PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents Optical Cable Corporation's unaudited condensed consolidated financial statements, showing a $1.8 million net loss, increased cash, and decreased shareholders' equity [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of April 30, 2025, shows total assets decreased to $39.1 million, liabilities increased to $20.0 million, and shareholders' equity decreased to $19.1 million Condensed Consolidated Balance Sheet Highlights (as of April 30, 2025 vs. October 31, 2024) | Metric | April 30, 2025 ($) | October 31, 2024 ($) | | :--- | :--- | :--- | | **Total Current Assets** | 29,592,904 | 30,600,240 | | **Total Assets** | 39,073,224 | 40,358,011 | | **Total Current Liabilities** | 15,674,593 | 15,143,512 | | **Total Liabilities** | 19,957,676 | 19,516,095 | | **Total Shareholders' Equity** | 19,115,548 | 20,841,916 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 net sales increased to $17.5 million with net loss narrowing to $0.7 million; H1 net sales grew to $33.3 million with net loss decreasing to $1.8 million Key Performance Indicators - Three Months Ended April 30 | Metric | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | Net Sales | 17,549,748 | 16,112,098 | | Gross Profit | 5,334,341 | 4,038,636 | | Loss from Operations | (429,202) | (1,301,137) | | Net Loss | (697,922) | (1,601,346) | | Net Loss Per Share | (0.09) | (0.21) | Key Performance Indicators - Six Months Ended April 30 | Metric | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | Net Sales | 33,292,365 | 30,966,863 | | Gross Profit | 9,961,135 | 7,752,158 | | Loss from Operations | (1,281,554) | (2,700,822) | | Net Loss | (1,805,353) | (3,026,620) | | Net Loss Per Share | (0.23) | (0.39) | [Condensed Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) Shareholders' equity decreased from $20.8 million to $19.1 million by April 30, 2025, primarily due to a $1.8 million cumulative net loss - Total shareholders' equity decreased by approximately **$1.73 million** during the six months ended April 30, 2025, moving from **$20,841,916** to **$19,115,548**[16](index=16&type=chunk) - The primary driver for the decrease in shareholders' equity was the **net loss of $1,805,353** (sum of $1,107,431 and $697,922) recorded during the six-month period[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended April 30, 2025, operating cash flow improved to $2.8 million, financing activities used $2.0 million, increasing cash by $650,034 to $894,281 Cash Flow Summary - Six Months Ended April 30 | Cash Flow Activity | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | Net Cash from Operating Activities | 2,816,063 | 112,605 | | Net Cash used in Investing Activities | (143,254) | (16,921) | | Net Cash used in Financing Activities | (2,022,775) | (474,481) | | **Net Increase (Decrease) in Cash** | **650,034** | **(378,797)** | | **Cash at End of Period** | **894,281** | **1,089,912** | [Condensed Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Condensed%20Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail accounting policies, stock incentive plan, inventory, debt, leases, and revenue disaggregation, highlighting a single reportable segment and 18.7% customer concentration - Shareholders approved an amendment to the 2017 Stock Incentive Plan, adding **350,000 common shares** for issuance, bringing the total available for grant to approximately **407,000 shares** as of April 30, 2025[21](index=21&type=chunk) - The company has a Revolver credit facility maturing July 24, 2027, and a Virginia Real Estate Loan maturing May 5, 2026; **$6.5 million** was outstanding on the Revolver as of April 30, 2025[32](index=32&type=chunk)[39](index=39&type=chunk)[42](index=42&type=chunk) - One distributor customer accounted for **22.5%** and **18.7%** of consolidated net sales for the three and six months ended April 30, 2025, respectively, indicating significant customer concentration[62](index=62&type=chunk) Net Sales by Geography - Six Months Ended April 30 | Region | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | United States | 25,870,014 | 24,993,866 | | Outside the United States | 7,422,351 | 5,972,997 | | **Total Net Sales** | **33,292,365** | **30,966,863** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 and H1 2025 financial results, highlighting increased net sales, improved gross profit margins, narrowed net losses, and enhanced liquidity from operations [Results of Operations - Three Months Ended April 30, 2025 and 2024](index=21&type=section&id=Results%20of%20Operations%20-%20Three%20Months%20Ended%20April%2030,%202025%20and%202024) Q2 2025 net sales increased 8.9% to $17.5 million, gross profit surged 32.1% to $5.3 million with margin at 30.4%, and net loss narrowed to $0.7 million Q2 2025 vs Q2 2024 Performance | Metric | Q2 2025 ($) | Q2 2024 ($) | % Change | | :--- | :--- | :--- | :--- | | Net Sales | 17.5M | 16.1M | 8.9% | | Gross Profit | 5.3M | 4.0M | 32.1% | | Gross Profit Margin | 30.4% | 25.1% | N/A | | Loss from Operations | (0.4M) | (1.3M) | (67.0)% | | Net Loss | (0.7M) | (1.6M) | (56.4)% | - The increase in net sales was attributed to strength in specialty markets, particularly military markets, and a **27.1% increase in sales outside the U.S.