OPTICAL CABLE CORP 10-Q

Item 1. Financial Statements OPTICAL CABLE CORPORATION Condensed Consolidated Balance Sheets (Unaudited) July 31, October 31, 2026 2025 Assets Current assets: Cash $ 297,193 $ 237,508 Trade accounts receivable, net of allowance for credit losses of $ 84,549 at July 31, 2026 and $ 72,909 at October 31, 2025 11,842,621 10,280,616 Income taxes refundable - current — 13,500 Other receivables 40,814 19,863 Inventories 22,938,467 19,801,754 Prepaid expenses and other assets 450,002 402,542 Total current assets 35,569,097 30,755,783 Property and equipment, net 6,613,711 6,589,517 Intangible assets, net 467,739 481,225 Other assets, net 2,204,000 2,233,256 Total assets $ 44,854,547 $ 40,059,781 Liabilities, Redeemable Restricted Common Stock and Shareholders ’ Equity Current liabilities: Current installments of long-term debt $ 66,949 $ 2,570,793 Note payable, revolver - current 6,329,173 5,624,816 Accounts payable and accrued expenses 7,312,352 6,848,785 Accrued compensation and payroll taxes 2,666,595 1,784,207 Income taxes payable 33,812 24,688 Total current liabilities 16,408,881 16,853,289 Long-term debt, excluding current installments 2,572,866 — Other noncurrent liabilities 1,602,230 1,632,587 Total liabilities 20,583,977 18,485,876 Redeemable restricted common stock, no par value, 642,199 shares issued and outstanding as of July 31, 2026 and October 31, 2025 9,543,077 5,066,950 Shareholders’ equity: Preferred stock, no par value, authorized 1,000,000 shares; none issued and outstanding — — Common stock, no par value, authorized 50,000,000 shares; issued and outstanding 8,199,825 shares at July 31, 2026 and 8,227,871 shares at October 31, 2025 15,925,002 15,743,742 Retained earnings (accumulated deficit) ( 1,197,509 ) 763,213 Total shareholders’ equity 14,727,493 16,506,955 Commitments and contingencies Total liabilities, redeemable restricted common stock and shareholders' equity $ 44,854,547 $ 40,059,781 See accompanying condensed notes to condensed consolidated financial statements. 2 Table of Contents OPTICAL CABLE CORPORATION Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended Nine Months Ended July 31, July 31, 2026 2025 2026 2025 Net sales $ 24,297,022 $ 19,916,919 $ 62,941,623 $ 53,209,284 Cost of goods sold 15,202,314 13,597,608 40,882,703 36,928,838 Gross profit 9,094,708 6,319,311 22,058,920 16,280,446 Selling, general and administrative expenses 6,962,706 5,736,667 18,790,608 16,939,181 Royalty expense, net 6,601 6,571 19,804 19,714 Amortization of intangible assets 13,769 13,599 41,305 40,631 Income (loss) from operations 2,111,632 562,474 3,207,203 ( 719,080 ) Other income (expense), net: Interest expense, net ( 247,112 ) ( 260,002 ) ( 692,205 ) ( 772,559 ) Other, net 2,160 3,882 ( 8,098 ) 19,485 Other expense, net ( 244,952 ) ( 256,120 ) ( 700,303 ) ( 753,074 ) Income (loss) before income taxes 1,866,680 306,354 2,506,900 ( 1,472,154 ) Income tax expense (benefit) 8,563 4,468 ( 8,505 ) 31,313 Net income (loss) $ 1,858,117 $ 301,886 $ 2,515,405 $ ( 1,503,467 ) Net income (loss) per share: basic and diluted $ 0.21 $ 0.04 $ 0.28 $ ( 0.19 ) See accompanying condensed notes to condensed consolidated financial statements. 3 Table of Contents OPTICAL CABLE CORPORATION Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) Nine Months Ended July 31, 2026 Retained Earnings Total Common Stock (Accumulated Shareholders' Shares Amount Deficit) Equity Balances at October 31, 2025 8,227,871 $ 15,743,742 $ 763,213 $ 16,506,955 Share-based compensation, net ( 38,472 ) ( 67,748 ) — ( 67,748 ) (Increase) decrease in aggregate redemption value of redeemable restricted common stock — — 2,087,147 2,087,147 Net loss — — ( 397,529 ) ( 397,529 ) Balances at January 31, 2026 8,189,399 $ 15,675,994 $ 2,452,831 $ 18,128,825 Share-based compensation, net — 73,670 — 73,670 (Increase) decrease in aggregate redemption value of redeemable restricted common stock — — ( 4,033,010 ) ( 4,033,010 ) Net income — — 1,054,817 1,054,817 Balances at April 30, 2026 8,189,399 $ 15,749,664 $ ( 525,362 ) $ 15,224,302 Share-based compensation, net 10,426 175,338 — 175,338 (Increase) decrease in aggregate redemption value of redeemable restricted common stock — — ( 2,530,264 ) ( 2,530,264 ) Net income — — 1,858,117 1,858,117 Balances at July 31, 2026 8,199,825 $ 15,925,002 $ ( 1,197,509 ) $ 14,727,493 Nine Months Ended July 31, 2025 Total Common Stock Retained Shareholders’ Shares Amount Earnings Equity Balances at October 31, 2024 8,220,344 $ 15,464,416 $ 5,377,500 $ 20,841,916 Share-based compensation, net ( 21,767 ) 7,051 — 7,051 Net loss — — ( 1,107,431 ) ( 1,107,431 ) Balances at January 31, 2025 8,198,577 $ 15,471,467 $ 4,270,069 $ 19,741,536 Share-based compensation, net ( 6,560 ) 71,934 — 71,934 Net loss — — ( 697,922 ) ( 697,922 ) Balances at April 30, 2025 8,192,017 $ 15,543,401 $ 3,572,147 $ 19,115,548 Share-based compensation, net 36,228 107,101 — 107,101 Issuance costs of redeemable stock — — ( 92,483 ) ( 92,483 ) (Increase) decrease in aggregate redemption value of redeemable restricted common stock — — ( 1,202,325 ) ( 1,202,325 ) Net income — — 301,886 301,886 Balances at July 31, 2025 8,228,245 $ 15,650,502 $ 2,579,225 $ 18,229,727 See accompanying condensed notes to condensed consolidated financial statements. 