ADDvantage Technologies Group, Inc.
1605 East Iola
Broken Arrow, Oklahoma 74012
NOTICE OF ANNUAL MEETING
Date: Tuesday, March 8, 2005
Time: 10:00 a.m.
Place: Corporate Office of ADDvantage Technologies Group, Inc.
1605 E. Iola
Broken Arrow, Oklahoma
Matters to be voted on:
1. Election of five directors.
2. Ratification of the appointment of Tullius Taylor Sartain & Sartain LLP
as our independent auditors for 2005.
3. Any other business properly brought before the shareholders at the
meeting.
By Order of the Board of Directors,
Lynnwood R. Moore, Jr., Secretary
February 10, 2005
CONTENTS
Page
----
General Information About Voting 2
security Ownership of Certain Beneficial Owners and Management 3
Proposal No. 1: Election of Directors 4
Certain Relationships and Related Party Transactions 9
Section 16(a) Beneficial Ownership Reporting Compliance 10
Summary Compensation Table 10
Shareholder Return Performance Graph 11
Proposal No. 2: Appointment of Independent Auditors 12
Shareholder Proposals for 2006 Annual Meeting 13
Other Matters 13
PROXY STATEMENT
Your vote at the annual meeting is important to us. Please vote your
shares of common stock by completing the enclosed proxy card and returning it
to us in the enclosed envelope. This proxy statement has information about
the annual meeting and was prepared by our management for the board of
directors. This proxy statement is first being sent to shareholders on or
about February 11, 2005. Please note that our annual report accompanies this
mailing of the proxy statement.
ADDvantage Technologies Group, Inc.
1605 East Iola
Broken Arrow, Oklahoma 74012
PROXY STATEMENT FOR 2005 ANNUAL MEETING
GENERAL INFORMATION ABOUT VOTING
Who can vote? Although we encourage you to
You can vote your shares of common complete and return the proxy card to
stock if our records show that you ensure that your vote is counted, you
owned the shares on January 25, 2005. can attend the annual meeting and
A total of 10,061,789 shares of common vote your shares in person.
stock can vote at the annual meeting.
You get one vote for each share of If your shares are held in the name
common stock. We do not recognize of your broker, a bank, or other
cumulative voting for the election of nominee, that party should give
our directors. The enclosed proxy you instructions for voting your
card shows the number of shares you shares.
can vote.
How are votes counted?
How do I vote by proxy? We will hold the annual meeting if
Follow the instructions on the holders of a majority of the shares
enclosed proxy card to vote on each of common stock entitled to vote
proposal to be considered at the annual either sign and return their proxy
meeting. Sign and date the proxy card cards or attend the meeting. If
and mail it back to us in the enclosed you sign and return your proxy card,
envelope. The proxyholders named on your shares will be counted to
the proxy card will vote your shares determine whether we have a quorum
as you instruct. If you sign and even if you abstain or fail to vote
return the proxy card but do not vote on any of the proposals listed on
on a proposal, the proxyholders will the proxy card. Votes will be
vote for you on that proposal. Unless tabulated by an inspector of election
you instruct otherwise, the appointed by our board of directors.
proxyholders will vote for each of the Abstentions from voting, which you
five directors and for the ratification may specify on the ratification of
of Tullius Taylor Sartain & Sartain LLP the appointment of Tullius, Taylor,
as independent auditors. Sartain & Sartain LLP as independent
auditors, will have the effect of a
What if other matters come up at the negative vote.
annual meeting?
