-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M1viKkJCq7KDfL6xF/UQ6cuijFqtr5PyIFhOBVo5zH5s2pbMaYmkKMcOevA3Ru0J 8wgaOPSLTsSzMAf/MWyHBQ== 0000930661-98-001707.txt : 19980910 0000930661-98-001707.hdr.sgml : 19980910 ACCESSION NUMBER: 0000930661-98-001707 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980812 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADDVANTAGE MEDIA GROUP INC /OK CENTRAL INDEX KEY: 0000874292 STANDARD INDUSTRIAL CLASSIFICATION: 5040 IRS NUMBER: 731351610 STATE OF INCORPORATION: OK FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 001-10799 FILM NUMBER: 98682782 BUSINESS ADDRESS: STREET 1: 5100 E SKELLY DR STREET 2: MERIDIAN TOWER SUITE 1080 CITY: TULSA STATE: OK ZIP: 74135-6552 BUSINESS PHONE: 9186658414 MAIL ADDRESS: STREET 1: 5100 EAST SKELLY DRIVE STREET 2: MERIDIAN TOWER SUITE 1080 CITY: TULSA STATE: OK ZIP: 74135 10QSB 1 FORM 10-QSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [x] QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period ________________ to ______________ Commission File number 1-10799 ADDVANTAGE MEDIA GROUP, INC. (Exact name of small business issuer as specified in its charter) OKLAHOMA 73-1351610 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5100 East Skelly Drive Meridian Tower, Suite 1080 Tulsa, Oklahoma 74135-6552 (Address of principal executive office) (Zip Code) (918) 665-8414 (Registrant's telephone number, including area code) NONE (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Shares outstanding of the issuer's $.01 par value common stock as of August 14, 1998 is 5,906,584. Transitional Small Business Issuer Disclosure Format (Check one): Yes No X --- --- PART I. FINANCIAL INFORMATION Item 1. Financial Statements ADDVANTAGE MEDIA GROUP, INC. BALANCE SHEETS
June 30, December 31, 1998 1997 ------------ ------------ ASSETS (UNAUDITED) Current assets: Cash and cash equivalents $2,687,592 $2,003,165 Accounts receivable 326,528 1,548,961 Deferred income taxes -- 1,432,000 Other current assets 109,936 36,086 ---------- ---------- Total current assets 3,124,056 5,020,212 Property and equipment, at cost: Calculators 2,305,262 2,585,693 Office and production equipment 922,817 891,743 Transportation equipment 383,580 -- Furniture and fixtures 99,779 97,879 ---------- ---------- 3,711,438 3,575,315 Accumulated depreciation 1,210,604 981,186 ---------- ---------- 2,500,834 2,594,129 Deferred income taxes -- 41,000 Patent, net of accumulated amortization of $672,558 and $627,150 at June 30, 1998 and December 31, 1997, respectively 235,552 280,960 Other assets 263,161 186,184 ---------- ---------- Total assets $6,123,603 $8,122,485 ========== ==========
-1- ADDVANTAGE MEDIA GROUP, INC. BALANCE SHEETS
June 30, December 31, 1998 1997 ------------ ------------- LIABILITIES AND STOCKHOLDERS' EQUITY (UNAUDITED) Current liabilities: Notes payable $ 323,560 $ -- Accounts payable 241,824 834,115 Income taxes payable 40,000 22,326 Other accrued liabilities 270,388 449,944 Unearned advertising revenue 47,850 810,001 ----------- ----------- Total current liabilities 923,622 2,116,386 Long-term obligations 293,784 228,072 Shareholders' equity: Preferred stock, $1.00 par value, 1,000,000 shares authorized; Series A preferred stock--227,750 shares issued and outstanding at December 31, 1997; liquidation preference, $911,000 -- 760,260 Common stock, $.01 par value, 10,000,000 shares authorized, 5,906,584 issued and outstanding at June 30, 1998 and December 31, 1997, respectively 59,066 59,066 Capital in excess of par value 8,711,894 8,862,634 Accumulated deficit (3,864,763) (3,903,933) ----------- ----------- Total stockholders' equity 4,906,197 5,778,027 ----------- ----------- Total liabilities and stockholders' equity $ 6,123,603 $ 8,122,485 =========== ===========
-2- ADDVANTAGE MEDIA GROUP, INC. STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended June 30, -------------------------- 1998 1997 ------------ ------------ Revenues: Advertising sales $1,947,480 $2,869,424 Other 49,668 6,465 ---------- ---------- 1,997,148 2,875,889 Costs and expenses: Cost of advertising services 694,429 978,302 Selling expenses 142,716 157,261 General and administrative expenses 430,618 392,968 ---------- ---------- 1,267,763 1,528,531 ---------- ---------- Operating income 729,385 1,347,358 Calculator writedown 364,822 -- Interest expense 4,117 20,477 ---------- ---------- Income before provision for income taxes 360,446 1,326,881 Provision for income taxes 1,116,204 512,932 ---------- ---------- Net income (loss) (755,758) 813,949 Preferred stock dividends (15,681) (22,650) ---------- ---------- Net income (loss) applicable to common stock $ (771,439) $ 791,299 ========== ========== Net income (loss) per common share: Basic $ (0.13) $0.14 Diluted $ (0.13) $0.12 ========== ==========
