Market Newsdesk

ErosSTX Files Registration Statement with Respect to Shares Issued in Merger

DOUGLAS, Isle of Man & BURBANK, Calif.–(BUSINESS WIRE)–
Eros STX Global Corporation (NYSE: ESGC) (“ErosSTX” or the “Company”), a global entertainment company, today submitted to the SEC a Registration Statement on Form F-3 that registers the offer and sale of, among other things, approximately 196.3 million ErosSTX A ordinary shares issued to former stockholders of STX Filmworks, Inc. (“STX”) in connection with the merger of Eros International Plc (“Eros”) and STX (the “Merger”).

The approximately 196.3 million A ordinary shares are comprised of (1) approximately 171.9 million A ordinary shares underlying the contingent value rights (“CVRs”) issued to former STX stockholders in connection with the Merger, and (2) approximately 24.4 million A ordinary shares issued to certain former STX stockholders pursuant to the previously disclosed PIPE financing consummated in connection with the Merger on July 30, 2020. The A ordinary shares underlying the CVRs have not yet been issued to the holders of the CVRs.

The Registration Statement on Form F-3 has not been declared effective by the SEC. The CVRs will be settled and the A ordinary shares underlying the CVRs will be issued when the SEC declares the Registration Statement on Form F-3 effective. The Company currently expects the registration statement to become effective in the first calendar quarter of 2021, although the timing of effectiveness is uncertain.

As of December 11, 2020, the Company had approximately 185.3 million A ordinary shares and 21.7 million B ordinary shares issued and outstanding. Following the completion of this share issuance and registration associated with the CVRs and PIPE, there will be approximately 357.2 million A ordinary shares and 21.7 million B ordinary shares issued and outstanding, for a combined total of 378.9 million ordinary shares. As previously announced, the Company intends to issue, pending Board approval, an additional 40 million A ordinary shares in management plan equity awards, which would bring the number of issued and outstanding A ordinary shares to 397.2 million, and the combined total ordinary shares to 418.9 million.

Investor Day Update

The Company will announce the date for its investor day event once there is better visibility on the completion of the SEC’s review of this Registration Statement.

A registration statement on Form F-3 relating to these securities has been filed with the SEC but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective.

This press release does not constitute an offer to sell or the solicitation of offers to buy any securities, and shall not constitute an offer, solicitation or sale of any security in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

Eros STX Global Corporation:

Eros STX Global Corporation, (“ErosSTX”) (NYSE: ESGC) is a global entertainment company that acquires, co-produces and distributes films, digital content & music across multiple formats such as theatrical, television and OTT digital media streaming to consumers around the world. Eros International Plc changed its name to Eros STX Global Corporation pursuant to the July 2020 merger with STX Entertainment, merging two international media and entertainment groups. The combination of one of the largest Indian OTT players and premier studio with one of Hollywood’s fastest-growing independent media companies has created an entertainment powerhouse with a presence in over 150 countries. ErosSTX delivers star-driven premium feature film and episodic content across a multitude of platforms at the intersection of the world’s most dynamic and fastest-growing global markets, including US, India, Middle East, Asia and China. The company also owns the rapidly growing OTT platform Eros Now which has rights to over 12,000 films across Hindi and regional languages and had 211.5 million registered users and 36.2 million paying subscribers as of September 30, 2020. For further information, please visit ErosSTX.com.

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS:

