Optical Cable (OCC) - 2025 Q3 - Quarterly Report

FORM 10-Q Filing Information Registrant Information 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] - Commission file number: 0-27022[3] - Principal executive offices: 5290 Concourse Drive, Roanoke, Virginia 24019[3] Filing Status 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] - The registrant has submitted electronically every Interactive Data File required by Rule 405 of Regulation S-T during the preceding 12 months[5] - The registrant is classified as a Non-accelerated Filer and a Smaller Reporting Company[5] - As of September 3, 2025, 8,870,444 shares of Common Stock, no par value, were outstanding[5] Table of Contents Form 10-Q Index 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] - Part II (Other Information) includes Item 6 (Exhibits) and the Signatures[7] PART I. FINANCIAL INFORMATION Item 1. Financial Statements (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 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][34] - Note payable, revolver - current decreased from $8,321,782 to $6,465,321, reflecting net repayments on the Revolver[10][156] Condensed Consolidated Statements of Operations The statements of operations show a significant improvement in profitability for both the three-month and nine-month periods ended July 31, 2025, driven by increased net sales and gross profit margins | Metric | 3 Months Ended July 31, 2025 ($) | 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) ($) | Change (YoY %) | | :-------------------------------- | :--------------------------- | :--------------------------- | :----------- | :------------- | | Net sales | 53,209,284 | 47,188,534 | 6,020,750 | 12.76% | | Gross profit | 16,280,446 | 11,672,382 | 4,608,064 | 39.48% | | Income (loss) from operations | (719,080) | (4,038,375) | 3,319,295 | 82.20% | | Net income (loss) | (1,503,467) | (4,583,673) | 3,080,206 | 67.20% | | Net income (loss) per share: Basic and diluted | (0.19) | (0.59) | 0.40 | 67.80% | Condensed Consolidated Statements of Shareholders' Equity The statements detail changes in shareholders' equity, highlighting the impact of net losses, share-based compensation, and the issuance and subsequent increase in redemption value of redeemable common stock | Metric | July 31, 2025 ($) | 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][15] - Share-based compensation, net, for the nine months ended July 31, 2025, was $186,086, increasing common stock amount[15][158] - Issuance costs of redeemable common stock totaled $92,483, and the increase to aggregate redemption value of redeemable common stock was $1,202,325, both reducing retained earnings[15][158] Condensed Consolidated Statements of Cash Flows The cash flow statements indicate a net increase in cash for the nine months ended July 31, 2025, primarily driven by operating activities, despite cash used in investing and financing activities | Cash Flow Activity | 9 Months Ended July 31, 2025 ($) | 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][163] - Investing activities in 2025 primarily involved purchases of property and equipment ($217,048)[18][165] - Financing activities in 2025 included the issuance of redeemable common stock ($1,907,517) and net repayments on the revolver ($1,856,461)[18][166] Condensed Notes to Condensed Consolidated Financial Statements These notes provide additional information and disclosures to the condensed consolidated financial statements, covering accounting policies, specific financial line items, and recent corporate activities (1) General This note outlines the basis of presentation for the unaudited interim financial statements and highlights various factors that could impact future operating results, such as macroeconomic conditions and supply chain constraints - The financial statements are prepared in accordance with U.S. GAAP for interim financial information and Form 10-Q instructions, and do not include all information required for complete annual statements[20] - Future results may be impacted by changing macroeconomic conditions, supply chain and labor constraints, market conditions, seasonality, inflation, interest rates, and timing of key customer projects[20] (2) Stock Incentive Plan and Other Share‑Based Compensation This note details the company's stock incentive plan, share-based compensation expense, and restricted stock award activity, including grants to non-employee Directors - Approximately 371,000 shares remained available for grant under the 2017 Stock Incentive Plan as of July 31, 2025[21] | Period | Share-based Compensation Expense ($) | | :-------------------------------- | :------------------------------- | | 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] - As of July 31, 2025, the estimated compensation cost related to unvested equity-based awards is approximately $857,000, to be recognized over a 3.7-year weighted-average period[27] (3) Allowance for Credit Losses for Trade Accounts Receivable This note summarizes the changes in the allowance for credit losses for trade accounts receivable for the nine-month periods | Metric | 9 Months Ended July 31, 2025 ($) | 9 Months Ended July 31, 2024 ($) | | :-------------------------- | :--------------------------- | :--------------------------- | | Balance at beginning of period | 92,125 | 71,189 | | Bad debt expense (recovery) | 496 | (447) | | Balance at end of period | 92,621 | 70,742 | (4) Inventories This note provides a breakdown of inventory components as of July 31, 2025, and October 31, 2024 | Inventory Component | July 31, 2025 ($) | 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 $18,697,434 at July 31, 2025[29] (5) Product Warranties This note details the accrual for estimated product warranty claims and the related expense for the reported periods | Metric | July 31, 2025 ($) | 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 