-3- ADDVANTAGE MEDIA GROUP, INC. STATEMENTS OF OPERATIONS (UNAUDITED)
Six Months Ended June 30, -------------------------- 1998 1997 ------------ ------------ Revenues: Advertising sales $4,863,481 $5,707,316 Other 82,283 8,821 ---------- ---------- 4,945,764 5,716,137 Costs and expenses: Cost of advertising services 1,739,113 1,907,042 Selling expenses 280,412 267,752 General and administrative expenses 835,006 811,972 ---------- ---------- 2,854,531 2,986,766 ---------- ---------- Operating income 2,091,233 2,729,371 Calculator writedown 364,822 -- Interest expense 7,937 63,815 ---------- ---------- Income before provision for income taxes 1,718,474 2,665,556 Provision for income taxes 1,640,972 1,029,151 ---------- ---------- Net income 77,502 1,636,405 Preferred stock dividends (38,332) (45,301) ---------- ---------- Net income applicable to common stock $ 39,170 $1,591,104 ========== ========== Net income per common share: Basic $ 0.01 $ 0.27 Diluted $ 0.01 $ 0.25 ========== ==========
-4- ADDVANTAGE MEDIA GROUP, INC. STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended June 30, --------------------------- 1998 1997 ------------- ------------ OPERATING ACTIVITIES Net income $ 77,502 $ 1,636,405 Adjustments to reconcile net income to net cash used in operating activities: Deferred income tax 1,473,000 1,029,151 Depreciation and amortization 472,472 251,879 Calculator writedown 364,822 -- Accrual of long-term obligations 65,712 59,736 Changes in assets and liabilities: Accounts receivable 1,222,433 874,229 Other current assets (73,850) (22,650) Other assets (76,977) (63,725) Accounts payable (592,291) (55,964) Income taxes payable 17,674 (19,334) Accrued settlement obligation -- (285,588) Other accrued liabilities (179,556) (317,880) Accrued preferred dividends -- (370,301) Unearned advertising revenue (762,151) (409,916) ---------- ----------- Net cash provided by operating activities 2,008,790 2,306,042 INVESTING ACTIVITIES Purchases of property and equipment (698,591) (662,963) ---------- ----------- Net cash used in investing activities (698,591) (662,963) FINANCING ACTIVITIES Proceeds from notes payable 383,680 -- Payments on bank note -- (1,156,656) Payment on notes payable (60,120) -- Payment of preferred stock dividends (38,332) -- Redemption of preferred stock (911,000) -- Exercise of options and warrants -- 28,799 ---------- ----------- Net cash used in financing activities (625,772) (1,127,857) ---------- ----------- Increase in cash 684,427 515,222 Cash at beginning of period 2,003,165 739,140 ---------- ----------- Cash at end of period $2,687,592 $ 1,254,362 ========== =========== Supplemental disclosures of cash information: Interest Paid $ 7,938 $ 83,072 ========== =========== Income Taxes Paid $ 127,972 $ -- ========== ===========
-5- NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial statements and do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. However, the information furnished reflects all adjustments, consisting only of normal recurring adjustments which are, in the opinion of management, necessary in order to make the financial statements not misleading. NOTE 2 - DESCRIPTION OF BUSINESS ADDvantage Media Group, Inc. (the "Company") markets and sells in-store advertising to national advertisers. This advertising is positioned on solar powered calculators attached to the handles of shopping carts. The patented calculators are marketed under the registered trademark "Shoppers Calculator/(R)/." On September 1, 1995, the Company and Wal-Mart Stores, Inc. ("Wal-Mart") entered into a four-year contract in settlement of a lawsuit related to prior contracts under which the Company will install and maintain Shoppers Calculator/(R)/ in all of Wal-Mart's Supercenters in the continental United States and Wal-Mart was responsible for selling the advertising for the calculators during the initial phase of the