4 Table of Contents OPTICAL CABLE CORPORATION Condensed Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended July 31, 2026 2025 Cash flows from operating activities: Net income (loss) $ 2,515,405 $ ( 1,503,467 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 584,792 608,001 Bad debt expense 13,494 496 Share-based compensation expense 387,546 293,399 Loss on disposal of property and equipment 10,275 6,292 (Increase) decrease in: Trade accounts receivable ( 1,575,499 ) ( 131,850 ) Other receivables ( 20,951 ) 46,959 Income taxes refundable 13,500 1,625 Inventories ( 3,136,713 ) 27,883 Prepaid expenses and other assets 52,540 144,190 Other assets 350,567 340,825 Increase (decrease) in: Accounts payable and accrued expenses 399,837 848,216 Accrued compensation and payroll taxes 882,388 236,364 Income taxes payable 9,124 ( 7,730 ) Other noncurrent liabilities ( 338,670 ) ( 294,458 ) Net cash provided by operating activities 147,635 616,745 Cash flows from investing activities: Purchase of and deposits for the purchase of property and equipment ( 424,600 ) ( 217,048 ) Investment in intangible assets ( 27,818 ) ( 16,538 ) Proceeds from sale of property and equipment 976 — Net cash used in investing activities ( 451,442 ) ( 233,586 ) Cash flows from financing activities: Payroll taxes withheld and remitted on share-based payments ( 206,286 ) ( 107,313 ) Proceeds from note payable, revolver 62,439,871 53,653,397 Payments on note payable, revolver ( 61,735,514 ) ( 55,509,858 ) Principal payments on long-term debt ( 2,580,978 ) ( 42,881 ) Proceeds from new long-term debt 2,650,000 — Payments for financing costs ( 147,932 ) ( 75,000 ) Issuance of redeemable restricted common stock, net of issuance costs — 1,907,517 Principal payments on finance leases ( 55,669 ) ( 31,854 ) Net cash provided by (used in) financing activities 363,492 ( 205,992 ) Net increase in cash 59,685 177,167 Cash at beginning of period 237,508 244,247 Cash at end of period $ 297,193 $ 421,414 See accompanying condensed notes to condensed consolidated financial statements. 5 Table of Contents OPTICAL CABLE CORPORATION Condensed Notes to Condensed Consolidated Financial Statements Nine Months Ended July 31, 2026 (Unaudited) (1) General The accompanying unaudited condensed consolidated financial statements of Optical Cable Corporation and its subsidiaries (collectively, the “Company” or “OCC®”) have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and the instructions to Form 10‑Q and Regulation S‑X. Accordingly, they do not include all of the information and notes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all material adjustments considered necessary for a fair presentation have been included. Operating results for the nine months ended July 31, 2026 are not necessarily indicative of the results for the fiscal year ending October 31, 2026 because the following items, among other things, may impact those results: changing macroeconomic conditions in various markets, supply chain and labor constraints impacting production volumes, any increased costs related to raw materials, labor, or government and private industry mandates in the areas of the world in which we operate, changes in market conditions, seasonality, inflation and interest rates, changes in technology, competitive conditions, timing of certain projects and purchases by key customers, significant variations in sales resulting from high volatility and timing of large sales orders among a limited number of customers in certain markets, ability of management to execute its business plans, continued ability to maintain and/or secure future debt and/or equity financing to adequately finance ongoing operations; as well as other variables, uncertainties, contingencies and risks set forth as risks in the Company’s Annual Report on Form 10‑K for the fiscal year ended October 31, 2025 (including those set forth in the “Forward-Looking Information” section), or as otherwise set forth in other filings by the Company as variables, contingencies and/or risks possibly affecting future results. The unaudited condensed consolidated financial statements and condensed notes are presented as permitted by Form 10‑Q and do not contain certain information included in the Company’s annual consolidated financial statements and notes. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10‑K for the fiscal year ended October 31, 2025. In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 requires public entities to disclose significant segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”). Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosure requirements in ASC 280, Segment Reporting , on an interim and annual basis. The guidance in ASU 2023-07 is effective for annual reporting periods in fiscal years beginning after December 15, 2023 and interim reporting periods in fiscal years beginning after December 31, 2024. The Company adopted ASU 2023-07 on a retrospective basis for the annual period ended October 31, 2025 and for interim reporting periods beginning with the fiscal quarter ended January 31, 2026. See note 11 for further information regarding the Company’s single reportable segment disclosures. 6 Table of Contents (2) Stock Incentive Plan and Other Share ‑ Based Compensation As of July 31, 2026, there were approximately 400,000 remaining shares available for grant under the Optical Cable Corporation Stock Incentive Plan, as amended (“2017 Plan”). Share-based compensation expense for employees, a consultant and non-employee Directors recognized in the condensed consolidated statements of operations for the three months and nine months ended July 31, 2026 was $ 224,902 and $ 387,546 , respectively. Share-based compensation expense for employees, a consultant and non-employee Directors recognized in the condensed consolidated statements of operations for the three months and nine months ended July 31, 2025 was $ 107,101 and $ 293,399 , respectively. Share-based compensation expense is entirely related to expense recognized in connection with the vesting of restricted stock awards or other stock awards. Stock Compensation The Company has granted, and anticipates granting from time to time, restricted stock awards subject to approval by the Compensation Committee of the Board of Directors. Since fiscal year 2004, the Company has exclusively used restricted stock awards for all share-based compensation of employees