Clearfield, Inc. (CLFD)

CIK: 0000796505. SIC: 3661 Telephone & Telegraph Apparatus. Latest 10-K as of: 2025-11-25.

SIC breadcrumb: Manufacturing > Electronic And Other Electrical Equipment And Components, Except Computer Equipment > SIC 3661 Telephone & Telegraph Apparatus

SEC company page: https://www.sec.gov/edgar/browse/?CIK=796505. Latest filing source: 0001171843-25-007594.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2025-11-25. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000796505.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-07. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000796505.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001171843-26-003126.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-05-07. Report date: 2026-03-31.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the Company’s financial condition and results of operations as of and for the three and six months ended March 31, 2026, and 2025 should be read in conjunction with the financial statements and related notes in Item 1 of this report and our Annual Report on Form 10-K for the year ended September 30, 2025.

OVERVIEW

General

Clearfield designs, manufactures, and distributes fiber optic management, protection, and delivery products for communications networks. Its “fiber to the anywhere” platform serves the unique requirements of leading broadband service providers in the United States, which include Community Broadband, Large Regional Service Providers, National Carriers, and Multiple System Operators (“MSOs” or “cable TV”), while also serving the broadband needs of the International markets, primarily in Canada, the Caribbean, Central/South America and Mexico. These customers are collectively included in the category of Broadband Service Providers. The Company’s sales channels include direct to customer and through distribution partners. The Company’s products are sold by its sales employees and independent sales representatives.

Segment Information

We are engaged in global operations. On November 11, 2025, the Company completed the sale of its Nestor Cables business, which was previously reported as the Nestor Cables Operating Segment. In connection with this sale, the historical results of the Nestor Cables business and certain assets and liabilities of the Nestor Cables business are reported in our consolidated financial statements as discontinued operations. Following the sale of the Nestor Cables business, the continuing operations of the Company comprise one operating segment and one reportable segment. Unless otherwise stated below, all references in results of operations are to the Company’s continuing operations and not the discontinued operations.

Clearfield is focused on providing fiber management, fiber protection, and fiber delivery products that accelerate the turn-up of fiber-based networks in residential homes, businesses, and network infrastructure in the wireline and wireless access network. We offer a broad portfolio of fiber products that allow service providers to build fiber networks faster, meet service delivery demands, and align build costs with take rates.

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Clearfield’s products allow its customers to connect more homes in their Fiber to the Home (“FTTH”) builds by using fewer resources in less time. Our products speed up the time to revenue for our service provider customers in Multiple Dwelling Units (“MDUs”) and Multiple Tenant Units (“MTUs”) by reducing the amount of labor and materials needed to provide gigabit broadband service. Our products help make our customers’ business services more profitable through faster building access, easier reconfiguration, and quicker services turn-up. Finally, Clearfield is removing barriers to wireless 4G/5G deployments in backhaul from the tower to the cloud and fiber fronthaul from the tower to the antenna at the cell site through better fiber management, test access, and fiber protection.

Substantially all of the final build and assembly is completed at Clearfield’s plants in Brooklyn Park, Minnesota and Tijuana, Mexico, with manufacturing support from a network of domestic and global manufacturing partners. Clearfield specializes in producing these products on both a quick-turn and scheduled delivery basis.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2026 VS. THREE MONTHS ENDED MARCH 31, 2025

Net sales for the three months ended March 31, 2026, were $34,391,000, a decrease of approximately 15%, or $6,230,000 from net sales of $40,621,000 for the three months ended March 31, 2025. Net sales to Broadband Service Providers were $16,461,000 and $18,002,000 in the three months ended March 31, 2026 and 2025, respectively. In addition, the Company recorded $499,000 in international sales for the three months ended March 31, 2026 versus $777,000 for the three months ended March 31, 2025. The Company allocates sales from external customers to geographic areas based on the location to which the product is transported. International sales represented 1% and 2% of total net sales for the three months ended March 31, 2026 and 2025, respectively. Net sales to Legacy customers were $0 in the three months ended March 31, 2026 versus $710,000 in the three months ended March 31, 2025.

The decrease in net sales for the three months ended March 31, 2026, of $6,230,000 compared to the three months ended March 31, 2025, was primarily driven by decreased sales to MSO customers of $2,905,000, down 38%, Community Broadband customers of $1,541,000, down 9%, Large Regional Service Provider customers of $1,077,000, down 10%, and International customers of $278,000, down 36%, partially offset by increased sales to National Carrier customers of $281,000, up 13%. The decrease in sales in the MSO, Community Broadband and Large Regional customer markets for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, is due to decreased demand in the quarter to customers in these segments and the effect on customers of delays in the BEAD program.

Order backlog as of March 31, 2026, was $31,647,000, an increase of 39% compared to $22,763,000 as of December 31, 2025, and an increase of $3,463,000, or 12%, from March 31, 2025. The increase in backlog is due to normal seasonality.

