UNITED
STATES
|
SECURITIES
AND EXCHANGE COMMISSION
|
Washington,
D.C. 20549
|
|
FORM
10-K
|
|
xANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE
|
SECURITIES
EXCHANGE ACT OF 1934
|
For
the fiscal year ended September 30, 2006
|
|
oTRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE
|
SECURITIES
EXCHANGE ACT OF 1934
|
|
Commission
file number 1-10799
|
|
ADDVANTAGE
TECHNOLOGIES GROUP, INC.
|
(Exact
name of registrant as specified in its
charter)
|
Oklahoma
|
73-1351610
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
|
|
1221 E. Houston,
Broken Arrow, Oklahoma
|
74012
|
(Address
of principal executive offices)
|
(Zip
code)
|
Registrant’s
telephone number: (918) 251-9121
|
Securities
registered under Section 12(b) of the
Act
|
Title of each class
|
Name of exchange on which registered
|
Common
Stock, $.01 par value
|
American
Stock Exchange
|
Indicate
by check mark if the registrant is a well-known seasoned issuer,
as
defined in Rule 405 of the Securities Act
|
Yes o
No x
|
Indicate
by check mark if the registrant is not required to file reports pursuant
to Section 13 or 15(d) of the Act
|
Yes o
No x
|
Indicate
by check mark whether the registrant (1) filed all reports required
to be filed by Section 13 or 15(d) of the Securities Echange
Act during the past 12 months
(or
for such shorter period that the registrant was required to file
such
reports), and (2) has
been subject to such filing requirements for the past
90 days.
|
Yes
x
No o
|
Indicate
by check mark if disclosure of delinquent filers pursuant to Item
405 of
Regulation S-K is not contained herein, and disclosure
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.
|
o
|
Indicate
by check mark whether the registrant is a large accelerated filer,
an
accelerated filer, or a non-accelerated filer (as defined
in Rule 12b-2 of the Act)
Large
Accelerated Filer o Accelerated
Filer o
Non-accelerated filer x
|
|
Indicate
by check mark whether the registrant is a shell company (as defined
in
Rule 12b-2 of the Act).
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, 2006 was
$34,446,944.
|
Yes o
No x
|
The
number of shares
of the
registrant’s outstanding
common
stock, $.01 par value per share, was 10,232,756 as of December 12th,
2006.
|
Documents
Incorporated by Reference
|
The
identified sections of definitive Proxy Statement to be filed as
Schedule
14A pursuant to Regulation 14A in connection with the Registrant’s 2007
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 close of the registrant’s most recent fiscal
year.
|
Page
|
||
PART
I
|
||
PART
II
|
||
PART
III
|
||
PART
IV
|
||
· |
Broken
Arrow, Oklahoma - On November 20, 2006 Tulsat purchased a facility
consisting of an office, warehouse and service center of
approximately 100,000 square feet on ten acres, with an investment
of
$3,250,000, financed by a loan of $2,760,000, due in monthly payments
through 2021at an interest rate of LIBOR plus 1 1/2%. At December
1, 2006,
Tulsat also continues to lease a total of approximately 80,000 square
feet
of warehouse facilities in three buildings from entities which are
controlled by David E. Chymiak, Chairman of the Board, and Kenneth
A.
Chymiak, President and Chief Executive Officer. Each lease has a
renewable
five-year term, expiring at different times through 2008. At December
1,
2006, monthly rental payments on these leases totaled
$26,820.
|
· |
Deshler,
Nebraska - Tulsat-Nebraska owns a facility consisting of land and
an
office, warehouse and service center of approximately 8,000 square
feet.
|
· |
Warminster,
Pennsylvania - NCS owns its facility consisting of an office, warehouse
and service center of approximately 12,000 square feet, with an investment
of $567,000, financed by loans of $419,000, due in monthly payments
through 2013 at an interest rate of 5.5% through 2008, converting
thereafter to prime minus ¼%. NCS also rents property of approximately
2,000 square feet, with monthly rental payments of $1,250 through
December
2006.
|
· |
Sedalia,
Missouri - ComTech Services owns land and an office, warehouse and
service
center of approximately 25,000 square feet.
|
· |
New
Boston, Texas - Tulsat-Texas owns land and an office, warehouse and
service center of approximately 13,000 square feet.
|
· |
Suwanee,
Georgia - Tulsat-Atlanta leases an office and service center of
approximately 5,000 square feet. The lease provides for 36 monthly
lease
payments of $3,500 ending on March 31, 2008.
