What changed in this filing

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Item 1. Financial Statements

2025-06-16 compared with 2025-03-17 · 160 added, 116 removed, 245 unchanged (53% of the section changed)

4 unchanged sentences

(In thousands)

Three Months Ended January 31,

Six Months Ended April 30,

OPERATING ACTIVITIES:

1 unchanged sentence

Adjustments to reconcile consolidated net loss to net cash provided by operating activities:

Bad debt expense

Bad debt expense (recovery)

Depreciation and amortization

Gain on disposal of fixed assets

Stock-based compensation expense

2 unchanged sentences

Deferred income taxes

Extinguishment of debt issuance cost

Changes in operating assets and liabilities:

6 unchanged sentences

INVESTING ACTIVITIES:

Proceeds from sale of fixed assets

Capital expenditures

1 unchanged sentence

FINANCING ACTIVITIES:

Line of credit payments

Line of credit proceeds (payments)

Debt issuance cost

Proceeds from exercise of stock options

Term Loan payments

Net cash used in financing activities

Net cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents

12 unchanged sentences

as of October 31, 2024 included in our Annual Report on Form 10-K (the “Form 10-K”) for the year ended October 31, 2024 that was previously filed with the Securities and Exchange Commission (“SEC”).

Operating results for the three months ended January 31, 2025 are not necessarily indicative of the results that may be expected for the year ended October 31, 2025.

The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in our Form 10-K.

Operating results for the six months ended April 30, 2025 are not necessarily indicative of the results that may be expected for the year ended October 31, 2025.

The unaudited condensed consolidated financial statements should be read in conjunction with the condensed consolidated financial statements and footnotes thereto included in our Form 10-K.

Our accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities in the ordinary course of business.

The propriety of using the going-concern basis is dependent upon, among other things, the achievement of future profitable operations, the ability to generate sufficient cash from operations and potential other funding sources, in addition to cash on-hand along with the current credit facility with Eclipse Business Capital (“EBC”) to meet its obligations as they become due.

Although we have incurred operating losses during the three months ended January 31, 2025, we have implemented certain cost-cutting measures to reduce our operating expenses and to help drive positive operating cash flow and increase liquidity.

Our plan includes consolidating facilities and recognizing the related operating efficiencies and synergies in our production operations.

For the three and six months ended April 30, 2025, we generated operating income of $ 106,000 and $ 162,000 , respectively, compared to an operating loss of $ 415,000 and $ 2,499,000 for the same periods last year.

This is a result of an increase in sales, as well as certain cost-cutting measures we took to reduce our operating expenses and to help drive positive operating cash flow and increase liquidity.

Efforts to reduce expenses included consolidating facilities and recognizing the related operating efficiencies and synergies in our production operations.

The Company intends to continue to pursue additional continuous improvement and cost reduction measures, as well as organic growth in revenue and profitability.

2 unchanged sentences

Principles of consolidation

The accompanying consolidated financial statements include the accounts of RF Industries, Ltd., Cables Unlimited, Inc.

The accompanying unaudited condensed consolidated financial statements include the accounts of RF Industries, Ltd., Cables Unlimited, Inc.

(“Cables Unlimited”), Rel-Tech Electronics, Inc.

12 unchanged sentences

Level 3— Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

As of January 31, 2025 and October 31, 2024, the fair value carrying amounts reflected in the accompanying condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, and accounts payable approximated their carrying value due to their short-term nature.

As of April 30, 2025 and October 31, 2024, the carrying amounts reflected in the accompanying condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, and accounts payable approximated their carrying value due to their short-term nature.

Recent accounting standards

Recently issued accounting pronouncements not yet adopted:

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.

8 unchanged sentences

We maintain our cash and cash equivalents with high-credit quality financial institutions.

At January 31, 2025, we had cash and cash equivalent balances in excess of federally insured limits in the amount of approximately $ 1.3 million.

At April 30, 2025, we had cash and cash equivalent balances in excess of federally insured limits in the amount of approximately $ 3.3 million.

Sales from each customer that were 10% or greater of net sales were as follows:

Three Months Ended January 31,

Wireless provider

For the three months ended January 31, 2025, one wireless carrier accounted for 21 % of net sales and 21 % of net accounts receivable.

For the three months ended January 31, 2024, no customers accounted for 10% or more of net sales, and two distributor customers accounted for 10 % each of total net accounts receivable.

Three Months Ended April 30,

Six Months Ended April 30,

Wireless provider A

Wireless provider B

For the three months ended April 30, 2025, one wireless provider accounted for 11 % of net sales and 16 % of total net accounts receivable balance.

One distributor with less than 10% of total net sales, accounted for 10 % of total net accounts receivable balance.

