Market Overview - The third quarter of 2025 was characterized by exuberant markets and rising speculation, with major U.S. equity indices reaching new highs despite stretched valuations [2][3] - The enthusiasm surrounding artificial intelligence (AI) and cryptocurrencies significantly influenced risk assets, leading to concerns about potential bubble-like conditions [2][3][4] - AI-related companies saw rapid valuation increases as investors anticipated AI's transformative potential across various industries [3][4] AI and Cryptocurrency Trends - AI-linked companies propelled the S&P 500 and Nasdaq to all-time highs, reflecting a strong investor appetite for AI-related investments [3] - Bitcoin surpassed the $100,000 mark and approached $120,000 by late Q3, contributing to a broader crypto market valuation of approximately $3.9 trillion [5] - The rapid inflows into crypto markets exemplify speculative behavior, raising concerns about volatility and the potential for sudden reversals [5][6] Investment Strategy - The company emphasizes a disciplined investment approach, focusing on genuine innovation while being cautious of extreme market pricing [2][6] - Historical precedents, such as the late-1990s tech boom, highlight the risks associated with "priced for perfection" scenarios, particularly in AI-related stocks [4][6] - The company aims to separate durable economic fundamentals from speculative narratives, maintaining a balanced stance amid market hype [6] Corning's Position - Corning has benefited from increased demand for fiber optics driven by AI, with its stock rising approximately 75% year-to-date [7] - The company is compared to its past during the dot-com boom, where it experienced extraordinary demand and soaring valuations, raising caution about current market conditions [8][9] - Corning's current valuation is near 36x earnings, which, while not at 2000 extremes, still raises concerns about sustainability given historical returns on equity [13] Portfolio Adjustments - The company exited positions in Donnelley Financial, Lazard, and Capstone Copper, while initiating a new holding in Topgolf Callaway Brands [19] - The decision to exit Donnelley Financial was based on concerns over market share loss to competitors, while Lazard's stock approached fair value [20][22] - Topgolf Callaway Brands was initiated due to its straightforward business model and potential for value realization through a possible sale [24][29]

[Report Highlights](index=1&type=section&id=Report%20Highlights) This section provides a concise overview of Optical Cable Corporation's key financial achievements for the third quarter and first nine months of fiscal year 2025 [Third Quarter 2025 Key Financial Highlights](index=1&type=section&id=Third%20Quarter%202025%20Key%20Financial%20Highlights) Optical Cable Corporation (OCC) reported substantial year-over-year growth in net sales and gross profit for the third quarter of fiscal year 2025, with net sales increasing 22.8% and gross profit increasing 61.2% - OCC reported substantial year-over-year growth in net sales and gross profit for both the third quarter and the first nine months of fiscal year 2025[2](index=2&type=chunk) Q3 FY2025 Key Financial Highlights (YoY) | Metric | Q3 FY2025 | Q3 FY2024 | Change (%) | | :----- | :-------- | :-------- | :--------- | | Net Sales | $19.9M | $16.2M | +22.8% | | Gross Profit | $6.3M | $3.9M | +61.2% | - The company experienced an increase in net sales in both its enterprise and specialty markets, and continues to see general market improvement, including strengthening in military and severe duty markets[3](index=3&type=chunk) [Detailed Financial Results](index=1&type=section&id=Detailed%20Financial%20Results) This section presents a comprehensive analysis of OCC's financial performance for the third quarter and year-to-date fiscal year 2025, covering sales, profit, and expenses [Third Quarter 2025 Performance](index=1&type=section&id=Third%20Quarter%202025%20Performance) OCC demonstrated strong financial performance in Q3 FY2025, marked by significant year-over-year and sequential growth in net sales and gross profit, leading to a return to net income [Net Sales Analysis](index=1&type=section&id=net-sales-analysis-q3) This subsection details OCC's net sales performance for Q3 FY2025, including year-over-year and sequential growth, and geographic contributions Net Sales Performance (Q3 FY2025) | Metric | Q3 FY2025 | Q3 FY2024 | Change (%) | | :----- | :-------- | :-------- | :--------- | | Net Sales (YoY) | $19.9M | $16.2M | +22.8% | | Net Sales (Sequential) | $19.9M | $17.5M (Q2 FY2025) | +13.5% | Geographic Net Sales Growth (Q3 FY2025 YoY) | Region | Change (%) | | :----- | :--------- | | United States | +22.0% | | Outside US | +26.2% | - Sales order backlog/forward load was **$7.1 million** at the end of Q3 FY2025, compared to $7.2 million as of April 30, 2025, $6.6 million as of January 31, 2025, and $5.7 million as of October 31, 2024[5](index=5&type=chunk) [Gross Profit and Margin](index=2&type=section&id=gross-profit-and-margin-q3) This subsection analyzes OCC's gross profit and margin for Q3 FY2025, highlighting year-over-year and sequential changes and contributing factors Gross Profit Performance (Q3 FY2025) | Metric | Q3 FY2025 | Q3 FY2024 | Change ($) | Change (%) | | :----- | :-------- | :-------- | :--------- | :--------- | | Gross Profit (YoY) | $6.3M | $3.9M | +$2.4M | +61.2% | | Gross Profit (Sequential) | $6.3M | $5.3M (Q2 FY2025) | +$1.0M | +18.5% | Gross Profit Margin (Q3 FY2025) | Metric | Q3 FY2025 | Q3 FY2024 | Q2 FY2025 | | :----- | :-------- | :-------- | :-------- | | Margin | 31.7% | 24.2% | 30.4% | - Gross profit benefited from production efficiencies driven by increased volumes and the positive impact of OCC's operating leverage[6](index=6&type=chunk) [Operating Expenses and Profitability](index=2&type=section&id=operating-expenses-and-profitability-q3) This subsection examines OCC's operating expenses and overall profitability for Q3 FY2025, including SG&A and net income/loss - SG&A expenses increased **9.5% to $5.7 million** in Q3 FY2025 (from $5.2 million in Q3 FY2024), primarily due to increases in employee and contracted sales personnel-related costs and shipping costs associated with net sales growth[8](index=8&type=chunk) Net Income (Loss) and EPS (Q3 FY2025 YoY) | Metric | Q3 FY2025 | Q3 FY2024 | | :----- | :-------- | :-------- | | Net Income (Loss) | $302,000 | ($1.6M) | | Basic & Diluted EPS | $0.04 | ($0.20) | [Fiscal Year-to-Date 2025 Performance](index=2&type=section&id=Fiscal%20Year-to-Date%202025%20Performance) For the first nine months of fiscal year 2025, OCC achieved significant year-over-year growth in net sales and gross profit, leading to a substantial reduction in net loss compared to the prior year [Net Sales Analysis (YTD)](index=2&type=section&id=net-sales-analysis-ytd) This subsection details OCC's net sales performance for the first nine months of FY2025, including year-over-year growth and market impacts Net Sales Performance (9M FY2025 YoY) | Metric | 9M FY2025 | 9M FY2024 | Change (%) | | :----- | :-------- | :-------- | :--------- | | Net Sales | $53.2M | $47.2M | +12.8% | Geographic Net Sales Growth (9M FY2025 YoY) | Region | Change (%) | | :----- | :--------- | | United States | +9.8% | | Outside US | +24.9% | - Net sales were positively impacted by general market improvements, including particular strength in OCC's military and severe duty markets[11](index=11&type=chunk) [Gross Profit and Margin (YTD)](index=2&type=section&id=gross-profit-and-margin-ytd) This subsection analyzes OCC's gross profit and margin for the first nine months of FY2025, highlighting year-over-year changes Gross Profit Performance (9M FY2025 YoY) | Metric | 9M FY2025 | 9M FY2024 | Change (%) | | :----- | :-------- | :-------- | :--------- | | Gross Profit | $16.3M | $11.7M | +39.5% | Gross Profit Margin (9M FY2025 YoY) | Metric | 9M FY2025 | 9M FY2024 | | :----- | :-------- | :-------- | | Margin | 30.6% | 24.7% | [Operating Expenses and Profitability (YTD)](index=3&type=section&id=operating-expenses-and-profitability-ytd) This subsection examines OCC's operating expenses and overall profitability for the first nine months of FY2025, including SG&A and net loss - SG&A expenses increased **8.2% to $16.9 million** in 9M FY2025 (from $15.7 million in 9M FY2024), primarily due to increases in employee and contracted sales personnel-related costs and shipping costs[13](index=13&type=chunk) Net