UNITED STATES
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SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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FORM 10-K
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xANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended September 30, 2015
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oTRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Commission file number 1-10799
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ADDVANTAGE TECHNOLOGIES GROUP, INC.
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(Exact name of registrant as specified in its charter)
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Oklahoma
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73-1351610
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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1221 E. Houston, Broken Arrow, Oklahoma
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74012
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(Address of principal executive offices)
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(Zip code)
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Registrant’s telephone number: (918) 251-9121
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Securities registered under Section 12(b) of the Act:
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Title of each class
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Name of exchange on which registered
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Common Stock, $.01 par value
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NASDAQ Global Market
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
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Yes o No x
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Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.
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Yes o No x
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 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.
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Yes x No o
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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during
the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
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Yes x No o
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
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x
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer,
or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o Accelerated filer o
Non-accelerated filer o Smaller reporting company x
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
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Yes o No x
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The aggregate market value of the outstanding shares of common stock, par value $.01 per share, held by non-affiliates
computed by reference to the closing price of the registrant’s common stock as of March 31, 2015 was $12,198,302.
|
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The number of shares of the registrant’s outstanding common stock, $.01 par value per share, was 10,063,563 as of
November 30, 2015.
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Documents Incorporated by Reference
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The identified sections of definitive Proxy Statement to be filed as Schedule 14A pursuant to Regulation 14A in connection with the Registrant’s 2016 annual meeting of shareholders are incorporated by reference into Part III of this Form 10-K. The Proxy Statement will be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this Form 10-K.
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Page
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PART I
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Item 1.
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Business.
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Item 2.
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Properties.
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Item 3.
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Legal Proceedings.
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PART II
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||
Item 5.
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Market for Registrant's Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities.
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Item 6.
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Selected Financial Data.
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Item 7.
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Management's Discussion and Analysis of Financial Condition and Results
of Operations.
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Item 8.
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Financial Statements and Supplementary Data.
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Item 9.
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Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.
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Item 9A.
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Controls and Procedures.
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Item 9B.
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Other Information.
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PART III
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Item 10.
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Directors, Executive Officers and Corporate Governance.
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Item 11.
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Executive Compensation.
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence.
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Item 14.
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Principal Accounting Fees and Services.
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PART IV
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Item 15.
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Exhibits, Financial Statement Schedules.
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SIGNATURES
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2015
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2014
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2013
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||||||||||
United States
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||||||||||||
Cable TV
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$ | 23,975,197 | $ | 25,738,706 | $ | 27,541,137 | ||||||
Telco (a)
|
16,031,293 | 6,533,458 | − | |||||||||
Canada, Central America, Asia, Europe, Mexico, South America and Other
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||||||||||||
Cable TV
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1,418,488 | 1,465,514 | 1,136,214 | |||||||||
Telco (a)
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2,308,642 | 2,151,014 | − | |||||||||
$ | 43,733,620 | $ | 35,888,692 | $ | 28,677,351 |
·
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we sell both new and refurbished Cable TV equipment as well as repair what we sell, while most of our competition does not offer all of these services;
|
·
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we stock both new and refurbished inventory;
|
·
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we stock a wide breadth of inventory, which many of our competitors do not due to working capital constraints;
|
·
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we can reconfigure new and refurbished equipment to meet the different needs of our customers;
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·
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we can meet our customers’ timing needs for product due to our inventory on hand; and
|
·
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we have experienced sales support staff that have the technical know-how to assist our customers regarding solutions for various products and configurations.
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·
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we stock a broad range of used inventory, which allows us to meet our customers’ timing needs;
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·
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we have experienced sales support staff that have strong relationships with our customers and technical knowledge of the products we offer;
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·
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we have the following quality certifications: TL9000 (telecommunications quality certification), ISO 14001 (environmental management certification), OHSAS18000 (occupational safety
and health management certification), and R2 (EPA responsible recycling practices for electronics); and
|
·
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we provide multiple services for our customers including deinstallation and decommission of products, storage and management of spares inventory and recycling.
|
·
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Broken Arrow, Oklahoma – We own a facility in a suburb of Tulsa consisting of our headquarters, additional offices, warehouse and service center of approximately 100,000 square feet on ten
acres, with an investment of $3.3 million, financed by a loan of $2.8 million, due in monthly payments through 2021 at an interest rate of LIBOR plus 1.4%. In 2007, we also constructed a 62,500
square foot warehouse facility on the rear of our existing property in Broken Arrow, OK, with an investment of $1.6 million, financed with cash flows from operations.
|
·
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Deshler, Nebraska – We own a facility near Lincoln consisting of land and an office, warehouse and service center of approximately 8,000 square feet.
|
·
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Warminster, Pennsylvania – We own a facility in a suburb of Philadelphia consisting of an office, warehouse and service center of approximately 12,000 square feet, with an investment of $0.6
million. We also lease property of approximately 2,000 square feet, with monthly rental payments of $1,425 through December 31, 2015. We also rent on a month-to-month basis another
property of approximately 2,000 square feet, with monthly rental payments of $1,325.
|
·
|
Sedalia, Missouri – We own a facility near Kansas City consisting of land and an office, warehouse and service center of approximately 24,300 square feet. In 2007, we also constructed an
18,000 square foot warehouse facility on the back of our existing property in Sedalia, MO, with an investment of $0.4 million.
|
·
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New Boston, Texas – We own a facility near Texarkana consisting of land and an office, warehouse and service center of approximately 13,000 square feet.
|
·
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Suwanee, Georgia – We rent on a month-to-month basis a facility in a suburb of Atlanta consisting of an office and service center of approximately 5,000 square feet, with monthly rental
payments of $3,060.
|
·
|
Phoenix, Arizona – We lease a facility in Phoenix, Arizona consisting of an office, service center and warehouse of approximately 6,300 square feet, with monthly rental payments of $3,565,
$3,690, and $3,815 plus common area operating expenses of approximately $1,500 through May 31, 2016, 2017 and 2018, respectively.
|
·
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Jessup, Maryland – We lease a facility in a suburb of Baltimore consisting of an office, warehouse, and service center of approximately 88,000 square feet, with monthly rental payments of
$41,000 increasing each year by 2.5% through November 30, 2023.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
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Year Ended September 30, 2015
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High
|
Low
|
First Quarter
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$2.70
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$2.24
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Second Quarter
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$2.49
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$2.18
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Third Quarter
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$2.49
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$2.27
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Fourth Quarter
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$2.40
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$2.20
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Year Ended September 30, 2014
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High
|
Low
|
First Quarter
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$3.28
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$2.41
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Second Quarter
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$3.42
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$2.55
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Third Quarter
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$3.55
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$2.55
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Fourth Quarter
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$2.80
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$2.25
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Plan Category
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Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
(a)
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Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)
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Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in column (a))
(c)
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Equity compensation plans approved by security holders
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535,000
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$2.88
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539,883
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Equity compensation plans not approved by security holders
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0
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0
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0
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Total
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535,000
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$2.88
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539,883
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2015
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2014
|
2013
|
2012
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2011
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||||||||||||||||
Sales
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$ | 43,734 | $ | 35,889 | $ | 28,677 | $ | 29,677 | $ | 36,145 | ||||||||||
Income from operations
|
$ | 2,576 | $ | 1,097 | $ | 2,896 | $ | 2,619 | $ | 4,754 | ||||||||||
Income from continuing operations
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$ | 1,498 | $ | 659 | $ | 1,772 | $ | 939 | $ | 2,431 | ||||||||||
Continuing operations earnings per
share
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||||||||||||||||||||
Basic
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$ | 0.15 | $ | 0.07 | $ | 0.18 | $ | 0.09 | $ | 0.24 | ||||||||||
Diluted
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$ | 0.15 | $ | 0.07 | $ | 0.18 | $ | 0.09 | $ | 0.24 | ||||||||||
Total assets
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$ | 51,973 | $ | 53,406 | $ | 43,116 | $ | 42,033 | $ | 52,888 | ||||||||||
Long-term obligations inclusive
of current maturities
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$ | 5,240 | $ | 6,086 | $ | 1,503 | $ | 1,687 | $ | 12,058 |
Year Ended September 30, 2015
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Year Ended September 30, 2014
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|||||||||||||||||||||||
Cable TV
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Telco
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Total
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Cable TV
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Telco
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Total
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|||||||||||||||||||
Operating income (loss)
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$ | 2,210,414 | $ | 365,796 | $ | 2,576,210 | $ | 1,492,100 | $ | (395,001 | ) | $ | 1,097,099 | |||||||||||
Depreciation
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296,876 | 111,827 | 408,703 | 293,353 | 66,926 | 360,279 | ||||||||||||||||||
Amortization
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− | 825,805 | 825,805 | − | 481,722 | 481,722 | ||||||||||||||||||
EBITDA (a)
|
$ | 2,507,290 | $ | 1,303,428 | $ | 3,810,718 | $ | 1,785,453 | $ | 153,647 | $ | 1,939,100 |
(a)
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The Telco segment for the year ended September 30, 2014 includes acquisition-related costs of $0.6 million related to the acquisition of Nave Communications.
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Year Ended September 30, 2014
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Year Ended September 30, 2013
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|||||||||||||||||||||||
Cable TV
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Telco
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Total
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Cable TV
|
Telco
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Total
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|||||||||||||||||||
Operating income (loss)
|
$ | 1,492,100 | $ | (395,001 | ) | $ | 1,097,099 | $ | 2,896,254 | $ | − | $ | 2,896,254 | |||||||||||
Depreciation
|
293,353 | 66,926 | 360,279 | 276,356 | − | 276,356 | ||||||||||||||||||
Amortization
|
− | 481,722 | 481,722 | − | − | − | ||||||||||||||||||
EBITDA (a)
|
$ | 1,785,453 | $ | 153,647 | $ | 1,939,100 | $ | 3,172,610 | $ | − | $ | 3,172,610 |
(a)
|
The Telco segment for the year ended September 30, 2014 includes acquisition-related costs of $0.6 million related to the acquisition of Nave Communications.