contract. Under the contract, the Company has the right to retain 90% of the advertising revenue. During the last quarter of 1996, the Company assumed the responsibility for sales of advertising and this arrangement was formalized in an amendment to the Wal-Mart contract dated August 25, 1997. Wal- Mart agreed to guarantee advertising revenues to the Company of $23.5 million, subject to the Company's obligation to install and service the Shoppers Calculators/(R)/ during the revenue guaranty period. In May 1998, the Company received the final revenue guarantee payment. The Company had the option to continue the contract to October 6, 1999, however, Wal-Mart notified the Company that it would not agree to a new contract or an extension of the current contract past its present term. Based on Wal-Mart's decision not to renew the present contract, the Company made the decision to commence de-installation of the Shopper Calculator/(R)/ program beginning June 15, 1998. It is anticipated that the Shopper Calculators/(R)/ will be de-installed by the end of August, 1998. At the present time, the Company is negotiating contracts with Service Merchandise (approximately 360 stores) and several different divisions of Kroger and an amendment to its contract with Kmart Stores for its Super Kmart Stores (approximately 105 stores). The Company doesn't know if, or when, these will be implemented or if they will be implemented at all, or whether the Company will enter into similar agreements with any other retailers. -6- The Company is currently evaluating a number of options and opportunities which could include a merger, the sale of the Shoppers Calculator/(R)/ assets or some other business alliance. NOTE 3 - INCOME TAXES As a result of Wal-Mart's decision to terminate its contract with the Company, management has reevaluated the likelihood of realizing the deferred tax assets resulting from its net operating loss and tax credit carryforwards. Management has determined that the Company no longer meets the criteria to continue to recognize these tax carryforwards as assets. Consequently, the second quarter tax provision has been increased to reverse the deferred tax asset. The tax provision for the three months ended June 30, 1998 is as follows: Current federal and state income taxes, after reduction for use of net operating loss in the current period $ 85,000 Deferred taxes, including provision for reversal of deferred tax assets 1,556,000 ---------- Total tax provision $1,641,000 ==========
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Three Months Ended June 30, 1998 compared to Three Months Ended June 30, 1997 - - ----------------------------------------------------------------------------- The Company entered into a contract with Wal-Mart effective as of September 1, 1995, whereby the Company agreed to install and maintain its Shoppers Calculators in all of Wal-Mart's Supercenter stores in the continental United States. Under the contract, Wal-Mart guaranteed that the Company's share of advertising revenues would be $2,700 per installed store, per four-week advertising cycle, until a total of approximately $23,500,000 had been received by the Company. At June 30, 1998 the total amount of the revenue guarantee had been received, so therefore, future periods will not include any revenue guarantee payments from Wal-Mart. Advertising revenues decreased approximately $921,900 (32%) for the three months ended June 30, 1998, as compared to the three months ended June 30, 1997. During the second fiscal quarter of 1998, the Wal-Mart revenue guarantee was concluded with a final billing of $360,900 ($1,074 per store) for advertising cycle number six which ended on June 14, 1998. There were no significant advertising revenues earned during the last half of June 1998. -7- Operating income (income before interest, taxes and preferred stock dividends) decreased $618,000 during the three months ended June 30, 1998 as compared to the three months ended June 30, 1997. The Company's net income applicable to common stock was $202,000 for 1998 second quarter, as compared to $791,300 for the same period last year. Based on the Company's decision to de-install the Wal-Mart supercenter program beginning June 15, 1998, it is anticipated that the last half of 1998 will reflect operating losses as the Company defines its future operating