|
· |
Oceanside,
California - Jones Broadband leases an office, warehouse and service
center of approximately 15,000 square feet for $12,000 a month. The
lease
runs through November 30, 2007 and has a one year renewal option.
|
· |
Stockton,
California - Jones Broadband leases a warehouse of approximately
45,000
square feet for $6,032 a month. The lease ends February 28, 2007
and has a
one-year renewal option.
|
· |
Chambersburg,
Pennsylvania - Broadband Remarketing International leases an office,
warehouse, and service center of approximately 10,000
square
feet. The
lease is month to month and the lease payment varies based on the
volume
of warehouse space used. The average rent for the
year
was $4,667 per month.
|
Year
Ended September 30, 2006
|
High
|
Low
|
First
Quarter
|
$7.10
|
$3.51
|
Second
Quarter
|
$9.09
|
$5.75
|
Third
Quarter
|
$6.86
|
$4.63
|
Fourth
Quarter
|
$4.97
|
$3.55
|
Year
Ended September 30, 2005
|
||
First
Quarter
|
$6.30
|
$3.85
|
Second
Quarter
|
$5.94
|
$3.95
|
Third
Quarter
|
$4.25
|
$3.03
|
Fourth
Quarter
|
$4.05
|
$3.10
|
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||
Net
Sales and service income
|
$
|
52,541
|
$
|
50,273
|
$
|
47,071
|
$
|
33,327
|
$
|
25,409
|
||||||
Income
from operations
|
$
|
8,117
|
$
|
9,973
|
$
|
9,484
|
$
|
6,197
|
$
|
3,550
|
||||||
Net
income
|
$
|
4,843
|
$
|
5,814
|
$
|
5,814
|
$
|
4,493
|
$
|
2,201
|
||||||
Earnings
per share
|
||||||||||||||||
Basic
|
$
|
.39
|
$
|
.49
|
$
|
.46
|
$
|
.33
|
$
|
.10
|
||||||
Diluted
|
$
|
.39
|
$
|
49
|
$
|
.41
|
$
|
.30
|
$
|
.10
|
||||||
Total
assets
|
$
|
40,925
|
$
|
39,269
|
$
|
32,359
|
$
|
31,748
|
$
|
26,531
|
||||||
Long-term
obligations inclusive
|
||||||||||||||||
of
current maturities
|
$
|
9,385
|
$
|
9,382
|
$
|
11,610
|
$
|
6,912
|
$
|
6,276
|
Contractual
Obligations
|
Total
|
Less
than 1 year
|
1- 3 years
|
3-5
years
|
More
than 5 years
|
|||||||||||
Long
Term Debt
|
$
|
9,384,
808
|
$
|
4,718,070
|
$
|
4,489,840
|
$
|
48,765
|
$
|
128,133
|
||||||
Capital
Leases
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Operating
Leases
|
$
|
928,592
|
$
|
541,752
|
$
|
386,840
|
$
|
-
|
$
|
-
|
||||||
Purchase
Obligations
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Total
|
$
|
10,313,400
|
$
|
5,259,822
|
$
|
4,876,680
|
$
|
48,765
|
$
|
128,133
|
Index
to Financial Statements
|
Page
|
|
|
|
|
|
|
September 30,
|
|||||||
Assets
|
2006
|
2005
|
|||||
Current
assets:
|
|||||||
Cash
|
$
|
98,898
|
$
|
449,219
|
|||
Accounts receivable, net of allowance of $554,000
|
|||||||
and $92,000, respectively
|
5,318,127
|
7,671,549
|
|||||
Income tax refund receivable
|
307,299
|
-
|
|||||
Inventories,
net of allowance for excess and obsolete inventory
|
|||||||
of $1,178,000 and $1,575,395, respectively
|
28,990,696
|
25,321,149
|
|||||
Deferred income taxes
|
1,074,000
|
968,000
|
|||||
Total
current assets
|
35,789,020
|
34,409,917
|
|||||
|
|
||||||
Property
and equipment, at cost:
|
|||||||
Machinery and equipment
|
2,697,476
|
2,357,182
|
|||||
Land and buildings
|
1,668,511