Cost of sales for the three months ended March 31, 2026, was $23,230,000, a decrease of $3,430,000, or 13%, from $26,660,000, for the three months ended March 31, 2025. Gross profit percent was 32.5% of net sales for the three months ended March 31, 2026, a decrease from 34.4% of net sales for the three months ended March 31, 2025. Gross profit decreased $2,800,000, or 20%, to $11,161,000 for the three months ended March 31, 2026, from $13,961,000 for the three months ended March 31, 2025. Gross margin as a percentage of net sales decreased compared to the prior period, primarily driven by lower overhead absorption resulting from reduced sales volumes, as fixed manufacturing costs were spread over a smaller revenue base.

Selling, general and administrative expenses for the three months ended March 31, 2026, were $13,230,000 in comparison to $12,279,000 for the three months ended March 31, 2025, an increase of $951,000, or 8%. The increase is due to higher wages and benefit related expense of $236,000, increased software costs of $360,000, and increased stock-based compensation of $167,000.

Loss from continuing operations for the three months ended March 31, 2026, was $2,069,000 compared to income from continuing operations of $1,682,000 for the three months ended March 31, 2025, a decrease of approximately 223%. The loss from continuing operations is the result of decreased net sales and gross profit margin and increased selling, general and administrative expenses as explained above.

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Net investment income for the three months ended March 31, 2026, was $1,365,000 compared to $1,588,000 for the three months ended March 31, 2025. The decrease in net investment income is due to decreased interest income driven by lower interest rates earned on investments during the quarter.

The Company recorded an income tax benefit of $176,000 and income tax expense of $722,000 for the three months ended March 31, 2026, and 2025, respectively. We record our quarterly provision for income taxes based on our estimated annual effective tax rate for the year. The income tax rate for the three months ended March 31, 2026, was 25.0% compared to 22.1% for the three months ended March 31, 2025. The income tax rate for the three months ended March 31, 2026, approximated the Company's estimated annual effective tax rate, reflecting the nondeductibility of certain executive compensation under Section 162(m) of the Internal Revenue Code being partially offset by excess tax benefits from the vesting of restricted stock. The income tax rate for the three months ended March 31, 2025, was lower than the statutory rate primarily due to the impact of discrete tax items, including excess tax shortfall from the vesting of restricted stock.

The Company’s net loss from continuing operations for the three months ended March 31, 2026, was $528,000, or $(0.04) per basic and diluted share compared to net income from continuing operations for the three months ended March 31, 2025, of $2,548,000, or $0.18 per basic and diluted share.

The Company’s net loss from discontinued operations for the three months ended March 31, 2026, was $0, or $0.00 per basic and diluted share compared to net loss from discontinued operations for the three months ended March 31, 2025, of $1,221,000, or $(0.09) per basic and diluted share. The decrease in net loss from discontinued operations is due to the sale of the Nestor Cables business in the first quarter of fiscal 2026.

SIX MONTHS ENDED MARCH 31, 2026 VS. SIX MONTHS ENDED MARCH 31, 2025

Net sales for the six months ended March 31, 2026, were $68,732,000, a decrease of approximately 2%, or $1,587,000, from net sales of $70,319,000 for the six months ended March 31, 2025. Net sales to Broadband Service Providers were $32,869,000 and $31,214,000 in the six months ended March 31, 2026 and 2025, respectively. In addition, the Company recorded $2,436,000 in international sales for the six months ended March 31, 2026 versus $1,143,000 for the six months ended March 31, 2025. The Company allocates sales from external customers to geographic areas based on the location to which the product is transported. Accordingly, international sales represented 4% and 2% of total net sales for the six months ended March 31, 2026 and March 31, 2025, respectively. Net sales to Legacy customers were $0 in the six months ended March 31, 2026 versus $1,199,000 in the six months ended March 31, 2025.

The decrease in net sales for the six months ended March 31, 2026, of $1,587,000 compared to the six months ended March 31, 2025, was primarily driven by decreased sales to MSO customers of $2,243,000, down 17%, Large Regional Service Provider customers of $664,000, down 4%, and National Carrier customers of $429,000, down 9%, partially offset by increased sales to Community Broadband customers of $1,654,000, up 5%, and International customers of $1,293,000, up 113%. The decrease in sales across these markets for the six months ended March 31, 2026, as compared to the six months ended March 31, 2025, is due to seasonality and lumpiness in early build season orders and the effect on customers of delays in the BEAD program. In addition, the reduction in sales of the Legacy market is due to the sale of this product line in September, 2025.

Cost of sales for the six months ended March 31, 2026, was $46,183,000, a decrease of $1,500,000, or 3%, from $47,683,000 for the six months ended March 31, 2025. Gross profit percent remained consistent at 32.8% of net sales for the six months ended March 31, 2026, when compared to 32.2% of net sales for the six months ended March 31, 2025. Gross profit decreased $87,000, or 0.4%, to $22,549,000 for the six months ended March 31, 2026, from $22,636,000 for the six months ended March 31, 2025.

