10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

⌧  QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED June 30, 2020

OR

□ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

            FOR THE TRANSITION PERIOD FROM________________ TO ______________

Commission File number 1‑10799

ADDvantage Technologies Group, Inc.

(Exact name of registrant as specified in its charter)

OKLAHOMA	73‑1351610
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1430 Bradley Lane

Carrollton, Texas 75007

(Address of principal executive office)

(918) 251-9121

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 ⌧    No  □
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).	Yes ⌧    No  □
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer□Accelerated filer□ Non-accelerated filer⌧            Smaller reporting company  ⌧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.	□
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).	Yes □    No  ⌧
Shares outstanding of the issuer's $.01 par value common stock as of July 31, 2020 were 11,788,940.

ADDVANTAGE TECHNOLOGIES GROUP, INC.

Form 10-Q

For the Period Ended June 30, 2020

	PART I.    FINANCIAL INFORMATION
		Page
Item 1.	Financial Statements.
	Consolidated Condensed Balance Sheets (unaudited)	2
	June 30, 2020 and September 30, 2019
	Consolidated Condensed Statements of Operations (unaudited)	4
	Three and Nine Months Ended June 30, 2020 and 2019
	Consolidated Condensed Statements of Changes in Shareholders’ Equity (unaudited)	5
	Three and Nine Months ended June 30, 2020 and 2019
	Consolidated Condensed Statements of Cash Flows (unaudited)	7
	Nine Months Ended June 30, 2020 and 2019
	Notes to Unaudited Consolidated Condensed Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	20
Item 4.	Controls and Procedures.	30
	PART II.   OTHER INFORMATION
Item 6.	Exhibits.	31
	SIGNATURES

1

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements.

ADDVANTAGE TECHNOLOGIES GROUP, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(UNAUDITED)

	June 30, 2020			September 30, 2019
Assets
Current assets:
Cash and cash equivalents	$	10,365,744		$	1,242,143
Restricted cash		105,117			351,909
Accounts receivable, net of allowance for doubtful accounts of $250,000 and $150,000, respectively		3,164,893			4,826,716
Unbilled revenue		677,702			2,691,232
Promissory note – current		1,400,000			1,400,000
Income tax receivable		34,915			21,350
Inventories, net of allowance for excess and obsolete inventory of $3,400,000 and $1,275,000, respectively		5,964,490			7,625,573
Prepaid expenses		1,013,645			543,762
Other assets		289,300			262,462
Total current assets		23,015,806			18,965,147
Property and equipment, at cost:
Machinery and equipment		3,503,199			2,475,545
Leasehold improvements		846,783			190,984
Total property and equipment, at cost		4,349,982			2,666,529
Less: Accumulated depreciation		(1,326,477	)		(835,424	)
Net property and equipment		3,023,505			1,831,105
Right-of-use operating lease assets		4,158,786			‒
Promissory note – noncurrent		2,950,000			4,975,000
Intangibles, net of accumulated amortization		1,504,773			6,002,998
Goodwill		57,554			4,877,739
Deferred income taxes		1,220,564			‒
Other assets		178,602			176,355
Total assets	$	36,109,590		$	36,828,344

See notes to unaudited consolidated condensed financial statements.

2

ADDVANTAGE TECHNOLOGIES GROUP, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(UNAUDITED)

	June 30, 2020			September 30, 2019
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	4,786,788		$	4,730,537
Accrued expenses		1,415,792			1,617,911
Deferred revenue		241,452			97,478
Bank line of credit		2,800,000			‒
Note payable – current		2,580,652			‒
Operating lease obligations – current		1,224,630			‒
Financing lease obligations – current		328,151			‒
Other current liabilities		‒			757,867
Total current liabilities		13,377,465			7,203,793
Note payable		2,171,680			‒
Operating lease obligations		3,809,803			‒
Financing lease obligations		855,052			‒
Other liabilities		15,000			177,951
Total liabilities		20,229,000			7,381,744
Shareholders’ equity:
Common stock, $.01 par value; 30,000,000 shares authorized; 11,294,839 and 10,861,950 shares issued, respectively;    11,294,839 and 10,361,292 shares outstanding, respectively		112,950			108,620
Paid in capital		(2,592,034	)		(4,377,103	)
Retained earnings		18,359,674			34,715,097
Total shareholders’ equity before treasury stock		15,880,590			30,446,614
Less: Treasury stock, 0 and 500,658 shares, respectively, at cost		‒			(1,000,014	)
Total shareholders’ equity		15,880,590			29,446,600
Total liabilities and shareholders’ equity	$	36,109,590		$	36,828,344

See notes to unaudited consolidated condensed financial statements.

3

ADDVANTAGE TECHNOLOGIES GROUP, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended June 30,						Nine Months Ended June 30,
	2020			2019			2020			2019
Sales	$	12,021,820		$	17,559,315		$	37,943,303		$	37,259,352
Cost of sales		7,851,241			12,971,910			30,619,379			27,472,042
Gross profit		4,170,579			4,587,405			7,323,924			9,787,310
Operating expenses		1,998,184			1,611,751			6,276,442			3,943,026
Selling, general and administrative expenses		2,420,629			2,846,168			8,095,815			7,385,008
Impairment of right of use asset		660,242			‒			660,242			‒
Impairment of intangibles including goodwill		‒			‒			8,714,306			‒
Depreciation and amortization expense		241,501			382,565			1,196,860			1,069,653
Loss from operations		(1,149,977	)		(253,079	)		(17,619,741	)		(2,610,377	)
Other income (expense):
Interest income		83,544			‒			258,847			‒
Income from equity method investment		‒			20,005			40,500			75,005
Other income (expense)		(29,454	)		158,739			(86,588	)		118,319
Interest expense		(101,327	)		(25,860	)		(184,005	)		(68,612	)
Total other income (expense), net		(47,237	)		152,884			28,754			124,712
Loss before income taxes		(1,197,214	)		(100,195	)		(17,590,987	)		(2,485,665	)
Benefit for income taxes		(1,220,564	)		(42,000	)		(1,235,564	)		(13,000	)
Income (loss) from continuing operations		23,350			(58,195	)		(16,355,423	)		(2,472,665	)
Loss from discontinued operations, net of tax		‒			(1,426,970	)		‒			(1,267,344	)
Net income (loss)	$	23,350		$	(1,485,165	)	$	(16,355,423	)	$	(3,740,009	)
Income (loss) per share:
Basic
Continuing operations	$	0.00		$	(0.00	)	$	(1.49	)	$	(0.24	)
Discontinued operations		‒			(0.14	)		‒			(0.12	)
Net income (loss)	$	0.00		$	(0.14	)	$	(1.49	)	$	(0.36	)
Diluted
Continuing operations	$	0.00		$	(0.00	)	$	(1.49	)	$	(0.24	)
Discontinued operations		‒			(0.14	)		‒			(0.12	)
Net income (loss)	$	0.00		$	(0.14	)	$	(1.49	)	$	(0.36	)
Shares used in per share calculation:
Basic		11,079,580			10,361,292			10,955,235			10,361,292
Diluted		11,216,688			10,361,292			10,955,235			10,361,292

See notes to unaudited consolidated condensed financial statements.

4

ADDVANTAGE TECHNOLOGIES GROUP, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(UNAUDITED)

	Common Stock						Paid-in			Retained			Treasury
	Shares			Amount			Capital			Earnings			Stock			Total
Balance, September 30, 2019		10,861,950		$	108,620		$	(4,377,103	)	$	34,715,097		$	(1,000,014	)	$	29,446,600
Net loss		–			–			–			(1,717,692	)		–			(1,717,692	)
Share based compensation expense		–			–			13,890			–			–			13,890
Balance, December 31, 2019		10,861,950		$	108,620		$	(4,363,213	)	$	32,997,405		$	(1,000,014	)	$	27,742,798
Net loss		–			–			–			(14,661,081	)		–			(14,661,081	)
Restricted stock issuance		–			–			475,618			–			–			475,618
Stock option exercise		110,000			1,100			171,833			–			–			172,933
Share based compensation expense		–			–			(6,364	)		–			–			(6,364	)
Balance, March 31, 2020		10,971,950		$	109,720		$	(3,722,126	)	$	18,336,324		$	(1,000,014	)	$	13,723,904
Net income		–			–			–			23,350			–			23,350
Utilization of treasury shares		(500,658	)		(5,006	)		(995,008	)		–			1,000,014			–
Issuance of shares		573,199			5,732			2,103,125			–			–			2,108,857
Restricted stock issuance		237,014			2,370			12,630			–			–			15,000
Stock option exercise		13,334			134			24,001			–			–			24,135
Share based compensation expense		–			–			(14,656	)		–			–			(14,656	)
Balance, June 30, 2020		11,294,839		$	112,950		$	(2,592,034	)	$	18,359,674		$	–		$	15,880,590

See notes to unaudited consolidated condensed financial statements.

5

	Common Stock				Paid-in			Retained			Treasury
	Shares		Amount		Capital			Earnings			Stock			Total
Balance, September 30, 2018		10,806,803	$	108,068	$	(4,598,343	)	$	40,017,540		$	(1,000,014	)	$	34,527,251
Net loss		–		–		–			(1,038,981	)		–			(1,038,981	)
Restricted stock issuance		55,147		552		74,448			–			–			75,000
Share based compensation expense		–		–		28,070			–			–			28,070
Balance, December 31, 2018		10,861,950	$	108,620	$	(4,495,825	)	$	38,978,559		$	(1,000,014	)	$	33,591,340
Net loss		–		–		–			(1,215,863	)		–			(1,215,863	)
Share based compensation expense		–		–		33,019			–			–			33,019
Balance, March 31, 2019		10,861,950	$	108,620	$	(4,462,806	)	$	37,762,696		$	(1,000,014	)	$	32,408,496
Net loss		–		–		–			(1,485,165	)		–			(1,485,165	)
Share based compensation expense		–		–		42,852			–			–			42,852
Balance, June 30, 2019		10,861,950	$	108,620	$	(4,419,954	)	$	36,277,531		$	(1,000,014	)	$	30,966,183

See notes to unaudited consolidated condensed financial statements.

6

ADDVANTAGE TECHNOLOGIES GROUP, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended June 30,
	2020			2019
Operating Activities
Net loss	$	(16,355,423	)	$	(3,740,009	)
Net loss from discontinued operations		‒			(1,267,344	)
Net loss from continuing operations		(16,355,423	)		(2,472,665	)
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities:
Depreciation		589,866			257,128
Amortization		606,994			812,525
Impairment of right of use asset		660,242			‒
Impairment of intangibles including goodwill		8,714,306			‒
Provision for excess and obsolete inventories		2,125,000			77,889
Share based compensation expense		167,405			152,691
Gain from disposal of property and equipment		(36,286	)		(250,877	)
Gain from equity method investment		(40,500	)		(75,005	)
Deferred income taxes		(1,220,564	)		‒
Changes in assets and liabilities:
Accounts receivable		1,661,823			(2,074,342	)
Unbilled revenue		2,013,531			(1,793,065	)
Income tax receivable\payable		(13,565	)		4,476
Inventories		(463,917	)		(1,799,042	)
Prepaid expenses and other assets		97,118			(395,726	)
Accounts payable		56,251			2,306,092
Accrued expenses and other liabilities		(135,416	)		455,426
Deferred revenue		143,974			‒
Net cash used in operating activities – continuing operations		(1,429,161	)		(4,794,495	)
Net cash provided by operating activities – discontinued operations		‒			1,179,876
Net cash used in operating activities		(1,429,161	)		(3,614,619	)
Investing Activities
Proceeds from promissory note receivable		2,025,000			‒
Acquisition of net operating assets of a business		‒			(1,264,058	)
Loan repayment from equity method investee		40,500			124,005
Purchases of property and equipment		(471,226	)		(457,225	)
Disposals of property and equipment		77,505			452,244
Net cash provided by (used in) investing activities – continuing operations		1,671,779			(1,145,034	)
Net cash provided by investing activities – discontinued operations		‒			7,075,000
Net cash provided by investing activities		1,671,779			5,929,966
Financing Activities
Change in bank line of credit		2,800,000			‒
Proceeds from note payable		6,373,929			‒
Guaranteed payments for acquisition of business		(667,000	)		(667,000	)
Payments on financing lease obligations		(277,061	)		‒
Payments on notes payable		(1,621,597	)		(1,246,279	)
Proceeds from sale of common stock		1,828,852			‒
Proceeds from stock options exercised		197,068			‒
Net cash provided by (used in) financing activities – continuing operations		8,634,191			(1,913,279	)
Net cash used in financing activities – discontinued operations					(597,906	)
Net cash provided by (used in) financing activities		8,634,191			(2,511,185	)
Net increase (decrease) in cash and cash equivalents and restricted cash		8,876,809			(195,838	)
Cash and cash equivalents and restricted cash at beginning of period		1,594,052			3,129,280
Cash and cash equivalents and restricted cash at end of period	$	10,470,861		$	2,933,442
Supplemental cash flow information:
Cash paid for interest	$	244,995		$	109,106
Cash paid for income taxes	$	‒		$	‒
Non-cash financing activities:
Proceeds from sale of common stock receivable	$	280,005		$	‒

See notes to unaudited consolidated condensed financial statements.

7

ADDVANTAGE TECHNOLOGIES GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Note 1 - Basis of Presentation and Accounting Policies

Basis of presentation

The unaudited consolidated condensed financial statements include the accounts of ADDvantage Technologies Group, Inc. and its subsidiaries, all of which are wholly owned (collectively, the “Company” or “we”).  Intercompany balances and transactions have been eliminated in consolidation.  The Company’s reportable segments are Wireless Infrastructure Services (“Wireless”) and Telecommunications (“Telco”).

The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial statements and do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.  However, the information furnished reflects all adjustments, which are, in the opinion of management, necessary in order to make the unaudited consolidated condensed financial statements not misleading.  The Company’s business is subject to certain seasonal variations due to weather in the geographic areas that services are performed, and to a certain extent due to calendar events and national holidays. Therefore, the results of operations for the nine months ended June 30, 2020 and 2019, are not necessarily indicative of the results to be expected for the full fiscal year.  It is suggested that these unaudited consolidated condensed financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2019.

Reclassification

The Company changed its presentation of cost of sales and operating, selling, general and administrative expenses on the unaudited consolidated condensed statements of operations.  During fiscal year 2020, the Company reviewed its financial reporting of expenses in connection with its current operating segments in order to enhance the usefulness of the presentation of the Company’s expenses. Based on that review, the Company reclassified certain expenses into operating expenses for presentation purposes.  Operating expenses include the indirect costs associated with operating our businesses.  Indirect costs are costs that are not directly attributable to projects or products, which would include indirect personnel costs, facility costs, vehicles, insurance, communication, and business taxes, among other less significant cost categories.  These costs were previously recorded in either costs of sales or operating, selling, general and administrative expenses in prior periods.  Additionally, the Company reclassified depreciation and amortization from operating, selling, general and administrative expenses into its own financial statement line item in the unaudited consolidated condensed statements of operations.  Selling, general and administrative expenses include overhead costs, which primarily consist of personnel costs, insurance, professional services, and communication, among other less significant cost categories. The prior period has been reclassified to conform with the current period’s presentation of costs of sales, operating expenses, selling, general and administrative expenses, and depreciation and amortization.  These reclassifications had no effect on previously reported results of operations or retained earnings.

Recently Issued Accounting Standards

In June 2016, the FASB issued ASU 2016-13: “Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments.”  This ASU requires entities to measure all expected credit losses for most financial assets held at the reporting date based on an expected loss model which includes historical experience, current conditions, and reasonable and supportable forecasts.  Entities will now use forward-looking information to better form their credit loss estimates.  This ASU also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio.  ASU 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal periods.  We are currently in the process of evaluating this new standard update.

8

Note 2 – Revenue Recognition

The Company’s principal sales are from Wireless services, sales of Telco equipment and Telco recycled equipment. Sales are primarily to customers in the United States. International sales are made by the Telco segment to a customer in Asia for its recycling program and, to a substantially lesser extent, other international regions for equipment sales that utilize the same technology, which totaled approximately $0.7 million and $0.6 million for the three months ended June 30, 2020 and 2019, respectively, and $1.5 million and $1.6 million for the nine months ended June 30, 2020 and 2019, respectively.

The Company’s customers include wireless carriers, wireless equipment providers, multiple system operators, resellers and direct sales to end-user customers.  Sales to the Company’s largest customer totaled approximately 14% of consolidated revenues for the nine months ended June 30, 2020.

Our sales by type were as follows:

	Three Months Ended June 30,						Nine Months Ended June 30,
	2020			2019			2020			2019
Wireless services sales	$	5,123,176		$	8,733,444		$	16,592,907		$	12,951,368
Equipment sales:
Telco		6,147,676			7,989,318			19,912,137			22,876,047
Intersegment		(23,033	)		(5,305	)		(23,033	)		(49,452	)
Telco repair sales		33,236			31,142			49,438			36,542
Telco recycle sales		740,765			810,716			1,411,854			1,444,847
Total sales	$	12,021,820		$	17,559,315		$	37,943,303		$	37,259,352

The timing of revenue recognition from the wireless segment results in contract assets and contract liabilities.  Generally, billing occurs subsequent to revenue recognition, resulting in contract assets.  However, the Company sometimes receives advances or deposits from customers before revenue is recognized, resulting in contract liabilities.  Contract assets and contract liabilities are included in Unbilled revenue and Deferred revenue, respectively, in the consolidated condensed balance sheets. At June 30, 2020 and September 30, 2019, contract assets were $0.7 million and $2.7 million, respectively, and contract liabilities were $0.2 million and $0.1 million, respectively. The Company recognized the entire $0.1 million of contract revenue during the nine months ended June 30, 2020 related to contract liabilities recorded in Deferred revenue at September 30, 2019.

For the three months ended June 30, 2020, the Company recognized $0.5 million of revenue in its Wireless segment associated with adjustments to constrained variable consideration from change orders related to several projects for which the costs had been recognized in prior quarters.

Note 3 – Accounts Receivable Agreements

The Company’s Wireless segment has entered into various agreements, one agreement with recourse, to sell certain receivables to unrelated third-party financial institutions.  For the agreement with recourse, the Company is responsible for collecting payments on the sold receivables from its customers.  Under this agreement, the third-party financial institution advances the Company 90% of the sold receivables and establishes a reserve of 10% of the sold receivables until the Company collects the sold receivables.  As the Company collects the sold receivables, the third-party financial institution will remit the remaining 10% to the Company.  At June 30, 2020, the third-party financial institution has a reserve against the sold receivables of $0.1 million, which is reflected as restricted cash.  For the receivables sold under the agreement with recourse, the agreement addresses events and conditions which may obligate the Company to immediately repay the institution the outstanding purchase price of the receivables sold.  The total amount of receivables uncollected by the institution was $0.5 million at June 30, 2020 for which there is a limit of $4.0 million.  Although the sale of receivables is with recourse, the Company did not record a recourse obligation at June 30, 2020 as the Company concluded that the sold receivables are collectible.  The other agreements without recourse are under programs offered by certain customers in the Wireless segment.

9

For the nine months ended June 30, 2020 and 2019, the Company received proceeds from the sold receivables under all of the various agreements of $15.9 million and $9.9 million, respectively, and included the proceeds in net cash used in operating activities in the Consolidated Condensed Statements of Cash Flows.  The fees associated with selling these receivables ranged from 1.0% to 1.8% of the gross receivables sold for the nine months ended June 30, 2020 and 2019.  The Company recorded costs of $0.1 million and $0.3 million for the three and nine months ended June 30, 2020, respectively, and $0.1 million and $0.2 million for the three and nine months ended June 30, 2019, in other expense in the Consolidated Condensed Statements of Operations.

The Company accounts for these transactions in accordance with ASC 860, “Transfers and Servicing” (“ASC 860”).  ASC 860 allows for the ownership transfer of accounts receivable to qualify for sale treatment when the appropriate criteria is met, which permits the Company to present the balances sold under the program to be excluded from accounts receivable, net on the consolidated condensed balance sheets.  Receivables are considered sold when they are transferred beyond the reach of the Company and its creditors, the purchaser has the right to pledge or exchange the receivables and the Company has surrendered control over the transferred receivables.

