-----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, TYKuS0zSE8U4wWlohSjNWYxe1qFYDuL4Ud72uQibCTjv2nkIwx2WOt/gzBauXDcI VXHko75rSG5cPYEcRkOCOg== 0001012082-04-000004.txt : 20040217 0001012082-04-000004.hdr.sgml : 20040216 20040213174638 ACCESSION NUMBER: 0001012082-04-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20031231 FILED AS OF DATE: 20040217 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADDVANTAGE TECHNOLOGIES GROUP INC CENTRAL INDEX KEY: 0000874292 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PROFESSIONAL & COMMERCIAL EQUIPMENT & SUPPLIES [5040] IRS NUMBER: 731351610 STATE OF INCORPORATION: OK FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10799 FILM NUMBER: 04601076 BUSINESS ADDRESS: STREET 1: 1605 EAST JOLA CITY: BROKEN ARROW STATE: OK ZIP: 74012 BUSINESS PHONE: 9182519121 MAIL ADDRESS: STREET 1: 1605 E IOLA CITY: BROKEN ARROW STATE: OK ZIP: 74012 FORMER COMPANY: FORMER CONFORMED NAME: ADDVANTAGE MEDIA GROUP INC /OK DATE OF NAME CHANGE: 19930328 10-Q 1 r10q1q2004.txt 10Q 1ST QUARTER 2004 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [x] QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2003, OR [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM________________ TO ______________ Commission File number 1-10799 ADDvantage Technologies Group, Inc. (Exact name of registrant as specified in its charter) OKLAHOMA 73-1351610 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1605 E. Iola Broken Arrow, Oklahoma 74012 (Address of principal executive office) (Zip Code) (918) 251-9121 (Registrant's telephone number, including area code) Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 ----- ----- Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes No X ----- ----- Shares outstanding of the issuer's $.01 par value common stock as of February 10, 2004 were 10,031,234. Part I - Financial Information Page Financial Information: Item 1. Financial Statements Consolidated Condensed Balance Sheets (Unaudited) December 31, 2003 and September 30, 2003 3 Consolidated Condensed Statements of Income (Unaudited) Three Months Ended December 31, 2003 and 2002 5 Consolidated Condensed Statements of Cash Flows (Unaudited) Three Months Ended December 31, 2003 and 2002 6 Notes to Unaudited Consolidated Condensed Financial Statements 7 Item 2. Management's Discussion and Analysis of the Financial Condition and Results of Operations 10 Item 3. Quantitative and Qualitative Disclosures About Market Risk 13 Item 4. Controls and Procedures 13 Part II - Other Information Item 6. Exhibits and Reports on Form 8-K 14 Signatures 15 2
ADDVANTAGE TECHNOLOGIES GROUP, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) December 31, September 30, 2003 2003 ---- ---- Assets Current assets: Cash $ 665,194 $ 496,283 Accounts receivable, net of allowance of $73,312 and $78,359 5,313,132 3,783,680 Inventories 21,187,420 22,131,096 Deferred income taxes 440,000 367,000 Total current assets 27,605,746 26,778,059 Property and equipment, at cost: Machinery and equipment 2,075,279 2,061,598 Land and buildings 1,326,939 1,326,939 Leasehold improvements 521,972 521,972 ------------ ------------ 3,924,190 3,910,509 Less accumulated depreciation and amortization (1,349,336) (1,284,347) ------------ ------------ Net property and equipment 2,574,854 2,626,162 Other assets: Deferred income taxes 1,131,000 1,154,000 Goodwill 1,150,060 1,150,060 Other assets 22,856 39,628 ------------ ------------ Total other assets 2,303,916 2,343,688 ------------ ------------ Total assets $ 32,484,516 $ 31,747,909 ============ ============ See notes to unaudited consolidated condensed financial statements. 3
ADDVANTAGE TECHNOLOGIES GROUP, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) December 31, September 30, 2003 2003 ---- ---- Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 2,033,828 $ 2,631,221 Accrued expenses 526,619 829,459 Accrued income taxes 885,337 95,114 Bank revolving line of credit 5,075,395 5,185,902 Notes payable - current portion 77,219 118,393 Dividends payable 310,000 310,000 Stockholder notes 764,199 838,473 ------------ ------------ Total current liabilities 9,672,597 10,008,562 Notes payable 375,305 384,411 Stockholder notes 375,094 385,171 Stockholders' equity: Preferred stock, 5,000,000 shares authorized, $1.00 par value, at stated value: Series A, 5% cumulative convertible; 200,000 shares issued and outstanding with a stated value of $40 per share 8,000,000 8,000,000 Series B, 7% cumulative; 300,000 shares issued And outstanding with a stated value of $40 per share 12,000,000 12,000,000 Common stock, $.01 par value; 30,000,000 shares authorized; 10,035,414 and 10,030,414 shares issued, respectively 100,354 100,304 Paid-in capital (7,380,662) (7,389,197) Retained earnings 9,395,992 8,312,822 ------------ ------------ 22,115,684 21,023,929 Less: Treasury stock, 21,100 shares at cost (54,164) (54,164) ------------ ------------ Total stockholders' equity 22,061,520 20,969,765 ------------ ------------ Total liabilities and stockholders' equity $ 32,484,516 $ 31,747,909 ============ ============ See notes to unaudited consolidated condensed financial statements. 4