**[98](index=98&type=chunk)[99](index=99&type=chunk) - The sales order backlog increased to **$7.2 million** at the end of Q2 2025, up from **$6.6 million** at the end of Q1 2025 and **$5.7 million** at fiscal year-end 2024[100](index=100&type=chunk) [Results of Operations - Six Months Ended April 30, 2025 and 2024](index=24&type=section&id=Results%20of%20Operations%20-%20Six%20Months%20Ended%20April%2030,%202025%20and%202024) H1 2025 net sales increased 7.5% to $33.3 million, gross profit grew 28.5% to $10.0 million with margin at 29.9%, and net loss narrowed to $1.8 million H1 2025 vs H1 2024 Performance | Metric | H1 2025 ($) | H1 2024 ($) | % Change | | :--- | :--- | :--- | :--- | | Net Sales | 33.3M | 31.0M | 7.5% | | Gross Profit | 10.0M | 7.8M | 28.5% | | Gross Profit Margin | 29.9% | 25.0% | N/A | | Loss from Operations | (1.3M) | (2.7M) | (52.5)% | | Net Loss | (1.8M) | (3.0M) | (40.4)% | - Sales growth in the first half was positively impacted by general market improvements and specific strength in military markets[121](index=121&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=26&type=section&id=Financial%20Condition,%20Liquidity%20and%20Capital%20Resources) As of April 30, 2025, assets decreased to $39.1 million, liabilities increased to $20.0 million, and working capital was $13.9 million; cash increased by $650,000, driven by $2.8 million from operations - Working capital decreased to **$13.9 million** at April 30, 2025, from **$15.5 million** at October 31, 2024[142](index=142&type=chunk) - Net cash provided by operating activities was **$2.8 million** in H1 2025, a significant improvement from **$113,000** in H1 2024[144](index=144&type=chunk) - As of April 30, 2025, the company had **$6.5 million** of outstanding borrowings on its Revolver and **$2.6 million** in available credit[157](index=157&type=chunk) - Management believes that cash flow from operations, cash on hand, and the existing Revolver will be adequate to fund operations for at least the next twelve months[160](index=160&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of April 30, 2025, and successfully remediated a material weakness in internal control - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of April 30, 2025[169](index=169&type=chunk) - The company has **remediated** the material weakness in internal control over financial reporting related to the classification of its Revolver balance as a current vs. noncurrent liability, previously identified in the fiscal 2024 Form 10-K[170](index=170&type=chunk)[171](index=171&type=chunk) PART II. OTHER INFORMATION [Item 6. Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section indexes all exhibits filed with the Form 10-Q, including corporate governance documents, material contracts, debt agreements, stock incentive plans, and CEO/CFO certifications - Lists various exhibits filed with the report, including amendments to the 2017 Stock Incentive Plan, loan and security agreements, and employment agreements[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk) - Includes certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[176](index=176&type=chunk)[178](index=178&type=chunk) - Interactive data files (iXBRL format) for the financial statements are included as Exhibit 101[178](index=178&type=chunk) SIGNATURES - The report is duly signed and authorized by **Neil D. Wilkin, Jr.** (Chairman, President, and CEO) and **Tracy G. Smith** (Senior Vice President and CFO) on June 5, 2025[180](index=180&type=chunk)[182](index=182&type=chunk)

Financial Data and Key Metrics Changes - Consolidated net sales for Q2 FY2025 increased by 8.9% to $17.5 million compared to $16.1 million in the same period last year, driven by growth in specialty markets [7][8] - Gross profit increased by 32.1% or $1.3 million to $5.3 million in Q2 FY2025, with gross profit margin rising to 30.4% from 25.1% in Q2 FY2024 [9][10] - The company recorded a net loss of $698,000 or $0.09 per share for Q2 FY2025, an improvement from a net loss of $1.6 million or $0.21 per share in Q2 FY2024 [11] Business Line Data and Key Metrics Changes - Net sales in specialty markets increased, while enterprise markets remained stable, contributing to overall sales growth [7][8] - SG&A expenses rose to $5.7 million in Q2 FY2025, but