strategy. As a result of the de-installation, a $360,400 calculator writedown was recorded during the second quarter of 1998. As a result of implementation of the new Wal-Mart contract, 1995 earnings were increased by $3,910,000 from the accounting recognition of the future tax benefits of the Company's net operating losses and temporary differences aggregating $10,290,000 at December 31, 1995. The second quarter 1997 tax expense of $512,900 reflects the amortization of the deferred tax asset recognized in 1995. As a result of Wal-Mart's decision to terminate its contract with the Company, management has reevaluated the likelihood of realizing the deferred tax assets resulting from its net operating loss and tax credit carryforwards. Management has determined that the Company no longer meets the criteria to continue to recognize these tax carryforwards as assets. Consequently, the second quarter tax provision has been increased by $1,556,000. Costs of advertising services (representing primarily labor to supervise, service and clean the installed units and change advertising messages and the depreciation of installed units) decreased approximately $283,900 (29%) in the second quarter of 1998 as compared to the same period in 1997 as a result of reduced labor costs. On March 1, 1998 the Company significantly reduced the size of its field service staff. Selling expense decreased approximately $14,500 (9%) in the second quarter of 1998 compared to the same period in 1997. This was primarily due to decreases in marketing materials costs and advertising expenses amounting to $22,000. These decreases were partially offset by increases during 1998 in payroll, payroll related expenses and sales representative retainer expenses of $7,500. General and administrative expenses increased $37,700 (10%) during the second quarter of 1998 as compared to the second quarter of 1997. During 1998, payroll and payroll related expenses increased $32,800. Officer and management bonus accruals decreased $25,000 in 1998 as compared to 1997. Executive retirement plan accruals, including insurance cost to fund future payments, increased $3,000 during 1998. Expenses related to broker and analyst meetings and other shareholder expenses increased $2,800 over 1997. Increases amounting to $24,100 occurred in professional fees, occupancy costs and other expenses. Interest expenses decreased approximately $16,400 (80%) during the second quarter of 1998 as compared to the same period in 1997. Interest on bank borrowings decreased $1,900 due primarily to the repayment of all bank debt during 1997. Interest accrued on amounts due investors, including the accretion of discount for the litigation settlement, was $18,000 lower for -8- 1998 as compared to 1997, all because of the reduction of amounts due and past due. Vendor interest increased during the current quarter by $3,500. Six Months Ended June 30, 1998 compared to Six Months Ended June 30, 1997 - - ------------------------------------------------------------------------- The Company entered into a contract with Wal-Mart effective as of September 1, 1995, whereby the Company agreed to install and maintain its Shoppers Calculators in all of Wal-Mart's Supercenter stores in the continental United States. Under the contract, Wal-Mart guaranteed that the Company's share of advertising revenues would be $2,700 per installed store, per four-week advertising cycle, until a total of approximately $23,500,000 had been received by the Company. At June 30, 1998, the total amount of the revenue guarantee had been received, so therefore, future periods will not include any revenue guarantee payments from Wal-Mart. Advertising revenues decreased approximately $843,800 (15%) for the six months ended June 30, 1998, as compared to the six months ended June 30, 1997. During the second fiscal quarter of 1998 the Wal-Mart revenue guarantee was concluded with a final billing of $360,900 ($1,074 per store) for advertising cycle number six which ended on June 14, 1998. There were no significant advertising revenues earned during the last half of June 1998. Operating income (income before interest, taxes and preferred stock dividends) decreased $638,100 during the six months ended June 30, 1998 as compared to the six months ended June 30, 1997. The Company's net income applicable to common stock was $1,012,600 for the first half of 1998, as compared to $1,591,100 for the same period last year. As a result of implementation of the new Wal-Mart contract, 1995 earnings were increased by $3,910,000 from the accounting recognition of the future tax benefits of the Company's net operating losses and temporary differences aggregating $10,290,000 at December 31, 1995. The first half 1997 tax expense of $1,029,200 reflects the amortization of the deferred tax asset recognized in 1995. As a result of Wal-Mart's decision to terminate its contract with the Company, management has reevaluated the likelihood of realizing the deferred tax assets resulting from its net operating loss and tax credit carryforwards. Management has determined that the Company no longer meets the criteria to continue to recognize these tax carryforwards as assets. Consequently, the second quarter tax provision has been increased by $1,556,000. Costs of advertising services (representing primarily labor to supervise, service and clean the installed units and change advertising messages and the depreciation of installed units) decreased approximately $167,900 (9%) in the first half of 1998 as compared to the same period in 1997 as a result of reduced labor costs. On March 1, 1998 the Company significantly reduced the size of its field service staff. Selling expense increased approximately $12,700 (5%) in the first six months of 1998 compared to the same period in 1997. During 1998, payroll, payroll related expenses and sales representative retainer expenses increased $42,900. Marketing materials cost and advertising expenses decreased $30,200 in 1998 as compared to 1997. -9- General and administrative expenses increased $23,000 (3%) during the first six months of 1998 as compared to the first six months of 1997. During 1998, payroll and payroll related expenses decreased $8,500. Officer and management bonus accruals decreased $30,000 in 1998 as compared to 1997. Executive retirement plan accruals, including insurance cost to fund future payments, increased $9,100 during 1998. Expenses related to broker and analyst meetings and other shareholder expenses increased $15,000 over 1997. Increases amounting to $37,400 occurred in professional fees, occupancy costs and other expenses. Interest expenses decreased approximately $55,900 (88%) during the first six months of 1998 as compared to the same period in 1997. Interest on bank borrowings decreased $19,900 due primarily to the repayment of all bank debt during 1997. Vendor interest was $600 higher and interest accrued on amounts due investors, including the accretion of discount for the litigation settlement, was $36,600 lower for 1998 as compared to 1997, all because of the reduction of amounts due and past due. FINANCIAL CONDITION AND LIQUIDITY The Company entered into separate agreements with Wal-Mart in July 1993 and June 1994 which provided for the installation of the Company's calculators in certain Wal-Mart stores. The July 1993 and June 1994 contracts were never implemented and on January 18, 1995, the Company filed a suit against Wal-Mart for the alleged breach of the terms of those contract. On September 1, 1995, the Company and Wal-Mart entered into a new contract and the Company dismissed the lawsuit. Under the terms of the new contract, the Company agreed to install the Shoppers Calculators in all of Wal-Mart's Supercenters in the continental United States, and Wal-Mart was to sell the advertising for the calculators during the initial phase of the contract. During the last quarter of 1996, the Company assumed responsibility for sales of advertising for the calculators, and this arrangement was formalized in an amendment to the Wal-Mart contract in August 1997. Under the contract, Wal-Mart agreed to guarantee advertising revenues to the Company of approximately $23.5 million subject to the Company's obligation to install and service the Shoppers Calculators during the revenue guaranty period. In May 1998, the Company received the final revenue guarantee payment. During August of 1997, the Company submitted a proposal to Wal-Mart for a new Shoppers Calculator contract to be implemented after the Company receives payment of the $23.5 guaranteed revenues provided for under the current contract. During May of 1998, the Company received notification from Wal-Mart that it would