The matters described in this proxy If your shares are held in the name
statement are the only matters we of a nominee, and you do not tell the
know will be voted on at the annual nominee how to vote your shares
meeting. If other matters are (so-called "broker nonvotes"), the
properly presented at the meeting, nominee may vote them on the
the proxyholders will vote your shares proposals to elect directors and to
as they see fit. ratify the appointment of Tullius
Taylor Sartain & Sartain LLP as our
independent auditors. Additionally,
Can I change my vote after I return broker nonvotes will be counted as
my proxy card? present to determine if a quorum
Yes. At any time before the vote on exists.
a proposal, you can change your vote
either by giving our secretary a Who pays for this proxy solicitation?
written notice revoking your proxy The accompanying proxy is solicited
card or by signing, dating and by and on behalf of our board of
returning to us a new proxy card. We directors, and the entire cost will
will honor the proxy card with the be paid by us. In addition to
latest date. Attendance at the annual sending you these materials, some of
meeting will not, by itself, revoke our employees may contact you by
your proxy card. telephone, by mail or in person.
None of these employees will receive
Can I vote in person at the annual any extra compensation for doing
meeting rather than by completing this, but they may be reimbursed for
the proxy card? their out-of-pocket expenses incurred
while assisting us in soliciting your
proxy.
2
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the number of shares of common stock or preferred
stock beneficially owned (as of January 25, 2005) by:
* each person known by us who beneficially owns more than 5% of any class of
our voting stock;
* each director and nominee for director;
* each executive officer named in the Summary Compensation Table on page 10;
and
* our directors and executive officers as a group.
Except as otherwise indicated, the beneficial owners listed in the table have
sole voting and investment powers of their shares.
Beneficial Ownership
Number of
Number of Shares of
Shares of Series B
Common Preferred
Stock Percent Stock Percent
Name and Address of Beneficially of Beneficially of
Beneficial Owner Owned (1) Class (1) Owned Class
---------------- --------- --------- ----- -----
David E. Chymiak 3,684,900 (2) 36.6% 150,000 50.0%
1605 E. Iola
Broken Arrow, OK 74012
Kenneth A. Chymiak(3) 3,301,000 (2) 32.8% 150,000 50.0%
1605 E. Iola
Broken Arrow, OK 74012
Stephen J. Tyde 22,000 (2) * -0- -0-
1900 Sandwedge Place
Wilmington, NC 28405
Freddie H. Gibson 5,000 (2) * -0- -0-
8008 S. Erie Avenue
Tulsa, OK 74136
Henry F. McCabe 2,000 * -0- -0-
7225 S. 85th E. Avenue
Tulsa, OK 74133
All Executive Officers 7,014,900 (4) 69.7% 300,000 100%
and Directors as a group
(5 persons)
_____________________________
* Less than one percent.
3
(1) Shares which an individual has the right to acquire within 60 days pursuant
to the exercise of options are deemed to be outstanding for the purpose of
computing the percentage ownership of such individual, but are not deemed to be
outstanding for the purpose of computing the percentage ownership of any other
person shown in the table or the percentage ownership of all officers and
directors as a group.
(2) Includes 5,000 shares subject to stock options which are fully exercisable.
(3) All of the shares beneficially owned by Mr. Chymiak are held of record
45.6% by him as trustee of the Ken Chymiak Revocable Trust and 54.4% by his
wife as trustee of the Susan Chymiak Revocable Trust. Mr. Chymiak disclaims
beneficial ownership of the shares held by his wife.
(4) Includes 20,000 shares subject to stock options which are fully
exercisable.
PROPOSAL NO. 1
Election of Directors
Our entire board of directors will be elected at the annual meeting. The
directors will be elected for one-year terms expiring at the next annual
meeting. Our bylaws provide that our board shall consist of not less than one
nor more than nine directors, as determined from time to time by board
resolution. Our board has established the number of directors at five.
Vote Required. The five nominees receiving the highest number of votes
will be elected. Votes withheld for a nominee will not be counted. You get
one vote for each of your shares of common stock for each of the directorships.
Nominations. At the annual meeting, we will nominate as directors the
persons named in this proxy statement. Although we do not know of any reason
why one of these nominees might not be able to serve, our board of directors
will propose a substitute nominee if any nominee is unavailable for election.
General Information About the Nominees. All of the nominees are currently
directors of ADDvantage. Each has agreed to be named in this proxy statement
and to serve as director if elected. The ages listed for the nominees are as
of January 23, 2005.
David E. Chymiak Director since 1999
David E. Chymiak, 59, has been the Chairman of our board since 1999. He
is also the President and a director of our wholly owned subsidiary, TULSAT
Corporation, which he and Kenneth A. Chymiak acquired in 1985. David E.
Chymiak is the brother of Kenneth A. Chymiak, our President and Chief
Executive Officer.
Kenneth A. Chymiak Director since 1999
Kenneth A. Chymiak, 58, has been our President and Chief Executive Officer
since 1999. He has also been the Executive Vice President and a director of
our wholly owned subsidiary, TULSAT Corporation, which he acquired with David
E. Chymiak in 1985, since 1985. Kenneth A. Chymiak is the brother of David E.
Chymiak, our Chairman of the Board since 1999.
Freddie H. Gibson Director since 1999
Freddie H. Gibson, 57, has been with the Heat Transfer Equipment Company
in Tulsa, Oklahoma since 1988. First as CEO, he has served since 1994 as the
President with responsibilities for the financial and accounting controls,
financial reporting, management of staff coordination and short and long-term
planning. Previously, Mr. Gibson had been President of Interactive Computer
Systems from 1980-1988. Also, he was the Controller and Systems Manager for
two other companies and began his career with Arthur Andersen & Co. in their
administrative services division. Mr. Gibson holds a Bachelor of Science
degree in Business Administration from Oklahoma State University, graduating
with honors.
4
Stephen J. Tyde Director since 1999
Stephen J. Tyde, 58, is the founder of The Pump & Motor Works, Inc., a
re-manufacturer of industrial pumps, motors, transformers and switchgear (to
20,000 hp). After 20 years in the turbo machinery business, Mr. Tyde started
The Pump & Motor Works in 1989 and developed it to a multi-million dollar
operation before his divestiture in 2001. During that time, Mr. Tyde oversaw
all aspects of the company and retained personal responsibility for financial
planning, reporting and controls. He continues to serve on a part time basis
as Vice President. Mr. Tyde is currently the sole owner and COO of P&MW
Holding, Inc., an industrial real estate company. Steven J. Tyde received an
undergraduate degree in Business Administration from The Ohio State University,
a Masters Degree in Business Administration from George Washington University,
and has studied engineering at the University of Pittsburgh.
Henry F. McCabe Director since 2004
Henry F. McCabe, 82, is Chairman of the Board of McCabe Minerals Inc. in
Tulsa, Oklahoma, where he has been employed since 1976. McCabe Minerals
operates manufacturing and processing plants in the states of Nebraska, Kansas
and Oklahoma, which provide granules for asphalt shingle manufacturers. Mr.
McCabe was Co-Founder of the company in 1976 and engages in numerous other
business enterprises.
Board of Directors
Board Independence. The board of directors has determined that Messrs.
Gibson, Tyde and McCabe have no relationship with the Company that would
interfere with the exercise of independent judgment in carrying out the
responsibilities of a director and that such individuals are independent under
the rules and listing standards of the American Stock Exchange ("AMEX").
Committees of the Board. The board of directors has three committees, the
Audit Committee, the Compensation Committee and the Corporate Governance and
Nominating Committee. The following chart describes the function and
membership of each committee and the number of times it met during our fiscal
year ended September 30, 2004:
Audit Committee - 2 Meetings
Functions Members
--------- -------
* Selects the firm that will serve as our independent Stephen J. Tyde
auditors
Freddie H. Gibson
* Reviews scope and results of audits with independent
auditors, compliance with any of our accounting policies Henry F. McCabe
and procedures and the adequacy of our system of internal
controls
* Oversees quarterly reporting
* Performs the other functions listed in the Charter of the Audit
Committee which may be found on our website at www.addvantagetech.com.