Note 4 – Promissory Note

The Company completed a sale of its former Cable TV reporting segment on June 30, 2019.  In the first quarter of 2020, Leveling 8 Inc. (“Leveling 8”) paid the Company the first installment of $0.7 million, including interest of $0.1 million, under the promissory note as part of the sale of the Cable TV segment to Leveling 8.  In the third quarter of 2020, Leveling 8 made another payment of $1.7 million ($1.4 million related to principal), which will lower the $2.5 million balloon payment due upon the maturity of the note as $0.7 million of this payment was a prepayment against the promissory note.  David Chymiak, a director and substantial shareholder of the Company, personally guaranteed the promissory note due to the Company and pledged certain assets (directly and indirectly owned) to secure the payment of the promissory note, including substantially all of David Chymiak’s Company common stock.  On March 10, 2020, the Company entered into a loan agreement with its primary financial lender for $3.5 million to monetize a portion of this promissory note (see Note 8).

The remaining promissory note will be paid in semi-annual installments over five years including interest of 6% as follows at June 30, 2020:

Fiscal year 2021	$	1,400,000
Fiscal year 2022		940,000
Fiscal year 2023		940,000
Fiscal year 2024		1,725,754
Total proceeds		5,005,754
Less:  interest to be paid		(655,754	)
Promissory note principal balance	$	4,350,000

Note 5 – Inventories

Inventories, which are all within the Telco segment, at June 30, 2020 and September 30, 2019 are as follows:

	June 30, 2020			September 30, 2019
New equipment	$	1,174,899		$	1,496,145
Refurbished and used equipment		8,189,591			7,404,428
Allowance for excess and obsolete inventory		(3,400,000	)		(1,275,000	)
Total inventories, net	$	5,964,490		$	7,625,573

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New equipment includes products purchased from manufacturers plus “surplus-new”, which are unused products purchased from other distributors or multiple system operators.  Refurbished and used equipment includes factory refurbished, Company refurbished and used products.

The Telco segment identified certain inventory that more than likely will not be sold or that the cost will not be recovered when it is processed through its recycling program and recorded a $2.1 million expense in cost of sales to increase the allowance for excess and obsolete inventory during the nine months ended June 30, 2020.  Therefore, the Company has a $3.4 million and a $1.3 million allowance at June 30, 2020 and September 30, 2019, respectively.

Note 6 – Intangible Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the asset’s carrying amount may not be recoverable. The Company conducts its long-lived asset impairment analyses in accordance with ASC 360-10-15, “Impairment or Disposal of Long-Lived Assets.”  ASC 360-10-15 requires the Company to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows.  If the undiscounted future cash flows do not indicate the carrying amount of the asset is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds its fair value based on discounted cash flow analysis or appraisals.

As of March 31, 2020, the Company determined that changes in the economy related to the COVID-19 pandemic and the continued losses experienced in the Telco segment may cause the carrying amounts of its intangible assets to exceed their fair values.  The Company performed an assessment of its intangible assets and determined that the carrying value of its customer relationships were in fact impaired based on valuation appraisals performed by the Company using a multi-period excess earnings model.  Therefore, the Company recorded a $3.9 million impairment charge in the Telco segment as of March 31, 2020. As of June 30, 2020, no further indicators of potential impairment were present.

Intangible assets with their associated accumulated amortization and impairment at June 30, 2020 and September 30, 2019 are as follows:

	June 30, 2020
	Gross		Accumulated Amortization			Impairment			Net
Intangible assets:
Customer relationships – 10 years	$	8,396,000	$	(3,991,306	)	$	(3,894,121	)	$	510,573
Trade name – 10 years		2,119,000		(1,124,800	)		‒			994,200
Non-compete agreements – 3 years		374,000		(374,000	)		‒			‒
Total intangible assets	$	10,889,000	$	(5,490,106	)	$	(3,894,121	)	$	1,504,773

	September 30, 2019
	Gross		Accumulated Amortization			Net
Intangible assets:
Customer relationships – 10 years	$	8,396,000	$	(3,547,389	)	$	4,848,611
Trade name – 10 years		2,119,000		(966,280	)		1,152,720
Non-compete agreements – 3 years		374,000		(372,333	)		1,667
Total intangible assets	$	10,889,000	$	(4,886,002	)	$	6,002,998

Note 7 – Goodwill

The Company tests goodwill at least annually for impairment. The Company tests more frequently if indicators are present or changes in circumstances suggest that impairment may exist. These indicators include, among others,

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declines in sales, earnings or cash flows, or the development of a material adverse change in the business climate. The Company assesses goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment.  The reporting units for the Company are its two operating segments.

As of March 31, 2020, indicators were present, which indicated that the Company should test for impairment of goodwill.  These indicators included reduced revenues in the current fiscal year and the overall impact of the business climate as a result of the COVID-19 pandemic.  While the Company is deemed an essential service during the COVID-19 pandemic and has remained in operation, it has seen a reduced revenue stream in the current year.  Therefore, the Company performed a goodwill impairment analysis as of March 31, 2020.  This analysis forecasted the debt free cash flows of the segment, on a discounted basis, to estimate the fair value of the segment compared to the carrying value of the segment. For the Telco segment, the carrying value exceeded the estimated fair value of the segment by more than the carrying amount of goodwill recorded in the segment.  Therefore, the Company fully impaired the goodwill balance in the Telco segment and recorded an impairment charge of $4.8 million as of March 31, 2020.

Note 8 – Notes Payable and Line of Credit

Loan Agreement

On March 10, 2020, the Company entered into a loan agreement with its primary financial lender for $3.5 million, bearing interest at 6% per annum.  The loan is payable in seven semi-annual installments of principal and interest with the first payment occurring June 30, 2020, and the final payment due June 30, 2023.   Payment of the loan may be accelerated in the event of a default.  The principal and interest payments correlate to the payment schedule for the promissory note with Leveling 8 (see Note 4).  In connection with the $1.7 million payment made in the third quarter of 2020 by Leveling 8 under the promissory note, the Company paid down $1.6 million of principal under this loan, for which $1.0 million was a prepayment against the loan. As a result, the balance under this loan is now $1.9 million and the final payment will be June 30, 2022. The loan is secured by substantially all of the assets of the Company, including, without limitation, the promissory note that the Company received in connection with the sale of its cable segment in 2019 to Leveling 8, Inc. (see Note 4).

Credit Agreement

The Company has a $4.0 million revolving line of credit agreement with its primary financial lender, which matures on December 17, 2020.  The line of credit requires quarterly interest payments based on the prevailing Wall Street Journal Prime Rate (3.25% at June 30, 2020), and the interest rate is reset monthly.  At June 30, 2020, there was $2.8 million outstanding under the line of credit. Future borrowings under the line of credit are limited to the lesser of $4.0 million or the sum of 80% of eligible accounts receivable and 25% of eligible Telco segment inventory. Under these limitations, the Company’s total line of credit borrowing capacity was $3.1 million at June 30, 2020.

Loan Covenant with Primary Financial Lender

Both the March 10, 2020 loan agreement and line of credit agreement provide that the Company maintain a fixed charge coverage ratio (net cash flow to total fixed charge) of not less than 1.25 to 1.0 measured annually.  The Company believes that it is probable that it will not be in compliance with this covenant as of the measurement date of September 30, 2020. The noncompliance with this covenant would result in an event of default, which if not cured or waived, could result in the lender accelerating the maturity of the Company’s indebtedness or preventing access to additional funds under the line of credit agreement, or requiring prepayment of outstanding indebtedness under the loan agreement or the line of credit agreement.

Paycheck Protection Program Loan

On April 14, 2020, the Company received a SBA Payroll Protection Program (“PPP”) loan pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), with its primary lender for $2.9 million.  The PPP loan bears interest at 1% per annum, with monthly payments of principal and interest in the amount of $164,045 commencing on November 10, 2020, and matures on April 10, 2022.  The Paycheck Protection Program provides that the PPP loan may be partially or fully forgiven if the funds are used for certain qualifying expenses as described in the CARES Act.  The Company intends to use the proceeds from the PPP loan for

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qualifying expenses and to apply for forgiveness in accordance with the terms in the CARES Act.  While the Company plans to apply for forgiveness of the PPP loan in accordance with the requirements and limitations under the CARES Act, the PPP Flexibility Act and SBA regulations and requirements, no assurance can be given that all or any portion of the PPP loan will be forgiven.

Fair Value of Debt

The carrying value of the Company’s variable-rate line of credit approximates its fair value since the interest rate fluctuates periodically based on a floating interest rate.  The carrying value of the Company’s term debt approximates fair value.

Note 9 – Equity Distribution Agreement and Sale of Common Stock

On April 24, 2020, the Company entered into an Equity Distribution Agreement (the “Sales Agreement”) with Northland Securities, Inc., as agent (“Northland”), pursuant to which the Company may offer and sell, from time to time, through Northland, shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), having an aggregate offering price of up to $13,850,000 (the “Shares”).

The offer and sale of the Shares will be made pursuant to a shelf registration statement on Form S-3 and the related prospectus filed by the Company with the Securities and Exchange Commission (the “SEC”) on March 3, 2020, as amended on March 23, 2020, and declared effective by the SEC on April 1, 2020.

Pursuant to the Sales Agreement, Northland may sell the Shares by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 of the Securities Act of 1933 (the “Securities Act”), including sales made by means of ordinary brokers’ transactions, including on The Nasdaq Global Market, at market prices or as otherwise agreed with Northland. Northland will use commercially reasonable efforts consistent with its normal trading and sales practices to sell the Shares from time to time, based upon instructions from the Company, including any price or size limits or other customary parameters or conditions the Company may impose. The sales agreement may be terminated without prior notice at any time prior to the fulfillment of the Sales Agreement if additional sales are deemed not warranted.

The Company will pay Northland a commission rate equal to an aggregate of 3.0% of the aggregate gross proceeds from each sale of Shares and have agreed to provide Northland with customary indemnification and contribution rights. The Company will also reimburse Northland for certain specified expenses in connection with entering into the Sales Agreement. The Sales Agreement contains customary representations and warranties and conditions to the placements of the Shares pursuant thereto.

During the three months ended June 30, 2020, 573,199 shares were sold by Northland on behalf of the Company with gross proceeds of $2.2 million, and net proceeds after commissions and fees of $2.1 million. Of the 573,199 shares sold, 80,043 shares were sold by June 30, 2020, but were settled in July 2020, resulting in a receivable of $0.3 million net of commissions and fees, which is reflected in Other current assets.

Note 10 – Income Taxes

As a result of the CARES Act, the Company can carryback net operating losses generated in 2018 through 2020 for a period of five years.  As a result, the Company’s effective tax rate included an income tax benefit recognized during the nine months ended June 30, 2020 related to tax losses generated during the fiscal year up to the amount that the Company estimates is realizable based upon taxable income in the carryback periods.  Therefore, as of June 30, 2020, the Company recorded $1.2 million of deferred tax assets and recorded a benefit for income taxes.  The

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Company continues to provide a valuation allowance of $9.4 million for all deferred taxes where the Company believes it is more likely than not that those deferred taxes will not be realized.

Note 11 – Earnings Per Share

Basic earnings per share are based on the sum of the average number of common shares outstanding and issuable, restricted and deferred shares.  Diluted earnings per share include any dilutive effect of stock options and restricted stock.  In computing the diluted weighted average shares, the average share price for the period is used in determining the number of shares assumed to be reacquired under the treasury stock method from the exercise of options.

Basic and diluted earnings per share for the three and nine months ended June 30, 2020 and 2019 are:

	Three Months Ended June 30,					Nine Months Ended June 30,
	2020		2019			2020			2019
Income (loss) from continuing operations	$	23,350	$	(58,195	)	$	(16,355,423	)	$	(2,472,665	)
Discontinued operations, net of tax		‒		(1,426,970	)		‒			(1,267,344	)
Net income (loss) attributable to common shareholders	$	23,350	$	(1,485,165	)	$	(16,355,423	)	$	(3,740,009	)
Basic weighted average shares		11,079,580		10,361,292			10,955,235			10,361,292
Effect of dilutive securities:
Stock options		137,108		‒			‒			‒
Diluted weighted average shares		11,216,688		10,361,292			10,955,235			10,361,292
Earnings (loss) per common share:
Basic:
Continuing operations	$	0.00	$	(0.00	)	$	(1.49	)	$	(0.24	)
Discontinued operations		‒		(0.14	)		‒			(0.12	)
Net income (loss)	$	0.00	$	(0.14	)	$	(1.49	)	$	(0.36	)
Diluted:
Continuing operations	$	0.00	$	(0.00	)	$	(1.49	)	$	(0.24	)
Discontinued operations		‒		(0.14	)		‒			(0.12	)
Net income (loss)	$	0.00	$	(0.14	)	$	(1.49	)	$	(0.36	)

The table below includes information related to stock options that were outstanding at the end of each respective three and nine-month periods ended June 30, but have been excluded from the computation of weighted-average stock options for dilutive securities because their effect would be anti-dilutive. The stock options were anti-dilutive either due to the Company incurring a net loss for the periods presented or the exercise price exceeded the average market price per share of our common stock for the three and nine months ended June 30, 2020 and 2019.

	Three Months Ended June 30,				Nine Months Ended June 30,
	2020		2019		2020		2019
Stock options excluded		150,000		770,000		480,000		770,000
Weighted average exercise price of
stock options	$	2.96	$	1.73	$	1.89	$	1.73
Average market price of common stock	$	2.41	$	1.38	$	2.48	$	1.37

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Note 12 – Stock-Based Compensation

Plan Information

The 2015 Incentive Stock Plan (the “Plan”) provides for awards of stock options and restricted stock to officers, directors, key employees and consultants.  Under the Plan, option prices will be set by the Compensation Committee and may not be less than the fair market value of the stock on the grant date.

In March 2020, at the Company’s annual meeting of shareholders, the shareholders authorized an additional 1,000,000 shares of common stock be added to the Plan.  At June 30, 2020, 2,100,415 shares of common stock were reserved for stock award grants under the Plan.  Of these reserved shares, 936,806 shares were available for future grants.

Stock Options

All share-based payments to employees, including grants of employee stock options, are recognized in the financial statements based on their grant date fair value over the requisite service period.  Compensation expense for share-based awards is included in the operating expenses and  selling, general and administrative expenses sections of the Company’s consolidated condensed statements of operations.

Stock options are valued at the date of the award, which does not precede the approval date, and compensation cost is recognized on a straight-line basis over the vesting period.  Stock options granted to employees generally become exercisable over a three, four or five-year period from the date of grant and generally expire ten years after the date of grant.  Stock options granted to the Board of Directors generally become exercisable on the date of grant and generally expire ten years after the grant.

A summary of the status of the Company's stock options at June 30, 2020 and changes during the nine months then ended is presented below:

	Shares			Wtd. Avg. Ex. Price		Aggregate Intrinsic Value
Outstanding at September 30, 2019		770,000		$	1.73	$	352,700
Granted		‒			‒		‒
Exercised		(123,334	)	$	1.20	$	304,568
Expired		–			–		–
Forfeited		(166,666	)	$	1.35	$	347,999
Outstanding at June 30, 2020		480,000		$	1.89	$	742,800
Exercisable at June 30, 2020		376,667		$	1.99	$	546,101

No nonqualified stock options were granted for the nine months ended June 30, 2020.  The Company estimates the fair value of the options granted using the Black-Scholes option valuation model.  The Company estimates the expected term of options granted based on the historical grants and exercises of the Company’s options.  The Company estimates the volatility of its common stock at the date of the grant based on both the historical volatility as well as the implied volatility on its common stock.  The Company bases the risk-free rate that is used in the Black-Scholes option valuation model on the implied yield in effect at the time of the option grant on U.S. Treasury zero-coupon issues with equivalent expected term.  The Company has never paid cash dividends on its common stock and does not anticipate paying cash dividends in the foreseeable future.  Consequently, the Company uses an expected dividend yield of zero in the Black-Scholes option valuation model.  The Company amortizes the resulting fair value of the options ratably over the vesting period of the awards.  The Company recognizes forfeitures as they occur.

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Compensation expense related to unvested stock options recorded for the nine months ended June 30, 2020 is as follows:

	Nine Months Ended June 30, 2020
Fiscal year 2017 grant	$	(5,652	)
Fiscal year 2019 grants	$	(1,476	)

The Company records compensation expense over the vesting term of the related options.  At June 30, 2020, compensation costs related to these unvested stock options not yet recognized in the consolidated condensed statements of operations was $7,202.

Restricted Stock

As a result of the shareholders authorizing the additional shares being added to the Plan in March 2020, the Company granted restricted stock awards to its eligible board members for both the prior fiscal year and current fiscal year awards due to eligible board members.  The shares granted totaled 237,014, which were valued at market value on the date of grant.  The shares have varying vesting periods ranging from immediate to three years.  The unamortized portion of the restricted stock is included in prepaid expenses on the Company’s consolidated condensed balance sheets.

The Company granted restricted stock in October 2018 to its Chairman of the Board of Directors totaling 55,147 shares, which were valued at market value on the date of grant.  The shares will vest 20% per year with the first installment vesting on the first anniversary of the grant date.  The unamortized portion of the restricted stock is included in prepaid expenses on the Company’s consolidated condensed balance sheets.

Note 13 – Leases

Effective October 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842), utilizing the modified-retrospective transition approach. which is intended to improve financial reporting about leasing transactions. The standard requires the recognition of right-of-use assets and lease liabilities on the consolidated balance sheet and disclosure of key information about leasing arrangements.  The Company elected to use the transition option that allows the Company to initially apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment, if any, to the opening balance of retained earnings in the year of adoption.  The adoption of ASC 842 did not result in any adjustments to retained earnings.

In accordance with ASC 842, the Company has made accounting policy elections (1) to not apply the new standard to lessee arrangements with a term of twelve months or less and (2) to combine lease and non-lease components.  The non-lease components are not material and do not result in significant timing differences in the recognition of lease expense.  As a result of adopting ASC 842, the Company recognized net operating lease right-of-use assets of $4.7 million and operating lease liabilities of $4.7 million on the effective date.  In addition, as a result of adopting ASC 842, the Company recognized net financing lease assets of $0.6 million and financing lease liabilities of $0.6 million on the effective date that were previously accounted for as operating leases.

The Company categorizes leases at their inception as either operating or finance leases. The Company has operating and financing leases in place for various office and warehouse properties, vehicles and certain wireless services equipment.  The leases have remaining lease terms of one year to [ten] years, some of which include the option to extend the lease terms.  Operating leases are included in right-of-use operating lease assets, operating lease liabilities - current, and operating lease liabilities in the consolidated condensed balance sheets.  Finance leases are included in net property and equipment, financing lease liabilities – current, and financing lease liabilities in the consolidated condensed balance sheets.

Leased assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease.  Operating lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.  The Company uses a discount rate that approximates the rate of interest for a collateralized loan over a similar term as the discount

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rate for present value of lease payments when the rate implicit in the contract is not readily determinable.  Leases that have a term of twelve months or less upon commencement date are considered short-term in nature.  Accordingly, short-term leases are not included in the consolidated condensed balance sheets and are expensed on a straight-line basis over the lease term, which commences on the date the Company has the right to control the property.

The Company has an operating lease for a building in Jessup, Maryland for Nave Communications.  As a result of moving Nave’s operations to Palco Telecom, a third-party logistics provider in Huntsville, Alabama, in fiscal year 2019, Nave completely vacated the building in May 2020 and was subleasing part of the building during fiscal year 2020.  As of June 30, 2020, the Company determined that the right of use asset associated with this lease may exceed its fair value.  The Company performed an assessment of this right of use asset in accordance with ASC 360-10-15 and determined that the carrying value was impaired based on a valuation appraisal performed by the Company using a forecasted debt free cash flow model.  Therefore, Company recorded a $0.7 million impairment charge in the Telco segment as of June 30, 2020.