Loss and EPS (9M FY2025 YoY) | Metric | 9M FY2025 | 9M FY2024 | | :----- | :-------- | :-------- | | Net Loss | ($1.5M) | ($4.6M) | | Basic & Diluted EPS | ($0.19) | ($0.59) | [Strategic Initiatives](index=3&type=section&id=Strategic%20Initiatives) This section outlines OCC's recent strategic actions, including a key collaboration agreement and associated investment aimed at expanding market reach [Strategic Collaboration and Investment](index=3&type=section&id=Strategic%20Collaboration%20and%20Investment) OCC announced a strategic collaboration agreement with Lightera, LLC to expand product offerings and solutions in the enterprise and data center sectors, which included Lightera making an investment in OCC - On July 7, 2025, OCC and Lightera, LLC announced a strategic collaboration agreement to expand product offerings and solutions to the enterprise sector, the data center sector, as well as an expanded presence in other sectors[15](index=15&type=chunk) - The collaboration involves combining portions of product portfolios to deliver additional integrated cabling and connectivity solution offerings, including certain Lightera products being offered and sold by OCC[15](index=15&type=chunk) - Lightera made an investment in OCC, purchasing shares of common stock and holding **7.24%** of the Company's outstanding shares[16](index=16&type=chunk) [Management Outlook](index=3&type=section&id=Management%20Outlook) This section provides insights from OCC's CEO regarding the company's recent performance, operational leverage, and future growth prospects [CEO's Commentary](index=3&type=section&id=CEO%27s%20Commentary) Neil Wilkin, President and CEO, highlighted Q3 as a strong quarter with significant net sales growth and gross profit expansion, driven by increased demand and operating leverage. He expressed confidence in the company's long-term growth strategy and anticipated further opportunities from the Lightera collaboration - OCC delivered significant net sales growth and gross profit expansion during both the third quarter and first nine months, capturing additional opportunities as demand increased[17](index=17&type=chunk) - The company saw benefits of significant operating leverage, with a **22.8% year-over-year increase in net sales** driving **61.2% gross profit growth**[17](index=17&type=chunk) - Management anticipates the strategic collaboration with Lightera will provide additional growth opportunities and is confident in OCC's market positioning to capture growth and create shareholder value[17](index=17&type=chunk) [Corporate Information](index=4&type=section&id=Corporate%20Information) This section provides essential background on Optical Cable Corporation, including its business scope, innovative technologies, and a disclaimer on forward-looking statements [Company Profile](index=4&type=section&id=Company%20Profile) Optical Cable Corporation (OCC) is a leading manufacturer of fiber optic and copper data communication cabling and connectivity solutions, serving enterprise, harsh environment, specialty, and wireless carrier markets, recognized for pioneering innovative technologies - OCC is a leading manufacturer of a broad range of fiber optic and copper data communication cabling and connectivity solutions primarily for the enterprise market and various harsh environment and specialty markets, and also the wireless carrier market[19](index=19&type=chunk) - The company is internationally recognized for pioneering innovative fiber optic and copper communications technologies, offering integrated suites of high-quality products[19](index=19&type=chunk)[20](index=20&type=chunk) - OCC's solutions cover a broad range of applications including commercial, enterprise network, datacenter, residential, campus installations, and customized products for military, industrial, mining, petrochemical, broadcast, and wireless carrier markets[21](index=21&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section serves as a disclaimer regarding forward-looking information, highlighting inherent risks and uncertainties that could cause actual results to differ materially from expectations, and states that the company disclaims any obligation to update such information - The news release may contain forward-looking information concerning the company's outlook, beliefs, future plans, strategies, and anticipated events[24](index=24&type=chunk) - Such information is subject to known and unknown variables, uncertainties, contingencies, and risks that may cause actual events or results to differ materially from expectations[24](index=24&type=chunk) - The Company expressly disclaims any obligation to update this information, whether as a result of new information, future events or otherwise, except as required by applicable laws and regulations[24](index=24&type=chunk) [Financial Tables](index=5&type=section&id=Financial%20Tables) This section presents the unaudited condensed consolidated financial statements, including statements of operations and balance sheet data for specified periods [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This table presents the unaudited condensed consolidated statements of operations for the three and nine months ended July 31, 2025, and 2024, detailing revenue, costs, expenses, and net income/loss Condensed Consolidated Statements of Operations (Q3 and 9M FY2025, in thousands) | | Three Months Ended | | | Nine Months Ended | | | :--- | :--- | :--- | :--- | :--- | :--- | | | July 31, 2025 | July 31, 2024 | July 31, 2025 | July 31, 2024 | | Net sales | $19,917 | $16,222 | $53,209 | $47,188 | | Cost of goods sold | 13,598 | 12,302 | 36,929 | 35,516 | | Gross profit | 6,319 | 3,920 | 16,280 | 11,672 | | SG&A expenses | 5,737 | 5,237 | 16,939 | 15,650 | | Royalty expense, net | 7 | 7 | 20 | 20 | | Amortization of intangible assets | 13 | 13 | 40 | 40 | | Income (loss) from operations | 562 | (1,337) | (719) | (4,038) | | Interest expense, net | (260) | (301) | (772) | (881) | | Gain on insurance proceeds, net | — | 90 | — | 309 | | Other, net | 4 | (2) | 19 | 47 | | Other income (expense), net | (256) | (213) | (753) | (525) | | Income (loss) before income taxes | 306 | (1,550) | (1,472) | (4,563) | | Income tax expense | 4 | 7 | 31 | 21 | | Net income (loss) | $302 | $(1,557) | $(1,503) | $(4,584) | | Net income (loss) per share: | | | | | | Basic and diluted | $0.04 | $(0.20) | $(0.19) | $(0.59) | | Weighted average shares outstanding: | | | | | | Basic and diluted | 8,395 | 7,739 | 7,901 | 7,753 | [Condensed Consolidated Balance Sheet Data](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheet%20Data) This table provides unaudited condensed consolidated balance sheet data as of July 31, 2025, and October 31, 2024, detailing assets, liabilities, and shareholders' equity Condensed Consolidated Balance Sheet Data (July 31, 2025 vs. October 31, 2024, in thousands) | | July 31, 2025 | October 31, 2024 | | :--- | :--- | :--- | | Cash | $421 | $244 | | Trade accounts receivable, net | 11,078 | 10,946 | | Inventories | 18,697 | 18,725 | | Other current assets | 492 | 685 | | Total current assets | 30,688 | 30,600 | | Non-current assets | 9,480 | 9,758 | | Total assets | $40,168 | $40,358 | | Current liabilities | $16,959 | $15,144 | | Non-current liabilities | 1,777 | 4,372 | | Total liabilities | 18,736 | 19,516 | | Redeemable common stock | 3,202 | — | | Total shareholders' equity | 18,230 | 20,842 | | Total liabilities, redeemable common stock and shareholders' equity | $40,168 | $40,358 | [Investor Relations](index=3&type=section&id=Investor%20Relations) This section provides details for investors regarding the company's conference call to discuss financial results and access information [Conference Call Details](index=3&type=section&id=Conference%20Call%20Details) This section provides information for the conference call to discuss the third quarter fiscal year 2025 financial results, including access details and replay options - OCC hosted a conference call on September 11, 2025, at 4:15 p.m. Eastern Time[18](index=18&type=chunk) - Participants could join by calling (800) 274-8461 (U.S.) or (203) 518-9814 (internationally), using Conference ID: OCCQ325[18](index=18&type=chunk) - A replay was available through September 18, 2025, by dialing (800) 934-8233 or (402) 220-6991, and the call was also broadcast live over the internet via www.occfiber.com[18](index=18&type=chunk)