Report of the Audit Committee
-----------------------------
The Audit Committee of our board of directors is comprised of three
directors who are not officers of the Company. Under currently applicable
rules, all members are "independent" as defined under the American Stock
Exchange listing standards. The Audit Committee reviews our financial
reporting process on behalf of the board of directors. The Audit Committee's
policy is to submit all proposed non-audit services to the Audit Committee
chairman, who considers and pre-approves all engagements for audit or non-audit
services rendered by our independent auditors. The Audit Committee approved
100% of such services in 2004 under its pre-approval policy. Management has
the primary responsibility for the financial statements and the reporting
process, including the system of internal controls.
5
In connection with its function to oversee and monitor our financial
reporting process, the Audit Committee has done the following:
- reviewed and discussed the audited financial statements for the fiscal
year ended September 30, 2004, with management;
- discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61 (Certification of
Statements on Auditing Standards, AU Section 380);
- received the written disclosures and the letter from the independent
accountants required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees) and has discussed
with the independent accountant the independent accountant's
independence; and
- based on the review and discussions referred to above, recommended to
the Board that the audited financial statements be included in our
Annual Report on Form 10-K for fiscal year 2004 for filing with the
Securities and Exchange Commission.
Stephen J. Tyde Freddie H. Gibson Henry F. McCabe
Audit Committee Financial Expert
--------------------------------
The Securities and Exchange Commission has adopted rules pursuant to the
provisions of the Sarbanes-Oxley Act requiring audit committees to include an
"audit committee financial expert," defined as a person who has the following
attributes:
1) an understanding of generally accepted accounting principles and
financial statements;
2) the ability to assess the general application of such principles in
connection with the accounting for estimates, accruals and reserves;
3) experience preparing, auditing, analyzing or evaluating financial
statements that present a breadth and level of complexity of
accounting issues that are generally comparable to the breadth and
complexity of issues that can reasonably be expected to be raised by
the registrant's financial statements, or experience actively
supervising one or more persons engaged in such activities;
4) an understanding of internal control over financial reporting; and
5) an understanding of audit committee functions.
An individual will have to possess all of the attributes listed above to
qualify as an audit committee financial expert. The Audit Committee member
currently serving in this capacity is Stephen J. Tyde, an independent director.
Compensation Committee - 1 Meeting
Functions Members
--------- -------
* Reviews and monitors performance of our Stephen J. Tyde
officers
Freddie H. Gibson
* Approves compensation and benefits programs
of our officers Henry F. McCabe
6
Report of the Compensation Committee
------------------------------------
The Compensation Committee of our board of directors is comprised of three
directors who are not officers of the Company. The Compensation Committee is
responsible for the review of the performance of Kenneth Chymiak and David
Chymiak, who are the only executive officers of the Company. The performance
of the executive officers of the Company is reviewed in light of the
performance of the Company and the Company's working capital position and
prospects. The Committee does not assign relative weights to the factors
considered in setting compensation, but rather considers all factors as a
whole. In determining compensation levels, the Committee has not set specific
performance targets for officers to attain in order to earn any specific
component of compensation.
The Committee and the board of directors have considered other companies in
the telecommunications industry and reviewed, to the extent such information
was available, the compensation paid to the Chief Executive Officer and other
executive officers of those companies. As a result of such review, the board
of directors has concluded that the compensation levels of the Company's
executive officers are in the lower range of compensation paid by comparably
situated companies. There have been no material increases in salary or other
compensation paid to the executive officers in the past three fiscal years.
At the present time, the Company maintains its 1998 Incentive Plan for the
purpose of awarding options to its directors, executive officers and other key
employees. Stock options were granted to the executive officers during fiscal
2004 as described herein under "Summary Compensation Table."
The Company's future compensation policies will be developed in light of the
Company's profitability and with the goal of rewarding members of management
for their contributions to the Company's success.
Stephen J. Tyde Freddie H. Gibson Henry F. McCabe
Compensation Committee Interlocks and Insider Participation
During 2004, the Compensation Committee was composed of Stephen J. Tyde,
Freddie H. Gibson and Henry F. McCabe, all of whom are non-employee directors
of the Company. During 2004, none of the Company's executive officers served
on the board of directors or on the compensation committee of any other entity
who had an executive officer that served either on the Company's Board of
Directors or on its Compensation Committee.