and consultants, and restricted stock awards or stock awards to non-employee members of the Board of Directors. During the three months ended July 31, 2026, OCC granted restricted stock awards totaling 14,932 shares to non-employee Directors under the 2017 Plan. The shares are subject to a one -year vesting period and are part of the non-employee Directors’ annual compensation for service on the Board of Directors. Restricted stock award activity during the nine months ended July 31, 2026 consisted of stock grants totaling 14,932 shares, restricted shares forfeited totaling 6,685 shares and restricted shares withheld for taxes in connection with the vesting of restricted shares totaling 36,293 shares. OCC restricted stock grants provide the participant with the option to surrender shares to pay for withholding tax obligations resulting from any vesting restricted shares, or to pay cash to the Company or taxing authorities in the amount of the withholding taxes owed on the value of any vesting restricted shares in order to avoid surrendering shares. As of July 31, 2026, the estimated amount of compensation cost related to unvested equity-based compensation awards in the form of service-based and operational performance-based shares that the Company will recognize over a 1.1 year weighted-average period is approximately $ 661,000 . (3) Allowance for Credit Losses for Trade Accounts Receivable A summary of changes in the allowance for credit losses for trade accounts receivable for the nine months ended July 31, 2026 and 2025 follows: Nine Months Ended July 31, 2026 2025 Balance at beginning of period $ 72,909 $ 92,125 Bad debt expense (recovery) 13,494 496 Losses charged to allowance ( 1,854 ) — Balance at end of period $ 84,549 $ 92,621 7 Table of Contents (4) Inventories Inventories as of July 31, 2026 and October 31, 2025 consist of the following: July 31, October 31, 2026 2025 Finished goods $ 5,713,569 $ 5,542,575 Work in process 6,834,989 5,047,737 Raw materials 10,082,391 8,890,488 Production supplies 307,518 320,954 Total $ 22,938,467 $ 19,801,754 (5) Product Warranties As of July 31, 2026 and October 31, 2025, the Company’s accrual for estimated product warranty claims totaled $ 110,000 and $ 100,000 , respectively, and is included in accounts payable and accrued expenses. Warranty claims expense for the three months and nine months ended July 31, 2026 totaled $ 34,455 and $ 71,067 , respectively. Warranty claims expense for the three months and nine months ended July 31, 2025 totaled $ 53,088 and $ 85,029 , respectively. Warranty claims expense includes certain costs to investigate claims and potential claims, and the costs to replace and/or repair product pursuant to claims, which can include claims not deemed valid by the Company. The following table summarizes the changes in the Company’s accrual for product warranties during the nine months ended July 31, 2026 and 2025: Nine Months Ended July 31, 2026 2025 Balance at beginning of period $ 100,000 $ 65,000 Liabilities accrued for warranties issued during the period 106,094 109,520 Warranty claims and costs paid during the period ( 61,067 ) ( 45,029 ) Changes in liability for pre-existing warranties during the period ( 35,027 ) ( 24,491 ) Balance at end of period $ 110,000 $ 105,000 (6) Long-term Debt and Notes Payable The Company has credit facilities consisting of a term loan (the “Term Loan”) and a Revolving Credit Master Promissory Note and related Loan and Security Agreement (collectively, the “Revolver”). The Company entered into the Term Loan consisting of a Business Loan Agreement (the “Loan Agreement”) with Freedom First Federal Credit Union (“Freedom First”) on April 30, 2026. In connection with the Loan Agreement, the Company also executed a Promissory Note in the original principal amount of $ 2,650,000 . Coinciding with the Company entering the Loan Agreement with Freedom First, the Company paid the full outstanding balance of the Company’s existing Virginia Real Estate Loan with Northeast Bank, which had a maturity date of May 5, 2026. The Term Loan is payable in monthly installments of principal and interest. Principal is calculated using the unpaid balance of the loan and a two hundred forty ( 240 ) month amortization schedule. Interest is computed on the aggregate principal balance outstanding at a fixed rate of 6.5 % per annum for 60 months. Effective June 1, 2031, the interest rate will change to the monthly average yield on U.S. Treasury Securities, adjusted to a constant maturity of five years, plus 2.5 %, for a new fixed rate for years six though ten. Notwithstanding any other provision, the interest rate on the Promissory Note shall at no time be less than 4.5 % per annum. The maturity date of the Term Loan is May 1, 2036. 8 Table of Contents The Term Loan is secured by a first lien deed of trust on the land and building at the Company’s headquarters and manufacturing facilities located in Roanoke, Virginia. The Company had an outstanding balance on its Term Loan of $ 2,639,815 as of July 31, 2026. The Company had an outstanding balance on its Virginia Real Estate Loan of $ 2,570,793 as of October 31, 2025. The Revolver with North Mill Capital LLC (doing business as SLR Business Credit, “SLR”) provides the Company with one or more advances in an amount up to: (a) 85 % of the aggregate outstanding amount of eligible accounts (the “eligible accounts loan value”); plus (b) the lowest of (i) an amount up to 35 % of the aggregate value of eligible inventory, (ii) $ 7,000,000 , and (iii) an amount not to exceed 100 % of the then outstanding eligible accounts loan value; minus (c) $ 1,150,000 . The maximum aggregate principal amount subject to the Revolver is $ 18,000,000 . Interest accrues on the daily balance at the per annum rate of 1.5 % above the Prime Rate in effect from time to time, but not less