|
Index to Financial Statements
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Page
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Report of Independent Registered Public Accounting Firm
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Consolidated Balance Sheets, September 30, 2015 and 2014
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Consolidated Statements of Operations, Years ended
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September 30, 2015, 2014 and 2013
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Consolidated Statements of Changes in Shareholders’ Equity, Years ended
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September 30, 2015, 2014 and 2013
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Consolidated Statements of Cash Flows, Years ended
|
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September 30, 2015, 2014 and 2013
|
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Notes to Consolidated Financial Statements
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September 30,
|
||||||||
2015
|
2014
|
|||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 6,110,986 | $ | 5,286,097 | ||||
Accounts receivable, net of allowance for doubtful accounts of
$250,000 and $200,000, respectively
|
4,286,377 | 6,393,580 | ||||||
Income tax receivable
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− | 220,104 | ||||||
Inventories, net of allowance for excess and obsolete
|
||||||||
inventory of $2,756,628 and $2,156,628, respectively
|
23,600,996 | 22,780,523 | ||||||
Prepaid expenses
|
153,454 | 174,873 | ||||||
Deferred income taxes
|
1,776,000 | 1,416,000 | ||||||
Total current assets
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35,927,813 | 36,271,177 | ||||||
Property and equipment, at cost:
|
||||||||
Land and buildings
|
7,218,678 | 7,208,679 | ||||||
Machinery and equipment
|
3,415,164 | 3,244,153 | ||||||
Leasehold improvements
|
151,957 | 206,393 | ||||||
Total property and equipment, at cost
|
10,785,799 | 10,659,225 | ||||||
Less: Accumulated depreciation
|
(4,584,796 | ) | (4,191,516 | ) | ||||
Net property and equipment
|
6,201,003 | 6,467,709 | ||||||
Intangibles, net of accumulated amortization
|
5,799,473 | 6,625,278 | ||||||
Goodwill
|
3,910,089 | 3,910,089 | ||||||
Other assets
|
134,678 | 131,428 | ||||||
Total assets
|
$ | 51,973,056 | $ | 53,405,681 | ||||
September 30,
|
||||||||
2015
|
2014
|
|||||||
Liabilities and Shareholders’ Equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 1,784,482 | $ | 2,880,761 | ||||
Accrued expenses
|
1,358,681 | 1,809,878 | ||||||
Income tax payable
|
122,492 | − | ||||||
Notes payable – current portion
|
873,752 | 845,845 | ||||||
Other current liabilities
|
982,094 | 983,269 | ||||||
Total current liabilities
|
5,121,501 | 6,519,753 | ||||||
Notes payable, less current portion
|
4,366,130 | 5,240,066 | ||||||
Deferred income taxes
|
286,000 | 267,000 | ||||||
Other liabilities
|
1,064,717 | 1,942,889 | ||||||
Total liabilities
|
10,838,348 | 13,969,708 | ||||||
Shareholders’ equity:
|
||||||||
Common stock, $.01 par value; 30,000,000 shares authorized;
10,564,221 and 10,541,864 shares issued, respectively;
10,063,563 and 10,041,206 shares outstanding, respectively
|
105,642 | 105,419 | ||||||
Paid in capital
|
(5,112,269 | ) | (5,312,881 | ) | ||||
Retained earnings
|
47,141,349 | 45,643,449 | ||||||
Total shareholders’ equity before treasury stock
|
42,134,722 | 40,435,987 | ||||||
Less: Treasury stock, 500,658 shares, at cost
|
(1,000,014 | ) | (1,000,014 | ) | ||||
Total shareholders’ equity
|
41,134,708 | 39,435,973 | ||||||
Total liabilities and shareholders’ equity
|
$ | 51,973,056 | $ | 53,405,681 |
Years ended September 30,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Sales
|
$ | 43,733,620 | $ | 35,888,692 | $ | 28,677,351 | ||||||
Cost of sales
|
28,434,731 | 24,283,236 | 19,968,034 | |||||||||
Gross profit
|
15,298,889 | 11,605,456 | 8,709,317 | |||||||||
Operating, selling, general and administrative expenses
|
12,722,679 | 10,508,357 | 5,813,063 | |||||||||
Income from operations
|
2,576,210 | 1,097,099 | 2,896,254 | |||||||||
Interest expense
|
305,310 | 217,910 | 25,980 | |||||||||
Income before income taxes
|
2,270,900 | 879,189 | 2,870,274 | |||||||||
Provision for income taxes
|
773,000 | 220,000 | 1,098,351 | |||||||||
Income from continuing operations
|
1,497,900 | 659,189 | 1,771,923 | |||||||||
Discontinued operations:
|
||||||||||||
Loss from discontinued operations, net of tax
|
− | (36,211 | ) | (102,207 | ) | |||||||
Loss on sale of discontinued operations, net of tax
|
− | (629,835 | ) | − | ||||||||
Discontinued operations, net of tax
|
− | (666,046 | ) | (102,207 | ) | |||||||
Net income (loss)
|
$ | 1,497,900 | $ | (6,857 | ) | $ | 1,669,716 | |||||
Earnings (loss) per share:
|
||||||||||||
Basic
|
||||||||||||
Continuing operations
|
$ | 0.15 | $ | 0.07 | $ | 0.18 | ||||||
Discontinued operations
|
− | (0.07 | ) | (0.01 | ) | |||||||
Net income (loss)
|
$ | 0.15 | $ | (0.00 | ) | $ | 0.17 | |||||
Diluted
|
||||||||||||
Continuing operations
|
$ | 0.15 | $ | 0.07 | $ | 0.18 | ||||||
Discontinued operations
|
− | (0.07 | ) | (0.01 | ) | |||||||
Net income (loss)
|
$ | 0.15 | $ | (0.00 | ) | $ | 0.17 | |||||
Shares used in per share calculation:
|
||||||||||||
Basic
|
10,055,052 | 10,021,431 | 10,052,359 | |||||||||
Diluted
|
10,055,052 | 10,049,440 | 10,052,359 |
Common Stock
|
Paid-in
|
Retained
|
Treasury
|
|||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Stock
|
Total
|
|||||||||||||||||||
Balance, September 30, 2012
|
10,465,323 | $ | 104,653 | $ | (5,748,503 | ) | $ | 43,980,590 | $ | (520,100 | ) | $ | 37,816,640 | |||||||||||
Net income
|
– | – | – | 1,669,716 | – | 1,669,716 | ||||||||||||||||||
Restricted stock issuance
|
31,815 | 318 | 69,682 | – | – | 70,000 | ||||||||||||||||||
Stock options exercised
|
2,000 | 20 | 3,280 | – | – | 3,300 | ||||||||||||||||||
Share based compensation expense
|
– | – | 97,041 | – | – | 97,041 | ||||||||||||||||||
Purchase of common stock
|
– | – | – | – | (479,914 | ) | (479,914 | ) | ||||||||||||||||
Balance, September 30, 2013
|
10,499,138 | $ | 104,991 | $ | (5,578,500 | ) | $ | 45,650,306 | $ | (1,000,014 | ) | $ | 39,176,783 | |||||||||||
Net loss
|
– | – | – | (6,857 | ) | – | (6,857 | ) | ||||||||||||||||
Restricted stock issuance
|
42,726 | 428 | 135,572 | – | – | 136,000 | ||||||||||||||||||
Share based compensation expense
|
– | – | 130,047 | – | – | 130,047 | ||||||||||||||||||
Balance, September 30, 2014
|
10,541,864 | $ | 105,419 | $ | (5,312,881 | ) | $ | 45,643,449 | $ | (1,000,014 | ) | $ | 39,435,973 | |||||||||||
Net income
|
– | – | – | 1,497,900 | – | 1,497,900 | ||||||||||||||||||
Restricted stock issuance
|
22,357 | 223 | 58,944 | – | – | 59,167 | ||||||||||||||||||
Share based compensation expense
|
– | – | 141,668 | – | – | 141,668 | ||||||||||||||||||
Balance, September 30, 2015
|
10,564,221 | $ | 105,642 | $ | (5,112,269 | ) | $ | 47,141,349 | $ | (1,000,014 | ) | $ | 41,134,708 |
Years ended September 30,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Operating Activities
|
||||||||||||
Net income (loss)
|
$ | 1,497,900 | $ | (6,857 | ) | $ | 1,669,716 | |||||
Net loss from discontinued operations
|
− | (666,046 | ) | (102,207 | ) | |||||||
Net income from continuing operations
|
1,497,900 | 659,189 | 1,771,923 | |||||||||
Adjustments to reconcile net income (loss) to net cash
|
||||||||||||
provided by (used in) operating activities:
|
||||||||||||
Depreciation
|
408,703 | 360,279 | 276,356 | |||||||||
Amortization
|
825,805 | 481,722 | − | |||||||||
Allowance for doubtful accounts
|
50,000 | − | − | |||||||||
Provision for excess and obsolete inventories
|
600,000 | 601,351 | 600,000 | |||||||||
(Gain) loss on disposal of property and equipment
|
30,652 | − | (5,950 | ) | ||||||||
Deferred income tax benefit
|
(341,000 | ) | (276,000 | ) | (15,000 | ) | ||||||
Share based compensation expense
|
239,613 | 212,436 | 167,041 | |||||||||
Cash provided (used) by changes in operating assets
and liabilities:
|
||||||||||||
Accounts receivable
|
2,057,203 | (2,351,459 | ) | 195,733 | ||||||||
Income tax receivable\payable
|
342,596 | 38,686 | 137,547 | |||||||||
Inventories
|
(1,420,473 | ) | (2,188,205 | ) | 1,066,800 | |||||||
Prepaid expenses
|
(17,359 | ) | (14,753 | ) | 2,045 | |||||||
Other assets
|
(3,250 | ) | − | 2,350 | ||||||||
Accounts payable
|
(1,096,279 | ) | (78,670 | ) | 8,844 | |||||||
Accrued expenses
|
(330,544 | ) | 838,479 | (84,847 | ) | |||||||
Net cash provided by (used in) operating activities −
continuing operations
|
2,843,567 | (1,716,945 | ) | 4,122,842 | ||||||||
Net cash provided by (used in) operating activities −
discontinued operations
|
− | 280,462 | (16,365 | ) | ||||||||
Net cash provided by (used in) operating activities
|
2,843,567 | (1,436,483 | ) | 4,106,477 | ||||||||
Investing Activities
|
||||||||||||
Acquisition of net operating assets, net of cash acquired
|
− | (9,630,647 | ) | – | ||||||||
Guaranteed payments for acquisition of business
|
(1,000,000 | ) | − | − | ||||||||
Purchases of land and buildings
|
(56,074 | ) | − | − | ||||||||
Purchases of property and equipment
|
(116,575 | ) | (43,977 | ) | (211,223 | ) | ||||||
Proceeds from disposal of property and equipment
|
− | − | 12,350 | |||||||||
Net cash used in investing activities – continuing operations
|
(1,172,649 | ) | (9,674,624 | ) | (198,873 | ) | ||||||
Net cash provided by investing activities −
discontinued operations
|
− | 3,413,001 | − | |||||||||
Net cash used in investing activities
|
(1,172,649 | ) | (6,261,623 | ) | (198,873 | ) | ||||||
Financing Activities
|
||||||||||||
Proceeds on notes payable
|
− | 5,000,000 | − | |||||||||
Payments on notes payable
|
(846,029 | ) | (492,522 | ) | (184,008 | ) | ||||||
Purchase of treasury stock
|
− | − | (479,914 | ) | ||||||||
Proceeds from stock options exercised
|
− | − | 3,300 | |||||||||
Net cash provided by (used in) financing activities
|
(846,029 | ) | 4,507,478 | (660,622 | ) | |||||||
Net increase (decrease) in cash and cash equivalents
|
824,889 | (3,190,628 | ) | 3,246,982 | ||||||||
Cash and cash equivalents at beginning of year
|
5,286,097 | 8,476,725 | 5,229,743 | |||||||||
Cash and cash equivalents at end of year
|
$ | 6,110,986 | $ | 5,286,097 | $ | 8,476,725 | ||||||
Supplemental cash flow information:
|
||||||||||||
Cash paid for interest
|
$ | 245,051 | $ | 126,659 | $ | 26,137 | ||||||
Cash paid for income taxes
|
$ | 944,000 | $ | 62,000 | $ | 971,000 | ||||||
Supplemental noncash investing activities:
|
||||||||||||
Deferred guaranteed payments for acquisition of business
|
$ | − | $ | (2,744,338 | ) | $ | − |
·
|
Level 1 – Quoted prices for identical assets in active markets or liabilities that we have the ability to access. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
|
·
|
Level 2 – Inputs are other than quoted prices in active markets included in Level 1 that are either directly or indirectly observable. These inputs are either directly observable in the marketplace or indirectly observable through corroboration with market data for substantially the full contractual term of the asset or liability being measured.
|
·
|
Level 3 – Inputs that are not observable for which there is little, if any, market activity for the asset or liability being measured. These inputs reflect management’s best estimate of the assumptions market participants would use in determining fair value.