|
1,591,413
|
|||||
Leasehold improvements
|
205,797
|
565,945
|
|||||
4,571,784
|
4,514,540
|
||||||
Less
accumulated depreciation and amortization
|
(2,033,679
|
)
|
(1,811,784
|
)
|
|||
Net
property and equipment
|
2,538,105
|
2,702,756
|
|||||
Other
assets:
|
|||||||
Deferred income taxes
|
702,000
|
786,000
|
|||||
Goodwill
|
1,560,183
|
1,150,060
|
|||||
Other assets
|
335,566
|
220,275
|
|||||
Total other assets
|
2,597,749
|
2,156,335
|
|||||
Total
assets
|
$
|
40,924,874
|
$
|
39,269,008
|
September 30,
|
|||||||
Liabilities
and Stockholders’ Equity
|
2006
|
2005
|
|||||
Current
liabilities:
|
|
|
|||||
Accounts payable
|
$
|
2,618,490
|
$
|
4,958,834
|
|||
Accrued expenses
|
1,181,139
|
1,876,523
|
|||||
Accrued income taxes
|
-
|
110,691
|
|||||
Bank revolving line of credit
|
3,476,622
|
2,234,680
|
|||||
Notes payable - current portion
|
1,241,348 |
1,239,071
|
|||||
Dividends payable
|
210,000 | 210,000 | |||||
Total
current liabilities
|
8,727,599 | 10,629,799 | |||||
Notes
payable
|
4,666,738
|
5,908,199
|
|||||
|
|
||||||
Stockholders’
equity:
|
|||||||
Preferred stock, 5,000,000 shares authorized,
|
|||||||
$1.00
par value, at stated value:
|
|||||||
Series
B, 7% cumulative; 300,000 shares issued and
|
|||||||
outstanding
with a stated value of $40 per share
|
12,000,000
|
12,000,000
|
|||||
Common stock, $.01 par value; 30,000,000 shares
authorized;
|
|||||||
10,252,856
and 10,093,147 shares issued and outstanding,
|
|||||||
respectively
|
102,528
|
100,931
|
|||||
Paid-in capital
|
(6,474,018
|
)
|
(7,265,930
|
)
|
|||
Retained earnings
|
21,863,685
|
17,860,967
|
|||||
Accumulated other comprehensive income:
|
|||||||
Unrealized
gain on interest rate swap, net of tax
|
92,506
|
89,206
|
|||||
27,584,701
|
22,785,174
|
||||||
Less: Treasury stock, 21,100 shares at cost
|
(54,164
|
)
|
(54,164
|
)
|
|||
Total
stockholders’ equity
|
27,530,537
|
22,731,010
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
40,924,874
|
$
|
39,269,008
|
September 30,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Net
sales income
|
$
|
47,400,816
|
$
|
45,755,198
|
$
|
42,293,046
|
||||
Net
service income
|
5,140,393
|
4,517,997
|
4,778,283
|
|||||||
Total
net sales
|
52,541,209
|
50,273,195
|
47,071,329
|
|||||||
Cost of sales
|
35,799,831
|
33,401,167
|
31,092,890
|
|||||||
Gross
profit
|
16,741,378
|
16,872,028
|
15,978,439
|
|||||||
Operating, selling, general and
|
||||||||||
administrative expenses
|
8,377,152
|
6,642,641
|
6,216,728
|
|||||||
Depreciation and amortization
|
247,504
|
256,435
|
277,352
|
|||||||
Income
from operations
|
8,116,722
|
9,972,952
|
9,484,359
|
|||||||
Interest expense
|
530,004
|
557,560
|
157,606
|
|||||||
Income
before income taxes
|
7,586,718
|
9,415,392
|
9,326,753
|
|||||||
Provision form income taxes
|
2,744,000
|
3,601,000
|
3,513,000
|
|||||||
Net
income
|
4,842,718
|
5,814,392
|
5,813,753
|
|||||||
Other
comprehensive income
|
||||||||||
Unrealized gain on interest rate swap
|
||||||||||
(Net of $2,000 and $54,000 in taxes, respectively).