than 4.75 % (the “Applicable Rate”). As a result, the Revolver accrued interest at an 8.25 % rate at July 31, 2026 and 8.5 % at October 31, 2025. In the event of a default, interest may become 6.0 % above the Applicable Rate. The loan may be extended subject to the agreement of SLR. The Company’s Revolver requires a lockbox arrangement, which provides for all cash receipts to be swept daily to reduce the balance outstanding. This arrangement, combined with the existence of a “subjective acceleration clause” (as defined by U.S. generally accepted accounting principles) in the Revolver, requires the balance on the Revolver to be classified as a current liability. The “subjective acceleration clause” allows SLR to declare an event of default if there is a material adverse change in the Company’s business or financial condition. Upon the occurrence of an event of default, SLR may, among other things, declare all obligations payable in full. Management believes that no such material adverse change has occurred. In addition, at July 31, 2026 and through the date of this report, SLR has not informed the Company that any such event of default has occurred. The Revolver has a maturity date of July 24, 2027 and management believes that the Company will continue to be able to borrow on the Revolver to fund its operations over the remaining term. The Revolver is secured by all of the following assets, properties, rights and interests in property of the Company whether now owned or existing, or hereafter acquired or arising, and wherever located; all accounts, equipment, commercial tort claims, general intangibles, chattel paper, inventory, negotiable collateral, investment property, financial assets, letter-of-credit rights, supporting obligations, deposit accounts, money or assets of the Company, which hereafter come into the possession, custody, or control of SLR; all proceeds and products, whether tangible or intangible, of any of the foregoing, including proceeds of insurance covering any or all of the foregoing; any and all tangible or intangible property resulting from the sale, lease, license or other disposition of any of the foregoing, or any portion thereof or interest therein, and all proceeds thereof; and any other assets of the Company which may be subject to a lien in favor of SLR as security for the obligations under the Loan Agreement. As of July 31, 2026, the Company had $ 6.3 million of outstanding borrowings on its Revolver and $ 6.6 million in available credit. As of October 31, 2025, the Company had $ 5.6 million of outstanding borrowings on its Revolver and $ 4.7 million in available credit. 9 Table of Contents (7) Leases The Company has an operating lease agreement for approximately 34,000 square feet of office, manufacturing and warehouse space in Plano, Texas (near Dallas). The lease term expires on November 30, 2029. The Company has an operating lease agreement for approximately 27,500 square feet of warehouse space in Roanoke, Virginia. The lease term expires on April 30, 2029. The Company also leases certain office equipment under operating leases with initial 60 -month and 48 -month terms. The lease terms expire December 9, 2029 and May 19, 2030. The Company leases test equipment that is used in the Asheville, North Carolina manufacturing facility. The lease term expires on June 26, 2030. The right-of-use asset is being amortized on a straight-line basis over five years. When the lease term ends, if the Company elects to retain the test equipment, title will transfer to the Company and the remaining net book value of the right-of-use asset will be classified as property and equipment. The Company leases phone equipment that is used in the Roanoke, Virginia facility. The lease term expires on April 24, 2031. The right-of-use asset is being amortized on a straight-line basis over five years. When the lease term ends, if the Company elects to retain the phone equipment, title will transfer to the Company and the remaining net book value of the right-of-use asset will be classified as property and equipment. The Company leased printers that are used in the Roanoke, Virginia manufacturing facility. The lease term expired on August 22, 2026. The right-of-use asset was amortized on a straight-line basis over seven years. When the lease term ended, the Company elected to purchase and retain the printers for a nominal fee. Title will transfer to the Company and the remaining net book value of the right-of-use asset will be classified as property and equipment subsequent to July 31, 2026, once the fee has been paid. The Company’s lease contracts may include options to extend or terminate the leases. The Company exercises judgment to determine the term of those leases when such options are present and include such options in the calculation of the lease term when it is reasonably certain that it will exercise those options. The Company includes contract lease components in its determination of lease payments, while non-lease components of the contracts, such as taxes, insurance, and common area maintenance, are expensed as incurred. At commencement, right-of-use assets and lease liabilities are measured at the present value of future lease payments over the lease term. The Company uses either the rate implicit in the lease, where available, or its incremental borrowing rate based on information available at the time of lease commencement to measure the present value of future payments. Operating lease expense is recognized on a straight-line basis over the lease term. Short-term leases with an initial term of 12 months or less are expensed as incurred. The Company’s short-term leases have month-to-month terms. Operating lease right-of-use assets of $ 1,818,039 and $ 1,686,290 were included in other assets at July 31, 2026 and October 31, 2025, respectively. Operating lease liabilities of $ 468,155 and $ 1,432,777 were included in accounts payable and accrued expenses , and other noncurrent liabilities , respectively, at July 31, 2026. Operating lease liabilities of $ 392,898 and $ 1,358,584 were included in accounts payable and accrued expenses , and other noncurrent liabilities , respectively, at October 31, 2025. Operating lease expense recognized during the three months and nine months ended July 31, 2026 totaled $ 187,096 and $ 504,140 , respectively. Operating lease expense recognized during the three months and nine months ended July 31, 2025 totaled $ 153,107 and $ 462,766 , respectively. 