.0 million and is secured by the Company’s Nave and Triton Subsidiaries’ accounts receivable and inventory. As renewed, the Nave and Triton credit facility has been reduced by $1.0 million and requires quarterly interest payments based on the Wall Street Journal Prime Rate floating rate (3.25% as of December 31, 2021) plus 0.75%, and a fixed charge coverage ratio of 1.25x to be tested quarterly. The Company is required to pay a non-use fee equal to 25 basis points if the line of credit is not utilized. The Company may repay outstanding loans at any time without premium or penalty. The Nave and Triton credit facility matures on December 17, 2022. At December 31, 2021, there was $2.1 million outstanding under the line of credit. Future borrowings under the line of credit are limited to the lesser of $3.0 million or the sum of 80% of eligible accounts receivable and 50% of eligible Telco segment inventory. Under these limitations, the Company’s total line of credit borrowing capacity was $3.0 million at December 31, 2021. As of December, 31, 2021, the Company was not in compliance with the fixed charge coverage ratio. The Company notified its primary financial lender of the covenant violation, and on February 14, 2022, the lender granted a waiver of the covenant violation under the credit facility. Although the covenant violation was waived at December 31, 2021, the Company believes it may again be out of compliance with this covenant at March 31, 2022. If the Company is not in compliance with the covenant at March 31, 2022, it would result in an event of default, which if not cured or waived, could result in the lender accelerating the maturity of the Company’s indebtedness or |
Equity Distribution Agreement a
Equity Distribution Agreement and Sale of Common Stock | 3 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
Equity Distribution Agreement and Sale of Common Stock | Equity Distribution Agreement and Sale of Common Stock On April 24, 2020, the Company entered into an Equity Distribution Agreement with Northland Securities, Inc., as agent (“Northland”), pursuant to which the Company may offer and sell, from time to time, through Northland, shares of the Company’s common stock, par value 0.01 per share, having an aggregate offering price of up to 13.9 million ("Shares"). The offer and sale of the Shares will be made pursuant to a shelf registration statement on Form S-3 and the related prospectus filed by the Company with the Securities and Exchange Commission (the “SEC”) on March 3, 2020, as amended on March 23, 2020, and declared effective by the SEC on April 1, 2020. Pursuant to the Sales Agreement, Northland may sell the Shares by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 of the Securities Act of 1933 (the “Securities Act”), including sales made by means of ordinary brokers’ transactions, including on The Nasdaq Global Market, at market prices or as otherwise agreed with Northland. Northland will use commercially reasonable efforts consistent with its normal trading and sales practices to sell the Shares from time to time, based upon instructions from the Company, including any price or size limits or other customary parameters or conditions the Company may impose. The Sales Agreement may be terminated without prior notice at any time prior to the fulfillment if additional sales are deemed not warranted. The Company will pay Northland a commission rate equal to an aggregate of 3.0% of the aggregate gross proceeds from each sale of Shares and have agreed to provide Northland with customary indemnification and contribution rights. The Company will also reimburse Northland for certain specified expenses in connection with entering into the Sales Agreement. The Sales Agreement contains customary representations and warranties and conditions to the placements of the Shares pursuant thereto. |
Earnings per Share
Earnings per Share | 3 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic and diluted earnings per share for the three months ended December 31, 2021 and 2020, in thousands: Three Months Ended December 31, 2021 2020 Net loss attributable to common shareholders $ (2,029) $ (1,953) Basic weighted average shares 12,683 12,150 Effect of dilutive securities: Stock options — — Diluted weighted average shares 12,683 12,150 Loss per common share: Basic $ (0.16) $ (0.16) Diluted $ (0.16) $ (0.16) 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 because their effect would be anti-dilutive. Three Months Ended December 31, 2021 2020 Stock options excluded 50,000 100,000 Weighted average exercise price of stock options $ 1.28 $ 1.55 Average market price of common stock $ 2.05 $ 2.54 |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 3 Months Ended |