|
2015
|
2014
|
|||||||
New:
|
||||||||
Cable TV
|
$ | 16,255,487 | $ | 16,949,713 | ||||
Refurbished:
|
||||||||
Cable TV
|
3,676,132 | 3,982,140 | ||||||
Telco
|
6,426,005 | 4,005,298 | ||||||
Allowance for excess and obsolete inventory
|
(2,756,628 | ) | (2,156,628 | ) | ||||
$ | 23,600,996 | $ | 22,780,523 |
Gross
|
Accumulated
Amortization
|
Net
|
||||||||||
Intangible assets:
|
||||||||||||
Customer relationships – 10 years
|
$ | 4,257,000 | $ | (674,023 | ) | $ | 3,582,977 | |||||
Technology – 7 years
|
1,303,000 | (294,725 | ) | 1,008,275 | ||||||||
Trade name – 10 years
|
1,293,000 | (204,724 | ) | 1,088,276 | ||||||||
Non-compete agreements – 3 years
|
254,000 | (134,055 | ) | 119,945 | ||||||||
Total intangible assets
|
$ | 7,107,000 | $ | (1,307,527 | ) | $ | 5,799,473 |
Gross
|
Accumulated
Amortization
|
Net
|
||||||||||
Intangible assets:
|
||||||||||||
Customer relationships – 10 years
|
$ | 4,257,000 | $ | (248,325 | ) | $ | 4,008,675 | |||||
Technology – 7 years
|
1,303,000 | (108,583 | ) | 1,194,417 | ||||||||
Trade name – 10 years
|
1,293,000 | (75,425 | ) | 1,217,575 | ||||||||
Non-compete agreements – 3 years
|
254,000 | (49,389 | ) | 204,611 | ||||||||
Total intangible assets
|
$ | 7,107,000 | $ | (481,722 | ) | $ | 6,625,278 |
2016
|
$ | 825,810 | ||
2017
|
776,421 | |||
2018
|
741,143 | |||
2019
|
741,143 | |||
2020
|
741,143 | |||
Thereafter
|
1,973,813 | |||
Total
|
$ | 5,799,473 |
2015
|
2014
|
2013
|
||||||||||
Continuing operations:
|
||||||||||||
Current
|
$ | 1,114,000 | $ | 496,000 | $ | 1,113,351 | ||||||
Deferred
|
(341,000 | ) | (276,000 | ) | (15,000 | ) | ||||||
773,000 | 220,000 | 1,098,351 | ||||||||||
Discontinued operations – current
|
− | (385,000 | ) | (62,000 | ) | |||||||
Total provision (benefit) for income taxes
|
$ | 773,000 | $ | (165,000 | ) | $ | 1,036,351 |
2015
|
2014
|
2013
|
||||||||||
Statutory tax rate
|
34.0 | % | 34.0 | % | 34.0 | % | ||||||
State income taxes, net of U.S. federal tax benefit
|
2.1 | % | 5.7 | % | 4.3 | % | ||||||
Net operating loss
|
(4.0 | %) | (10.2 | %) | (3.1 | %) | ||||||
Return to accrual adjustment
|
(3.0 | %) | 1.0 | % | (2.4 | %) | ||||||
Additional state tax deduction for federal taxes
|
− | (5.6 | %) | − | ||||||||
Charges without tax benefit
|
1.6 | % | 3.9 | % | 1.1 | % | ||||||
Tax credits and other exclusions
|
3.3 | % | (3.8 | %) | 4.4 | % | ||||||
Company’s effective tax rate
|
34.0 | % | 25.0 | % | 38.3 | % |
2015
|
2014
|
|||||||
Deferred tax assets:
|
||||||||
Net operating loss carryforwards
|
$ | 236,000 | $ | 335,000 | ||||
Accounts receivable
|
96,000 | 77,000 | ||||||
Inventory
|
1,319,000 | 1,066,000 | ||||||
Intangibles
|
215,000 | 79,000 | ||||||
Accrued expenses
|
266,000 | 141,000 | ||||||
Stock options
|
212,000 | 163,000 | ||||||
Other
|
28,000 | 16,000 | ||||||
2,372,000 | 1,877,000 | |||||||
Deferred tax liabilities:
|
||||||||
Financial basis in excess of tax basis of certain assets
|
832,000 | 728,000 | ||||||
Other
|
50,000 | − | ||||||
Net deferred tax asset
|
$ | 1,490,000 | $ | 1,149,000 |
2015
|
2014
|
|||||||
Deferred tax asset – current
|
$ | 1,776,000 | $ | 1,416,000 | ||||
Deferred tax liability – noncurrent
|
(286,000 | ) | (267,000 | ) | ||||
$ | 1,490,000 | $ | 1,149,000 |
2015
|
2014
|
|||||||
Employee costs
|
$ | 856,078 | $ | 1,089,754 | ||||
Nave Communications earn-out
|
290,455 | 356,513 | ||||||
Taxes other than income tax
|
116,442 | 191,316 | ||||||
Interest
|
16,085 | 18,563 | ||||||
Other, net
|
79,621 | 153,732 | ||||||
$ | 1,358,681 | $ | 1,809,878 |
2016
|
$ | 873,752 | ||
2017
|
899,870 | |||
2018
|
908,945 | |||
2019
|
2,143,417 | |||
2020
|
184,008 | |||
Thereafter
|
229,890 | |||
Total
|
$ | 5,239,882 |
Options
|
Weighted Average
Exercise Price
|
Aggregate
Intrinsic Value
|
||||||||||
Outstanding at September 30, 2014
|
560,000 | $ | 2.96 | |||||||||
Granted
|
− | $ | – | |||||||||
Exercised
|
− | $ | – | $ | 0 | |||||||
Expired
|
(15,000 | ) | $ | 4.62 | ||||||||
Forfeited
|
(10,000 | ) | $ | 4.62 | ||||||||
Outstanding at September 30, 2015
|
535,000 | $ | 2.88 | $ | 0 | |||||||
Exercisable at September 30, 2015
|
301,667 | $ | 2.88 | $ | 0 |
Exercisable
|
Remaining
|
||
Stock Options
|
Stock Options
|
Contractual
|
|
Exercise Price
|
Outstanding
|
Outstanding
|
Life
|
$3.210
|
200,000
|
66,667
|
8.5 years
|
$2.450
|
250,000
|
150,000
|
6.5 years
|
$3.001
|
65,000
|
65,000
|
2.9 years
|
$3.450
|
10,000
|
10,000
|
1.4 years
|
$5.780
|
10,000
|
10,000
|
0.4 years
|
535,000
|
301,667
|
2014
|
2013
|
|||||||
Estimated fair value of options at grant date
|
$ | 244,400 | $ | 29,040 | ||||
Black-Scholes model assumptions:
|
||||||||
Average expected life (years)
|
6 | 6 | ||||||
Average expected volatile factor
|
34 | % | 41 | % | ||||
Average risk-free interest rate
|
2.79 | % | 2.95 | % | ||||
Average expected dividends yield
|
– | – |
2015
|
2014
|
2013
|
||||||||||
Fiscal year 2012 grant
|
$ | 33,044 | $ | 55,369 | $ | 95,560 | ||||||
Fiscal year 2013 grant
|
− | − | 1,481 | |||||||||
Fiscal year 2014 grant
|
108,624 | 74,678 | – | |||||||||
Total compensation expense
|
$ | 141,668 | $ | 130,047 | $ | 97,041 |
2015
|
2014
|
2013
|
||||||||||
Fiscal year 2012 grant
|
$ | − | $ | – | $ | 29,167 | ||||||
Fiscal year 2013 grant
|
− | 29,167 | 40,833 | |||||||||
Fiscal year 2014 grant
|
58,778 | 53,222 | − | |||||||||
Fiscal year 2015 grant
|
39,167 | − | – | |||||||||
$ | 97,945 | $ | 82,389 | $ | 70,000 |
2015
|
2014
|
2013
|
||||||||||
Income from continuing operations
|
$ | 1,497,900 | $ | 659,189 | $ | 1,771,923 | ||||||
Discontinued operations, net of tax
|
− | (666,046 | ) | (102,207 | ) | |||||||
Net income (loss) attributable to common shareholders
|
$ | 1,497,900 | $ | (6,857 | ) | $ | 1,669,716 | |||||
Basic weighted average shares
|
10,055,052 | 10,021,431 | 10,052,359 | |||||||||
Effect of dilutive securities:
|
||||||||||||
Stock options
|
− | 28,009 | – | |||||||||
Diluted weighted average shares
|
10,055,052 | 10,049,440 | 10,052,359 | |||||||||
Earnings (loss) per common share:
|
||||||||||||
Basic
|
||||||||||||
Continuing operations
|
$ | 0.15 | $ | 0.07 | $ | 0.18 | ||||||
Discontinued operations
|
− | (0.07 | ) | (0.01 | ) | |||||||
Net income (loss)
|
$ | 0.15 | $ | (0.00 | ) | $ | 0.17 | |||||
Diluted
|
||||||||||||
Continuing operations
|
$ | 0.15 | $ | 0.07 | $ | 0.18 | ||||||
Discontinued operations
|
− | (0.07 | ) | (0.01 | ) | |||||||
Net income (loss)
|
$ | 0.15 | $ | (0.00 | ) | $ | 0.17 |
2015
|
2014
|
2013
|
||||||||||
Stock options excluded
|
535,000 | 310,000 | 363,000 | |||||||||
Weighted average exercise price of
|
||||||||||||
stock options
|
$ | 2.88 | $ | 3.37 | $ | 2.83 | ||||||
Average market price of common stock
|
$ | 2.38 | $ | 2.76 | $ | 2.24 |
2016
|
$ | 568,126 | ||
2017
|
576,408 | |||
2018
|
568,744 | |||
2019
|
540,868 | |||
2020
|
554,390 | |||
Thereafter
|
1,847,632 | |||
Total
|
$ | 4,656,168 |
Fiscal Years Ended
|
||||||||||||
September 30,
2015
|
September 30,
2014
|
September 30,
2013
|
||||||||||
Sales
|
||||||||||||
Cable TV
|
$ | 25,396,779 | $ | 27,206,743 | $ | 28,677,351 | ||||||
Telco
|
18,835,116 | 8,710,267 | − | |||||||||
Intersegment
|
(498,275 | ) | (28,318 | ) | − | |||||||
Total sales
|
$ | 43,733,620 | $ | 35,888,692 | $ | 28,677,351 | ||||||
Gross profit
|
||||||||||||
Cable TV
|
$ | 8,025,651 | $ | 7,770,723 | $ | 8,709,317 | ||||||
Telco
|
7,273,238 | 3,834,733 | − | |||||||||
Total gross profit
|
$ | 15,298,889 | $ | 11,605,456 | $ | 8,709,317 | ||||||
Operating income (loss)
|
||||||||||||
Cable TV
|
$ | 2,210,414 | $ | 1,492,100 | $ | 2,896,254 | ||||||
Telco
|
365,796 | (395,001 | ) | − | ||||||||
Total operating income (loss)
|
$ | 2,576,210 | $ | 1,097,099 | $ | 2,896,254 | ||||||
Segment assets
|
||||||||||||
Cable TV
|
$ | 26,494,430 | $ | 29,241,335 | $ | 27,582,573 | ||||||
Telco
|
17,094,713 | 17,781,114 | − | |||||||||
Non-allocated (A)
|
8,383,913 | 6,383,232 | 15,533,547 | |||||||||
Total assets
|
$ | 51,973,056 | $ | 53,405,681 | $ | 43,116,120 |
(A)
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
|||||||||||||
Fiscal year ended 2015
|
||||||||||||||||
Sales
|
$ | 10,837,158 | $ | 11,366,539 | $ | 11,902,391 | $ | 9,627,532 | ||||||||
Gross profit
|
$ | 3,831,803 | $ | 4,243,512 | $ | 4,144,607 | $ | 3,078,967 | ||||||||
Income from continuing
operations
|
$ | 415,923 | $ | 234,255 | $ | 637,134 | $ | 210,588 | ||||||||
Basic earnings from
continuing operations per
common share
|
$ | 0.04 | $ | 0.02 | $ | 0.06 | $ | 0.02 | ||||||||
Diluted earnings from
continuing operations per
common share
|
$ | 0.04 | $ | 0.02 | $ | 0.06 | $ | 0.02 | ||||||||
Fiscal year ended 2014
|
||||||||||||||||
Sales
|
$ | 6,119,733 | $ | 8,313,815 | $ | 9,323,158 | $ | 12,131,986 | ||||||||
Gross profit
|
$ | 1,863,227 | $ | 2,231,167 | $ | 3,220,055 | $ | 4,291,007 | ||||||||
Income (loss) from continuing
operations
|
$ | 139,369 | $ | (243,264 | ) | $ | 143,726 | $ | 619,358 | |||||||
Basic earnings (loss) from
continuing operations per
common share
|
$ | 0.01 | $ | (0.02 | ) | $ | 0.01 | $ | 0.06 | |||||||
Diluted earnings (loss) from
continuing operations per
common share
|
$ | 0.01 | $ | (0.02 | ) | $ | 0.01 | $ | 0.06 | |||||||
Fiscal year ended 2013
|
||||||||||||||||
Sales
|
$ | 7,899,497 | $ | 6,764,102 | $ | 6,372,108 | $ | 7,641,644 | ||||||||
Gross profit
|
$ | 2,618,724 | $ | 1,866,352 | $ | 1,851,855 | $ | 2,372,386 | ||||||||
Income from continuing
operations
|
$ | 660,291 | $ | 292,994 | $ | 269,984 | $ | 548,654 | ||||||||
Basic earnings from
continuing operations per
common share
|
$ | 0.07 | $ | 0.03 | $ | 0.03 | $ | 0.05 | ||||||||
Diluted earnings from
continuing operations per
common share
|
$ | 0.07 | $ | 0.03 | $ | 0.03 | $ | 0.05 |
|
2.
|
The following financial statement Schedule II – Valuation and Qualifying Accounts for the years ended September 30, 2015, 2014 and 2013 is filed as part of this report. All other financial statement schedules have been omitted because they are not applicable or are not required or the information required to be set forth therein is included in the financial statements or notes thereto contained in Part II, Item 8 of this current report.