10 Table of Contents The weighted average remaining lease term for the operating leases was 41.2 months and the weighted average discount rate was 9.2 % as of July 31, 2026. For the three months and nine months ended July 31, 2026, cash paid for operating lease liabilities totaled $ 151,961 and $ 453,334 , respectively. For the three months and nine months ended July 31, 2025, cash paid for operating lease liabilities totaled $ 147,390 and $ 432,529 , respectively. For the three months ended July 31, 2026, right-of-use assets obtained in exchange for new operating lease liabilities totaled $ 30,568 . For the nine months ended July 31, 2026, right-of-use assets obtained in exchange for new operating lease liabilities totaled $ 479,254 . For the three months ended July 31, 2025, there were no right-of-use assets obtained in exchange for new operating lease liabilities. For the nine months ended July 31, 2025, right-of-use assets obtained in exchange for new operating lease liabilities totaled $ 266,141 and there was a reduction in the right-of-use assets for terminated lease liabilities totaling $ 21,344 . For the three months ended July 31, 2026, there were no right-of-use assets obtained in exchange for new finance lease liabilities. For the nine months ended July 31, 2026, right-of-use assets obtained in exchange for new finance lease liabilities totaled $ 35,081 . For the three months and nine months ended July 31, 2025 right-of-use assets obtained in exchange for new finance lease liabilities totaled $ 188,185 . Finance lease right-of-use assets of $ 239,793 and $ 257,986 were included in other assets at July 31, 2026 and October 31, 2025, respectively. Finance lease liabilities of $ 65,504 and $ 145,878 were included in accounts payable and accrued expenses , and other noncurrent liabilities , respectively, at July 31, 2026. Finance lease liabilities of $ 87,014 and $ 144,957 were included in accounts payable and accrued expenses , and other noncurrent liabilities , respectively, at October 31, 2025. Interest expense related to the finance leases totaled $ 3,510 and $ 11,305 , respectively, for the three months and nine months ended July 31, 2026. Interest expense related to the finance leases totaled $ 2,070 and $ 4,098 , respectively, for the three months and nine months ended July 31, 2025. For the three months and nine months ended July 31, 2026, amortization expense related to the finance leases totaled $ 19,707 and $ 53,274 , respectively. For the three months and nine months ended July 31, 2025, amortization expense related to the finance leases totaled $ 10,511 and $ 25,260 , respectively. The weighted average remaining lease term for the finance leases was 43.5 months and the weighted average discount rate was 6.4 % as of July 31, 2026. For the three months ended July 31, 2026, cash paid for the finance lease liabilities totaled $ 3,510 for interest and $ 19,222 for principal. For the nine months ended July 31, 2026, cash paid for the finance lease liabilities totaled $ 11,305 for interest and $ 55,669 for principal. For the three months ended July 31, 2025, cash paid for the finance lease liability totaled $ 2,070 for interest and $ 12,449 for principal. For the nine months ended July 31, 2025, cash paid for the finance lease liability totaled $ 4,098 for interest and $ 31,854 for principal. 11 Table of Contents The Company’s future payments due under leases reconciled to the lease liabilities are as follows: Fiscal Year Operating leases Finance leases 2026 (1) $ 152,711 $ 36,800 2027 629,022 52,948 2028 652,425 52,948 2029 675,460 52,948 Thereafter 119,635 41,409 Total undiscounted lease payments 2,229,253 237,053 Present value discount ( 328,321 ) ( 25,671 ) Total lease liability $ 1,900,932 $ 211,382 (1) Remaining three months of fiscal year 2026. (8) Fair Value Measurements The carrying amounts reported in the condensed consolidated balance sheets as of July 31, 2026 and October 31, 2025 for cash, trade accounts receivable, income taxes refundable – current, other receivables, current installments of long-term debt, accounts payable and accrued expenses, accrued compensation and payroll taxes, and income taxes payable approximate fair value because of the short maturity of these instruments. The carrying values reported in the condensed consolidated balance sheets as of July 31, 2026 and October 31, 2025 of the Company’s note payable, revolver – current approximate fair value because the interest rates vary with the market. The carrying value reported in the condensed consolidated balance sheet as of July 31, 2026 of the Company’s long-term debt, excluding current installments, approximates fair value based on similar long-term debt issues available to the Company as of July 31, 2026. Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. (9) Net Income (Loss) Per Share Basic net income (loss) per share excludes dilution and is computed by dividing net income (loss) available to common shareholders by the weighted-average number of common shares and shares of redeemable restricted common stock outstanding for the period. Diluted net income (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the net income (loss) of the Company. 