Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported) November 14, 2023

ADDVANTAGE TECHNOLOGIES GROUP, INC.

(Exact name of Registrant as specified in its Charter)

Oklahoma

(State or other Jurisdiction of Incorporation)


1-10799			73-1351610
(Commission file Number)			(IRS Employer Identification No.)

1430 Bradley Lane, Carrollton, Texas			75007
(Address of Principal Executive Offices)			(Zip Code)

(918) 251-9121

(Registrant's Telephone Number, Including Area Code)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):


☐			Written Communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)


☐			Recommencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


	Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, par value $0.01	AEY	NASDAQ

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operation and Financial Condition.

On November 14, 2023, ADDvantage Technologies Group, Inc. (NASDAQ: AEY), reported its financial results for the nine month period ended September 30, 2023. A copy of the press release is furnished as Exhibit 99.1 to this Current Report and is incorporated herein by reference.

Item 7.01 Regulation FD Disclosure.

The Company will host a conference call:

Date: Tuesday, November 14, 2023

Time: 5 p.m. Eastern

Toll-free Dial-in Number: 1-844-826-3035

International Dial-in Number: 1-412-317-5195

Conference ID: 10184146

The conference call will be available via webcast and can be accessed through the Investor Relations section of ADDvantage's website, www.addvantagetechnologies.com. Please allow extra time prior to the call to visit the site and download any necessary software to listen to the Internet broadcast.

A replay of the conference call will be available through November 28, 2023.

Toll-free Replay Number: 1-844-512-2921

International Replay Number: 1-412-317-6671

Replay Passcode: 10184146

An online archive of the webcast will be available on the Company's website for 30 days following the call.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

The following exhibit is furnished herewith:


Exhibit 99.1			Press release dated November 14, 2023


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


			ADDvantage Technologies Group, Inc.

			Date: November 14, 2023

			/s/ Michael A. Rutledge
			Michael A. Rutledge
			Chief Financial Officer

ADDvantage Technologies Reports Financial Results for the Quarter Ended September 30, 2023

Carrollton, Texas, November 14, 2023 – ADDvantage Technologies Group, Inc. (NASDAQ: AEY) (“ADDvantage Technologies” or the “Company”) today reported financial results for the three and nine months ended September 30, 2023, the third quarter of 2023.

“We have taken proactive steps to reduce our fixed costs by $2 million this year in response to industry-wide headwinds in both segments,” commented Joe Hart, Chief Executive Officer. “Simultaneously, we are aggressively expanding our Fulton Technologies business into adjacent Broadband and Fixed Wireless construction and infrastructure markets where we can take advantage of established relationships, existing contracts and proven capabilities. This expansion shows significant promise, representing a more durable revenue stream that is more resistant to economic pressures. We are encouraged with the initial response to our Broadband initiatives and our backlog for fiber network construction has increased substantially over just a few short months.”

“In the interim, we are carefully managing costs to navigate the ongoing downturn in 5G-related build activity by the national wireless carriers,” continued Mr. Hart. “Construction is expected to pick back up in 2024 as wireless data consumption and network demand continues to climb at a positive rate.

Our Telco Segment is also experiencing a start to increased monthly sales due to an increase in orders for Optical Transport equipment. Simultaneously, we have methodically reduced our Telco inventory levels by $1.8 million over the first nine months of the year in light of lower demand.”

Financial Results for the Three Months ended September 30, 2023

Third quarter sales were $10.3 million, a decrease of $15.6 million, or 60% compared to $25.9 million last year. The decrease was primarily due to a decrease of $11.4 million in Telco revenue, and a decrease of $4.2 million in Wireless revenue.

Gross profit was $2.8 million, or 27% gross margin, compared to gross profit of $8.5 million, or 33.0% gross margin, for the same period last year. Operating expenses decreased $0.6 million, or 27%, to $1.7 million reflecting the previously announced cost-reduction initiatives. Consolidated selling, general and administrative ("SG&A") expenses include overhead, which consist of personnel, insurance, professional services, communication, and other cost categories, decreased $1.4 million or 31%, to $3.1 million for the three months ended September 30, 2023 from $4.5 million for the same period last year.

Net loss for the quarter was $2.7 million, or $0.19 per basic and diluted share, compared to net income of $1.5 million, or $0.11 per basic and diluted share, for the same quarter last year.