For the six months ended April 30, 2025, a different wireless provider accounted for 11% of net sales and less than 10% of total net accounts receivable balance, and a wireless provider and the same distributor, whose sales were both less than 10% of total net sales, accounted for 16 % and 10 % of total net accounts receivable balance, respectively.

For the three months ended April 30, 2024, no customers accounted for 10% or more of net sales, and one wireless provider and one distributor, whose sales were both less than 10% of total net sales, accounted for 15 % and 10 % of total net accounts receivable balance, respectively.

For the six months ended April 30, 2024, no customers accounted for 10% or more of net sales, and two distributor customers, whose sales were both less than 10% of total net sales, accounted for 15 % and 10 % of total net accounts receivable balance, respectively.

Although these customers have been significant customers of the Company, the written agreements with these customers do not have any minimum purchase obligations and these customers could stop buying our products at any time and for any reason.

4 unchanged sentences

Inventories consist of the following (in thousands):

January 31, 2025

April 30, 2025

October 31, 2024

2 unchanged sentences

Finished goods

For the three months ended January 31, 2025, one vendor accounted for 10 % of inventory purchases.

For the three months ended January 31, 2024, no single vendor accounted for 10% or more of inventory purchases.

For the three months ended April 30, 2025 and 2024, no single vendor accounted for 10% or more of inventory purchases.

For the six months ended April 30, 2025 and 2024, no single vendor accounted for 10% or more of inventory purchases.

We have arrangements with these vendors to purchase products based on purchase orders that we periodically issue.

1 unchanged sentence

Other current assets consist of the following (in thousands):

January 31, 2025

April 30, 2025

October 31, 2024

3 unchanged sentences

Accrued expenses consist of the following (in thousands):

January 31, 2025

April 30, 2025

October 31, 2024

1 unchanged sentence

Accrued receipts

Deferred revenue

Other accrued expenses

Accrued receipts represent purchased inventory for which invoices have not been received.

Note 6 – Loss per share

Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period.

Note 6 – Income (Loss) per share

Basic income (loss) per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period.

Diluted earnings per share is computed by dividing net income by the weighted average number of common shares outstanding increased by the effects of assuming that other potentially dilutive securities (such as stock options) outstanding during the period had been exercised and the treasury stock method had been applied.

During the three months ended January 31, 2025, we reported a net loss, and in periods with a net loss, the basic loss per share equals the diluted loss per share, as all common stock equivalents are excluded from the per share calculation due to their anti-dilutive effect.

Potentially issuable securities that are out-of-the-money totaled 345,556 and 1,068,022 shares for the three months ended January 31, 2025 and 2024, respectively, and were excluded from the calculation of diluted per share amounts because of their anti-dilutive effect.

During the three months ended April 30, 2025, we reported a net loss and, in periods with a net loss, the basic loss per share equals the diluted loss per share as all common stock equivalents are excluded from the per share calculation due to their anti-dilutive effect.

Potentially issuable securities that are out-of-the-money totaled 405,056 and 1,152,513 shares for the three months ended April 30, 2025 and 2024, respectively, and 405,056 and 1,152,513 shares for the six months ended April 30, 2025 and 2024, respectively, and were excluded from the calculation of diluted per share amounts because of their anti-dilutive effect.

The following table summarizes the computation of basic and diluted weighted average shares outstanding:

Three Months Ended January 31,

Three Months Ended April 30,

Six Months Ended April 30,

Weighted average shares outstanding for basic earnings per share

2 unchanged sentences

Note 7 – Stock-based compensation and equity transactions

On November 1, 2023, we granted 15,202 shares of restricted stock to one officer in lieu of cash compensation.

The shares of restricted stock vest over one year as follows:

(i) one -quarter of the restricted shares on January 31, 2024 and (ii) the remaining restricted shares shall vest in three equal quarterly installments.

On January 11, 2024, we granted a total of 110,099 shares of restricted stock and 220,001 incentive stock options to one manager and three officers, respectively.

The shares of restricted stock and incentive stock options vest over four years as follows:

(i) one -quarter of the restricted shares and options shall vest on January 11, 2025 and (ii) the remaining restricted shares and options shall vest in 12 equal quarterly installments over the next three years.

On April 16, 2024, we granted a total of 25,000 incentive stock options to three managers.

The shares of incentive stock options vest over four years as follows:

(i) one -quarter of the restricted shares and options shall vest on April 16, 2025 and (ii) the remaining restricted shares and options shall vest in 12 equal quarterly installments over the next three years.

On December 2, 2024, we granted 47,500 incentive stock options to seven managers.

4 unchanged sentences

(i) one -quarter of the restricted shares and options shall vest on January 13, 2026 and (ii) the remaining restricted shares and options shall vest in 12 equal quarterly installments over the next three years.

No other shares or options were granted to Company employees during the three months ended January 31, 2025 and 2024.