ADDVANTAGE TECHNOLOGIES GROUP, INC. CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED) Three months ended December 31, 2003 2002 ---- ---- Net sales income $ 10,181,250 $ 6,491,416 Net service income 1,111,250 1,205,562 ------------- ------------- 11,292,500 7,696,978 Costs of sales 6,844,610 4,072,922 ------------- ------------- Gross profit 4,447,890 3,624,056 Operating, selling, general and administrative expenses 2,148,978 1,917,774 Depreciation and amortization 64,989 57,678 ------------- ------------- Income from operations 2,233,923 1,648,604 Interest expense 55,753 59,760 ------------- ------------- Income before income taxes 2,178,170 1,588,844 Provision for income taxes 785,000 574,669 ------------- ------------- Net income 1,393,170 1,014,175 Preferred dividends 310,000 310,000 ------------- ------------- Net income attributable to common stockholders $ 1,083,170 $ 704,175 ============= ============= Earnings per share: Basic $ 0.11 $ 0.07 Diluted $ 0.10 $ 0.07 Shares used in per share calculation Basic 10,011,314 10,004,181 Diluted 12,080,044 12,004,181 See notes to unaudited consolidated condensed financial statements. 5
ADDVANTAGE TECHNOLOGIES GROUP, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) Three months ended December 31, 2003 2002 ---- ---- Cash Flows from Operating Activities Net income $ 1,393,170 $ 1,014,175 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 64,989 57,678 Deferred income tax benefit (50,000) - Change in: Receivables (1,529,452) 128,091 Inventories 943,676 (1,637,336) Other assets 16,772 (242) Accounts payable (597,393) 300,657 Accrued liabilities 487,383 400,065 ------------ ------------ Net cash provided by operating activities 729,145 263,088 ------------ ------------ Cash Flows from Investing Activities Additions to property and equipment (13,681) (33,882) ------------ ------------ Net cash used in investing activities (13,681) (33,882) ------------ ------------ Cash Flows from Financing Activities Net change under line of credit (110,507) 195,301 Payments on stockholder loans (84,351) (75,000) Payments on notes payable (50,280) (52,094) Proceeds from stock options exercised 8,585 - Payments of preferred dividends (310,000) (310,000) ------------ ------------ Net cash used in financing activities (546,553) (241,793) ------------ ------------ Net (decrease) increase in cash 168,911 (12,587) Cash, beginning of period 496,283 775,740 ------------ ------------ Cash, end of period $ 665,194 $ 763,153 Supplemental Cash Flow Information Cash paid for interest $ 55,509 $ 59,267 Cash paid for income taxes $ 16,000 $ - See notes to unaudited consolidated condensed financial statements. 6
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS Note 1 - Basis of Presentation The accompanying unaudited consolidated 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 items which are, in the opinion of management, necessary in order to make the financial statements not misleading. The consolidated financial statements as of September 30, 2003 have been audited by independent certified public accountants. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-KSB for the fiscal year ended September 30, 2003. Note 2 - Description of Business ADDvantage Technologies Group, Inc., through its subsidiaries TULSAT Corporation, ADDvantage Technologies Group of Nebraska, (dba "Lee Enterprise"), NCS Industries Inc. ("NCS"), ADDvantage Technologies Group of Missouri, (dba "Comtech Services"), ADDvantage Technologies Group of Texas, (dba "Tulsat - Texas"), and Tulsat - Atlanta LLC ("Tulsat - Atlanta")(collectively, the "Company"), sells new, surplus, and refurbished cable television equipment throughout North America in addition to being a repair center for various cable companies. The Company operates in one business segment. Note 3 - Earnings per Share Basic and diluted net earnings per share were computed in accordance with Statement of Financial Accounting Standards No. 128, "Earnings Per Share." Basic net earnings per share is computed by dividing net earnings available to common shareholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period and excludes the dilutive effect of stock options. Diluted net earnings per share gives effect to all dilutive potential common shares outstanding during a period. In computing diluted net earnings per share, the average stock price for the period is used in determining the number of shares assumed to be reacquired under the treasury stock method from the exercise of stock options. 7