|
Balance at
|
Charged to
|
Balance at
|
||||||||||||||||||
Beginning
|
Costs and
|
End
|
||||||||||||||||||
of Year
|
Expenses
|
Write offs
|
Recoveries
|
of Year
|
||||||||||||||||
Year Ended September 30, 2015
|
||||||||||||||||||||
Allowance for Doubtful Accounts
|
$ | 200,000 | 44,514 | − | 5,486 | $ | 250,000 | |||||||||||||
Allowance for Excess and Obsolete Inventory
|
$ | 2,156,628 | 600,000 | − | − | $ | 2,756,628 | |||||||||||||
Year Ended September 30, 2014
|
||||||||||||||||||||
Allowance for Doubtful Accounts
|
$ | 300,000 | – | (103,403 | ) | 3,403 | $ | 200,000 | ||||||||||||
Allowance for Excess and Obsolete Inventory
|
$ | 1,600,000 | 601,351 | (208,056 | ) | 163,333 | $ | 2,156,628 | ||||||||||||
Year Ended September 30, 2013
|
||||||||||||||||||||
Allowance for Doubtful Accounts
|
$ | 300,000 | – | (5,692 | ) | 5,692 | $ | 300,000 | ||||||||||||
Allowance for Excess and Obsolete Inventory
|
$ | 1,000,000 | 600,000 | – | – | $ | 1,600,000 |
|
3.1
|
Certificate of Incorporation of the Company and amendments thereto incorporated by reference to Exhibit 3.1 to the Annual Report on Form 10-KSB filed with the Securities and Exchange Commission by the Company on January 10, 2003 (File No. 033-39902-FW).
|
|
3.2
|
Bylaws of the Company, as amended, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission by the Company on December 31, 2007 (File No. 001-10799).
|
|
4.1
|
Certificate of Designation, Preferences, Rights and Limitations of ADDvantage Media Group, Inc. Series A 5% Cumulative Convertible Preferred Stock and Series B 7% Cumulative Preferred Stock as filed with the Oklahoma Secretary of State on September 30, 1999 incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission by the Company on October 14, 1999 (File No. 033-39902-FW).
|
|
10.1
|
Senior Management Incentive Compensation Plan, incorporated by reference to the Current Report on Form 8-K filed with the Securities and Exchange Commission by the Company on March 9, 2007 (File No. 001-10799).
|
|
10.2
|
Employment Contract between the Company and Scott A. Francis, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission by the Company on September 18, 2008 (File No. 001-10799).
|
|
10.3
|
Amended and Restated Revolving Credit and Term Loan Agreement dated November 30, 2010, incorporated by reference to Exhibit 10.6 to the Company’s Form 10-K filed with the Securities and Exchange Commission on December 14, 2010 (File No. 001-10799).
|
|
10.4
|
Amendment One to Amended and Restated Revolving Credit and Term Loan Agreement dated November 30, 2011, incorporated by reference to Exhibit 10.6 to the Company’s Form 10-K filed with the Securities and Exchange Commission on December 15, 2011 (File No. 001-10799).
|
|
10.5
|
Employment Agreement dated April 2, 2012 between the Company and David L. Humphrey, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission by the Company on April 6, 2012 (File No. 001-10799).
|
|
10.6
|
Form of Non-Qualified Stock Option Agreement under the Company’s 1998 Incentive Stock Plan as amended, incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission by the Company on April 6, 2012 (File No. 001-10799).
|
|
10.7
|
Change in Control Agreement dated April 2, 2012 between the Company and Scott A. Francis, incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed with the Securities and Exchange Commission by the Company on April 6, 2012 (File No. 001-10799).
|
|
10.8
|
Form of Restricted Stock Agreement under the Company’s 1998 Incentive Stock Plan as amended, incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed with the Securities and Exchange Commission by the Company on April 6, 2012 (File No. 001-10799).
|
|
10.9
|
Amendment Two to Amended and Restated Revolving Credit and Term Loan Agreement dated November 30, 2012, incorporated by reference to Exhibit 10.11 to the Company’s Form 10-K filed with the Securities and Exchange Commission on December 11, 2012 (File No. 001-10799).
|
|
10.10
|
Amendment Three to Amended and Restated Revolving Credit and Term Loan Agreement dated November 29, 2013, incorporated by reference to Exhibit 10.12 to the Company’s Form 10-K/A filed with the Securities and Exchange Commission on December 13, 2013 (File No. 001-10799).
|
|
10.11
|
Amendment Four to Amended and Restated Revolving Credit and Term Loan Agreement dated March 3, 2014, incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q filed with the Securities and Exchange Commission on May 14, 2014 (File No. 001-10799).
|
|
10.12
|
Amendment Five to Amended and Restated Revolving Credit and Term Loan Agreement dated November 28, 2014, incorporated by reference to Exhibit 10.14 to the Company’s Form 10-K filed with the Securities and Exchange Commission on December 9, 2014 (File No. 001-10799).
|
|
10.13
|
The ADDvantage Technologies Group, Inc. 2015 Incentive Stock Plan, incorporated by reference to the Company's Form DEF 14A filed with the Securities and Exchange Commission on January 23, 2015 (File No. 001-10799).
|
|
10.14
|
Amendment Six to Amended and Restated Revolving Credit and Term Loan Agreement dated November 27, 2015.
|
|
21.1
|
Listing of the Company's subsidiaries.
|
|
23.1
|
Consent of HoganTaylor LLP.
|
|
31.1
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.
|
|
31.2
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.
|
|
32.1
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
32.2
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101.INS
|
XBRL Instance Document.
|
|
101.SCH
|
XBRL Taxonomy Extension Schema.
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase.
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase.
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase.
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase.
|
|
|
3.1
|
Certificate of Incorporation of the Company and amendments thereto incorporated by reference to Exhibit 3.1 to the Annual Report on Form 10-KSB filed with the Securities and Exchange Commission by the Company on January 10, 2003 (File No. 033-39902-FW).
|
|
3.2
|
Bylaws of the Company, as amended, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission by the Company on December 31, 2007 (File No. 001-10799).
|
|
4.1
|
Certificate of Designation, Preferences, Rights and Limitations of ADDvantage Media Group, Inc. Series A 5% Cumulative Convertible Preferred Stock and Series B 7% Cumulative Preferred Stock as filed with the Oklahoma Secretary of State on September 30, 1999 incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission by the Company on October 14, 1999 (File No. 033-39902-FW).
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10.1
|
Senior Management Incentive Compensation Plan, incorporated by reference to the Current Report on Form 8-K filed with the Securities and Exchange Commission by the Company on March 9, 2007 (File No. 001-10799).
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10.2
|
Employment Contract between the Company and Scott A. Francis, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission by the Company on September 18, 2008 (File No. 001-10799).
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10.3
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Amended and Restated Revolving Credit and Term Loan Agreement dated November 30, 2010, incorporated by reference to Exhibit 10.6 to the Company’s Form 10-K filed with the Securities and Exchange Commission on December 14, 2010 (File No. 001-10799).
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10.4
|
Amendment One to Amended and Restated Revolving Credit and Term Loan Agreement dated November 30, 2011, incorporated by reference to Exhibit 10.6 to the Company’s Form 10-K filed with the Securities and Exchange Commission on December 15, 2011 (File No. 001-10799).
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10.5
|
Employment Agreement dated April 2, 2012 between the Company and David L. Humphrey, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission by the Company on April 6, 2012 (File No. 001-10799).
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10.6
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Form of Non-Qualified Stock Option Agreement under the Company’s 1998 Incentive Stock Plan as amended, incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission by the Company on April 6, 2012 (File No. 001-10799).
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10.7
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Change in Control Agreement dated April 2, 2012 between the Company and Scott A. Francis, incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed with the Securities and Exchange Commission by the Company on April 6, 2012 (File No. 001-10799).
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10.8
|
Form of Restricted Stock Agreement under the Company’s 1998 Incentive Stock Plan as amended, incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed with the Securities and Exchange Commission by the Company on April 6, 2012 (File No. 001-10799).
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10.9
|
Amendment Two to Amended and Restated Revolving Credit and Term Loan Agreement dated November 30, 2012, incorporated by reference to Exhibit 10.11 to the Company’s Form 10-K filed with the Securities and Exchange Commission on December 11, 2012 (File No. 001-10799).
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10.10
|
Amendment Three to Amended and Restated Revolving Credit and Term Loan Agreement dated November 29, 2013, incorporated by reference to Exhibit 10.12 to the Company’s Form 10-K/A filed with the Securities and Exchange Commission on December 13, 2013 (File No. 001-10799).
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10.11
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Amendment Four to Amended and Restated Revolving Credit and Term Loan Agreement dated March 3, 2014, incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q filed with the Securities and Exchange Commission on May 14, 2014 (File No. 001-10799).
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10.12
|
Amendment Five to Amended and Restated Revolving Credit and Term Loan Agreement dated November 28, 2014, incorporated by reference to Exhibit 10.14 to the Company’s Form 10-K filed with the Securities and Exchange Commission on December 9, 2014 (File No. 001-10799).
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10.13
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The ADDvantage Technologies Group, Inc. 2015 Incentive Stock Plan, incorporated by reference to the Company's Form DEF 14A filed with the Securities and Exchange Commission on January 23, 2015 (File No. 001-10799).
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10.14
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Amendment Six to Amended and Restated Revolving Credit and Term Loan Agreement dated November 27, 2015.
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21.1
|
Listing of the Company's subsidiaries.
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23.1
|
Consent of HoganTaylor LLP.
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31.1
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.
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31.2
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.
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32.1
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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32.2
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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101.INS
|
XBRL Instance Document.
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101.SCH
|
XBRL Taxonomy Extension Schema.
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101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase.
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101.DEF
|
XBRL Taxonomy Extension Definition Linkbase.
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101.LAB
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XBRL Taxonomy Extension Label Linkbase.
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101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase.
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Scott A. Francis, Vice President, Chief Financial Officer and Chief Accounting Officer
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Scott A. Francis, Vice President, Chief Financial Officer and Chief Accounting Officer
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1.
|
I have reviewed this annual report on Form 10-K of ADDvantage Technologies Group, Inc.;
|
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 registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
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a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant'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 registrant'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 registrant's internal control over financial reporting.
|
1.
|
I have reviewed this annual report on Form 10-K of ADDvantage Technologies Group, Inc.;
|
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 registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant'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 registrant'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 registrant's internal control over financial reporting.
|
(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.
|
(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.
