<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[x] QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period ________________ to ______________
Commission File number 1-10799
ADDVANTAGE MEDIA GROUP, INC.
(Exact name of small business issuer as specified in its charter)
OKLAHOMA 73-1351610
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5100 East Skelly Drive
Meridian Tower, Suite 1080
Tulsa, Oklahoma 74135-6552
(Address of principal executive office) (Zip Code)
(918) 665-8414
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange 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
--- ---
Shares outstanding of the issuer's $.01 par value common stock as of August 14,
1998 is 5,906,584.
Transitional Small Business Issuer Disclosure Format (Check one): Yes No X
--- ---
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ADDVANTAGE MEDIA GROUP, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
------------ ------------
ASSETS (UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents $2,687,592 $2,003,165
Accounts receivable 326,528 1,548,961
Deferred income taxes -- 1,432,000
Other current assets 109,936 36,086
---------- ----------
Total current assets 3,124,056 5,020,212
Property and equipment, at cost:
Calculators 2,305,262 2,585,693
Office and production equipment 922,817 891,743
Transportation equipment 383,580 --
Furniture and fixtures 99,779 97,879
---------- ----------
3,711,438 3,575,315
Accumulated depreciation 1,210,604 981,186
---------- ----------
2,500,834 2,594,129
Deferred income taxes -- 41,000
Patent, net of accumulated amortization of
$672,558 and $627,150 at June 30, 1998
and December 31, 1997, respectively 235,552 280,960
Other assets 263,161 186,184
---------- ----------
Total assets $6,123,603 $8,122,485
========== ==========
</TABLE>
-1-
<PAGE>
ADDVANTAGE MEDIA GROUP, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
------------ -------------
LIABILITIES AND STOCKHOLDERS' EQUITY (UNAUDITED)
<S> <C> <C>
Current liabilities:
Notes payable $ 323,560 $ --
Accounts payable 241,824 834,115
Income taxes payable 40,000 22,326
Other accrued liabilities 270,388 449,944
Unearned advertising revenue 47,850 810,001
----------- -----------
Total current liabilities 923,622 2,116,386
Long-term obligations 293,784 228,072
Shareholders' equity:
Preferred stock, $1.00 par value, 1,000,000
shares authorized; Series A preferred
stock--227,750 shares issued and
outstanding at December 31, 1997;
liquidation preference, $911,000 -- 760,260
Common stock, $.01 par value, 10,000,000
shares authorized, 5,906,584 issued and
outstanding at June 30, 1998 and
December 31, 1997, respectively 59,066 59,066
Capital in excess of par value 8,711,894 8,862,634
Accumulated deficit (3,864,763) (3,903,933)
----------- -----------
Total stockholders' equity 4,906,197 5,778,027
----------- -----------
Total liabilities and stockholders' equity $ 6,123,603 $ 8,122,485
=========== ===========
</TABLE>
-2-
<PAGE>
ADDVANTAGE MEDIA GROUP, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
--------------------------
1998 1997
------------ ------------
<S> <C> <C>
Revenues:
Advertising sales $1,947,480 $2,869,424
Other 49,668 6,465
---------- ----------
1,997,148 2,875,889
Costs and expenses:
Cost of advertising services 694,429 978,302
Selling expenses 142,716 157,261
General and administrative expenses 430,618 392,968
---------- ----------
1,267,763 1,528,531
---------- ----------
Operating income 729,385 1,347,358
Calculator writedown 364,822 --
Interest expense 4,117 20,477
---------- ----------
Income before provision for income taxes 360,446 1,326,881
Provision for income taxes 1,116,204 512,932
---------- ----------
Net income (loss) (755,758) 813,949
Preferred stock dividends (15,681) (22,650)
---------- ----------
Net income (loss) applicable to common stock $ (771,439) $ 791,299
========== ==========
Net income (loss) per common share:
Basic $ (0.13) $0.14
Diluted $ (0.13) $0.12
========== ==========
</TABLE>
-3-
<PAGE>
ADDVANTAGE MEDIA GROUP, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------
1998 1997
------------ ------------
<S> <C> <C>
Revenues:
Advertising sales $4,863,481 $5,707,316
Other 82,283 8,821
---------- ----------
4,945,764 5,716,137
Costs and expenses:
Cost of advertising services 1,739,113 1,907,042
Selling expenses 280,412 267,752
General and administrative expenses 835,006 811,972
---------- ----------
2,854,531 2,986,766
---------- ----------
Operating income 2,091,233 2,729,371
Calculator writedown 364,822 --