Information provided in this communication includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are subject to the safe harbors created thereby. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “approximately,” “anticipate,” “believe,” “estimate,” “continue,” “could,” “expect,” “future,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will” and similar expressions. Those statements include, among other things, the discussions of the Company’s business strategy and expectations concerning its and the Company’s market position, future operations, margins, profitability, liquidity and capital resources, tax assessment orders and future capital expenditures. All such forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we are expecting, including, without limitation: our ability to successfully and cost-effectively source film content; the Company’s ability to achieve the desired growth rate of Eros Now, its digital over-the-top (“OTT”) entertainment service; our ability to maintain or raise sufficient capital; delays, cost overruns, cancellation or abandonment of the completion or release of the Company’s films; our ability to predict the popularity of its films, or changing consumer tastes; our ability to maintain existing rights, and to acquire new rights, to film content; our ability to successfully defend any future class action lawsuits we are a party to in the U.S.; anonymous letters to regulators or business associates or anonymous allegations on social media regarding the Company’s business practices, accounting practices and/or officers and directors; our ability to recoup the full amount of box office revenues to which it is entitled due to underreporting of box office receipts by theater operators; our dependence on our relationships with theater operators and other industry participants to exploit the Company’s film content; our ability to mitigate risks relating to distribution and collection in international markets; our ability to compete with other forms of entertainment; our ability to combat piracy and to protect our intellectual property; our ability to maintain an effective system of internal control over financial reporting; contingent liabilities that may materialize, our exposure to liabilities on account of unfavorable judgments/decisions in relation to legal proceedings involving the Company or its subsidiaries and certain of its directors and officers; our ability to successfully respond to technological changes; our ability to satisfy debt obligations, fund working capital and pay dividends; the monetary and fiscal policies of countries around the world, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices; our ability to address the risks associated with acquisition opportunities; risks that the ongoing novel coronavirus pandemic and its spread, and related public health measures, may have material adverse effects on our business, financial position, results of operations and/or cash flows; challenges, disruptions and costs of the Merger and related transactions, integrating the Eros and STX businesses and achieving anticipated synergies, and the risk that such synergies will take longer to realize than expected or may not be realized in whole or in part; the amount of any costs, fees, expenses, impairments and charges related to the Merger and related transactions; uncertainty as to the effects of the consummation of the Merger and related transactions on the market price of our A Ordinary Shares and/or the Company’s financial performance; and uncertainty as to the long-term value of the Company’s ordinary shares.

The forward-looking statements contained in this communication are based on historical performance and management’s current plans, estimates and expectations in light of information currently available and are subject to uncertainty and changes in circumstances. There can be no assurance that future developments affecting the Company will be those that it has anticipated. Actual results may differ materially from these expectations due to changes in global, regional or local political, economic, business, competitive, market, regulatory and other factors, many of which are beyond the Company’s control. Should one or more of these risks or uncertainties materialize or should any of the Company’s assumptions prove to be incorrect, the Company’s actual results may vary in material respects from what the Company may have expressed or implied by these forward-looking statements. The Company cautions that you should not place undue reliance on any of its forward-looking statements. Any forward-looking statement made by the Company in this communication speaks only as of the date on which the Company makes it. Factors or events that could cause the Company’s actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by applicable securities laws.

View source version on businesswire.com: https://www.businesswire.com/news/home/20201216006024/en/

Investor Contact:

Drew Borst

EVP, Investor Relations & Business Development

ErosSTX Global Corporation

[email protected]

KEYWORDS: Europe Isle of Man United States North America California

INDUSTRY KEYWORDS: Music Film & Motion Pictures Online Entertainment TV and Radio

MEDIA:

Posted on December 16, 2020 5:58 pm

ErosSTX Releases Historical Pro Forma Financials

ErosSTX Releases Historical Pro Forma Financials

DOUGLAS, Isle of Man & BURBANK, Calif.–(BUSINESS WIRE)–
Eros STX Global Corporation (NYSE: ESGC) (“ErosSTX” or the “Company”), a global entertainment company, today submitted to the SEC a Form 6-K (the “Form 6-K”) that contains (1) unaudited pro forma U.S. GAAP financial statements in connection with the merger (the “Merger”) of STX Filmworks, Inc (“STX”) and Eros International Plc (“Eros”), for the twelve months ended June 30, 2020 and (2) unaudited U.S. GAAP financial statements for legacy STX for the three months ended June 30, 2020.

The company recently announced that Ernst & Young LLP (“EY”) was appointed its auditor, effective December 2, 2020, for the fiscal year ending March 31, 2021. Prior to the Merger, EY was the auditor for STX and Grant Thornton Bharat LLP was the auditor for Eros. For additional details on this topic, please refer to the Company’s Form 6-K submitted to the SEC on December 3, 2020.

