On
December 3, 2007, the Audit Committee of the Board of Directors of
ADDvantage
Technologies Group, Inc. (the “Company”) concluded that the reported cash flows
from certain operating and investing activities set forth in the Consolidated
Statements of Cash Flows for the fiscal years ended September 30, 2005
and 2006,
contained in the Company’s Annual Report on Form 10-K for the year ended
September 30, 2006, were inaccurate and should not be relied upon.
The Company
intends to amend its Form 10-K for the year ended September 30, 2006,
to restate
the Consolidated Statements of Cash Flows for the years ended September
30, 2006
and 2005.
For
all
periods amended there was no change in the Net Income, Beginning of period
or End of period Cash, Consolidated Statements of Income and
Comprehensive Income, Consolidated Balance Sheets or Consolidated Statements
of
Changes in Stockholders’ Equity. Accordingly, the Company’s
historical revenues, net income, earnings per share and total assets
remain
unchanged.
The
Audit Committee discussed the matters described in this report
with representatives of the Company's current independent accounting
firm Hogan & Slovacek and the Company's preceeding independent
accounting firm for fiscal 2005 Tullius, Taylor, Sartain &
Sartain.
The
restatements for the periods described above were caused by errors
in presenting
the cash outflows related to the Company's August 19, 2005 acquisition of
Jones Broadband International in accordance with Statement of
Financial Accounting Standard No. 95, Statement of Cash
Flows. This statement requires only the actual cash
outflows associated with the purchase be presented as an Investing
Activity during the period reported. Management recorded
the acquisition correctly in the 2005 Consolidated Balance Sheet but
incorrectly disclosed certain liabilities assumed with the purchase as
well as purchase price payments made subsequent to fiscal 2005 as part
of the
2005 Investment in Jones Broadband. As such, the "Investment in Jones
Broadband International," disclosed in the 2005 Consolidated Statements
of Cash
Flows, net of cash acquired of $100,322, totaling $3,510,935 was overstated
by
$626,321. The assumed liabilities as well as purchase price payments
made subsequent to fiscal 2005 should have been presented in the Net cash
provided by operating activities section of the 2005 Consolidated Statement
of Cash Flows.
During
fiscal 2006, the Company paid $500,471 of the Jones International
acquisition price and during fiscal 2007, the Company made the final
payments
associated with the August 19, 2005 acquisition totaling $145,833.
As a portion
of the purchase price was paid in 2006, the 2006 Statement of Cash
Flows will be restated to include these payments.
The
key
reporting lines of the original 2005 and 2006 Statements of Cash Flows,
the
impact of the adjustments and resulting restated 2005 and 2006 Statements
of
Cash Flows are summarized below:
ADDVANTAGE
TECHNOLOGIES GROUP, INC.
SUMMARY
OF ADJUSTMENTS TO 2005 & 2006 STATEMENTS OF CASH FLOWS
Fiscal
Year Ended September 30
|
|
|
Restated
|
|
|
|
Original
|
|
Restated
|
|
|
|
Original
|
|
|
2006
|
|
Adjustments
|
|
2006
|
|
2005
|
|
Adjustments
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$ |
4,842,718
|
|
|
|
$ |
4,842,718
|
|
$ |
5,814,392
|
|
|
|
$ |
5,814,392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by operating activities
|
|
|
743,403
|
|
|
500,471
|
|
|
242,932
|
|
|
5,525,339
|
|
|
(626,321) |
|
|
6,151,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in investing activities
|
|
|
(599,991) |
|
|
(500,471) |
|
|
99,520
|
|
|
(3,331,148) |
|
|
626,321
|
|
|
(3,957,469) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash (used in) or provided by financing activities
|
|
|
(493,733) |
|
|
0
|
|
|
(493,733) |
|
|
(3,061,211) |
|
|
0
|
|
|
(3,061,211) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(decrease) increase in cash
|
|
|
(350,321) |
|
|
|
|
|
(350,321) |
|
|
(867,020) |
|
|
|
|
|
(867,020) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash,
beginning of period
|
|
|
449,219
|
|
|
|
|
|
449,219
|
|
|
1,316,239
|
|
|
|
|
|
1,316,239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash,
end of period
|
|
$ |
98,898
|
|
|
|
|
$ |
98,898
|
|
$ |
449,219
|
|
|
|
|
$ |
449,219
|