Three months ended December 31, 2003 2002 ---- ---- Basic EPS Computation: Net income attributable to common stockholders $ 1,083,170 $ 704,175 Weighted average outstanding common shares 10,011,314 10,004,181 Earnings per Share - Basic $ 0.11 $ 0.07 ============= ============= Diluted EPS Computation: Net income attributable to common stockholders $ 1,083,170 $ 704,175 Add: Dividends on Series A convertible preferred stock 100,000 100,000 ------------- ------------- Net income attributable to common stockholders - Diluted 1,183,170 804,175 Weighted average outstanding common shares 10,011,314 10,004,181 Potentially dilutive securities Assumed conversion of 200,000 shares of Series A convertible preferred stock 2,000,000 2,000,000 Effect of dilutive stock options 143,453 - ------------- ------------- Weighted average shares outstanding - assuming dilution 12,154,767 12,004,181 Earnings per Share - Diluted $ 0.10 $ 0.07 ============= =============
Note 4 - Line of Credit, Stockholder Loans, and Notes Payable At December 31, 2003, a $5,075,395 balance is outstanding under a $9.0 million line of credit due June 30, 2004, with interest payable monthly at Chase Manhattan Prime less 1 1/4% (2.75% at December 31, 2003). Borrowings under the line of credit are limited to the lesser of $7.0 million or the sum of 80% of qualified accounts receivable and 40% of qualified inventory for working capital purposes and $2.0 million for future acquisitions meeting Bank of Oklahoma credit guidelines. The line of credit agreement provides that the Company's net worth must be greater than $14.0 million and net income before the payment of preferred dividends greater than $2.0 million. The line of credit is collateralized by inventory, accounts receivable, equipment and fixtures, and general intangibles. Cash receipts are applied from the Company's lockbox account directly against the bank line of credit, and checks clearing the bank are funded from the line of credit. The resulting overdraft balance, consisting of outstanding checks, is $346,560 at December 31, 2003 and is included in the bank revolving line of credit. 8 Stockholder loans of $725,000 bear interest at rates that correspond with the line of credit (2.75% at December 31, 2003). The notes are due on demand and are classified as current. Stockholder notes, which were issued for purchases of real estate, total $414,293. These notes bear interest at 7.5% and are due in monthly payments through 2011. Notes payable to unrelated parties totaled $452,524, of which $41,667 is due in quarterly payments through March 2004, with $25,000 of this amount bearing interest at 7%. The remaining amount of $410,857 is due in monthly payments through 2013 with interest at 5.5% through 2008, converting thereafter to prime minus 1/4%. 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview We are a Value Added Reseller ("VAR") for selected Scientific-Atlanta and Motorola broadband new products. We also specialize in the sale of refurbished, previously-owned cable television ("CATV") equipment to CATV operators and other broadband communication companies. Within the last two years, we have become distributors for several different manufacturers of equipment and other related products. It is through our development of these relationships that that we have focused our initiative to market our products and services to the larger cable multiple system operators ("MSOs"). As a result, our overall sales are up significantly for the first three months of 2004. We continue to believe that as cable companies look at expanding their services in key markets and to recover from or address the effects of a slow economy and depressed capital markets, there will be an emphasis on minimizing their costs, thus creating a higher demand for our repair services and surplus- new equipment. Results of Operations Comparison of Results of Operations for the Three Months Ended December 31, 2003 and December 31, 2002 Net Sales. Net sales increased $3.6 million, or 46.7%, to $11.3 million in the first quarter of fiscal 2004, from $7.7 million for the same period in fiscal 2003, primarily due to the positive results of our marketing initiatives and distributor relationships discussed in the previous paragraph. Also, several MSOs accelerated their equipment purchases during the period. Consequently, it is possible that this level of sales may not continue in the coming periods. New equipment sales were up 85.4% to $7.6 million for the current period, compared with $4.1 million for the same period of fiscal 2003. Sales of remanufactured equipment increased by 8.3% to $2.6 million for the current period, compared with $2.4 million in the same period last year. Repair service revenues were down 8.3% to $1.11 million for the current quarter, compared with $1.21 million for the same period last year. The decrease in repair services was due to favorable weather conditions which resulted in fewer weather-related repairs and the fact that many of the MSOs have replaced their older equipment with new distribution equipment having longer OEM warranties. Cost of Sales. Costs of sales includes (i) the