Interest expense 7,937 63,815
---------- ----------
Income before provision for income taxes 1,718,474 2,665,556
Provision for income taxes 1,640,972 1,029,151
---------- ----------
Net income 77,502 1,636,405
Preferred stock dividends (38,332) (45,301)
---------- ----------
Net income applicable to common stock $ 39,170 $1,591,104
========== ==========
Net income per common share:
Basic $ 0.01 $ 0.27
Diluted $ 0.01 $ 0.25
========== ==========
</TABLE>
-4-
<PAGE>
ADDVANTAGE MEDIA GROUP, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30,
---------------------------
1998 1997
------------- ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 77,502 $ 1,636,405
Adjustments to reconcile net income to net cash used
in operating activities:
Deferred income tax 1,473,000 1,029,151
Depreciation and amortization 472,472 251,879
Calculator writedown 364,822 --
Accrual of long-term obligations 65,712 59,736
Changes in assets and liabilities:
Accounts receivable 1,222,433 874,229
Other current assets (73,850) (22,650)
Other assets (76,977) (63,725)
Accounts payable (592,291) (55,964)
Income taxes payable 17,674 (19,334)
Accrued settlement obligation -- (285,588)
Other accrued liabilities (179,556) (317,880)
Accrued preferred dividends -- (370,301)
Unearned advertising revenue (762,151) (409,916)
---------- -----------
Net cash provided by operating activities 2,008,790 2,306,042
INVESTING ACTIVITIES
Purchases of property and equipment (698,591) (662,963)
---------- -----------
Net cash used in investing activities (698,591) (662,963)
FINANCING ACTIVITIES
Proceeds from notes payable 383,680 --
Payments on bank note -- (1,156,656)
Payment on notes payable (60,120) --
Payment of preferred stock dividends (38,332) --
Redemption of preferred stock (911,000) --
Exercise of options and warrants -- 28,799
---------- -----------
Net cash used in financing activities (625,772) (1,127,857)
---------- -----------
Increase in cash 684,427 515,222
Cash at beginning of period 2,003,165 739,140
---------- -----------
Cash at end of period $2,687,592 $ 1,254,362
========== ===========
Supplemental disclosures of cash information:
Interest Paid $ 7,938 $ 83,072
========== ===========
Income Taxes Paid $ 127,972 $ --
========== ===========
</TABLE>
-5-
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
statements and do not include all information and footnotes required by
generally accepted accounting principles for complete financial statements.
However, the information furnished reflects all adjustments, consisting only of
normal recurring adjustments which are, in the opinion of management, necessary
in order to make the financial statements not misleading.
NOTE 2 - DESCRIPTION OF BUSINESS
ADDvantage Media Group, Inc. (the "Company") markets and sells in-store
advertising to national advertisers. This advertising is positioned on solar
powered calculators attached to the handles of shopping carts. The patented
calculators are marketed under the registered trademark "Shoppers
Calculator/(R)/."
On September 1, 1995, the Company and Wal-Mart Stores, Inc. ("Wal-Mart") entered
into a four-year contract in settlement of a lawsuit related to prior contracts
under which the Company will install and maintain Shoppers Calculator/(R)/ in
all of Wal-Mart's Supercenters in the continental United States and Wal-Mart was
responsible for selling the advertising for the calculators during the initial
phase of the contract. Under the contract, the Company has the right to retain
90% of the advertising revenue. During the last quarter of 1996, the Company
assumed the responsibility for sales of advertising and this arrangement was
formalized in an amendment to the Wal-Mart contract dated August 25, 1997. Wal-
Mart agreed to guarantee advertising revenues to the Company of $23.5 million,
subject to the Company's obligation to install and service the Shoppers
Calculators/(R)/ during the revenue guaranty period. In May 1998, the Company
received the final revenue guarantee payment. The Company had the option to
continue the contract to October 6, 1999, however, Wal-Mart notified the Company
that it would not agree to a new contract or an extension of the current
contract past its present term. Based on Wal-Mart's decision not to renew the
present contract, the Company made the decision to commence de-installation of
the Shopper Calculator/(R)/ program beginning June 15, 1998. It is anticipated
that the Shopper Calculators/(R)/ will be de-installed by the end of August,
1998.