|
3,300
|
89,206
|
-
|
|||||||
Comprehensive Income
|
$
|
4,846,018
|
$
|
5,903,598
|
$
|
5,813,753
|
||||
Net
income
|
4,842,718
|
5,814,392
|
5,813,753
|
|||||||
Preferred stock dividends
|
840,000
|
840,000
|
1,240,000
|
|||||||
Net
income attribute
|
||||||||||
to common stockholders
|
$
|
4,002,718
|
$
|
4,974,392
|
$
|
4,573,753
|
||||
Earnings
per share:
|
||||||||||
Basic
|
$
|
0.39
|
$
|
0.49
|
$
|
0.46
|
||||
Diluted
|
$
|
0.39
|
$
|
0.49
|
$
|
0.41
|
||||
Shares
used in per share calculation
|
||||||||||
Basic
|
10,152,472
|
10,067,277
|
10,041,197
|
|||||||
Diluted
|
10,201,474
|
10,109,854
|
12,104,541
|
Series
A
|
Series
B
|
Retained
|
Other
|
|||||||||||||||||||||||||
Common
Stock
|
Preferred
|
Preferred
|
Paid-in
|
Earnings
|
ComComprehensive
|
T
Treasury
|
||||||||||||||||||||||
Shares
|
Amount
|
Stock
|
Stock
|
Capital
|
(Deficit)
|
Income
|
Stock
|
Total
|
||||||||||||||||||||
Balance,
September 30, 2003
|
10,030,414
|
$
|
100,304
|
$
|
8,000,000
|
$
|
12,000,000
|
($7,389,197
|
)
|
$
|
8,312,822
|
-
|
($54,164
|
)
|
$
|
20,969,765
|
||||||||||||
Net
income
|
-
|
-
|
-
|
-
|
-
|
5,813,753
|
-
|
-
|
5,813,753
|
|||||||||||||||||||
Preferred
stock dividends
|
-
|
-
|
-
|
-
|
-
|
(1,240,000
|
)
|
-
|
-
|
(1,240,000
|
)
|
|||||||||||||||||
Stock
options exercised
|
51,375
|
514
|
-
|
-
|
103,633
|
-
|
-
|
-
|
104,147
|
|||||||||||||||||||
Redemption
of Series A
|
||||||||||||||||||||||||||||
Preferred
stock
|
-
|
-
|
(8,000,000
|
)
|
-
|
-
|
-
|
-
|
-
|
(8,000,000
|
)
|
|||||||||||||||||
Balance,
September 30, 2004
|
10,081,789
|
$
|
100,818
|
-
|
$
|
12,000,000
|
($7,285,564
|
)
|
$
|
12,886,575
|
-
|
($54,164
|
)
|
$
|
17,647,665
|
|||||||||||||
Net
income
|
-
|
-
|
-
|
-
|
-
|
5,814,392
|
-
|
-
|
5,814,392
|
|||||||||||||||||||
Preferred
stock dividends
|
-
|
-
|
-
|
-
|
-
|
(840,000
|
)
|
-
|
-
|
(840,000
|
)
|
|||||||||||||||||
Stock
options exercised
|
11,358
|
113
|
-
|
-
|
19,634
|
-
|
-
|
-
|
19,747
|
|||||||||||||||||||
Unrealized
gain on interest swap
|
-
|
-
|
-
|
-
|
-
|
-
|
89,206
|
-
|
89,206
|
|||||||||||||||||||
Balance,
September 30, 2005
|
10,093,147
|
$
|
100,931
|
-
|
$
|
12,000,000
|
($7,265,930
|
)
|
$
|
17,860,967
|
$
|
89,206
|
($54,164
|
)
|
$
|
22,731,010
|
||||||||||||
Net
income
|
-
|
-
|
-
|
-
|
-
|
$
|
4,842,718
|
-
|
-
|
4,842,718
|
||||||||||||||||||
Preferred
stock dividends
|
-
|
-
|
-
|
-
|
-
|
(840,000
|
)
|
-
|
-
|
(840,000
|
)
|
|||||||||||||||||
Stock
options exercised
|
72,500
|
725
|
-
|
-
|
244,674
|
-
|
-
|
-
|
245,399
|
|||||||||||||||||||
Unrealized
gain on interest swap
|
-
|
-
|
-
|
-
|
-
|
-
|
3,300
|
-
|
3,300
|
|||||||||||||||||||
Share
based compensation expense
|
-
|
-
|
-
|
-
|
98,110
|
-
|
-
|
-
|
98,110
|
|||||||||||||||||||
Shares
issued in exchange for certain assets
|
87,209
|
872
|
-
|
-
|
449,128
|
-
|
-
|
-
|
450,000
|
|||||||||||||||||||
Balance,
September 30, 2006
|
10,252,856
|
$
|
102,528
|
-
|
$
|
12,000,000
|
($6,474,018
|
)
|
$
|
21,863,685
|
$
|
92,506
|
($54,164
|
)
|
$
|
27,530,537
|
|
September 30,
|
|||||||||
|
||||||||||
Cash
Flows from Operating Activities
|
2006 2005 2004
|
|||||||||
Net
income
|
$
|