not enter into a new agreement or agree to an extension of the current contract. Based on Wal-Mart's decision not to renew the present contract, the Company made the decision to commence the de-installation of the Shoppers Calculator program beginning June 15, 1998. It is anticipated that the Shoppers Calculators will be de-installed by the end of August 1998. -10- Based on the Company's decision to de-install the Wal-Mart supercenter program beginning June 15, 1998, it is anticipated that the last half of 1998 will reflect operating losses as the Company defines its future operating strategy. On January 28, 1998, the Company entered into a letter of intent to acquire Sports Display, Inc. and its affiliated company Sports Display of Canada, Inc. at a purchase price of $16.75 million, payable in cash of $8.5 million, seller financed notes of $5.25 million and convertible preferred stock to be valued at $3.0 million. The Company would also be obligated to pay an additional $1.5 million at closing for certain non-compete and employment contracts. The parties extended this letter of intent to May 31, 1998. However, the termination of the Wal-Mart contract caused the efforts to agree upon a definitive agreement to be put on hold. While the parties have continued to maintain contact and there is the possibility that a transaction will be consummated on some basis (which would most likely vary significantly from the terms and structure contemplated by the letter of intent), there can be no assurance at this time that the acquisition will be consummated. FORWARD-LOOKING STATEMENTS Certain statements included in this report which are not historical facts are forward-looking statements. These forward-looking statements are based on current expectations, estimates, assumptions and beliefs of management; and words such as "expects," "anticipates," "intends," "plans," "believes," "estimates" and similar expressions are intended to identify such forward- looking statements. These forward-looking statements involve risks and uncertainties, including, but not limited to, the Company's ability to obtain new users of the Shoppers Calculator/(R)/ program and to sell advertising for that program, general economic conditions and conditions affecting the mass merchandising industry, the availability of raw materials and manufactured components and the Company's ability to fund the costs thereof, and other factors which may affect the Company's ability to comply with its obligations under the contract. Accordingly, actual results may differ materially from those expressed in the forward looking statements. -11- PART II--OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS The annual meeting of shareholders of the Company was held in the Meeting Tower Conference Room, Meridian Tower, 4th Floor, 5100 East Skelly Drive, Tulsa, Oklahoma on May 28, 1997. At the meeting the following directors were elected for one year terms (with the votes as indicated):
Abstentions/ For Withheld Broker Non-Votes --------- -------- ---------------- Charles H. Hood 5,007,436 98,110 -0- Gary W. Young 5,007,436 98,110 -0- J. Larri Barrett 5,007,436 98,110 -0- John W. Condon 5,007,436 98,110 -0- Stephen G. Smith 5,007,436 98,110 -0- Steven C. Oden 5,007,436 98,110 -0-
The shareholders approved the ADDvantage Media Group, Inc. 1998 Stock Plan (with the votes as indicated): For: 1,282,647 Against: 553,035 Abstentions: 5,400 Broker Non-Votes: 3,264,464 The shareholders ratified Tullius Taylor Sartain & Sartain LLP as auditors to perform the audit for the fiscal year ending December 31, 1998 (with the votes as indicated): For: 5,077,026 Against: 24,020 Abstentions/Broker Non-Votes: 4,500 ITEM 5. OTHER INFORMATION As set forth in the Company's Proxy Statement for the 1998 Annual Meeting, stockholder proposals submitted pursuant to Rule 14a-8 for inclusion in the Company's proxy statement for the 1999 Annual Meeting of Stockholders must be received no later than December 29, 1998. Any stockholder who intends to present a proposal at the 1999 Annual Meeting and has not sought inclusion of the proposal in the Company's proxy materials pursuant to Rule 14a-8 must provide notice of such proposal to the Company no later than March 14, 1999. Failure to provide timely notice of such proposal will mean that the persons named as proxies will be able to vote