The fair value of each option granted during the three months ended January 31, 2025 and 2024 was estimated on the grant date using the Black-Scholes option pricing model with the following assumptions:

Three Months Ended January 31,

No other shares or options were granted to Company employees during the three and six months ended April 30, 2025 and 2024.

The fair value of each option granted during the six months ended April 30, 2025 and 2024 was estimated on the grant date using the Black-Scholes option pricing model with the following assumptions:

Six Months Ended April 30,

Weighted average volatility

5 unchanged sentences

Expected volatilities are based on historical volatility of our stock price and other factors.

We used the historical method to calculate the expected life of the 2025 and 2024 options granted.

We used the historical method to calculate the expected life of the 2025 and 2024 option grants.

The expected life represents the period of time that options granted are expected to be outstanding.

4 unchanged sentences

Descriptions of our stock option plans are included in Note 8 to our audited financial statements included in our Annual Report on Form 10-K for the year ended October 31, 2024.

A summary of the status of the options granted under our stock option plans as of January 31, 2025 and the changes in options outstanding during the three months then ended is presented in the table that follows:

A summary of the status of the options granted under our stock option plans as of April 30, 2025 and the changes in options outstanding during the three months then ended is presented in the table that follows:

Exercise Price

3 unchanged sentences

Options canceled or expired

Options outstanding at January 31, 2025

Options exercisable at January 31, 2025

Options vested and expected to vest at January 31, 2025

Option price range at January 31, 2025

Options outstanding at April 30, 2025

Options exercisable at April 30, 2025

Options vested and expected to vest at April 30, 2025

Option price range at April 30, 2025

Aggregate intrinsic value of options exercised during year

Weighted average remaining contractual life of options outstanding as of January 31, 2025:

Weighted average remaining contractual life of options exercisable as of January 31, 2025:

Weighted average remaining contractual life of options vested and expected to vest as of January 31, 2025:

Aggregate intrinsic value of options outstanding at January 31, 2025:

Aggregate intrinsic value of options exercisable at January 31, 2025:

Aggregate intrinsic value of options vested and expected to vest at January 31, 2025:

As of January 31, 2025, $ 994,000 and $ 888,000 of expenses with respect to nonvested stock options and restricted shares, respectively, has yet to be recognized but is expected to be recognized over a weighted average period of 1.8 and 1.5 years, respectively.

Weighted average remaining contractual life of options outstanding as of April 30, 2025:

Weighted average remaining contractual life of options exercisable as of April 30, 2025:

Weighted average remaining contractual life of options vested and expected to vest as of April 30, 2025:

Aggregate intrinsic value of options outstanding at April 30, 2025:

Aggregate intrinsic value of options exercisable at April 30, 2025:

Aggregate intrinsic value of options vested and expected to vest at April 30, 2025:

As of April 30, 2025, $ 961,000 and $ 787,000 of expenses with respect to nonvested stock options and restricted shares, respectively, have yet to be recognized but are expected to be recognized over a weighted average period of 1.6 and 1.4 years, respectively.

Stock option expense

During the three months ended January 31, 2025 and 2024, stock-based compensation expense totaled $ 195,000 and $ 255,000 , respectively, and was classified in selling and general expense.

During the three months ended April 30, 2025 and 2024, stock-based compensation expense totaled $ 227,000 and $ 248,000 , respectively, and was classified in selling and general expense.

During the six months ended April 30, 2025 and 2024, stock-based compensation expense totaled $ 421,000 and $ 503,000 , respectively, and was classified in selling and general expense.

Note 8 – Segment information

5 unchanged sentences

and (5) if applicable, the nature of the regulatory environment.

Based upon this evaluation, as of January 31, 2025, we had two reportable segments – RF Connector and Cable Assembly (“RF Connector”) segment and Custom Cabling Manufacturing and Assembly (“Custom Cabling”) segment.

On August 1, 2023, C Enterprises moved and transitioned its physical operations into the RF Connector office in San Diego, CA.

Given the synergies in consolidating both the operating divisions into one building, C Enterprises has been included in the RF Connector segment since August 1, 2023.

Further, since the acquisition of C Enterprises in 2019, the customer base for the division has shifted more towards distribution as opposed to direct to end customer which is more aligned with the RF Connector segment.

The segment change of including C Enterprise as part of the RF Connector segment was made retroactive to the beginning of our fiscal year starting November 1, 2022 and reclassified for fiscal year 2022 for comparative purposes.

In annual and interim periods prior to the transition on August 1, 2023, C Enterprises was included in the Custom Cabling segment.

Based upon this evaluation, as of April 30, 2025, we had two reportable segments – RF Connector and Cable Assembly (“RF Connector”) segment and Custom Cabling Manufacturing and Assembly (“Custom Cabling”) segment.