Financial Data and Key Metrics Changes - Net sales increased by 22.8% in Q3 FY2025 to $19.9 million compared to $16.2 million in Q3 FY2024, and increased by 12.8% to $53.2 million for the first nine months of FY2025 compared to $47.2 million in the same period last year [5][8] - Gross profit rose by 61.2% to $6.3 million in Q3 FY2025 from $3.9 million in Q3 FY2024, with gross profit margin increasing to 31.7% from 24.2% [9][10] - Net income for Q3 FY2025 was $302,000 or $0.04 per share, compared to a net loss of $1.6 million or $0.20 per share in Q3 FY2024 [11][12] Business Line Data and Key Metrics Changes - Sales increases were noted in both enterprise and specialty markets, contributing to overall net sales growth [8][9] - SG&A expenses increased to $5.7 million in Q3 FY2025, but as a percentage of net sales, it decreased to 28.8% from 32.3% in the prior year [10][11] Market Data and Key Metrics Changes - The sales order backlog at the end of Q3 FY2025 was $7.1 million, slightly down from $7.2 million at the end of Q2 FY2025, but still higher than previous fiscal periods [9][20] Company Strategy and Development Direction - The company entered a strategic collaboration with Laterra to expand product offerings in the enterprise and data center sectors, with Laterra holding a 7.24% stake in OCC [6][27] - The focus remains on disciplined execution and capitalizing on growth opportunities to drive shareholder value [6][7] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in the industry and strength in targeted markets, particularly in data centers [41][42] - The company is not currently planning significant investments in extra capacity but is filling open positions to meet anticipated demand [24][25] Other Important Information - The gross profit margin is heavily influenced by product mix and operating leverage, which has improved due to higher sales volumes [10][49] - The company is in the process of improving its website to better showcase its data center products [59] Q&A Session Summary Question: What is driving growth in the U.S. market? - Management noted that growth is due to a recovery from previous downturns and a strong market position, with growth seen in both enterprise and specialty markets [39][40] Question: What factors contribute to the optimism for the next fiscal year? - Optimism stems from the recovery in the industry, strength in specialty markets, and the new collaboration with Laterra [41][42] Question: How does the decrease in backlog affect expectations for Q4? - Management described the decrease in backlog as minimal and related to timing rather than indicative of weaker demand [20][21] Question: What is driving the increase in gross margin? - Gross margin improvements are attributed to product mix and operating leverage as sales increase [49][50] Question: Will the collaboration with Laterra drive more production volume? - The collaboration is expected to create more demand and production volume, with current capacity utilization around 50% [53][54]

Financial Data and Key Metrics Changes - Net sales increased by 22.8% in Q3 FY2025 to $19.9 million compared to $16.2 million in Q3 FY2024, and increased by 12.8% to $53.2 million for the first nine months of FY2025 compared to $47.2 million in the same period last year [5][8] - Gross profit rose by 61.2% to $6.3 million in Q3 FY2025 from $3.9 million in Q3 FY2024, with gross profit margin increasing to 31.7% from 24.2% [9][10] - Net income for Q3 FY2025 was $302,000 or $0.04 per share, compared to a net loss of $1.6 million or $0.20 per share in Q3 FY2024 [11] Business Line Data and Key Metrics Changes - Sales increases were noted in both enterprise and specialty markets, contributing to overall net sales growth [8][9] - SG&A expenses increased to $5.7 million in Q3 FY2025, but as a percentage of net sales, it decreased to 28.8% from 32.3% in the prior year [10][11] Market Data and Key Metrics Changes - The sales order backlog at the end of Q3 FY2025 was $7.1 million, slightly down from $7.2 million at the end of Q2 FY2025, indicating a leveling off rather than a significant decrease [9][20] Company Strategy and Development Direction - The company entered a strategic collaboration with Lightera to expand product offerings in the enterprise and data center sectors, with Lightera holding a 7.24% stake in OCC [6][28] - The focus remains on disciplined execution and capitalizing on growth opportunities to drive shareholder value [7] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in the industry and strength in targeted markets, particularly in data centers [41] - The company is not currently planning significant investments in additional capacity but is filling open positions to meet anticipated demand [24][25] Other Important Information - The gross profit margin is heavily influenced by product mix and operating leverage, which has improved due to higher sales volumes [10][49] - The company is in the process of improving its website to better promote its data center products [59] Q&A Session Summary Question: Can you comment on what you are seeing in your traditional markets? - Management noted strength in targeted markets, benefiting from a strong market position reflected in top-line results [15] Question: Can you comment on the impact of AI? - AI is positively impacting the industry, particularly in hyperscale data centers, although OCC's products are more suited for tier two and tier three data centers [17] Question: Does the decline in backlog indicate weaker demand? - Management described the backlog decline as minimal and not indicative of weaker demand, with strength still observed in target markets [20][21] Question: Why was the gross margin lower despite higher sales? - The gross profit margin varies based on product mix, which impacted the comparison between quarters [22][23] Question: Will Lightera's collaboration drive more volume? - The collaboration is expected to create more production volume, with current capacity utilization around 50% [53][54]

Financial Data and Key Metrics Changes - Net sales increased by 22.8% in Q3 2025 to $19.9 million compared to $16.2 million in Q3 2024, and increased by 12.8% to $53.2 million for the first nine months of fiscal 2025 compared to $47.2 million in the same period last year [6][9] - Gross profit rose by 61.2% to $6.3 million in Q3 2025 from $3.9 million in Q3 2024, with gross profit margin increasing to 31.7% from 24.2% [10][11] - The company recorded net income of $302,000 or $0.04 per share in Q3 2025, compared to a net loss of $1.6 million or $0.20 per share in Q3 2024 [12][13] Business Line Data and Key Metrics Changes - Sales increases were noted in both enterprise and specialty markets, contributing to the overall growth in net sales [9][40] - SG&A expenses increased to $5.7 million in Q3 2025, but as a percentage of net sales, it decreased to 28.8% from 32.3% in the prior year [11][12] Market Data and Key Metrics Changes - The sales order backlog at the end of Q3 2025 was $7.1 million, slightly down from $7.2 million in Q2 2025, but higher than previous quarters [10][21] - The company is experiencing broad growth across both U.S. and international markets [40] Company Strategy and Development Direction - The company entered a strategic collaboration with Laterra to expand product offerings in the enterprise and data center sectors, with Laterra holding a 7.24% stake in OCC [7][28] - The focus remains on disciplined execution and capitalizing on growth opportunities to drive shareholder value [7] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in the industry and the strength in targeted markets, despite not being directly involved in hyperscale data centers [42][44] - The company is not currently planning significant investments in additional capacity but is filling open positions to meet anticipated demand [25][56] Other Important Information - The gross profit margin is heavily influenced by product mix and operating leverage, which has improved due to higher sales volumes [11][52] - The company is in the process of improving its website to better showcase its data center products [61] Q&A Session Summary Question: Can you comment on what you're seeing in your traditional markets? - Management noted strength in targeted markets, benefiting from a strong market position reflected in top-line results [15] Question: Can you comment on the impact of AI? - AI is positively impacting the industry, particularly in the growth of hyperscale data centers, although OCC's products are more suited for tier two and