Pro Forma Financials: The financial information included in the Form 6-K reflects certain pro forma adjustments to the historical consolidated Eros financial statements to (1) convert them from IFRS to U.S. GAAP accounting standards, and (2) conform their accounting and presentation policies to those applied by STX. In the Form 6-K, these adjustments are detailed quantitatively in the financial statements, which include a bridge from the legacy figures to the pro forma figures, and qualitatively in the footnotes to the financial statements. Additionally, the balance sheet adjustments reflect the company’s updated and current view of the impact from the COVID-19 pandemic.

The pro forma balance sheet as of June 30, 2020 combines the historical audited balance sheet of STX and the March 31, 2020 historical audited balance sheet of Eros, on a pro forma basis as if the Merger had been consummated on June 30, 2020. This presentation, even with the mismatch in reporting periods for STX and Eros, is consistent with the SEC accounting guidelines and regulations.

The pro forma combined income statement for the twelve months ended June 30, 2020, combine the historical statements of operations of STX and Eros on a pro forma basis as if the Merger had been consummated on July 1, 2019.

Legacy STX Financials: The stand-alone STX financial statements for the three months ended June 30, 2020 show a year-on-year increase in operating income, net income and operating cash flow despite a year-on-year decrease in revenue. While the COVID-19 pandemic had a noticeable impact on the company’s financial results this quarter the results, these results also underscore the high profit generation from STX’s growing film and TV library. During the three months ended June 30, 2020, total revenue declined by $13 million year-on-year to $97 million, reflecting a $17 million decrease in theatrical revenue (to nil) due to the closure of movie theaters caused by COVID-19, and a $17 million decrease in TV and Other revenue from a difficult comparison to the prior year period that included the delivery of an unscripted TV series without a comparable delivery this period. These revenue declines were partially offset by an $18 million increase in TV/Streaming from film licensing. Meanwhile, total operating expenses decreased by $85 million year-on-year to $76 million driven by a $57 million decrease in distribution and marketing expenses from the absence of theatrical releases due to COVID-19. Operating cash flow increased by $101 million year-on-year to $41 million, reflecting the aforementioned decrease in marketing and distribution expenses, as well as a $28 million decrease in film and television cash investment due to the suspension of productions caused by COVID-19.

Therefore, the Company does not believe these quarterly results are fully representative of legacy STX’s future revenue and profit potential if production and release activities normalize after the COVID-19 pandemic is contained. During COVID-19 STX pursued new film distribution strategies with profit margins and ROIs that are comparable, or in some cases higher, than the traditional box office-led distribution model used in the past, although there can be no assurance that such profit margins or ROIs will be achieved. Going forward, the Company will continue to evaluate the evolving marketplace and will pursue what it believes to be the optimal distribution and monetization strategy for each film, including the potential use of a hybrid model that leverages multiple global distribution channels across theatrical, premium video on-demand (PVOD), physical and digital home video, television and streaming.

Eros STX Global Corporation:

Eros STX Global Corporation, (“ErosSTX”) (NYSE: ESGC) is a global entertainment company that acquires, co-produces and distributes films, digital content & music across multiple formats such as theatrical, television and OTT digital media streaming to consumers around the world. Eros International Plc changed its name to Eros STX Global Corporation pursuant to the July 2020 merger with STX Entertainment, merging two international media and entertainment groups. The combination of one of the largest Indian OTT players and premier studio with one of Hollywood’s fastest-growing independent media companies has created an entertainment powerhouse with a presence in over 150 countries. ErosSTX delivers star-driven premium feature film and episodic content across a multitude of platforms at the intersection of the world’s most dynamic and fastest-growing global markets, including US, India, Middle East, Asia and China. The company also owns the rapidly growing OTT platform Eros Now which has rights to over 12,000 films across Hindi and regional languages and had 211.5 million registered users and 36.2 million paying subscribers as of September 30, 2020. For further information, please visit ErosSTX.com.