The RF Connector segment consists of three divisions and the Custom Cabling segment also consists of three divisions.

10 unchanged sentences

We attribute sales to geographic areas based on the location of the customers.

The following table presents the sales by geographic area for the three months ended January 31, 2025 and 2024 (in thousands):

Three Months Ended January 31,

The following table presents the sales by geographic area for the three and six months ended April 30, 2025 and 2024 (in thousands):

Three Months Ended April 30,

Six Months Ended April 30,

United States

Foreign Countries:

Net sales to external customers, income (loss) before provision (benefit) for income taxes and other related segment information for the three months ended January 31, 2025 and 2024 are as follows (in thousands):

United Kingdom

Net sales, (loss) income before provision for income taxes and other related segment information for the three months ended April 30, 2025 and 2024 are as follows (in thousands):

Custom Cabling

1 unchanged sentence

Cable Assembly

(Loss) income before benefit for income taxes

(Loss) income before provision for income taxes

Depreciation and amortization

Expenditures for Segment Assets

Loss before benefit for income taxes

(Loss) income before provision for income taxes

Depreciation and amortization

Expenditures for Segment Assets

Net sales, (loss) income before benefit for income taxes and other related segment information for the six months ended April 30, 2025 and 2024 are as follows (in thousands):

Custom Cabling

Manufacturing and

Cable Assembly

(Loss) income before provision from income taxes

Depreciation and amortization

Expenditures for Segment Assets

(Loss) income before provision for income taxes

Depreciation and amortization

Expenditures for Segment Assets

Note 9 – Income taxes

We use an estimated annual effective tax rate, which is based on expected annual taxable income (loss), statutory tax rates and tax planning opportunities available in the various jurisdictions in which we operate, to determine our quarterly provision (benefit) for income taxes.

Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter.

We recorded income tax provisions (benefits) of $ 36,000 and ($ 831,000 ) for the three months ended January 31, 2025 and 2024, respectively.

The effective tax rate was ( 17.2 %) for the three months ended January 31, 2025, compared to 37.9 % for the three months ended January 31, 2024.

The change in effective tax rate for the three months ended January 31, 2025 compared to the three months ended January 31, 2024 was primarily driven by the valuation allowance.

We had $ 205,000 and $ 186,000 of unrecognized tax benefits as of January 31, 2025 and October 31, 2024, respectively.

The unrecognized tax benefits, if recognized, would result in a net tax benefit of $ 123,000 as of January 31, 2025.

The Company assesses all positive and negative evidence in determining if, based on the weight of such evidence, a valuation allowance is required to be recorded against the deferred tax assets as of January 31, 2025.

In accordance with applicable accounting guidance, the Company is required to use an estimated annual effective tax rate to compute its tax provision during an interim period.

However, there is an exception to the use of this method when a reliable estimate of the annual effective tax rate cannot be made due to the sensitivity of changes in estimates of ordinary income (loss).

In that case, an entity may report the actual tax provision or benefit applicable when annual income (loss) cannot be estimated as a discrete item in the interim period.

This exception was used in determining the tax provision for the six months ended April 30, 2025.

We recorded income tax provisions of $ 135,000 and $ 3,649,000 for the three months ended April 30, 2025 and 2024, respectively.

The effective tax rate for the three months ended April 30, 2025 and 2024 was ( 122.7 %) and ( 564.7 %), respectively.

For the six months ended April 30, 2025 and 2024, we recorded income tax provisions of $ 171,000 and $ 2,818,000 , respectively.

The effective tax rate for the six months ended April 30, 2025 and 2024 was ( 53.6 %) and ( 99.3 %), respectively.

The effective tax rate for the three months and six months ended April 30, 2025 differed from the U.S.

statutory tax rate of 21% primarily due to state taxes, various permanent differences, research and development tax credits, unrecognized tax benefits and change in valuation allowance.

We had $ 224,000 and $ 186,000 of unrecognized tax benefits as of April 30, 2025 and October 31, 2024, respectively.

The unrecognized tax benefits, if recognized, would result in a net tax benefit of $ 144,000 as of April 30, 2025.

The Company has evaluated future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.

In making such judgments, significant weight is given to evidence that can be objectively verified.

In making such judgements, significant weight is given to evidence that can be objectively verified.

After analyzing all available evidence, including the recent trend of losses, the Company has determined that it is not more likely than not that all of its deferred tax assets will be realized, and therefore, has a partial valuation allowance against its deferred tax assets.

The Company's valuation allowance was $ 4,075,000 and $ 3,962,000 as of January 31, 2025 and October 31, 2024, respectively.

The Company's valuation allowance was $ 4,040,000 and $ 3,962,000 as of April 30, 2025 and October 31, 2024, respectively.