|
Document And Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2015 |
Nov. 30, 2015 |
Mar. 31, 2015 |
|
Entity Registrant Name | ADDVANTAGE TECHNOLOGIES GROUP INC | ||
Entity Central Index Key | 0000874292 | ||
Trading Symbol | aey | ||
Current Fiscal Year End Date | --09-30 | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Common Stock, Shares Outstanding (in shares) | 10,063,563 | ||
Entity Public Float | $ 12,198,302 | ||
Document Type | 10-K | ||
Document Period End Date | Sep. 30, 2015 | ||
Document Fiscal Year Focus | 2015 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Consolidated Balance Sheets (Parentheticals) - USD ($) |
Sep. 30, 2015 |
Sep. 30, 2014 |
---|---|---|
Accounts receivable, allowance | $ 250,000 | $ 200,000 |
Allowance for excess and obsolete inventory | $ 2,756,628 | $ 2,156,628 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 30,000,000 | 30,000,000 |
Common stock, shares issued (in shares) | 10,564,221 | 10,541,864 |
Common stock, shares outstanding (in shares) | 10,063,563 | 10,041,206 |
Treasury stock, shares (in shares) | 500,658 | 500,658 |
Consolidated Statements of Changes in Shareholders' Equity - USD ($) |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Retained Earnings [Member] |
Treasury Stock [Member] |
Total |
---|---|---|---|---|---|
Balance (in shares) at Sep. 30, 2012 | 10,465,323 | ||||
Balance at Sep. 30, 2012 | $ 104,653 | $ (5,748,503) | $ 43,980,590 | $ (520,100) | $ 37,816,640 |
Net income | 1,669,716 | 1,669,716 | |||
Restricted stock issuance (in shares) | 31,815 | ||||
Restricted stock issuance | $ 318 | 69,682 | 70,000 | ||
Stock options exercised (in shares) | 2,000 | ||||
Stock options exercised | $ 20 | 3,280 | 3,300 | ||
Share based compensation expense | 97,041 | 97,041 | |||
Purchase of common stock | $ (479,914) | (479,914) | |||
Balance (in shares) at Sep. 30, 2013 | 10,499,138 | ||||
Balance at Sep. 30, 2013 | $ 104,991 | (5,578,500) | 45,650,306 | (1,000,014) | 39,176,783 |
Net income | (6,857) | (6,857) | |||
Restricted stock issuance (in shares) | 42,726 | ||||
Restricted stock issuance | $ 428 | 135,572 | 136,000 | ||
Share based compensation expense | 130,047 | 130,047 | |||
Balance (in shares) at Sep. 30, 2014 | 10,541,864 | ||||
Balance at Sep. 30, 2014 | $ 105,419 | (5,312,881) | 45,643,449 | (1,000,014) | 39,435,973 |
Net income | 1,497,900 | 1,497,900 | |||
Restricted stock issuance (in shares) | 22,357 | ||||
Restricted stock issuance | $ 223 | 58,944 | 59,167 | ||
Share based compensation expense | 141,668 | 141,668 | |||
Balance (in shares) at Sep. 30, 2015 | 10,564,221 | ||||
Balance at Sep. 30, 2015 | $ 105,642 | $ (5,112,269) | $ 47,141,349 | $ (1,000,014) | $ 41,134,708 |
Note 1 - Summary of Significant Accounting Policies |
12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2015 | ||||||||||
Notes to Financial Statements | ||||||||||
Significant Accounting Policies [Text Block] | Note 1 – Summary of Significant Accounting Policies Organization and 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 Cable Television (“Cable TV”) and Telecommunications (“Telco”). Cash and cash equivalents Cash and cash equivalents includes demand and time deposits, money market funds and other marketable securities with maturities of three months or less when acquired. Accounts receivable Trade receivables are carried at original invoice amount less an estimate made for doubtful accounts. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history and current economic conditions. Trade receivables are written off against the allowance when deemed uncollectible. Recoveries of trade receivables previously written off are recorded when received. The Company generally does not charge interest on past due accounts. Inventor ies Inventories consist of new and used electronic components for the Cable TV segment and used telecommunications networking equipment for the Telco segment. Inventory is stated at the lower of cost and net realizable value. Cost is determined using the weighted-average method. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. For the Cable Television segment, the Company records an inventory reserve provision to reflect inventory at its estimated net realizable value based on a review of inventory quantities on hand, historical sales volumes and technology changes. These reserves are to provide for items that are potentially slow-moving, excess or obsolete. For the Telco segment, the Company does not maintain an inventory reserve as this segment will recycle any surplus and obsolete equipment on hand through its recycling program when it is identified. Property and equipment Property and equipment consists of software, office equipment, warehouse and service equipment, and buildings with estimated useful lives generally of 3 years, 5 years, 10 years and 40 years, respectively. Depreciation is provided using the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized over the shorter of the useful lives or the remainder of the lease agreement. Gains or losses from the ordinary sale or retirement of property and equipment are recorded in other income (expense). Repairs and maintenance costs are generally expensed as incurred, whereas major improvements are capitalized. Depreciation expense was $0.4 million, $0.4 million and $0.3 million for the years ended September 30, 2015, 2014 and 2013, respectively. Goodwill Goodwill represents the excess of the purchase price of acquisitions over the acquisition date fair value of the net identifiable tangible and intangible assets acquired. In accordance with current accounting guidance, goodwill is not amortized and is tested at least annually for impairment at the reporting unit level. The Company performs this annual analysis in the fourth quarter of each fiscal year and in any other period in which indicators of impairment warrant additional analysis. The goodwill analysis is a two-step process. Goodwill is first evaluated for impairment by comparing management’s estimate of the fair value of the reporting unit with the reporting unit’s carrying value, including goodwill. If the carrying value of the reporting unit exceeds its fair value, a computation of the implied fair value of goodwill would then be compared to its related carrying value. If the carrying value of the reporting unit’s goodwill exceeds the implied fair value of goodwill, an impairment loss would be recognized in the amount of the excess. Management utilizes a discounted cash flow analysis, referred to as an income approach, to determine the estimated fair value of its reporting units. Judgments and assumptions are inherent in our estimate of future cash flows used to determine the estimate of the reporting unit’s fair value. The use of alternate judgments and/or assumptions could result in the recognition of different levels of impairment charges in the consolidated financial statements. At September 30, 2015 and 2014, the estimated fair value of our reporting unit exceeded its carrying value, so goodwill was not impaired. Intangible Assets Intangible assets that have finite useful lives are amortized on a straight-line basis over their estimated useful lives ranging from 3 years to 10 years. Income taxes The Company provides for income taxes in accordance with the liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and tax carryforward amounts. Management provides a valuation allowance against deferred tax assets for amounts which are not considered “more likely than not” to be realized. Revenue recognition The Company recognizes revenue for product sales when title transfers, the risks and rewards of ownership have been transferred to the customer, the fee is fixed and determinable and the collection of the related receivable is probable, which is generally at the time of shipment. The stated shipping terms are generally FOB shipping point per the Company's sales agreements with its customers. Accruals are established for expected returns based on historical activity. Revenue for repair services is recognized when the repair is completed and the product is shipped back to the customer. Revenue for recycle services is recognized when title transfers, the risks and rewards of ownership have been transferred to the customer, the fee is fixed and determinable and the collection of the related receivable is probable, which is generally upon acceptance of the shipment at the recycler’s location. Freight Amounts billed to customers for shipping and handling represent revenues earned and are included in sales income in the accompanying consolidated statements of operations. Actual costs for shipping and handling of these sales are included in cost of sales. Advertising costs Advertising costs are expensed as incurred. Advertising expense was $0.1 million, $0.1 million and $0.2 million for the years ended September 30, 2015, 2014 and 2013, respectively. Management estimates The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Any significant, unanticipated changes in product demand, technological developments or continued economic trends affecting the cable or telecommunications industries could have a significant impact on the value of the Company's inventory and operating results. Concentrations of credit risk The Company holds cash with one major financial institution, which at times exceeds FDIC insured limits. Historically, the Company has not experienced any losses due to such concentration of credit risk. Other financial instruments that potentially subject the Company to concentration of credit risk consist principally of trade receivables. Concentrations of credit risk with respect to trade receivables are limited because a large number of geographically diverse customers make up the Company’s customer base, thus spreading the trade credit risk. The Company controls credit risk through credit approvals, credit limits and monitoring procedures. The Company performs in-depth credit evaluations for all new customers but does not require collateral to support customer receivables. The Company had no customer in 2015, 2014 or 2013 that contributed in excess of 10% of the total net sales. The Company’s sales to foreign (non-U.S. based) customers were approximately $3.7 million, $3.6 million and $1.1 million for the years ended September 30, 2015, 2014 and 2013, respectively. In 2015, the Cable TV segment purchased approximately 26% of its inventory either directly from Cisco or indirectly through their primary stocking distributor and approximately 18% of its inventory from Arris Solutions, Inc. The concentration of suppliers of the Company’s inventory subjects the Company to risk. The Telco segment purchased approximately 11% of its total inventory purchases from Westworld Telecom. Employee stock-based awards Share-based payments to employees, including grants of employee stock options, are recognized in the consolidated financial statements based on their grant date fair value over the requisite service period. The Company determines the fair value of the options issued, using the Black-Scholes valuation model, and amortizes the calculated value over the vesting term of the stock options. Compensation expense for stock-based awards is included in the operating, selling, general and administrative expense section of the consolidated statements of operations. Earnings per share Basic earnings per share is computed by dividing the earnings available to common shareholders by the weighted average number of common shares outstanding for the year. Dilutive earnings per share include any dilutive effect of stock options and restricted stock. Fair value of financial instruments The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to their short maturities. FASB ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a consistent framework for measuring fair value and establishes a fair value hierarchy based on the observability of inputs used to measure fair value. The three levels of the fair value hierarchy are as follows:
Recent ly Issued Accounting Standards In May 2014, the FASB issued ASU No. 2014-09: “Revenue from Contracts with Customers (Topic 606)”. This guidance was issued to clarify the principles for recognizing revenue and develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards (“IFRS”). In addition, in August 2015, the FASB issued ASU No. 2015-14: “Revenue from Contracts with Customers (Topic 606). This update was issued to defer the effective date of ASU No. 2014-09 by one year. Therefore, the effective date of ASU No. 2014-09 is for annual reporting periods beginning after December 15, 2017. Management is evaluating the impact that ASU No. 2014-09 will have on the Company’s consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11: “Inventory (Topic 330) – Simplifying the Measurement of Inventory.” This guidance was issued to simplify the measurement of inventory. The amendments in this Update require an entity to measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The amendments in this Update are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years with earlier application permitted. Management has decided to early adopt ASU 2015-11. In November 2015, the FASB issued ASU No. 2015-17: “Income Taxes (Topic 740) – Balance Sheet Classification of Deferred Taxes.” This guidance was issued to simplify the presentation of deferred income taxes. The amendments in this Update require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The effective date of ASU No. 2015-17 is for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Management is evaluating the impact that ASU No. 2015-17 will have on the Company’s consolidated financial statements. |
Note 2 - Inventories |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Text Block] | Note 2 – Inventories Inventories at September 30, 2015 and 2014 are as follows:
New inventory includes products purchased from the manufacturers plus “surplus-new”, which are unused products purchased from other distributors or multiple system operators. Refurbished inventory includes factory refurbished, Company refurbished and used products. Generally, the Company does not refurbish its used inventory until there is a sale of that product or to keep a certain quantity on hand. The Company regularly reviews the Cable TV segment inventory quantities on hand, and an adjustment to cost is recognized when the loss of usefulness of an item or other factors, such as obsolete and excess inventories, indicate that cost will not be recovered when an item is sold. The Company recorded charges in the Cable TV segment to allow for obsolete inventory, which increased the cost of sales during the fiscal years ended September 30, 2015, 2014 and 2013, by approximately $0.6 million, respectively. For the Telco segment, any obsolete and excess telecommunications inventory is processed through its recycling program when it is identified. |
Note 3 - Intangible Assets |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets Disclosure [Text Block] | Note 3 – Intangible Assets Intangible assets with finite useful lives and their associated accumulated amortization amounts at September 30, 2015 are as follows:
The intangible assets with their associated accumulated amortization amounts at September 30, 2014 are as follows:
Amortization expense was $0.8 million and $0.5 million for the years ended September 30, 2015 and 2014, respectively. There was no amortization expense for the year ended September 30, 2013. The estimated aggregate amortization expense for each of the next five fiscal years is as follows:
|
Note 4 - Income Taxes |
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Income Tax Disclosure [Text Block] | Note 4 – Income Taxes The provision (benefit) for income taxes for the years ended September 30, 2015, 2014 and 2013 consists of:
The following table summarizes the differences between the U.S. federal statutory rate and the Company’s effective tax rate for continuing operations financial statement purposes for the years ended September 30, 2015, 2014 and 2013:
The tax credits and other exclusions rate for fiscal year 2015 includes, among other things, the impact of deferred taxes resulting from intangible and goodwill basis differences . The tax effects of temporary differences related to deferred taxes at September 30, 2015 and 2014 consist of the following:
The above net deferred tax asset is presented in the Company’s consolidated balance sheets at September 30, 2015 and 2014 as follows:
Utilization of the Company’s net operating loss carryforward, totaling approximately $0.6 million at September 30, 2015, to reduce future taxable income is limited to an annual deductible amount of approximately $0.3 million. The net operating loss carryforward expires in varying amounts in 2019 and 2020. The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial performance. The Company has concluded, based on its historical earnings and projected future earnings, that it will be able to realize the full effect of the deferred tax assets and no valuation allowance is needed. Based upon a review of its income tax positions, the Company believes that its positions would be sustained upon an examination by the Internal Revenue Service and does not anticipate any adjustments that would result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded. Generally, the Company is no longer subject to examinations by the U.S. federal, state or local tax authorities for tax years before 2012. |
Note 5 - Accrued Expenses |
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Accounts Payable and Accrued Liabilities Disclosure [Text Block] | Note 5 – Accrued Expenses Accrued expenses at September 30, 2015 and 2014 are as follows:
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Note 6 - Line of Credit and Notes Payable |
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Debt Disclosure [Text Block] | Note 6 – Line of Credit and Notes Payable Notes Payable The Company has an Amended and Restated Revolving Credit and Term Loan Agreement (“Credit and Term Loan Agreement”). At September 30, 2015, the Company has two term loans outstanding under the Credit and Term Loan Agreement. One outstanding term loan has an outstanding balance of $1.1 million at September 30, 2015 and is due on November 30, 2021, with monthly principal payments of $15,334 plus accrued interest. The interest rate is the prevailing 30-day LIBOR rate plus 1.4% (1.60% at September 30, 2015) and is reset monthly. This term loan is collateralized by inventory, accounts receivable, equipment and fixtures and general intangibles. The second outstanding term loan was entered into as a result of the acquisition of Nave Communications for $5.0 million. This term loan has an outstanding balance of $4.0 million at September 30, 2015 and is due March 4, 2019, with monthly principal and interest payments of $68,505, with the balance due at maturity. It is a five year term loan with a seven year amortization payment schedule with a fixed interest rate of 4.07%. This term loan is collateralized by inventory, accounts receivable, equipment and fixtures and general intangibles. Capital Lease Obligations The Company has two capital lease obligations related to machinery and equipment totaling $43 thousand at September 30, 2015 with monthly principal and interest payments of $2,069. The capital lease obligations are due on June 20, 2017 and September 20, 2017. The aggregate minimum maturities of notes payable for each of the next five years are as follows:
Line of Credit The Company has a $7.0 million Revolving Line of Credit (“Line of Credit”) under the Credit and Term Loan Agreement with its primary financial lender. At September 30, 2015, the Company had no amount outstanding under the Line of Credit. The Line of Credit requires quarterly interest payments based on the prevailing 30-day LIBOR rate plus 2.75% (2.91% at September 30, 2015), and the interest rate is reset monthly. Any future borrowings under the Line of Credit are due on November 27, 2015. Future borrowings under the Line of Credit are limited to the lesser of $7.0 million or the net balance of 80% of qualified accounts receivable plus 50% of qualified inventory. Under these limitations, the Company’s total Line of Credit borrowing base was $7.0 million at September 30, 2015. Among other financial covenants, the Line of Credit agreement provides that the Company must maintain a fixed charge ratio of coverage (EBITDA to total fixed charges) of not less than 1.25 to 1.0, determined quarterly. The Line of Credit is collateralized by inventory, accounts receivable, equipment and fixtures and general intangibles. Subsequent to September 30, 2015, the Company signed the Sixth Amendment to the Amended and Restated Revolving Credit and Term Loan Agreement with its primary financial lender dated November 27, 2015. This amendment extended the Line of Credit maturity to March 31, 2017. The Line of Credit remains at $7.0 million, and the interest rate remains at the prevailing 30-day LIBOR rate plus 2.75%. Fair Value of Debt The carrying value of the Company’s variable-rate term loan approximates its fair value since the interest rate fluctuates periodically based on a floating interest rate. The Company has determined the fair value of its fixed-rate term loan utilizing the Level 2 hierarchy as the fair value can be estimated from broker quotes corroborated by other market data. These broker quotes are based on observable market interest rates at which loans with similar terms and maturities could currently be executed. The Company then estimated the fair value of the fixed-rate term loan using cash flows discounted at the current market interest rate obtained. The fair value of the Company’s second term loan was approximately $4.0 million as of September 30, 2015. |
Note 7 - Stock-Based Compensation and Preferred Stock |
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Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | Note 7 – Stock-Based Compensation and Preferred Stock Plan Information At the annual meeting of shareholders in March 2015, the shareholders approved the 2015 Incentive Stock Plan (the “Plan”). The Plan provides for awards of stock options and restricted stock to officers, directors, key employees and consultants. The Plan provides an additional 500,000 shares of common stock available for issuance in addition to those stock awards that were outstanding under the previous incentive stock plan. Under the Plan, option prices will be set by the Compensation Committee and may not be less than the fair market value of the stock on the grant date. At September 30, 2015, 1,100,415 shares of common stock were reserved for stock award grants under the Plan. Of these reserved shares, 539,883 shares were available for future grants. Stock Options Share-based payments to employees, including grants of employee stock options, are recognized in the consolidated financial statements based on their grant date fair value over the requisite service period. Compensation expense for stock-based awards is included in the operating, selling, general and administrative expense section of the consolidated statements of operations. Stock options are valued at the date of the award, which does not precede the approval date, and compensation cost is recognized on a straight-line basis over the vesting period. Stock options granted to employees generally become exercisable over a three, four or five-year period from the date of grant and generally expire ten years after the date of grant. Stock options granted to the Board of Directors generally become exercisable on the date of grant and generally expire ten years after the date of grant. A summary of the status of the Company's stock options at September 30, 2015 and changes during the year then ended is presented below:
The total intrinsic value of options exercised was $0, $0, and $940 for the years ended September 30, 2015, 2014 and 2013, respectively. Information about the Company’s outstanding and exercisable stock options at September 30, 2015 is as follows:
No nonqualified stock options were granted in 2015. The Company granted nonqualified stock options totaling 200,000 shares and 30,000 shares for fiscal years ended September 30, 2014 and 2013, respectively. The Company estimated the fair value of the options granted using the Black-Scholes option valuation model and the assumptions shown in the table below. The Company estimated the expected term of options granted based on the historical grants and exercises of the Company's options. The Company estimated the volatility of its common stock at the date of the grant based on both the historical volatility as well as the implied volatility on its common stock. The Company based the risk-free rate that was used in the Black-Scholes option valuation model on the implied yield in effect at the time of the option grant on U.S. Treasury zero-coupon issues with equivalent expected terms. The Company has never paid cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. Consequently, the Company used an expected dividend yield of zero in the Black-Scholes option valuation model. The Company amortizes the resulting fair value of the options ratably over the vesting period of the awards. The Company used historical data to estimate the pre-vesting options forfeitures and records share-based expense only for those awards that are expected to vest. The estimated fair value at date of grant for stock options utilizing the Black-Scholes option valuation model and the assumptions that were used in the Black-Scholes option valuation model for the fiscal years 2014 and 2013 stock option grants are as follows:
Compensation expense related to stock options recorded for the years ended September 30, 2015, 2014 and 2013 is as follows:
The Company records compensation expense over the vesting term of the related options. At September 30, 2015, compensation costs related to these unvested stock options not yet recognized in the statements of operations was $83,871. Restricted stock The Company granted restricted stock in March 2015, 2014 and 2013 to its Board of Directors totaling 31,915, 19,050 shares and 31,815 shares, respectively. The restricted stock grants were valued at market value on the date of grant. The restricted shares are delivered to the directors and employees at the end of the 12 month holding period. For the shares granted in March 2015 and March 2014, a director resigned from the Board of Directors prior to the expiration of the respective holding period, so their individual share grant of 6,383 shares and 3,175 shares for 2015 and 2014, respectively, was forfeited. The fair value of the shares upon issuance totaled $60,000, $60,000 and $70,000 for the 2015, 2014 and 2013 fiscal year grants, respectively. The grants are amortized over the 12 month holding period as compensation expense. The Company granted restricted stock in April of 2014 to certain employees totaling 23,676 shares, which were valued at market value on the date of grant. The shares have a holding restriction, which will expire in equal annual installments of 7,892 shares over three years starting in April 2015. The fair value of these shares upon issuance totaled $76,000 and is being amortized over the respective one, two and three year holding periods as compensation expense. Compensation expense related to restricted stock recorded for the years ended September 30, 2015, 2014 and 2013 is as follows:
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Note 8 - Retirement Plan |
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Notes to Financial Statements | |
Pension and Other Postretirement Benefits Disclosure [Text Block] | Note 8 – Retirement Plan The Company sponsors a 401(k) plan that allows participation by all employees who are at least 21 years of age and have completed one year of service. The Company's contributions to the plan consist of a matching contribution as determined by the plan document. Costs recognized under the 401(k) plan were $0.3 million for the year ended September 30, 2015 and $0.2 million for each of the years ended September 30, 2014 and 2013. |
Note 9 - Earnings per Share |
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Earnings Per Share [Text Block] | Note 9 – Earnings per Share Basic and diluted earnings per share for the years ended September 30 , 2015, 2014 and 2013 are:
The table below includes information related to stock options that were outstanding at the end of each respective year but have been excluded from the computation of weighted-average stock options for dilutive securities due to the option exercise price exceeding the average market price per share of our common stock for the fiscal year, or their effect would be anti-dilutive.
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Note 10 - Related Parties |
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Related Party Transactions Disclosure [Text Block] | Note 10 – Related Parties David E. Chymiak and Kenneth A. Chymiak beneficially owned 26% and 22%, respectively, of the Company’s outstanding common stock at September 30, 2015. |
Note 11 - Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Text Block] | Note 11 – Commitments and Contingencies The Company leases and rents various office and warehouse properties in Arizona, Georgia, Maryland, North Carolina and Pennsylvania. The terms on its operating leases vary and contain renewal options or are rented on a month-to-month basis. Rental payments associated with leased properties totaled $0.6 million, $0.4 million and $37,000 for the years ended September 30, 2015, 2014 and 2013, respectively. The Company’s minimum annual future obligations under all existing operating leases for each of the next five years are as follows:
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Note 12 - Segment Reporting |
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Segment Reporting Disclosure [Text Block] | Note 12 – Segment Reporting The Company has two reporting segments, Cable Television and Telecommunications, as described below. Cable Television (“Cable TV”) The Company’s Cable TV segment sells new, surplus and re-manufactured cable television equipment throughout North America, Central America, South America and, to a substantially lesser extent, other international regions that utilize the same technology. In addition, this segment also repairs cable television equipment for various cable companies. Telecommunications (“Telco”) The Company’s Telecommunications segment consists of Nave Communications. Through Nave Communications’ diverse customer base and its broad range of manufacturer systems and components, Nave Communications’ provides cost effective telecommunications and networking solutions to expand network capacity and infrastructure for its customers. Nave Communications specializes in the sale of used telecommunications networking equipment. In addition, Nave Communications offers its customers decommissioning services for surplus and obsolete equipment, which Nave Communications in turn processes through its recycling services. The Company evaluates performance and allocates its resources based on operating income. The accounting policies of its reportable segments are the same as those described in the summary of significant accounting policies. Segment assets consist primarily of cash and cash equivalents, accounts receivable, inventory, property, plant and equipment, goodwill and other intangible assets.