The components of lease expense were as follows:

	Three Months ended June 30, 2020		Nine Months ended June 30, 2020
Operating lease cost:
Operating lease cost	$	296,677	$	943,834
Impairment of right of use asset		660,242		660,242
Operating lease cost	$	956,919	$	1,604,076
Finance lease cost:
Amortization of right-of-use assets	$	71,925	$	198,289
Interest on lease liabilities		18,220		43,182
Total finance lease cost	$	90,145	$	241,471

Supplemental cash flow information related to leases are as follows for the nine months ended:

	June 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	768,784
Operating cash flows from finance leases	$	43,182
Financing cash flows from finance leases	$	277,061
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	1,076,700
Finance leases	$	718,058

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Supplemental balance sheet information related to leases are as follows:

	June 30, 2020
Operating leases
Operating lease right-of-use assets	$	4,158,786
Operating lease obligations - current	$	1,224,630
Operating lease obligations		3,809,803
Total operating lease liabilities	$	5,034,433
Finance leases
Property and equipment, gross	$	1,462,865
Accumulated depreciation		(210,253	)
Property and equipment, net	$	1,252,612
Financing lease obligations - current	$	328,151
Financing lease obligations		855,052
Total finance lease liabilities	$	1,183,203
Weighted Average Remaining Lease Term
Operating leases	3.94 years
Finance leases	3.98 years
Weighted Average Discount Rate
Operating leases		5.00	%
Finance leases		4.96	%

Maturities of lease liabilities are as follows for the years ending September 30:

	Operating Leases		Finance Leases
2020	$	355,239	$	140,761
2021		1,440,544		314,093
2022		1,468,081		295,617
2023		1,369,882		281,636
2024		802,026		227,541
Thereafter		150,478		44,334
Total lease payments		5,586,250		1,303,982
Less imputed interest		555,817		120,779
Total	$	5,034,433	$	1,183,203

Note 14 – Segment Reporting

The Company is reporting its financial performance based on its external reporting segments: Wireless Infrastructure Services and Telecommunications.  These reportable segments are described below.

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Wireless Infrastructure Services (“Wireless”)

The Wireless segment provides turn-key wireless infrastructure services for the four major U.S. wireless carriers, communication tower companies, national integrators, and original equipment manufacturers that support these wireless carriers.  These services primarily consist of the installation and upgrade of technology on cell sites and the construction of new small cells for 5G.

Telecommunications (“Telco”)

The Company’s Telco segment sells new and refurbished telecommunications networking equipment, including both central office and customer premise equipment, to its customer base of telecommunications providers, enterprise customers and resellers located primarily in North America.  This segment also offers its customers repair and testing services for telecommunications networking equipment.  In addition, this segment offers its customers decommissioning services for surplus and obsolete equipment, which it in turn processes through its recycling program.

The Company evaluates performance and allocates its resources based on operating income.  The accounting policies of its reportable segments are the same as those described in the summary of significant accounting policies.  Segment assets consist primarily of cash and cash equivalents, accounts receivable, inventory, property and equipment, goodwill and intangible assets.

	Three Months Ended						Nine Months Ended
	June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
Sales
Wireless	$	5,123,175		$	8,733,444		$	16,592,907		$	12,951,368
Telco		6,898,645			8,825,871			21,350,396			24,307,984
Total sales	$	12,021,820		$	17,559,315		$	37,943,303		$	37,259,352
Gross profit
Wireless	$	2,251,153		$	2,235,406		$	4,298,915		$	3,524,164
Telco		1,919,426			2,351,999			3,025,009			6,263,146
Total gross profit	$	4,170,579		$	4,587,405		$	7,323,924		$	9,787,310
Loss from operations
Wireless	$	(253,416	)	$	(454,672	)	$	(4,136,645	)	$	(1,568,255	)
Telco		(896,561	)		201,593			(13,483,096	)		(1,042,122	)
Total loss from operations	$	(1,149,977	)	$	(253,079	)	$	(17,619,741	)	$	(2,610,377	)

	June 30, 2020		September 30, 2019
Segment assets
Wireless	$	5,082,120	$	5,515,793
Telco		12,274,168		22,619,565
Non-allocated		18,753,302		8,692,986
Total assets	$	36,109,590	$	36,828,344

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Special Note on Forward-Looking Statements

Certain statements in Management's Discussion and Analysis (“MD&A”), other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements generally are identified by the words “estimates,” “projects,” “believes,” “plans,” “intends,” “will likely result,” and similar expressions.  Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. These statements are subject to a number of risks, uncertainties and developments beyond our control or foresight, including changes in the trends of the wireless infrastructure services industry, changes in the trends of the telecommunications industry, changes in our supplier agreements, technological developments, changes in the general economic environment, the potential impact of the novel strain of coronavirus (“COVID-19”) pandemic, the growth or formation of competitors, changes in governmental regulation or taxation, changes in our personnel and other such factors.  Our actual results, performance or achievements may differ significantly from the results, performance or achievements expressed or implied in the forward-looking statements.  We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.

Overview

The following MD&A is intended to help the reader understand the results of operations, financial condition, and cash flows of the Company.  MD&A is provided as a supplement to, and should be read in conjunction with the information presented elsewhere in this quarterly report on Form 10-Q and with the information presented in our annual report on Form 10-K for the year ended September 30, 2019, which includes our audited consolidated financial statements and the accompanying notes to the consolidated financial statements.

The Company reports its financial performance based on two external reporting segments: Wireless and Telecommunications.  These reportable segments are described below.

Wireless Infrastructure Services (“Wireless”)

The Company’s Wireless segment provides turn-key wireless infrastructure services for the four major U.S. wireless carriers, communication tower companies, national integrators, and original equipment manufacturers that support these wireless carriers.  These services primarily consist of the installation and upgrade of technology on cell sites and the construction of new small cells for 5G.

Telecommunications (“Telco”)

The Company’s Telco segment sells new and refurbished telecommunications networking equipment, including both central office and customer premise equipment, to its customer base of telecommunications providers, enterprise customers and resellers located primarily in North America.  This segment also offers its customers repair and testing services for telecommunications networking equipment.  In addition, this segment offers its customers decommissioning services for surplus and obsolete equipment, which it in turn processes through its recycling program.

Recent Business Developments

Management Changes

Subsequent to June 30, 2020, we announced several management changes.  First, Jarrod Watson was appointed as the Chief Financial Officer of the Company.  Mr. Watson is filling the vacancy from the former chief financial officer who resigned earlier this fiscal year.  Mr. Watson comes to our Company with more than 20 years of corporate

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financial leadership, including multiple Fortune 500 organizations.  Reginald Jaramillo was promoted to President of our Telco segment, replacing Don Kinison who recently left the Company.  Mr. Jaramillo has 15 years of experience in the telecommunications industry working for companies such as Cox Communications, Time Warner Cable and Suddenlink Communications.  Finally, Jimmy Taylor was named the President of the Wireless segment, where he had been serving in that capacity on an interim basis since February 2020.

COVID-19

On March 11, 2020, the World Health Organization declared the current outbreak of COVID-19 to be a global pandemic, and on March 13, 2020, the United States declared a national emergency. In response to these declarations and the rapid spread of COVID-19, federal, state and local governments have imposed varying degrees of restrictions on business and social activities to contain COVID-19, including quarantine and “stay-at-home” or “shelter-in-place” orders in markets where we operate. Despite these “stay-at-home” or “shelter-in-place” orders, we are classified as an essential business due to the services and products we provide to the telecommunications industry.  Therefore, we continue to operate in the markets we serve, but most of our back-office and administrative personnel were working from home through June 30, 2020 while these orders were in place.  Although we can continue to operate our businesses, our revenues have slowed, especially in our Wireless segment, due to the carriers slowing down various wireless tower projects. We have not experienced a material disruption in our supply chain to date; however, we expect COVID-19 could materially negatively affect the supply chain, customer demand for our telecommunications products or further delay wireless carriers’ infrastructure build plans in the coming months as a result of the disruption and uncertainty it is causing.  There is considerable uncertainty regarding the extent to which COVID-19 will continue to spread and the extent and duration of governmental and other measures implemented to try to slow the spread of COVID-19, such as large-scale travel bans and restrictions, border closures, quarantines, shelter-in-place orders and business and government shutdowns. Restrictions of this nature have caused, and may continue to cause, us, our subcontractors, suppliers and other business counterparties to experience operational delays.

In response to COVID-19, we have taken a variety of measures to ensure the availability of our critical infrastructure, promote the health and safety of our employees, and support the communities in which we operate. These measures include providing support for our customers as reflected in the FCC's "Keep Americans Connected" pledge, requiring work-from-home arrangements for a large portion of our workforce and imposing travel restrictions for our employees where practicable, canceling physical participation in meetings, events and conferences, and other modifications to our business practices. We will continue to actively monitor the situation and may take further actions as may be required by governmental authorities or that we determine are in the best interests of our employees, customers, business partners and stockholders.

While we continue to assess the COVID-19 situation, the extent to which the COVID-19 pandemic may impact our business, operating results, financial condition, or liquidity in the future will depend on future developments, including the duration of the outbreak, travel restrictions, business and workforce disruptions, and the effectiveness of actions taken to contain and treat the virus.

Results of Operations

Comparison of Results of Operations for the Three Months Ended June 30, 2020 and June 30, 2019

Consolidated

Consolidated sales decreased $5.5 million, or 32%, to $12.0 million for the three months ended June 30, 2020 from $17.6 million for the three months ended June 30, 2019.  The decrease in sales was due to declines in sales in the Wireless and Telco segments of $3.6 million and $1.9 million, respectively.

Consolidated gross profit decreased $0.4 million to $4.2 million for the three months ended June 30, 2020 from $4.6 million for the same period last year.  The decrease in gross profit was due primarily to the Telco segment as the Wireless segment was essentially flat compared to the same period last year.

Consolidated operating expenses include indirect costs associated with operating our business.  Indirect costs are costs that are not directly attributable to projects or products, which would include indirect personnel costs, facility costs,

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vehicles, insurance, communication, and business taxes, among other less significant cost categories.  Operating expenses increased $0.4 million, or 24%, to $2.0 million for the three months ended June 30, 2020 from $1.6 million the same period last year.  The increase in operating expenses was due to the Telco segment.

Consolidated selling, general and administrative expenses include overhead costs, which primarily consist of personnel costs, insurance, professional services, and communication, among other less significant cost categories.  Selling, general and administrative expenses decreased $0.4 million, or 15%, to $2.4 million for the three months ended June 30, 2020 from $2.8 million for the same period last year.  The decrease in expenses was due to the Wireless segment and Telco segment of $0.2 million and $0.2 million, respectively.

Impairment of right of use assets for the three months ended June 30, 2020 was $0.7 million related to the impairment of a right of use asset associated with a building lease in the Telco segment.

Depreciation and amortization expenses decreased $0.1 million, or 25%, to $0.3 million for the three months ended June 30, 2020 from $0.4 million for the same period last year.  The decrease was due primarily to a decrease in expenses to the Telco segment of $0.2 million, partially offset by an increase in expenses from the Wireless segment of $0.1 million.

Interest income primarily consists of interest earned on the promissory note from the sale of the cable business in June 2019.  Interest income was $0.1 million for the three months ended June 30, 2020 and zero for the same period last year.

Income from equity method investment, which consists of activity related to our investment in YKTG Solutions, for the three months ended June 30, 2020 was zero and $20 thousand for the three months ended June 30, 2019.  The income for the three months ended June 30, 2019 consisted primarily of payments received under a loan to the former YKTG Solutions partners.

Other income and expense for the three months ended June 30, 2020 was essentially zero as compared to income of $0.2 million for the same period last year.  The income for the three months ended June 30, 2019 is primarily related to a gain on sales of assets of $0.3 million, partially offset by our factoring arrangements with our Wireless segment.

Interest expense for the three months ended June 30, 2020 was $0.1 million as compared to $26 thousand for the same period last year.  The expense for the three months ended June 30, 2020 was primarily related to interest expense on the revolving bank line of credit and the loan with our primary financial lender.  The expense for the three months ended June 30, 2019 was primarily related to interest expense from our revolving bank line of credit and from our deferred guaranteed payments related to the Triton Miami, Inc. acquisition.

The benefit for income taxes was $1.2 million for the three months ended June 30, 2020 compared to a benefit for income taxes of $42 thousand for the three months ended June 30, 2019. As a result of the CARES Act, the Company can carryback net operating losses generated in 2018 through 2020 for a period of five years.  As a result, the Company’s effective tax rate included an income tax benefit of $1.2 million recognized during the three months ended June 30, 2020 related to tax losses generated during the fiscal year up to the amount that the Company estimates is realizable based upon taxable income in the carryback periods.

Segment Results

Wireless

Revenues for the Wireless segment decreased $3.6 million to $5.1 million for the three months ended June 30, 2020 from $8.7 million for the same period of last year. Revenues for the three months ended June 30, 2020 continued to be negatively impacted due to delays in infrastructure spending from the major U.S. carriers related to the COVID-19 pandemic.  However, we believe that the 5G rollout will gain momentum in the calendar year and that there is substantial and growing pent-up demand for 5G-related work on existing towers, new raw-land builds, and small cell networks.  In addition, we have made and are continuing to make the necessary operational changes in order to be well positioned to secure an increased share of the 5G construction services work and to improve our operating cost efficiency and gross profit.

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Gross profit was $2.2 million, or 44% for the three months ended June 30, 2020 and $2.2 million, or 26%, for the three months ended June 30, 2019. Gross profit was essentially flat for three months ended June 30, 2020 as compared to the same period of last year despite decreased revenues for the three months ended June 30, 2020. The significant improvement in the gross profit percentage was driven by several factors including recognition of change order revenues, where expenses had been incurred in prior quarters, operational improvements, and a higher mix of specialty service work. Management believes margins will continue to show improvement over prior quarters, but will be lower, on a percentage basis, than the three months ended June 30, 2020 due to $0.5 million of change order revenue recognized in the current quarter, where expenses were incurred in prior quarters.

Operating expenses were $1.2 million for both the three months ended June 30, 2020 and the three months ended June 30, 2019.

Selling, general and administrative expenses decreased $0.2 million to $1.1 million for the three months ended June 30, 2020 from $1.3 million for the three months ended June 30, 2019.  This decrease was due primarily to decreased payroll-related expenses for the three months ended June 30, 2020 compared to the prior year due to cost controlling initiatives including headcount reductions for the three months ended June 30, 2020.

Depreciation and amortization expense increased $0.1 million to $0.2 million for the three months ended June 30, 2020 from $0.1 million for the same period last year.

Telco

Sales for the Telco segment decreased $1.9 million to $6.9 million for the three months ended June 30, 2020 from $8.8 million for the same period last year.  The decrease in sales for the Telco segment was due primarily to a decrease in equipment sales due to Triton Datacom of $2.2 million, partially offset by an increase at Nave Communications of $0.3 million.  The decrease in revenue at Triton Datacom was significantly impacted by the COVID-19 pandemic as many of its customers were closed during the three months ended June 30, 2020.

Gross profit was $1.9 million for the three months ended June 30, 2020 and $2.3 million for the three months ended June 30, 2019.  The decreased gross profit was due primarily to decreased revenues for the three months ended June 30, 2020.

Operating expenses increased $0.4 million to $0.8 million for the three months ended June 30, 2020 from $0.4 million for the three months ended June 30, 2019.  This increase was due primarily to increased personnel costs and operating charges from Palco Telecom, our third-party logistics provider in Huntsville, Alabama.

Selling, general and administrative expenses decreased $0.4 million to $1.3 million for the three months ended June 30, 2020 from $1.7 million for the same period last year.  This decrease was due primarily to decreased personnel costs.

Impairment of right of use assets for the three months ended June 30, 2020 was $0.7 million related to the impairment of a right of use asset associated with a building lease in the Telco segment.

Depreciation and amortization expense decreased $0.2 million to $0.1 million for the three months ended June 30, 2020 from $0.3 million for the same period last year.  This decrease was due primarily to decreased amortization expense resulting from the impairment of intangibles taken in the three months ended March 31, 2020.

Comparison of Results of Operations for the Nine Months Ended June 30, 2020 and June 30, 2019

Consolidated

Consolidated sales increased $0.6 million, or 2%, to $37.9 million for the nine months ended June 30, 2020 from $37.3 million for the nine months ended June 30, 2019.  The increase in sales was primarily in the Wireless segment, which increased $3.6 million, largely offset by a decrease in sales from the Telco segment of $3.0 million.

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Consolidated gross profit decreased $2.5 million, or 25%, to $7.3 million for the nine months ended June 30, 2020 from $9.8 million for the same period last year.  The decrease in gross profit was due to the Telco segment of $3.3 million, partially offset by an increase in the Wireless segment of $0.8 million.

Consolidated operating expenses include indirect costs associated with operating our business.  Indirect costs are costs that are not directly attributable to projects or products, which would include indirect personnel costs, facility costs, vehicles, insurance, communication, and business taxes, among other less significant cost categories.  Operating expenses increased $2.4 million, or 59%, to $6.3 million for the nine months ended June 30, 2020 from $3.9 million the same period last year.  The increase in operating expenses was due to an increase in the Wireless segment and Telco segment of $1.8 million and $0.6 million, respectively.

Consolidated selling, general and administrative expenses include overhead costs, which primarily consist of personnel costs, insurance, professional services, and communication, among other less significant cost categories.  Selling, general and administrative expenses increased $0.7 million, or 10%, to $8.1 million for the nine months ended June 30, 2020 from $7.4 million for the same period last year.  This was due to an increase in the Wireless segment of $1.3 million, partially offset by a decrease in the Telco segment of $0.6 million, respectively.

Impairment of right of use assets for the nine months ended June 30, 2020 was $0.7 million related to the impairment of a right of use asset associated with a building lease in the Telco segment.

Impairment of intangibles including goodwill for the nine months ended June 30, 2020 was $8.7 million related to the write-off of goodwill and certain intangibles in the Telco segment.

Depreciation and amortization expenses increased $0.1 million, or 16%, to $1.2 million for the nine months ended June 30, 2020 from $1.1 million for the same period last year.  The increase was due to increased depreciation expense in the Wireless segment of $0.3 million, partially offset by a decrease in the Telco segment of $0.1 million.

Interest income primarily consists of interest earned on the promissory note from the sale of the cable business in June 2019.  Interest income was $0.3 million for the nine months ended June 30, 2020 and zero for the same period last year.

Income from equity method investment, which consists of activity related to our investment in YKTG Solutions, for the nine months ended June 30, 2020 was $41 thousand and $75 thousand for the nine months ended June 30, 2019.  The income consisted primarily of payments received under a loan to the former YKTG Solutions partners.

Other income and expense for the nine months ended June 30, 2020 was an $86 thousand expense as compared to income of $118 thousand for the same period last year.  The expense for the nine months ended June 30, 2020 was primarily related to our factoring arrangements with our Wireless segment, partially offset by a gain on sales of assets of $36 thousand.  The income for the nine months ended June 30, 2019 was primarily related to a gain on sales of assets of $0.3 million, partially offset by our factoring arrangements with our Wireless segment.

Interest expense for the nine months ended June 30, 2020 was $0.2 million as compared to $69 thousand for the same period last year.  The expense for the nine months ended June 30, 2020 was primarily related to our revolving bank line of credit and loan with our primary financial lender.  The expense for the nine months ended June 30, 2019 was primarily related to interest expense from our outstanding term loans that were extinguished in November 2018.

The benefit for income taxes was $1.2 million for the nine months ended June 30, 2020 compared to a benefit of $13 thousand for the nine months ended June 30, 2019.  As a result of the CARES Act, the Company can carryback net operating losses generated in 2018 through 2020 for a period of five years.  As a result, the Company’s effective tax rate included an income tax benefit of $1.2 million recognized during the nine months ended June 30, 2020 related to tax losses generated during the fiscal year up to the amount that the Company estimates is realizable based upon taxable income in the carryback periods.

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Segment Results

Wireless

Revenues for the Wireless segment were $16.6 million for the nine months ended June 30, 2020 and $13.0 million for the same period last year.  The increase in revenue was primarily from the acquisition of Fulton Technologies, Inc. and its affiliate (“Fulton”) in January 2019.

Gross profit was $4.3 million, or 26% for the nine months ended June 30, 2020 and $3.5 million, or 27%, for the nine months ended June 30, 2019. This increase is due primarily to the timing of the acquisition of Fulton in January 2019, partially offset by increased expenses of repositioning our Southern workforce to the North during the nine months ended June 30, 2020.

