Item 1.01 Entry into a Material Definitive Agreement.
PPP Loan. On April 10, 2020, ADDvantage Technologies Group, Inc. entered into an SBA Payroll Protection Program (PPP) loan with its primary lender, Vast Bank, N.A. in the principal amount of $2,915,000, bearing
interest at 1.0% per annum, with monthly payments of principal and interest in the amount of $164,045 each, commencing on November 10, 2020, and payable in full on April 10, 2022. In the event the conditions of the PPP loan are satisfied by the
Company (principally related to the use of loan proceeds primarily for the payment of payroll expenses and the retention of the Company’s work staff), the loan will be converted into a grant and will not be repayable by the Company.
Equity Distribution Agreement. On April 24, 2020, the Company
entered into an Equity Distribution Agreement (the “Sales Agreement”) with Northland Securities, Inc., as agent (“Northland”), pursuant to which the Company may offer and sell, from time to time, through Northland, shares of the Company’s common
stock, par value $0.01 per share (the “Common Stock”), having an aggregate offering price of up to $13,850,000 (the “Shares”).
The offer and sale of the Shares will be made pursuant to a shelf registration statement on Form S-3 and the related prospectus (File No. 333-236859) filed by
the Company with the Securities and Exchange Commission (the “SEC”) on March 3, 2020, as amended on March 23, 2020, and declared effective by the SEC on April 1, 2020.
Pursuant to the Sales Agreement, Northland may sell the Shares by any method permitted by law deemed to be an “at the market offering” as defined in Rule
415 of the Securities Act of 1933 (the “Securities Act”), including sales made by means of ordinary brokers’ transactions, including on The Nasdaq Global Market, at market prices or as otherwise agreed with Northland. Northland will use commercially
reasonable efforts consistent with its normal trading and sales practices to sell the Shares from time to time, based upon instructions from the Company, including any price of size limits or other customary parameters or conditions the Company may
impose.
The offering of Shares pursuant to the Sales Agreement will terminate upon the earliest of (a) the sale of all of the Shares subject to the Sales Agreement
or (b) the termination of the Sales Agreement by Northland or the Company, as permitted therein.
The Company will pay Northland a commission rate equal to an aggregate of 3.0% of the aggregate gross proceeds from each sale of Shares and have agreed to
provide Northland with customary indemnification and contribution rights. The Company will also reimburse Northland for certain specified expenses in connection with entering into the Sales Agreement. The Sales Agreement contains customary
representations and warranties and conditions to the placements of the Shares pursuant thereto.
The foregoing description of the Sales Agreement is not complete and is qualified in its entirety by reference to the full text of such agreement, a copy
of which is filed herewith as Exhibit 1.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The legal opinion, including the related consent of Hall, Estill, Hardwick, Gable, Golden & Nelson, P.C. relating to the issuance and sale of the
Shares is filed as Exhibit 5.1 hereto.
This Current Report of Form 8-K shall not constitute an offer to sell or the solicitation of an offer to buy the Common Stock discussed herein, nor shall
there be any offer, solicitation, or sale of common stock in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state.