costs of new and refurbished equipment, on a weighted average cost basis, sold during the period, (ii) the equipment costs used in repairs, and (iii) the related transportation costs. Costs of sales increased to $6.8 million for the first quarter of fiscal 2004 from $4.1 million for the same period of fiscal 2003. The increase was primarily due to the increase in sales for the period. Costs of sales for new and refurbished equipment increased to 65.1% of net sales for 2004 from 59.7% of net sales for 2003. This increase was primarily due to the increase in the allowance for obsolete inventory during 2004. Costs of sales for repair services increased to 19.7% of net sales for 2004 from 16.6% of net sales for 2003. This increase was due primarily to the high-end hybrid and fiber optic equipment being repaired, which involves a higher relative cost of material. Gross Profit. Gross profit climbed $824,000 or 22.2% to $4.4 million for the first quarter of fiscal 2004 from $3.6 million for the same period in fiscal 2003. The gross margin percentage was 39.4% for the current quarter, compared to 47.1% for the same quarter last year. The percentage decrease was primarily due to an increase in sales of new and surplus equipment which are accompanied by margins lower than that of re-manufactured equipment or repairs. 10 Operating, Selling, General and Administrative Expenses. Operating, selling, general and administrative expenses includes all personnel costs, including fringe benefits, insurance and taxes, occupancy, transportation (other than freight-in), communication and professional services, among other less significant accounts. Operating, selling, general and administrative expenses increased by $231,000 in the first quarter of fiscal 2004, to $2.15 million from $1.92 million for the same period in 2003, an increase of 12.0%. The increase in operating, selling, general and administrative expenses was primarily due to increases in salaries and wages and the incurrence of fees for the Company's commencement of trading on the American Stock Exchange. Income from Operations. Income from operations rose $585,000, or 35.2%, to $2.23 million for the first quarter of fiscal 2004 from $1.65 million for the same period last year. This increase was primarily due to increases in sales to the larger MSOs, partially offset by the increase in the allowance for obsolete inventory in 2004. Interest Expense. Interest expense for the three months ended December 31, 2003 was $55,753 compared to $59,760 for the same period last year. The decrease was primarily attributable to a lower average interest rate on our line of credit. The weighted average interest rate paid on the line of credit decreased to 2.75% for 2004 from 3.2% for 2003. Income Taxes. The provision for income taxes for fiscal 2004 increased to $785,000 from $575,000 in fiscal 2003. This increase was primarily due to higher pre-tax earnings in fiscal 2004. Critical Accounting Policies Note 1 to the Consolidated Financial Statements in Form 10-KSB for fiscal year 2003 includes a summary of the significant accounting policies or methods used in the preparation of our Consolidated Financial Statements. Some of those significant accounting policies or methods require us to make estimates and assumptions that affect the amounts reported by us. We believe the following items require the most significant judgments and often involve complex estimates. General The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We base our estimates and judgments on historical experience, current market conditions, and various other factors we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant estimates and assumptions relate to the carrying value of our inventory and, to a lesser extent, the adequacy of our allowance for doubtful accounts. Inventory Valuation Inventory consists of new and used electronic components for the cable television industry. Inventory is stated at the lower of cost or market. Market is defined principally as net realizable value. Cost is determined using the weighted average method. 11 We market our products primarily to MSOs and other users of cable television equipment who are seeking products of which manufacturers have discontinued production, or are seeking shipment on a same-day basis. Our position in the industry requires us to carry large inventory quantities relative to quarterly sales, but also allows us to realize high overall gross profit margins on our sales. Carrying these large inventories represents our largest risk. For individual inventory items, we may carry inventory quantities that are excessive relative to market potential, or we may not be able to recover our acquisition costs for sales we are able to make in a reasonable period. Over the past two years, our investment in inventory has shifted to become predominantly new products purchased from manufacturers and "surplus-new" products, which are unused