Optical Cable (US:OCC)2025-06-05 16:31PART I. FINANCIAL INFORMATION Item 1. Financial Statements 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 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 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 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 $19,115,54816 - 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 period16 Condensed Consolidated Statements of Cash Flows 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 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, 202521 - The company has a Revolver credit facility maturing July 24, 2027, and a Virginia Real Estate Loan maturing May 5, 2026; $6.5 million was outstanding on the Revolver as of April 30, 2025323942 - One distributor customer accounted for 22.5% and 18.7% of consolidated net sales for the three and six months ended April 30, 2025, respectively, indicating significant customer concentration62 Net Sales by Geography - Six Months Ended April 30 | Region | 2025 ($) | 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 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 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.9899 - 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 2024100 Results of Operations - Six Months Ended April 30, 2025 and 2024 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 markets121 Financial Condition, Liquidity and Capital Resources 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, 2024142 - Net cash provided by operating activities was $2.8 million in H1 2025, a significant improvement from $113,000 in H1 2024144 - As of April 30, 2025, the company had $6.5 million of outstanding borrowings on its Revolver and $2.6 million in available credit157 - 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 months160 Item 4. Controls and Procedures 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, 2025169 - 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-K170171 PART II. OTHER INFORMATION Item 6. Exhibits 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 agreements173174175 - Includes certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002176178 - Interactive data files (iXBRL format) for the financial statements are included as Exhibit 101178 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, 2025180182