4,842,718
|
$
|
5,814,392
|
$
|
5,813,753
|
||||
Adjustments
to reconcile net income
|
||||||||||
provided
by operating activities:
|
||||||||||
Depreciation and amortization
|
247,504
|
256,435
|
277,352
|
|||||||
Provision for losses on accounts receivable
|
445,541
|
40,080
|
-
|
|||||||
Provision for excess and obsolete inventories
|
439,625
|
482,395
|
645,900
|
|||||||
Loss on disposal of property and equipment
|
76,829
|
-
|
24,412
|
|||||||
Deferred income tax benefit
|
(22,000
|
)
|
(3,000
|
)
|
(172,000
|
)
|
||||
Change in:
|
||||||||||
Receivables
|
1,600,582
|
(2,174,498
|
)
|
(1,004,069
|
)
|
|||||
Inventories
|
(4,109,172
|
)
|
(1,927,585
|
)
|
506,482
|
|||||
Other assets
|
(132,276
|
)
|
(51,577
|
)
|
8,406
|
|||||
Accounts payable
|
(2,340,344
|
)
|
3,027,827
|
(872,526
|
)
|
|||||
Accrued liabilities
|
(806,075
|
)
|
687,191
|
208,086
|
||||||
Net
cash provided by operating activities
|
242,932
|
6,151,660
|
5,435,796
|
|||||||
Cash
Flows from Investing Activities
|
||||||||||
Additions
to property and equipment
|
(99,520
|
)
|
(446,534
|
)
|
(77,201
|
)
|
||||
Investment
in Jones Broadband International,
|
||||||||||
net of cash acquired of $100,322
|
-
|
(3,510,935
|
)
|
-
|
||||||
Net
cash used in investing activities
|
(99,520
|
) |
(3,957,469
|
)
|
(77,201
|
)
|
||||
Cash
Flows from Financing Activities
|
||||||||||
Net
change under bank revolving line of credit
|
1,241,942
|
(990,503
|
)
|
(1,960,719
|
)
|
|||||
Proceeds
on notes payable
|
-
|
-
|
8,000,000
|
|||||||
Payments
on notes payable
|
(1,239,184
|
)
|
(1,250,455
|
)
|
(1,342,067
|
)
|
||||
Proceeds
from stock options exercised
|
343,509
|
19,747
|
104,147
|
|||||||
Payments
of preferred dividends
|
(840,000
|
)
|
(840,000
|
)
|
(1,340,000
|
)
|
||||
Redemption
of preferred stock
|
-
|
-
|
(8,000,000
|
)
|
||||||
Net
cash used in financing activities
|
(493,733
|
)
|
(3,061,211
|
)
|
(4,538,639
|
) | ||||
Net
increase (decrease) in cash
|
(350,321
|
)
|
(867,020
|
)
|
819,956
|
|||||
Cash,
beginning of year
|
449,219
|
1,316,239
|
496,283
|
|||||||
Cash,
end of year
|
$
|
98,898
|
$
|
449,219
|
$
|
1,316,239
|
||||
Supplemental
Cash Flow Information
|
||||||||||
Cash
paid for interest
|
$
|
531,596
|
$
|
557,560
|
$
|
172,426
|
||||
Cash
paid for income taxes
|
$
|
3,019,768
|
$
|
3,582,616
|
$
|
3,669,170
|
||||
Value
of shares issued in exchange for business and
|
||||||||||
certain assets
|
$
|
450,000
|
-
|
-
|
2006
|
2005
|
||||||
New
|
$
|
21,012,912
|
$
|
20,066,957
|
|||
Used
|
9,155,784
|
6,829,587
|
|||||
Allowance
for excess and obsolete inventory
|
(1,178,000
|
)
|
(1,575,395
|
)
|
|||
$
|
28,990,696
|
$
|
25,321,149
|
2007
|
$
|
4,718,070
|
||
2008
|
1,243,685
|
|||
2009
|
3,246,155
|
|||
2010
|
48,765
|
|||
2011
|
51,522
|
|||
Thereafter
|
76,611
|
|||
|
|
|||
Total
|
$
|
9,384,808
|
||
|
|
2006
|
2005
|
2004
|
||||||||
Current
|
$
|
2,766,000
|
$
|
3,604,000
|
$
|
3,685,000
|
||||
Deferred
|
(22,000
|
)
|
(3,000
|
)
|
(172,000
|
)
|
||||
2,744,000
|
$
|
3,601,000
|
$
|
3,513,000
|
2006
|
2005
|
2004
|
||||||||
Statutory
tax rate
|
34.0%
|
|
34.0%
|
|
34.0%
|
|
||||
State
income taxes, net of U.S.