tier three data centers [16][18] Question: Does the decline in backlog indicate weaker demand? - Management described the decrease in backlog as minimal and not indicative of weaker demand, attributing it to timing of shipments [20][22] Question: Why was the gross margin lower despite higher sales? - The gross profit margin varies based on product mix, which impacted the comparison between quarters [23] Question: Will you need to increase capacity? - The company believes it has sufficient capacity to meet anticipated demand without significant new investments [25] Question: Is the current OpEx level sustainable? - Management indicated that operating expenses should be sustainable at current and higher sales levels due to operating leverage [26] Question: How will Laterra add value to OCC? - The collaboration is expected to expand product offerings and solutions, benefiting both companies [29] Question: What is the typical ticket size for tier two or tier three data centers? - Management did not provide specific forecasts but noted that opportunities vary widely [33] Question: Will Laterra invest in sales and marketing for the partnership? - Laterra has begun marketing efforts, including participation in trade shows, but specific strategies were not disclosed [30][31] Question: How is the collaboration with Laterra expected to drive production volume? - The collaboration is anticipated to create more production volume, leveraging OCC's existing capacity [55]

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q%20Filing%20Information) [Registrant Information](index=1&type=section&id=Registrant%20Information) This section details Optical Cable Corporation's official registrant information, including address, telephone, and commission file number - Registrant's exact name: **OPTICAL CABLE CORPORATION**[3](index=3&type=chunk) - Commission file number: **0-27022**[3](index=3&type=chunk) - Principal executive offices: **5290 Concourse Drive, Roanoke, Virginia 24019**[3](index=3&type=chunk) [Filing Status](index=1&type=section&id=Filing%20Status) This section confirms the company's compliance with SEC filing requirements and its classification as a non-accelerated filer and smaller reporting company - The registrant has filed all required reports under Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and has been subject to such filing requirements for the past 90 days[5](index=5&type=chunk) - The registrant has submitted electronically every Interactive Data File required by Rule 405 of Regulation S-T during the preceding 12 months[5](index=5&type=chunk) - The registrant is classified as a **Non-accelerated Filer** and a **Smaller Reporting Company**[5](index=5&type=chunk) - As of September 3, 2025, **8,870,444** shares of Common Stock, no par value, were outstanding[5](index=5&type=chunk) [Table of Contents](index=3&type=section&id=Table%20of%20Contents) [Form 10-Q Index](index=3&type=section&id=Form%2010-Q%20Index) This section provides an index to the various parts and items included in the Form 10-Q, outlining the structure of financial information and other disclosures - The index lists Part I (Financial Information) including Item 1 (Financial Statements), Item 2 (Management's Discussion and Analysis), and Item 4 (Controls and Procedures)[7](index=7&type=chunk) - Part II (Other Information) includes Item 6 (Exhibits) and the Signatures[7](index=7&type=chunk) [PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements of Optical Cable Corporation for the periods ended July 31, 2025, and October 31, 2024, along with accompanying notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheets present the company's financial position, showing slight decreases in total assets and liabilities, and a notable decline in shareholders' equity due to net loss and redeemable common stock issuance | Metric | July 31, 2025 ($) | October 31, 2024 ($) | Change ($) | Change (%) | | :-------------------------------- | :------------ | :--------------- | :----- | :--------- | | Total Assets | 40,167,958 | 40,358,011 | -190,053 | -0.47% | | Total Liabilities | 18,735,906 | 19,516,095 | -780,189 | -4.00% | | Total Shareholders' Equity | 18,229,727 | 20,841,916 | -2,612,189 | -12.53% | | Redeemable Common Stock | 3,202,325 | 0 | 3,202,325 | N/A | - Current installments of long-term debt significantly increased from **$57,184** at October 31, 2024, to **$2,585,094** at July 31, 2025, primarily due to the reclassification of the Virginia Real Estate Loan[10](index=10&type=chunk)[34](index=34&type=chunk) - Note payable, revolver - current decreased from **$8,321,782** to **$6,465,321**, reflecting net repayments on the Revolver[10](index=10&type=chunk)[156](index=156&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The statements of operations show a significant improvement in profitability for both the three-month and nine-month periods ended July 31, 2025, driven by increased net sales and gross profit margins | Metric | 3 Months Ended July 31, 2025 ($) | 3 Months Ended July 31, 2024 ($) | Change (YoY) ($) | Change (YoY %) | | :-------------------------------- | :--------------------------- | :--------------------------- | :----------- | :------------- | | Net sales | 19,916,919 | 16,221,671 | 3,695,248 | 22.78% | | Gross profit | 6,319,311 | 3,920,224 | 2,399,087 | 61.19% | | Income (loss) from operations | 562,474 | (1,337,553) | 1,900,027 | 142.06% | | Net income (loss) | 301,886 | (1,557,053) | 1,858,939 | 119.39% | | Net income (loss) per share: Basic and diluted | 0.04 | (0.20) | 0.24 | 120.00% | | Metric | 9 Months Ended July 31, 2025 ($) | 9 Months Ended July 31, 2024 ($) | Change (YoY) ($) | Change (YoY %) | | :-------------------------------- | :--------------------------- | :--------------------------- | :----------- | :------------- | | Net sales | 53,209,284 | 47,188,534 | 6,020,750 | 12.76% | | Gross profit | 16,280,446 | 11,672,382 | 4,608,064 | 39.48% | | Income (loss) from operations | (719,080) | (4,038,375) | 3,319,295 | 82.20% | | Net income (loss) | (1,503,467) | (4,583,673) | 3,080,206 | 67.20% | | Net income (loss) per share: Basic and diluted | (0.19) | (0.59) | 0.40 | 67.80% | [Condensed Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) The statements detail changes in shareholders' equity, highlighting the impact of net losses, share-based compensation, and the issuance and subsequent increase in redemption value of redeemable common stock | Metric | July 31, 2025 ($) | October 31, 2024 ($) | Change ($) | | :-------------------------- | :------------ | :--------------- | :----- | | Total Shareholders' Equity | 18,229,727 | 20,841,916 | -2,612,189 | | Retained Earnings | 2,579,225 | 5,377,500 | -2,798,275 | | Common Stock Amount | 15,650,502 | 15,464,416 | 186,086 | | Common Stock Shares | 8,228,245 | 8,220,344 | 7,901 | - Net loss for the nine months ended July 31, 2025, was **$1,503,467**, contributing to the decrease in retained earnings[12](index=12&type=chunk)[15](index=15&type=chunk) - Share-based compensation, net, for the nine months ended July 31, 2025, was **$186,086**, increasing common stock amount[15](index=15&type=chunk)[158](index=158&type=chunk) - Issuance costs of redeemable common stock totaled **$92,483**, and the increase to aggregate redemption value of redeemable common stock was **$1,202,325**, both reducing retained earnings[15](index=15&type=chunk)[158](index=158&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The cash flow statements indicate a net increase in cash for the nine months ended July 31, 2025, primarily driven by operating activities, despite cash used in investing and financing activities | Cash Flow Activity | 9 Months Ended July 31, 2025 ($) | 9 Months Ended July 31, 2024 ($) | Change (YoY) ($) | | :-------------------------------- | :--------------------------- | :--------------------------- | :----------- | | Net cash provided by operating activities | 616,745 | 665,046 | -48,301 | | Net cash used in investing activities | (233,586) | (43,227) | -190,359 | | Net cash used in financing activities | (205,992) | (1,293,793) | 1,087,801 | | Net increase (decrease) in cash | 177,167 | (671,974) | 849,141 | | Cash at end of period | 421,414 | 796,735 | -375,321 | - Operating cash flow was positively impacted by depreciation and amortization (**$608,001**) and share-based compensation expense (**$293,399**) in 2025[18](index=18&type=chunk)[163](index=163&type=chunk) - Investing activities in 2025 primarily involved purchases