12 Table of Contents The following is a reconciliation of the numerators and denominators of the net income (loss) per share computations for the periods presented: Three Months Ended Nine Months Ended July 31, July 31, 2026 2025 2026 2025 Net income (loss) (numerator) $ 1,858,117 $ 301,886 $ 2,515,405 $ ( 1,503,467 ) Shares (denominator) 8,834,543 8,394,988 8,844,796 7,900,901 Basic and diluted net income (loss) per share $ 0.21 $ 0.04 $ 0.28 $ ( 0.19 ) Nonvested shares which have been issued and were outstanding as of July 31, 2025 totaling 370,720 were not included in the computation of basic and diluted net loss per share for the nine months ended July 31, 2025 (because to include such shares would have been antidilutive, or in other words, to do so would have reduced the net loss per share for those periods). Redeemable restricted common stock totaling 642,199 shares, issued July 7, 2025 and outstanding as of July 31, 2026 and 2025, were included in the computation of basic and diluted net income per share for the three months and nine months ended July 31, 2026 and 2025. (10) Business and Credit Concentrations The Company provides credit, in the normal course of business, to various commercial enterprises, governmental entities and not‑for‑profit organizations. Concentration of credit risk with respect to trade receivables is normally limited due to the Company’s large number of customers. The Company also manages exposure to credit risk through credit approvals, credit limits and monitoring procedures. Management believes that credit risks as of July 31, 2026 have been adequately provided for in the condensed consolidated financial statements. The Company includes all entities under common ownership for the purpose of calculating business concentrations. For the three months and nine months ended July 31, 2026, 12.3 % and 14.8 %, respectively, of consolidated net sales were attributable to one distributor customer. For the three months ended July 31, 2026, 10.7 % of consolidated net sales were attributable to another distributor customer. For the three months and nine months ended July 31, 2025, 20.5 % and 19.4 %, respectively, of consolidated net sales were attributable to one distributor customer. (11) Segment Information Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the Chief Operating Decision Maker (“CODM”), who makes decisions about allocating resources and assessing performance, as described in accordance with U.S. generally accepted accounting principles. The Company’s CODM is its Chief Executive Officer. The Company has identified a single reportable segment for purposes of segment reporting and manages the business activities of the single operating segment on a consolidated basis. The Company’s single operating segment derives revenues from sales of its fiber optic and copper data communication cabling and connectivity solutions in the enterprise market and various harsh environment and specialty markets. 13 Table of Contents Financial information is provided to the CODM primarily on a consolidated basis. The CODM evaluates the Company’s financial performance and makes key operating decisions, including the allocation of resources, based primarily on consolidated net sales, consolidated operating income (loss) and net income (loss). The Company’s financial statements provide a comprehensive view of its overall financial condition. The following table presents selected financial information with respect to the Company's single reportable segment, including significant single reportable segment expenses that are regularly provided to the CODM: Three Months Ended Nine Months Ended July 31, July 31, 2026 2025 2026 2025 Net sales $ 24,297,022 $ 19,916,919 $ 62,941,623 $ 53,209,284 Cost of goods sold 15,202,314 13,597,608 40,882,703 36,928,838 Employee and contracted sales personnel-related expenses 4,795,818 3,855,114 12,627,619 11,296,809 Shipping expenses 705,288 526,574 1,771,427 1,428,902 Travel and entertainment expenses 167,751 144,790 572,046 478,494 Professional fees and expenses 123,896 126,132 340,370 428,644 Other (1) 1,190,323 1,104,227 3,540,255 3,366,677 Income (loss) from operations 2,111,632 562,474 3,207,203 ( 719,080 ) Other expense Interest expense ( 247,112 ) ( 260,002 ) ( 692,205 ) ( 772,559 ) Other income (expense) 2,160 3,882 ( 8,098 ) 19,485 Other expense, net ( 244,952 ) ( 256,120 ) ( 700,303 ) ( 753,074 ) Income (loss) before income taxes 1,866,680 306,354 2,506,900 ( 1,472,154 ) Income tax expense (benefit) 8,563 4,468 ( 8,505 ) 31,313 Net income (loss) $ 1,858,117 $ 301,886 $ 2,515,405 $ ( 1,503,467 ) (1) Other is comprised of other segment SG&A expenses including certain public company expenses, corporate insurance premiums not included in employee and contracted sales personnel-related expenses, marketing expenses, certain office and manufacturing facility expenses and all other SG&A expenses not individually set forth in the table above, as well as royalty expense, net and amortization of intangible assets. Information related to the Company’s geographical distribution of revenues is disclosed in note 12. (12) Revenue Recognition Revenues consist of product sales that are recognized at a specific point in time under the core principle of recognizing revenue when control transfers to the customer. The Company considers customer purchase orders, governed by master sales agreements or the Company’s standard terms and conditions, to be the contract with the customer. For each contract, the promise to transfer the control of the products, each of which is individually distinct, is considered to be the identified performance obligation. The Company evaluates each customer’s credit risk when determining whether to accept a contract. In determining transaction prices, the Company evaluates whether fixed order prices are subject to adjustment to determine the net consideration to which the Company expects to be entitled. Contracts do not include financing components, as payment terms are generally due 30 to 90 days after shipment. Taxes assessed by governmental authorities and collected from the customer including, but not limited to, sales and use taxes and value-added taxes, are not included in the transaction price and are not included in net sales. 