as a percentage of net sales, it decreased to 32.7% from 33% in the prior year [10][11] Market Data and Key Metrics Changes - Sales backlog and forward load increased to $7.2 million at the end of Q2 FY2025, up from $6.6 million at the end of Q1 FY2025 [5][9] Company Strategy and Development Direction - The company is focused on executing growth strategies and capitalizing on operating efficiencies to drive shareholder value [5][6] - OCC is exploring opportunities in the data center market, particularly in Tier two and Tier three segments, while also expanding its product offerings [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about positive industry trends and the potential for continued growth in the second half of FY2025 [5][30] - The company noted that it has experienced less impact from tariffs compared to competitors, benefiting from having all manufacturing facilities located in the U.S. [32] Other Important Information - The company does not provide forward-looking guidance but has indicated positive trends in sales and backlog growth [29][30] - OCC's gross profit margin is heavily influenced by product mix, which can vary quarterly [10][36] Q&A Session Summary Question: Demand from data centers and growth opportunities - Management acknowledged the demand in data centers but clarified that OCC has not targeted hyperscale data centers, focusing instead on Tier two and Tier three markets [17][18] Question: Operational leverage potential - Management indicated that operational leverage can be seen in historical results, with fixed costs spread over larger volumes leading to improved margins [25][26] Question: Business related to copper vs. fiber - Management confirmed that fiber constitutes the largest portion of the business, although some products are hybrid [27] Question: Update on data centers and opportunities - Management reiterated that while data center sales are significant, growth is more pronounced in military markets currently [20][28] Question: Company outlook compared to previous quarters - Management noted that sales typically see seasonality, with the second half of the fiscal year expected to be stronger [30] Question: Impact of tariffs and Build in America trends - Management stated that while tariffs have affected some products, the impact has been less severe than for competitors due to U.S.-based manufacturing [32] Question: Backlog significance - Management explained that the backlog includes all confirmed orders, indicating both near-term and future demand [34] Question: Expected sequential revenue growth - Management indicated that while they do not provide guidance, historical trends suggest stronger sales in the second half of the fiscal year [35] Question: Gross margin at full capacity - Management noted that gross margins at full capacity depend on product mix, making it difficult to provide specific figures [36]

Financial Data and Key Metrics Changes - Consolidated net sales for Q2 FY2025 increased by 8.9% to $17.5 million compared to $16.1 million in the same period last year, driven by growth in specialty markets [7] - Sequentially, net sales increased by 11.5% from $15.7 million in Q1 FY2025 [7] - Gross profit rose by 32.1% or $1.3 million to $5.3 million in Q2 FY2025, with gross profit margin increasing to 30.4% from 25.1% in Q2 FY2024 [8] - SG&A expenses increased to $5.7 million in Q2 FY2025, but as a percentage of net sales, it decreased to 32.7% from 33% in the prior year [9] Business Line Data and Key Metrics Changes - Sales in specialty markets contributed to the overall net sales growth, while enterprise markets remained stable [7] - Gross profit margin improvements were attributed to production efficiencies from higher volumes and operating leverage [9] Market Data and Key Metrics Changes - The sales backlog increased to $7.2 million at the end of Q2 FY2025, up from $6.6 million at the end of Q1 FY2025 and $5.7 million at the end of Q4 FY2024 [5][8] Company Strategy and Development Direction - The company is focused on disciplined execution and capitalizing on growth opportunities to enhance shareholder value [6] - There is an ongoing evaluation of cable and connectivity offerings to better address customer needs, particularly in Tier two and Tier three data centers [28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for the second half of FY2025, citing positive trends and an increase in backlog [29] - The company has seen less impact from tariffs compared to competitors, benefiting from having all manufacturing facilities located in the U.S. [31] Other Important Information - The company does not provide forward-looking guidance but has shared insights on market trends and expectations based on historical performance [28] Q&A Session Summary Question: Demand from data centers and growth opportunities - Management clarified that while there is significant demand in the data center market, OCC has not targeted hyperscale data centers but is seeing growth in Tier two and Tier three markets [15][16] Question: Operational leverage potential - Management indicated that operational leverage can be seen in historical results, with fixed costs spread over larger volumes leading to benefits [23][24] Question: Business related to copper vs. fiber - Management stated that fiber constitutes the largest portion of the business, although copper remains significant [26] Question: Update on data centers and opportunities - Management acknowledged ongoing opportunities in data centers, particularly in Tier two and Tier three, and mentioned the addition of loose tube fiber cable products [27] Question: Company outlook compared to previous quarters - Management noted that while they do not provide guidance, they have seen positive trends and backlog increases compared to previous quarters [28][29] Question: Impact of tariffs and Build in America trends - Management confirmed that while tariffs have impacted the company, the effect has been less severe than for others in the industry due to U.S.-based manufacturing [31] Question: Backlog significance - Management explained that the backlog includes all confirmed orders regardless of expected shipment dates, indicating both near-term and future demand [33] Question: Expected sequential revenue growth - Management reiterated that while they do not provide revenue guidance, they typically see stronger sales in the second half of the fiscal year due to seasonality [34] Question: Gross margin at full capacity - Management stated that gross profit margins at full capacity are highly dependent on product mix, making specific predictions difficult [35]

Group 1 - The Oklahoma Corporation Commission (OCC) has approved Public Service Company of Oklahoma's (PSO) acquisition of the Green Country Power Plant, a 795 MW natural gas-fired facility, to enhance its capacity to meet rising energy demands [1][2] - This acquisition is expected to be finalized by July 2025 and is part of PSO's commitment to provide affordable and reliable energy while supporting economic development in Oklahoma [2][3] - The purchase will not only strengthen grid reliability but also generate local benefits, including increased ad valorem tax revenue that will support Tulsa County schools, public services, and job creation [3] Group 2 - PSO serves nearly 575,000 customer accounts in eastern and southwestern Oklahoma and has approximately 4,400 megawatts of diverse generating capacity, primarily from wind and natural gas [4] - The company operates over 20,000 miles of distribution lines and 3,800 miles of transmission lines, making it one of the largest distributors of wind energy in the state [4] - PSO was recognized with an Emergency Response Award by the Edison Electric Institute in January 2025, highlighting its commitment to service and community [4]

Core Viewpoint - Wells Fargo & Company (WFC) is making progress in resolving regulatory issues, as evidenced by the termination of a 2015 agreement by the Office of the Comptroller of the Currency (OCC), which has positively impacted its stock price and moves the bank closer to lifting its $1.95-trillion asset cap [1][5]. Group 1: Regulatory Progress - The termination of the 2015 agreement is the 13th consent order resolved by Wells Fargo since 2019 and the seventh since the beginning of 2025, indicating a significant step forward in addressing regulatory challenges [2]. - The bank has faced scrutiny from regulators due to scandals, including the creation of millions of unauthorized accounts, leading to a $1.95-trillion asset cap imposed by the Federal Reserve since 2018 [3]. - CEO Charlie Scharf expressed confidence in the bank's regulatory improvements and highlighted ongoing efforts to strengthen compliance, including an annual allocation of $2 billion to enhance risk controls and operational processes [4]. Group 2: Impact of Asset Cap - The termination of the OCC's 2015 consent order brings Wells Fargo closer to lifting the asset cap, with the focus now on the remaining 2018 Federal Reserve board consent order [5]. - The asset cap has hindered the bank's growth potential, particularly affecting loan growth, which is crucial for the bank's asset base [6]. - Lifting the asset cap will enable Wells Fargo to offer loans without restrictions, supporting top-line expansion and positioning the bank for long-term growth [6]. Group 3: Stock Performance - Over the past year, WFC shares have gained 27.3%, compared to the industry's growth of 29.4%, reflecting a positive market response to the bank's regulatory progress [7].