of property and equipment (**$217,048**)[18](index=18&type=chunk)[165](index=165&type=chunk) - Financing activities in 2025 included the issuance of redeemable common stock (**$1,907,517**) and net repayments on the revolver (**$1,856,461**)[18](index=18&type=chunk)[166](index=166&type=chunk) [Condensed Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Condensed%20Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide additional information and disclosures to the condensed consolidated financial statements, covering accounting policies, specific financial line items, and recent corporate activities [(1) General](index=8&type=section&id=(1)%20General) This note outlines the basis of presentation for the unaudited interim financial statements and highlights various factors that could impact future operating results, such as macroeconomic conditions and supply chain constraints - The financial statements are prepared in accordance with U.S. GAAP for interim financial information and Form 10-Q instructions, and do not include all information required for complete annual statements[20](index=20&type=chunk) - Future results may be impacted by changing macroeconomic conditions, supply chain and labor constraints, market conditions, seasonality, inflation, interest rates, and timing of key customer projects[20](index=20&type=chunk) [(2) Stock Incentive Plan and Other Share‑Based Compensation](index=8&type=section&id=(2)%20Stock%20Incentive%20Plan%20and%20Other%20Share%E2%80%91Based%20Compensation) This note details the company's stock incentive plan, share-based compensation expense, and restricted stock award activity, including grants to non-employee Directors - Approximately **371,000** shares remained available for grant under the 2017 Stock Incentive Plan as of July 31, 2025[21](index=21&type=chunk) | Period | Share-based Compensation Expense ($) | | :-------------------------------- | :------------------------------- | | Three Months Ended July 31, 2025 | 107,101 | | Nine Months Ended July 31, 2025 | 293,399 | | Three Months Ended July 31, 2024 | 78,079 | | Nine Months Ended July 31, 2024 | 328,871 | - During the three months ended July 31, 2025, OCC granted **36,228** restricted stock awards to non-employee Directors with a one-year vesting period[25](index=25&type=chunk) - As of July 31, 2025, the estimated compensation cost related to unvested equity-based awards is approximately **$857,000**, to be recognized over a **3.7-year** weighted-average period[27](index=27&type=chunk) [(3) Allowance for Credit Losses for Trade Accounts Receivable](index=9&type=section&id=(3)%20Allowance%20for%20Credit%20Losses%20for%20Trade%20Accounts%20Receivable) This note summarizes the changes in the allowance for credit losses for trade accounts receivable for the nine-month periods | Metric | 9 Months Ended July 31, 2025 ($) | 9 Months Ended July 31, 2024 ($) | | :-------------------------- | :--------------------------- | :--------------------------- | | Balance at beginning of period | 92,125 | 71,189 | | Bad debt expense (recovery) | 496 | (447) | | Balance at end of period | 92,621 | 70,742 | [(4) Inventories](index=9&type=section&id=(4)%20Inventories) This note provides a breakdown of inventory components as of July 31, 2025, and October 31, 2024 | Inventory Component | July 31, 2025 ($) | October 31, 2024 ($) | | :------------------ | :------------ | :--------------- | | Finished goods | 5,488,480 | 5,098,148 | | Work in process | 4,449,031 | 3,724,999 | | Raw materials | 8,455,917 | 9,562,563 | | Production supplies | 304,006 | 339,607 | | Total | 18,697,434 | 18,725,317 | - Total inventories slightly decreased from **$18,725,317** at October 31, 2024, to **$18,697,434** at July 31, 2025[29](index=29&type=chunk) [(5) Product Warranties](index=9&type=section&id=(5)%20Product%20Warranties) This note details the accrual for estimated product warranty claims and the related expense for the reported periods | Metric | July 31, 2025 ($) | October 31, 2024 ($) | | :-------------------------- | :------------ | :--------------- | | Accrual for estimated product warranty claims | 105,000 | 65,000 | | Period | Warranty Claims Expense ($) | | :-------------------------------- | :---------------------- | | Three Months Ended July 31, 2025 | 53,088 | | Nine Months Ended July 31, 2025 | 85,029 | | Three Months Ended July 31, 2024 | 9,153 | | Nine Months Ended July 31, 2024 | 60,994 | | Warranty Accrual Changes | 9 Months Ended July 31, 2025 ($) | 9 Months Ended July 31, 2024 ($) | | :-------------------------------- | :--------------------------- | :--------------------------- | | Balance at beginning of period | 65,000 | 80,000 | | Liabilities accrued for warranties issued | 109,520 | 84,792 | | Warranty claims and costs paid | (45,029) | (65,994) | | Changes in liability for pre-existing warranties | (24,491) | (23,798) | | Balance at end of period | 105,000 | 75,000 | [(6) Long-term Debt and Notes Payable](index=10&type=section&id=(6)%20Long-term%20Debt%20and%20Notes%20Payable) This note describes the company's credit facilities, including the Virginia Real Estate Loan and the Revolving Credit Master Promissory Note, detailing their terms, balances, and security - The Virginia Real Estate Loan has an outstanding balance of **$2.6 million** as of July 31, 2025, and October 31, 2024, with its maturity date of May 5, 2026, leading to its reclassification as a current liability[34](index=34&type=chunk)[35](index=35&type=chunk) - The Revolver with SLR has a maximum aggregate principal amount of **$18.0 million**, with interest accruing at **1.5%** above the Prime Rate (**9.0%** at July 31, 2025)[37](index=37&type=chunk) | Revolver Metric | July 31, 2025 ($ millions) | October 31, 2024 ($ millions) | | :-------------------------- | :------------ | :--------------- | | Outstanding borrowings | 6.5 | 8.3 | | Available credit | 4.4 | 3.2 | - The Revolver balance is classified as a current liability due to a lockbox arrangement and a 'subjective acceleration clause'[38](index=38&type=chunk) [(7) Leases](index=11&type=section&id=(7)%20Leases) This note provides comprehensive details on the company's operating and finance leases, including lease terms, assets, liabilities, expenses, and future payment obligations - The company has operating leases for office, manufacturing, and warehouse space in Plano, Texas (expiring Nov 2029) and Roanoke, Virginia (expiring Apr 2026), and for office equipment (expiring Nov 2029)[42](index=42&type=chunk)[43](index=43&type=chunk) | Lease Metric | July 31, 2025 ($) | October 31, 2024 ($) | | :-------------------------------- | :------------ | :--------------- | | Operating lease right-of-use assets | 1,795,891 | 1,872,206 | | Operating lease liabilities (current) | 411,273 | 376,965 | | Operating lease liabilities (noncurrent) | 1,444,593 | 1,525,423 | | Finance lease right-of-use assets | 274,770 | 111,844 | | Finance lease liabilities (current) | 72,903 | 39,277 | | Finance lease liabilities (noncurrent) | 176,879 | 54,174 | | Lease Expense/Cash Paid | 3 Months Ended July 31, 2025 ($) | 9 Months Ended July 31, 2025 ($) | 3 Months Ended July 31, 2024 ($) | 9 Months Ended July 31, 2024 ($) | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Operating lease expense | 153,107 | 462,766 | 109,143 | 327,431 | | Cash paid for operating lease liabilities | 147,390 | 432,529 | 112,670 | 335,628 | | Finance lease interest expense | 2,070 | 4,098 | 1,297 | 4,224 | | Finance lease amortization expense | 10,511 | 25,260 | 7,374 | 22,123 | | Cash paid for finance lease principal | 12,449 | 31,854 | 9,419 | 27,927 | | Future Lease Payments | Operating Leases ($) | Finance Leases ($) | | :-------------------------- | :--------------- | :------------- | | Total undiscounted lease payments | 2,263,334 | 290,710 | | Present value discount | (407,468) | (40,928) | | Total lease liability | 1,855,866 | 249,782 | [(8) Fair Value Measurements](index=13&type=section&id=(8)%20Fair%20Value%20Measurements) This note states that the carrying amounts of most financial instruments approximate their fair value due to their short maturity or variable interest rates - Carrying amounts for cash, trade accounts receivable, other receivables, current installments of long-term debt, accounts payable, accrued compensation, and income taxes payable approximate fair value due to short maturity[58](index=58&type=chunk) - The carrying value of the note payable (revolver) and long-term debt approximates fair