Note 10 – Intangible assets

Intangible assets consist of the following as of January 31, 2025 and October 31, 2024 (in thousands):

January 31, 2025

Intangible assets consist of the following as of April 30, 2025 and October 31, 2024 (in thousands):

April 30, 2025

October 31, 2024

13 unchanged sentences

Non-amortizable intangible assets:

Amortization expense for the three months ended January 31, 2025 and the year ended October 31, 2024 was $ 411,000 and $ 1,688,000 , respectively.

As of January 31, 2025, the weighted-average amortization period for the amortizable intangible assets is 7.38 years.

Amortization expense for the six months ended April 30, 2025 and the year ended October 31, 2024 was $ 822,000 and $ 1,688,000 , respectively.

As of April 30, 2025, the weighted-average amortization period for the amortizable intangible assets is 7.14 years.

Note 11 – Commitments

We adopted ASU 2016-02 on November 1, 2019, and elected the practical expedient modified retrospective method whereby the lease qualification and classification was carried over from the accounting for leases under ASC 840.

The lease contracts for Cables Unlimited and Rel-Tech commenced prior to the effective date of November 1, 2019, and were determined to be operating leases.

All other new contracts have been assessed for the existence of a lease and for the proper classification into operating leases.

The rate implicit in the leases was undeterminable and, therefore, the discount rate used in all lease contracts is our incremental borrowing rate.

We have operating leases for corporate offices, manufacturing facilities, and certain storage units.

Our leases have remaining lease terms of one year to ten years.

Our leases have remaining lease terms of one year to 10 years.

A portion of our operating leases are leased from K&K Unlimited, a company controlled by Darren Clark, the former owner and current President of Cables Unlimited, to whom we make rent payments totaling $ 18,000 per month.

We also have other operating leases for certain equipment.

The components of our facilities and equipment operating lease expenses for the periods ending January 31, 2025 and 2024 were as follows (in thousands):

Three Months Ended January 31,

The components of our facilities and equipment operating lease expenses for the periods ending April 30, 2025 and 2024 were as follows (in thousands):

Three Months Ended April 30,

Six Months Ended April 30,

Operating lease cost

As of January 31, 2025, operating lease right-of-use assets were $ 14.9 million and operating lease liabilities totaled $ 20.1 million, of which $ 1.9 million is classified as current.

There were no finance leases as of January 31, 2025.

Future minimum lease payments under non-cancellable leases as of January 31, 2025 are a total of $26.7 million.

The Schrofftech facilities, consisting of one building of a total of 7,000 square feet, are leased by RF Industries, Ltd.

under a lease that was renewed effective February 1, 2025, for one year expiring January 31, 2026.

The aggregate monthly rental payment under the new lease currently is $ 4,607 per month.

As of April 30, 2025, operating lease right-of-use assets were $ 14.5 million and operating lease liabilities totaled $ 19.6 million, of which $ 1.9 million is classified as current.

There were no finance leases as of April 30, 2025.

Future minimum lease payments under non-cancellable leases as of April 30, 2025 are a total of $ 25.9 million.

Note 12 – Term Loan and Line of credit

13 unchanged sentences

We filed the EBC Credit Agreement as Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarter ended January 31, 2024 and the First Amendment as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended July 31, 2024.

Debt issuance costs related to the EBC Credit Agreement totaled $ 368,000 and were included as part of our other long-term assets balance in the condensed consolidated balance sheet.

As of January 31, 2025, our outstanding borrowings under the EBC Credit Agreement were $ 8,053,000 .

Debt issuance costs related to the EBC Credit Agreement have been capitalized and the remaining balance, which is included as part of our other long-term assets balance, totaled $ 325,000 as of April 30, 2025.

As of April 30, 2025, our outstanding borrowings under the EBC Credit Agreement were $ 7,994,000 .

In accordance with ASC 470-10-45, Other Presentations Matters - General , we have classified the outstanding borrowings as part of current liabilities in the condensed consolidated balance sheet.

Note 13 – Cash dividends and declared dividends

We did not pay any dividends during the three months ended January 31, 2025, nor during the three months ended January 31, 2024.

Note 13 – Cash dividend and declared dividends

We did not pay any dividends during the three or six months ended April 30, 2025, nor during the three or six months ended April 30, 2024.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

9 unchanged sentences

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes and other financial information appearing elsewhere in this Form 10-Q.

Readers are also urged to carefully review and consider the various disclosures made by the Company which attempt to advise interested parties of the factors which affect our business, including without limitation the disclosures made under the caption “ Management ’ s Discussion and Analysis of Financial Condition and Results of Operations, ” under the caption “ Risk Factors, ” and the audited consolidated financial statements and related notes included in our Annual Report filed on Form 10-K for the year ended October 31, 2024 and other reports and filings made with the Securities and Exchange Commission.