Core Viewpoint - The termination of Wells Fargo's 2021 consent order by the OCC signifies progress in the bank's compliance efforts, marking the 11th consent order closed since 2019, and reflects positively on the bank's management under CEO Charlie Scharf [1][4][9]. Summary by Relevant Sections Consent Order Details - In 2021, the OCC imposed a $250 million fine on Wells Fargo for deficiencies in its home lending loss mitigation program and for failing to comply with a 2018 consent order regarding excessive fees charged to customers [2][3]. Management Remarks - CEO Charlie Scharf expressed satisfaction with the OCC's decision to terminate the consent order, highlighting improvements in the timeframe for closing consent orders compared to historical cases [4]. Compliance Progress - Scharf emphasized the bank's commitment to addressing compliance issues, stating that detailed plans have been developed for each consent order, which regulators have reviewed [5]. Recent Developments - The OCC has recently terminated several consent orders related to Wells Fargo's compliance risk management and legacy practices, indicating a trend towards resolving regulatory issues [6][7]. Future Implications - The termination of consent orders is expected to bolster investor confidence regarding the potential lifting of the $1.95 trillion asset cap imposed in 2018, which would allow Wells Fargo to expand its lending capabilities [8][9]. Stock Performance - Wells Fargo's shares have increased by 28.3% over the past six months, outperforming the industry growth of 13.7% [10].

Financial Performance - Consolidated net sales for Q1 FY 2025 increased by 6.0% to $15.7 million, compared to $14.9 million in Q1 FY 2024[3] - Gross profit rose by 24.6%, or $913,000, to $4.6 million, resulting in a gross profit margin of 29.4% compared to 25.0% in the prior year[5][6] - Net sales to international customers increased by 21.3%, while sales within the U.S. grew by 2.3%[4] - The company recorded a net loss of $1.1 million, or $0.14 per share, an improvement from a net loss of $1.4 million, or $0.18 per share, in Q1 FY 2024[8] Operational Metrics - The sales order backlog increased to $6.6 million from $5.7 million as of October 31, 2024[4] - SG&A expenses increased to $5.5 million, representing 34.7% of net sales, up from 34.3% in the previous year[7] - Total current assets decreased to $28.0 million from $30.6 million as of October 31, 2024[21] - Total liabilities decreased to $18.1 million from $19.5 million, while total shareholders' equity fell to $19.7 million from $20.8 million[21] Market Insights - The company noted strong momentum in enterprise and specialty markets, particularly in military sectors[9] - The company is focused on executing growth strategies and improving operational efficiency to drive long-term value[9]

Financial Data and Key Metrics Changes - Consolidated net sales for Q1 2025 increased by 6% to $15.7 million compared to $14.9 million in Q1 2024 [14] - Gross profit increased by 24.6% or $913,000 to $4.6 million in Q1 2025 compared to $3.7 million in Q1 2024 [15] - Gross profit margin improved to 29.4% in Q1 2025 from 25% in Q1 2024 [15] - Net loss for Q1 2025 was $1.1 million or $0.14 per share, compared to a net loss of $1.4 million or $0.18 per share in Q1 2024 [16] Business Line Data and Key Metrics Changes - Net sales in enterprise and specialty markets increased, with sales to customers outside the U.S. rising by 21.3% and sales within the U.S. increasing by 2.3% [14] - Sales order backlog and forward load increased approximately 16% to $6.6 million compared to $5.7 million as of October 31, 2024 [10][14] Market Data and Key Metrics Changes - The company noted improvements in both enterprise and specialty markets, including the military sector [9] - The overall market weakness experienced since fiscal 2023 is beginning to subside, leading to a more optimistic outlook [8][9] Company Strategy and Development Direction - The company is focused on executing growth strategies and operating efficiently to drive results, including gross profit margin expansion [9] - The company is monitoring proposed tariffs and their potential impacts on raw material purchases and exports [12] - The company aims to capitalize on growth opportunities and drive long-term value for customers and shareholders [11] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the outlook for 2025 despite experiencing typical seasonality