value because interest rates vary with the market[58](index=58&type=chunk) [(9) Net Income (Loss) Per Share](index=14&type=section&id=(9)%20Net%20Income%20(Loss)%20Per%20Share) This note provides the reconciliation of the numerators and denominators used in calculating basic and diluted net income (loss) per share | Metric | 3 Months Ended July 31, 2025 ($) | 3 Months Ended July 31, 2024 ($) | 9 Months Ended July 31, 2025 ($) | 9 Months Ended July 31, 2024 ($) | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income (loss) (numerator) | 301,886 | (1,557,053) | (1,503,467) | (4,583,673) | | Shares (denominator) | 8,394,988 | 7,739,266 | 7,900,901 | 7,753,148 | | Basic and diluted net income (loss) per share | 0.04 | (0.20) | (0.19) | (0.59) | - Nonvested shares totaling **370,720** as of July 31, 2025, were excluded from EPS computation for the nine months ended July 31, 2025, as their inclusion would have been antidilutive[61](index=61&type=chunk) [(10) Segment Information and Business and Credit Concentrations](index=14&type=section&id=(10)%20Segment%20Information%20and%20Business%20and%20Credit%20Concentrations) This note discusses the company's credit risk management, customer concentration, and confirms that it operates as a single reportable segment - Concentration of credit risk with respect to trade receivables is normally limited due to the company's large number of customers, managed through credit approvals and monitoring[63](index=63&type=chunk) | Period | Consolidated Net Sales Attributable to One Distributor Customer | | :-------------------------------- | :-------------------------------------------------------------- | | Three Months Ended July 31, 2025 | 20.5% | | Nine Months Ended July 31, 2025 | 19.4% | | Three Months Ended July 31, 2024 | 18.7% | | Nine Months Ended July 31, 2024 | 16.9% | - The Company has a single reportable segment for purposes of segment reporting[65](index=65&type=chunk) [(11) Revenue Recognition](index=15&type=section&id=(11)%20Revenue%20Recognition) This note outlines the company's policies for revenue recognition, including when control transfers, payment terms, and the disaggregation of revenue by geographic region - Revenue from product sales is recognized at the point in time when control transfers to the customer, typically upon shipment or delivery from the manufacturing facility[68](index=68&type=chunk)[70](index=70&type=chunk) | Liability Type | July 31, 2025 ($) | October 31, 2024 ($) | | :-------------------------- | :------------ | :--------------- | | Contract liability (advance consideration) | 270,870 | 70,263 | | Refund liability (price adjustments, rebates, returns) | 339,381 | 232,692 | | Geographic Net Sales | 3 Months Ended July 31, 2025 ($) | 3 Months Ended July 31, 2024 ($) | 9 Months Ended July 31, 2025 ($) | 9 Months Ended July 31, 2024 ($) | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | United States | 15,949,437 | 13,077,203 | 41,819,451 | 38,071,069 | | Outside the United States | 3,967,482 | 3,144,468 | 11,389,833 | 9,117,465 | | Total net sales | 19,916,919 | 16,221,671 | 53,209,284 | 47,188,534 | [(12) Issuance of Redeemable Restricted Common Stock](index=16&type=section&id=(12)%20Issuance%20of%20Redeemable%20Restricted%20Common%20Stock) This note details the issuance of redeemable restricted common stock to Lightera, LLC, as part of a strategic collaboration, and the accounting treatment for this instrument - On July 7, 2025, the Company issued **642,199** shares of common stock to Lightera, LLC for **$2.0 million** cash consideration, representing **7.24%** of OCC's outstanding common shares[78](index=78&type=chunk)[107](index=107&type=chunk) - The shares are subject to a Call Option by OCC and a Put Option by Lightera, exercisable after two years (July 7, 2027), with a redemption price based on the greater of issuance price or a 10-day average trading price[78](index=78&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk)[83](index=83&type=chunk) - The common stock is classified as redeemable and recorded outside of permanent equity, with an initial value of **$1,907,517** (net of **$92,483** issuance costs) and a redemption value of **$3.2 million** as of July 31, 2025[86](index=86&type=chunk) - The Call and Put Options were concluded to be embedded derivative instruments, but their fair value was insignificant as the strike price adjusts with the underlying common stock's trading price[87](index=87&type=chunk) [(13) Contingencies](index=18&type=section&id=(13)%20Contingencies) This note addresses the company's involvement in various claims and legal actions, stating management's opinion on their potential impact - Management believes that the ultimate disposition of current claims, legal actions, and regulatory reviews will not have a material adverse effect on the company's financial position, results of operations, or liquidity[88](index=88&type=chunk) [(14) New Accounting Standards Not Yet Adopted](index=18&type=section&id=(14)%20New%20Accounting%20Standards%20Not%20Yet%20Adopted) This note provides an overview of recently issued FASB Accounting Standards Updates (ASUs) that have not yet been adopted by the company and their potential impact - ASU 2023-07 (Segment Reporting), ASU 2023-09 (Income Tax Disclosures), and ASU 2024-03/2025-01 (Expense Disaggregation) are being evaluated for their impact on financial statement disclosures[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk) - ASU 2025-05 (Measurement of Credit Losses for Accounts Receivable) is not expected to have a material impact on the company's financial position, operating results, liquidity, or disclosures[92](index=92&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and liquidity, discussing key trends, operational results, and future outlook [Forward-Looking Information](index=19&type=section&id=Forward-Looking%20Information) This subsection serves as a cautionary statement regarding forward-looking information, outlining numerous variables, uncertainties, contingencies, and risks that could cause actual results to differ materially from expectations - Forward-looking information is subject to known and unknown variables, uncertainties, contingencies, and risks that may cause actual events or results to differ materially from expectations[94](index=94&type=chunk) - Key factors include sales to key customers, timing of projects, economic conditions, competitor actions, raw material price fluctuations, dependence on customized equipment, and ability to protect proprietary technology[94](index=94&type=chunk) - Other risks include market conditions, supply chain issues, labor costs, interest rates, cybersecurity, data privacy laws, and changes in accounting policies or government regulations[94](index=94&type=chunk) [Overview of Optical Cable Corporation](index=21&type=section&id=Overview%20of%20Optical%20Cable%20Corporation) This section provides a general overview of Optical Cable Corporation, detailing its business as a manufacturer of fiber optic and copper data communication solutions, its target markets, product offerings, and operational locations - Optical Cable Corporation (OCC®) is a leading manufacturer of fiber optic and copper data communication cabling and connectivity solutions[99](index=99&type=chunk) - The company primarily serves the enterprise market and various harsh environment and specialty markets (e.g., military, industrial, mining, petrochemical, renewable energy, broadcast), as well as the wireless carrier market[99](index=99&type=chunk) - Product offerings include fiber optic and copper cabling, hybrid cabling, connectors, patch cords, cable assemblies, racks, cabinets, and other management accessories[99](index=99&type=chunk) - OCC's headquarters and manufacturing facilities are located in Roanoke, Virginia; near Asheville, North Carolina; and near Dallas, Texas, with each facility specializing in different product categories[101](index=101&type=chunk) [Summary of Company Performance for Third Quarter of Fiscal Year 2025](index=22&type=section&id=Summary%20of%20Company%20Performance%20for%20Third%20Quarter%20of%20Fiscal%20Year%202025) This section highlights the company's strategic collaboration with Lightera, LLC, and key financial performance metrics for the third quarter of fiscal year 2025, showing significant improvements in sales and profitability - OCC and Lightera, LLC entered into a strategic collaboration agreement on July 7, 2025, to expand product offerings and solutions, particularly