Operating expenses increased $1.8 million to $4.1 million for the nine months ended June 30, 2020 from $2.4 million for the same period last year due primarily to the timing of the acquisition of Fulton in January 2019.

Selling, general and administrative expenses increased $1.3 million to $3.8 million for the nine months ended June 30, 2020 from $2.5 million for the nine months ended June 30, 2019 due primarily to the timing of the acquisition of Fulton in January 2019.

Depreciation and amortization expense was $0.5 million and $0.2 million for the nine months ended June 30, 2020 and June 30, 2019, respectively.

Telco

Sales for the Telco segment decreased $3.0 million to $21.3 million for the nine months ended June 30, 2020 from $24.3 million for the same period last year.  The decrease in sales for the Telco segment was due to a decrease in equipment sales at both Triton Datacom and Nave Communications of $1.8 million and $1.2 million, respectively.

Gross profit was $3.0 million for the nine months ended June 30, 2020 and 6.3 million for the nine months ended June 30, 2019.  Gross profit for the nine months ended June 30, 2020 was impacted by an increase in inventory obsolescence expense of $2.1 million and an increase in lower of cost or net realizable value expense of $0.2 million.  The decrease in gross margin percentage was due primarily to the impact of these inventory adjustments in the nine months ended June 30, 2020.

Operating expenses increased $0.6 million to $2.1 million for the nine months ended June 30, 2020 from $1.5 million for the same period last year.  This increase was due primarily to additional facility costs as a result of moving into Triton’s new facility in the first fiscal quarter of 2020 and additional personnel costs.

Selling, general and administrative expenses decreased $0.6 million to $4.2 million for the nine months ended June 30, 2020 from $4.8 million for the same period last year.  This decrease was due primarily to decreased personnel costs.

Impairment of right of use assets for the nine months ended June 30, 2020 was $0.7 million related to the impairment of a right of use asset associated with a building lease in the Telco segment.

Impairment of intangibles including goodwill for the nine months ended June 30, 2020 was $8.7 million related to the write-off of goodwill and certain intangibles in the Telco segment.

Depreciation and amortization expense decreased $0.2 million to $0.7 million from $0.9 million for the nine months ended June 30, 2020 and 2019, respectively. This decrease was due primarily to decreased amortization expense resulting from the impairment of intangibles taken in the three months ended March 31, 2020.

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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.

A reconciliation by segment of loss from operations to Adjusted EBITDA for the three and nine months ended June 30, follows:

	Three Months Ended June 30, 2020									Three Months Ended June 30, 2019
	Wireless			Telco			Total			Wireless			Telco		Total
Income (loss) from operations	$	(253,416	)	$	(896,561	)	$	(1,149,977	)	$	(454,672	)	$	201,593	$	(253,079	)
Impairment of right of use asset		‒			660,242			660,242			‒			‒		‒
Impairment of intangibles including goodwill		‒			‒			‒			‒			‒		‒
Depreciation and amortization expense		143,245			98,256			241,501			81,607			300,958		382,565
Stock compensation expense		25,577			35,769			61,346			12,166			34,436		46,602
Adjusted EBITDA	$	(84,594	)	$	(102,294	)	$	(186,888	)	$	(360,899	)	$	536,987	$	176,088

	Nine Months Ended June 30, 2020									Nine Months Ended June 30, 2019
	Wireless			Telco			Total			Wireless			Telco			Total
Loss from operations	$	(4,136,645	)	$	(13,483,096	)	$	(17,619,741	)	$	(1,568,255	)	$	(1,042,122	)	$	(2,610,377	)
Impairment of right of use asset		‒			660,242			660,242			‒			‒			‒
Impairment of intangibles including goodwill		‒			8,714,306			8,714,306			‒			‒			‒
Depreciation and amortization expense		461,672			735,188			1,196,860			172,240			897,413			1,069,653
Stock compensation expense		64,344			103,061			167,405			31,628			121,063			152,691
Adjusted EBITDA (a)	$	(3,610,629	)	$	(3,270,299	)	$	(6,880,928	)	$	(1,364,387	)	$	(23,646	)	$	(1,388,033	)

(a) The Telco segment includes inventory-related non-cash adjustments of $2.3 million for the nine months ended June 30, 2020.

Critical Accounting Policies

Note 1 to the Consolidated Financial Statements in Form 10-K for fiscal 2019 includes a summary of the significant accounting policies or methods used in the preparation of our Consolidated Financial Statements.  Some of those significant accounting policies or methods require us to make estimates and assumptions that affect the amounts

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reported by us.  We believe the following items require the most significant judgments and often involve complex estimates.

General

The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  We base our estimates and judgments on historical experience, current market conditions, and various other factors we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results could differ from these estimates under different assumptions or conditions.  The most significant estimates and assumptions are discussed below.

Inventory Valuation

For our Telco segment, our position in the telecommunications industry requires us to carry relatively large inventory quantities relative to annual sales, but it also allows us to realize high overall gross profit margins on our sales.  We market our products primarily to telecommunication providers, telecommunication resellers, and other users of telecommunication equipment who are seeking products for which manufacturers have discontinued production or cannot ship new equipment on a same-day basis as well as providing used products as an alternative to new products from the manufacturer.  Carrying these large inventory quantities represents our largest risk.

We are required to make judgments as to future demand requirements from our customers.  We regularly review the value of our inventory in detail with consideration given to rapidly changing technology which can significantly affect future customer demand.  For individual inventory items, we may carry inventory quantities that are excessive relative to market potential, or we may not be able to recover our acquisition costs for sales that we do make.  In order to address the risks associated with our investment in inventory, we review inventory quantities on hand and reduce the carrying value when the loss of usefulness of an item or other factors, such as obsolete and excess inventories, indicate that cost will not be recovered when an item is sold.

Our inventories are all carried in the Telco segment and consist of new and used electronic components for the telecommunications industry.  Inventory is stated at the lower of cost or net realizable value, with cost determined using the weighted-average method.  Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.  At June 30, 2020, we had total inventory, before the reserve for excess and obsolete inventories, of $9.3 million, consisting of $1.2 million in new products and $8.1 million in used or refurbished products.

We identified certain inventory that more than likely will not be sold or that the cost will not be recovered when it is processed through its recycling program.  Therefore, we have an obsolete and excess inventory reserve of $3.4 million at June 30, 2020.  If actual market conditions differ from those projected by management, this could have a material impact on our gross margin and inventory balances based on additional write-downs to net realizable value or a benefit from inventories previously written down.

Inbound freight charges are included in cost of sales.  Purchasing and receiving costs, inspection costs, warehousing costs, internal transfer costs and other inventory expenditures are included in operating expenses, since the amounts involved are not considered a material component of cost of sales.

Accounts Receivable Valuation

Management judgments and estimates are made in connection with establishing the allowance for doubtful accounts. Specifically, we analyze the aging of accounts receivable balances, historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in our customer payment terms.  Significant changes in customer concentration or payment terms, deterioration of customer creditworthiness, or weakening in economic trends could have a significant impact on the collectability of receivables and our operating results.  If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, an

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additional provision to the allowance for doubtful accounts may be required.  The reserve for bad debts was $0.3 million at June 30, 2020 and $0.2 million at September 30, 2019.   At June 30, 2020, accounts receivable, net of allowance for doubtful accounts, was $3.2 million.

Intangibles

Intangible assets that have finite useful lives are amortized on a straight-line basis over their estimated useful lives ranging from 3 years to 10 years. Intangible assets are also tested for impairment when events and circumstances indicate that the carrying value may not be recoverable. Due to our continued operating losses and the uncertainties surrounding the COVID-19 pandemic on the overall economy and the resulting impact on our Company, we determined that there were indicators for us to test our intangible assets for impairment at March 31, 2020.  It was determined that we needed to perform a specific fair value assessment for each of the intangible assets at both Nave and Triton as their individual undiscounted forecasted cash flows did not exceed their respective carrying values.  We then performed a fair value assessment of each of the intangible assets and compared them to the individual carrying value amounts at March 31, 2020. As a result of this assessment, we recorded an impairment charge of $3.9 million related to the customer relationship intangibles in the Telco segment as of March 31, 2020. As of June 30, 2020, there were no further indicators of impairment.

Goodwill

Goodwill represents the excess of purchase price of acquisitions over the acquisition date fair value of the net identifiable tangible and intangible assets acquired.  Goodwill is not amortized and is tested at least annually for impairment.  We perform our annual analysis during the fourth quarter of each fiscal year and in any other period in which indicators of impairment warrant additional analysis.  Goodwill is evaluated for impairment by first comparing our estimate of the fair value of each reporting unit, with the reporting unit’s carrying value, including goodwill.  Our reporting units for purposes of the goodwill impairment calculation are the Wireless segment, Nave and Triton.

Management utilizes a discounted cash flow analysis to determine the estimated fair value of each reporting unit.  Significant judgments and assumptions including the discount rate, anticipated revenue growth rate, gross margins and operating expenses are inherent in these fair value estimates.  As a result, actual results may differ from the estimates utilized in our discounted cash flow analysis.  The use of alternate judgments and/or assumptions could result in the recognition of different levels of impairment charges in the financial statements.

Due to our continued operating losses and the uncertainties surrounding the COVID-19 pandemic on the overall economy and the resulting impact on our Company, we determined that there were indicators to warrant us to test goodwill for impairment at March 31, 2020. We calculated a fair value using the income approach of both Nave and Triton to determine if the fair value exceeded their respective carrying values.  For both Nave and Triton, the fair value for each was less than their respective carrying values after considering the intangible asset impairment.  Therefore, we recorded an impairment charge of $4.8 million in the Telco segment as of March 31, 2020, which fully impaired goodwill for the Telco segment.  Although we do not anticipate a future impairment charge, certain events could occur that might adversely affect the reported value of the remaining goodwill in the Wireless segment.  Such events could include, but are not limited to, economic or competitive conditions, a significant change in technology, the economic condition of the customers and industries we serve, and a material negative change in the relationships with one or more of our significant customers or equipment suppliers.  If our judgments and assumptions change as a result of the occurrence of any of these events or other events that we do not currently anticipate, our expectations as to future results and our estimate of the implied fair value of the Wireless segment also may change.

Liquidity and Capital Resources

Cash Flows Used in Operating Activities

In fiscal year 2020, we have financed our operations primarily through financing activities by utilizing our line of credit, entering into an additional $3.5 million term loan from our primary financial lender, and receiving a $2.9 million SBA Payroll Protection Program (“PPP”) loan.  During the nine months ended June 30, 2020, we used $1.4 million of cash flows for operations.  The cash flows from operations was negatively impacted by a net loss of $16.4

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million, which was partially offset by non-cash adjustments of $13.0 million and net cash provided by working capital of $2.0 million to reconcile net loss to net cash used in operating activities.

Cash Flows Used for Investing Activities

During the nine months ended June 30, 2020, cash provided by investing activities was $1.7 million, consisting primarily of $2.0 million of payments received under the promissory note related to the sale of the cable business in fiscal year 2019, partially offset by $0.5 million of purchases of property and equipment.  Of the $2.0 million of payments received under the promissory note, $0.7 million was a prepayment.

Cash Flows Used for Financing Activities

During the nine months ended June 30, 2020, cash provided by financing activities was $8.6 million, which primarily related to net borrowings of $2.8 million under our revolving credit agreement, proceeds, net of principal payments, from our note payable of $1.9 million, proceeds from the receipt of the PPP loan of $2.9 million, and proceeds from the sale of our common stock utilizing our shelf registration of $1.8 million.  These were partially offset by the final guaranteed payment of $0.7 million to the Triton Miami, Inc. partners and payments under our financing lease arrangements of $0.3 million.

In March 2020, we entered into a loan agreement with our primary financial lender for $3.5 million, bearing interest at 6% per annum.  The loan is payable in seven semi-annual installments of principal and interest with the first payment occurring on June 30, 2020, and the final payment due June 30, 2023.  The principal and interest payments correlate to the promissory note with Leveling 8.  We effectively monetized $3.5 million of the $5.8 million remaining balance of the promissory note resulting from the sale of our cable businesses in 2019 to Leveling 8 to assist us with working capital needs. In connection with a $1.7 million payment made in the third quarter of 2020 by Leveling 8 under the promissory note, we paid down $1.6 million of principal under this loan, for which $1.0 million was a prepayment against the loan. As a result, the balance under this loan is now $1.9 million and the final payment will be June 30, 2022.

Our credit agreement contains a $4.0 million revolving line of credit, which matures on December 17, 2020.  The revolving line of credit requires quarterly interest payments based on the prevailing Wall Street Journal Prime Rate (3.25% at June 30, 2020), and the interest rate is reset monthly. The credit agreement provides that the Company maintain a fixed charge coverage ratio (net cash flow to total fixed charges) of not less than 1.25 to 1.0.  Future borrowings under the revolving line of credit are limited to the lesser of $4.0 million or the sum of 80% of eligible accounts receivable and 25% of eligible inventory.  Under these limitations, our total available revolving line of credit borrowing base was $3.1 million at June 30, 2020.

We believe that it is probable that we will not be in compliance with our fixed charge coverage ratio loan covenant with our primary financial lender as of September 30, 2020.  We would therefore need to seek a waiver of this covenant violation.  We have been in preliminary discussions with our primary financial lender, and we expect them to grant us a waiver for this covenant violation.  However, if our primary financial lender does not grant the waiver, this could result in our lender accelerating the maturity of our indebtedness or preventing access to additional funds under our line of credit agreement, or requiring prepayment of our outstanding indebtedness under our March 10, 2020 loan agreement or the line of credit agreement.

On April 14, 2020, we received a PPP loan with our primary lender for $2.9 million, bearing interest at 1% per annum, with monthly payments of principal and interest in the amount of $164,045 commencing on November 10, 2020.  The loan matures on April 10, 2022.  We plan to use the proceeds from the PPP loan for payroll-related expenses, rent, and utility expenses in accordance with the guidelines for the loan.  We plan to apply for forgiveness of the PPP loan in accordance with the requirements and limitations under the CARES Act, the PPP Flexibility Act and SBA regulations and requirements, and although no assurance can be given that all or any portion of the PPP loan will be forgiven, we believe that most of this loan will be forgiven.

Of the $6.4 million in proceeds received from the March 2020 loan and the PPP loan, we believe that most of the

29

payments for these loans will not have to be repaid using funds generated from our operations. The March 2020 loan will be paid by payments received from our promissory note with Leveling 8, and we anticipate that most of the PPP loan will be forgiven.

In the third quarter of 2020, we utilized our recently filed shelf registration statement to raise additional cash by selling common shares utilizing an at the market offering under our equity distribution agreement with Northland Securities, Inc. (“Northland”).  Under this program, we sold 573,199 shares for net proceeds of $2.1 million.

We believe that our cash and cash equivalents and restricted cash of $10.5 million at June 30, 2020 and our existing revolving bank line of credit will provide sufficient liquidity and capital resources to cover our operating losses and our additional working capital and debt payment needs.  However, we will likely need to seek a waiver for our probable covenant violation under our loan agreements with our primary financial lender.  In addition, there is still significant uncertainty surrounding the timing of the overall recovery of the economy and the timing of wireless infrastructure service opportunities for the upgrade to 5G.  Therefore, depending on the timing of these factors and our primary financial lender granting us a waiver of the probable covenant violation, there is still risk that we may not have sufficient cash and cash equivalents available for us to sustain our operations at our current level.  If that were to occur, we would need to seek additional funding and further utilize our shelf registration that we have available to us in order to enhance our cash position and assist in our working capital needs.

Item 4.  Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure the information we are required to disclose in the reports we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.  Based on their evaluation as of June 30, 2020, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to accomplish their objectives and to ensure the information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

30

PART II.   OTHER INFORMATION

Item 6.  Exhibits.
Exhibit No.	Description
10.1	Financial Institution Business Loan Agreement dated April 14, 2020
31.1	Certification of Chief Executive Officer under Section 302 of the Sarbanes Oxley Act of 2002.
31.2	Certification of Chief Financial Officer under Section 302 of the Sarbanes Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF	XBRL Taxonomy Extension Definition Linkbase.
101.LAB	XBRL Taxonomy Extension Label Linkbase.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.

31

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 TECHNOLOGIES GROUP, INC.

(Registrant)

Date:  August 11, 2020

/s/ Joseph E. Hart

Joseph E. Hart,

President and Chief Executive Officer

(Principal Executive Officer)

Date:  August 11, 2020 \

/s/ Jarrod M. Watson

Jarrod M. Watson,

Chief Financial Officer

(Principal Financial Officer)

32

Exhibit Index

The following documents are included as exhibits to this Form 10-Q:

Exhibit No.	Description
10.1	Financial Institution Business Loan Agreement dated April 14, 2020
31.1	Certification of Chief Executive Officer under Section 302 of the Sarbanes Oxley Act of 2002.
31.2	Certification of Chief Financial Officer under Section 302 of the Sarbanes Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF	XBRL Taxonomy Extension Definition Linkbase.
101.LAB	XBRL Taxonomy Extension Label Linkbase.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.

33

EX-10.1

PROMISSORY NOTE

Principal $2,915,000.00	Loan Date 04-10-2020	Maturity 04-10-2022	Loan No 19845002	Call / Coll	Account	Officer LNS	Initials
References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item. Any item above containing "***" has been omitted due to text length limitations.

Borrower: ADDVANTAGE TECHNOLOGIES GROUP INC (TIN:  73-1351610) 1221 E HOUSTON BROKEN ARROW, OK  74012 Lender: Vast Bank, N.A. dba Valley National Bank Tulsa - Elgin 110 N Elgin Tulsa, OK  74120

  Principal Amount:  $2,915,000.00   Date of Note:  April 10, 2020

SBA LOAN #. SBA Loan #60465370-03.

PROMISE TO PAY.  ADDVANTAGE TECHNOLOGIES GROUP INC ("Borrower") promises to pay to Vast Bank, N.A. dba Valley National Bank ("Lender"), or order, in lawful money of the United States of America, the principal amount of Two Million Nine Hundred Fifteen Thousand & 00/100 Dollars ($2,915,000.00), together with interest on the unpaid principal balance from April 10, 2020, until paid in full.

PAYMENT.  Borrower will pay this loan in accordance with the following payment schedule, which calculates interest on the unpaid principal balances as described in the "INTEREST CALCULATION METHOD" paragraph using the interest rates described in this paragraph:  17 monthly consecutive principal and interest payments of $164,045.00 each, beginning November 10, 2020, with interest calculated on the unpaid principal balances using an interest rate of 1.000% per annum based on a year of 360 days; and one principal and interest payment of $164,044.99 on April 10, 2022, with interest calculated on the unpaid principal balances using an interest rate of 1.000% per annum based on a year of 360 days.  This estimated final payment is based on the assumption that all payments will be made exactly as scheduled; the actual final payment will be for all principal and accrued interest not yet paid, together with any other unpaid amounts under this Note.  Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; then to any unpaid collection costs; and then to any late charges.  Borrower will pay Lender at Lender's address shown above or at such other place as Lender may designate in writing.

INTEREST CALCULATION METHOD.  Interest on this Note is computed on a 30/360 simple interest basis; that is, with the exception of odd days before the first full payment cycle, monthly interest is calculated by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by a month of 30 days.  Interest for the odd days before the first full month is calculated on the basis of the actual days and a 360-day year.  All interest payable under this Note is computed using this method.

PREPAYMENT.  Borrower may pay without penalty all or a portion of the amount owed earlier than it is due.  Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments under the payment schedule.  Rather, early payments will reduce the principal balance due and may result in Borrower's making fewer payments.  Borrower agrees not to send Lender payments marked "paid in full", "without recourse", or similar language.  If Borrower sends such a payment, Lender may accept it without losing any of Lender's rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender.  All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes "payment in full" of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to:  Vast Bank, N.A. dba Valley National Bank, 13112 S. Memorial Drive Bixby, OK  74008.

LATE CHARGE.  If a payment is 15 days or more late, Borrower will be charged 5.000% of the unpaid portion of the regularly scheduled payment or $50.00, whichever is greater.