in the first quarter [29][47] - The company has not changed its outlook since the annual report, indicating a positive trend in the industry [29][47] - The demand for communication bandwidth is expected to continue increasing, positively impacting the company [49] Other Important Information - SG&A expenses increased to $5.5 million in Q1 2025 from $5.1 million in Q1 2024, primarily due to higher employee and contracted sales personnel costs [16] Q&A Session Summary Question: Impact of tariffs on the company - Management acknowledged potential impacts from tariffs but does not expect significant effects at this time [21][22] Question: Advantage from Buy America, Built America initiative - Management noted that being U.S.-based could provide a competitive advantage, but they are not solely relying on this for increased sales [23][24][25] Question: Outlook for the company given recent economic changes - Management stated that the outlook has not changed and remains optimistic despite seasonal impacts [29][47] Question: Operational leverage and revenue scenarios - Management discussed the significant operating leverage and its impact on gross profit and margins, with sensitivity to revenue scenarios [34][35] Question: Benefits from AI data center demand - Management confirmed opportunities to benefit from the demand in data centers, including those driven by AI [40][42] Question: New product launches - Management refrained from discussing specific new products but indicated ongoing reviews of new opportunities based on customer needs [44][45] Question: Changes in industry outlook - Management believes the prospects are strong due to increasing demand for communication bandwidth [49]

Financial Data and Key Metrics Changes - Consolidated net sales for Q1 2025 increased by 6% to $15.7 million compared to $14.9 million in Q1 2024 [14] - Gross profit increased by 24.6% to $4.6 million, with gross profit margin rising to 29.4% from 25% year-over-year [15] - Net loss for Q1 2025 was $1.1 million or $0.14 per share, an improvement from a net loss of $1.4 million or $0.18 per share in Q1 2024 [16] Business Line Data and Key Metrics Changes - Net sales in both enterprise and specialty markets increased, with sales to international customers rising by 21.3% and domestic sales increasing by 2.3% [14] - Sales order backlog and forward load increased by approximately 16% to $6.6 million compared to $5.7 million as of October 31, 2024 [10][14] Market Data and Key Metrics Changes - Improvements were noted in both enterprise and specialty markets, including the military sector, indicating a recovery from previous industry weaknesses [9] Company Strategy and Development Direction - The company is focused on executing growth strategies and operating efficiently to drive results, including gross profit margin expansion [9] - Monitoring of proposed tariffs and their potential impacts on raw material purchases and exports is ongoing, with no significant impact anticipated at this time [12] Management's Comments on Operating Environment and Future Outlook - The management remains optimistic about the outlook for 2025, despite typical seasonality affecting the first half of the year [29][47] - The company has not changed its outlook since the annual report, continuing to see benefits from easing market conditions [29][47] Other Important Information - The company is exploring opportunities in the data center market, particularly related to AI demand, although it has not been a significant part of the business to date [42] - The company is reviewing new product opportunities regularly, although specific launches are not discussed prior to official announcements [44] Q&A Session Summary Question: Impact of tariffs on the company - Management acknowledged potential positive and negative impacts from tariffs but does not expect significant effects at this time [21][22] Question: Advantage from Buy America, Built America initiative - Management noted that being a US-based manufacturer provides a competitive edge, but they are not solely relying on this initiative for sales growth [24][25] Question: Outlook for the company given recent economic changes - Management stated that the outlook remains unchanged and optimistic, despite experiencing seasonality in the first quarter [29][47] Question: Operational leverage and revenue scenarios - Management discussed the significant operating leverage and its impact on gross profit