SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
[Amendment No. ]
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ADDvantage Technologies Group, Inc.
(Name of Registrant As Specified In Charter)
(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
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ADDvantage Technologies Group, Inc.
1605 East Iola
Broken Arrow, Oklahoma 74012
NOTICE OF ANNUAL MEETING
Date: Tuesday, March 4, 2003
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 six directors.
2. Ratification of the appointment of Tullius Taylor Sartain &
Sartain LLP as our independent auditors for 2002.
3. Any other business properly brought before the shareholders
at the meeting.
By Order of the Board of Directors,
/S/ Lynnwood R. Moore
Lynnwood R. Moore, Jr., Secretary
February 6, 2003
CONTENTS
Page
----
General Information About Voting 2
Stock Ownership 3
Proposal No. 1: Election of Directors 4
Proposal No. 2: Appointment of Independent Auditors 8
Shareholder Proposals for 2003 Annual Meeting 9
Other Matters 9
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 7th, 2003. 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 2003 ANNUAL MEETING
GENERAL INFORMATION ABOUT VOTING
Who can vote?
You can vote your shares of common stock if our records show that
you owned the shares on January 28, 2003. A total of 10,010,414 shares of
common stock can vote at the annual meeting. You get one vote for each
share of common stock. We do not recognize cumulative voting for the
election of our directors. The enclosed proxy card shows the number of
shares you can vote.
How do I vote by proxy?
Follow the instructions on the enclosed proxy card to vote on each
proposal to be considered at the annual meeting. Sign and date the proxy
card and mail it back to us in the enclosed envelope. The proxyholders
named on the proxy card will vote your shares as you instruct. If you sign
and return the proxy card but do not vote on a proposal, the proxyholders
will vote for you on that proposal. Unless you instruct otherwise, the
proxyholders will vote for each of the six directors and for each of the
other proposals to be considered at the meeting.
What if other matters come up at the annual meeting?
The matters described in this proxy statement are the only matters
we know will be voted on at the annual meeting. If other matters are
properly presented at the meeting, the proxyholders will vote your shares
as they see fit.
Can I change my vote after I return my proxy card?
Yes. At any time before the vote on a proposal, you can change
your vote either by giving our secretary a written notice revoking your
proxy card or by signing, dating and returning to us a new proxy card. We
will honor the proxy card with the latest date. Attendance at the annual
meeting will not, by itself, revoke your proxy card.
Can I vote in person at the annual meeting rather than by completing the
proxy card?
Although we encourage you to complete and return the proxy card to
ensure that your vote is counted, you can attend the annual meeting and vote
your shares in person.
What do I do if my shares are held in "street name"?
If your shares are held in the name of your broker, a bank, or other
nominee, that party should give you instructions for voting your shares.
How are votes counted?
We will hold the annual meeting if holders of a majority of the
shares of common stock entitled to vote either sign and return their proxy
cards or attend the meeting. If you sign and return your proxy card, your
shares will be counted to determine whether we have a quorum even if you
abstain or fail to vote on any of the proposals listed on the proxy card.
Votes will be tabulated by an inspector of election appointed by our board
of directors. Abstentions from voting, which you may specify on each
proposal except the election of directors, will have the effect of a negative
vote.
If your shares are held in the name of a nominee, and you do not
tell the nominee how to vote your shares (so called "broker nonvotes"),
the nominee cannot vote them on any proposal. Broker nonvotes will be
counted as present to determine if a quorum exists but will not be counted
as present and entitled to vote on the election of directors or to ratify
the approval of Tullius Taylor Sartain & Sartain LLP as our independent
auditors.
Who pays for this proxy solicitation?
The accompanying proxy is solicited by and on behalf of our board
of directors, and the entire cost will be paid by us. In addition to
sending you these materials, some of our employees may contact you by
telephone, by mail or in person. None of these employees will receive
any extra compensation for doing this, but they may be reimbursed for
their out-of-pocket expenses incurred while assisting us in soliciting
your proxy.
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STOCK OWNERSHIP
The following table shows the number of shares of common stock or preferred
stock beneficially owned (as of January 28, 2003) by:
- each person who we know beneficially owns more than 5% of our common
stock;
- each director;
- each executive officer named in the Summary Compensation Table on page 2;
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
Number of Shares of Shares of
Shares of Series A Series B
Common Preferred Preferred
Stock Percent Stock Percent Stock Percent
Name and Address of Beneficially of Beneficially of Beneficially of
Beneficial Owner Owned (1) Class Owned (2) Class Owned Class
---------------- --------- ----- --------- ----- ----- -----
Gary W. Young 138,708 (3) 1.4% -0- -0- -0- -0-
5905 S. Knoxville Ave.
Tulsa, OK 74135
David E. Chymiak 4,169,100 (4) 41.6% 100,000 50.0% 150,000 50.0%
1605 E. Iola
Broken Arrow, OK 74012
Kenneth A. Chymiak 4,003,000 (4) 40.0% 100,000 50.0% 150,000 50.0%
1605 E. Iola
Broken Arrow, OK 74012
Stephen J. Tyde 20,000 (4) * -0- -0- -0- -0-
8008 S. Fulton Ave.
Tulsa, OK 74136
Freddie H. Gibson 3,000 (4) * -0- -0- -0- -0-
808 S. Erie Avenue
Tulsa, OK 74136
Randy L. Weideman 138,780 (4) 1.4% -0- -0- -0- -0-
Highway 136 West
Deshler, NE 68340
All Executive Officers 8,473,588(3,4) 84.6% 200,000 100% 300,000 100%
Directors as a group
(6 persons)
_____________________________
* Less than one percent.
(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) Each share of Series A Cumulative Convertible Preferred Stock is
convertible into 10 shares of our common stock.
(3) Includes 27,000 shares are subject to stock options which are fully
exercisable.
(4) Includes 3,000 shares subject to stock options which are fully
exercisable.
(5) All of the shares beneficially owned by Mr. Young are held of record by the
GWYSEY General Partnership jointly owned by Mr. Young and his wife.
(6) All of the shares beneficially owned by Mr. Chymiak are held of record 50%
by him as trustee of the Ken Chymiak Revocable Trust and 50% by his wife as
trustee of the Susan Chymiak Revocable Trust. Mr. Chymiak disclaims
beneficial ownership of the shares held by his wife.
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 or more than nine directors, as determined from time to time by board
resolution. Our board has established the number of directors at six.
Vote Required. The six 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 the persons named
in this proxy statement as directors. 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.
Shareholders also can nominate persons to be directors. If you want to
nominate a person, you must make the nomination in person at the annual meeting
and the nominee must have agreed to serve if elected.
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 28, 2003.
David E. Chymiak Director since 1999
David E. Chymiak, 57, 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.
Kenneth A. Chymiak Director since 1999
Kenneth A. Chymiak, 56, has been our President and Chief Executive officer
since 1999. He is also the Executive Vice President and a director of TULSAT
Corporation which he acquired with David E. Chymiak in 1985.
Freddie H. Gibson Director since 1999
Freddie H. Gibson, 55, has been the president and chairman of the board of
directors of Heat Transfer and Equipment, a manufacturer of shell and turbo heat
exchangers for oil and petroleum industries, since 1992.
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Stephen J. Tyde Director since 1999
Stephen J. Tyde, 55, was the founder, president and chief executive officer
of The Pump & Motor Works, Inc., an electric motor and turbo machinery
manufacturing company from 1991- 2001. He was also the co-owner and chief
operating officer of P&MW Holdings, Inc during the same period.
Gary W. Young Director since 1990
Gary W. Young, 61, served as our Executive Vice President - Finance and
Administration from 1990-1999. He is also the owner and president of Young
Ideas Inc., a financial consulting and investment company, he founded in
1987.
Randy L. Weideman Director since 1999
Randy L. Weideman, 46, founded Diamond W Investments, Inc. in 1985 and
has served as its president since that time. We acquired Diamond W Investments,
Inc. in 1999 and changed its name to Lee CATV Corporation.
Committees of the Board. The board of directors has two principal
committees. 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, 2002:
Audit Committee - 1 Meeting
Functions Members
- Reviews qualifications of our independent auditors and Gary W. Young
makes recommendations to our board about our independent
auditors Freddie H.Gibson
- Reviews scope and results of audits with independent Stephen J. Tyde
auditors, compliance with any of our written policies
and procedures and the adequacy of our system of internal
accounting and controls
- Oversees quarterly reporting
- Performs the other functions listed in the Charter of
the Audit Committee which is Attachment I to this proxy
statement.
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 Nasdaq Stock Market
listing standards. The Audit Committee reviews our financial reporting process
on behalf of the board of directors. Management has the primary
responsibility for the financial statements and the reporting process,
including the system of internal controls.
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, 2002, with
management;
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- discussed with the independent auditors the matters
required to be discussed by Statement on Auditing Standards
No. 61 (Communications with Audit Committees);
- 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
- 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-KSB
for filing with the SEC.
Gary W. Young Freddie H. Gibson Stephen J. Tyde
Compensation Committee - 1 Meeting
Functions Members
- Reviews and monitors performance of our Gary W. Young
officers
Freddie H. Gibson
- Approves compensation and benefits programs Stephen J. Tyde
of our officers
Our board had one meeting during fiscal 2002 (all other action being
taken by unanimous written consent). Each director attended all meetings of
the board and the committees on which he served.
Compensation of Directors
We pay our three non-employee directors at a rate of $500 for each board
meeting and $250 for each committee meeting the director attends. In addition,
directors are eligible to receive awards of options to purchase 1,000 shares
of our common stock each year. 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, 2002, each of the
three non-employee directors received a director's fee of $750. All of the
directors received an award of stock options to purchase 1,000 shares of common
stock at an exercise price of $0.81 per share. Directors who were our employees
received no additional cash compensation for their services on our board of
directors, but each of them did receive options covering 1,000 shares of our
common stock during 2002.
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 under which the annual rental due to Chymiak Investments,
L.L.C. is $180,000. TULSAT Corporation is leasing other property from Chymiak
Investments, L.L.C. and paid that company $150,000 in 2001 and 2002; and is
scheduled to pay $126,500 for 2003, and $78,000 for 2004.
In fiscal 2001, ADDvantage Technologies Group of Texas borrowed $150,000
each on June 26, 2001 from Chymiak Investments, L.L.C for the purchase of a
6
building comprising of office and warehouse space at the location in Texas.
The note is payable at 7.5% over 10 years and total interest paid in 2002 was
$10,694.
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 comprising of office and warehouse space.
The note is payable at 7.5% over 10 years and total interest paid in 2002 was
$21,657.
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 2003) at rentals of $3,000 per month each
(aggregate rentals per year of $108,000 for all three buildings).
The Company has outstanding, unsecured stockholder loans of $1,100,000.
Of this amount, $950,000s payable to revocable trusts for the benefit of
Kenneth A. Chymiak and his wife and $150,000 is payable to David E. Chymiak.
The interest rate on the notes is one and one-quarter percentage point below
the Chase Manhattan Bank Prime, which is the same rate as the Company's bank
line of credit. The current rate on the notes is 3.5% and the total interest
paid on the notes was $79,166 in 2001 and $47,352 in 2002.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and executive officers, and persons who own more than 10% of our common stock
to report their initial ownership of our common stock and any subsequent changes
in that ownership to the Securities and Exchange Commission or the SEC and to
furnish us with a copy of each of these reports. SEC regulations impose
specific due dates for these reports, and we are required to disclose in this
proxy statement any failure to file by these dates during fiscal 2002.
To our knowledge, based solely on the review of the copies of these reports
furnished to us and written representations that no other reports were required,
during and with respect to fiscal 2002, all Section 16(a) filing requirements
applicable to our executive officers, directors and more than 10% shareholders
were complied with one exception. One of our directors, Stephen J. Tyde filed
one late annual report with respect to three separate purchases of our shares
during the 2001 fiscal year.
Summary Compensation Table
Executive Officers
Annual Compensation Long-Term Compensation
------------------------- ---------------------------------
Number
Other of Shares
Annual Restricted Under- Long-Term
Compen- Stock lying Incentive
Name and Salary Bonus sation Awards Options Payouts
Principal Position Year ($)(1) ($) ($)(2) ($) Granted ($)
------------------ ---- ------- ------ ------- ------ ------- ---
David E. Chymiak 2002 225,000 -0- 10,000 -0- 1,000 -0-
Chairman 2001 213,463 -0- 8,500 -0- 1,000 -0-
2000 150,000 -0- 6,837 -0- 1,000 -0-
Kenneth A. Chymiak 2002 225,000 -0- 10,000 -0- 1,000 -0-
President and 2001 213,463 -0- 8,500 -0- 1,000 -0-
Chief Executive Officer 2000 150,000 -0- 6,837 -0- 1,000 -0-
________________
(1) These amounts represent the salaries paid to these officers by TULSAT
Corporation.
(2) Other annual compensation represents, in 2002, 2001, 2000 our contribu-
tions on behalf of each of the individuals to our 401(k) Plan.
7
Option Grants During Fiscal 2002
The following table sets forth information regarding options granted during
fiscal 2002 to named executive officers.