INTEREST AFTER DEFAULT.  Upon default, including failure to pay upon final maturity, the interest rate on this Note shall be increased by adding an additional 5.000 percentage point margin ("Default Rate Margin").  The Default Rate Margin shall also apply to each succeeding interest rate change that would have applied had there been no default.  After maturity, or after this Note would have matured had there been no default, the Default Rate Margin will continue to apply to the final interest rate described in this Note.  However, in no event will the interest rate exceed the maximum interest rate limitations under applicable law.

DEFAULT.  Each of the following shall constitute an event of default ("Event of Default") under this Note:

Payment Default.  Borrower fails to make any payment when due under this Note.

Other Defaults.  Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.

Default in Favor of Third Parties.  Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's property or Borrower's ability to repay this Note or perform Borrower's obligations under this Note or any of the related documents.

False Statements.  Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.

Insolvency.  The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.

Creditor or Forfeiture Proceedings.  Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan.  This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender.  However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.

Events Affecting Guarantor.  Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party of any of the indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note.

Change In Ownership.  Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.

Adverse Change.  A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of this Note is impaired.

Insecurity.  Lender in good faith believes itself insecure.

Cure Provisions.  If any default, other than a default in payment, is curable and if Borrower has not been given a notice of a breach of the same provision of this Note within the preceding twelve (12) months, it may be cured if Borrower, after Lender sends written notice to Borrower demanding cure of such default:  (1)  cures the default within ten (10) days; or  (2)  if the cure requires more than ten (10) days, immediately initiates steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.

LENDER'S RIGHTS.  Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest immediately due, and then Borrower will pay that amount.

ATTORNEYS' FEES; EXPENSES.  Lender may hire or pay someone else to help collect this Note if Borrower does not pay.  Borrower will pay Lender that amount.  This includes, subject to any limits under applicable law, Lender's attorneys' fees and Lender's legal expenses, whether or not there is a lawsuit, including without limitation all attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals.  If not prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by law.

JURY WAIVER.  Lender and Borrower hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Borrower against the other.

GOVERNING LAW.  This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Oklahoma without regard to its conflicts of law provisions.  This Note has been accepted by Lender in the State of Oklahoma.

CHOICE OF VENUE.  If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of TULSA County, State of Oklahoma.

RIGHT OF SETOFF.  To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender (whether checking, savings, or some other account).  This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future.  However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law.  Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the debt against any and all such accounts.

COLLATERAL.  This loan is unsecured.

COMMERCIAL LOAN LATE CHARGE. If a payment is 15 days or more late, I will be charged $50.00 or 5% of the past due amount.  However, Lender may charge the maximum delinquency charge authorized by law as it may be increased during the term of this loan.

SMALL BUSINESS ADMINISTRATION (SBA).  When SBA is the holder, this Note will be interpreted and enforced under Federal law, including SBA regulations. Lender or SBA may use state or local procedures for filing papers, recording documents, giving notice, foreclosing liens, and other purposes. By using such procedures, SBA does not waive any Federal immunity from state or local control, penalty, tax, or liability. As to this Note, Borrower may not claim or assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or preempt Federal law.

SUCCESSOR INTERESTS.  The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representatives, successors and assigns, and shall inure to the benefit of Lender and its successors and assigns.

GENERAL PROVISIONS.  If any part of this Note cannot be enforced, this fact will not affect the rest of the Note.  Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them.  Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor.  Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability.  All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender's security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone.  All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made.  The obligations under this Note are joint and several.

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE.  BORROWER AGREES TO THE TERMS OF THE NOTE.

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

BORROWER:

ADDVANTAGE TECHNOLOGIES GROUP INC

By: _/s/ Joseph E. Hart__________________________

JOSEPH E HART, President of ADDVANTAGE

TECHNOLOGIES GROUP INC

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Joseph E. Hart, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ADDvantage Technologies Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:August 11, 2020

/s/ Joseph E. Hart

Joseph E. Hart

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jarrod M. Watson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ADDvantage Technologies Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

c. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

d. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  August 11, 2020

/s/ Jarrod M. Watson

Jarrod M. Watson

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of ADDvantage Technologies Group, Inc. (the “Company”) for the fiscal quarter ended June 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”) I, Joseph E. Hart, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Joseph E. Hart

Name:Joseph E. Hart

Title:President and Chief Executive Officer

Date:August 11, 2020

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of ADDvantage Technologies Group, Inc. (the “Company”) for the fiscal quarter ended June 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”) I, Scott A. Francis, Chief Accounting Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Jarrod M. Watson

Name:Jarrod M. Watson

Title:Chief Financial Officer

Date:August 11, 2020

XML

Document And Entity Information - shares	9 Months Ended
	Jun. 30, 2020	Jul. 31, 2020
Document Information [Line Items]
Entity Registrant Name	ADDVANTAGE TECHNOLOGIES GROUP INC
Entity Central Index Key	0000874292
Trading Symbol	aey
Current Fiscal Year End Date	--09-30
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Interactive Data Current	Yes
Entity Common Stock, Shares Outstanding (in shares)		11,788,940
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Jun. 30, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Amendment Flag	false
Title of 12(b) Security	Common Stock, $.01 par value

XML

Consolidated Condensed Balance Sheets (Current Period Unaudited) - USD ($)	Jun. 30, 2020	Sep. 30, 2019
Assets
Cash and cash equivalents	$ 10,365,744	$ 1,242,143
Restricted cash	105,117	351,909
Accounts receivable, net of allowance for doubtful accounts of $250,000 and $150,000, respectively	3,164,893	4,826,716
Unbilled revenue	677,702	2,691,232
Promissory note – current	1,400,000	1,400,000
Income tax receivable	34,915	21,350
Inventories, net of allowance for excess and obsolete inventory of $3,400,000 and $1,275,000, respectively	5,964,490	7,625,573
Prepaid expenses	1,013,645	543,762
Other assets	289,300	262,462
Total current assets	23,015,806	18,965,147
Property and equipment, at cost:
Machinery and equipment	3,503,199	2,475,545
Leasehold improvements	846,783	190,984
Total property and equipment, at cost	4,349,982	2,666,529
Less: Accumulated depreciation	(1,326,477)	(835,424)
Net property and equipment	3,023,505	1,831,105
Right-of-use operating lease assets	4,158,786
Promissory note – noncurrent	2,950,000	4,975,000
Intangibles, net of accumulated amortization	1,504,773	6,002,998
Goodwill	57,554	4,877,739
Deferred income taxes	1,220,564
Other assets	178,602	176,355
Total assets	36,109,590	36,828,344
Current liabilities:
Accounts payable	4,786,788	4,730,537
Accrued expenses	1,415,792	1,617,911
Deferred revenue	241,452	97,478
Bank line of credit	2,800,000
Note payable – current	2,580,652
Operating lease obligations – current	1,224,630
Financing lease obligations – current	328,151
Other current liabilities		757,867
Total current liabilities	13,377,465	7,203,793
Note payable	2,171,680
Operating lease obligations	3,809,803
Financing lease obligations	855,052
Other liabilities	15,000	177,951
Total liabilities	20,229,000	7,381,744
Shareholders’ equity:
Common stock, $.01 par value; 30,000,000 shares authorized; 11,294,839 and 10,861,950 shares issued, respectively; 11,294,839 and 10,361,292 shares outstanding, respectively	112,950	108,620
Paid in capital	(2,592,034)	(4,377,103)
Retained earnings	18,359,674	34,715,097
Total shareholders’ equity before treasury stock	15,880,590	30,446,614
Less: Treasury stock, 0 and 500,658 shares, respectively, at cost		(1,000,014)
Total shareholders’ equity	15,880,590	29,446,600
Total liabilities and shareholders’ equity	$ 36,109,590	$ 36,828,344

XML

Consolidated Condensed Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)	Jun. 30, 2020	Sep. 30, 2019
Accounts receivable, allowance for doubtful accounts	$ 250,000	$ 150,000
Inventories, allowance for excess and obsolete inventory	$ 3,400,000	$ 1,275,000
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	30,000,000	30,000,000
Common stock, shares issued (in shares)	11,294,839	10,861,950
Common stock, shares outstanding (in shares)	11,294,839	10,361,292
Treasury stock, shares (in shares)	0	500,658

XML

Consolidated Condensed Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Sales	$ 12,021,820	$ 17,559,315	$ 37,943,303	$ 37,259,352
Cost of sales	7,851,241	12,971,910	30,619,379	27,472,042
Gross profit	4,170,579	4,587,405	7,323,924	9,787,310
Operating expenses	1,998,184	1,611,751	6,276,442	3,943,026
Selling, general and administrative expenses	2,420,629	2,846,168	8,095,815	7,385,008
Impairment of right of use asset	660,242		660,242
Impairment of intangibles including goodwill			8,714,306
Depreciation and amortization expense	241,501	382,565	1,196,860	1,069,653
Loss from operations	(1,149,977)	(253,079)	(17,619,741)	(2,610,377)
Other income (expense):
Interest income	83,544		258,847
Income from equity method investment		20,005	40,500	75,005
Other income (expense)	(29,454)	158,739	(86,588)	118,319
Interest expense	(101,327)	(25,860)	(184,005)	(68,612)
Total other income (expense), net	(47,237)	152,884	28,754	124,712
Loss before income taxes	(1,197,214)	(100,195)	(17,590,987)	(2,485,665)
Benefit for income taxes	(1,220,564)	(42,000)	(1,235,564)	(13,000)
Income (loss) from continuing operations	23,350	(58,195)	(16,355,423)	(2,472,665)
Loss from discontinued operations, net of tax		(1,426,970)		(1,267,344)
Net income (loss)	$ 23,350	$ (1,485,165)	$ (16,355,423)	$ (3,740,009)
Income (loss) per share:
Continuing operations (in dollars per share)	$ 0	$ 0	$ (1.49)	$ (0.24)
Discontinued operations (in dollars per share)		(0.14)		(0.12)
Net income (loss) (in dollars per share)	0	(0.14)	(1.49)	(0.36)
Continuing operations (in dollars per share)	0	0	(1.49)	(0.24)
Discontinued operations (in dollars per share)		(0.14)		(0.12)
Net income (loss) (in dollars per share)	$ 0	$ (0.14)	$ (1.49)	$ (0.36)
Shares used in per share calculation:
Basic (in shares)	11,079,580	10,361,292	10,955,235	10,361,292
Diluted (in shares)	11,216,688	10,361,292	10,955,235	10,361,292

XML

Consolidated Condensed Statements of Changes in Shareholders' Equity (Unaudited) - USD ($)	Common Stock [Member]	Paid in Capital [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Total
Balance (in shares) at Sep. 30, 2018	10,806,803
Balance at Sep. 30, 2018	$ 108,068	$ (4,598,343)	$ 40,017,540	$ (1,000,014)	$ 34,527,251
Net loss			(1,038,981)		(1,038,981)
Share based compensation expense		28,070			28,070
Restricted stock issuance	$ 552	74,448			75,000
Restricted stock issuance (in shares)	55,147
Balance (in shares) at Dec. 31, 2018	10,861,950
Balance at Dec. 31, 2018	$ 108,620	(4,495,825)	38,978,559	(1,000,014)	33,591,340
Balance (in shares) at Sep. 30, 2018	10,806,803
Balance at Sep. 30, 2018	$ 108,068	(4,598,343)	40,017,540	(1,000,014)	34,527,251
Net loss					(3,740,009)
Balance (in shares) at Jun. 30, 2019	10,861,950
Balance at Jun. 30, 2019	$ 108,620	(4,419,954)	36,277,531	(1,000,014)	30,966,183
Balance (in shares) at Dec. 31, 2018	10,861,950
Balance at Dec. 31, 2018	$ 108,620	(4,495,825)	38,978,559	(1,000,014)	33,591,340
Net loss			(1,215,863)		(1,215,863)
Share based compensation expense		33,019			33,019
Balance (in shares) at Mar. 31, 2019	10,861,950
Balance at Mar. 31, 2019	$ 108,620	(4,462,806)	37,762,696	(1,000,014)	32,408,496
Net loss			(1,485,165)		(1,485,165)
Share based compensation expense		42,852			42,852
Balance (in shares) at Jun. 30, 2019	10,861,950
Balance at Jun. 30, 2019	$ 108,620	(4,419,954)	36,277,531	(1,000,014)	30,966,183
Balance (in shares) at Sep. 30, 2019	10,861,950
Balance at Sep. 30, 2019	$ 108,620	(4,377,103)	34,715,097	(1,000,014)	29,446,600
Net loss			(1,717,692)		(1,717,692)
Share based compensation expense		13,890			13,890
Balance (in shares) at Dec. 31, 2019	10,861,950
Balance at Dec. 31, 2019	$ 108,620	(4,363,213)	32,997,405	(1,000,014)	27,742,798
Balance (in shares) at Sep. 30, 2019	10,861,950
Balance at Sep. 30, 2019	$ 108,620	(4,377,103)	34,715,097	(1,000,014)	29,446,600
Net loss					$ (16,355,423)
Stock option exercise (in shares)					123,334
Balance (in shares) at Jun. 30, 2020	11,294,839
Balance at Jun. 30, 2020	$ 112,950	(2,592,034)	18,359,674		$ 15,880,590
Balance (in shares) at Dec. 31, 2019	10,861,950
Balance at Dec. 31, 2019	$ 108,620	(4,363,213)	32,997,405	(1,000,014)	27,742,798
Net loss			(14,661,081)		(14,661,081)
Share based compensation expense		(6,364)			(6,364)
Restricted stock issuance		475,618			475,618
Stock option exercise (in shares)	110,000
Stock option exercise	$ 1,100	171,833			172,933
Balance (in shares) at Mar. 31, 2020	10,971,950
Balance at Mar. 31, 2020	$ 109,720	(3,722,126)	18,336,324	(1,000,014)	13,723,904
Net loss			23,350		23,350
Share based compensation expense		(14,656)			(14,656)
Restricted stock issuance	$ 2,370	12,630			15,000
Stock option exercise (in shares)	13,334
Stock option exercise	$ 134	24,001			24,135
Utilization of treasury shares (in shares)	(500,658)
Utilization of treasury shares	$ (5,006)	(995,008)
Utilization of treasury shares, treasury				1,000,014
Issuance of shares (in shares)	573,199
Issuance of shares	$ 5,732	2,103,125			2,108,857
Restricted stock issuance (in shares)	237,014
Balance (in shares) at Jun. 30, 2020	11,294,839
Balance at Jun. 30, 2020	$ 112,950	$ (2,592,034)	$ 18,359,674		$ 15,880,590

XML

Consolidated Condensed Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Operating Activities
Net loss	$ (16,355,423)	$ (3,740,009)
Net loss from discontinued operations		(1,267,344)
Net loss from continuing operations	(16,355,423)	(2,472,665)
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities:
Depreciation	589,866	257,128
Amortization	606,994	812,525
Impairment of right of use asset	660,242
Impairment of intangibles including goodwill	8,714,306
Provision for excess and obsolete inventories	2,125,000	77,889
Share based compensation expense	167,405	152,691
Gain from disposal of property and equipment	(36,286)	(250,877)
Gain from equity method investment	(40,500)	(75,005)
Deferred income taxes	(1,220,564)
Changes in assets and liabilities:
Accounts receivable	1,661,823	(2,074,342)
Unbilled revenue	2,013,531	(1,793,065)
Income tax receivable\payable	(13,565)	4,476
Inventories	(463,917)	(1,799,042)
Prepaid expenses and other assets	97,118	(395,726)
Accounts payable	56,251	2,306,092
Accrued expenses and other liabilities	(135,416)	455,426
Deferred revenue	143,974
Net cash used in operating activities – continuing operations	(1,429,161)	(4,794,495)
Net cash provided by operating activities – discontinued operations		1,179,876
Net cash used in operating activities	(1,429,161)	(3,614,619)
Investing Activities
Proceeds from promissory note receivable	2,025,000
Acquisition of net operating assets of a business		(1,264,058)
Loan repayment from equity method investee	40,500	124,005
Purchases of property and equipment	(471,226)	(457,225)
Disposals of property and equipment	77,505	452,244
Net cash provided by (used in) investing activities – continuing operations	1,671,779	(1,145,034)
Net cash provided by investing activities – discontinued operations		7,075,000
Net cash provided by investing activities	1,671,779	5,929,966
Financing Activities
Change in bank line of credit	2,800,000
Proceeds from note payable	6,373,929
Guaranteed payments for acquisition of business	(667,000)	(667,000)
Payments on financing lease obligations	(277,061)
Payments on notes payable	(1,621,597)	(1,246,279)
Proceeds from sale of common stock	1,828,852
Proceeds from stock options exercised	197,068
Net cash provided by (used in) financing activities – continuing operations	8,634,191	(1,913,279)
Net cash used in financing activities – discontinued operations		(597,906)
Net cash provided by (used in) financing activities	8,634,191	(2,511,185)
Net increase (decrease) in cash and cash equivalents and restricted cash	8,876,809	(195,838)
Cash and cash equivalents and restricted cash at beginning of period	1,594,052	3,129,280
Cash and cash equivalents and restricted cash at end of period	10,470,861	2,933,442
Supplemental cash flow information:
Cash paid for interest	244,995	109,106
Cash paid for income taxes
Non-cash financing activities:
Proceeds from sale of common stock receivable	$ 280,005

XML

Note 1 - Basis of Presentation and Accounting Policies

9 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Significant Accounting Policies [Text Block]

Note

1

- Basis of Presentation and

Accounting Policies

Basis of presentation

The unaudited consolidated condensed financial statements include the accounts of ADDvantage Technologies Group, Inc. and its subsidiaries, all of which are wholly owned (collectively, the “Company” or “we”). Intercompany balances and transactions have been eliminated in consolidation. The Company's reportable segments are Wireless Infrastructure Services (“Wireless”) and Telecommunications (“Telco”).

The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial statements and do

not

include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. However, the information furnished reflects all adjustments, which are, in the opinion of management, necessary in order to make the unaudited consolidated condensed financial statements

not

misleading. The Company's business is subject to certain seasonal variations due to weather in the geographic areas that services are performed, and to a certain extent due to calendar events and national holidays. Therefore, the results of operations for the

nine

months ended

June 30, 2020

and

2019,

are

not

necessarily indicative of the results to be expected for the full fiscal year. It is suggested that these unaudited consolidated condensed financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company's Annual Report on Form

10

-K for the fiscal year ended

September 30, 2019.

Reclassification

The Company changed its presentation of cost of sales and operating, selling, general and administrative expenses on the unaudited consolidated condensed statements of operations. During fiscal year

2020,

the Company reviewed its financial reporting of expenses in connection with its current operating segments in order to enhance the usefulness of the presentation of the Company's expenses. Based on that review, the Company reclassified certain expenses into operating expenses for presentation purposes. Operating expenses include the indirect costs associated with operating our businesses. Indirect costs are costs that are

not

directly attributable to projects or products, which would include indirect personnel costs, facility costs, vehicles, insurance, communication, and business taxes, among other less significant cost categories. These costs were previously recorded in either costs of sales or operating, selling, general and administrative expenses in prior periods. Additionally, the Company reclassified depreciation and amortization from operating, selling, general and administrative expenses into its own financial statement line item in the unaudited consolidated condensed statements of operations. Selling, general and administrative expenses include overhead costs, which primarily consist of personnel costs, insurance, professional services, and communication, among other less significant cost categories. The prior period has been reclassified to conform with the current period's presentation of costs of sales, operating expenses, selling, general and administrative expenses, and depreciation and amortization. These reclassifications had

no

effect on previously reported results of operations or retained earnings.

Recently Issued Accounting Standards

In

June 2016,

the FASB issued ASU

2016

-

13:

“Financial Instruments – Credit Losses (Topic

326

) – Measurement of Credit Losses on Financial Instruments.” This ASU requires entities to measure all expected credit losses for most financial assets held at the reporting date based on an expected loss model which includes historical experience, current conditions, and reasonable and supportable forecasts. Entities will now use forward-looking information to better form their credit loss estimates. This ASU also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity's portfolio. ASU

2016

-

13

is effective for annual periods beginning after

December 15, 2019,

including interim periods within those fiscal periods. We are currently in the process of evaluating this new standard update.