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Note 13 - Quarterly Results of Operations (Unaudited) |
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Quarterly Financial Information [Text Block] | Note 13 – Quarterly Results of Operations (Unaudited) The following is a summary of the quarterly results of operations for the years ended September 30, 2015, 2014 and 2013:
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Schedule II - Valuation and Qualifying Accounts |
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Schedule of Valuation and Qualifying Accounts Disclosure [Text Block] | Schedule II – Valuation and Qualifying Accounts
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Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | ||||||||||
Consolidation, Policy [Policy Text Block] | Organization and 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 Cable Television (“Cable TV”) and Telecommunications (“Telco”). |
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Cash and Cash Equivalents, Policy [Policy Text Block] | Cash and cash equivalents Cash and cash equivalents includes demand and time deposits, money market funds and other marketable securities with maturities of three months or less when acquired. |
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Receivables, Policy [Policy Text Block] | Accounts receivable Trade receivables are carried at original invoice amount less an estimate made for doubtful accounts. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history and current economic conditions. Trade receivables are written off against the allowance when deemed uncollectible. Recoveries of trade receivables previously written off are recorded when received. The Company generally does not charge interest on past due accounts. |
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Inventory, Policy [Policy Text Block] | Inventor ies Inventories consist of new and used electronic components for the Cable Television segment and used telecommunications networking equipment for the Telco segment. Inventory is stated at the lower of cost and net realizable value. Cost is determined using the weighted-average method. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. For the Cable Television segment, the Company records an inventory reserve provision to reflect inventory at its estimated net realizable value based on a review of inventory quantities on hand, historical sales volumes and technology changes. These reserves are to provide for items that are potentially slow-moving, excess or obsolete. For the Telco segment, the Company does not maintain an inventory reserve as this segment will recycle any surplus and obsolete equipment on hand through its recycling program when it is identified. |
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Property, Plant and Equipment, Policy [Policy Text Block] | Property and equipment Property and equipment consists of software, office equipment, warehouse and service equipment, and buildings with estimated useful lives generally of 3 years, 5 years, 10 years and 40 years, respectively. Depreciation is provided using the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized over the remainder of the lease agreement. Gains or losses from the ordinary sale or retirement of property and equipment are recorded in other income (expense). Repairs and maintenance costs are generally expensed as incurred, whereas major improvements are capitalized. Depreciation expense was $0.4 million, $0.4 million and $0.3 million for the years ended September 30, 2015, 2014 and 2013, respectively. |
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Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block] | Goodwill Goodwill represents the excess of the purchase price of acquisitions over the acquisition date fair value of the net identifiable tangible and intangible assets acquired. In accordance with current accounting guidance, goodwill is not amortized and is tested at least annually for impairment at the reporting unit level. The Company performs this annual analysis in the fourth quarter of each fiscal year and in any other period in which indicators of impairment warrant additional analysis. The goodwill analysis is a two-step process. Goodwill is first evaluated for impairment by comparing management’s estimate of the fair value of the reporting unit with the reporting unit’s carrying value, including goodwill. If the carrying value of the reporting unit exceeds its fair value, a computation of the implied fair value of goodwill would then be compared to its related carrying value. If the carrying value of the reporting unit’s goodwill exceeds the implied fair value of goodwill, an impairment loss would be recognized in the amount of the excess. Management utilizes a discounted cash flow analysis, referred to as an income approach, to determine the estimated fair value of its reporting units. Judgments and assumptions are inherent in our estimate of future cash flows used to determine the estimate of the reporting unit’s fair value. The use of alternate judgments and/or assumptions could result in the recognition of different levels of impairment charges in the consolidated financial statements. At September 30, 2015 and 2014, the estimated fair value of our reporting unit exceeded its carrying value, so goodwill was not impaired. |
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Intangible Assets, Finite-Lived, Policy [Policy Text Block] | Intangible Assets Intangible assets that have finite useful lives are amortized on a straight-line basis over their estimated useful lives ranging from 3 years to 10 years. |
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Income Tax, Policy [Policy Text Block] | Income taxes The Company provides for income taxes in accordance with the liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax carryforward amounts. Management provides a valuation allowance against deferred tax assets for amounts which are not considered “more likely than not” to be realized. |
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Revenue Recognition, Policy [Policy Text Block] | Revenue recognition The Company recognizes revenue for product sales when title transfers, the risks and rewards of ownership have been transferred to the customer, the fee is fixed and determinable and the collection of the related receivable is probable, which is generally at the time of shipment. The stated shipping terms are generally FOB shipping point per the Company's sales agreements with its customers. Accruals are established for expected returns based on historical activity. Revenue for repair services is recognized when the repair is completed and the product is shipped back to the customer. Revenue for recycle services is recognized when title transfers, the risks and rewards of ownership have been transferred to the customer, the fee is fixed and determinable and the collection of the related receivable is probable, which is generally upon acceptance of the shipment at the recycler’s location. |
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Shipping and Handling Cost, Policy [Policy Text Block] | Freight Amounts billed to customers for shipping and handling represent revenues earned and are included in sales income in the accompanying consolidated statements of operations. Actual costs for shipping and handling of these sales are included in cost of sales. |
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Advertising Costs, Policy [Policy Text Block] | Advertising costs Advertising costs are expensed as incurred. Advertising expense was $0.1 million, $0.1 million and $0.2 million for the years ended September 30, 2015, 2014 and 2013, respectively. |
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Use of Estimates, Policy [Policy Text Block] | Management estimates The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Any significant, unanticipated changes in product demand, technological developments or continued economic trends affecting the cable or telecommunications industries could have a significant impact on the value of the Company's inventory and operating results. |
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Concentration Risk, Credit Risk, Policy [Policy Text Block] | Concentrations of credit risk The Company holds cash with one major financial institution, which at times exceeds FDIC insured limits. Historically, the Company has not experienced any losses due to such concentration of credit risk. Other financial instruments that potentially subject the Company to concentration of credit risk consist principally of trade receivables. Concentrations of credit risk with respect to trade receivables are limited because a large number of geographically diverse customers make up the Company’s customer base, thus spreading the trade credit risk. The Company controls credit risk through credit approvals, credit limits and monitoring procedures. The Company performs in-depth credit evaluations for all new customers but does not require collateral to support customer receivables. The Company had no customer in 2015, 2014 or 2013 that contributed in excess of 10% of the total net sales. The Company’s sales to foreign (non-U.S. based customers) were approximately $3.7 million, $3.6 million and $1.1 million for the years ended September 30, 2015, 2014 and 2013, respectively. In 2015, the Cable TV segment purchased approximately 26% of its inventory either directly from Cisco or indirectly through their primary stocking distributor and approximately 18% of its inventory from Arris Solutions, Inc. The concentration of suppliers of the Company’s inventory subjects the Company to risk. The Telco segment purchased approximately 11% of its total inventory purchases from Westworld Telecom. |
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Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | Employee stock-based awards Share-based payments to employees, including grants of employee stock options, are recognized in the consolidated financial statements based on their grant date fair value over the requisite service period. The Company determines the fair value of the options issued, using the Black-Scholes valuation model, and amortizes the calculated value over the vesting term of the stock options. Compensation expense for stock-based awards is included in the operating, selling, general and administrative expense section of the consolidated statements of operations. |
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Earnings Per Share, Policy [Policy Text Block] | Earnings per share Basic earnings per share is computed by dividing the earnings available to common shareholders by the weighted average number of common shares outstanding for the year. Dilutive earnings per share include any dilutive effect of stock options and restricted stock. |
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Fair Value of Financial Instruments, Policy [Policy Text Block] | Fair value of financial instruments The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to their short maturities. FASB ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a consistent framework for measuring fair value and establishes a fair value hierarchy based on the observability of inputs used to measure fair value. The three levels of the fair value hierarchy are as follows:
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New Accounting Pronouncements, Policy [Policy Text Block] | Recent ly Issued Accounting Standards In May 2014, the FASB issued ASU No. 2014-09: “Revenue from Contracts with Customers (Topic 606)”. This guidance was issued to clarify the principles for recognizing revenue and develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards (“IFRS”). In addition, in August 2015, the FASB issued ASU No. 2015-14: “Revenue from Contracts with Customers (Topic 606). This update was issued to defer the effective date of ASU No. 2014-09 by one year. Therefore, the effective date of ASU No. 2014-09 is for annual reporting periods beginning after December 15, 2017. Management is evaluating the impact that ASU No. 2014-09 will have on the Company’s consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11: “Inventory (Topic 330) – Simplifying the Measurement of Inventory.” This guidance was issued to simplify the measurement of inventory. The amendments in this Update require an entity to measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The amendments in this Update are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years with earlier application permitted. Management has decided to early adopt ASU 2015-11. In November 2015, the FASB issued ASU No. 2015-17: “Income Taxes (Topic 740) – Balance Sheet Classification of Deferred Taxes.” This guidance was issued to simplify the presentation of deferred income taxes. The amendments in this Update require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The effective date of ASU No. 2015-17 is for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Management is evaluating the impact that ASU No. 2015-17 will have on the Company’s consolidated financial statements. |
Note 2 - Inventories (Tables) |
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Schedule of Inventory, Current [Table Text Block] |
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Note 3 - Intangible Assets (Tables) |
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Schedule of Intangible Assets and Goodwill [Table Text Block] |
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Note 4 - Income Taxes (Tables) |
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Schedule of Components of Income Tax Expense (Benefit) [Table Text Block] |
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Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] |
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Schedule of Deferred Tax Assets and Liabilities [Table Text Block] |
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Note 5 - Accrued Expenses (Tables) |
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Schedule of Accrued Liabilities [Table Text Block] |
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Note 6 - Line of Credit and Notes Payable (Tables) |
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Schedule of Maturities of Long-term Debt [Table Text Block] |
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Note 7 - Stock-Based Compensation and Preferred Stock (Tables) |
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Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block] |
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Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block] |