for data center and enterprise sectors[106](index=106&type=chunk) - In connection with the collaboration, OCC issued **642,199** redeemable restricted shares of common stock to Lightera for **$2.0 million**, giving Lightera a **7.24%** stake[107](index=107&type=chunk) | Metric | Q3 FY2025 ($ millions) | Q3 FY2024 ($ millions) | Change (YoY) ($ millions) | Change (YoY %) | | :-------------------------------- | :---------- | :---------- | :----------- | :------------- | | Consolidated net sales | 19.9 | 16.2 | 3.7 | 22.8% | | Gross profit | 6.3 | 3.9 | 2.4 | 61.2% | | Gross profit margin | 31.7% | 24.2% | 7.5 pp | N/A | | SG&A expenses | 5.7 | 5.2 | 0.5 | 9.5% | | SG&A as % of net sales | 28.8% | 32.3% | -3.5 pp | N/A | | Net income (loss) | 0.302 | (1.6) | 1.9 | 119.4% | | Net income (loss) per share | 0.04 | (0.20) | 0.24 | 120.0% | [Results of Operations](index=22&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's financial performance for the three and nine months ended July 31, 2025, compared to the prior year periods, explaining the drivers behind changes in sales, profits, and expenses [Three Months Ended July 31, 2025 and 2024](index=23&type=section&id=Three%20Months%20Ended%20July%2031,%202025%20and%202024) For the third quarter of fiscal year 2025, the company reported substantial growth in net sales and gross profit, leading to a return to operating income and net income, driven by market improvements and operating leverage | Metric | Q3 FY2025 ($ millions) | Q3 FY2024 ($ millions) | Change (YoY) ($ millions) | Change (YoY %) | | :-------------------------------- | :---------- | :---------- | :----------- | :------------- | | Net Sales | 19.9 | 16.2 | 3.7 | 22.8% | | Gross Profit | 6.3 | 3.9 | 2.4 | 61.2% | | Gross Profit Margin | 31.7% | 24.2% | 7.5 pp | N/A | | SG&A Expenses | 5.7 | 5.2 | 0.5 | 9.5% | | Income (loss) from operations | 0.562 | (1.3) | 1.9 | 142.0% | | Net Income (loss) | 0.302 | (1.6) | 1.9 | 119.4% | - Net sales increased in both enterprise and specialty markets, with general market improvements and strength in military and severe duty markets[116](index=116&type=chunk) - SG&A expenses increased primarily due to higher employee and contracted sales personnel-related costs (**$304,000**) and shipping costs (**$130,000**), both linked to increased net sales[124](index=124&type=chunk) - The improvement in income from operations was primarily due to the **$2.4 million** increase in gross profit, partially offset by the **$499,000** increase in SG&A expenses[127](index=127&type=chunk) [Nine Months Ended July 31, 2025 and 2024](index=26&type=section&id=Nine%20Months%20Ended%20July%2031,%202025%20and%202024) For the first nine months of fiscal year 2025, the company significantly reduced its operating loss and net loss compared to the prior year, driven by strong net sales growth and improved gross profit margins | Metric | 9 Months FY2025 ($ millions) | 9 Months FY2024 ($ millions) | Change (YoY) ($ millions) | Change (YoY %) | | :-------------------------------- | :-------------- | :-------------- | :----------- | :------------- | | Net Sales | 53.2 | 47.2 | 6.0 | 12.8% | | Gross Profit | 16.3 | 11.7 | 4.6 | 39.5% | | Gross Profit Margin | 30.6% | 24.7% | 5.9 pp | N/A | | SG&A Expenses | 16.9 | 15.7 | 1.2 | 8.2% | | Loss from operations | (0.719) | (4.0) | 3.3 | 82.2% | | Net Loss | (1.5) | (4.6) | 3.1 | 67.2% | - Net sales were positively impacted by general market improvements in the industry overall, as well as specifically in military and severe duty markets[138](index=138&type=chunk) - SG&A expenses increased due to higher employee and contracted sales personnel-related costs (**$643,000**) and shipping costs (**$298,000**), driven by new hires, rate increases, and increased net sales[142](index=142&type=chunk) - The reduction in loss from operations was primarily due to the **$4.6 million** increase in gross profit, partially offset by the **$1.3 million** increase in SG&A expenses[145](index=145&type=chunk) [Financial Condition](index=28&type=section&id=Financial%20Condition) The company's financial condition at July 31, 2025, showed minor changes in total assets and liabilities, but a notable decrease in shareholders' equity primarily due to net loss and the accounting for redeemable common stock | Metric | July 31, 2025 ($ millions) | October 31, 2024 ($ millions) | Change ($ millions) | Change (%) | | :-------------------------- | :------------ | :--------------- | :----- | :--------- | | Total assets | 40.2 | 40.4 | -0.2 | -0.47% | | Total liabilities | 18.7 | 19.5 | -0.8 | -4.00% | | Total shareholders' equity | 18.2 | 20.8 | -2.6 | -12.53% | - The decrease in total liabilities was mainly due to a **$1.9 million** decrease in the Revolver note payable, partially offset by a **$915,000** increase in accounts payable and accrued expenses[156](index=156&type=chunk) - The issuance of **642,199** shares of redeemable restricted common stock for **$2.0 million**, with its aggregate redemption value increasing to **$3.2 million**, significantly impacted the equity structure[157](index=157&type=chunk) - The decrease in total shareholders' equity was primarily driven by a **$1.5 million** net loss, **$92,000** in issuance costs for redeemable stock, and a **$1.2 million** increase in the redeemable stock's aggregate redemption value[158](index=158&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's sources and uses of capital, including cash on hand, operating cash flows, credit facilities, and capital expenditure plans, concluding that current resources are adequate for the next twelve months | Metric | July 31, 2025 ($ thousands) | October 31, 2024 ($ thousands) | Change ($ thousands) | | :-------------------------- | :------------ | :--------------- | :----- | | Cash | 421 | 244 | 177 | | Working capital | 13,700 | 15,500 | -1,800 | | Current ratio | 1.8 to 1.0 | 2.0 to 1.0 | -0.2 | - The decrease in working capital and current ratio was mainly due to the reclassification of **$2.5 million** of the real estate term loan to current liabilities and an increase in accounts payable, partially offset by a decrease in the Revolver balance[161](index=161&type=chunk) | Cash Flow Activity | 9 Months Ended July 31, 2025 ($ thousands) | 9 Months Ended July 31, 2024 ($ thousands) | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | 617 | 665 | | Net cash used in investing activities | (234) | (43) | | Net cash used in financing activities | (206) | (1,300) | - Outstanding Revolver balance was **$6.5 million** at July 31, 2025, with **$4.4 million** in available credit, and the Virginia Real Estate Loan balance was **$2.6 million**[162](index=162&type=chunk)[169](index=169&type=chunk)[175](index=175&type=chunk) - The company estimates **$1.0 million** in capital expenditures for fiscal year 2025, to be funded by working capital, operations, or Revolver borrowings[176](index=176&type=chunk) - Management believes future cash flow from operations, cash on hand, and the existing Revolver will be adequate to fund operations for at least the next twelve months[178](index=178&type=chunk) [Critical Accounting Policies and Estimates](index=31&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section reaffirms that the company's financial statements are prepared in accordance with U.S. GAAP and that no significant accounting policies have changed since the last annual report - Financial statements are prepared in accordance with U.S. GAAP for interim financial information and Form 10-Q instructions, requiring management estimates and assumptions[180](index=180&type=chunk) - No significant accounting policies detailed in the fiscal year 2024 Form 10-K changed during the period from November 1, 2024, through July 31, 2025[181](index=181&type=chunk) [New Accounting Standards](index=32&type=section&id=New%20Accounting%20Standards) This section discusses recently issued FASB Accounting Standards Updates (ASUs) and their potential impact on the company's financial statements, noting that several are currently under evaluation - ASU 2023-07 (Segment Reporting), ASU 2023-09 (Income Tax Disclosures), and ASU 2024-03/2025-01 (Expense Disaggregation) are being evaluated for their impact on financial statement disclosures[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk) - ASU 2025-05 (Measurement of Credit Losses for Accounts Receivable) is not expected to have a material impact on the company's financial position, operating results, liquidity, or disclosures[185](index=185&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms that the company's management, including the CEO and CFO, evaluated the effectiveness of its disclosure controls and procedures, concluding they were effective as of July 31, 2025, with no material changes to internal control over financial reporting - The company maintains disclosure controls and procedures designed to provide reasonable assurance that required information is recorded, processed, summarized, and reported timely[188](index=188&type=chunk) - Management, with CEO and CFO participation, concluded that the company's disclosure controls and procedures were effective as of July 31, 2025[189](index=189&type=chunk) - There were no changes in the company's internal control over financial reporting during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[189](index=189&type=chunk) [PART II. OTHER INFORMATION](index=34&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 6. Exhibits](index=34&type=section&id=Item%206.