Critical Accounting Estimates

1 unchanged sentence

The preparation of these financial statements requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, net revenue and expenses, and the disclosure of contingent liabilities.

Management believes that there have been no material changes during the three months ended January 31, 2025 to the items that we disclosed as our critical accounting estimates in the MD&A in our Annual Report on Form10-K for the fiscal year ended October 31, 2024.

Management believes that there have been no material changes during the three months ended April 30, 2025 to the items that we disclosed as our critical accounting estimates in the MD&A in our Annual Report on Form10-K for the fiscal year ended October 31, 2024.

RF Industries, Ltd.

6 unchanged sentences

The Custom Cabling segment designs, manufactures, markets and distributes custom copper and fiber cable assemblies, complex hybrid fiber optic and power solution cables, electromechanical wiring harnesses for a broad range of applications in a diverse set of end markets, energy-efficient cooling systems for wireless base stations and remote equipment shelters and custom designed, pole-ready 4G and 5G small cell integrated enclosures.

For the three months ended January 31, 2025, revenues from the Custom Cabling segment were generated from the sale of fiber optics cable, copper cabling, custom patch cord assemblies, and wiring harnesses, which collectively accounted for 55% of the Company’s total sales.

Revenues from the RF Connector segment were generated from the sales of RF Connector products and cable assemblies and accounted for 45% of total sales for the three months ended January 31, 2025.

For the six months ended April 30, 2025, revenues from the Custom Cabling segment were generated from the sale of fiber optics cable, copper cabling, custom patch cord assemblies, and wiring harnesses, which collectively accounted for 53% of the Company’s total sales.

Revenues from the RF Connector segment were generated from the sales of RF Connector products and cable assemblies and accounted for 47% of total sales for the six months ended April 30, 2025.

The RF Connector segment mostly sells standardized products regularly used by customers and, therefore, has a more stable revenue stream.

4 unchanged sentences

Liquidity and Capital Resources

Historically, we have been able to fund our cash flow requirements for operations and other capital requirements from funds we generated from operations.

However, we have incurred an operating loss during the three months ended January 31, 2025.

During the period, we have implemented certain cost-cutting measures to reduce our operating expenses and to help drive positive operating cash flow and increase liquidity.

Our plan includes consolidating facilities and recognizing the related operating efficiencies and synergies in our production operations.

Historically, we have been able to fund our liquidity and other capital requirements from funds we generated from operations.

We generated operating income during the six months ended April 30, 2025, as we saw sales continue to recover during the current period.

Further, the cost-cutting measures that were implemented to reduce our operating expenses and to help drive positive operating cash flow and increase liquidity have started to be realized.

These cost-cutting efforts included consolidating facilities and recognizing the related operating efficiencies and synergies in our production operations.

We intend to continue to pursue additional continuous improvement and cost reduction measures, as well as organic growth in revenue and profitability.

As of January 31, 2025, we had a total of $1.3 million of cash and cash equivalents compared to a total of $0.8 million of cash and cash equivalents as of October 31, 2024.

As of January 31, 2025, we had working capital of $11.7 million and a current ratio of approximately 1.7:1 with current assets of $29.5 million and current liabilities of $17.8 million.

As of April 30, 2025, we had a total of $3.6 million of cash and cash equivalents compared to a total of $0.8 million of cash and cash equivalents as of October 31, 2024.

As of April 30, 2025, we had working capital of $12.1 million and a current ratio of approximately 1.6:1 with current assets of $32.7 million and current liabilities of $20.6 million.

We believe that the amount of cash remaining, plus the amount available to us under the EBC Revolving Loan Facility, will be sufficient to fund our anticipated liquidity needs.

As of January 31, 2025, we had $15.2 million of backlog, compared to $19.5 million as of October 31, 2024.

The decrease in backlog relates primarily to completion of a large tier one carrier project.

As of April 30, 2025, we had $15.0 million of backlog, compared to $19.5 million as of October 31, 2024, due primarily to shipments against our backlog and timing of orders.

Since purchase orders are submitted from customers based on the timing of their requirements, our ability to predict orders in future periods or trends in future periods is limited.

Furthermore, purchase orders may be subject to cancellation from customers, although we have not historically experienced material cancellations of purchase orders.

In the three months ended January 31, 2025, we generated $0.6 million of cash in our operating activities.

This net inflow of cash is primarily related to a decrease in inventories of $1.3 million as a result of better inventory management and supply chain conditions improving allowing us to carry less inventory on hand, $0.6 million from depreciation and amortization, $0.2 million from stock-based compensation expense, $0.3 million from the change in accrued expenses, $0.1 million from bad debt expense, $43,000 from amortization of debt issuance costs and $6,000 from deferred income taxes.