At the present time, the Company is negotiating contracts with Service
Merchandise (approximately 360 stores) and several different divisions of Kroger
and an amendment to its contract with Kmart Stores for its Super Kmart Stores
(approximately 105 stores). The Company doesn't know if, or when, these will be
implemented or if they will be implemented at all, or whether the Company will
enter into similar agreements with any other retailers.
-6-
<PAGE>
The Company is currently evaluating a number of options and opportunities which
could include a merger, the sale of the Shoppers Calculator/(R)/ assets or some
other business alliance.
NOTE 3 - INCOME TAXES
As a result of Wal-Mart's decision to terminate its contract with the Company,
management has reevaluated the likelihood of realizing the deferred tax assets
resulting from its net operating loss and tax credit carryforwards. Management
has determined that the Company no longer meets the criteria to continue to
recognize these tax carryforwards as assets. Consequently, the second quarter
tax provision has been increased to reverse the deferred tax asset. The tax
provision for the three months ended June 30, 1998 is as follows:
<TABLE>
<S> <C>
Current federal and state income taxes, after reduction for
use of net operating loss in the current period $ 85,000
Deferred taxes, including provision for reversal of
deferred tax assets 1,556,000
----------
Total tax provision $1,641,000
==========
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three Months Ended June 30, 1998 compared to Three Months Ended June 30, 1997
- - -----------------------------------------------------------------------------
The Company entered into a contract with Wal-Mart effective as of September 1,
1995, whereby the Company agreed to install and maintain its Shoppers
Calculators in all of Wal-Mart's Supercenter stores in the continental United
States. Under the contract, Wal-Mart guaranteed that the Company's share of
advertising revenues would be $2,700 per installed store, per four-week
advertising cycle, until a total of approximately $23,500,000 had been received
by the Company. At June 30, 1998 the total amount of the revenue guarantee had
been received, so therefore, future periods will not include any revenue
guarantee payments from Wal-Mart.
Advertising revenues decreased approximately $921,900 (32%) for the three months
ended June 30, 1998, as compared to the three months ended June 30, 1997.
During the second fiscal quarter of 1998, the Wal-Mart revenue guarantee was
concluded with a final billing of $360,900 ($1,074 per store) for advertising
cycle number six which ended on June 14, 1998. There were no significant
advertising revenues earned during the last half of June 1998.
-7-
<PAGE>
Operating income (income before interest, taxes and preferred stock dividends)
decreased $618,000 during the three months ended June 30, 1998 as compared to
the three months ended June 30, 1997. The Company's net income applicable to
common stock was $202,000 for 1998 second quarter, as compared to $791,300 for
the same period last year. Based on the Company's decision to de-install the
Wal-Mart supercenter program beginning June 15, 1998, it is anticipated that the
last half of 1998 will reflect operating losses as the Company defines its
future operating strategy. As a result of the de-installation, a $360,400
calculator writedown was recorded during the second quarter of 1998. As a
result of implementation of the new Wal-Mart contract, 1995 earnings were
increased by $3,910,000 from the accounting recognition of the future tax
benefits of the Company's net operating losses and temporary differences
aggregating $10,290,000 at December 31, 1995. The second quarter 1997 tax
expense of $512,900 reflects the amortization of the deferred tax asset
recognized in 1995. As a result of Wal-Mart's decision to terminate its
contract with the Company, management has reevaluated the likelihood of
realizing the deferred tax assets resulting from its net operating loss and tax
credit carryforwards. Management has determined that the Company no longer
meets the criteria to continue to recognize these tax carryforwards as assets.