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS:

Information provided in this communication includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are subject to the safe harbors created thereby. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “approximately,” “anticipate,” “believe,” “estimate,” “continue,” “could,” “expect,” “future,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will” and similar expressions. Those statements include, among other things, the discussions of the Company’s business strategy and expectations concerning its and the Company’s market position, future operations, margins, profitability, liquidity and capital resources, tax assessment orders and future capital expenditures. All such forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we are expecting, including, without limitation: our ability to successfully and cost-effectively source film content; the Company’s ability to achieve the desired growth rate of Eros Now, its digital over-the-top (“OTT”) entertainment service; our ability to maintain or raise sufficient capital; delays, cost overruns, cancellation or abandonment of the completion or release of the Company’s films; our ability to predict the popularity of its films, or changing consumer tastes; our ability to maintain existing rights, and to acquire new rights, to film content; our ability to successfully defend any future class action lawsuits we are a party to in the U.S.; anonymous letters to regulators or business associates or anonymous allegations on social media regarding the Company’s business practices, accounting practices and/or officers and directors; our ability to recoup the full amount of box office revenues to which it is entitled due to underreporting of box office receipts by theater operators; our dependence on our relationships with theater operators and other industry participants to exploit the Company’s film content; our ability to mitigate risks relating to distribution and collection in international markets; our ability to compete with other forms of entertainment; our ability to combat piracy and to protect our intellectual property; our ability to maintain an effective system of internal control over financial reporting; contingent liabilities that may materialize, our exposure to liabilities on account of unfavorable judgments/decisions in relation to legal proceedings involving the Company or its subsidiaries and certain of its directors and officers; our ability to successfully respond to technological changes; our ability to satisfy debt obligations, fund working capital and pay dividends; the monetary and fiscal policies of countries around the world, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices; our ability to address the risks associated with acquisition opportunities; risks that the ongoing novel coronavirus pandemic and its spread, and related public health measures, may have material adverse effects on our business, financial position, results of operations and/or cash flows; challenges, disruptions and costs of the Merger and related transactions, integrating the Eros and STX businesses and achieving anticipated synergies, and the risk that such synergies will take longer to realize than expected or may not be realized in whole or in part; the amount of any costs, fees, expenses, impairments and charges related to the Merger and related transactions; uncertainty as to the effects of the consummation of the Merger and related transactions on the market price of our A Ordinary Shares and/or the Company’s financial performance; and uncertainty as to the long-term value of the Company’s ordinary shares.

The forward-looking statements contained in this communication are based on historical performance and management’s current plans, estimates and expectations in light of information currently available and are subject to uncertainty and changes in circumstances. There can be no assurance that future developments affecting the Company will be those that it has anticipated. Actual results may differ materially from these expectations due to changes in global, regional or local political, economic, business, competitive, market, regulatory and other factors, many of which are beyond the Company’s control. Should one or more of these risks or uncertainties materialize or should any of the Company’s assumptions prove to be incorrect, the Company’s actual results may vary in material respects from what the Company may have expressed or implied by these forward-looking statements. The Company cautions that you should not place undue reliance on any of its forward-looking statements. Any forward-looking statement made by the Company in this communication speaks only as of the date on which the Company makes it. Factors or events that could cause the Company’s actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by applicable securities laws.

View source version on businesswire.com: https://www.businesswire.com/news/home/20201216006023/en/

Investor Contact:

Drew Borst

EVP, Investor Relations & Business Development

ErosSTX Global Corporation

[email protected]

KEYWORDS: California Europe Isle of Man United States North America

INDUSTRY KEYWORDS: Film & Motion Pictures TV and Radio Online Consumer Electronics General Entertainment Licensing (Entertainment) Technology Entertainment

MEDIA:

Posted on December 16, 2020 5:56 pm

ADDvantage Technologies Reports Financial Results for Fourth Quarter and Year End Fiscal 2020

CARROLLTON, Texas, Dec. 16, 2020 (GLOBE NEWSWIRE) — ADDvantage Technologies Group, Inc. (NASDAQ: AEY) (“ADDvantage Technologies” or the “Company”) today reported its financial results for the three and twelve months ended September 30, 2020.

ADDvantage’s Chief Executive Officer, Joe Hart, commented, “With 2020 being a challenging global business environment, ADDvantage Technologies group was identified as an ‘essential service’ as we provide critical infrastructure in building and supporting communications services. We have been resilient in our cost and cash management as we had significant hurdles to overcome in both our Telco and Wireless business during fiscal year 2020. These hurdles were primarily driven by the shift to remote work as offices shut down impacting our Telco business and closure of special outdoor event or large gathering events impacting our Wireless business.”