%20Exhibits) This section provides a comprehensive list of all exhibits filed as part of the Form 10-Q, including corporate governance documents, debt agreements, stock incentive plans, and certifications - Exhibits include Articles of Amendment, Amended and Restated Bylaws, forms of Common Stock certificates, and various loan and security agreements[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk) - Key agreements listed are the Loan and Security Agreement and Revolving Credit Master Promissory Note with North Mill Capital LLC (SLR Business Credit)[193](index=193&type=chunk) - Also included are the Optical Cable Corporation 2017 Stock Incentive Plan and its amendments, employment agreements, and the Stock Purchase Agreement with Lightera, LLC[194](index=194&type=chunk)[195](index=195&type=chunk) - Certifications from the CEO and CFO pursuant to the Sarbanes-Oxley Act of 2002 are filed herewith[195](index=195&type=chunk)[197](index=197&type=chunk) [SIGNATURES](index=39&type=section&id=SIGNATURES) [Signatures](index=39&type=section&id=Signatures) This section contains the official signatures of the registrant's authorized officers, confirming the submission of the Form 10-Q report - The report is signed by Neil D. Wilkin, Jr., Chairman of the Board of Directors, President and Chief Executive Officer, and Tracy G. Smith, Senior Vice President and Chief Financial Officer[201](index=201&type=chunk) - The signing date for the report is September 11, 2025[201](index=201&type=chunk)

Core Viewpoint - Optical Cable Corporation (OCC) reported significant year-over-year growth in net sales and gross profit for the third quarter and first nine months of fiscal year 2025, indicating strong market demand and operational efficiency [1][16]. Financial Performance - Consolidated net sales for Q3 FY2025 increased by 22.8% to $19.9 million, up from $16.2 million in Q3 FY2024 [2]. - Net sales in the U.S. rose by 22.0%, while international sales increased by 26.2% in Q3 FY2025 compared to the same period last year [3]. - Sequentially, net sales grew by 13.5% from $17.5 million in Q2 FY2025 [3]. - For the first nine months of FY2025, net sales increased by 12.8% to $53.2 million, compared to $47.2 million in the same period of FY2024 [9]. Gross Profit and Margins - Gross profit for Q3 FY2025 rose by 61.2% to $6.3 million, compared to $3.9 million in Q3 FY2024, benefiting from production efficiencies [5]. - The gross profit margin increased to 31.7% in Q3 FY2025, up from 24.2% in Q3 FY2024 [6]. Operating Expenses - SG&A expenses increased by 9.5% to $5.7 million in Q3 FY2025, primarily due to higher employee and shipping costs [7]. - For the first nine months of FY2025, SG&A expenses rose by 8.2% to $16.9 million compared to $15.7 million in the same period of FY2024 [12]. Net Income - OCC recorded a net income of $302,000, or $0.04 per share, in Q3 FY2025, a significant improvement from a net loss of $1.6 million, or $0.20 per share, in Q3 FY2024 [8]. - For the first nine months of FY2025, OCC reported a net loss of $1.5 million, or $0.19 per share, compared to a net loss of $4.6 million, or $0.59 per share, in the same period of FY2024 [13]. Strategic Initiatives - OCC announced a strategic collaboration with Lightera, LLC to expand product offerings in the enterprise and data center sectors, with Lightera acquiring a 7.24% stake in OCC [14][15]. Management Commentary - The CEO of OCC highlighted the strong performance in Q3 FY2025, attributing growth to increased demand and operational leverage, and expressed confidence in future growth opportunities through the collaboration with Lightera [16].

Group 1 - The company focuses on two main types of investment situations: deep value stocks that are expected to grow and are underappreciated by the market, and investment trends triggered by significant changes in the world [1] - Understanding change is crucial as it often signifies the beginning of a new trend, and the company conducts detailed research on companies and themes to identify these opportunities [1] - The investment concepts developed can be either micro or macro in nature, with an emphasis on gaining a deeper understanding of situations compared to competitors to assess whether a security is mispriced [1] Group 2 - The company employs a thorough research methodology, including seeking insights from industry experts, former employees, and management to validate investment ideas [1] - The motivation for publishing on platforms like Seeking Alpha includes generating constructive criticism of investment ideas and seeking the truth in a landscape filled with opinions [1] - The company adheres to the principle of radical doubt, believing that the best-performing investment ideas are those where potential flaws in the thesis are understood in detail [1]

Core Insights - Lightera and Optical Cable Corporation (OCC) have entered into a strategic collaboration agreement aimed at expanding product offerings and solutions for the data center and enterprise sectors [1][3] - Lightera has made an investment in OCC, acquiring 7.24% of the company's outstanding shares [4] Company Information - Lightera is recognized as a global leader in optical fiber and connectivity solutions, known for its innovative technologies and high-performance optical fibers [2][6] - OCC is a leading manufacturer of fiber optic and copper cabling solutions, with a strong reputation for innovative technologies and product designs [2][8] - Both companies have a long-standing relationship, having partnered in various capacities over the years, which has now culminated in this strategic collaboration [2][3] Strategic Collaboration Benefits - The collaboration is expected to enhance both companies' ability to offer integrated cabling and connectivity solutions, particularly in the enterprise and data center sectors [3][5] - The partnership aims to leverage the combined product portfolios of OCC and Lightera to meet the growing demands of critical customer segments [3][5] - Management from both companies expressed confidence that this collaboration will accelerate sales growth and create significant value for shareholders [5]

Sales Performance - Consolidated net sales for Q2 FY2025 increased by 8.9% to $17.5 million compared to $16.1 million in Q2 FY2024[2] - Net sales to international customers rose by 27.1%, while domestic sales increased by 4.6% in Q2 FY2025[3] - For the first half of FY2025, net sales totaled $33.3 million, a 7.5% increase from $31.0 million in the first half of FY2024[8] Profitability - Gross profit for Q2 FY2025 increased by 32.1% to $5.3 million, resulting in a gross profit margin of 30.4%[5][6] - Gross profit for the first half of FY2025 was $10.0 million, up 28.5% from $7.8 million in the first half of FY2024[10] Expenses and Losses - SG&A expenses rose to $5.7 million in Q2 FY2025, compared to $5.3 million in Q2 FY2024[7] - The net loss for Q2 FY2025 was $698,000, or $0.09 per share, an improvement from a net loss of $1.6 million, or $0.21 per share, in Q2 FY2024[7] - The company reported a net loss of $1.8 million for the first half of FY2025, compared to a net loss of $3.0 million in the same period last year[12] Future Outlook - The sales order backlog increased to $7.2 million at the end of Q2 FY2025, up from $6.6 million at the end of Q1 FY2025[3] - Management noted positive industry trends and plans to focus on disciplined execution to drive shareholder value in the second half of the year[13]