Consequently, the second quarter tax provision has been increased by $1,556,000.
Costs of advertising services (representing primarily labor to supervise,
service and clean the installed units and change advertising messages and the
depreciation of installed units) decreased approximately $283,900 (29%) in the
second quarter of 1998 as compared to the same period in 1997 as a result of
reduced labor costs. On March 1, 1998 the Company significantly reduced the
size of its field service staff.
Selling expense decreased approximately $14,500 (9%) in the second quarter of
1998 compared to the same period in 1997. This was primarily due to decreases
in marketing materials costs and advertising expenses amounting to $22,000.
These decreases were partially offset by increases during 1998 in payroll,
payroll related expenses and sales representative retainer expenses of $7,500.
General and administrative expenses increased $37,700 (10%) during the second
quarter of 1998 as compared to the second quarter of 1997. During 1998, payroll
and payroll related expenses increased $32,800. Officer and management bonus
accruals decreased $25,000 in 1998 as compared to 1997. Executive retirement
plan accruals, including insurance cost to fund future payments, increased
$3,000 during 1998. Expenses related to broker and analyst meetings and other
shareholder expenses increased $2,800 over 1997. Increases amounting to $24,100
occurred in professional fees, occupancy costs and other expenses.
Interest expenses decreased approximately $16,400 (80%) during the second
quarter of 1998 as compared to the same period in 1997. Interest on bank
borrowings decreased $1,900 due primarily to the repayment of all bank debt
during 1997. Interest accrued on amounts due investors, including the accretion
of discount for the litigation settlement, was $18,000 lower for
-8-
<PAGE>
1998 as compared to 1997, all because of the reduction of amounts due and past
due. Vendor interest increased during the current quarter by $3,500.
Six Months Ended June 30, 1998 compared to Six Months Ended June 30, 1997
- - -------------------------------------------------------------------------
The Company entered into a contract with Wal-Mart effective as of September 1,
1995, whereby the Company agreed to install and maintain its Shoppers
Calculators in all of Wal-Mart's Supercenter stores in the continental United
States. Under the contract, Wal-Mart guaranteed that the Company's share of
advertising revenues would be $2,700 per installed store, per four-week
advertising cycle, until a total of approximately $23,500,000 had been received
by the Company. At June 30, 1998, the total amount of the revenue guarantee had
been received, so therefore, future periods will not include any revenue
guarantee payments from Wal-Mart.
Advertising revenues decreased approximately $843,800 (15%) for the six months
ended June 30, 1998, as compared to the six months ended June 30, 1997. During
the second fiscal quarter of 1998 the Wal-Mart revenue guarantee was concluded
with a final billing of $360,900 ($1,074 per store) for advertising cycle number
six which ended on June 14, 1998. There were no significant advertising
revenues earned during the last half of June 1998.
Operating income (income before interest, taxes and preferred stock dividends)
decreased $638,100 during the six months ended June 30, 1998 as compared to the
six months ended June 30, 1997. The Company's net income applicable to common
stock was $1,012,600 for the first half of 1998, as compared to $1,591,100 for
the same period last year. As a result of implementation of the new Wal-Mart
contract, 1995 earnings were increased by $3,910,000 from the accounting
recognition of the future tax benefits of the Company's net operating losses and
temporary differences aggregating $10,290,000 at December 31, 1995. The first
half 1997 tax expense of $1,029,200 reflects the amortization of the deferred
tax asset recognized in 1995. As a result of Wal-Mart's decision to terminate
its contract with the Company, management has reevaluated the likelihood of
realizing the deferred tax assets resulting from its net operating loss and tax
credit carryforwards. Management has determined that the Company no longer
meets the criteria to continue to recognize these tax carryforwards as assets.
Consequently, the second quarter tax provision has been increased by $1,556,000.