“During this business environment, we wanted to accomplish three strategic imperatives in strengthening our balance sheet for sustainable growth.”  

“First, we wanted to increase our overall cash position and did so by increasing our cash holdings to over $8 million while maintaining working capital¹ at over $11 million.”

“Second, we wanted to use this environment to reshape our Telco and Wireless business for expanded growth plus drive a more nimble and leaner business model by reducing overhead and direct expenses. For Telco, we took major write-downs of Goodwill, Intangibles and Inventory at over $11 million. This action made our Telco business nimble and more competitive in both a COVID and post-COVID business environment. For growth, we invested in our Wireless business by increasing our revenue coverage model by adding resources in sales and back office in supporting the increase 5G build opportunities. For Telco growth, we completed our investment for a new facility for our Triton business in improving efficiencies and employee work environment while allowing for expansion.”

“Third, continue to attract and retain great people to support growth. In fiscal year 2020, we rewarded key functional team members with restricted stock awards tied into the financial success of the company and shareholder returns. We added new talent within our Executive leadership team that, from experience, know how to scale through growth while working within a lean operation. Overall, our people drive our business and continue to excel during these challenging times.”

“With these FY2020 strategic imperatives we continue to transform our business model by streamlining our expenses and improving our operational efficiency and positioning the Company for growth and profitability as the 5G transformation accelerates. Over the past year, we have improved gross margins by more than 1,500 basis points, and eliminated approximately $0.5 million in quarterly operating expenses, resulting in a significant narrowing of our loss from operations.”

“We continue to improve our liquidity, with cash in excess of $8 million and working capital over $11 million in preparing for 5G growth. We are seeing clear signs that the 5G transformation will begin in earnest in 2021, and we are well-positioned to capture a meaningful share of the tower work related to this important project in the geographic areas we currently serve. Apple recently released the new 5G capable handset, providing the clearest indication yet of the impending 5G opportunity. With all of the Carriers advertising 5G services, the actual long-term upgrade of the networks is just about to begin in 2021. These 3G, 4G and now 5G cycles typically last 7-10 years and require major Capex spend by every Carrier principally in the first 5 years of each cycle.”

“Our Telco business delivered the strongest quarter of the fiscal year in Q4 as spending started to return to normal after pandemic cutbacks, giving us optimism as we head into our new fiscal year. We anticipate double-digit revenue growth for our business in fiscal 2021 and anticipate reaching positive net income on a quarterly basis by the end of the year. We enter 2021 with a lean and efficient organization, strategically positioned throughout the middle of the country, with strong relationships with the leading Wireless Carriers and Telco clients and we have significantly improved our liquidity to execute our growth strategy. We are already starting to see wireless activity picking up in our southwest region, another positive indicator. All indications from trade news and industry press releases are that 5G network construction will be in full swing by midyear 2021.”

Financial Results for the Three Months ended September 30, 2020

Fourth quarter sales decreased to $12.2 million compared with $17.9 million for the three months last year a decrease of 31%. The decrease of $5.3 million in the Wireless segment compared to the prior year quarter was the result of the impact of COVID business environment and 5G delays in infrastructure spending from the major U.S. carriers. Traditionally Wireless has earned $4 to 5 million in revenue for the construction and deployment of large complex temporary cell sites during the summer months for county fairs, air shows, and large events such as the Democratic National Convention in Milwaukee, Indy 500, World Series, etc. which were either rescheduled or cancelled in 2020.

We also experienced a decline in sales in the Telco segment of $0.4 million resulting from a decrease in equipment sales at Triton, which sells office telephone and IP products for enterprise networks, as most large offices were closed during the quarter also as a result of the COVID-19 pandemic.

Even with a $5.6 million sales decrease, gross profit increased $0.7 million to $4.4 million compared with a gross profit of $3.7 million for the same quarter last year. The increase was primarily due to Telco segment profit improving by $1.2 million, partially offset by the Wireless segment margin decrease of $0.5 million. Gross profit margin improved to 36% from 21% from the prior year fourth quarter due to 2,000 basis point improvement in the Wireless services group and a 1,700 basis point improvement in the Telco business.

