Financial Analysis

(19) 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 Companys financial position, results of operations or liquidity. …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

(9) Employee Benefits Health Insurance Coverage The Company contracts for health insurance coverage for employees and their dependents through third-party administrators. During the fiscal years ended October 31, 2025 and 2024, total expense of $3,878,501 and $3,608,222, respectively, was recognized under the Companys insured health care program. 401(k) Plan The Company maintains a 401(k) retirement savings plan for the benefit of its eligible employees. Substantially all of the Companys employees who meet certain service and age requirements are eligible to participate in the plan. The Companys plan document provides that the Companys matching contributions are discretionary. The Company expensed matching contributions to the plan of $55,113 and $54,494 for the fiscal years ended October 31, 2025 and 2024, respectively. Stock Incentives for Key Employees and Non-Employee Directors Optical Cable Corporation uses stock incentives to increase the personal financial interest that key employees and non-employee Directors have in the future success of the Company, thereby aligning their interests with those of other shareholders and strengthening their desire to remain with the Company. As of October 31, 2025, there were approximately 372,000 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 members of the Companys Board of Directors re …

CompensationAndEmployeeBenefitPlansTextBlock · excerpt; the full note is in the filing

(14) Fair Value Measurements The carrying amounts reported in the consolidated balance sheets as of October 31, 2025 and 2024 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 consolidated balance sheets as of October 31, 2025 and 2024 of the Companys note payable, revolver current, and long-term debt, excluding current installments, approximate fair value because the interest rates vary with the market. 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. The Company uses a fair value hierarchy that prioritizes the inputs for valuation methods used to measure fair value. The three levels of the fair value hierarchy are as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. The Company utilizes the best available inf …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

(13) Income Taxes Income tax expense (benefit) for the years ended October 31, 2025 and 2024 consists of: Fiscal year ended October 31, 2025 Current Deferred Total U.S. Federal $ $ $ State 30,297 30,297 Totals $ 30,297 $ $ 30,297 Fiscal year ended October 31, 2024 Current Deferred Total U.S. Federal $ 830 $ $ 830 State 19,872 19,872 Totals $ 20,702 $ $ 20,702 Reported income tax expense for the years ended October 31, 2025 and 2024 differs from the expected tax expense (benefit), computed by applying the U.S. Federal statutory income tax rate of 21% in fiscal years 2025 and 2024 to income before income taxes as follows: Years ended October 31, 2025 2024 Expected income tax benefit $ (299,157 ) $ (879,797 ) Increase (reduction) in income tax expense (benefit) resulting from: State income taxes, net of federal benefi (15,062 ) (68,711 ) Excess tax benefit (expense) related to share-based compensation (26,116 ) 32,023 Meals and entertainment 17,563 14,863 Other differences, net 7,343 11,634 Change in valuation allowance 345,726 910,690 Reported income tax expense $ 30,297 $ 20,702 The tax effects of temporary differences that give rise to significant portions of the Companys deferred tax assets and deferred tax liabilities as of October 31, 2025 and 2024 are presented below: October 31, 2025 2024 Deferred tax assets: Accounts receivable, due to allowances for credit losses and sales returns $ 35,217 $ 38,782 Inventories, due to allowance for damaged and slow-moving inventories a …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

(7) Long-term Debt and Notes Payable The Company has credit facilities consisting of a real estate term loan, as amended and restated (the Virginia Real Estate Loan) and a Revolving Credit Master Promissory Note and related Loan and Security Agreement (collectively, the Revolver). The Virginia Real Estate Loan is with Northeast Bank and 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 rate equal to the Prime Rate, adjusted monthly on the fifth day of each calendar month in accordance with changes to the Prime Rate, provided, however, that the interest rate is never less than 8.5% per annum on the basis of a 360-day year times the actual number of days elapsed. The Prime Rate was 7.0% per annum at October 31, 2025 and 8.0% at October 31, 2024. The maturity date of the Virginia Real Estate Loan is May 5, 2026 and, as such, the balance of the loan was reclassified from a non-current liability to a current liability during fiscal year 2025. The Company intends to refinance the obligation prior to maturity. The Loan is secured by a first lien deed of trust on the land and buildings at the Companys headquarters and manufacturing facilities located in Roanoke, Virginia. The Company had an outstanding balance on its Virginia Real Estate Loan of $2.6 million as of October 31, 2025 a …

LongTermDebtTextBlock · excerpt; the full note is in the filing

(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 Companys 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 customers 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, any sales and use taxes and value-added taxes, are not included in the transaction price and are not included in net sales. 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. …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

(11) Segment Information Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the CODM, who makes decisions about allocating resources and assessing performance. The Companys 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 Companys 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. Financial information is provided to the CODM primarily on a consolidated basis. The CODM evaluates the Companys 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 Companys 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: Years ended October 31, 2025 2024 Net sales $ 73,038,213 $ 66,674,099 Cost of goods sold 50,439,277 48,469,327 Employee related expenses 15,156,256 14,540,632 Shipping expenses …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

(16) Shareholders Equity Stockholder Protection Rights Agreement On October 28, 2011, the Board of Directors of the Company adopted a Stockholder Protection Rights Agreement (the Rights Agreement) and declared a dividend of one preferred share purchase right for each outstanding share of common stock. These purchase rights and the related Rights Agreement were set to expire on November 2, 2021. On November 2, 2021, the Board of Directors of the Company amended and restated the Rights Agreement (the Amended Rights Agreement) to amend and restate the Rights Agreement to continue the dividend of one preferred share purchase right (a Right) for each outstanding share of Common Stock, no par value, of the Company (Common Shares), held of record at the close of business on November 2, 2021, or issued thereafter. Except to extend the Amended Rights Agreement to November 2, 2031, no other material changes were made to the Rights Agreement by the Amended Rights Agreement. Under the terms of the Amended Rights Agreement, if a person or group who is deemed an Acquiring Person as defined in the Amended Rights Agreement acquires 15% (or other applicable percentage, as provided in the Amended Rights Agreement) or more of the outstanding common stock, each Right will entitle its holder (other than such person or members of such group) to purchase, at the Rights then current exercise price, a number of shares of common stock having a market value of twice such price. In addition, if the Comp …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing

(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 Companys financial position, results of operations or liquidity. …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

(2) Stock Incentive Plan and Other Share - Based Compensation As of April 30, 2026, there were approximately 410,000 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 six months ended April 30, 2026 was $73,670 and $162,644, 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 six months ended April 30, 2025 was $71,934 and $186,298, 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. Restricted stock award activity during the six months ended April 30, 2026 consisted of restricted shares forfeited totaling 6,685 shares and restricted shares withheld for taxes …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

(8) Fair Value Measurements The carrying amounts reported in the condensed consolidated balance sheets as of April 30, 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 April 30, 2026 and October 31, 2025 of the Companys 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 April 30, 2026 of the Companys long-term debt, excluding current installments, approximates fair value based on similar long-term debt issues available to the Company as of April 30, 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. …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

(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). On April 30, 2026, the Company entered into the Term Loan consisting of a Business Loan Agreement (the Loan Agreement) with Freedom First Federal Credit Union (Freedom First). In connection with the Loan Agreement, the Company also executed a Promissory Note dated April 30, 2026, 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 Companys 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 beginning June 1, 2026. 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 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 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. The T …

LongTermDebtTextBlock · excerpt; the full note is in the filing

(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 Companys 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 customers 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. 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 …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

(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 Companys 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 Companys 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. Financial information is provided to the CODM primarily on a consolidated basis. The CODM evaluates the Companys 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 Companys 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 Six Months Ended April 30, April 30, 2026 202 …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing