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                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  25049

                                 FORM 10-KSB/A
                                AMENDMENT NO. 1
(Mark One)
   [X]    ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
          OF 1934 [FEE REQUIRED]
          For the fiscal year ended December 31, 1996



   [ ]    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
          ACT OF 1934 [NO FEE REQUIRED]

          ---------------------------------------

                        Commission File number 1-10799

                         ADDVANTAGE MEDIA GROUP, INC.
                (Name of Small Business Issuer in its charter)

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

                            5100 EAST SKELLY DRIVE
                          MERIDIAN TOWER, SUITE 1080
                             TULSA, OKLAHOMA 74135
          (Address of principal executive office, including zip code)

                  Issuer's telephone number:  (918) 665-8414

     Securities registered under Section 12(b) of the Exchange Act:  NONE

        Securities registered under Section 12(g) of the Exchange Act:

                    COMMON STOCK, PAR VALUE $.01 PER SHARE


     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.         
Yes   X       No 
     ---          ---

     Check if there is no disclosure of delinquent filers pursuant to Item 405
of Regulation S-B contained in this form, and no disclosure will be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.  [ ]

     Issuer's revenues for its most recent fiscal year.  $7,044,015

     As of March 19, 1997, 5,781,089 shares of the Registrant's Common Stock
were outstanding, and the aggregate market value of the Common Stock held by
non-affiliates was approximately $26,167,307.

     Documents Incorporated by Reference:  Portions of the Registrant's proxy
statement to be sent to shareholders in connection with 1997 Annual Meeting of
Shareholders are incorporated by reference into Part II of the Form 10-KSB.

     Transitional Small Business Disclosure Format (Check one):  Yes      No  X
                                                                     ---     ---
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                                    PART I


Items 1, 2, 6, and 12 of the Company's Form 10-KSB for the year ended
December 31, 1996 are hereby amended in their entirety, as follows:

ITEMS 1 AND 2.    DESCRIPTION OF BUSINESS AND PROPERTIES

GENERAL

     The Company, ADDvantage Media Group, Inc., is in the business of marketing
Shoppers Calculators(R) which are solar-powered calculators which attach to the
handles of shopping carts.  The calculators are marketed under the registered
trademark "Shoppers Calculator(R)" and are designed with the three-fold purpose
of increasing the retailer's sales, assisting shoppers while they are in the
store and presenting an advertising message targeted to that consumer (in the
space provided on the calculator unit).  Prior to 1996, principal operating
revenues of the Company historically were generated from the sales of the
calculators and of the advertising placed on the calculators.  The Company is
currently installing its Shoppers Calculator(R) program in all the Supercenter
stores operated by Wal-Mart Stores, Inc. ("Wal-Mart").  Substantially all of the
Company's revenues in 1996 were generated from its contract with Wal-Mart.  See
"--Wal-Mart Supercenters" below.

DEVELOPMENT OF BUSINESS

     The Company was formed in late 1989 for the purpose of producing the
Shoppers Calculator(R) and marketing them as in-store advertising vehicles.  The
Company's business efforts initially were directed toward placing the
calculators in retail grocery chains and then selling the advertising space on
those calculators to national advertisers.  During 1991, the Company installed
163,000 Shoppers Calculators(R) in 794 stores representing 13 grocery chains.
The Company incurred a substantial increase in its general and administrative
expenses as it increased the size and scope of its operations, but the
advertising revenues generated from those installations was significantly less
than anticipated under the Company's business plan.  Although independent
marketing research substantiated the Company's belief in the Shoppers
Calculator(R) as an effective in-store advertising medium, the Company believes
that national advertisers were reluctant to commit their advertising dollars
because calculators were not installed in enough stores in the top market areas
to be considered a national advertising network.

     Consequently, the Company shifted its primary emphasis during 1992 from
selling advertising on the installed calculators to selling the calculator units
directly to the grocery chains.  Although the shift in emphasis from advertising
sales to unit sales provided some short-term cash flow relief, the Company
believed it was necessary to change its long-term strategy in order to become
successful.

     In early 1993, the Company redirected its managed in-store Shoppers
Calculator(R) program away from the retail grocery chain industry to the mass
merchandising industry segment.  This move was motivated substantially by the
following:

     .    The significant decline in advertising revenues from the units
          installed in grocery chains during the last half of 1992 due, the
          Company believes, to the limited size and location of the Company's
          installed network.

     .    The opportunity to manage a Shoppers Calculator(R) program in a retail
          environment that has not previously been available to other in-store
          advertising companies.

     .    The available market penetration (and accompanying media value to
          advertisers) of the mass merchants.

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Because of the strategic change in direction and in an effort to reduce
operating costs, the Company removed its calculators from its retail grocery
chain network.

     Beginning in 1991, the Company began test marketing the Shoppers
Calculator(R) in several Wal-Mart discount stores and, in 1992, added several
Kmart stores to its test marketing efforts.  The Company entered into agreements
with Wal-Mart in July 1993 and June 1994 which provided for the installation of
the Company's calculators in certain Wal-Mart stores.  However, the July 1993
and June 1994 contracts were never implemented.  In January 1995, the Company
initiated a lawsuit against Wal-Mart based on Wal-Mart's alleged breach of the
terms of the agreements.  The Company and Wal-Mart settled the lawsuit and, in
connection with such settlement, entered into a new contract, effective as of
September 1, 1995, calling for the Company to install and maintain its Shoppers
Calculator(R) in all of Wal-Mart's Supercenters in the continental United
States.  In July 1996, the chief executive officer of Wal-Mart expressed
concerns over certain aspects of the current Wal-Mart contract.  Since that
time, the Company has, at Wal-Mart's request, assumed the primary advertising
responsibilities of Wal-Mart under the contract and has continued its
installation of the Shoppers Calculator(R) program in the Supercenter stores
pursuant to the contract.  In August 1996, Wal-Mart issued a press release
stating that it remained committed to honoring its contractual obligations to
the Company.  See "--Wal-Mart Supercenters" below.

     The Company continued negotiations with Kmart Corporation ("Kmart") after
the Company discontinued its test marketing in Kmart stores in 1993.  In June of
1996, the Company entered into an agreement with Kmart.  Under the Kmart
agreement, the Company will install and maintain its Shoppers Calculators in
certain Kmart and Super Kmart Center stores and will be responsible for
generating revenues, which will be shared with Kmart, from the sale of the
advertising messages.  See "--Kmart Stores."

SHOPPERS CALCULATOR(R)

     Shoppers Calculator(R) is a 3" x 7 1/2" calculator which mounts on the
handles of retail shopping carts and includes an advertising image area of 2
9/16" x 2 1/8" within which advertising messages are positioned.  The units
themselves are molded from high impact plastic and are constructed to be both
water and shock resistant.  The units are attached to the handle of each
shopping cart with stainless steel clamps, brackets and headless screws.  The
calculator performs the basic mathematical functions (add, subtract, multiply
and divide) and has an expected life of approximately five years based on the
life of the solar cell.

WAL-MART SUPERCENTERS

     As discussed above under "--Development of Business," the Company and Wal-
Mart entered into a contract, effective as of September 1, 1995, providing for
the installation and maintenance of the Company's Shoppers Calculator(R) in all
of Wal-Mart's Supercenter stores in the continental United States.  Under the
contract, the Company is responsible for installing its calculators in Wal-
Mart's Supercenters and Wal-Mart is to be initially responsible for selling the
advertising to be placed on the calculators.  The Company is to assist Wal-Mart
and potential advertisers with respect to developing advertising messages and
will be responsible for coordinating and obtaining the necessary camera-ready
art work, printing and producing the advertising messages, placing and changing
the messages on the installed calculators, and servicing and maintaining the
calculators.

     Under the contract, Wal-Mart is obligated to pay the Company $2,700 per
installed store, per four week advertising cycle, during the term of the
contract in which Wal-Mart is responsible for selling the advertising and to pay
the Company the amount of any shortfall if the advertising revenues paid to the
Company by October 6, 1998 are less than $23,500,000.  After the Company has
received a total

                                      -2-
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of approximately $23,500,000 from Wal-Mart, the Company has the option to
continue the contract and become responsible for all of the advertising sales
activities through October 6, 1999, the expiration date of the contract.  During
this period, Wal-Mart has no obligation to guarantee advertising revenues and
any advertising revenues will be split 90% to the Company and 10% to Wal-Mart.

     During the last quarter of 1996, the Company, at Wal-Mart's request,
assumed primary responsibility for sales of advertising and has submitted to
Wal-Mart proposals relating to the recovery of the Company's costs and expenses
incurred in its advertising sales efforts, amending the sharing ratios after the
guaranteed amount of revenues has been received and extending the contract
termination date.  At March 15, 1997, no formal action on these proposals had
been taken.  However, Wal-Mart is providing certain assistance to the Company by
providing, without charge to the advertiser or the Company:

     .    the right to place Shoppers Calculators(R) with flashing lights on the
          shelves where the advertised products are located;

     .    broadcast advertising spots over each store's public address system
          for products which are advertised on the Shoppers Calculators(R); and

     .    statistical information regarding sales of advertised products which
          is useful in evaluating the effectiveness of the advertising on the
          Shoppers Calculators(R).

This assistance is not required of Wal-Mart under the terms of the contract and
any or all of it could be terminated or modified at any time.

     At December 31, 1996, Shoppers Calculators(R) were installed on
approximately 266,000 shopping carts in 327 Wal-Mart Supercenters.  This
represents 89% of the Wal-Mart Supercenters open at that date.  Shoppers
Calculators(R) will be installed in existing as well as all new Supercenters
opened during the term of the contract.  It is estimated that approximately 100
new Supercenters will be opened in each of 1997 and 1998.  No installations are
expected to be made in 1997 until about April.

     Also under the contract, Wal-Mart guaranteed the Company's additional bank
financing in the amount of $700,000 which was utilized primarily to fund the
acquisition of component parts and injection molding equipment for completing
calculator units, the initial installation and servicing of the calculators at
Supercenter locations, the repayment of a note due with respect to the Company's
acquisition of its interests in certain patent and trademark rights and the
repayment of certain past due trade accounts.  The Company repaid the additional
bank financing in October 1996.  See "--Manufacturing" below and "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Financial Condition and Liquidity".

     Upon receipt by the Company of total payments of approximately $23,500,000
under the Wal-Mart contract (which would occur no later than October 6, 1998),
the Company has the option to (i) continue the contract, at which time it will
contractually assume all advertising responsibilities, or (ii) allow the
contract to terminate.  If the Company elects to maintain the Shoppers
Calculator(R) program in the Supercenters, the contract will be continued
through October 6, 1999.  The contract may be terminated earlier upon the breach
of any covenant, agreement, representation or warranty which is not cured within
30 days after receipt of written notice of such default.  Under the contract,
the Company has agreed to reasonably adhere to the schedule for installations
and to service and repair the calculators and advertising messages to the extent
necessary to assure the proper functional performance and first class appearance
of the calculator and advertisement.  The Company has warranted to Wal-Mart that
each calculator will be in good working order on its installation date and has
covenanted to make all necessary adjustments, repairs and replacements necessary
to maintain the

                                      -3-
<PAGE>
 
calculators in good working order.  In addition, upon the termination of the
contract or upon its expiration, the Company will be solely responsible for
removing all the calculators from the Supercenters.

     Under the contract, the Company submits a bill to Wal-Mart in the amount of
$2,700 for each installed Supercenter at the beginning of each four week
advertising cycle.  Wal-Mart is obligated to pay the Company within ten business
days of Wal-Mart's receipt of any advertising revenues from third parties, but
in no event later than 30 days from the beginning of an advertising cycle.
Through December 31, 1996, the Shoppers Calculator(R) program was utilized
primarily for advertising Wal-Mart's private label products.  During the last
quarter of 1996, the Company sold advertising test programs to three national
advertisers, resulting in advertising revenues of $192,000.  These revenues have
been recorded in the Company's financial statements as an account payable since
they may offset amounts due from Wal-Mart under the contract.  See footnote 7 in
the notes to Financial Statements.

     If the Wal-Mart contract is not renewed upon its termination and the
Company has not then entered into or implemented contracts with other mass
merchants or other parties or acquired or entered into or acquired new lines of
business, the Company may have to cease operations and perhaps liquidate.  In
any event, it is anticipated that if the Wal-Mart contract is not renewed, it
will very likely have a material adverse effect on the Company and its
operations.

KMART STORES

     On June 3, 1996, the Company and Kmart entered into an agreement whereby
the Company will install and maintain its Shoppers Calculator(R) in designated
Kmart and Super Kmart Centers stores at no cost to Kmart.  Under the agreement,
the Company will be responsible for selling the advertising to be placed on the
calculators and has agreed to pay Kmart a fee equal to 15% of the gross
advertising revenues generated.  The agreement is for an initial term of one
year and continues thereafter on a month to month basis until terminated by
either party on 60 days' prior written notice.  The agreement is subject to
earlier termination by a party in the event of (i) a material breach of the
agreement by the other party, (ii) a material failure of any covenant,
representation or warranty set forth in the agreement, (iii) the insolvency or
certain events of bankruptcy of the other party, or (iv) the cessation of
operations of the other party.

     The number of Kmart stores to initially be included in the Shoppers
Calculator program has not yet been determined by the parties; however, the
Company currently anticipates that the agreement will initially include
approximately 125 Super Kmart Centers and 50 Kmart "Pantry" Stores.  The Company
anticipates that it will not commence installation of its calculators in the
Kmart stores until it (i) receives sufficient advertising commitments necessary
to cover the manufacturing and installation costs of the calculators to be
installed in such stores and (ii) the Company's new calculator units are
available for installation.  At this time, the Company is not able to predict
when or if installation of Shoppers Calculators(R) in Kmart stores will
commence.  No advertising for Shoppers Calculators has been sold or committed at
this time and the Company cannot predict with any certainty what the price
for advertising on such caculators will be if and when they are ultimately
installed.

MARKETING

     MASS MERCHANDISING PROGRAM.  As discussed above under "--Development of
Business," in early 1993, the Company redirected its efforts away from the
retail grocery chain network towards the mass merchandising industry.  The
Company intends to focus its efforts on fully developing its Shoppers
Calculator(R) network under the Wal-Mart and Kmart agreements in the near
future.  Accordingly, the Company is not negotiating with any other mass
merchandisers at this time.  The Company anticipates that it will offer its
Shoppers Calculator(R) program to other mass merchandisers in the future if it
is

                                      -4-
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successful in developing the Wal-Mart and Kmart networks.  Currently, the
Company believes it will offer to install the Shoppers Calculator(R) in a mass
merchandiser's retail store chain at no cost to the merchandiser and, in
consideration therefor, will agree to pay the merchandiser a percentage of the
advertising revenues generated from the units installed in the stores.  The
Company expects that it will tailor the specific terms of any future
installation programs to meet the requirements of each of its future mass
merchandiser customers, if any.  There can be no assurance at this time what the
specific terms of any such agreements will be should the Company be successful
in its efforts to enter into an agreement with any additional mass merchandisers
in the future.

     Revenues generated from the Wal-Mart contract accounted for approximately
99.5% and 51% of the Company's total revenues in 1996 and 1995, respectively.
The Company anticipates that the Wal-Mart contract will continue to account for
a significant portion of the Company's revenues in 1997.

          ADVERTISING.  Advertising contracts are sold in cycles of four weeks
each (13 cycles per year).  The advertising messages displayed on the
calculators are changed at the beginning of each cycle by the Company.
Advertisers are generally responsible for submitting the proposed ad inserts in
camera-ready art form and the Company then reproduces the ads onto custom cut
advertising inserts for installation on the calculators.

     Under the Company's Shoppers Calculator(R) program with Wal-Mart, the
Company, at Wal-Mart's request, has assumed primary responsibility for obtaining
advertising contracts from national advertisers for the calculators installed in
the Supercenters even though Wal-Mart has such responsibility under the
contract.  Wal-Mart has the option to advertise its own private label products
or to sell advertising space on the calculators to the national advertisers;
however, after the expiration of the period in which Wal-Mart is responsible
under the contract for obtaining advertising contracts, the Company will be
solely responsible for obtaining advertising contracts.  Under the Kmart
agreement, and under the program expected to be offered eventually to other mass
merchandising retail chains, the Company will also be responsible for obtaining
advertising contracts covering the calculator units to be installed in each
merchandiser's chain.

     The Company currently offers advertisers contracts to place advertising
messages on a certain percentage of the total calculators installed for a
particular mass merchandising chain (e.g., 25% of the calculators installed in
the Supercenters).  In addition, the Company may grant particular advertisers an
exclusive product category for advertising which prohibits the Company from
advertising products of competitors in that product category during the term of
the advertising cycle.

     The Company has developed "package concept" calculators, which are
calculators with the shape and design of canned products (such as a soup, soft
drink or beer can) or packaged products (such as a detergent box, rice package
or candy bar), which also are attached to shopping cart handles.  These
calculators would duplicate the packaging and bear the trademark and trade name
of a particular brand of product manufactured by an advertiser.  The Company is
currently developing a new mounting base so that the Company's package concept
calculators will be more readily interchangeable with the Company's standard
calculator.  The package concept and standard calculators manufactured for use
in the future with the new mounting base will contain a larger advertising
space.  The Company estimates that the tooling costs necessary to commence
manufacturing the mounting base, package concept calculators and new standard
calculators will be approximately $150,000.  The Company has recently begun the
production of its first "package concept" calculator for a major manufacturer.
Installation of these calculators is expected to commence in May 1997.

     The Company currently uses a combination of an in-house marketing staff and
independent sales representatives for obtaining advertising commitments for the
Company's Shopper Calculator(R) program.  The Company has two full-time
employees comprising its in-house marketing staff and has agreements

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with four independent sales representatives located in the New York, Chicago,
Dallas and San Francisco markets.  Under its agreements with each of the
independent sales representatives, the Company pays a fixed monthly amount
during the initial stage of the contract, usually six to nine months, and a
sales commission ranging from 5% to 10% on the advertising revenues generated by
the representative.  As a result of the establishment of the Company's marketing
force, it is likely that the Company's costs will increase with respect to its
generation of advertising revenues in the future and, as a consequence, without
corresponding increases in the number of stores included in its Shoppers
Calculator(R) program or an increase in the advertising rates obtained, the
Company's net revenues may decline by the increased costs incurred.  In
addition, the Company is currently obtaining guaranteed revenues for each
advertising cycle for each Supercenter which is fully installed with the
Shoppers Calculator(R).  There can be no assurance at this time that the Company
will be able to sell all or any available advertising slots during any
advertising cycle in the future or that it will be able to sell such advertising
at prices that are comparable with that received currently under the Wal-Mart
agreement.

     SALES OF UNITS.  During the period from 1994 through 1995, the majority of
the Company revenues were generated from the sales of the Shoppers
Calculator(R). Most of the sales were to domestic retail grocery chains,
although some sales were made in the international marketplace.  Revenues from
sales of Shoppers Calculators(R) have not been material.  The Company currently
anticipates that its efforts in 1997 will be focused towards the installation of
its calculators in the mass merchandising industry.  Accordingly, the Company
does not intend to actively market the Shoppers Calculator(R) to grocery and
other categories of retailers in the immediate future.  Depending on the
availability of the calculators and the demand therefore from grocery or other
retailers, the Company may resume efforts to sell the units from time to time in
the future.

COMPETITION

     Currently, most major mass merchandising chains have not licensed third
parties to sell in-store advertising in their retail stores.  As a result, the
Company may be one of the first advertising providers serving the mass
merchants' retail stores.  However, there are numerous competitors providing
other types of in-store advertising mediums to other types of retailers
including the framed advertising on the front of each shopping cart, shelf and
aisle signs and displays, and check-out counter signage.  Most of these possible
competitors have greater financial and human resources and generally a more
diversified product line than the Company.  In addition, one or more of the
Company's competitors could develop a product similar or, should it choose to
dispute the validity of the design patent, identical to the Shoppers
Calculator(R) and compete directly against the Company.

     Since most manufacturers and suppliers have limited advertising budgets,
the Company competes with all other advertising media.  It is still uncertain
whether the Shoppers Calculator(R) will be able to compete effectively for
available advertising dollars.

OPERATIONS

     The Company currently employs a network of field service technicians to
maintain and service the installed units and to replace the advertising inserts
on the calculators at the end of each advertising cycle.  Each field service
technician is responsible for approximately five Supercenter locations.  The
Company also employs area supervisors who have the responsibility for overseeing
the field service operations for approximately 40 to 50 Supercenter locations,
the exact number of such locations depending on the geographic concentration of
the stores.  In addition, the Company currently employs two regional supervisors
who have overall responsibility for the area supervisors and field service
technicians in their respective geographic areas.  From time to time the Company
will establish operating crews, consisting of three to four employees, for
installing the calculators on the shopping carts at the Wal-Mart Supercenter
locations.

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MANUFACTURING

     All of the calculators previously installed in the Company's grocery chain
network were manufactured by Texas Instruments pursuant to a manufacturing
services agreement between the parties entered into in 1991.  The Company
purchased approximately 259,000 units from Texas Instruments under the
agreement.  The agreement with Texas Instruments was terminated in 1992 when the
Company ceased manufacturing units due to the significant decline in advertising
revenues experienced.  Texas Instruments recently ceased providing custom
manufacturing services and the Company has begun ordering components of the
Shoppers Calculator(R) from several manufacturers and intends to complete the
final assembly at its warehouse facility.  The Company has engaged the services
of a purchasing agent to source the needed components for assembling the
complete calculator units.  In consideration for such services, the Company is
paying the agent a consulting fee equal to 15% of the costs of the components
purchased by the Company.

     The Company salvaged the internal assemblies (the primary internal
calculator components) from approximately 70,000 of the calculators previously
installed in the Company's grocery chain network.  These assemblies have been
utilized to complete the calculator units initially installed in the Supercenter
network.  The Company currently utilizes Gavco Plastics Incorporated ("Gavco"),
a manufacturing company located in Broken Arrow, Oklahoma, to manufacture the
plastic cases constituting the shell of the calculators.  The Company was able
to acquire the injection molding tools for the calculator units from Texas
Instruments and provide such tools to Gavco for its manufacturing of the shells.
Gavco is currently manufacturing the calculator shells at a rate of
approximately 30,000 per month.

     The Company was able to purchase 140,000 pcb boards (a part of the internal
assembly) from Texas Instruments' inventory and Texas Instruments was
responsible for obtaining the remaining internal assembly components from
outside sources necessary for assembling 140,000 complete internal assemblies.
The Company reached an agreement with OAI Electronics, Inc., a manufacturing
company located in Tulsa, Oklahoma, to have one of its plants assemble the
internal assembly components received from Texas Instruments' inventory and
sourcing services.  The completed internal assemblies will then be returned to
the Company for final assembly of the calculator units.

     The Company has entered into an agreement with Nam Tai Electronic &
Electrical Products Ltd. ("Nam Tai"), a manufacturing company located in Hong
Kong, for the manufacture of the internal assemblies which will be needed to
complete installation of the Supercenter network.  The Company received shipment
of 160,000 internal assemblies from Nam Tai through December 31, 1996.  As of
February 28, 1997, the Company had purchase order commitments for delivery of
113,000 internal   assemblies through July 1997, and has posted a letter of
credit for its purchase commitments.

     While the Company is currently dependent on its existing suppliers for
component parts needed to complete the calculators for installation in the
Supercenter network, it believes that there are a number of available suppliers
for its component parts.

     Other components for installation of the units (brackets, clamps, screws
and washers) are purchased from various manufacturers in the United States.

DESIGN PATENTS AND TRADEMARKS

     An initial design patent was issued on the Shoppers Calculator(R) design
without an advertising space in December 1986.  A design patent was issued in
August 1992 for the Shoppers Calculator(R) design which includes the advertising
space.  The Company acquired the rights to these design patents in December
1990.  Registration by the Company of the trademark "Shoppers Calculator(R)" was
granted in July 1992 for a 10 year term.  In December 1995, the Company filed an
application for registration

                                      -7-
<PAGE>
 
of the trademark "Shoppers Calculator(R)" and design with respect to its new
logo.  This application is still pending and the registration has not yet been
granted.

     In 1992, the Company filed seven applications for design patents for
additional designs for the Shoppers Calculator(R).  Patents for these designs
were granted in late 1994.  The design patents issued expire 14 years after the
date of their issuance.  In February 1996, the Company filed a U.S. application
for a design patent for a calculator design in the form of certain rectangular
packaged goods.  This application is pending.

     The Company has filed the necessary documentation to seek design patents or
registered designs in Australia, Canada, France, Germany, the United Kingdom and
Venezuela with respect to the U.S. design patent issued in August 1992.  Design
patents or registered designs for the Shoppers Calculator(R) have been granted
or registered in Australia, Canada, Germany and the United Kingdom.  There is no
assurance that foreign design patents will ultimately be granted in those
countries where applications are pending.  In addition, there is no assurance
that the granting of design patents or the registration of registered designs
will provide adequate protection against competing products.

     The Company believes that the design patent issued in August 1992 is
material and important to its business because of (i) the protection it should
provide against competitors using this precise design of advertising medium, and
(ii) the revenues it believes it will be able to generate through leasing and
sales of the Shoppers Calculators(R) and licensing their use.  However, the
Company does not believe that the design patent is essential to its success.
Because of its development and marketing activities to date and the size of the
potential market, the Company believes that it could operate profitably even if
it did not have the protection of the design patent.  The granting of a patent
by the U.S. Patent Office is not determinative of the validity of a patent; such
validity can be disputed by third parties in legal proceedings or the Company
may be forced to institute legal proceedings to enforce validity.  If any such
legal proceedings were commenced, the costs thereof could be substantial and
have a material adverse effect on the Company.  The Company will benefit from
the design patent and pending design patent only if it is successful in its
efforts to market the advertising space to advertisers, however, there is no
assurance that such advertising will be commercially accepted.  Additionally,
substitutes for successfully patented items are frequently developed and there
can be no assurance that a substitute for the Shoppers Calculator(R) will not be
successfully developed and marketed, which could have a material adverse effect
on the future operations of the Company.

RESEARCH AND DEVELOPMENT ACTIVITIES

     Most of the Company's research activities over the past two fiscal years
have consisted of researching the market impact of its Shopper's Calculator
program on sales of advertised products in Wal-Mart Supercenters.  Most of this
information has been supplied to the Company by Wal-Mart.  The Company did not
spend a material amount on research and development activities during that
period.

PROPERTIES

     The Company maintains its corporate offices at 5100 East Skelly Drive,
Meridian Tower, Suite 1080, Tulsa, Oklahoma 74135.  The Company currently leases
approximately 6,300 square feet for its corporate offices from a third party
under a lease which expires on August 31, 1999.  The lease provides for monthly
rental payments of $6,715, and the Company currently subleases a portion of its
rented space for which it receives $1,950 per month.  The Company also leases
approximately 5,500 square feet of warehouse space in Tulsa, Oklahoma from a
third party.  The lease for the warehouse space expires June 4, 1999, and
requires monthly rental payments of $1,614.

                                      -8-
<PAGE>
 
EMPLOYEES

     At December 31, 1996, the Company had 105 employees, 12 of which were
employed in the Company's corporate offices, 89 of which were employed in field
service operations and four of which were employed in the Company's warehouse
and installation operations.  Management considers its relationships with its
employees to be excellent.  The employees of the Company are not unionized and
the Company is not subject to any collective bargaining agreements.



                                    PART II


ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
---------------------------------------------------------------------

     The Company entered into a contract with Wal-Mart effective as of September
1, 1995, whereby the Company will install and maintain its Shoppers Calculators
in all of Wal-Mart's Supercenter stores in the continental United States.  Under
the contract, Wal-Mart is obligated to pay the Company $2,700 per installed
store, per four-week advertising cycle, until a total of approximately
$23,500,000 has been received by the Company.  Supercenter store installations
commenced in October 1995 with 41 stores being installed by year-end.  During
1996 a total of 286 additional stores were installed bringing total
installations to 327 by the end of 1996.

     The Company's first revenue period under the Wal-Mart contract began on
November 6, 1995.  As a result, advertising revenues totaled $126,900 during
1995, as compared to $7,013,000 for 1996.

     The significant increase in revenues improved operating income (income
before interest, taxes and preferred stock dividends) by $4,960,000 in 1996 as
compared to 1995.  The Company's net income applicable to common stock was
$1,723,300 for year 1996 as compared to net income of $1,587,800 for 1995.  As a
result of implementation of the new Wal-Mart contract, 1995 earnings were
increased by $3,910,000 from the accounting recognition of the future tax
benefits of the Company's net operating losses and temporary differences
aggregating $10,290,000 at December 31, 1995.  This compares to 1996 tax expense
of $940,000.

     Revenues from sales of calculators declined from $114,900 for the year
ended December 31, 1995 to $22,300 for the year ended December 31, 1996.
Approximately 8,300 units were sold during 1995, compared to approximately 1,500
units sold in 1996.

     Cost of advertising services, representing primarily labor to supervise,
service and clean the installed units and to change advertising messages, and
depreciation of installed units, increased approximately $1,891,800 (873%) in
1996 as compared to 1995 as a result of higher labor costs, printing costs and
depreciation due to the increase in the number of calculators installed and
serviced during the respective periods.