14 Table of Contents The Company recognizes revenue at the point in time when products are shipped or delivered from its manufacturing facility to its customer, in accordance with the agreed-upon shipping terms. Since the Company typically invoices the customer at the same time that performance obligations are satisfied, no contract assets are recognized. The Company’s contract liability represents advance consideration received from customers prior to transfer of the product. This liability was $ 252,841 as of July 31, 2026 and $ 68,386 as of October 31, 2025. Sales to certain customers are made pursuant to agreements that provide price adjustments and limited return rights with respect to the Company’s products. The Company maintains a reserve for estimated future price adjustment claims, rebates and returns as a refund liability, included in accounts payable and accrued expenses, and the Company excludes such amounts from net sales. The Company’s refund liability was $ 231,425 as of July 31, 2026 and $ 403,816 as of October 31, 2025. The Company offers standard product warranty coverage which provides assurance that its products will conform to contractually agreed-upon specifications for a limited period from the date of shipment. Separately-priced warranty coverage is not offered. The warranty claim is generally limited to a credit equal to the purchase price or a promise to repair or replace the product for a specified period of time at no additional charge. The Company accounts for shipping and handling activities related to contracts with customers as a cost to fulfill its promise to transfer control of the related product. Shipping and handling costs are included in selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Operations. The Company incurs expenses for sales incentives to acquire customer contracts that are directly attributable to the contracts. The incentives are expensed as selling expenses during the period that the related products are transferred to customers. Disaggregation of Revenue The following table presents net sales attributable to the United States and all other countries in total for the three months and nine months ended July 31, 2026 and 2025: Three Months Ended Nine Months Ended July 31, July 31, 2026 2025 2026 2025 United States $ 19,187,791 $ 15,949,437 $ 48,004,056 $ 41,819,451 Outside the United States 5,109,231 3,967,482 14,937,567 11,389,833 Total net sales $ 24,297,022 $ 19,916,919 $ 62,941,623 $ 53,209,284 (13) Redeemable Restricted Common Stock The Company issued 642,199 shares of redeemable restricted common stock to Lightera, LLC (“Lightera”) for $ 2.0 million in cash consideration on July 7, 2025 pursuant to a Stock Purchase Agreement (the “SPA”). The SPA provides the Company with the right to repurchase the shares issued to Lightera at a price equal to the greater of the price per share of common stock paid at issuance or the average price per share of common stock as traded for the ten trading days ending on the business day immediately prior to the date on which the call notice is delivered (the “Call Option”). Similarly, Lightera has a corresponding right to require the Company repurchase the shares issued using the same pricing mechanism included in the Call Option (the “Put Option”). 15 Table of Contents Contemporaneous with the SPA, the Company and Lightera entered into a Joint Collaboration Agreement (the “Collaboration Agreement”) on the same date, establishing a strategic collaboration aimed at expanding product offerings to customers, increasing customer engagement and enhancing customer service for both new and existing customers, which includes certain Lightera products being offered and sold by the Company. The Call Option and the Put Option cannot be exercised for a period of two years from July 7, 2025 unless accelerated based on contingent events, including but not limited to the termination of the Collaboration Agreement, a change-in-control of the Company, or material acquisition by the Company. Unless the term of the Collaboration Agreement is extended beyond such date, the Call Option and the Put Option will generally expire 90 days following July 7, 2027, if they are not exercised. Lightera is restricted from transferring or disposing of the shares of common stock before the Call Option and Put Option become exercisable. The Put Option becomes exercisable on July 7, 2027, if not sooner, upon the occurrence of certain events, or later pursuant to the extension of the Collaborative Agreement as described above. The exercise of the Put Option is outside of the Company’s control. Therefore, the common stock issued to Lightera is determined to be redeemable with the passage of time and thus recorded outside of permanent equity. The Call Option and the Put Option can be exercised one or more times during the permitted exercise period, but the total number of shares of redeemable common stock purchased cannot exceed the original 642,199 shares of redeemable common stock originally issued to Lightera on July 7, 2025. The Company may be obligated to cumulatively purchase a sufficient number of redeemable common stock through one or more exercises of the Call Option and the Put Option up to a cap equal to the value of Lightera’s total original investment of $ 2.0 million, using a price per share of redeemable common stock equal to the greater of the price per share of redeemable common stock paid at issuance, or the average