Costs of advertising services (representing primarily labor to supervise,
service and clean the installed units and change advertising messages and the
depreciation of installed units) decreased approximately $167,900 (9%) in the
first half of 1998 as compared to the same period in 1997 as a result of reduced
labor costs. On March 1, 1998 the Company significantly reduced the size of its
field service staff.
Selling expense increased approximately $12,700 (5%) in the first six months of
1998 compared to the same period in 1997. During 1998, payroll, payroll related
expenses and sales representative retainer expenses increased $42,900.
Marketing materials cost and advertising expenses decreased $30,200 in 1998 as
compared to 1997.
-9-
<PAGE>
General and administrative expenses increased $23,000 (3%) during the first six
months of 1998 as compared to the first six months of 1997. During 1998,
payroll and payroll related expenses decreased $8,500. Officer and management
bonus accruals decreased $30,000 in 1998 as compared to 1997. Executive
retirement plan accruals, including insurance cost to fund future payments,
increased $9,100 during 1998. Expenses related to broker and analyst meetings
and other shareholder expenses increased $15,000 over 1997. Increases amounting
to $37,400 occurred in professional fees, occupancy costs and other expenses.
Interest expenses decreased approximately $55,900 (88%) during the first six
months of 1998 as compared to the same period in 1997. Interest on bank
borrowings decreased $19,900 due primarily to the repayment of all bank debt
during 1997. Vendor interest was $600 higher and interest accrued on amounts
due investors, including the accretion of discount for the litigation
settlement, was $36,600 lower for 1998 as compared to 1997, all because of the
reduction of amounts due and past due.
FINANCIAL CONDITION AND LIQUIDITY
The Company entered into separate agreements with Wal-Mart in July 1993 and June
1994 which provided for the installation of the Company's calculators in certain
Wal-Mart stores. The July 1993 and June 1994 contracts were never implemented
and on January 18, 1995, the Company filed a suit against Wal-Mart for the
alleged breach of the terms of those contract.
On September 1, 1995, the Company and Wal-Mart entered into a new contract and
the Company dismissed the lawsuit. Under the terms of the new contract, the
Company agreed to install the Shoppers Calculators in all of Wal-Mart's
Supercenters in the continental United States, and Wal-Mart was to sell the
advertising for the calculators during the initial phase of the contract. During
the last quarter of 1996, the Company assumed responsibility for sales of
advertising for the calculators, and this arrangement was formalized in an
amendment to the Wal-Mart contract in August 1997. Under the contract, Wal-Mart
agreed to guarantee advertising revenues to the Company of approximately $23.5
million subject to the Company's obligation to install and service the Shoppers
Calculators during the revenue guaranty period. In May 1998, the Company
received the final revenue guarantee payment.
During August of 1997, the Company submitted a proposal to Wal-Mart for a new
Shoppers Calculator contract to be implemented after the Company receives
payment of the $23.5 guaranteed revenues provided for under the current
contract. During May of 1998, the Company received notification from Wal-Mart
that it would not enter into a new agreement or agree to an extension of the
current contract. Based on Wal-Mart's decision not to renew the present
contract, the Company made the decision to commence the de-installation of the
Shoppers Calculator program beginning June 15, 1998. It is anticipated that the
Shoppers Calculators will be de-installed by the end of August 1998.
-10-
<PAGE>
Based on the Company's decision to de-install the Wal-Mart supercenter program
beginning June 15, 1998, it is anticipated that the last half of 1998 will
reflect operating losses as the Company defines its future operating strategy.
On January 28, 1998, the Company entered into a letter of intent to acquire
Sports Display, Inc. and its affiliated company Sports Display of Canada, Inc.
at a purchase price of $16.75 million, payable in cash of $8.5 million, seller
financed notes of $5.25 million and convertible preferred stock to be valued at
$3.0 million. The Company would also be obligated to pay an additional $1.5
million at closing for certain non-compete and employment contracts. The parties
extended this letter of intent to May 31, 1998. However, the termination of the
Wal-Mart contract caused the efforts to agree upon a definitive agreement to be
put on hold. While the parties have continued to maintain contact and there is
the possibility that a transaction will be consummated on some basis (which
would most likely vary significantly from the terms and structure contemplated
by the letter of intent), there can be no assurance at this time that the
acquisition will be consummated.