Balance sheet

Cash and cash equivalents were $1.6 million as of September 30, 2023, compared to $2.6 million at December 31, 2022. Outstanding debt as of September 30, 2023 was $3.6 million.

As a result of continuing negative operating results, the Company is exploring obtaining other funding arrangements to supplement working capital and a replacement of its current accounts receivable factoring facility which matures December 17, 2023. Our unaudited financial statements include an explanatory paragraph related to the Company’s ability to continue as a going concern. See further discussion in Note 2 to the Company’s financial statements included in the Company’s Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2023. This announcement does not represent any change or amendment to the Company’s financial statements or to its Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2023.

Earnings Conference Call

The Company will host a conference call on Tuesday, November 14, 2023 at 5 p.m. Eastern.

Date: Tuesday, November 14, 2023

Time: 5 p.m. Eastern

Toll-free Dial-in Number: 1-844-826-3035

International Dial-in Number: 1-412-317-5195

Conference ID: 10184146

Participants can also click this link to have an operator connect interested parties to the call using passcode: 6996978.

A replay of the conference call will be available through November 28, 2023.

Toll-free Replay Number: 1-844-512-2921

International Replay Number: 1-412-317-6671

Replay Passcode: 10184146

An online archive of the webcast will be available on the Company's website for 30 days following the call.

About ADDvantage Technologies Group, Inc.

ADDvantage Technologies Group, Inc. (Nasdaq: AEY) is a communications infrastructure services and equipment provider operating a diversified group of companies through its Wireless Infrastructure Services and

Telecommunications segments. Through its Wireless segment, Fulton Technologies provides turn-key wireless infrastructure services including the installation, modification and upgrading of equipment on communication towers and small cell sites for wireless carriers, national integrators, tower owners and major equipment manufacturers. Through its Telecommunications segment, Nave Communications and Triton Datacom sell equipment and hardware used to acquire, distribute, and protect the communications signals carried on fiber optic, coaxial cable and wireless distribution systems. The Telecommunications segment also offers repair services focused on telecommunication equipment and recycling surplus and related obsolete telecommunications equipment.

ADDvantage operates through its subsidiaries, Fulton Technologies, Nave Communications, and Triton Datacom. For more information, please visit the corporate web site at www.addvantagetechnologies.com/.

Cautions Regarding Forward-Looking Statements

The information in this announcement may include forward-looking statements. All statements, other than statements of historical facts, which address activities, events or developments that the Company expects or anticipates will or may occur in the future, are forward-looking statements. These statements are subject to risks and uncertainties, which could cause actual results and developments to differ materially from these statements. A complete discussion of these risks and uncertainties is contained in the Company’s reports and documents filed from time to time with the Securities and Exchange Commission.

For further information:

Hayden IR

Brett Maas

(646) 536-7331

aey@haydenir.com

-- Tables follow –

ADDvantage Technologies Group, Inc.

Consolidated Balance Sheets

(in thousands, except share amounts)

(Unaudited)


	September 30, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	1,632	$	2,552
Restricted cash	722		1,101
Accounts receivable, net of allowances of $304 and $262, respectively	1,491		1,682
Unbilled revenue	1,232		5,005

Income tax receivable	102		102
Inventories, net of allowances of $4,118 and $3,871, respectively	7,788		9,563
Prepaid expenses and other current assets	1,313		1,399
Total current assets	14,280		21,404

Property and equipment, at cost:
Machinery and equipment	5,568		5,542
Leasehold improvements	899		899
Total property and equipment, at cost	6,467		6,441
Less: Accumulated depreciation	(3,761)		(3,057)
Net property and equipment	2,706		3,384
Right-of-use lease assets	814		1,540

Intangibles, net of accumulated amortization	470		709
Goodwill	58		58

Other assets	207		123
Total assets	$	18,535	$	27,218


Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	6,777	$	9,407
Accrued expenses	1,531		1,445
Deferred revenue	332		148

Notes payable	2,220		—
Right-of-use lease obligations, current	757		1,204
Finance lease obligations, current	627		636
Other current liabilities	565		442
Total current liabilities	12,809		13,282

Right-of-use lease obligations, long-term	149		635
Finance lease obligations, long-term	790		1,254