Operating expenses decreased $0.5 million to $1.9 million for the quarter ended September 30, 2020 compared with $2.4 million the same period last year, as a result of cost reduction efforts in our Wireless segment.

Selling, general and administrative expenses for the quarter increased $0.6 million to $3.2 million compared with $2.6 million for the same quarter last year. This increase was due to an investment in building out the sales team for the Wireless segment.

Net loss for the quarter was $1.0 million, or a loss of $0.09 per diluted share, an improvement of $0.6 million, compared with a net loss of $1.6 million, or a loss of $0.15 per diluted share for the same quarter last year.

Adjusted EBITDA loss for the quarter was $0.1 million compared with an Adjusted EBITDA loss of $0.9 million for the same quarter last year.

Financial Results for the Fiscal Year Ended September 30, 2020

Overall sales decreased 9% to $50.2 million compared with $55.1 million last year. The decrease in sales was driven principally by the global COVID-19 pandemic and investment delays in 5G network build-outs. Sales for the Wireless segment decreased $1.6 million to $21.4 million for the year compared with $23.0 million in the prior year. Wireless was significantly impacted during the summer months by crowd safety restrictions due to COVID-19. Traditionally Fulton has earned significant revenues for the construction and deployment of large complex temporary cell sites for summer and fall festivals, county fairs, air shows, and large events like the Democratic National Convention in Milwaukee, Indy 500, World Series, etc. which were cancelled or rescheduled this year.

Sales for the Telco segment decreased 10% or $3.4 million to $28.8 million for the year compared with $32.2 million last year. The decrease in sales resulted primarily from Telcom and IP office equipment as customers delayed build-out of new office space and upgrades of office space communications equipment as employees were sent home to work during 2020.

Annual gross profit decreased 13% or $1.8 million to $11.7 million compared with $13.5 million for the prior year, primarily related to the Telco segment, for which gross profit decreased $2.0 million as a result of an increase in our reserve for inventory obsolescence in Q2, partially offset by an increase in gross profit of $0.2 million in the Wireless segment as a result of operational cost reduction efforts in the second half of FY2020.

Operating expenses for the year increased $1.8 million to $8.2 million compared with $6.4 million last year. The increase is attributable to having four full quarters of Wireless expense in 2020 versus three quarters in 2019, as the Fulton acquisition concluded in the second quarter of 2019. Additionally, the Company incurred one-time facility costs as a result of moving into Triton’s new facility in the first fiscal quarter of 2020 and additional operating personnel costs.

Selling, general and administrative expenses increased $1.3 million to $11.2 million for the year compared with $10.0 million last year. Of this increase, $0.9 million is attributable to having four full quarters of Wireless expense in 2020 versus three quarters in 2019, as the Fulton acquisition concluded in the second quarter of 2019. This increase is partially offset by a decrease of $0.4 million in general and administrative personnel costs in the Telco segment.

Impairment of intangibles including goodwill was $8.7 million in the Telco segment in the second fiscal quarter. The Company determined that changes in the economy related to the COVID-19 pandemic and the continued losses experienced in the Telco segment had caused the carrying amounts on our books for intangible assets, including goodwill, to exceed their fair values. Therefore, after performing the appropriate valuations, the Company recorded a $3.9 million impairment charge for intangible assets and $4.8 million for goodwill in the Telco segment.

Net loss for the year was $17.3 million, or loss of $1.55 per diluted share, compared with a net loss $5.3 million, or loss of $0.51 per diluted share, for the prior year. The current year net loss includes one-time charges to the Telco segment including the $8.7 million write-off of intangible assets and goodwill and a $0.7 million impairment related to a right of use asset for a facility that we no longer use. Also in the Telco segment, the Company had inventory obsolescence charges of $1.8 million for the year compared to $0.7 million for prior year. The Company recognized a $1.2 million tax benefit for the year ended 2020, compared to a tax benefit of $13 thousand for the prior year. The prior-year included approximately $1.3 million in losses from discontinued operations.