products purchased from other distributors or MSOs. In order to address the risks associated with our investment in inventory, we regularly review inventory quantities on hand and reduce the carrying value by recording a provision for excess and obsolete inventory based primarily on inventory aging and forecasts of product demand and pricing. The broadband industry is characterized by changing customer demands and changes in technology that could result in significant increases or decreases of inventory pricing or increases in excess or obsolete quantities on hand. Our estimates of future product demand may prove to be inaccurate; in which case the provision required for excess and obsolete inventory may have been understated or overstated. Although every effort is made to ensure the accuracy of internal forecasting, any significant changes in demand or prices could have a significant impact on the carrying value of our inventory and reported operating results. Demand for some of the items in our inventory has been impacted by recent economic conditions present in the cable industry. We recorded an allowance of 2%, or $447,000, of the inventory balance at September 30, 2003 as a reserve for obsolete equipment. For the three months ended December 31, 2003, we increased this allowance by 1%, or $201,000, as a reserve for obsolete equipment purchased during the period. No allowance was recorded for the three months ended December 31, 2002. Accounts Receivable Valuation Management judgments and estimates are made in connection with establishing the allowance for doubtful accounts. Specifically, we analyze the aging of accounts receivable balances, historical bad debts, customer concentrations, customer credit-worthiness, current economic trends and changes in our customer payment terms. Significant changes in customer concentration or payment terms, deterioration of customer credit-worthiness, or weakening in economic trends could have a significant impact on the collectibility of receivables and our operating results. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. At December 31, 2003, accounts receivable, net of allowance for doubtful accounts of $73,000, amounted to $5.3 million. Liquidity and Capital Resources We have a line of credit with the Bank of Oklahoma under which we are authorized to borrow up to $9.0 million at a borrowing rate of 1.25% below Chase Manhattan Prime (2.75% at December 31, 2003). This line of credit will provide the lesser of $7.0 million or the sum of 80% of qualified accounts receivable and 40% of qualified inventory in a revolving line of credit for working capital purposes and $2.0 million for future acquisitions meeting Bank of Oklahoma credit guidelines. The line of credit is collateralized by inventory, accounts receivable, equipment and fixtures, and general intangibles and had an outstanding balance at December 31, 2003 of $5.1 million, due June 30, 2004. We intend to renew the agreement at the maturity date under similar terms. 12 We finance our operations primarily through internally generated funds and a bank line of credit. The final payment of $42,000 including principal and interest for obligations related to the NCS purchase will be paid on March 1, 2004. Monthly payments of principal for loans used to purchase buildings total $71,000 in the next 12 months. We expect to fund these payments through cash flows from operations. Stockholder loans include two notes totaling $725,000, due on demand, bearing interest at the same rate as our bank line of credit. These notes are being repaid at the rate of $25,000 per month. It is not expected that these notes will be called within the next year. 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," "projects", "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 future prospects for our business, our ability to generate or to raise sufficient capital to allow it to make additional business acquisitions, changes or developments in the cable television business that could adversely affect our business or operations, the continued availability to us of our key management personnel, general economic conditions, the availability of new and used equipment and other inventory and our ability to fund the costs thereof, and other factors which may affect our ability to comply with future obligations. Accordingly, actual results may differ materially from those expressed in the forward-looking statements. Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company's exposure to market rate risk for changes in interest rates relates primarily to its revolving line of credit and stockholder notes. The interest rates under the line of credit and the stockholder notes fluctuate with the prime rate. At December 31, 2003, the outstanding balances subject to variable interest rate fluctuations totaled $5.8 million. Future changes in interest rates could cause our borrowing costs to increase or decrease. The Company maintains no cash equivalents and does not enter into derivative financial instruments. All sales and purchases are denominated in U.S. dollars. Item 4. Controls and Procedures Based on his evaluation, our Chief Executive Officer and Principal Financial Officer has concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report on Form 10-Q are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. During the period covered by this report on Form 10-Q, there have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal control over financial reporting. 13 PART II-OTHER INFORMATION OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibit No. Description 31.1 Certification of Periodic Report by Chief Executive Officer and Chief Financial Officer under Section 302 of the Sarbanes Oxley Act of 2002. 32.1 Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to 8 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) Reports on Form 8-K for the quarter ended December 31, 2003: The Company furnished several reports on Form 8-K covering matters disclosed under Items 9 and 12 but no reports on Form 8-K were filed during the period. 14 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 TECHNOLOGIES GROUP, INC. (Registrant) By: /s/ Kenneth A. Chymiak ---------------------------- Date: February 13, 2004 Kenneth A. Chymiak, President and Chief Executive Officer (Principal Executive Officer and Principal Financial Officer) By: /s/ Dee Cooper ----------------------------- Date: February 13, 2004 Dee Cooper, Controller (Chief Accounting Officer) 15 Exhibit 31.1 CERTIFICATION I, Kenneth A. Chymiak, certify that: 1. I have reviewed this quarterly report on Form 10-Q of ADDvantage Technologies Group, Inc, (the "Company"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d- 15(e)) for the Company and have; a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared; b. Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on my evaluation; and c. Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and 5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of Company's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting. 16 Date: February 13, 2004 By: /s/ Kenneth A. Chymiak ----------------------------- Kenneth A. Chymiak, Principal Executive Officer and Principal Financial Officer 17 Exhibit 32.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES- OXLEY ACT OF 2002 In connection with the Quarterly Report of ADDvantage Technologies Group, Inc. (the "Company") on Form 10-Q for the fiscal quarter ending December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Kenneth A. Chymiak, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Sec 1350, as adopted pursuant to Sec 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. By: /s/ Kenneth A. Chymiak - ----------------------------- Kenneth A. Chymiak Chief Executive Officer and Chief Financial Officer February 13, 2004 A signed original of this written statement required by Section 906, or other Document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to ADDvantage Technologies Group, Inc. and will be retained by ADDvantage Technologies Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. 18 EX-31 3 r10q1q2004ex311.txt PEO AND PFO CERTIFICATION Exhibit 31.1 CERTIFICATION I, Kenneth A. Chymiak, certify that: 1. I have reviewed this quarterly report on Form 10-Q of ADDvantage Technologies Group, Inc, (the "Company"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d- 15(e)) for the Company and have; a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared; b. Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on my evaluation; and c. Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and 5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of Company's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting. 16 Date: February 13, 2004 By: /s/ Kenneth A. Chymiak ----------------------------- Kenneth A. Chymiak, Principal Executive Officer and Principal Financial Officer EX-32 4 r10q1q2004ex321.txt CEO AND CFO CERTIFICATION Exhibit 32.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES- OXLEY ACT OF 2002 In connection with the Quarterly Report of ADDvantage Technologies Group, Inc. (the "Company") on Form 10-Q for the fiscal quarter ending December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Kenneth A. Chymiak, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Sec 1350, as adopted pursuant to Sec 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. By: /s/ Kenneth A. Chymiak - ----------------------------- Kenneth A. Chymiak Chief Executive Officer and Chief Financial Officer February 13, 2004 A signed original of this written statement required by Section 906, or other Document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to ADDvantage Technologies Group, Inc. and will be retained by ADDvantage Technologies Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. 18 -----END PRIVACY-ENHANCED MESSAGE-----