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Note 2 - Revenue Recognition

9 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

Note

2

– Revenue Recognition

The Company's principal sales are from Wireless services, sales of Telco equipment and Telco recycled equipment. Sales are primarily to customers in the United States. International sales are made by the Telco segment to a customer in Asia for its recycling program and, to a substantially lesser extent, other international regions for equipment sales that utilize the same technology, which totaled approximately

$0.7

million and

$0.6

million for the

three

months ended

June 30, 2020

and

2019,

respectively, and

$1.5

million and

$1.6

million for the

nine

months ended

June 30, 2020

and

2019,

respectively.

The Company's customers include wireless carriers, wireless equipment providers, multiple system operators, resellers and direct sales to end-user customers. Sales to the Company's largest customer totaled approximately

14%

of consolidated revenues for the

nine

months ended

June 30, 2020.

Our sales by type were as follows:

	Three Months Ended June 30,						Nine Months Ended June 30,
	2020			2019			2020			2019
Wireless services sales	$	5,123,176		$	8,733,444		$	16,592,907		$	12,951,368
Equipment sales:
Telco		6,147,676			7,989,318			19,912,137			22,876,047
Intersegment		(23,033	)		(5,305	)		(23,033	)		(49,452	)
Telco repair sales		33,236			31,142			49,438			36,542
Telco recycle sales		740,765			810,716			1,411,854			1,444,847
Total sales	$	12,021,820		$	17,559,315		$	37,943,303		$	37,259,352

The timing of revenue recognition from the wireless segment results in contract assets and contract liabilities. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, the Company sometimes receives advances or deposits from customers before revenue is recognized, resulting in contract liabilities. Contract assets and contract liabilities are included in Unbilled revenue and Deferred revenue, respectively, in the consolidated condensed balance sheets. At

June 30, 2020

and

September 30, 2019,

contract assets were

$0.7

million and

$2.7

million, respectively, and contract liabilities were

$0.2

million and

$0.1

million, respectively. The Company recognized the entire

$0.1

million of contract revenue during the

nine

months ended

June 30, 2020

related to contract liabilities recorded in Deferred revenue at

September 30, 2019.

For the

three

months ended

June 30, 2020,

the Company recognized

$0.5

million of revenue in its Wireless segment associated with adjustments to constrained variable consideration from change orders related to several projects for which the costs had been recognized in prior quarters.

XML

Note 3 - Accounts Receivable Agreements

9 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Financing Receivables [Text Block]

Note

3

– Accounts Receivable Agreements

The Company's Wireless segment has entered into various agreements,

one

agreement with recourse, to sell certain receivables to unrelated

third

-party financial institutions. For the agreement with recourse, the Company is responsible for collecting payments on the sold receivables from its customers. Under this agreement, the

third

-party financial institution advances the Company

90%

of the sold receivables and establishes a reserve of

10%

of the sold receivables until the Company collects the sold receivables. As the Company collects the sold receivables, the

third

-party financial institution will remit the remaining

10%

to the Company. At

June 30, 2020,

the

third

-party financial institution has a reserve against the sold receivables of

$0.1

million, which is reflected as restricted cash. For the receivables sold under the agreement with recourse, the agreement addresses events and conditions which

may

obligate the Company to immediately repay the institution the outstanding purchase price of the receivables sold. The total amount of receivables uncollected by the institution was

$0.5

million at

June 30, 2020

for which there is a limit of

$4.0

million. Although the sale of receivables is with recourse, the Company did

not

record a recourse obligation at

June 30, 2020

as the Company concluded that the sold receivables are collectible. The other agreements without recourse are under programs offered by certain customers in the Wireless segment.

For the

nine

months ended

June 30, 2020

and

2019,

the Company received proceeds from the sold receivables under all of the various agreements of

$15.9

million and

$9.9

million, respectively, and included the proceeds in net cash used in operating activities in the Consolidated Condensed Statements of Cash Flows.  The fees associated with selling these receivables ranged from

1.0%

to

1.8%

of the gross receivables sold for the

nine

months ended

June 30, 2020

and

2019.

  The Company recorded costs of

$0.1

million and

$0.3

million for the

three

and

nine

months ended

June 30, 2020,

respectively, and

$0.1

million and

$0.2

million for the

three

and

nine

months ended

June 30, 2019,

in other expense in the Consolidated Condensed Statements of Operations.

The Company accounts for these transactions in accordance with ASC

860,

“Transfers and Servicing” (“ASC

860”

). ASC

860

allows for the ownership transfer of accounts receivable to qualify for sale treatment when the appropriate criteria is met, which permits the Company to present the balances sold under the program to be excluded from accounts receivable, net on the consolidated condensed balance sheets. Receivables are considered sold when they are transferred beyond the reach of the Company and its creditors, the purchaser has the right to pledge or exchange the receivables and the Company has surrendered control over the transferred receivables.

XML

Note 4 - Promissory Note

9 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Note

4

– Promissory Note

The Company completed a sale of its former Cable TV reporting segment on

June 30, 2019.

In the

first

quarter of

2020,

Leveling

8

Inc. (“Leveling

8”

) paid the Company the

first

installment of

$0.7

million, including interest of

$0.1

million, under the promissory note as part of the sale of the Cable TV segment to Leveling

8.

In the

third

quarter of

2020,

Leveling

8

made another payment of

$1.7

million (

$1.4

million related to principal), which will lower the

$2.5

million balloon payment due upon the maturity of the note as

$0.7

million of this payment was a prepayment against the promissory note. David Chymiak, a director and substantial shareholder of the Company, personally guaranteed the promissory note due to the Company and pledged certain assets (directly and indirectly owned) to secure the payment of the promissory note, including substantially all of David Chymiak's Company common stock. On

March 10, 2020,

the Company entered into a loan agreement with its primary financial lender for

$3.5

million to monetize a portion of this promissory note (see Note

8

).

The remaining promissory note will be paid in semi-annual installments over

five

years including interest of

6%

as follows at

June 30, 2020:

Fiscal year 2021	$	1,400,000
Fiscal year 2022		940,000
Fiscal year 2023		940,000
Fiscal year 2024		1,725,754
Total proceeds		5,005,754
Less: interest to be paid		(655,754	)
Promissory note principal balance	$	4,350,000

XML

Note 5 - Inventories

9 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Inventory Disclosure [Text Block]

Note

5

–

Inventories

Inventories, which are all within the Telco segment, at

June 30, 2020

and

September 30, 2019

are as follows:

	June 30, 2020			September 30, 2019
New equipment	$	1,174,899		$	1,496,145
Refurbished and used equipment		8,189,591			7,404,428
Allowance for excess and obsolete inventory		(3,400,000	)		(1,275,000	)
Total inventories, net	$	5,964,490		$	7,625,573

New equipment includes products purchased from manufacturers plus “surplus-new”, which are unused products purchased from other distributors or multiple system operators.  Refurbished and used equipment includes factory refurbished, Company refurbished and used products.

The Telco segment identified certain inventory that more than likely will

not

be sold or that the cost will

not

be recovered when it is processed through its recycling program and recorded a

$2.1

million expense in cost of sales to increase the allowance for excess and obsolete inventory during the

nine

months ended

June 30, 2020.

Therefore, the Company has a

$3.4

million and a

$1.3

million allowance at

June 30, 2020

and

September 30, 2019,

respectively.

XML

Note 6 - Intangible Assets

9 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Intangible Assets Disclosure [Text Block]

Note

6

– Intangible Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the asset's carrying amount

may

not

be recoverable. The Company conducts its long-lived asset impairment analyses in accordance with ASC

360

-

10

-

15,

“Impairment or Disposal of Long-Lived Assets.” ASC

360

-

10

-

15

requires the Company to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows. If the undiscounted future cash flows do

not

indicate the carrying amount of the asset is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds its fair value based on discounted cash flow analysis or appraisals.

As of

March 31, 2020,

the Company determined that changes in the economy related to the COVID-

19

pandemic and the continued losses experienced in the Telco segment

may

cause the carrying amounts of its intangible assets to exceed their fair values. The Company performed an assessment of its intangible assets and determined that the carrying value of its customer relationships were in fact impaired based on valuation appraisals performed by the Company using a multi-period excess earnings model. Therefore, the Company recorded a

$3.9

million impairment charge in the Telco segment as of

March 31, 2020.

As of

June 30, 2020,

no

further indicators of potential impairment were present.

Intangible assets with their associated accumulated amortization and impairment at

June 30, 2020

and

September 30, 2019

are as follows:

	June 30, 2020
	Gross		Accumulated Amortization			Impairment			Net
Intangible assets:
Customer relationships – 10 years	$	8,396,000	$	(3,991,306	)	$	(3,894,121	)	$	510,573
Trade name – 10 years		2,119,000		(1,124,800	)		‒			994,200
Non-compete agreements – 3 years		374,000		(374,000	)		‒			‒
Total intangible assets	$	10,889,000	$	(5,490,106	)	$	(3,894,121	)	$	1,504,773

	September 30, 2019
	Gross		Accumulated Amortization			Net
Intangible assets:
Customer relationships – 10 years	$	8,396,000	$	(3,547,389	)	$	4,848,611
Trade name – 10 years		2,119,000		(966,280	)		1,152,720
Non-compete agreements – 3 years		374,000		(372,333	)		1,667
Total intangible assets	$	10,889,000	$	(4,886,002	)	$	6,002,998

XML

Note 7 - Goodwill

9 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Goodwill Disclosure [Text Block]

Note

7

–

Goodwill

The Company tests goodwill at least annually for impairment. The Company tests more frequently if indicators are present or changes in circumstances suggest that impairment

may

exist. These indicators include, among others, declines in sales, earnings or cash flows, or the development of a material adverse change in the business climate. The Company assesses goodwill for impairment at the reporting unit level, which is defined as an operating segment or

one

level below an operating segment. The reporting units for the Company are its

two

operating segments.

As of

March 31, 2020,

indicators were present, which indicated that the Company should test for impairment of goodwill. These indicators included reduced revenues in the current fiscal year and the overall impact of the business climate as a result of the COVID-

19

pandemic. While the Company is deemed an essential service during the COVID-

19

pandemic and has remained in operation, it has seen a reduced revenue stream in the current year. Therefore, the Company performed a goodwill impairment analysis as of

March 31, 2020.

This analysis forecasted the debt free cash flows of the segment, on a discounted basis, to estimate the fair value of the segment compared to the carrying value of the segment. For the Telco segment, the carrying value exceeded the estimated fair value of the segment by more than the carrying amount of goodwill recorded in the segment. Therefore, the Company fully impaired the goodwill balance in the Telco segment and recorded an impairment charge of

$4.8

million as of

March 31, 2020.

XML

Note 8 - Notes Payable and Line of Credit

9 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Debt Disclosure [Text Block]

Note

8

– Notes Payable and Line of Credit

Loan Agreement

On

March 10, 2020,

the Company entered into a loan agreement with its primary financial lender for

$3.5

million, bearing interest at

6%

per annum.  The loan is payable in

seven

semi-annual installments of principal and interest with the

first

payment occurring

June 30, 2020,

and the final payment due

June 30, 2023.   

Payment of the loan

may

be accelerated in the event of a default.  The principal and interest payments correlate to the payment schedule for the promissory note with Leveling

8

(see Note

4

). In connection with the

$1.7

million payment made in the

third

quarter of

2020

by Leveling

8

under the promissory note, the Company paid down

$1.6

million of principal under this loan, for which

$1.0

million was a prepayment against the loan. As a result, the balance under this loan is now

$1.9

million and the final payment will be

June 30, 2022.

The loan is secured by substantially all of the assets of the Company, including, without limitation, the promissory note that the Company received in connection with the sale of its cable segment in

2019

to Leveling

8,

Inc. (see Note

4

).

Credit Agreement

The Company has a

$4.0

million revolving line of credit agreement with its primary financial lender, which matures on

December 17, 2020.

The line of credit requires quarterly interest payments based on the prevailing Wall Street Journal Prime Rate (

3.25%

at

June 30, 2020),

and the interest rate is reset monthly. At

June 30, 2020,

there was

$2.8

million outstanding under the line of credit. Future borrowings under the line of credit are limited to the lesser of

$4.0

million or the sum of

80%

of eligible accounts receivable and

25%

of eligible Telco segment inventory. Under these limitations, the Company's total line of credit borrowing capacity was

$3.1

million at

June 30, 2020.

Loan Covenant with Primary Financial Lender

Both the

March 10, 2020

loan agreement and line of credit agreement provide that the Company maintain a fixed charge coverage ratio (net cash flow to total fixed charge) of

not

less than

1.25

to

1.0

measured annually. The Company believes that it is probable that it will

not

be in compliance with this covenant as of the measurement date of

September 30, 2020.

The noncompliance with this covenant would result in an event of default, which if

not

cured or waived, could result in the lender accelerating the maturity of the Company's indebtedness or preventing access to additional funds under the line of credit agreement, or requiring prepayment of outstanding indebtedness under the loan agreement or the line of credit agreement.

Paycheck Protection

Program

Loan

On

April 14, 2020,

the Company received a SBA Payroll Protection Program (“PPP”) loan pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), with its primary lender for

$2.9

million. The PPP loan bears interest at

1%

per annum, with monthly payments of principal and interest in the amount of

$164,045

commencing on

November 10, 2020,

and matures on

April 10, 2022.

The Paycheck Protection Program provides that the PPP loan

may

be partially or fully forgiven if the funds are used for certain qualifying expenses as described in the CARES Act. The Company intends to use the proceeds from the PPP loan for qualifying expenses and to apply for forgiveness in accordance with the terms in the CARES Act. While the Company plans to apply for forgiveness of the PPP loan in accordance with the requirements and limitations under the CARES Act, the PPP Flexibility Act and SBA regulations and requirements,

no

assurance can be given that all or any portion of the PPP loan will be forgiven.

Fair Value of Debt

The carrying value of the Company's variable-rate line of credit approximates its fair value since the interest rate fluctuates periodically based on a floating interest rate. The carrying value of the Company's term debt approximates fair value.

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Note 9 - Equity Distribution Agreement and Sale of Common Stock

9 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

Note

9

– Equity Distribution Agreement

and Sale of Common Stock

On

April 24, 2020,

the Company entered into an Equity Distribution Agreement (the “Sales Agreement”) with Northland Securities, Inc., as agent (“Northland”), pursuant to which the Company

may

offer and sell, from time to time, through Northland, shares of the Company's common stock, par value

$0.01

per share (the “Common Stock”), having an aggregate offering price of up to

$13,850,000

(the “Shares”).

The offer and sale of the Shares will be made pursuant to a shelf registration statement on Form S-

3

and the related prospectus filed by the Company with the Securities and Exchange Commission (the “SEC”) on

March 3, 2020,

as amended on

March 23, 2020,

and declared effective by the SEC on

April 1, 2020.

Pursuant to the Sales Agreement, Northland

may

sell the Shares by any method permitted by law deemed to be an “at the market offering” as defined in Rule

415

of the Securities Act of

1933

(the “Securities Act”), including sales made by means of ordinary brokers' transactions, including on The Nasdaq Global Market, at market prices or as otherwise agreed with Northland. Northland will use commercially reasonable efforts consistent with its normal trading and sales practices to sell the Shares from time to time, based upon instructions from the Company, including any price or size limits or other customary parameters or conditions the Company

may

impose. The sales agreement

may

be terminated without prior notice at any time prior to the fulfillment of the Sales Agreement if additional sales are deemed

not

warranted.

The Company will pay Northland a commission rate equal to an aggregate of

3.0%

of the aggregate gross proceeds from each sale of Shares and have agreed to provide Northland with customary indemnification and contribution rights. The Company will also reimburse Northland for certain specified expenses in connection with entering into the Sales Agreement. The Sales Agreement contains customary representations and warranties and conditions to the placements of the Shares pursuant thereto.

During the

three

months ended

June 30, 2020,

573,199

shares were sold by Northland on behalf of the Company with gross proceeds of

$2.2

million, and net proceeds after commissions and fees of

$2.1

million. Of the

573,199

shares sold,

80,043

shares were sold by

June 30, 2020,

but were settled in

July 2020,

resulting in a receivable of

$0.3

million net of commissions and fees, which is reflected in Other current assets.

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Note 10 - Income Taxes

9 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note

10

–

Income Taxes

As a result of the CARES Act, the Company can carryback net operating losses generated in

2018

through

2020

for a period of

five

years.  As a result, the Company's effective tax rate included an income tax benefit recognized during the

nine

months ended

June 30, 2020

related to tax losses generated during the fiscal year up to the amount that the Company estimates is realizable based upon taxable income in the carryback periods.  Therefore, as of

June 30, 2020,

the Company recorded

$1.2

million of deferred tax assets and recorded a benefit for income taxes.  The Company continues to provide a valuation allowance of

$9.4

million for all deferred taxes where the Company believes it is more likely than

not

that those deferred taxes will

not

be realized.

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Note 11 - Earnings Per Share

9 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Earnings Per Share [Text Block]

Note

11

– Earnings Per Share

Basic earnings per share are based on the sum of the average number of common shares outstanding and issuable, restricted and deferred shares. Diluted earnings per share include any dilutive effect of stock options and restricted stock. In computing the diluted weighted average shares, the average share price for the period is used in determining the number of shares assumed to be reacquired under the treasury stock method from the exercise of options.

Basic and diluted earnings per share for the

three

and

nine

months ended

June 30, 2020

and

2019

are:

	Three Months Ended June 30,					Nine Months Ended June 30,
	2020		2019			2020			2019
Income (loss) from continuing operations	$	23,350	$	(58,195	)	$	(16,355,423	)	$	(2,472,665	)
Discontinued operations, net of tax		−		(1,426,970	)		−			(1,267,344	)
Net income (loss) attributable to common shareholders	$	23,350	$	(1,485,165	)	$	(16,355,423	)	$	(3,740,009	)
Basic weighted average shares		11,079,580		10,361,292			10,955,235			10,361,292
Effect of dilutive securities:
Stock options		137,108		‒			‒			‒
Diluted weighted average shares		11,216,688		10,361,292			10,955,235			10,361,292
Earnings (loss) per common share:
Basic:
Continuing operations	$	0.00	$	(0.00	)	$	(1.49	)	$	(0.24	)
Discontinued operations		−		(0.14	)		−			(0.12	)
Net income (loss)	$	0.00	$	(0.14	)	$	(1.49	)	$	(0.36	)
Diluted:
Continuing operations	$	0.00	$	(0.00	)	$	(1.49	)	$	(0.24	)
Discontinued operations		−		(0.14	)		−			(0.12	)
Net income (loss)	$	0.00	$	(0.14	)	$	(1.49	)	$	(0.36	)

The table below includes information related to stock options that were outstanding at the end of each respective

three

and

nine

-month periods ended

June 30,

but have been excluded from the computation of weighted-average stock options for dilutive securities because their effect would be anti-dilutive.  The stock options were anti-dilutive either due to the Company incurring a net loss for the periods presented or the exercise price exceeded the average market price per share of our common stock for the

three

and

nine

months ended

June 30, 2020

and

2019.

	Three Months Ended June 30,				Nine Months Ended June 30,
	2020		2019		2020		2019
Stock options excluded		150,000		770,000		480,000		770,000
Weighted average exercise price of stock options	$	2.96	$	1.73	$	1.89	$	1.73
Average market price of common stock	$	2.41	$	1.38	$	2.48	$	1.37

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Note 12 - Stock-based Compensation

9 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

Note

12

– Stock-Based Compensation

Plan Information

The

2015

Incentive Stock Plan (the “Plan”) provides for awards of stock options and restricted stock to officers, directors, key employees and consultants. Under the Plan, option prices will be set by the Compensation Committee and

may

not

be less than the fair market value of the stock on the grant date.

In

March 2020,

at the Company's annual meeting of shareholders, the shareholders authorized an additional

1,000,000

shares of common stock be added to the Plan. At

June 30, 2020,

2,100,415

shares of common stock were reserved for stock award grants under the Plan. Of these reserved shares,

936,806

shares were available for future grants.

Stock Options

All share-based payments to employees, including grants of employee stock options, are recognized in the financial statements based on their grant date fair value over the requisite service period.  Compensation expense for share-based awards is included in the operating expenses and selling, general and administrative expenses sections of the Company's consolidated condensed statements of operations.