FORWARD-LOOKING STATEMENTS
Certain statements included in this report which are not historical facts are
forward-looking statements. These forward-looking statements are based on
current expectations, estimates, assumptions and beliefs of management; and
words such as "expects," "anticipates," "intends," "plans," "believes,"
"estimates" and similar expressions are intended to identify such forward-
looking statements. These forward-looking statements involve risks and
uncertainties, including, but not limited to, the Company's ability to obtain
new users of the Shoppers Calculator/(R)/ program and to sell advertising for
that program, general economic conditions and conditions affecting the mass
merchandising industry, the availability of raw materials and manufactured
components and the Company's ability to fund the costs thereof, and other
factors which may affect the Company's ability to comply with its obligations
under the contract. Accordingly, actual results may differ materially from those
expressed in the forward looking statements.
-11-
<PAGE>
PART II--OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
The annual meeting of shareholders of the Company was held in the Meeting
Tower Conference Room, Meridian Tower, 4th Floor, 5100 East Skelly Drive, Tulsa,
Oklahoma on May 28, 1997. At the meeting the following directors were elected
for one year terms (with the votes as indicated):
<TABLE>
<CAPTION>
Abstentions/
For Withheld Broker Non-Votes
--------- -------- ----------------
<S> <C> <C> <C>
Charles H. Hood 5,007,436 98,110 -0-
Gary W. Young 5,007,436 98,110 -0-
J. Larri Barrett 5,007,436 98,110 -0-
John W. Condon 5,007,436 98,110 -0-
Stephen G. Smith 5,007,436 98,110 -0-
Steven C. Oden 5,007,436 98,110 -0-
</TABLE>
The shareholders approved the ADDvantage Media Group, Inc. 1998 Stock Plan
(with the votes as indicated):
For: 1,282,647 Against: 553,035 Abstentions: 5,400 Broker Non-Votes: 3,264,464
The shareholders ratified Tullius Taylor Sartain & Sartain LLP as auditors
to perform the audit for the fiscal year ending December 31, 1998 (with the
votes as indicated):
For: 5,077,026 Against: 24,020 Abstentions/Broker Non-Votes: 4,500
ITEM 5. OTHER INFORMATION
As set forth in the Company's Proxy Statement for the 1998 Annual Meeting,
stockholder proposals submitted pursuant to Rule 14a-8 for inclusion in the
Company's proxy statement for the 1999 Annual Meeting of Stockholders must be
received no later than December 29, 1998. Any stockholder who intends to present
a proposal at the 1999 Annual Meeting and has not sought inclusion of the
proposal in the Company's proxy materials pursuant to Rule 14a-8 must provide
notice of such proposal to the Company no later than March 14, 1999. Failure to
provide timely notice of such proposal will mean that the persons named as
proxies will be able to vote the shares for which they have received proxies on
such proposal in their discretion.
-12-
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit No. Description
----------- -----------
11 Statement re: Computation of Per Share Earnings
27 Financial Data Schedule
(b) Reports on Form 8-K.
None.
-13-
<PAGE>
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 thereunto duly authorized.
ADDVANTAGE MEDIA GROUP, INC.
SIGNATURE TITLE DATE
- - --------- ----- ----
/s/ Charles H. Hood President August 11, 1998
- - --------------------- (Principal Executive Officer)
Charles H. Hood
/s/ Gary W. Young Executive Vice President - August 11, 1998
- - --------------------- Finance and Administration and
Gary W. Young Treasurer (Principal Financial Officer)
-14-
<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT NO. DESCRIPTION
----------- -----------
11 Statement re: Computation of Per Share
Earnings
27 Financial Data Schedule
-15-
<PAGE>
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
The Company adopted SFAS No. 128, "Earnings Per Share," during 1997. SFAS No.
128 requires presentation of basic and diluted earnings per share. Basic
earnings per share is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding for the
reporting period. Diluted earnings per share reflects the potential dilution
that could occur if securities or other contracts to issue common stock were
exercised or converted into common stock. All prior period weighted average and
per share information has been restated in accordance with SFAS No. 128.