     Cost of sales of calculators, representing the manufacturing costs of units
sold, decreased approximately $38,200 (78%) in 1996 as compared to 1995.  This
was due to the decreased number of units sold during 1996 as compared to 1995.

                                      -9-
<PAGE>
 
     Selling expense increased approximately $234,200 (714%) in 1996. This was
primarily due to increases during 1996 in payroll, payroll related expenses,
sales representative retainer expenses and marketing materials costs.  In
approximately July of 1996, the Company assumed primary responsibility for
selling advertising on the Shoppers Calculators(R) installed in Wal-Mart
Supercenters.

     General and administrative expenses increased $515,100 (58%) in 1996 as
compared to the same period in 1995. During 1996, payroll and payroll related
expenses increased $124,200 as the Company began to increase staff to handle the
increased work load required from the Wal-Mart Supercenter contract. Officer
bonus accruals decreased $37,500 in 1996 as compared to the same period in 1995.
Executive retirement plan accruals, including insurance cost to fund future
payments, totaled $274,200 during 1996.  There were no such accruals in 1995.
Expenses related to broker and analyst meetings and other shareholder expenses
increased $24,000 over 1995. Increases amounting to $138,700 occurred in
professional fees, occupancy costs, business taxes and other expenses.  The
increase was offset by a decrease in investment banking fees of $8,500 from
1995.

     Litigation expenses in the amount of $636,300 were incurred during 1995 in
connection with the Company's lawsuit against Wal-Mart.  The Company had no
litigation expenses in 1996.

     Interest expenses decreased approximately $15,500 (3%) during 1996 as
compared to the same period in 1995. Interest on bank borrowings increased
$33,800 due to higher levels of bank borrowing offset somewhat by lower prime
interest rates during 1996.  Vendor interest was $30,800 lower in 1996 as
compared to 1995.  Interest accrued on amounts due investors decreased $18,500
in 1996 as compared to 1995 due to the conversion of certain portions of such
amounts to equity through the exercise of warrants issued to such investors and
payment of all remaining balances in 1996.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
---------------------------------------------------------------------

     In early 1993, the Company implemented a strategic change in its business
plan by redirecting its managed in-store Shoppers Calculator program away from
the retail grocery industry into the mass merchandising segment. This strategic
change resulted in significant declines in revenues during 1993, 1994 and 1995.
Through September 30, 1995 business activity had been severely curtailed and was
limited to selling Shoppers Calculators while the lawsuit filed against Wal-Mart
on January 18, 1995 was being processed.  In September, 1995 the lawsuit was
settled with a new contract and operating plan. Future business activity will be
primarily related to managing a Shoppers Calculator program in Wal-Mart
Supercenters and developing programs with other mass merchants.

     As a result of implementation of the new Wal-Mart contract, fourth quarter
1995 earnings were increased by $3,910,000 from the accounting recognition of
the future tax benefits of the Company's net operating losses and temporary
differences aggregating $10,290,000 at December 31, 1995.
 
     Revenue from sales of calculators decreased from $402,000 for the year
ended December 31, 1994 to $114,900 for the year ended December 31, 1995.
Approximately 30,900 units were sold during 1994, of which 4,000 units were sold
in the domestic market and 26,900 units were sold in the international market.
This compares to approximately 8,300 units being sold in 1995, including sales
of 8,000 units in the domestic market and 300 units in the international market.
The average selling price per unit during 1995 was $13.84 as compared to $13.01
per unit during 1994.

     Cost of sales of calculators representing the manufacturing costs of units
sold, decreased approximately $123,000 (72%) in 1995 as compared to 1994.  This
was due to the decreased number of units sold in 1995 as compared to 1994. Cost
of services, representing primarily labor to supervise, service and clean the
installed units and to change advertising messages, and depreciation of
installed

                                      -10-
<PAGE>
 
units, decreased approximately $67,300 (23.7%) in 1995, compared to 1994 as a
result of lower labor costs due to a reduction in the number of calculators
installed and serviced during the respective periods.

     The complete inventory of calculators, some of which was classified with
property and equipment in 1994 was inspected in preparation for installation in
Wal-Mart Supercenters.  Calculators not suitable for installation costing
$132,000 were written off.

     Selling expense decreased approximately $92,300 (74%) in 1995 as compared
to the same period in 1994.  This was primarily due to reductions during 1995 in
sales department payroll, payroll related expenses, marketing materials costs
and travel expense.

     General and administrative expenses increased $360,700 (68%) in 1995 as
compared to the same period in 1994.  During 1995, payroll and payroll related
expenses increased $73,500 as the Company began to increase administrative and
operations staff and their salaries to enable it to handle the increased work
load required from the Wal-Mart Supercenter contract. In June, 1995 officer
bonuses amounting to $187,500 were paid by issuing common stock and in December
$100,000 of additional officer bonuses were accrued.  Expenses related to broker
and analyst meetings increased $21,800 over 1994.  Also, investment banking fees
of $8,500 were incurred for financial consulting during the first quarter of
1995.  Reductions amounting to $38,900 occurred in insurance, legal and audit
fees, and occupancy costs while other miscellaneous expenses increased $8,300.

     Litigation expense in the amount of $636,300 was incurred during 1995 which
consisted of legal expenses and amounts due to investors who provided funding to
process the lawsuit against Wal-Mart.  See "--Financial Condition and Liquidity"
below.

     Interest expenses increased approximately $195,100 (63%) in 1995 as
compared to 1994 due primarily to high levels of borrowing and higher interest
rates. Also during 1995, interest has been accrued on certain past due accounts
payable and accrued preferred stock dividends.