Dec. 31, 2021 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Information | Supplemental Cash Flow Information (in thousands) Three Months Ended December 31, 2021 2020 Supplemental cash flow information: Cash paid for interest $ 59 $ 43 Supplemental noncash investing and financing activities: Assets acquired under financing leases $ 272 $ 34 |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation 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. At December 31, 2021, 2,100,415 shares of common stock were reserved for stock award grants under the Plan. Of these reserved shares, 221,029 shares were available for future grants. Stock Options As of September 30, 2021, there were 50,000 stock options with a weighted average exercise price of $1.28 per share and an aggregate intrinsic value of $54 thousand outstanding under the Plan. There were no stock options granted, exercised, expired or forfeited during the quarter ended December 31, 2021. As of December 31, 2021, 50,000 stock options remained outstanding and exercisable, with an average exercise price of $1.28 per share and an aggregate intrinsic value of $22 thousand. Restricted stock awards A summary of the Company's non-vested restricted share awards at December 31, 2021 and changes during the quarter ended December 31, 2021 is presented in the following table (in thousands, except shares): Shares Fair Value Non-vested at September 30, 2021 739,913 $ 1,706 Granted 130,111 333 Vested (112,390) (230) Forfeited (20,000) (41) Non-vested at December 31, 2021 737,634 $ 1,768 Expenses related to stock-based compensation including restricted stock and stock option awards, were $0.3 million in each of the three month periods ended December 31, 2021 and 2020. The Company did not recognize a tax benefit for compensation expense recognized during the three months ended December 31, 2021 and 2020. At December 31, 2021, unrecognized compensation expense related to non-vested stock-based compensation awards not yet recognized in the consolidated statements of operations was $0.9 million. That cost is expected to be recognized over a period of 2.8 years. |
Leases
Leases | 3 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Leases | Leases Our Wireless segment has an operating lease for a building in Fridley, Minnesota for Fulton Technologies, Inc. As a result of closing down and vacating Fulton Technologies, Inc.’s Minnesota office in May 2019, a third-party telecom company began subleasing this building in June 2019. Our Telco segment has an operating lease for a building in Jessup, Maryland for Nave Communications. As a result of moving Nave’s operations to Palco Telecom, a third-party logistics provider in Huntsville, Alabama, in fiscal year 2021, Nave completely vacated the building in May 2020 and has subleased part of the building during certain periods of fiscal year 2022. Rental payments received related to these subleases were recorded as a reduction of rent expense in our consolidated statements of operations for the periods ending December 31, 2021 and 2020. |
Segment Reporting
Segment Reporting | 3 Months Ended |
Dec. 31, 2021 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting The Company is reporting its financial performance based on its external reporting segments: Wireless Infrastructure Services and Telecommunications. These reportable segments are described below. Wireless Infrastructure Services (“Wireless”) The Company's Wireless segment provides turn-key wireless infrastructure services for the four major U.S. wireless carriers, communication tower companies, national integrators, and original equipment manufacturers that support these wireless carriers. These services primarily consist of the installation and upgrade of technology on cell sites and the construction of new small cells for 5G. Telecommunications (“Telco”) The Company’s Telco segment sells new and refurbished telecommunications networking equipment, including both central office and customer premise equipment, to its customer base of telecommunications providers, enterprise customers and resellers located primarily in North America. This segment also offers its customers repair and testing services for telecommunications networking equipment. In addition, this segment offers its customers decommissioning services for surplus and obsolete equipment, which it in turn processes through 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 and equipment, goodwill and intangible assets. The Company allocates its corporate general and administrative expenses to the reportable segments. (in thousands) Three Months Ended December 31, 2021 December 31, 2020 Sales Wireless $ 7,119 $ 5,247 Telco 11,571 7,502 Total sales $ 18,690 $ 12,749 Gross profit Wireless $ 1,507 $ 1,609 Telco 3,124 2,020 Total gross profit $ 4,631 $ 3,629 Income (loss) from operations Wireless $ (2,326) $ (1,105) Telco 424 (809) Total loss from operations $ (1,902) $ (1,914) (in thousands) December 31, 2021 September 30, 2021 Segment assets Wireless $ 7,640 $ 7,867 Telco 14,545 14,472 Non-allocated 3,241 4,973 Total assets $ 25,426 $ 27,312 |
Basis of Presentation and Acc_2