Adjusted EBITDA for the year was a loss of $7.0 million compared with a loss of $2.3 million for the same period of 2019.

Balance sheet

Cash and cash equivalents were $8.4 million as of September 30, 2020, compared with $1.6 million as of September 30, 2019. As of September 30, 2020, the Company had inventories of $5.8 million, compared with $7.6 million as of September 30, 2019.

Outstanding debt was $8.0 million as of September 30, 2020 comprised of $2.8 million on a revolving line of credit (LOC), $4.1 million of notes payable and $1.1 million in financing leases compared with no debt as of September 30, 2019. At September 30, 2020, notes payable were comprised of $1.2 million notes payable with our primary banker, which correlate to payments that we will receive from the $3.8 million promissory note receivable balance from the 2019 sale of our cable business, and $2.9 million on our Payroll Protection Program (PPP) loan. We have applied for forgiveness of the PPP loan.
____________________________________

¹ Working Capital is defined as Current Assets minus Current Liabilities

Earnings Conference Call

Date:	Thursday, December 17, 2020
Time:	9 a.m. Eastern
Toll-free Dial-in Number:	1-855-327-6837
International Dial-in Number:	1-631-891-4304
Conference ID:	10012176
A replay of the conference call will be available through December 31, 2020.
Toll-free Replay Number:	1-844-512-2921
International Replay Number:	1-412-317-6671 (international).
Replay Passcode:	10012176

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.

Non-GAAP Financial Measures

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, intangible assets including goodwill, stock compensation expense, other income, other expense, interest income and income from equity method investment. Management believes providing 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 in the table 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.

Contacts:

ADDvantage Technologies Group, Inc.
1221 E. Houston
Broken Arrow, Oklahoma 74012

Hayden IR
Brett Maas
(646) 536-7331
[email protected]

— Tables follow –

ADDvantage Technologies Group, Inc.

Consolidated Balance Sheets

(unaudited)

	September 30,
(in thousands, except share amounts)	2020				2019
Assets
Current assets:
Cash and cash equivalents	$	8,265			$	1,242
Restricted cash	108				352
Accounts receivable, net of allowances of $250 and $150, respectively	3,968				4,827
Unbilled revenue	590				2,691
Promissory note, current	1,400				1,400
Income tax receivable	1,283				21
Inventories, net of allowance of $3,054 and $1,275, respectively	5,756				7,626
Prepaid expenses and other current assets	884				806
Total current assets	22,254				18,965
Property and equipment, at cost:
Machinery and equipment	3,500				2,476
Leasehold improvements	720				191
Total property and equipment, at cost	4,220				2,667
Less: Accumulated depreciation	(1,586		)		(836		)
Net property and equipment	2,634				1,831
Right-of-use assets	3,758				—
Promissory note, long-term	2,375				4,975
Intangibles, net of accumulated amortization	1,425				6,003
Goodwill	58				4,878
Other assets	179				176
Total assets	$	32,683			$	36,828

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	3,472			$	4,731
Accrued expenses	1,499				1,618
Deferred revenue	113				97
Bank line of credit	2,800				—
Notes payable, current	1,709				—
Right-of-use obligations, current	1,275				—
Finance lease obligations, current	285				—
Other current liabilities	41				758
Total current liabilities	11,194				7,204
Note payable	2,440				—
Right-of-use obligations, long-term	3,310				—
Finance lease obligations, long-term	791				—
Other liabilities	15				177
Total liabilities	17,750				7,382
Shareholders’ equity:
Common stock, $.01 par value; 30,000,000 shares authorized; 11,822,009 and 10,861,950 shares issued, respectively; 11,822,009 and 10,361,292 shares outstanding, respectively	118				109
Paid in capital	(2,567		)		(4,377		)
Retained earnings	17,382				34,715
Treasury stock, zero and 500,658 shares, at cost at September 30, 2020 and 2019, respectively	—				(1,000		)
Total shareholders’ equity	$	14,933			$	29,447
Total liabilities and shareholders’ equity	$	32,683			$	36,828

ADDvantage Technologies Group, Inc.