The cash usage was primarily due to the net loss of $0.2 million, the change in accounts receivable of $0.7 million, the change in other current assets of $0.4 million, the change in accounts payable of $0.4 million, right-of-use assets of $0.1 million and $29,000 tax payments on cancelled shares of restricted stock.

During the three months ended January 31, 2025, we also spent $27,000 on capital expenditures, repaid $0.1 million on the revolving credit facility with EBC and received $4,000 in proceeds from the exercise of stock options.

In the six months ended April 30, 2025, we generated $2.8 million of cash in our operating activities.

This net inflow of cash is primarily related to a decrease in inventories of $2.2 million as a result of better inventory management and supply chain conditions improving allowing us to carry less inventory on hand, $1.2 million from depreciation and amortization, $1.0 million from the change in accounts payable, $0.4 million from stock-based compensation expense, $1.6 million from the change in accrued expenses, $0.1 million from bad debt expense and $87,000 from amortization of debt issuance costs.

The cash usage was primarily due to the net loss of $0.5 million, the change in accounts receivable of $3.0 million, the change in other current assets of $0.1 million, right-of-use assets of $0.2 million, $34,000 tax payments on cancelled shares of restricted stock and $3,000 from deferred income taxes.

During the six months ended April 30, 2025, we also spent $61,000 on capital expenditures, repaid $0.2 million on the revolving credit facility with EBC and received $0.2 million in proceeds from the exercise of stock options.

Our goal to expand and grow our business both organically and through acquisitions may require material additional capital equipment.

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Results of Operations

Three Months Ended January 31, 2025 vs.

Three Months Ended January 31, 2024

Net sales for the three months ended January 31, 2025 (the “fiscal 2025 quarter”) increased by 42.2%, or $5.7 million, to $19.2 million as compared to the three months ended January 31, 2024 (the “fiscal 2024 quarter”).

Three Months Ended April 30, 2025 vs.

Three Months Ended April 30, 2024

Net sales for the three months ended April 30, 2025 (the “fiscal 2025 quarter”) increased by 17.4%, or $2.8 million, to $18.9 million as compared to the three months ended April 30, 2024 (the “fiscal 2024 quarter”).

Net sales for the fiscal 2025 quarter at the Custom Cabling segment increased by $3.4 million, or 54.8%, to $9.6 million, compared to $6.2 million in the fiscal 2024 quarter.

The increase was primarily driven by tier one carrier applications for our direct air cooling offering.

Net sales for the fiscal 2025 quarter at the RF Connector segment decreased by $0.1 million, or 1.1%, to $8.7 million as compared to $8.8 million in the fiscal 2024 quarter, primarily due to a decrease in sales related to lower levels of inventory being kept on hand at our distributor customers based on seasonality and the lower carrier capital expenditure environment, and fewer carrier projects involving approved RF components.

The increase was primarily driven by tier one carrier applications for our direct air cooling offering and new market penetration in our Custom Cabling segment.

Net sales for the fiscal 2025 quarter at the RF Connector segment decreased by $0.5 million, or 5.1%, to $9.4 million as compared to $9.9 million in the fiscal 2024 quarter, primarily due to timing of small cell applications and deployment.

Gross profit for the fiscal 2025 quarter increased by $1.2 million to $6.0 million, and gross margins increased to 31.5% of sales compared to 29.9% of sales in the fiscal 2024 quarter.

The increases in gross profit and gross margins were primarily related to the overall increase in sales and direct air cooling product mix.

Engineering expenses decreased by $0.1 million to $0.7 million in the fiscal 2025 quarter compared to $0.8 million in the fiscal 2024 quarter.

The decrease was the result of more forward looking product development and cost savings initiatives.

The increases in gross profit and gross margins were primarily related to the overall increase in sales, direct air cooling product mix and new market penetration.

Engineering expenses increased by $0.1 million to $0.7 million in the fiscal 2025 quarter compared to $0.6 million in the fiscal 2024 quarter.

The increase was the result of new product development.

Engineering expenses represent costs incurred relating to the ongoing research and development of current and new products.

Selling and general expenses increased by $0.4 million to $5.0 million (25.9% of sales) compared to $4.6 million (34.3% of sales) in the first quarter last year primarily due to an increase variable compensation related to commissions and bonuses as a result of the higher sales.

We did not incur one-time charges in the fiscal 2025 quarter.

For the fiscal 2025 quarter, the Custom Cabling segment had pretax income of $1.6 million and the RF Connector segment had a pretax loss of $1.5 million, as compared to $0.3 million loss and $1.7 million loss, respectively, for the comparable quarter last year.

The increase in pretax income at the Custom Cabling segment was due to the increase in sales of direct air cooling to wireless carriers.

The improvement in pretax loss at the RF Connector segment was primarily due to cost savings initiatives and operating efficiencies.