|
||||||||||
federal
tax benefit
|
4.9%
|
|
4.7%
|
|
4.7%
|
|
||||
Tax
credits and exclusions
|
(1.7%)
|
|
(
.5%)
|
|
(0.6%)
|
|
||||
Other
|
(1.0%)
|
|
-
|
(0.4%)
|
|
|||||
36.2%
|
|
38.2%
|
|
37.7%
|
|
|
2006
|
2005
|
|||||
Net
operating loss carryforwards
|
$
|
1,117,000
|
$
|
1,239,000
|
|||
Financial
basis in excess of tax basis
|
|
|
|||||
of
certain assets
|
(321,000
|
)
|
(397,000
|
)
|
|||
Accounts
Receivable
|
211,000
|
27,000
|
|||||
Inventory
|
718,000
|
834,000
|
|||||
Other,
net
|
51,000
|
51,000
|
|||||
|
|
|
|||||
Deferred
tax assets, net
|
$
|
1,776,000
|
$
|
1,754,000
|
|||
Deferred
tax assets are classified as:
|
|||||||
Current
|
$
|
1,074,000
|
$
|
968,000
|
|||
Non-Current
|
702,000
|
786,000
|
|||||
$
|
1,776,000
|
$
|
1,754,000
|
2006
|
2005
|
2004
|
|||||||||||||||||
Wtd.
Avg.
|
Wtd.
Avg
|
Wtd.
Avg.
|
|||||||||||||||||
Shares
|
Ex.
Price
|
Shares
|
Ex.
Price
|
Shares
|
Ex.
Price
|
||||||||||||||
Outstanding,
beginning of year
|
144,767
|
$
|
3.23
|
131,125
|
$
|
2.83
|
179,000
|
$
|
1.97
|
||||||||||
Granted
|
35,000
|
$
|
5.78
|
25,000
|
$
|
4.62
|
4,000
|
$
|
4.40
|
||||||||||
Exercised
|
(72,500
|
) |
$
|
3.38
|
(11,358
|
)
|
$
|
1.74
|
(51,375
|
)
|
$
|
2.03
|
|||||||
Canceled
|
(2,517
|
) |
$
|
1.50
|
-
|
-
|
(500
|
)
|
$
|
1.50
|
|||||||||
Outstanding,
end of year
|
104,750
|
$
|
4.01
|
144,767
|
$
|
3.23
|
131,125
|
$
|
2.83
|
||||||||||
Exercisable,
end of year
|
94,750
|
$
|
3.83
|
144,767
|
$
|
3.23
|
108,500
|
$
|
3.08
|
Options Exercisable
|
|||
Number
|
Remaining
|
||
Outstanding
|
Contractual
|
||
Exercise
Price
|
At
9/30/06
|
Life
|
|
$5.780
|
25,000
|
9.5
years
|
|
$4.620
|
25,000
|
8.5
years
|
|
$4.400
|
4,000
|
7.5
years
|
|
$1.900
|
10,000
|
6.5
years
|
|
$1.650
|
2,000
|
6.5
years
|
|
$0.810
|
2,000
|
5.5
years
|
|
$1.500
|
13,750
|
4.5
years
|
|
$3.125
|
13,000
|
3.5
years
|
|
94,750
|
2006
|
2005
|
2004
|
|
Expected
life in years
|
5.5
|
6.0
|
6.0
|
Expected
volatility
|
63.0%
|
55.0%
|
142.0%
|
Risk-free
interest rate
|
4.7%
|
4.3%
|
2.0%
|
Expected
dividend yeild
|
-
|
-
|
-
|
2006
|
2005
|
2004
|
||||||||
(In
thousands)
|
||||||||||
Net
income as reported
|
$
|
4,003
|
$
|
4,974
|
$
|
4,574
|
||||
Pro
forma compensation expense from stock options
|
0
|
(65
|
)
|
(10
|
)
|
|||||
Pro
forma net income
|
$
|
4,003
|
$
|
4,909
|
$
|
4,564
|
||||
Earnings
per common share as reported:
|
||||||||||
Basic
|
$
|
.39
|
$
|
.49
|
$
|
.46
|
||||
Diluted
|
$
|
.39
|
$
|
.49
|
$
|
.41
|
||||
Proforma
earings per common share
|
||||||||||
Basic
|
$
|
.39
|
$
|
.49
|
$
|
.46
|
||||
Diluted
|
$
|
.39
|
$
|
.49
|
$
|
.41
|
Name
of
Beneficial
Owner
|
Percent
of
Common
Stock
Beneficially
Owned
|
Percent
of
Series
B
Preferred
Stock
Beneficially
Owned
(A)
|
||
David
E. Chymiak
|
23%
|
50.0%
|
||
Kenneth
A. Chymiak
|
20%
|
50.0%
|
Year
ended
|
Year
ended
|
Year
Ended
|
||||||||
September
30,
|
September
30,
|
September
30,
|
||||||||
|
2006
|
2005
|
2004
|
|||||||
Net
income
|
$
|
4,842,718
|
$
|
5,814,392
|
$
|
5,813,753
|
||||
Dividends
on preferred stock
|
840,000
|
840,000
|
1,240,000
|
|||||||
Net
income attributable to
|