Stock options are valued at the date of the award, which does

not

precede the approval date, and compensation cost is recognized on a straight-line basis over the vesting period. Stock options granted to employees generally become exercisable over a

three

,

four

or

five

-year period from the date of grant and generally expire

ten

years after the date of grant. Stock options granted to the Board of Directors generally become exercisable on the date of grant and generally expire

ten

years after the grant.

A summary of the status of the Company's stock options at

June 30, 2020

and changes during the

nine

months then ended is presented below:

	Shares			Wtd. Avg. Ex. Price		Aggregate Intrinsic Value
Outstanding at September 30, 2019		770,000		$	1.73	$	352,700
Granted		‒			‒		‒
Exercised		(123,334	)	$	1.20	$	304,568
Expired		–			–		–
Forfeited		(166,666	)	$	1.35	$	347,999
Outstanding at June 30, 2020		480,000		$	1.89	$	742,800
Exercisable at June 30, 2020		376,667		$	1.99	$	546,101

No

nonqualified stock options were granted for the

nine

months ended

June 30, 2020.

The Company estimates the fair value of the options granted using the Black-Scholes option valuation model. The Company estimates the expected term of options granted based on the historical grants and exercises of the Company's options. The Company estimates the volatility of its common stock at the date of the grant based on both the historical volatility as well as the implied volatility on its common stock. The Company bases the risk-free rate that is used in the Black-Scholes option valuation model on the implied yield in effect at the time of the option grant on U.S. Treasury

zero

-coupon issues with equivalent expected term. The Company has never paid cash dividends on its common stock and does

not

anticipate paying cash dividends in the foreseeable future. Consequently, the Company uses an expected dividend yield of

zero

in the Black-Scholes option valuation model. The Company amortizes the resulting fair value of the options ratably over the vesting period of the awards. The Company recognizes forfeitures as they occur.

Compensation expense related to unvested stock options recorded for the

nine

months ended

June 30, 2020

is as follows:

	Nine Months Ended June 30, 2020
Fiscal year 2017 grant	$	(5,652	)
Fiscal year 2019 grants	$	(1,476	)

The Company records compensation expense over the vesting term of the related options. At

June 30, 2020,

compensation costs related to these unvested stock options

not

yet recognized in the consolidated condensed statements of operations was

$7,202.

Restricted Stock

As a result of the shareholders authorizing the additional shares being added to the Plan in

March 2020,

the Company granted restricted stock awards to its eligible board members for both the prior fiscal year and current fiscal year awards due to eligible board members. The shares granted totaled

237,014,

which were valued at market value on the date of grant. The shares have varying vesting periods ranging from immediate to

three

years. The unamortized portion of the restricted stock is included in prepaid expenses on the Company's consolidated condensed balance sheets.

The Company granted restricted stock in

October 2018

to its Chairman of the Board of Directors totaling

55,147

shares, which were valued at market value on the date of grant. The shares will vest

20%

per year with the

first

installment vesting on the

first

anniversary of the grant date. The unamortized portion of the restricted stock is included in prepaid expenses on the Company's consolidated condensed balance sheets.

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Note 13 - Leases

9 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Lessee, Operating and Finance Leases [Text Block]

Note

13

–

Leases

Effective

October 1, 2019,

the Company adopted ASU

2016

-

02,

Leases (Topic

842

), utilizing the modified-retrospective transition approach. which is intended to improve financial reporting about leasing transactions. The standard requires the recognition of right-of-use assets and lease liabilities on the consolidated balance sheet and disclosure of key information about leasing arrangements. The Company elected to use the transition option that allows the Company to initially apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment, if any, to the opening balance of retained earnings in the year of adoption. The adoption of ASC

842

did

not

result in any adjustments to retained earnings.

In accordance with ASC

842,

the Company has made accounting policy elections (

1

) to

not

apply the new standard to lessee arrangements with a term of

twelve

months or less and (

2

) to combine lease and non-lease components. The non-lease components are

not

material and do

not

result in significant timing differences in the recognition of lease expense. As a result of adopting ASC

842,

the Company recognized net operating lease right-of-use assets of

$4.7

million and operating lease liabilities of

$4.7

million on the effective date. In addition, as a result of adopting ASC

842,

the Company recognized net financing lease assets of

$0.6

million and financing lease liabilities of

$0.6

million on the effective date that were previously accounted for as operating leases.

The Company categorizes leases at their inception as either operating or finance leases. The Company has operating and financing leases in place for various office and warehouse properties, vehicles and certain wireless services equipment. The leases have remaining lease terms of

one

year to [

ten

] years, some of which include the option to extend the lease terms. Operating leases are included in right-of-use operating lease assets, operating lease liabilities - current, and operating lease liabilities in the consolidated condensed balance sheets. Finance leases are included in net property and equipment, financing lease liabilities – current, and financing lease liabilities in the consolidated condensed balance sheets.

Leased assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company uses a discount rate that approximates the rate of interest for a collateralized loan over a similar term as the discount rate for present value of lease payments when the rate implicit in the contract is

not

readily determinable. Leases that have a term of

twelve

months or less upon commencement date are considered short-term in nature. Accordingly, short-term leases are

not

included in the consolidated condensed balance sheets and are expensed on a straight-line basis over the lease term, which commences on the date the Company has the right to control the property.

The Company has an operating lease for a building in Jessup, Maryland for Nave Communications.  As a result of moving Nave's operations to Palco Telecom, a

third

-party logistics provider in Huntsville, Alabama, in fiscal year

2019,

Nave completely vacated the building in

May 2020

and was subleasing part of the building during fiscal year

2020.

  As of

June 30, 2020,

the Company determined that the right of use asset associated with this lease

may

exceed its fair value.  The Company performed an assessment of this right of use asset in accordance with ASC

360

-

10

-

15

and determined that the carrying value was impaired based on a valuation appraisal performed by the Company using a forecasted debt free cash flow model.  Therefore, Company recorded a

$0.7

million impairment charge in the Telco segment as of

June 30, 2020.

The components of lease expense were as follows:

	Three Months ended June 30, 2020		Nine Months ended June 30, 2020
Operating lease cost:
Operating lease cost	$	296,677	$	943,834
Impairment of right of use asset		660,242		660,242
Operating lease cost	$	956,919	$	1,604,076
Finance lease cost:
Amortization of right-of-use assets	$	71,925	$	198,289
Interest on lease liabilities		18,220		43,182
Total finance lease cost	$	90,145	$	241,471

Supplemental cash flow information related to leases are as follows for the

nine

months ended:

	June 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	768,784
Operating cash flows from finance leases	$	43,182
Financing cash flows from finance leases	$	277,061
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	1,076,700
Finance leases	$	718,058

Supplemental balance sheet information related to leases are as follows:

	June 30, 2020
Operating l eases
Operating lease right-of-use assets	$	4,158,786
Operating lease obligations - current	$	1,224,630
Operating lease obligations		3,809,803
Total operating lease liabilities	$	5,034,433
Finance leases
Property and equipment, gross	$	1,462,865
Accumulated depreciation		(210,253	)
Property and equipment, net	$	1,252,612
Financing lease obligations - current	$	328,151
Financing lease obligations		855,052
Total finance lease liabilities	$	1,183,203
Weighted Average Remaining Lease Term
Operating leases (in years)	3.94
Finance leases (in years)	3.98
Weighted Average Discount Rate
Operating leases		5.00	%
Finance leases		4.96	%

Maturities of lease liabilities are as follows for the years ending

September 30:

	Operating Leases		Finance Leases
2020	$	355,239	$	140,761
2021		1,440,544		314,093
2022		1,468,081		295,617
2023		1,369,882		281,636
2024		802,026		227,541
Thereafter		150,478		44,334
Total lease payments		5,586,250		1,303,982
Less imputed interest		555,817		120,779
Total	$	5,034,433	$	1,183,203

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Note 14 - Segment Reporting

9 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

Note

14

– Segment Reporting

The Company is reporting its financial performance based on its external reporting segments: Wireless Infrastructure Services and Telecommunications. These reportable segments are described below.

Wireless Infrastructure Services (“Wireless”)

The Wireless segment provides turn-key wireless infrastructure services for the

four

major U.S. wireless carriers, communication tower companies, national integrators, and original equipment manufacturers that support these wireless carriers. These services primarily consist of the installation and upgrade of technology on cell sites and the construction of new small cells for

5G.

Telecommunications (“Telco”)

The Company's Telco segment sells new and refurbished telecommunications networking equipment, including both central office and customer premise equipment, to its customer base of telecommunications providers, enterprise customers and resellers located primarily in North America. This segment also offers its customers repair and testing services for telecommunications networking equipment. In addition, this segment offers its customers decommissioning services for surplus and obsolete equipment, which it in turn processes through its recycling program.

The Company evaluates performance and allocates its resources based on operating income. The accounting policies of its reportable segments are the same as those described in the summary of significant accounting policies. Segment assets consist primarily of cash and cash equivalents, accounts receivable, inventory, property and equipment, goodwill and intangible assets.

	Three Months Ended						Nine Months Ended
	June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
Sales
Wireless	$	5,123,175		$	8,733,444		$	16,592,907		$	12,951,368
Telco		6,898,645			8,825,871			21,350,396			24,307,984
Total sales	$	12,021,820		$	17,559,315		$	37,943,303		$	37,259,352
Gross profit
Wireless	$	2,251,153		$	2,235,406		$	4,298,915		$	3,524,164
Telco		1,919,426			2,351,999			3,025,009			6,263,146
Total gross profit	$	4,170,579		$	4,587,405		$	7,323,924		$	9,787,310
Loss from operations
Wireless	$	(253,416	)	$	(454,672	)	$	(4,136,645	)	$	(1,568,255	)
Telco		(896,561	)		201,593			(13,483,096	)		(1,042,122	)
Total loss from operations	$	(1,149,977	)	$	(253,079	)	$	(17,619,741	)	$	(2,610,377	)

	June 30, 2020		September 30, 2019
Segment assets
Wireless	$	5,082,120	$	5,515,793
Telco		12,274,168		22,619,565
Non-allocated		18,753,302		8,692,986
Total assets	$	36,109,590	$	36,828,344

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Significant Accounting Policies (Policies)

9 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of presentation

The unaudited consolidated condensed financial statements include the accounts of ADDvantage Technologies Group, Inc. and its subsidiaries, all of which are wholly owned (collectively, the “Company” or “we”). Intercompany balances and transactions have been eliminated in consolidation. The Company's reportable segments are Wireless Infrastructure Services (“Wireless”) and Telecommunications (“Telco”).

The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial statements and do

not

include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. However, the information furnished reflects all adjustments, which are, in the opinion of management, necessary in order to make the unaudited consolidated condensed financial statements

not

misleading. The Company's business is subject to certain seasonal variations due to weather in the geographic areas that services are performed, and to a certain extent due to calendar events and national holidays. Therefore, the results of operations for the

nine

months ended

June 30, 2020

and

2019,

are

not

necessarily indicative of the results to be expected for the full fiscal year. It is suggested that these unaudited consolidated condensed financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company's Annual Report on Form

10

-K for the fiscal year ended

September 30, 2019.

Reclassification, Comparability Adjustment [Policy Text Block]

Reclassification

The Company changed its presentation of cost of sales and operating, selling, general and administrative expenses on the unaudited consolidated condensed statements of operations. During fiscal year

2020,

the Company reviewed its financial reporting of expenses in connection with its current operating segments in order to enhance the usefulness of the presentation of the Company's expenses. Based on that review, the Company reclassified certain expenses into operating expenses for presentation purposes. Operating expenses include the indirect costs associated with operating our businesses. Indirect costs are costs that are

not

directly attributable to projects or products, which would include indirect personnel costs, facility costs, vehicles, insurance, communication, and business taxes, among other less significant cost categories. These costs were previously recorded in either costs of sales or operating, selling, general and administrative expenses in prior periods. Additionally, the Company reclassified depreciation and amortization from operating, selling, general and administrative expenses into its own financial statement line item in the unaudited consolidated condensed statements of operations. Selling, general and administrative expenses include overhead costs, which primarily consist of personnel costs, insurance, professional services, and communication, among other less significant cost categories. The prior period has been reclassified to conform with the current period's presentation of costs of sales, operating expenses, selling, general and administrative expenses, and depreciation and amortization. These reclassifications had

no

effect on previously reported results of operations or retained earnings.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued Accounting Standards

In

June 2016,

the FASB issued ASU

2016

-

13:

“Financial Instruments – Credit Losses (Topic

326

) – Measurement of Credit Losses on Financial Instruments.” This ASU requires entities to measure all expected credit losses for most financial assets held at the reporting date based on an expected loss model which includes historical experience, current conditions, and reasonable and supportable forecasts. Entities will now use forward-looking information to better form their credit loss estimates. This ASU also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity's portfolio. ASU

2016

-

13

is effective for annual periods beginning after

December 15, 2019,

including interim periods within those fiscal periods. We are currently in the process of evaluating this new standard update.

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Note 2 - Revenue Recognition (Tables)

9 Months Ended

Jun. 30, 2020

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Three Months Ended June 30,						Nine Months Ended June 30,
	2020			2019			2020			2019
Wireless services sales	$	5,123,176		$	8,733,444		$	16,592,907		$	12,951,368
Equipment sales:
Telco		6,147,676			7,989,318			19,912,137			22,876,047
Intersegment		(23,033	)		(5,305	)		(23,033	)		(49,452	)
Telco repair sales		33,236			31,142			49,438			36,542
Telco recycle sales		740,765			810,716			1,411,854			1,444,847
Total sales	$	12,021,820		$	17,559,315		$	37,943,303		$	37,259,352

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Note 4 - Promissory Note (Tables)

9 Months Ended

Jun. 30, 2020

Notes Tables

Schedule of Financing Receivables, Minimum Payments [Table Text Block]

Fiscal year 2021	$	1,400,000
Fiscal year 2022		940,000
Fiscal year 2023		940,000
Fiscal year 2024		1,725,754
Total proceeds		5,005,754
Less: interest to be paid		(655,754	)
Promissory note principal balance	$	4,350,000

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Note 5 - Inventories (Tables)

9 Months Ended

Jun. 30, 2020

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	June 30, 2020			September 30, 2019
New equipment	$	1,174,899		$	1,496,145
Refurbished and used equipment		8,189,591			7,404,428
Allowance for excess and obsolete inventory		(3,400,000	)		(1,275,000	)
Total inventories, net	$	5,964,490		$	7,625,573

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Note 6 - Intangible Assets (Tables)

9 Months Ended

Jun. 30, 2020

Notes Tables

Schedule of Intangible Assets and Goodwill [Table Text Block]

	June 30, 2020
	Gross		Accumulated Amortization			Impairment			Net
Intangible assets:
Customer relationships – 10 years	$	8,396,000	$	(3,991,306	)	$	(3,894,121	)	$	510,573
Trade name – 10 years		2,119,000		(1,124,800	)		‒			994,200
Non-compete agreements – 3 years		374,000		(374,000	)		‒			‒
Total intangible assets	$	10,889,000	$	(5,490,106	)	$	(3,894,121	)	$	1,504,773

	September 30, 2019
	Gross		Accumulated Amortization			Net
Intangible assets:
Customer relationships – 10 years	$	8,396,000	$	(3,547,389	)	$	4,848,611
Trade name – 10 years		2,119,000		(966,280	)		1,152,720
Non-compete agreements – 3 years		374,000		(372,333	)		1,667
Total intangible assets	$	10,889,000	$	(4,886,002	)	$	6,002,998

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Note 11 - Earnings Per Share (Tables)

9 Months Ended

Jun. 30, 2020

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended June 30,					Nine Months Ended June 30,
	2020		2019			2020			2019
Income (loss) from continuing operations	$	23,350	$	(58,195	)	$	(16,355,423	)	$	(2,472,665	)
Discontinued operations, net of tax		−		(1,426,970	)		−			(1,267,344	)
Net income (loss) attributable to common shareholders	$	23,350	$	(1,485,165	)	$	(16,355,423	)	$	(3,740,009	)
Basic weighted average shares		11,079,580		10,361,292			10,955,235			10,361,292
Effect of dilutive securities:
Stock options		137,108		‒			‒			‒
Diluted weighted average shares		11,216,688		10,361,292			10,955,235			10,361,292
Earnings (loss) per common share:
Basic:
Continuing operations	$	0.00	$	(0.00	)	$	(1.49	)	$	(0.24	)
Discontinued operations		−		(0.14	)		−			(0.12	)
Net income (loss)	$	0.00	$	(0.14	)	$	(1.49	)	$	(0.36	)
Diluted:
Continuing operations	$	0.00	$	(0.00	)	$	(1.49	)	$	(0.24	)
Discontinued operations		−		(0.14	)		−			(0.12	)
Net income (loss)	$	0.00	$	(0.14	)	$	(1.49	)	$	(0.36	)

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

	Three Months Ended June 30,				Nine Months Ended June 30,
	2020		2019		2020		2019
Stock options excluded		150,000		770,000		480,000		770,000
Weighted average exercise price of stock options	$	2.96	$	1.73	$	1.89	$	1.73
Average market price of common stock	$	2.41	$	1.38	$	2.48	$	1.37

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Note 12 - Stock-based Compensation (Tables)

9 Months Ended

Jun. 30, 2020

Notes Tables

Share-based Payment Arrangement, Option, Activity [Table Text Block]

	Shares			Wtd. Avg. Ex. Price		Aggregate Intrinsic Value
Outstanding at September 30, 2019		770,000		$	1.73	$	352,700
Granted		‒			‒		‒
Exercised		(123,334	)	$	1.20	$	304,568
Expired		–			–		–
Forfeited		(166,666	)	$	1.35	$	347,999
Outstanding at June 30, 2020		480,000		$	1.89	$	742,800
Exercisable at June 30, 2020		376,667		$	1.99	$	546,101

Share-based Payment Arrangement, Expensed and Capitalized, Amount [Table Text Block]

	Nine Months Ended June 30, 2020
Fiscal year 2017 grant	$	(5,652	)
Fiscal year 2019 grants	$	(1,476	)

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Note 13 - Leases (Tables)

9 Months Ended

Jun. 30, 2020

Notes Tables

Lease, Cost [Table Text Block]

	Three Months ended June 30, 2020		Nine Months ended June 30, 2020
Operating lease cost:
Operating lease cost	$	296,677	$	943,834
Impairment of right of use asset		660,242		660,242
Operating lease cost	$	956,919	$	1,604,076
Finance lease cost:
Amortization of right-of-use assets	$	71,925	$	198,289
Interest on lease liabilities		18,220		43,182
Total finance lease cost	$	90,145	$	241,471

Lessee, Operating and Finance Lease, Supplemental Cash Flow Information [Table Text Block]

	June 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	768,784
Operating cash flows from finance leases	$	43,182
Financing cash flows from finance leases	$	277,061
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	1,076,700
Finance leases	$	718,058

Lessee, Operating and Finance Lease, Supplemental Balance Sheet Information [Table Text Block]

	June 30, 2020
Operating l eases
Operating lease right-of-use assets	$	4,158,786
Operating lease obligations - current	$	1,224,630
Operating lease obligations		3,809,803
Total operating lease liabilities	$	5,034,433
Finance leases
Property and equipment, gross	$	1,462,865
Accumulated depreciation		(210,253	)
Property and equipment, net	$	1,252,612
Financing lease obligations - current	$	328,151
Financing lease obligations		855,052
Total finance lease liabilities	$	1,183,203
Weighted Average Remaining Lease Term
Operating leases (in years)	3.94
Finance leases (in years)	3.98
Weighted Average Discount Rate
Operating leases		5.00	%
Finance leases		4.96	%

Operating and Finance Lease, Liability, Maturity [Table Text Block]

	Operating Leases		Finance Leases
2020	$	355,239	$	140,761
2021		1,440,544		314,093
2022		1,468,081		295,617
2023		1,369,882		281,636
2024		802,026		227,541
Thereafter		150,478		44,334
Total lease payments		5,586,250		1,303,982
Less imputed interest		555,817		120,779
Total	$	5,034,433	$	1,183,203

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Note 14 - Segment Reporting (Tables)