Basis of Presentation and Accounting Policies (Policies) | 3 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of presenation | Basis of presentation The consolidated financial statements include the accounts of ADDvantage Technologies Group, Inc. and its subsidiaries, all of which are wholly owned (collectively, the “Company”). Intercompany balances and transactions have been eliminated in consolidation. The Company’s reportable segments are Wireless Infrastructure Services (“Wireless”) and Telecommunications (“Telco”). The accompanying unaudited consolidated 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, which are, in the opinion of management, necessary in order to make the unaudited consolidated financial statements not misleading. The Company’s business is subject to seasonal variations due to weather in the geographic areas where services are performed, as well as calendar events and national holidays. Therefore, the results of operations for the three months ended December 31, 2021 and 2020, are not necessarily indicative of the results to be expected for the full fiscal year. These unaudited consolidated financial statements should 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, 2021. |
Recently issued accounting standards | Recently Issued Accounting Standards In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13: “Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments.” This ASU requires entities to measure all expected credit losses for most financial assets held at the reporting date based on an expected loss model which includes historical experience, current conditions, and reasonable and supportable forecasts. Upon adoption, entities will use forward-looking information to better form their credit loss estimates. This ASU also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. On November 15, 2019, the FASB delayed the effective date of the standard for companies that qualify under smaller reporting company reporting rules. As amended, the effective date of ASC Topic 326 was delayed until fiscal years beginning after December 15, 2022 for SEC filers that are eligible to be smaller reporting companies under the Securities and Exchange Commission definition. We are currently in the process of evaluating this new standard update, however we do not anticipate the adoption will have a material impact on our results. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | Our sales by type were as follows, in thousands: Three Months Ended December 31, 2021 2020 Wireless services sales $ 7,119 $ 5,246 Telco equipment sales 11,424 7,275 Telco repair sales 11 6 Telco recycle sales 136 222 Total sales $ 18,690 $ 12,749 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current | Inventories, which are all within the Telco segment, at December 31, 2021 and September 30, 2021 are as follows, in thousands: December 31, 2021 September 30, 2021 New equipment $ 1,396 $ 1,295 Refurbished and used equipment 7,824 8,103 Allowance for excess and obsolete inventory (3,567) (3,476) Total inventories, net $ 5,653 $ 5,922 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets and Goodwill | Intangible assets with their associated accumulated amortization and impairment at December 31, 2021 and September 30, 2021 are as follows, in thousands: December 31, 2021 Intangible assets: Gross Accumulated Amortization Net Customer relationships – 10 years $ 3,155 $ (2,807) $ 348 Trade name – 10 years 2,122 (1,443) 679 Total intangible assets $ 5,277 $ (4,250) $ 1,027 September 30, 2021 Intangible assets: Gross Accumulated Net Customer relationships – 10 years $ 3,155 $ (2,780) $ 375 Trade name – 10 years 2,122 (1,390) 732 Total intangible assets $ 5,277 $ (4,170) $ 1,107 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | Basic and diluted earnings per share for the three months ended December 31, 2021 and 2020, in thousands: Three Months Ended December 31, 2021 2020 Net loss attributable to common shareholders $ (2,029) $ (1,953) Basic weighted average shares 12,683 12,150 Effect of dilutive securities: Stock options — — Diluted weighted average shares 12,683 12,150 Loss per common share: Basic $ (0.16) $ (0.16) Diluted $ (0.16) $ (0.16) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | 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 because their effect would be anti-dilutive. Three Months Ended December 31, 2021 2020 Stock options excluded 50,000 100,000 Weighted average exercise price of stock options $ 1.28 $ 1.55 Average market price of common stock $ 2.05 $ 2.54 |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of Cash Flow, Supplemental Disclosures | (in thousands) Three Months Ended December 31, 2021 2020 Supplemental cash flow information: Cash paid for interest $ 59 $ 43 Supplemental noncash investing and financing activities: Assets acquired under financing leases $ 272 $ 34 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award | A summary of the Company's non-vested restricted share awards at December 31, 2021 and changes during the quarter ended December 31, 2021 is presented in the following table (in thousands, except shares): Shares Fair Value Non-vested at