Total liabilities	13,748		15,171
Shareholders’ equity:
Common stock, $0.01 par value; 30,000,000 shares authorized; 14,850,858 and 14,132,033 shares issued and outstanding, respectively	149		141
Paid in capital	3,625		2,585
Retained earnings	1,013		9,321
Total shareholders’ equity	4,787		12,047
Total liabilities and shareholders’ equity	$	18,535	$	27,218

ADDvantage Technologies Group, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Sales	$	10,341	$	25,926	$	37,148	$	77,474
Cost of sales	7,502		17,383		27,620		55,026
Gross profit	2,839		8,543		9,528		22,448
Operating expenses	1,689		2,303		5,703		7,600
Selling, general and administrative expenses	3,071		4,464		9,965		12,459


Depreciation and amortization expense	308		295		942		925
Gain on disposal of assets	—		311		—		309
Income (loss) from operations	(2,229)		1,792		(7,082)		1,773
Other expense:


Other expense	(158)		(273)		(491)		(675)
Interest expense	(338)		(36)		(717)		(134)
Other expense, net	(496)		(309)		(1,208)		(809)

Income (loss) before income taxes	(2,725)		1,483		(8,290)		964
Income tax provision	2		—		18		—




Net income (loss)	$	(2,727)	$	1,483	$	(8,308)	$	964

Income (loss) per share:
Basic and diluted	$	(0.19)	$	0.11	$	(0.60)	$	0.07

Shares used in per share calculation:
Basic and diluted	14,256,869		13,638,162		13,882,628		13,302,410

Non-GAAP Financial Measure

Adjusted EBITDA is a supplemental, non-GAAP financial measure. EBITDA is defined as earnings before interest expense, income taxes, depreciation and amortization. Adjusted EBITDA as presented also excludes impairment charges for operating lease right-of-use assets and intangible assets including goodwill, stock compensation expense, other income, other expense, interest income and income from equity method investment. Adjusted EBITDA is presented below because this metric is used by the financial community as a method of measuring our financial performance and of evaluating the market value of companies considered to be in similar businesses. Since Adjusted EBITDA is not a measure of performance calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, net earnings as an indicator of operating performance. Adjusted EBITDA, as calculated below, may not be comparable to similarly titled measures employed by other companies. In addition, Adjusted EBITDA is not necessarily a measure of our ability to fund our cash needs.

The following table provides a reconciliation by segment of loss from operations to Adjusted EBITDA for the three and nine month periods ended September 30, 2023 and 2022, in thousands:


	Three Months Ended September 30, 2023						Three Months Ended September 30, 2022
	Wireless		Telco		Total		Wireless		Telco		Total
Income (loss) from operations	$	(1,853)	$	(376)	$	(2,229)	$	(202)	$	1,994	$	1,792
Depreciation and amortization expense	188		120		308		174		121		295
Stock compensation expense	(7)		72		65		78		72		150
Adjusted EBITDA	$	(1,672)	$	(184)	$	(1,856)	$	50	$	2,187	$	2,237

	Nine Months Ended September 30, 2023						Nine Months Ended September 30, 2022
	Wireless		Telco		Total		Wireless		Telco		Total
Income (loss) from operations	$	(5,617)	$	(1,465)	$	(7,082)	$	(3,859)	$	5,632	$	1,773
Depreciation and amortization expense	582		360		942		561		364		925
Stock compensation expense	283		380		663		234		266		500
Adjusted EBITDA	$	(4,752)	$	(725)	$	(5,477)	$	(3,064)	$	6,262	$	3,198

Cover	Nov. 14, 2023
Cover [Abstract]
Document Type	8-K
Document Period End Date	Nov. 14, 2023
Entity Registrant Name	ADDVANTAGE TECHNOLOGIES GROUP, INC
Entity Incorporation, State or Country Code	OK
Entity File Number	1-10799
Entity Tax Identification Number	73-1351610
Entity Address, Address Line One	1430 Bradley Lane
Entity Address, City or Town	Carrollton
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75007
City Area Code	(918)
Local Phone Number	251-9121
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Title of 12(b) Security	Common stock, par value $0.01
Trading Symbol	AEY
Security Exchange Name	NASDAQ
Entity Central Index Key	0000874292
Amendment Flag	false
Document Information [Line Items]
Document Period End Date	Nov. 14, 2023