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Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] |
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Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding and Exercisable [Table Text Block] |
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Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] |
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Note 9 - Earnings per Share (Tables) |
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Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] |
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] |
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Note 11 - Commitments and Contingencies (Tables) |
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Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] |
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Note 12 - Segment Reporting (Tables) |
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Schedule of Segment Reporting Information, by Segment [Table Text Block] |
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Note 13 - Quarterly Results of Operations (Unaudited) (Tables) |
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Schedule of Quarterly Financial Information [Table Text Block] |
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Schedule II - Valuation and Qualifying Accounts (Tables) |
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Summary of Valuation Allowance [Table Text Block] |
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Note 2 - Inventories (Details Textual) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
Sep. 30, 2013 |
|
Inventory Write-down | $ 600,000 | $ 601,351 | $ 600,000 |
Note 2 - Inventories - Schedule of Inventories (Details) - USD ($) |
Sep. 30, 2015 |
Sep. 30, 2014 |
---|---|---|
New: | ||
Cable TV | $ 16,255,487 | $ 16,949,713 |
Refurbished: | ||
Cable TV | 3,676,132 | 3,982,140 |
Telco | 6,426,005 | 4,005,298 |
Allowance for excess and obsolete inventory | (2,756,628) | (2,156,628) |
$ 23,600,996 | $ 22,780,523 |
Note 3 - Intangible Assets (Details Textual) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
Sep. 30, 2013 |
|
Amortization of Intangible Assets | $ 800,000 | $ 500,000 | $ 0 |
Note 3 - Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) |
Sep. 30, 2015 |
Sep. 30, 2014 |
---|---|---|
Customer Relationships [Member] | ||
Gross | $ 4,257,000 | $ 4,257,000 |
Accumulated Amortization | (674,023) | (248,325) |
Net | 3,582,977 | 4,008,675 |
Technology-Based Intangible Assets [Member] | ||
Gross | 1,303,000 | 1,303,000 |
Accumulated Amortization | (294,725) | (108,583) |
Net | 1,008,275 | 1,194,417 |
Trade Names [Member] | ||
Gross | 1,293,000 | 1,293,000 |
Accumulated Amortization | (204,724) | (75,425) |
Net | 1,088,276 | 1,217,575 |
Noncompete Agreements [Member] | ||
Gross | 254,000 | 254,000 |
Accumulated Amortization | (134,055) | (49,389) |
Net | 119,945 | 204,611 |
Gross | 7,107,000 | 7,107,000 |
Accumulated Amortization | (1,307,527) | (481,722) |
Net | $ 5,799,473 | $ 6,625,278 |
Note 3 - Intangible Assets - Future Amortization Expense (Details) |
Sep. 30, 2015
USD ($)
|
---|---|
2016 | $ 825,810 |
2017 | 776,421 |
2018 | 741,143 |
2019 | 741,143 |
2020 | 741,143 |
Thereafter | 1,973,813 |
Total | $ 5,799,473 |
Note 4 - Income Taxes (Details Textual) |
Sep. 30, 2015
USD ($)
|
---|---|
Reserve for Uncertain Income Tax Positions | $ 0 |
Operating Loss Carryforwards | 600,000 |
Annual Deductible Amount of Operating Loss Carryforward Limit, Amount | $ 300,000 |
Note 4 - Income Taxes - Provision (Benefit) for Income Taxes (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
Sep. 30, 2013 |
|
Continuing operations: | |||
Current | $ 1,114,000 | $ 496,000 | $ 1,113,351 |
Deferred | (341,000) | (276,000) | (15,000) |
$ 773,000 | 220,000 | 1,098,351 | |
Discontinued operations – current | (385,000) | (62,000) | |
Total provision (benefit) for income taxes | $ 773,000 | $ (165,000) | $ 1,036,351 |
Note 4 - Income Taxes - Summary of Differences Between U.S. Federal Statutory Rate and Company's Effective Tax Rate (Details) |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
Sep. 30, 2013 |
|
Statutory tax rate | 34.00% | 34.00% | 34.00% |
State income taxes, net of U.S. federal tax benefit | 2.10% | 5.70% | 4.30% |
Net operating loss | (4.00%) | (10.20%) | (3.10%) |
Return to accrual adjustment | (3.00%) | 1.00% | (2.40%) |
Additional state tax deduction for federal taxes | (5.60%) | ||
Charges without tax benefit | 1.60% | 3.90% | 1.10% |
Tax credits and other exclusions | 3.30% | (3.80%) | 4.40% |
Company’s effective tax rate | 34.00% | 25.00% | 38.30% |
Note 4 - Income Taxes - Deferred Tax Assets (Details) - USD ($) |
Sep. 30, 2015 |
Sep. 30, 2014 |
---|---|---|
Deferred tax assets: | ||
Net operating loss carryforwards | $ 236,000 | $ 335,000 |
Accounts receivable | 96,000 | 77,000 |
Inventory | 1,319,000 | 1,066,000 |
Intangibles | 215,000 | 79,000 |
Accrued expenses | 266,000 | 141,000 |
Stock options | 212,000 | 163,000 |
Other | 28,000 | 16,000 |
Deferred tax assets | 2,372,000 | 1,877,000 |
Deferred tax liabilities: | ||
Financial basis in excess of tax basis of certain assets | 832,000 | $ 728,000 |
Other | 50,000 | |
Net deferred tax asset | 1,490,000 | $ 1,149,000 |
Deferred tax asset – current | 1,776,000 | 1,416,000 |
Deferred tax liability – noncurrent | $ (286,000) | $ (267,000) |
Note 5 - Accrued Expenses (Details) - USD ($) |
Sep. 30, 2015 |
Sep. 30, 2014 |
---|---|---|
Employee costs | $ 856,078 | $ 1,089,754 |
Nave Communications earn-out | 290,455 | 356,513 |
Taxes other than income tax | 116,442 | 191,316 |
Interest | 16,085 | 18,563 |
Other, net | 79,621 | 153,732 |
Total | $ 1,358,681 | $ 1,809,878 |
Note 6 - Aggregate Minimum Maturities of Notes Payable (Details) |
Sep. 30, 2015
USD ($)
|
---|---|
2016 | $ 873,752 |
2017 | 899,870 |
2018 | 908,945 |
2019 | 2,143,417 |
2020 | 184,008 |
Thereafter | 229,890 |
Total | $ 5,239,882 |
Note 7 - Summary of the Status of the Company's Stock Options (Details) |
12 Months Ended |
---|---|
Sep. 30, 2015
USD ($)
$ / shares
shares
| |
Outstanding at September 30, 2014 (in shares) | shares | 560,000 |
Outstanding at September 30, 2014 (in dollars per share) | $ / shares | $ 2.96 |
Expired (in shares) | shares | (15,000) |
Expired (in dollars per share) | $ / shares | $ 4.62 |
Forfeited (in shares) | shares | (10,000) |
Forfeited (in dollars per share) | $ / shares | $ 4.62 |
Outstanding at September 30, 2015 (in shares) | shares | 535,000 |
Outstanding at September 30, 2015 (in dollars per share) | $ / shares | $ 2.88 |
Outstanding at September 30, 2015 | $ | $ 0 |
Exercisable at September 30, 2015 (in shares) | shares | 301,667 |
Exercisable at September 30, 2015 (in dollars per share) | $ / shares | $ 2.88 |
Exercisable at September 30, 2015 | $ | $ 0 |
Note 7 - Black-Scholes Option Valuation Model Assumptions (Details) - $ / shares |
12 Months Ended | |
---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Estimated fair value of options at grant date (in dollars per share) | $ 244,400 | $ 29,040 |
Average expected life (years) | 6 years | 6 years |
Average expected volatile factor | 34.00% | 41.00% |
Average risk-free interest rate | 2.79% | 2.95% |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate |
Note 7 - Compensation Expense Related to Stock Options (Details) - Employee Stock Option [Member] - USD ($) |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
Sep. 30, 2013 |
|
Fiscal Year 2012 Grant [Member] | |||
Compensation expense | $ 33,044 | $ 55,369 | $ 95,560 |
Fiscal Year 2013 Grant [Member] | |||
Compensation expense | $ 1,481 | ||
Fiscal Year 2014 Grant [Member] | |||
Compensation expense | $ 108,624 | $ 74,678 | |
Compensation expense | $ 141,668 | $ 130,047 | $ 97,041 |
Note 7 - Compensation Expense Related to Restricted Stock (Details) - Restricted Stock [Member] - USD ($) |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
Sep. 30, 2013 |
|
Fiscal Year 2012 Grant [Member] | |||
Compensation expense | $ 29,167 | ||
Fiscal Year 2013 Grant [Member] | |||
Compensation expense | $ 29,167 | $ 40,833 | |
Fiscal Year 2014 Grant [Member] | |||
Compensation expense | $ 58,778 | $ 53,222 | |
Fiscal Year 2015 Grant [Member] | |||
Compensation expense | 39,167 | ||
Compensation expense | $ 97,945 | $ 82,389 | $ 70,000 |
Note 8 - Retirement Plan (Details Textual) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
Sep. 30, 2013 |
|
Defined Contribution Plan, Cost Recognized | $ 0.3 | $ 0.2 | $ 0.2 |
Number of Years of Employee Service Required to Be Eligible for 401k Plan | 1 year |
Note 9 - Basic and Diluted Earnings Per Share (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
Sep. 30, 2013 |
|
Income from continuing operations | $ 1,497,900 | $ 659,189 | $ 1,771,923 |
Discontinued operations, net of tax | (666,046) | (102,207) | |
Net income (loss) attributable to common shareholders | $ 1,497,900 | $ (6,857) | $ 1,669,716 |
Basic weighted average shares (in shares) | 10,055,052 | 10,021,431 | 10,052,359 |
Effect of dilutive securities: | |||
Stock options (in shares) | 28,009 | ||
Diluted weighted average shares (in shares) | 10,055,052 | 10,049,440 | 10,052,359 |
Basic | |||
Continuing operations (in dollars per share) | $ 0.15 | $ 0.07 | $ 0.18 |
Discontinued operations (in dollars per share) | (0.07) | (0.01) | |
Net income (loss) (in dollars per share) | $ 0.15 | 0 | 0.17 |
Diluted | |||
Continuing operations (in dollars per share) | $ 0.15 | 0.07 | 0.18 |
Discontinued operations (in dollars per share) | (0.07) | (0.01) | |
Net income (loss) (in dollars per share) | $ 0.15 | $ 0 | $ 0.17 |
Note 9 - Anti-dilutive Securities (Details) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
Sep. 30, 2013 |
|
Stock options excluded (in shares) | 535,000 | 310,000 | 363,000 |
Weighted average exercise price of stock options (in dollars per share) | $ 2.88 | $ 3.37 | $ 2.83 |
Average market price of common stock (in dollars per share) | $ 2.38 | $ 2.76 | $ 2.24 |
Note 10 - Related Parties (Details Textual) |
Sep. 30, 2015 |
---|---|
David E. Chhymiak [Member] | |
Percentage of Outstanding Common Stock Owned by a Related Party | 26.00% |
Kenneth A. Chymiak [Member] | |
Percentage of Outstanding Common Stock Owned by a Related Party | 22.00% |
Note 11 - Commitments and Contingencies (Details Textual) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
Sep. 30, 2013 |
|
Operating Leases, Rent Expense | $ 600,000 | $ 400,000 | $ 37,000 |
Note 11 - Minimum Annual Future Obligations for Operating Leases (Details) |
Sep. 30, 2015
USD ($)
|
---|---|
2016 | $ 568,126 |
2017 | 576,408 |
2018 | 568,744 |
2019 | 540,868 |
2020 | 554,390 |
Thereafter | 1,847,632 |
Total | $ 4,656,168 |
Note 12 - Segment Reporting (Details Textual) $ in Millions |
12 Months Ended | |
---|---|---|
Sep. 30, 2015 |
Sep. 30, 2013
USD ($)
|
|
Adams Global Communications [Member] | ||
Disposal Group, Including Discontinued Operation, Assets | $ 5.3 | |
Number of Reportable Segments | 2 |
Note 12 - Segment Reporting Information (Details) - USD ($) |
3 Months Ended | 12 Months Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2013 |
Sep. 30, 2013 |
Jun. 30, 2013 |
Mar. 31, 2013 |
Dec. 31, 2012 |
Sep. 30, 2015 |
Sep. 30, 2014 |
Sep. 30, 2013 |
|
Operating Segments [Member] | Cable TV [Member] | |||||||||||||||
Sales | |||||||||||||||
Cable TV | $ 25,396,779 | $ 27,206,743 | $ 28,677,351 | ||||||||||||
Gross profit | |||||||||||||||
Cable TV | 8,025,651 | 7,770,723 | 8,709,317 | ||||||||||||
Operating income (loss) | |||||||||||||||
Cable TV | 2,210,414 | 1,492,100 | $ 2,896,254 | ||||||||||||
Operating Segments [Member] | Telco [Member] | |||||||||||||||
Sales | |||||||||||||||
Cable TV | 18,835,116 | 8,710,267 | |||||||||||||
Gross profit | |||||||||||||||
Cable TV | 7,273,238 | 3,834,733 | |||||||||||||
Operating income (loss) | |||||||||||||||
Cable TV | 365,796 | (395,001) | |||||||||||||
Assets | |||||||||||||||
Cable TV | $ 26,494,430 | $ 29,241,335 | $ 27,582,573 | 26,494,430 | 29,241,335 | $ 27,582,573 | |||||||||
Operating Segments [Member] | |||||||||||||||
Assets | |||||||||||||||
Cable TV | 17,094,713 | 17,781,114 | 17,094,713 | 17,781,114 | |||||||||||
Intersegment Eliminations [Member] | |||||||||||||||
Sales | |||||||||||||||
Cable TV | (498,275) | (28,318) | |||||||||||||
Segment Reconciling Items [Member] | |||||||||||||||
Assets | |||||||||||||||
Cable TV | 8,383,913 | 6,383,232 | $ 15,533,547 | 8,383,913 | 6,383,232 | $ 15,533,547 | |||||||||
Cable TV | 43,733,620 | 35,888,692 | 28,677,351 | ||||||||||||
Cable TV | 3,078,967 | $ 4,144,607 | $ 4,243,512 | $ 3,831,803 | 4,291,007 | $ 3,220,055 | $ 2,231,167 | $ 1,863,227 | 2,372,386 | $ 1,851,855 | $ 1,866,352 | $ 2,618,724 | 15,298,889 | 11,605,456 | 8,709,317 |
Cable TV | 2,576,210 | 1,097,099 | 2,896,254 | ||||||||||||
Cable TV | $ 51,973,056 | $ 53,405,681 | $ 43,116,120 | $ 51,973,056 | $ 53,405,681 | $ 43,116,120 |
Note 13 - Summary of Quarterly Results of Operations (Details) - USD ($) |
3 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2013 |
Sep. 30, 2013 |
Jun. 30, 2013 |
Mar. 31, 2013 |
Dec. 31, 2012 |
|
Sales | $ 9,627,532 | $ 11,902,391 | $ 11,366,539 | $ 10,837,158 | $ 12,131,986 | $ 9,323,158 | $ 8,313,815 | $ 6,119,733 | $ 7,641,644 | $ 6,372,108 | $ 6,764,102 | $ 7,899,497 |
Cable TV | 3,078,967 | 4,144,607 | 4,243,512 | 3,831,803 | 4,291,007 | 3,220,055 | 2,231,167 | 1,863,227 | 2,372,386 | 1,851,855 | 1,866,352 | 2,618,724 |
Income from continuing operations | $ 210,588 | $ 637,134 | $ 234,255 | $ 415,923 | $ 619,358 | $ 143,726 | $ (243,264) | $ 139,369 | $ 548,654 | $ 269,984 | $ 292,994 | $ 660,291 |
Net income (loss) (in dollars per share) | $ 0.02 | $ 0.06 | $ 0.02 | $ 0.04 | $ 0.06 | $ 0.01 | $ (0.02) | $ 0.01 | $ 0.05 | $ 0.03 | $ 0.03 | $ 0.07 |
Diluted earnings from continuing operations per common share (in dollars per share) | $ 0.02 | $ 0.06 | $ 0.02 | $ 0.04 | $ 0.06 | $ 0.01 | $ (0.02) | $ 0.01 | $ 0.05 | $ 0.03 | $ 0.03 | $ 0.07 |
Schedule II - Valuation and Qualifying Accounts (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
Sep. 30, 2013 |
|
Allowance for Doubtful Accounts [Member] | |||
Balance at Beginning of Year | $ 200,000 | $ 300,000 | $ 300,000 |
Charged to Costs and Expenses | $ 44,514 | ||
Write offs | $ (103,403) | $ (5,692) | |
Recoveries | $ 5,486 | 3,403 | 5,692 |
Balance at End of Year | 250,000 | 200,000 | 300,000 |
Inventory Valuation Reserve [Member] | |||
Balance at Beginning of Year | 2,156,628 | 1,600,000 | 1,000,000 |
Charged to Costs and Expenses | $ 600,000 | 601,351 | $ 600,000 |
Write offs | (208,056) | ||
Recoveries | 163,333 | ||
Balance at End of Year | $ 2,756,628 | $ 2,156,628 | $ 1,600,000 |
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