Consolidated Statement of Operations

(Unaudited)

	Three months ended September 30,										Years ended September 30,
(in thousands except share and per share amounts)	2020				2019						2020				2019
Sales	$	12,239			$	17,859					$	50,182			$	55,118
Cost of sales	7,883				14,188						38,502				41,660
Gross profit	4,356				3,671						11,680				13,458
Operating expenses	1,890				2,421						8,166				6,364
Selling, general and administrative expense	3,153				2,577						11,249				9,962
Impairment of right-of-use asset	—				—						660				—
Impairment of intangibles including goodwill	—				—						8,714				—
Depreciation and amortization expense	357				383						1,554				1,453
Gain on disposal of assets	133				345						133				345
Loss from operations	(911		)		(2,055		)				(18,530		)		(3,976		)
Other income (expense):
Interest income	63				96						321				96
Interest expense	(70		)		(11		)				(254		)		(80		)
Income from equity method investment	—				61						41				136
Other expense, net	(73		)		(342		)				(160		)		(224		)
Total other expense	(80		)		(196		)				(52		)		(72		)
Loss before income taxes	(991		)		(1,562		)				(18,582		)		(4,048		)
Income tax benefit	(13		)		—						(1,249		)		(13		)
Loss from continuing operations	(978		)		(1,562		)				(17,333		)		(4,035		)
Loss from discontinued operations, net of tax	—				—						—				(1,267		)
Net loss	$	(978	)		$	(1,562	)				$	(17,333	)		$	(5,302	)
Loss per share:
Basic and diluted
Continuing operations	$	(0.09	)		$	(0.15	)				$	(1.55	)		$	(0.39	)
Discontinued operations	—				—						—				(0.12		)
Net loss	$	(0.09	)		$	(0.15	)				$	(1.55	)		$	(0.51	)
Shares used in per share calculation:
Basic and diluted	11,163,660				10,361,292						11,163,660				10,361,292

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 restructuring charge, 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 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.

A reconciliation by segment of loss from operations to Adjusted EBITDA follows:

	Three months ended September 30, 2020																Three months ended September 30, 2019
	Wireless				Telco				Corp				Total				Wireless				Telco				Corp				Total
Loss from operations	$	(283	)		$	(743	)		$	115			$	(911	)		$	99			$	(1,258	)		$	(206	)		$	(1,366	)
Depreciation and amortization expense	158				177				22				357				82				296				5				383
Impairment of intangibles including goodwill	—				—				—				—				—				—				—				—
Impairment of right of use asset	—				—				—				—				—				—				—				—
Stock compensation expense	(53		)		(94		)		554				407				31				16				—				47
Adjusted EBITDA (a)(b)	$	(178	)		$	(660	)		$	691			$	(147	)		$	211			$	(946	)		$	(201	)		$	(936	)

	For the year ended September 30, 2020																For the year ended September 30, 2019
	Wireless				Telco				Corp				Total				Wireless				Telco				Corp				Total
Loss from operations	$	(4,420	)		$	(14,226	)		$	115			$	(18,531	)		$	(1,469	)		$	(2,300	)		$	(204	)		$	(3,974	)
Depreciation and amortization expense	620				912				22				1,554				254				1,194				5				1,453
Impairment of intangibles including goodwill	—				8,715				—				8,715				—				—				—				—
Impairment of right of use asset	—				660				—				660				—				—				—				—
Stock compensation expense	11				9				554				574				62				137				—				199
Adjusted EBITDA (a)(b)	$	(3,789	)		$	(3,930	)		$	691			$	(7,028	)		$	(1,153	)		$	(970	)		$	(199	)		$	(2,322	)

(a)	The Wireless segment includes acquisition expenses of $0.2 million and integration expenses of $0.3 million for the year ended September 30, 2019, related to the acquisition of Fulton.
(b)	The Telco segment includes an inventory obsolescence charge of $1.8 million and $0.7 million for the years ended September 30, 2020 and 2019, respectively.  In addition, the Telco segment includes a lower of cost or net realizable value charge of $0.1 million and $0.7 million for the years ended September 30, 2020 and 2019, respectively.