Corporate Governance and Nominating Committee - No Meeting
Functions Members
--------- -------
* Provides oversight of the governance of the board of
directors Stephen J. Tyde
* Makes recommendations to the board as a whole concerning
board size,
make-up structure and compensation Freddie H. Gibson
* Identifies individuals qualified to become board members
* Selects or recommends that the board select the director
nominees Henry F. McCabe
to stand for election at the annual meeting of shareholders
* Recommends to the whole board nominees for the positions of Chairman
of the Board, chairmen of the various committees of the board, and members
of the various committees of the board
* Reviewing, monitoring and approving compliance with our Code of Business
Conduct and Ethics
* Considering, reviewing and approving potential conflict of interests
involving board members or corporate officers
7
The Corporate Governance and Nominating Committee has adopted a policy with
regard to the consideration of director candidates recommended by shareholders.
The Corporate Governance and Nominating Committee will consider director
candidates recommended by any shareholder holding 10,000 shares of our common
stock for at least 12 months prior to the date of submission of the
recommendation or nomination. Additionally, a recommending shareholder shall
submit a written statement in support of the candidate, particularly within the
context of the criteria for board membership, including issues of character,
judgment, age, independence, expertise, corporate experience, length of
service, other commitments and the like, personal references, and a written
indication by the candidate of his/her willingness to serve, if elected, and
evidence of the nominating person's ownership of our stock sufficient to meet
any applicable stock ownership requirements set forth in our corporate
governance guidelines.
A shareholder that instead desires to nominate a person directly for
election to the board must meet the deadlines and other requirements set forth
in the Company's bylaws and the rules and regulations of the Securities and
Exchange Commission.
The Corporate Governance and Nominating Committee's criteria and process
for identifying and evaluating the candidate that it selects, or recommends to
the full board for selection, as director nominees, are: (i) regular review of
composition and size of the board; (ii) review of qualifications of candidates
properly recommended or nominated by any qualifying shareholder; (iii)
evaluation of the performance of the board and qualification of members of the
board eligible for re-election: and (iv) consideration of the suitability of
each candidate, including current members of the board, in light of the size
and composition of the board. After such review and consideration, the
Corporate Governance and Nominating Committee will recommend a slate of
director nominees.
While the Corporate Governance and Nominating Committee has not established
specific minimum requirements for director candidates, the committee believes
that candidates and nominees must reflect a board that is comprised of
directors who: (i) are predominantly independent; (ii) are of high integrity;
(iii) have qualifications that will increase overall board effectiveness; and
(iv) meet other requirements as may be required by applicable rules, such as
financial literacy or financial expertise with respect to audit committee
members.
The Corporate Governance and Nominating Committee is comprised of three
directors who are not officers of the Company. Under currently applicable
rules, all members are "independent" as defined under the American Stock
Exchange listing standards. A copy of the Corporate Governance and Nominating
Committee Charter is posted on our website at www.addvantagetech.com.
Board Meetings
Our board held three meetings during fiscal 2004 (and took action by
unanimous written consent four times). Each director attended all meetings of
the board and the committees on which he served.
Shareholder Communication with the Board of Directors
Communication with the board of directors should be directed to the
attention of Stephen J. Tyde. Written correspondence to Mr. Tyde may be
delivered to our executive offices, 1605 East Iola, Broken Arrow, Oklahoma,
74012. All security holder communications directed to Mr. Tyde will be
promptly forwarded to him. All board members are encouraged, but not required,
to attend our annual meeting. Last year, four board members attended our
annual meeting.
Code of Ethics
We have adopted a Code of Business Conduct and Ethics which is applicable
to all of our directors, officers and employees. A copy of our Code of
Business Conduct and Ethics is posted on our website at www.addvantagetech.com.
8
Compensation of Directors
We pay our three non-employee directors $500 per quarter and $500 for each
board meeting and $250 for each committee meeting or telephonic board or
committee meeting the director attends. The chairman of the audit committee
receives an additional $250 per quarter. In addition, directors are eligible
to receive awards of options to purchase 1,000 shares of our common stock each
year after the annual shareholders meeting. We reimburse all directors for
out-of-pocket expenses incurred by them in connection with their service on our
board and any board committee. During the fiscal year ended September 30,
2004, Henry McCabe, Fred Gibson and Steve Tyde received director's fees of
$2,000, $2,750 and $3,000, respectively. All of the directors with the
exception of Henry McCabe received an award of stock options to purchase 1,000
shares of common stock at an exercise price of $4.40 per share. Directors who
were our employees received no additional cash compensation for their services
on our board of directors.
Certain Relationships and Related Party Transactions
In fiscal 1999, Chymiak Investments, L.L.C., which is owned by David E.
Chymiak and Kenneth A. Chymiak, purchased from TULSAT Corporation on September
30, 1999, the real estate and improvements comprising the headquarters and a
substantial portion of the other office and warehouse space of TULSAT
Corporation for a price of $1,286,000. The price represents the appraised
value of the property less the sales commission and other sales expenses that
would have been incurred by TULSAT Corporation if it had sold the property to a
third party in an arm's-length transaction. TULSAT Corporation entered into a
five-year lease commencing October 1, 1999 with Chymiak Investments, L.L.C.
covering the property. This lease was renewed on October 1, 2004 and will
expire on September 30, 2008.
In fiscal 2001, ADDvantage Technologies Group of Texas, a subsidiary of the
Company, borrowed $150,000 on June 26, 2001 from Chymiak Investments, L.L.C
for the purchase of a building consisting of office and warehouse space at the
location in Texas. The note was payable at 7.5% over 10 years and total
interest paid in 2004 was $4,898. The note was repaid in April 2004.
In fiscal 2002, ADDvantage Technologies Group of Missouri completed
additions at its location in Missouri and financed $342,000 from Chymiak
Investments, L.L.C for a building consisting of office and warehouse space.
The note is payable at 7.5% over 10 years and total interest paid in 2004 was
$11,694. The note was repaid in April 2004.
Chymiak Investments Inc., which is owned by Kenneth A. Chymiak and his
wife, Susan C. Chymiak, owns three other properties leased to TULSAT
Corporation for five-year terms (all ending in 2008).
The Company had outstanding, unsecured shareholder loans of $800,000 at
September 30, 2003. Of this amount, $650,000 was payable to revocable trusts
for the benefit of Kenneth A. Chymiak and his wife and $150,000 was payable to
David E. Chymiak. The interest rate on the notes was 1.25% below the Chase
Manhattan Bank Prime, which was the same rate as the Company's bank line of
credit. The total interest paid on the notes was $19,134 in 2004. These notes
were repaid in August and September 2004.
The Company leases various properties primarily from two companies owned by
David E. Chymiak and Kenneth A. Chymiak as discussed above. Future minimum
lease payments under these leases are as follows:
2005 $ 480,240
2006 380,040
2007 360,000
2008 324,000
-----------
$ 1,544,280
===========
Related party rental expense for the year ended September 30, 2004 was
$466,000.
9
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and executive officers, and persons who own more than 10% of our common stock
to report their initial ownership of our common stock and any subsequent
changes in that ownership to the SEC and to furnish us with a copy of each of
these reports. SEC regulations impose specific due dates for these reports and
we are required to disclose in this proxy statement any failure to file by
these dates during fiscal 2004.
Based solely on the review of the copies of these reports furnished to us
and written representations that no other reports were required, during and
with respect to the fiscal year ended September 30, 2004, we believe that these
persons have complied with all applicable filing requirements.