Outstanding stock options and warrants issued by the Company represent the only
dilutive effect on weighted average shares. A reconciliation between basic and
diluted weighted average shares outstanding and the related earnings per share
calculation is presented below:
Basic and diluted EPS for the three months ended June 30, 1998 and 1997, were
computed as follows:
<TABLE>
<CAPTION>
Three Months Ended June 30,
----------------------------
1998 1997
-------------- ------------
<S> <C> <C>
Basic EPS Computation:
Net income (loss) $ (755,758) $ 813,949
Less preferred stock dividends 15,681 22,650
---------- ----------
Net income (loss) available to common
stockholders $ (771,439) $ 791,299
========== ==========
Weighted average shares outstanding 5,906,584 5,856,584
---------- ----------
Basic EPS $ (0.13) $ 0.14
========== ==========
Diluted EPS Computation:
Net income (loss) available to common
stockholders $ (771,439) $ 791,299
========== ==========
Weighted average shares outstanding 5,906,584 5,856,584
Incremental shares for assumed exercise
of securities
Warrants -- 37,829
Options 289,044 470,679
---------- ----------
6,195,628 6,365,092
========== ==========
Diluted EPS (note) $ $ 0.12
========== ==========
</TABLE>
The 227,750 shares of convertible preferred stock were not included in the
computation of diluted EPS as their effect is anti-dilutive. The diluted EPS
computation for the three months ended June 30, 1998 is not presented since its
effect is anti-dilutive.
<PAGE>
Basic and diluted EPS for the six months ended June 30, 1998 and 1997, were
computed as follows:
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1998 1997
------------ -----------
<S> <C> <C>
Basic EPS Computation:
Net income $ 77,502 $1,636,405
Less preferred stock dividends 38,332 45,301
---------- ----------
Net income available to common stockholders $ 39,170 $1,591,104
========== ==========
Weighted average shares outstanding 5,906,584 5,818,385
---------- ----------
Basic EPS $ 0.01 $ 0.27
========== ==========
Diluted EPS Computation:
Net income available to common stockholders $ 39,170 $1,591,104
========== ==========
Weighted average shares outstanding 5,906,584 5,818,385
Incremental shares for assumed exercise
of securities
Warrants -- 18,915
Options 340,563 540,271
---------- ----------
6,247,147 6,377,571
========== ==========
Diluted EPS $ 0.01 $ 0.25
========== ==========
</TABLE>
The 227,750 shares of convertible preferred stock were not included in the
computation of diluted EPS as their effect is anti-dilutive.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-START> APR-01-1998 JAN-01-1998
<PERIOD-END> JUN-30-1998 JUN-30-1998
<CASH> 2,687,592 0
<SECURITIES> 0 0
<RECEIVABLES> 326,528 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 3,124,056 0
<PP&E> 3,711,438 0
<DEPRECIATION> 1,210,834 0
<TOTAL-ASSETS> 6,123,603 0
<CURRENT-LIABILITIES> 923,622 0
<BONDS> 0 0
0 0
0 0
<COMMON> 59,066 0
<OTHER-SE> 4,906,197 0
<TOTAL-LIABILITY-AND-EQUITY> 6,123,603 0
<SALES> 1,947,480 4,863,481
<TOTAL-REVENUES> 1,997,148 4,945,764
<CGS> 0 0
<TOTAL-COSTS> 1,267,763 2,091,233
<OTHER-EXPENSES> 573,334 1,115,418
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 4,117 7,937
<INCOME-PRETAX> 360,446 1,718,474
<INCOME-TAX> 1,116,204 1,640,972
<INCOME-CONTINUING> (755,758) 77,502
<DISCONTINUED> 0 0
<EXTRAORDINARY> (364,822) (364,822)
<CHANGES> 0 0
<NET-INCOME> (755,758) 77,502
<EPS-PRIMARY> (0.13) 0.01
<EPS-DILUTED> (0.13) 0.01
</TABLE>