For the fiscal 2025 and 2024 quarters, we recorded income tax provisions (benefits) of $36,000 and ($831,000), respectively.

Selling and general expenses increased by $0.6 million to $5.2 million (27.3% of sales) compared to $4.6 million (28.6% of sales) in the second quarter last year primarily due to an increase in variable compensation related to commissions and bonuses as a result of the higher sales and investment in additional resources.

We incurred one-time charges of $0.2 million relating to severance and related legal expenses in the fiscal 2025 quarter.

For the fiscal 2025 quarter, the Custom Cabling segment had pretax income of $1.6 million and the RF Connector segment had a pretax loss of $1.3 million, as compared to $0.4 million income and $0.7 million loss, respectively, for the comparable quarter last year.

The increase in pretax income at the Custom Cabling segment was due to the increase in sales of direct air cooling to wireless carriers and penetrating new market segments.

The increase in pretax loss at the RF Connector segment was primarily due to a decrease in sales relating to timing of orders.

For the fiscal 2025 and 2024 quarters, we recorded income tax provision of $135,000 and $3,649,000, respectively.

The effective tax rate was (122.7%) for the fiscal 2025 quarter, compared to (564.7%) for the fiscal 2024 quarter.

The change in effective tax from fiscal quarter 2025 to fiscal 2024 quarter was primarily driven by the valuation allowance.

The change in the effective tax rate from the fiscal 2025 quarter to fiscal 2024 quarter was primarily driven by the effects of the change in valuation allowance, research and development credits, state income taxes, and other expected permanent differences.

For the fiscal 2025 quarter, net loss was $0.2 million and fully diluted loss per share was $0.02, compared to a net loss of $4.3 million and fully diluted loss per share of $0.41 for the fiscal 2024 quarter.

For the fiscal 2025 quarter, the diluted weighted average shares outstanding were 10,669,608 as compared to 10,495,548 for the fiscal 2024 quarter.

Six Months Ended April 30, 2025 vs.

Six Months Ended April 30, 2024

Net sales for the six months ended April 30, 2025 (the “fiscal 2025 six-month period”) of $38.1 million increased by 28.7%, or $8.5 million, compared to the six months ended April 30, 2024 (the “fiscal 2024 six-month period”).

The increase in net sales is attributable mainly to the Custom Cabling segment, which increased by $9.1 million, or 83.5%, to $20.0 million compared to $10.9 million in the fiscal 2024 six-month period, primarily driven by tier one carrier applications for our direct air cooling offering and new market penetration through our Cables Unlimited business division.

Net sales for the fiscal 2025 six-month period at the RF Connector segment decreased by $0.6 million, or 3.2%, to $18.1 million compared to $18.7 million in the fiscal 2024 six-month period, primarily due to timing of small cell applications and deployment.

Gross profit for the fiscal 2025 six-month period increased by $3.6 million to $11.7 million while gross margins increased to 30.6% of sales compared to 27.5% of sales in the fiscal 2024 six-month period.

The increases in gross profit and gross margins were primarily related to the overall increase in sales, direct air cooling product mix and new market penetration.

Engineering expenses remained consistent at $1.4 million for the fiscal 2025 six-month period compared to the fiscal 2024 six-month period.

Engineering expenses represent costs incurred relating to the ongoing research and development of new products.

Selling and general expenses increased by $0.9 million to $10.1 million (26.6% of sales) compared to $9.2 million (31.3% of sales) in the six-month period last year primarily due to an increase in variable compensation related to commissions as a result of the higher sales, bonuses and investment in additional resources.

We incurred one-time charges of $0.2 million relating to severance and related legal expenses in fiscal 2025.

For the fiscal 2025 six-month period, pretax income for the Custom Cabling segment was $3.1 million and the pretax loss for the RF Connector segment was $2.8 million, as compared to $0.1 million income and $2.4 million loss, respectively, for the comparable six-month period last year.

For the fiscal 2025 and 2024 six-month periods, we recorded income tax provision of $171,000 and $2,818,000, respectively.

The effective tax rate was (53.6%) for the fiscal 2025 six-month period, compared to (99.3%) for the fiscal 2024 six-month period.

The change in effective tax rate for the fiscal 2025 and 2024 six-month periods was primarily driven by the effects of the change in valuation allowance, research and development credits, state income taxes, and other expected permanent differences.

For the fiscal 2025 six-month period, net loss was $0.5 million and fully diluted loss per share was ($0.05) per share as compared to a net loss of $5.7 million and fully diluted loss per share of ($0.54) per share for the fiscal 2024 six-month period.

For the fiscal 2025 six-month period, the diluted weighted average shares outstanding were 10,614,364 as compared to 10,452,597 for the fiscal 2024 six-month period.

Quantitative and Qualitative Disclosures about Market Risk

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What changed 10-Q

Item 1. Financial Statements