||||||||||
common
shareholders - basic
|
4,002,718
|
4,974,392
|
4,573,753
|
|||||||
Dividends
on Series A
|
||||||||||
Preferred
Stock
|
-
|
-
|
400,000
|
|||||||
Net
income attributable to common
|
||||||||||
shareholders
- diluted
|
$
|
4,002,718
|
$
|
4,974,392
|
$
|
4,973,753
|
||||
Weighted
average shares outstanding
|
10,152,472
|
10,067,277
|
10,041,197
|
|||||||
Potentially
dilutive securities
|
||||||||||
Assumed
conversion of 200,000 shares of
|
||||||||||
Series
A Preferred Stock
|
-
|
-
|
2,000,000
|
|||||||
Effect
of dilutive stock options
|
49,002
|
42,577
|
63,344
|
|||||||
Weighted
average shares outstanding -
|
||||||||||
assuming
dilution
|
10,201,474
|
10,109,854
|
12,104,541
|
|||||||
Earnings
per common share:
|
||||||||||
Basic
|
$
|
0.39
|
$
|
0.49
|
$
|
0.46
|
||||
Diluted
|
$
|
0.39
|
$
|
0.49
|
$
|
0.41
|
December
31
|
March
31
|
June
30
|
September
30
|
||||||||||
Fiscal
year ended 2006
|
|||||||||||||
Net
sales and service income
|
14,753,611
|
12,419,157
|
13,199,459
|
12,168,982
|
|||||||||
Gross
profit
|
5,070,522
|
4,095,811
|
4,195,569
|
3,379,446
|
|||||||||
Net
income
|
1,741,594
|
1,076,798
|
1,342,699
|
681,627
|
|||||||||
Basic
earnings per common share
|
.15
|
.09
|
.11
|
.05
|
|||||||||
Diluted
earnings per common share
|
.15
|
.09
|
.11
|
.05
|
|||||||||
Fiscal
year ended 2005
|
|||||||||||||
Net
sales and service income
|
$
|
12,261,125
|
$
|
9,894,886
|
$
|
12,093,891
|
$
|
16,023,293
|
|||||
Gross
profit
|
4,056,414
|
3,519,716
|
4,258,587
|
5,037,311
|
|||||||||
Net
income
|
1,514,687
|
1,088,238
|
1,446,426
|
1,765,041
|
|||||||||
Basic
earnings per common share
|
0.13
|
0.09
|
0.12
|
0.15
|
|||||||||
Diluted
earnings per common share
|
0.13
|
0.09
|
0.12
|
0.15
|
|
Balance
at
|
Charged
to
|
Balance
at
|
|||||||||||||
|
Beginning
|
Costs
and
|
|
End
|
||||||||||||
|
of
Period
|
Expenses
|
Write-offs
|
Recoveries
|
of
Period
|
|||||||||||
Period
Ended September 30, 2006
|
||||||||||||||||
Allowance
for Doubtful Accounts
|
$
|
92,000
|
$
|
445,541
|
-
|
$
|
16,459
|
$
|
554,000
|
|||||||
Allowance
for Excess and Obsolete Inventory
|
1,575,395
|
439,625
|
(837,020
|
)
|
-
|
1,178,000
|
||||||||||
Valuation
Allowance of Deferred Tax Asset
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
|
||||||||||||||||
Period
Ended September 30, 2005
|
||||||||||||||||
Allowance
for Doubtful Accounts
|
$
|
68,063
|
$
|
40,080
|
(16,143
|
)
|
-
|
$
|
92,000
|
|||||||
Allowance
for Excess and Obsolete Inventory
|
1,093,000
|
482,395
|
-
|
-
|
1,575,395
|
|||||||||||
Valuation
Allowance of Deferred Tax Asset
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
|
||||||||||||||||
Period
Ended September 30, 2004
|
||||||||||||||||
Allowance
for Doubtful Accounts
|
$
|
78,359
|
$
|
-
|
(19,968
|
)
|
$
|
9,672
|
$
|
68,063
|
||||||
Allowance
for Excess and Obsolete Inventory
|
447,100
|
645,900
|
-
|
-
|
1,093,000
|
|||||||||||
Valuation
Allowance of Deferred Tax Asset
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
|
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 Exchange Commission by the Company on January 10,
2003.