price per share of redeemable common stock as traded for the ten trading days ending on the business day immediately prior to the date any individual Call Option or Put Option is exercised. Generally, the maximum redemption value of the redeemable common stock is $ 2.0 million; however, in the event Lightera exercises the Put Option for a number of shares of redeemable common stock that would result in a redemption value greater than Lightera’s total investment, the Company may be required to assist Lightera with the disposition of any remaining shares of redeemable common stock in excess of $ 2.0 million in value, or in certain limited circumstances, the Company may be required to (i) register the remaining shares of redeemable common stock enabling Lightera to publicly trade these shares or (ii) purchase the remaining shares by issuing a promissory note to Lightera. As a result, the Company has recorded the value of the redeemable common stock at the average stock price for the ten days preceding the balance sheet date multiplied by the total number of the redeemable shares. The Company initially recorded the redeemable common stock at $ 1,907,517 , net of issuance costs of $ 92,483 . While not currently redeemable, the redeemable common stock is probable of becoming redeemable pursuant to U.S. generally accepted accounting principles, and thus the Company has elected to recognize the redeemable common stock at redemption value of $ 9.5 million as of July 31, 2026 and $ 5.1 million as of October 31, 2025. The corresponding changes in redemption value are recognized in retained earnings. 16 Table of Contents The Company evaluated the Call Option and Put Option and concluded that these embedded features were not indexed to the underlying equity-like instruments and are required to be bifurcated and recognized as a compound derivative instrument. As of the date of issuance and July 31, 2026, the Company concluded the fair value of the bifurcated compound derivative was insignificant as the strike price adjusts with the movement of the trading price of the underlying common stock. (14) Contingencies From time to time, the Company is involved in various claims, legal actions and regulatory reviews arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position, results of operations or liquidity. (15) New Accounting Standards Not Yet Adopted In December 2023, the FASB issued Accounting Standards Update 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). The objective of ASU 2023-09 is to enhance disclosures related to income taxes, including specific thresholds for inclusion within the tabular disclosure of income tax rate reconciliation and specified information about income taxes paid. ASU 2023-09 is effective for public companies starting in annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact ASU 2023-09 will have on its financial statement disclosures. In November 2024, the FASB issued Accounting Standards Update 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”). The objective of ASU 2024-03 is to improve disclosures about a public entity's expenses, primarily through additional disaggregation of income statement expenses. In January 2025, the FASB further clarified the effective date of ASU 2024-03 with the issuance of Accounting Standards Update 2025-01, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2025-01”). ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted and may be applied either on a prospective or retrospective basis. The Company is currently evaluating the impact ASU 2024-03 will have on its financial statement disclosures. In July 2025, the FASB issued Accounting Standards Update 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). The amendments in ASU 2025-05 provide entities with a practical expedient to simplify the estimation of expected credit losses on current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606, Revenue from Contracts with Customers (“ASC 606”) by allowing the assumption that current conditions as of the balance sheet date will not change during the remaining life of the asset. ASU 2025-05 is effective for annual periods beginning after December 15, 2025 and interim periods within those annual reporting periods, with early adoption permitted. The adoption of ASU 2025-05 is not expected to have a material impact on the Company's results of operations, financial position or liquidity or its related financial statement disclosures. In December 2025, the FASB issued Accounting Standards Update 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”). This update clarifies the applicability, form and content, and interim disclosure requirements in ASC Topic 270 and enhances navigability of the interim reporting guidance. ASU 2025-11 also establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact ASU 2025-11 will have on its financial statement disclosures. 17 Table of Contents In December 2025, the FASB issued Accounting Standards Update 2025-12, Codification Improvements , (“ASU 2025-12”). ASU 2025-12 includes changes that clarify, correct, or otherwise improve certain components of the Accounting Standards Codification. The improvements consist of narrow-scope amendments, technical corrections, clarification of existing guidance, and updates to clarify the appropriate scope and application of certain disclosure requirements. ASU 2025-12 is effective for annual periods beginning after December 15, 2026, and interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact ASU 2025-12 will have on its results of operations, financial position or liquidity or its related financial statement disclosures. There are no other new accounting standards issued, but not yet adopted by us, which are expected to materially impact our financial position, operating results or financial statement disclosures. 18 Table of Contents