September 30, 2021 739,913 $ 1,706 Granted 130,111 333 Vested (112,390) (230) Forfeited (20,000) (41) Non-vested at December 31, 2021 737,634 $ 1,768 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | (in thousands) Three Months Ended December 31, 2021 December 31, 2020 Sales Wireless $ 7,119 $ 5,247 Telco 11,571 7,502 Total sales $ 18,690 $ 12,749 Gross profit Wireless $ 1,507 $ 1,609 Telco 3,124 2,020 Total gross profit $ 4,631 $ 3,629 Income (loss) from operations Wireless $ (2,326) $ (1,105) Telco 424 (809) Total loss from operations $ (1,902) $ (1,914) (in thousands) December 31, 2021 September 30, 2021 Segment assets Wireless $ 7,640 $ 7,867 Telco 14,545 14,472 Non-allocated 3,241 4,973 Total assets $ 25,426 $ 27,312 |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2021 | |
Disaggregation of Revenue [Line Items] | |||
Contract assets | $ 2,219 | $ 2,488 | |
Contract liabilities | 207 | $ 168 | |
Contract liabilities, revenue recognized | $ 200 | ||
Customer Concentration Risk | Revenue Benchmark | Two Customers | |||
Disaggregation of Revenue [Line Items] | |||
Consolidate revenues, percentage of sales | 37.00% | 29.00% | |
Central and South America | |||
Disaggregation of Revenue [Line Items] | |||
Sales | $ 1,100 | $ 300 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | ||
Sales | $ 18,690 | $ 12,749 |
Operating segments | ||
Disaggregation of Revenue [Line Items] | ||
Total sales | 18,690 | 12,749 |
Operating segments | Telco equipment sales | ||
Disaggregation of Revenue [Line Items] | ||
Total sales | 11,571 | 7,502 |
Wireless services sales | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 7,119 | 5,246 |
Telco equipment sales | Operating segments | Telco equipment sales | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 11,424 | 7,275 |
Telco repair sales | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 11 | 6 |
Telco recycle sales | ||
Disaggregation of Revenue [Line Items] | ||
Sales | $ 136 | $ 222 |
Accounts Receivable Agreements
Accounts Receivable Agreements (Details) - USD ($) | 3 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2021 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Accounts receivable agreement percent of sold receivables advanced, deduction | 1.50% | ||
Fixed charge coverage ratio, minimum requirement | 1.25 | ||
Restricted cash | $ 581,000 | $ 334,000 | |
Certain Receivables to Unrelated Third-parties | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Maximum credit purchase capacity | 8,500,000 | $ 4,500,000 | |
Increase in maximum credit purchase capacity | $ 500,000 | ||
Accounts receivable agreement, percent of sold receivables advanced | 90.00% | ||
Accounts receivable agreement, reserve of sold receivables, percent | 10.00% | ||
Accounts receivable agreement percent of sold receivables advanced, deduction | 1.60% | ||
Maximum limit of receivables uncollected | $ 13,000,000 | ||
Proceeds from collection of finance receivables | 7,800,000 | $ 5,000,000 | |
Certain Receivables to Unrelated Third-parties | Other Nonoperating Income (Expense) | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Cost of selling receivables | 100,000 | $ 43,000 | |
Uncollectible Receivables | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Thirty Party Financial Institution Reserve | $ (4,300,000) |
Inventories - Schedule of Inven
Inventories - Schedule of Inventory (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Sep. 30, 2021 |
Inventory [Line Items] | ||
Allowance for excess and obsolete inventory | $ (3,567) | $ (3,476) |
Total inventories, net | 5,653 | 5,922 |
New equipment | ||
Inventory [Line Items] | ||
Inventory, gross | 1,396 | 1,295 |
Refurbished and used equipment | ||
Inventory [Line Items] | ||
Inventory, gross | $ 7,824 | $ 8,103 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Sep. 30, 2021 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross | $ 5,277 | $ 5,277 |
Accumulated Amortization | (4,250) | (4,170) |
Net | $ 1,027 | $ 1,107 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful life | 10 years | 10 years |
Gross | $ 3,155 | $ 3,155 |
Accumulated Amortization | (2,807) | (2,780) |
Net | $ 348 | $ 375 |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful life | 10 years | 10 years |
Gross | $ 2,122 | $ 2,122 |
Accumulated Amortization | (1,443) | (1,390) |
Net | $ 679 | $ 732 |
Debt (Details)
Debt (Details) | Dec. 28, 2021USD ($) | Dec. 31, 2021USD ($) | Sep. 30, 2021USD ($) |
Debt Instrument [Line Items] | |||
Fixed charge coverage ratio, minimum requirement | 1.25 | ||
Outstanding line of credit | $ 2,050,000 | $ 2,050,000 | |
New Credit Agreement | |||
Debt Instrument [Line Items] | |||
Fixed charge coverage ratio, minimum requirement | 1.25 | ||
New Credit Agreement | Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Line of credit, maximum borrowing capacity | $ 3,000,000 | $ 3,000,000 | |
Decrease in maximum borrowing capacity | $ 1,000,000 | ||
Debt instrument, effective interest rate | 0.75% | 3.25% | |
Unused capacity fee | 0.25% | ||