Summary Compensation Table
Executive Officers
Annual Compensation Long-Term Compensation
------------------- ----------------------
Number
Other of Shares
Annual under-
Compen- lying
Name and Salary Bonus sation Options
Principal Position Year ($)(1) ($) ($)(2) Granted
------------------ ---- ------ ----- ------ -------
David E. Chymiak 2004 225,000 -0- 10,837 1,000
Chairman 2003 225,000 -0- 10,240 1,000
2002 225,000 -0- 10,000 1,000
Kenneth A. Chymiak 2004 225,000 -0- 10,837 1,000
President and 2003 225,000 -0- 10,240 1,000
Chief Executive Officer 2002 225,000 -0- 10,000 1,000
________________
(1) These amounts represent the salaries paid to these officers by TULSAT
Corporation, our wholly owned subsidiary.
(2) Other annual compensation represents, in 2004, 2003, and 2002 our
contributions on behalf of each of the individuals to our 401(k) Plan.
Option Grants During Fiscal 2004
The following table sets forth information regarding options granted during
fiscal 2004 to named executive officers.
Potential Realizable Value
Shares % of Total at Assumed Annual Rates of
Under- Options Granted Stock Price Appreciation for
lying options to Employees in Excercise Expiration Option Term (2)
Name Granted Fiscal Year Price ($/Sh) Date 5% 10%
---- ------- ---------- ------------ ---- -- ---
Kenneth A. Chymiak 1,000 25.0% $ 4.40 3/1/14 $2,767 $7,012
David E. Chymiak 1,000 25.0% $ 4.40 3/1/14 $2,767 $7,012
(1) These options are fully vested and exercisable at date of grant.
(2) The dollar amounts under these columns represent the potential realizable
value of each grant of option assuming that the market price of the Company's
Common Stock appreciates in value from the date of grant at the 5% and 10%
annualized rates prescribed by the Securities and Exchange Commission for
purposes of this table and are not intended to forecast possible future
appreciation, if any, of the price of the Company's Common Stock.
10
Option Exercises and Year-End Option Value Table
There were no stock options exercised by the named executive officers
during fiscal 2004. The following table sets forth information regarding the
value of unexercised stock options held by each of the named executive officers
as of the year ended September 30, 2004.
Number of Number of Shares of Common Value of Unexercised In-
Shares Stock Underlying Unexercised the-money Options at
Acquired on Value Options at September 30, 2004 September 30, 2004
Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
-------- -------- ----------- ------------- ----------- -------------
Name
----
Kenneth A. Chymiak - - 5,000 - $8,315 -
David E. Chymiak - - 5,000 - $8,315 -
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on the Company's common stock against
the cumulative total return of the American Stock Exchange and the Index for
the Nasdaq Telecommunications Stocks for the period of five fiscal years
commencing October 1, 1999 and ending September 30, 2004. The graph assumes
that the value of the investment in the Company's common stock and each index
was $100 on September 30, 1999.
[Line graph appears here depicting the cumulative total shareholder return of
$100 invested in common stock holder of the Company as compared to $100
invested in the American Stock Exchange Index and the Nasdaq Telecommunications
Stocks. Line graph begins at September 30, 1999 and plots the cumulative
return at September 30, 2000, 2001, 2002, 2003 and
2004. The plot points are provided below.]
Cumulative Total Return
-----------------------
------------------------------------------------------------------------------
9/30/99 9/29/00 9/28/01 9/30/02 9/30/03 9/30/04
------------------------------------------------------------------------------
------------------------------------------------------------------------------
AEY $100.00 $63.28 $39.84 $27.34 $148.44 $150.39
------------------------------------------------------------------------------
------------------------------------------------------------------------------
American Stock Exchange 100.00 121.07 102.61 104.95 125.70 161.35
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Nasdaq Telecommunications 100.00 116.83 32.51 14.15 24.99 27.69
------------------------------------------------------------------------------
11
PROPOSAL NO. 2
Appointment Of Independent Auditors
We recommend that you vote for the ratification of the appointment of
Tullius Taylor Sartain & Sartain LLP.