and margins, with sensitivity to revenue scenarios highlighted [35][36] Question: Five-year revenue and EPS goals - Management confirmed that multi-year financial projections exist but are not publicly disclosed [38] Question: Opportunities from AI data centers - Management sees potential for growth in the data center market, particularly from AI demand, although it has not been a major part of the business yet [42] Question: New product launches - Management refrained from discussing specific new products but emphasized the company's capability to meet specialized customer needs [45] Question: Changes in industry outlook - Management believes the demand for communication bandwidth is increasing, positively impacting the company’s prospects [49]

Financial Performance - Consolidated net sales for the first quarter of fiscal year 2025 increased 6.0% to $15.7 million, compared to $14.9 million for the same period last year[94] - Gross profit increased 24.6%, or $913,000, to $4.6 million in the first quarter of fiscal year 2025, compared to $3.7 million for the first quarter of fiscal year 2024[94] - Gross profit margin increased to 29.4% during the first quarter of fiscal year 2025, compared to 25.0% for the first quarter of fiscal year 2024[94] - Net loss was $1.1 million, or $0.14 per share, during the first quarter of fiscal year 2025, compared to $1.4 million, or $0.18 per share, for the comparable period last year[94] - Loss from operations improved by 39.1% to $(852,000) in the first quarter of fiscal year 2025, compared to $(1,400,000) in the first quarter of fiscal year 2024[96] Expenses - SG&A expenses were $5.5 million during the first quarter of fiscal year 2025, compared to $5.1 million for the same period last year[94] - SG&A expenses as a percentage of net sales were 34.7% during the first quarter of fiscal year 2025, compared to 34.3% during the same period in fiscal year 2024[94] - SG&A expenses rose 7.2% to $5.5 million, representing 34.7% of net sales in Q1 FY 2025, compared to 34.3% in Q1 FY 2024[103] Sales and Market Performance - Net sales to international customers rose 21.3%, while sales in the U.S. increased by 2.3% in Q1 FY 2025 compared to the same period last year[98] - Sales order backlog increased to $6.6 million from $5.7 million as of October 31, 2024[99] Assets and Liabilities - Total assets decreased by 6.3% to $37.8 million as of January 31, 2025, primarily due to a $2.7 million decrease in trade accounts receivable[119] - Total liabilities decreased by 7.4% to $18.1 million, mainly due to a $2.7 million reduction in note payable[120] Cash Flow and Financing - Net cash provided by operating activities was $2.7 million in Q1 FY 2025, compared to net cash used of $261,000 in Q1 FY 2024[126] - The maximum aggregate principal amount subject to the Revolver is $18.0 million, with interest accruing at a rate of 9.0% as of January 31, 2025[135] - As of January 31, 2025, the company had $5.7 million of outstanding borrowings on the Revolver and $3.4 million in available credit[139] - The company anticipates capital expenditures of $1.0 million for the fiscal year 2025, which will be funded from working capital, cash from operations, or borrowings under the Revolver[140] - Future cash flow from operations, cash on hand, and the existing Revolver are expected to be adequate to fund operations for at least the next twelve months[142] - The Revolver has a maturity date of July 24, 2027, and the company believes it will continue to be able to borrow to fund operations[137] - The company has no material commitments for capital expenditures as of January 31, 2025[140] - The company has not experienced any material adverse changes that would trigger an event of default under the Revolver[137] - The Revolver requires a lockbox arrangement for daily cash sweeps to reduce the outstanding balance[137] Company Operations - The company primarily manufactures fiber optic cables at its Roanoke facility, which is ISO 9001:2015 registered[83] - The company offers a broad range of fiber optic and copper data communication products for various markets, including enterprise and harsh environments[81] - OCC's subsidiary Centric Solutions provides cabling and connectivity solutions specifically for the data center market[87] Accounting and Compliance - The company is currently evaluating the impact of new accounting standards issued by the FASB on financial statement disclosures[147][148][149]