|
3.2
|
Bylaws
of the Company, as amended, incorporated by reference to Exhibit
3.2 to
the Annual Report on Form 10-KSB filed with the Securities Exchange
Commission by the Company on January 10, 2003.
|
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 Exchange
Commission by the Company on October 14,
1999.
|
10.1
|
Lease
Agreement dated September 15, 1999 by and between Chymiak Investments,
L.L.C. and Tulsat Corporation (formerly named DRK Enterprises, Inc.)
incorporated by reference to Exhibit 10.3 to the Annual Report on
Form
10-KSB filed with the Securities Exchange Commission by the Company
on
December 30, 1999.
|
10.2
|
Schedule
of documents substantially similar to Exhibit 10.1 incorporated by
reference to Exhibit 10.3 to the Annual Report on Form 10-KSB filed
with
the Securities Exchange Commission by the Company on December 30,
1999.
|
10.4
|
Revolving
Credit and Term Loan Agreement dated September 30, 2004 ("Revolving
Credit
and Term Loan Agreement"), incorporated by reference to Exhibit 10.5
to
the Company's Form 10-K filed December 22,
2004.
|
10.5
|
Third
Amendment to Revolving Credit and Term Loan Agreement dated November
20,
2006.
|
10.6
|
The
ADDvantage Media Group, Inc. 1998 Incentive Stock Plan, incorporated
by
reference to Appendix A to the Company's Proxy Statement relating
to the
Company's 1998 Annual Meeting, filed April 28, 1998.
|
10.7
|
First
Amendment to ADDvantage Media Group, Inc. 1998 Incentive Stock Plan,
incorporated by reference to Exhibit 4.4 to
the
|
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.
|
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 Exchange Commission by the Company on January 10,
2003.
|
3.2
|
Bylaws
of the Company, as amended, incorporated by reference to Exhibit
3.2 to
the Annual Report on Form 10-KSB filed with the Securities Exchange
Commission by the Company on January 10, 2003.
|
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 Exchange
Commission by the Company on October 14,
1999.
|
10.1
|
Lease
Agreement dated September 15, 1999 by and between Chymiak Investments,
L.L.C. and Tulsat Corporation (formerly named DRK Enterprises, Inc.)
incorporated by reference to Exhibit 10.3 to the Annual Report on
Form
10-KSB filed with the Securities Exchange Commission by the Company
on
December 30, 1999.
|
10.2
|
Schedule
of documents substantially similar to Exhibit 10.1 incorporated by
reference to Exhibit 10.3 to the Annual Report on Form 10-KSB filed
with
the Securities Exchange Commission by the Company on December 30,
1999.
|
10.4
|
Revolving
Credit and Term Loan Agreement dated September 30, 2004 ("Revolving
Credit
and Term Loan Agreement"), incorporated by reference to Exhibit 10.5
to
the Company's Form 10-K filed December 22,
2004.
|
10.5
|
Third
Amendment to Revolving Credit and Term Loan Agreement dated November
20,
2006.
|
10.6
|
The
ADDvantage Media Group, Inc. 1998 Incentive Stock Plan, incorporated
by
reference to Appendix A to the Company's Proxy Statement relating
to the
Company's 1998 Annual Meeting, filed April 28, 1998.
|
10.7
|
First
Amendment to ADDvantage Media Group, Inc. 1998 Incentive Stock Plan,
incorporated by reference to Exhibit 4.4 to
the
|
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.
|