We have appointed the accounting firm of Tullius Taylor Sartain & Sartain
LLP as our independent auditors to examine our financial statements for the
fiscal year ending September 30, 2004. Tullius Taylor Sartain & Sartain LLP
has been our independent auditor since 1994. Our Audit Committee has
considered whether the provision of the tax services and other services of
Tullius Taylor Sartain & Sartain LLP are compatible with maintaining their
independence and have determined that they are. Fees paid to the firm in
relation to fiscal 2004 and 2003 were as follows:
Fee Category 2004 2003
------------ ---- ----
Audit Fees $ 44,221 $ 41,750
Audit-Related Fees 4,669 7,925
Tax Fees 18,259 40,190
All Other Fees - -
--------------------
Total $ 67,149 $ 89,865
====================
Audit Fees. Consists of fees billed for professional services rendered for
the audit of the Company's consolidated financial statements and review of the
interim consolidated financial statements included in quarterly reports and
services that are normally provided by Tullius Taylor Sartain & Sartain LLP in
connection with statutory and regulatory filings or engagements.
Audit-Related Fees. Consists of fees billed for assurance and related
services that are reasonably related to the performance of the audit or review
of the Company's consolidated financial statements and are not reported under
"Audit Fees." These services include consultation and review of the Company's
responses to ordinary and routine inquiries by the SEC.
Tax Fees. Consists of fees billed for professional services for tax
compliance, tax advice and representation pursuant to an examination by the
Internal Revenue Service.
All Other Fees. Consists of fees for all other services other than audit
services, audit-related services and tax services.
A resolution to ratify the appointment of Tullius Taylor Sartain & Sartain
LLP will be presented at the annual meeting. A majority of the votes present
in person or by proxy must vote in favor to ratify the appointment. If the
shareholders do not ratify the appointment, we will reconsider our selection of
Tullius Taylor Sartain & Sartain LLP. Although your ratification of the
appointment of our independent auditors is not required, we are submitting the
appointment of Tullius Taylor Sartain & Sartain LLP for your ratification as a
matter of good corporate practice.
A representative of Tullius Taylor Sartain & Sartain LLP will be present at
the annual meeting. The representative will have the opportunity to make a
statement if he or she desires to do so and will be available to respond to
appropriate questions.
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SHAREHOLDER PROPOSALS FOR 2006 ANNUAL MEETING
If you want to include a shareholder proposal in the proxy statement for
the 2006 annual meeting, it must be delivered to our executive offices, 1605
East Iola, Broken Arrow, Oklahoma, 74012, on or before October 14, 2005. In
addition, if you wish to present a proposal at the 2006 annual meeting that
will not be included in our proxy statement and you fail to notify us by
December 28, 2005, then the proxies solicited by our board for the 2006 annual
meeting will include discretionary authority to vote on your proposal in the
event that it is properly brought before the meeting.
OTHER MATTERS
At the date of mailing of this proxy statement, we are not aware of any
business to be presented at the annual meeting other than the proposals
discussed above. If other proposals are properly brought before the meeting,
any proxies returned to us will be voted as the proxyholders see fit.
You can obtain a copy of our Annual Report on Form 10-K for the year ended
September 30, 2004 at no charge by writing to us at 1605 East Iola,
Broken Arrow, Oklahoma, 74012. This document and other information may also
be accessed from our website at www.addvantagetech.com.
Only one annual report and proxy statement are being delivered to multiple
shareholders who share one address, unless we have received instructions to the
contrary. We will provide a separate copy of the annual report and proxy
statement to a shareholder at a shared address to which single copies were
delivered upon request sent in writing to 1605 East Iola, Broken Arrow,
Oklahoma, 74012, or by calling (918) 251-9121. If you wish to receive a
separate annual report and proxy statement in the future, or if you currently
receive multiple copies of the annual report and proxy statement and wish to
request delivery of only single copies, you may notify us at the same address
or phone number.
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