9 Months Ended

Jun. 30, 2020

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Three Months Ended						Nine Months Ended
	June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
Sales
Wireless	$	5,123,175		$	8,733,444		$	16,592,907		$	12,951,368
Telco		6,898,645			8,825,871			21,350,396			24,307,984
Total sales	$	12,021,820		$	17,559,315		$	37,943,303		$	37,259,352
Gross profit
Wireless	$	2,251,153		$	2,235,406		$	4,298,915		$	3,524,164
Telco		1,919,426			2,351,999			3,025,009			6,263,146
Total gross profit	$	4,170,579		$	4,587,405		$	7,323,924		$	9,787,310
Loss from operations
Wireless	$	(253,416	)	$	(454,672	)	$	(4,136,645	)	$	(1,568,255	)
Telco		(896,561	)		201,593			(13,483,096	)		(1,042,122	)
Total loss from operations	$	(1,149,977	)	$	(253,079	)	$	(17,619,741	)	$	(2,610,377	)

	June 30, 2020		September 30, 2019
Segment assets
Wireless	$	5,082,120	$	5,515,793
Telco		12,274,168		22,619,565
Non-allocated		18,753,302		8,692,986
Total assets	$	36,109,590	$	36,828,344

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Note 2 - Revenue Recognition (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Sep. 30, 2019
Revenue from Contract with Customer, Including Assessed Tax	$ 12,021,820	$ 17,559,315	$ 37,943,303	$ 37,259,352
Wireless Services [Member]
Contract with Customer, Liability, Revenue Recognized	500,000
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Largest Customer [Member]
Concentration Risk, Percentage			14.00%
International Regions Excluding Central America and South America [Member]
Revenue from Contract with Customer, Including Assessed Tax	700,000	$ 600,000	$ 1,500,000	$ 1,600,000
Contract with Customer, Asset, after Allowance for Credit Loss, Total	700,000		700,000		$ 2,700,000
Contract with Customer, Liability, Total	$ 200,000		200,000		$ 100,000
Contract with Customer, Liability, Revenue Recognized			$ 100,000

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Note 2 - Revenue Recognition - Disaggregation of Revenue (Details) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Sales	$ 12,021,820	$ 17,559,315	$ 37,943,303	$ 37,259,352
Telco [Member] | Operating Segments [Member]
Sales	6,898,645	8,825,871	21,350,396	24,307,984
Wireless Services [Member]
Sales	5,123,176	8,733,444	16,592,907	12,951,368
Equipment Sales [Member] | Intersegment Eliminations [Member]
Sales	(23,033)	(5,305)	(23,033)	(49,452)
Equipment Sales [Member] | Telco [Member] | Operating Segments [Member]
Sales	6,147,676	7,989,318	19,912,137	22,876,047
Telco Repair [Member]
Sales	33,236	31,142	49,438	36,542
Telco Recycle [Member]
Sales	$ 740,765	$ 810,716	$ 1,411,854	$ 1,444,847

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Note 3 - Accounts Receivable Agreements (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Sep. 30, 2019
Restricted Cash, Total	$ 105,117		$ 105,117		$ 351,909
Certain Receivables to Unrelated Third-parties [Member]
Accounts Receivable Agreement, Percent of Sold Receivables Advanced	90.00%		90.00%
Accounts Receivable Agreement, Reserve of Sold Receivables	10.00%		10.00%
Restricted Cash, Total	$ 100,000		$ 100,000
Accounts Receivable, after Allowance for Credit Loss, Total	500,000		500,000
Sale of Receivables, Maximum Limit of Receivables Uncollected	4,000,000		4,000,000
Proceeds from Collection of Finance Receivables			15,900,000	$ 9,900,000
Certain Receivables to Unrelated Third-parties [Member] | Other Nonoperating Income (Expense) [Member]
Cost of Selling Receivables	$ 100,000	$ 100,000	$ 300,000	$ 200,000
Certain Receivables to Unrelated Third-parties [Member] | Minimum [Member]
Receivables, Cost of Sales, Percent			1.00%	2019.00%
Certain Receivables to Unrelated Third-parties [Member] | Maximum [Member]
Receivables, Cost of Sales, Percent			1.80%

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Note 4 - Promissory Note (Details Textual) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2020	Dec. 31, 2019	Mar. 10, 2020
Loan Agreement with Primary Financial Leader [Member]
Debt Instrument, Face Amount			$ 3.5
Leveling 8 [Member] | Promissory Note [Member]
Proceeds from Collection of Notes Receivable, Gross	$ 1.7	$ 0.7
Proceeds from Collection of Notes Receivable, Interest		$ 0.1
Proceeds from Collection of Notes Receivable, Principal	1.4
Notes Receivable, Balloon Payment to Be Received at Maturity	2.5
Proceeds from Collection of Notes Receivable, Prepayment Portion	$ 0.7
Notes Receivable, Interest Rate	6.00%

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Note 4 - Promissory Note - Repayment Installments (Details)	Jun. 30, 2020 USD ($)
Fiscal year 2021	$ 1,400,000
Fiscal year 2022	940,000
Fiscal year 2023	940,000
Fiscal year 2024	1,725,754
Total proceeds	5,005,754
Less: interest to be paid	(655,754)
Promissory note principal balance	$ 4,350,000

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Note 5 - Inventories (Details Textual) - USD ($)	9 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Sep. 30, 2019
Inventory Write-down	$ 2,125,000	$ 77,889
Inventory Valuation Reserves, Ending Balance	3,400,000		$ 1,275,000
Telco [Member]
Inventory Write-down	2,100,000
Inventory Valuation Reserves, Ending Balance	$ 3,400,000		$ 1,300,000

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Note 5 - Inventories - Schedule of Inventory (Details) - USD ($)	Jun. 30, 2020	Sep. 30, 2019
Allowance for excess and obsolete inventory	$ (3,400,000)	$ (1,275,000)
Total inventories, net	5,964,490	7,625,573
New Inventory [Member]
Inventory	1,174,899	1,496,145
Refurbished and Used Inventory [Member]
Inventory	$ 8,189,591	$ 7,404,428

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Note 6 - Intangible Assets (Details Textual) $ in Millions	3 Months Ended
	Mar. 31, 2020 USD ($)
Telco [Member] | COVID-19 Pandemic [Member] | Customer Relationships [Member]
Impairment of Intangible Assets, Finite-lived	$ 3.9

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Note 6 - Intangible Assets - Schedule of Intangible Assets (Details) - USD ($)	Jun. 30, 2020	Sep. 30, 2019
Gross	$ 10,889,000	$ 10,889,000
Accumulated Amortization	(5,490,106)	(4,886,002)
Impairment	(3,894,121)
Net	1,504,773	6,002,998
Customer Relationships [Member]
Gross	8,396,000	8,396,000
Accumulated Amortization	(3,991,306)	(3,547,389)
Impairment	(3,894,121)
Net	510,573	4,848,611
Trade Names [Member]
Gross	2,119,000	2,119,000
Accumulated Amortization	(1,124,800)	(966,280)
Impairment
Net	994,200	1,152,720
Noncompete Agreements [Member]
Gross	374,000	374,000
Accumulated Amortization	(374,000)	(372,333)
Impairment
Net		$ 1,667

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Note 6 - Intangible Assets - Schedule of Intangible Assets (Details) (Parentheticals)	9 Months Ended
	Jun. 30, 2020
Customer Relationships [Member]
Finite-lived intangible asset, useful life (Year)	10 years
Trade Names [Member]
Finite-lived intangible asset, useful life (Year)	10 years
Noncompete Agreements [Member]
Finite-lived intangible asset, useful life (Year)	3 years

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Note 7 - Goodwill (Details Textual) $ in Millions	3 Months Ended	9 Months Ended
	Mar. 31, 2020 USD ($)	Jun. 30, 2020
Number of Reporting Units		2
COVID-19 Pandemic [Member] | Telco [Member]
Goodwill, Impairment Loss	$ 4.8

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Note 8 - Notes Payable and Line of Credit (Details Textual)		3 Months Ended		9 Months Ended
	Apr. 14, 2020 USD ($)	Jun. 30, 2020 USD ($)	Dec. 31, 2019 USD ($)	Jun. 30, 2020 USD ($)	Jun. 30, 2019 USD ($)	Mar. 10, 2020 USD ($)
Repayments of Notes Payable				$ 1,621,597	$ 1,246,279
Proceeds from Notes Payable, Total				6,373,929
Leveling 8 [Member] | Promissory Note [Member]
Proceeds from Collection of Notes Receivable, Gross		$ 1,700,000	$ 700,000
Loan Agreement [Member]
Debt Instrument, Face Amount						$ 3,500,000
Debt Instrument, Interest Rate, Stated Percentage						6.00%
Repayments of Notes Payable		1,600,000
Repayments of Debt, Prepayment Portion		1,000,000
Long-term Debt, Total		1,900,000		1,900,000
New Credit Agreement [Member] | Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity		$ 4,000,000		$ 4,000,000
Debt Instrument, Interest Rate, Effective Percentage		3.25%		3.25%
Long-term Line of Credit, Total		$ 2,800,000		$ 2,800,000
Percentage of Qualified Accounts Receivable Used in Determination of Maximum Borrowing Capacity of Line of Credit		80.00%		80.00%
Percentage of Qualified Inventory Used in Determination of Maximum Borrowing Capacity of Line of Credit		25.00%		25.00%
Line of Credit Facility, Current Borrowing Capacity		$ 3,100,000		$ 3,100,000
Loan Agreement with Primary Financial Leader [Member]
Debt Instrument, Face Amount						$ 3,500,000
Fixed Charge Coverage Ratio, Minimum Requirement						1.25
Paycheck Protection Program CARES Act [Member]
Proceeds from Notes Payable, Total	$ 2,900,000
Debt Instrument, Periodic Payment, Total	$ 164,045

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Note 9 - Equity Distribution Agreement and Sale of Common Stock (Details Textual) - USD ($)	1 Months Ended	3 Months Ended	9 Months Ended
	Jul. 31, 2020	Jun. 30, 2020	Jun. 30, 2020	Jun. 30, 2019	Apr. 24, 2020	Sep. 30, 2019
Common Stock, Par or Stated Value Per Share (in dollars per share)		$ 0.01	$ 0.01			$ 0.01
Proceeds from Issuance of Common Stock			$ 1,828,852
Sales Agreement With Northland [Member]
Common Stock, Par or Stated Value Per Share (in dollars per share)					$ 0.01
Equity Distribution Agreement, Maximum Amount					$ 13,850,000
Equity Distribution Agreement, Commission Rate		3.00%	3.00%
Stock Issued During Period, Shares, New Issues (in shares)		573,199
Proceeds from Issuance of Common Stock		$ 2,200,000
Proceeds from Issuance of Common Stock, Net		2,100,000
Sales Agreement With Northland [Member] | Other Current Assets [Member]
Common Stock, Share Subscribed but Unissued, Subscriptions Receivable		$ 300,000	$ 300,000
Sales Agreement With Northland [Member] | Subsequent Event [Member]
Stock Issued During Period, Shares, New Issues (in shares)	80,043

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Note 10 - Income Taxes (Details Textual) - USD ($)	9 Months Ended
	Jun. 30, 2020	Sep. 30, 2019
Deferred Income Tax Assets, Net, Total	$ 1,220,564
Domestic Tax Authority [Member]
Deferred Income Tax Assets, Net, Total	1,200,000
Deferred Income Tax Expense (Benefit), Total	(1,200,000)
Deferred Tax Assets, Valuation Allowance, Total	$ 9,400,000

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Note 11 - Earnings Per Share - Basic and Diluted Earnings Per Share (Details) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income (loss) from continuing operations	$ 23,350	$ (58,195)	$ (16,355,423)	$ (2,472,665)
Discontinued operations, net of tax		(1,426,970)		(1,267,344)
Net income (loss) attributable to common shareholders	$ 23,350	$ (1,485,165)	$ (16,355,423)	$ (3,740,009)
Basic (in shares)	11,079,580	10,361,292	10,955,235	10,361,292
Stock options (in shares)	137,108
Diluted weighted average shares (in shares)	11,216,688	10,361,292	10,955,235	10,361,292
Continuing operations (in dollars per share)	$ 0	$ 0	$ (1.49)	$ (0.24)
Discontinued operations (in dollars per share)		(0.14)		(0.12)
Net income (loss) (in dollars per share)	0	(0.14)	(1.49)	(0.36)
Continuing operations (in dollars per share)	0	0	(1.49)	(0.24)
Discontinued operations (in dollars per share)		(0.14)		(0.12)
Net income (loss) (in dollars per share)	$ 0	$ (0.14)	$ (1.49)	$ (0.36)

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Note 11 - Earnings Per Share - Anti-dilutive Securities (Details) - $ / shares	3 Months Ended		9 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Stock options excluded (in shares)	150,000	770,000	480,000	770,000
Weighted average exercise price of stock options (in dollars per share)	$ 2.96	$ 1.73	$ 1.89	$ 1.73
Average market price of common stock (in dollars per share)	$ 2.41	$ 1.38	$ 2.48	$ 1.37

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Note 12 - Stock-based Compensation (Details Textual) - USD ($)	1 Months Ended		9 Months Ended
	Mar. 31, 2020	Oct. 31, 2018	Jun. 30, 2020
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in shares)
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total			$ 7,202
Nonqualified Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in shares)			0
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate			0.00%
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)	237,014
Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)			4 years
Employees [Member] | Share-based Payment Arrangement, Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period (Year)			10 years
Employees [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)			5 years
Employees [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)			3 years
Board Of Directors [Member] | Share-based Payment Arrangement, Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period (Year)			10 years
Board of Directors Chairman [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)		55,147
Board of Directors Chairman [Member] | Restricted Stock [Member] | Vest 20% Per Year [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage		20.00%
Board of Directors Chairman [Member] | Maximum [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)	3 years
The 2015 Incentive Stock Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized (in shares)	1,000,000
Common Stock, Capital Shares Reserved for Future Issuance (in shares)			2,100,415
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in shares)			936,806

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Note 12 - Stock-based Compensation - Summary of the Status of the Company's Stock Options (Details)	9 Months Ended
	Jun. 30, 2020 USD ($) $ / shares shares	Sep. 30, 2019 USD ($)
Outstanding (in shares) | shares	770,000
Outstanding, weighted average exercise price (in dollars per share) | $ / shares	$ 1.73
Outstanding, aggregate intrinsic value | $	$ 742,800	$ 352,700
Granted (in shares) | shares
Granted, weighted average exercise price (in dollars per share) | $ / shares
Exercised (in shares) | shares	123,334
Exercised, weighted average exercise price (in dollars per share) | $ / shares	$ 1.20
Exercised, aggregate intrinsic value | $	$ 304,568
Expired (in shares) | shares
Expired, weighted average exercise price (in dollars per share) | $ / shares
Forfeited (in shares) | shares	(166,666)
Forfeited, weighted average exercise price (in dollars per share) | $ / shares	$ 1.35
Forfeited, aggregate intrinsic value | $	$ 347,999
Outstanding (in shares) | shares	480,000
Outstanding, weighted average exercise price (in dollars per share) | $ / shares	$ 1.89
Exercisable (in shares) | shares	376,667
Exercisable, weighted average exercise price (in dollars per share) | $ / shares	$ 1.99
Exercisable, aggregate intrinsic value | $	$ 546,101

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Note 12 - Stock-based Compensation - Compensation Expense Related to Stock Options (Details) - Share-based Payment Arrangement, Option [Member]	9 Months Ended
	Jun. 30, 2020 USD ($)
Fiscal Year 2017 [Member]
Compensation expense	$ (5,652)
Fiscal Year 2019 [Member]
Compensation expense	$ (1,476)

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Note 13 - Leases (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Oct. 01, 2019	Sep. 30, 2019
Operating Lease, Right-of-Use Asset	$ 4,158,786		$ 4,158,786
Operating Lease, Liability, Total	5,034,433		5,034,433
Finance Lease, Right-of-Use Asset	1,462,865		1,462,865
Finance Lease, Liability, Total	1,183,203		1,183,203
Operating Lease, Impairment Loss	$ 660,242		660,242
Telco [Member]
Operating Lease, Impairment Loss			$ 700,000
Minimum [Member]
Lessee, Operating and Finance Lease, Remaining Lease Term (Year)			1 year
Maximum [Member]
Lessee, Operating and Finance Lease, Remaining Lease Term (Year)			10 years
Accounting Standards Update 2016-02 [Member]
Operating Lease, Right-of-Use Asset					$ 4,700,000
Operating Lease, Liability, Total					4,700,000
Finance Lease, Right-of-Use Asset					600,000
Finance Lease, Liability, Total					$ 600,000

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Note 13 - Leases - Components of Lease Expense (Details) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Operating lease cost	$ 296,677		$ 943,834
Impairment of right of use asset	660,242		660,242
Operating lease cost	956,919		1,604,076
Amortization of right-of-use assets	71,925		198,289
Interest on lease liabilities	18,220		43,182
Total finance lease cost	$ 90,145		$ 241,471

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Note 13 - Leases - Supplemental Cash Flow Information (Details) - USD ($)	9 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Operating cash flows from operating leases	$ 768,784
Operating cash flows from finance leases	43,182
Financing cash flows from finance leases	277,061
Right-of-use assets obtained in exchange for operating leases	1,076,700
Right-of-use assets obtained in exchange for finance leases	$ 718,058

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Note 13 - Leases - Supplemental Balance Sheet Information (Details) - USD ($)	Jun. 30, 2020	Sep. 30, 2019
Right-of-use operating lease assets	$ 4,158,786
Operating lease obligations – current	1,224,630
Operating lease obligations	3,809,803
Total operating lease liabilities	5,034,433
Property and equipment, gross	1,462,865
Accumulated depreciation	(210,253)
Property and equipment, net	1,252,612
Financing lease obligations – current	328,151
Financing lease obligations	855,052
Total finance lease liabilities	$ 1,183,203
Weighted Average Remaining Lease Term, Operating leases (Year)	3 years 343 days
Weighted Average Remaining Lease Term, Finance leases (Year)	3 years 357 days
Weighted Average Discount Rate, Operating leases	5.00%
Weighted Average Discount Rate, Finance leases	4.96%

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Note 13 - Leases - Maturities of Lease Liabilities (Details)	Jun. 30, 2020 USD ($)
2020, operating leases	$ 355,239
2020, finance leases	140,761
2021, operating leases	1,440,544
2021, finance leases	314,093
2022, operating leases	1,468,081
2022, finance leases	295,617
2023, operating leases	1,369,882
2023, finance leases	281,636
2024, operating leases	802,026
2024, finance leases	227,541
Thereafter, operating leases	150,478
Thereafter, finance leases	44,334
Total lease payments, operating leases	5,586,250
Total lease payments, finance leases	1,303,982
Less imputed interest, operating leases	555,817
Less imputed interest, finance leases	120,779
Total, operating leases	5,034,433
Total, finance leases	$ 1,183,203

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Note 14 - Segment Reporting - Segment Reporting Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Sep. 30, 2019
Sales	$ 12,021,820	$ 17,559,315	$ 37,943,303	$ 37,259,352
Gross profit	4,170,579	4,587,405	7,323,924	9,787,310
Operating income (loss)	(1,149,977)	(253,079)	(17,619,741)	(2,610,377)
Segment assets	36,109,590		36,109,590		$ 36,828,344
Operating Segments [Member] | Wireless [Member]
Sales	5,123,175	8,733,444	16,592,907	12,951,368
Gross profit	2,251,153	2,235,406	4,298,915	3,524,164
Operating income (loss)	(253,416)	(454,672)	(4,136,645)	(1,568,255)
Operating Segments [Member] | Wireless [Member] | Continuing Operations [Member]
Segment assets	5,082,120		5,082,120		5,515,793
Operating Segments [Member] | Telco [Member]
Sales	6,898,645	8,825,871	21,350,396	24,307,984
Gross profit	1,919,426	2,351,999	3,025,009	6,263,146
Operating income (loss)	(896,561)	$ 201,593	(13,483,096)	$ (1,042,122)
Operating Segments [Member] | Telco [Member] | Continuing Operations [Member]
Segment assets	12,274,168		12,274,168		22,619,565
Segment Reconciling Items [Member]
Segment assets	$ 18,753,302		$ 18,753,302		$ 8,692,986