FINANCIAL CONDITION AND LIQUIDITY
---------------------------------

     During the first quarter of 1995, the Company completed an offering of
promissory notes and warrants for an aggregate consideration of $200,000 which
was used to pay the expenses of the lawsuit against Wal-Mart and certain
operating expenses incurred during the period that the lawsuit was pending.  The
offering involved the issuance by the Company of (a) a total of 500,000
warrants, each of which, upon exercise, entitled the holder to acquire one share
of the Company's Common Stock at a price of $.20 per share, and were exercisable
within 24 months from the date of issuance; (b) rights to receive amounts equal
to a total of 10% of the net recovery from the Wal-Mart lawsuit described
elsewhere herein; and (c) promissory notes of the Company in an aggregate
principal amount of $200,000 and bearing interest at the rate of 10% per annum
due on or before 20 days after the final resolution, by settlement, final
judgment or otherwise, of the Wal-Mart litigation.  On November 30, 1995,
investors holding warrants to purchase 425,000 shares of Common Stock exercised
such warrants by converting promissory notes in the principal amount of $85,000
to acquire the shares.  At the same date, new promissory notes totaling $130,808
(representing $115,000 principal and $15,808 accrued interest on the original
notes) were issued.  These notes mature on June 30, 1997.

     During the second quarter of 1995, the Company issued 200,000 shares of
Common Stock as a partial settlement of a past due account. As a result of this
transaction, accounts payable and accrued interest were reduced by $75,000 and
$14,800 respectively.

                                      -11-
<PAGE>
 
     The Company entered into separate agreements with Wal-Mart in July 1993 and
June 1994 which provided for the installation of the Company's calculators in
certain Wal-Mart stores. The July 1993 and June 1994 contracts were never
implemented and on January 18, 1995, the Company filed a suit against Wal-Mart
for the alleged breach of the terms of those contracts.

     On September 1, 1995 the Company and Wal-Mart entered into a new contract
and the Company dismissed the lawsuit.  Under the terms of the new four-year
contract, the Company is required to install the Shoppers Calculators in all of
Wal-Mart's Supercenters in the continental United States, and Wal-Mart is to
sell the advertising for the calculators during the initial phase of the
contract.  During the term of the contract in which Wal-Mart sells the
advertising, Wal-Mart has agreed to guarantee advertising revenues to the
Company of approximately $23.5 million subject to the Company's obligation to
install and service the Shoppers Calculators during the revenue guaranty period.
At the conclusion of the Wal-Mart sales phase, the Company has the option to
continue the contract through October 6, 1999, by assuming the advertising sales
responsibilities for the program.  Upon conclusion of the contract, the program
is subject to re-evaluation by both parties.

     The present value of the amount payable to the participants in the
Company's private placement (including Messrs. Hood and Young who provided the
initial funding for the lawsuit), who have the right to receive an aggregate of
12% of the net recovery in the Wal-Mart litigation, has been calculated by the
Company to be $498,711 and has been recorded as litigation expense in the
financial statements.

     In compliance with the terms of the new contract, on October 17, 1995, the
Company furnished Wal-Mart with a detailed "operating plan" which projects
advertising revenues, capital costs and operating expenses based on the new
contract.  The purpose of this operating plan was to determine the financial
impact of the new contract to the Company, F&M Bank and creditors.  The
operating plan in its final form covered years 1995, 1996, 1997 and 1998.  The
key assumptions used to develop the operating plan were provided to the Company
by Wal-Mart and were as follows:

                           SUPERCENTER INSTALLATIONS
<TABLE>
<CAPTION>
 
            YEAR                    STORES    SHOPPING CARTS
            ----                    ------    --------------
<S>                                 <C>       <C>
 
            1995                       33          39,600
            1996                      200         240,000
            1997                      100         120,000
            1998                      100         120,000
                                      ---         -------
            Total Installations       433         519,600
                                      ===         =======
</TABLE>

     The Wal-Mart contract provided the Company with additional bank financing,
which has been guaranteed by Wal-Mart, in the amount of $700,000.  The note
evidencing such financing, including $60,270 of accrued interest, was paid in
October 1996.

     On March 6, 1996, the Company completed a restructuring of all past due
bank debt effective as of October 1, 1995.  The $1,800,000 revolving line of
credit, other notes totaling $1,132,622 and accrued interest through September
30, 1995 of $474,034 were combined into a new note in the amount of $3,406,656.
This new loan bears interest at the Chase Manhattan Bank prime rate (8.25% on
December 31, 1996) plus 1%.  The loan has a maturity date of May 31, 1998, with
payment terms tied to the Company's projected revenues under the Wal-Mart
contract.  During the fourth quarter of 1996, cash flow from operations and
proceeds from the Company's warrant redemption were utilized to reduce the
principal amount of the loan by $2,250,000.  Based on current cash flow
projections, the Company anticipates the balance of the loan will be repaid
during the second quarter of 1997.
 

                                      -12-
<PAGE>
 
     The Company's first revenue period under the new contract began on November
6, 1995.  Through December 31, 1996, cumulative revenues received from Wal-Mart
totaled $7,139,959, reducing the guaranteed revenues to be received in future
periods to $16,354,571.  The Company believes the cash flow from the Wal-Mart
contract should allow the Company to meet its anticipated cash requirements for
the foreseeable future, including repayment of all past due obligations.

     During June 1996, certain warrants to purchase up to 60,000 units (each
unit consisting of two shares of Common Stock and one warrant to purchase one
share of Common Stock for $4.80 per share) were exercised.  These unit warrants
were issued in June 1991 to the selling agent in connection with the Company's
initial public offering.  A total of 120,000 shares of Common Stock and warrants
to purchase 60,000 shares of Common Stock at $4.80 per share were issued, with
net proceeds to the Company amounting to $432,000.  The warrants to purchase
60,000 shares of Common Stock, set to expire on December 31, 1996, were extended
to December 31, 1998.

     During August 1996, 50,000 shares of the Company's Series A, 10% Cumulative
Convertible Preferred Stock, including accrued dividends and interest thereon,
were converted into 75,532 shares of the Company's Common Stock at the
conversion rate of $4.00 per share.  As a result of this transaction,
stockholders' equity was increased $102,200.