Percentage of qualified accounts receivable used in determination of maximum borrowing capacity of line of credit | 0.80 | ||
Percentage of qualified inventory used in determination of maximum borrowing capacity of line of credit | 0.50 | ||
Line of credit, current borrowing capacity | $ 3,000,000 | ||
Line of credit, amount outstanding | $ 2,100,000 |
Equity Distribution Agreement_2
Equity Distribution Agreement and Sale of Common Stock (Details) - USD ($) | 3 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2021 | Apr. 24, 2020 | |
Subsidiary, Sale of Stock [Line Items] | ||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | ||
Proceeds from sale of common stock, gross | $ 636,000 | $ 878,000 | ||
Sales Agreement With Northland | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Common stock, par value (in dollars per share) | $ 0.01 | |||
Maximum aggregate offering price | $ 13,900,000 | |||
Commission rate | 3.00% | |||
Issuance of common shares (in shares) | 320,787 | |||
Proceeds from sale of common stock, gross | $ 700,000 | |||
Proceeds from sale of common stock, net | $ 600,000 |
Earnings Per Share - Basic and
Earnings Per Share - Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Earnings Per Share [Abstract] | ||
Net loss attributable to common shareholders, basic | $ (2,029) | $ (1,953) |
Net loss attributable to common shareholders, diluted | $ (2,029) | $ (1,953) |
Basic weighted average shares (in shares) | 12,683,312 | 12,149,778 |
Stock options (in shares) | 0 | 0 |
Diluted weighted average shares (in shares) | 12,683,312 | 12,149,778 |
Loss per common share: | ||
Basic (in dollars per share) | $ (0.16) | $ (0.16) |
Diluted (in dollars per share) | $ (0.16) | $ (0.16) |
Earnings Per Share - Anti-dilut
Earnings Per Share - Anti-dilutive Securities (Details) - $ / shares | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Earnings Per Share [Abstract] | ||
Stock options excluded (in shares) | 50,000 | 100,000 |
Weighted average exercise price of stock options (in dollars per share) | $ 1.28 | $ 1.55 |
Average market price of common stock (in dollars per share) | $ 2.05 | $ 2.54 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Supplemental cash flow information: | ||
Cash paid for interest | $ 59 | $ 43 |
Supplemental noncash investing and financing activities: | ||
Assets acquired under financing leases | $ 272 | $ 34 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock options outstanding (in shares) | 50,000 | 50,000 | |
Weighted average exercise price (in dollars per share) | $ 1.28 | $ 1.28 | |
Options outstanding, intrinsic value | $ 22 | $ 54 | |
Compensation expense | 300 | $ 300 | |
Compensation cost, not yet recognized | $ 900 | ||
Recognized over a period | 2 years 9 months 18 days | ||
The 2015 Incentive Stock Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common stock, capital shares reserved for future issuance (in shares) | 2,100,415 | ||
Number of shares available for grant (in shares) | 221,029 |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Non-vested Restricted Share Awards (Details) $ in Thousands | 3 Months Ended |
Dec. 31, 2021USD ($)shares | |
Shares | |
Nonvested, beginning balance (in shares) | shares | 739,913 |
Granted (in shares) | shares | 130,111 |
Vested (in shares) | shares | (112,390) |
Forfeited (in shares) | shares | (20,000) |
Nonvested, ending balance (in shares) | shares | 737,634 |
Fair Value | |
Non-vested, beginning balance (in dollars per share) | $ | $ 1,706 |
Granted (in dollars per share) | $ | 333 |
Vested (in dollars per share) | $ | (230) |
Forfeited (in dollars per share) | $ | (41) |
Non-vested, ending balance (in dollars per share) | $ | $ 1,768 |
Segment Reporting (Details)
Segment Reporting (Details) $ in Thousands | 3 Months Ended | ||
Dec. 31, 2021USD ($)carrier | Dec. 31, 2020USD ($) | Sep. 30, 2021USD ($) | |
Segment Reporting Information [Line Items] | |||
Number of U.S. wireless carriers | carrier | 4 | ||
Gross profit | $ 4,631 | $ 3,629 | |
Income (loss) from operations | (1,902) | (1,914) | |
Segment assets | 25,426 | $ 27,312 | |
Operating segments | |||
Segment Reporting Information [Line Items] | |||
Sales | 18,690 | 12,749 | |
Income (loss) from operations | (1,902) | (1,914) | |
Non-allocated | |||
Segment Reporting Information [Line Items] | |||
Segment assets | 3,241 | 4,973 | |
Wireless | Operating segments | |||
Segment Reporting Information [Line Items] | |||
Sales | 7,119 | 5,247 | |
Gross profit | 1,507 | 1,609 | |
Income (loss) from operations | (2,326) | (1,105) | |
Wireless | Operating segments | Continuing Operations | |||
Segment Reporting Information [Line Items] | |||
Segment assets | 7,640 | 7,867 | |
Telco | Operating segments | |||
Segment Reporting Information [Line Items] | |||
Sales | 11,571 | 7,502 | |
Gross profit | 3,124 | 2,020 | |
Income (loss) from operations | 424 | $ (809) | |
Telco | Operating segments | Continuing Operations | |||
Segment Reporting Information [Line Items] | |||
Segment assets | $ 14,545 | $ 14,472 |