the shares for which they have received proxies on such proposal in their discretion. -12- ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: Exhibit No. Description ----------- ----------- 11 Statement re: Computation of Per Share Earnings 27 Financial Data Schedule (b) Reports on Form 8-K. None. -13- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ADDVANTAGE MEDIA GROUP, INC. SIGNATURE TITLE DATE - - --------- ----- ---- /s/ Charles H. Hood President August 11, 1998 - - --------------------- (Principal Executive Officer) Charles H. Hood /s/ Gary W. Young Executive Vice President - August 11, 1998 - - --------------------- Finance and Administration and Gary W. Young Treasurer (Principal Financial Officer) -14- EXHIBIT INDEX ------------- EXHIBIT NO. DESCRIPTION ----------- ----------- 11 Statement re: Computation of Per Share Earnings 27 Financial Data Schedule -15- EX-11 2 COMPUTATION OF PER SHARE EARNINGS EXHIBIT 11 COMPUTATION OF EARNINGS PER SHARE The Company adopted SFAS No. 128, "Earnings Per Share," during 1997. SFAS No. 128 requires presentation of basic and diluted earnings per share. Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the reporting period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. All prior period weighted average and per share information has been restated in accordance with SFAS No. 128. Outstanding stock options and warrants issued by the Company represent the only dilutive effect on weighted average shares. A reconciliation between basic and diluted weighted average shares outstanding and the related earnings per share calculation is presented below: Basic and diluted EPS for the three months ended June 30, 1998 and 1997, were computed as follows:
Three Months Ended June 30, ---------------------------- 1998 1997 -------------- ------------ Basic EPS Computation: Net income (loss) $ (755,758) $ 813,949 Less preferred stock dividends 15,681 22,650 ---------- ---------- Net income (loss) available to common stockholders $ (771,439) $ 791,299 ========== ========== Weighted average shares outstanding 5,906,584 5,856,584 ---------- ---------- Basic EPS $ (0.13) $ 0.14 ========== ========== Diluted EPS Computation: Net income (loss) available to common stockholders $ (771,439) $ 791,299 ========== ========== Weighted average shares outstanding 5,906,584 5,856,584 Incremental shares for assumed exercise of securities Warrants -- 37,829 Options 289,044 470,679 ---------- ---------- 6,195,628 6,365,092 ========== ========== Diluted EPS (note) $ $ 0.12 ========== ==========
The 227,750 shares of convertible preferred stock were not included in the computation of diluted EPS as their effect is anti-dilutive. The diluted EPS computation for the three months ended June 30, 1998 is not presented since its effect is anti-dilutive. Basic and diluted EPS for the six months ended June 30, 1998 and 1997, were computed as follows:
Six Months Ended June 30, ------------------------- 1998 1997 ------------ ----------- Basic EPS Computation: Net income $ 77,502 $1,636,405 Less preferred stock dividends 38,332 45,301 ---------- ---------- Net income available to common stockholders $ 39,170 $1,591,104 ========== ========== Weighted average shares outstanding 5,906,584 5,818,385 ---------- ---------- Basic EPS $ 0.01 $ 0.27 ========== ========== Diluted EPS Computation: Net income available to common stockholders $ 39,170 $1,591,104 ========== ========== Weighted average shares outstanding 5,906,584 5,818,385 Incremental shares for assumed exercise of securities Warrants -- 18,915 Options 340,563 540,271 ---------- ---------- 6,247,147 6,377,571 ========== ========== Diluted EPS $ 0.01 $ 0.25 ========== ==========
The 227,750 shares of convertible preferred stock were not included in the computation of diluted EPS as their effect is anti-dilutive. EX-27 3 FINANCIAL DATA SCHEDULE
5 3-MOS 6-MOS DEC-31-1998 DEC-31-1998 APR-01-1998 JAN-01-1998 JUN-30-1998 JUN-30-1998 2,687,592 0 0 0 326,528 0 0 0 0 0 3,124,056 0 3,711,438 0 1,210,834 0 6,123,603 0 923,622 0 0 0 0 0 0 0 59,066 0 4,906,197 0 6,123,603 0 1,947,480 4,863,481 1,997,148 4,945,764 0 0 1,267,763 2,091,233 573,334 1,115,418 0 0 4,117 7,937 360,446 1,718,474 1,116,204 1,640,972 (755,758) 77,502 0 0 (364,822) (364,822) 0 0 (755,758) 77,502 (0.13) 0.01 (0.13) 0.01
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