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][35] - The Revolver with SLR has a maximum aggregate principal amount of $18.0 million, with interest accruing at 1.5% above the Prime Rate (9.0% at July 31, 2025)[37] | Revolver Metric | July 31, 2025 ($ 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] (7) Leases 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][43] | 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 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] - The carrying value of the note payable (revolver) and long-term debt approximates fair value because interest rates vary with the market[58] (9) Net Income (Loss) Per Share 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] (10) Segment Information and Business and Credit Concentrations 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] | 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] (11) Revenue Recognition 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][70] | 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 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][107] - 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][80][81][83] - 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] - 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] (13) Contingencies 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] (14) New Accounting Standards Not Yet Adopted 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][90][91] - 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] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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] - 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] - 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] Overview of Optical Cable Corporation 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] - 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] - Product offerings include fiber optic and copper cabling, hybrid cabling, connectors, patch cords, cable assemblies, racks, cabinets, and other management accessories[99] - 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] Summary of Company Performance for Third Quarter of Fiscal Year 2025 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] - In connection with the collaboration, OCC issued 642,199 redeemable restricted shares of common stock to Lightera for $2.0 million, giving Lightera a 7.24% stake[107] | Metric | Q3 FY2025 ($ 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 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 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] - 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] - The improvement in income from operations was primarily due to the $2.4 million increase in gross profit, partially offset by the $499,000 increase in SG&A expenses[127] Nine Months Ended July 31, 2025 and 2024 For the first nine months of fiscal year 2025, the company significantly reduced its operating loss and net loss compared to the prior year, driven by strong net sales growth and improved gross profit margins | Metric | 9 Months FY2025 ($ 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] - 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] - The reduction in loss from operations was primarily due to the $4.6 million increase in gross profit, partially offset by the $1.3 million increase in SG&A expenses[145] Financial Condition The company's financial condition at July 31, 2025, showed minor changes in total assets and liabilities, but a notable decrease in shareholders' equity primarily due to net loss and the accounting for redeemable common stock | Metric | July 31, 2025 ($ 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] - 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] - 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 $1.2 million increase in the redeemable stock's aggregate redemption value[158] Liquidity and Capital Resources This section discusses the company's sources and uses of capital, including cash on hand, operating cash flows, credit facilities, and capital expenditure plans, concluding that current resources are adequate for the next twelve months | Metric | July 31, 2025 ($ 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 $2.5 million of the real estate term loan to current liabilities and an increase in accounts payable, partially offset by a decrease in the Revolver balance[161] | Cash Flow Activity | 9 Months Ended July 31, 2025 ($ 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][169][175] - The company estimates $1.0 million in capital expenditures for fiscal year 2025, to be funded by working capital, operations, or Revolver borrowings[176] - 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] Critical Accounting Policies and Estimates 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] - 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] New Accounting Standards 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][183][184] - 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] Item 4. Controls and Procedures 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] - Management, with CEO and CFO participation, concluded that the company's disclosure controls and procedures were effective as of July 31, 2025[189] - 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] PART II. OTHER INFORMATION Item 6. Exhibits 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][193][194] - Key agreements listed are the Loan and Security Agreement and Revolving Credit Master Promissory Note with North Mill Capital LLC (SLR Business Credit)[193] - 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][195] - Certifications from the CEO and CFO pursuant to the Sarbanes-Oxley Act of 2002 are filed herewith[195][197] SIGNATURES 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] - The signing date for the report is September 11, 2025[201]