     On November 22, 1996, the Company completed the redemption of its 600,000
outstanding Common Stock Purchase Warrants that were set to expire on December
31, 1996.  A total of 582,907 Warrants, or 97%, were exercised with gross
proceeds aggregating $2,331,628.  This amount, net of commissions and
registration expenses of approximately $260,000, was committed to repayment of
the Company's bank debt.  From the net proceeds, the Company paid $2,000,000 of
its outstanding bank debt in December 1996.

     The Company's total stockholders' equity as reflected on its balance sheet
at December 31, 1992, fell below the minimum capital and surplus requirements
necessary to maintain the listing of the Common Stock on the Nasdaq Small Cap
Market.  Consequently, the Common Stock was delisted from the Nasdaq system on
April 23, 1993 and from the Boston Stock Exchange on January 14, 1994.  The
Company's securities are traded on the OTC Bulletin Board.  The Company has
submitted an application for its Common Stock to be quoted on the Nasdaq Small
Cap Market.

FORWARD LOOKING STATEMENTS

     Certain statements included in this report which are not historical facts
are forward looking statements, including the information provided with respect
to the projected installations of the Shoppers Calculator(R) in the Supercenters
and the anticipated dates of repayment of the restructured bank debt.  These
forward looking statements are based on current expectations, estimates,
assumptions and beliefs of management; and words such as "expects,"
"anticipates," "intends," "plans," "believes," "estimates" and similar
expressions are intended to identify such forward looking statements.  These
forward looking statements involve risks and uncertainties, including, but not
limited to, the Company's dependence on the Wal-Mart contract, the number and
rate of new Supercenters constructed by Wal-Mart, general economic conditions
and conditions affecting the mass merchandising industry, the availability of
raw materials and manufactured components and the Company's ability to fund the
costs thereof, the Company's ability to adequately install and service the
calculator units as required by the contract, and other factors which may affect
the Company's ability to comply with its obligations under the contract.
Accordingly, actual results may differ materially from those expressed in the
forward looking statements.

                                      -13-
<PAGE>

                                   PART III


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     On January 18, 1995, the Company filed suit against Wal-Mart Stores, Inc.
("Wal-Mart") in the United States District Court for the Western District of
Arkansas stemming from the contractual relationship between the Company and Wal-
Mart with respect to the use of the Shoppers Calculator(R) in certain Wal-Mart
stores.  In order to fund the initial filing of the litigation, Charles H. Hood
and Gary W. Young, each an officer and director of the Company, each loaned the
Company $10,000 for which they received an unsecured promissory note from the
Company payable within 20 days after final resolution of the Wal-Mart
litigation.  In addition, the Company agreed to pay to each of Messrs. Hood and
Young one percent of any recovery (net of legal fees and costs related to the
litigation) received as a result of the Wal-Mart litigation.  The Company and
Wal-Mart entered into a new contract effective as of September 1, 1995, in
settlement of the litigation.  Pursuant to the Company's calculation of the net
recovery to be received from the Wal-Mart contract entered into in settlement of
the litigation, each of Messrs. Hood and Young are entitled to receive
approximately $50,056.

     During the first quarter of 1995, the Company completed a private placement
of notes and warrants for an aggregate consideration of $200,000.  The notes
issued in the offering bear interest at a rate of 10% per annum and principal
and interest on the notes were due and payable on or before 20 days after the
final resolution, by settlement, judgment or otherwise, of the Wal-Mart
litigation.  Each warrant issued entitled the holder thereof to purchase one
share of Common Stock at an exercise price of $0.20 per share at any time within
two years of the date of issuance.  In addition, the Company agreed to pay to
the investors a total of 10% of the net recovery from the Wal-Mart lawsuit or
any settlement thereof.  Investors in the private placement included Messrs.
Hood, Young and Barrett, directors of the Company, and Robert W. Davis and
William S. Atherton, each an owner of more than five percent of a class of the
Company's outstanding securities.  The following table sets forth certain
information with respect to the securities acquired by such purchasers in the
private placement:

<TABLE>
<CAPTION>
                                           NUMBER OF
                                            SHARES        PRINCIPAL      NET
                       AGGREGATE CASH     UNDERLYING       AMOUNT     RECOVERY
NAME                   CONSIDERATION       WARRANTS       OF NOTES    AMOUNT(1)
----                   --------------     ----------      ---------  -----------
 
<S>                    <C>             <C>                <C>        <C>
Chuck H. Hood              $ 5,000           12,500        $ 5,000     $12,514
Gary W. Young                5,000           12,500          5,000      12,514
J. Larre Barrett            20,000           50,000         20,000      50,056
Robert W. Davis             10,000           25,000         10,000      25,028
William S. Atherton         20,000           50,000         20,000      50,056
</TABLE>

______________
(1)  Represents each investor's interest in the net after tax cash flow
     estimated to be received under the Wal-Mart contract which was entered into
     in settlement of the litigation.  The Company has calculated the total net
     after tax cash flow recovery from such contract to equal $5,005,000.

                                      -14-
<PAGE>
 
     On November 30, 1995, Messrs. Barrett, Davis and Atherton exercised their
warrants to purchase the underlying shares of Common Stock in exchange for one-
half of the outstanding principal balance of the notes covered in the private
placement.  At such date, the Company issued replacement notes to Messrs.
Barrett, Davis and Atherton in the amounts of approximately $11,468, $5,835 and
$11,671, respectively, representing the remaining outstanding principal balance
on the original notes and accrued interest on the original notes through such
date.  Principal and interest are due and payable on such notes on or before
June 30, 1997.  In addition, on such date Mr. Hood and Mr. Young exchanged the
notes purchased in the offering for new notes each in the principal amount of
$5,347 (representing the outstanding principal balance of the original notes and
accrued interest thereon through such date), which notes mature as to principal
and interest on June 30, 1997.

 

                                      -15-
<PAGE>
 
                                  SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this amendment to the Company's annual report for the year ended December
31, 1996 to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                 ADDVANTAGE MEDIA GROUP, INC.


Date:  October 24, 1997        By:   /s/  Gary W. Young
                                    --------------------------------------------
                                    Gary W. Young, Executive Vice President--
                                    Finance and Administration and Treasurer