Selling, general and administrative expenses increased $3,442,000, or 15%, to $26,442,000 for the six months ended March 31, 2026, from $23,000,000 for the six months ended March 31, 2025. The increase is due to higher wages and performance-based compensation accruals of $1,748,000, increased IT maintenance and services of $540,000, increased professional services of $247,000, and increased stock-based compensation of $382,000.

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Loss from continuing operations for the six months ended March 31, 2026 was $3,893,000 compared to loss from continuing operations of $364,000 for the

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Latest 10-K MD&A

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high. Filing date: 2025-11-25. Report date: 2025-09-30.

ITEM 7.            MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Regarding Forward-Looking Information

Statements made in this Annual Report on Form 10-K, in the Company’s other SEC filings, in press releases and in oral statements, that are not statements of historical fact are “forward-looking statements.” Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results or performance of the Company to be materially different from the results or performance expressed or implied by such forward-looking statements. The words “believes,” “expects,” “anticipates,” “seeks,” “may,” “will,” “plan,” “aim,” “project,” “target,” “intend,” “estimate,” “should,” “could,” “outlook,” “continue,” and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. The risks and uncertainties that could cause actual results to differ materially and adversely from those expressed or implied by the forward-looking statements include those risks described in Part I, Item 1A “Risk Factors.”

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Overview of Business: Clearfield designs, manufactures, and distributes fiber optic management, protection, and delivery products for communications networks. Its “fiber to the anywhere” platform serves the unique requirements of leading broadband service providers in the United States, which include Community Broadband, Large Regional Service Providers, National Carriers, and Multiple System Operators (“MSOs” or “cable TV”), while also serving the broadband needs of the International markets, primarily in Canada, the Caribbean, Central/South America and Mexico. These customers are collectively included in the category of Broadband Service Providers. The Company’s sales channels include direct to customer and through distribution partners. The Company’s products are sold by its sales employees and independent sales representatives.

Results of Operations

The Company’s reportable segment is based on the Company’s method of internal reporting. The internal reporting of the operating segment is defined based, in part, on the reporting and review process used by the Company’s Chief Executive Officer, also known as the Chief Operating Decision Maker (“CODM”). The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources and evaluating financial performance. As such, the Company has determined that it operates as one reportable segment.

On November 11, 2025, the Company completed the sale of its Nestor Cables business, which was previously reported as the Nestor Cables Operating Segment. In connection with this sale, the historical results of the Nestor Cables business and certain assets and liabilities of the Nestor Cables business are reported in our consolidated financial statements as discontinued operations. Following the sale of the Nestor Cables business, the continuing operations of the Company comprise one operating segment and one reportable segment.

Reported below are the results of operations for the Company’s continuing operations unless otherwise stated.

Year ended September 30, 2025, compared to year ended September 30, 2024

The Company’s net sales for fiscal year 2025 increased 20%, or $24,566,000, to $150,134,000 from net sales of $125,568,000 in fiscal year 2024. The Company allocates sales from external customers to geographic areas based on the location to which the product is transported. Accordingly, international sales represented 3% and 2% of net sales for the years ended September 30, 2025, and 2024, respectively.

The increase in net sales for fiscal year 2025 of $24,566,000 compared to fiscal year 2024 is attributable to increased demand across the Company’s core markets. Sales to the Community Broadband market increased 1%, or $767,000, from $66,005,000 in fiscal year 2024 to $66,772,000 in fiscal year 2025. Sales to Clearfield’s MSO/Cable TV market increased 38%, or $8,864,000 from $23,487,000 in fiscal year 2024 to $32,351,000 in fiscal year 2025. Sales to the Large Regional market increased 58% to $33,706,000 from $21,293,000 in fiscal year 2024. Sales to National Carriers increased 11%, or $976,000, from $8,767,000 in fiscal year 2024 to $9,743,000 in fiscal year 2025.

Cost of sales for fiscal year 2025 was $99,597,000 compared to $99,721,000 in fiscal year 2024. Gross profit increased 96%, or $24,690,000, from $25,847,000 for fiscal year 2024 to $50,537,000 for fiscal year 2025. Gross profit percent was 33.7% in fiscal year 2025 compared to 20.6% for fiscal year 2024. The improvement in gross margin was due to increased volumes resulting in improved absorption of manufacturing overhead, as well as lower excess inventory charges of $10,074,000 in fiscal year 2025, reflecting improved inventory utilization and beneficial recoveries from inventory previously written down.

Selling, general and administrative expenses for fiscal year 2025 was $48,419,000, an increase of $3,338,000, or 7%, compared to $45,081,000 for fiscal year 2024. The increase was due to higher wages and performance-based compensation of $3,164,000.

Income from continuing operations for fiscal year 2025 was $2,118,000 compared to a loss from continuing operations of $19,234,000 for fiscal year 2024. The increase in income is attributable to increased sales and gross profit from higher customer demand and improved gross profit margin, partially offset by higher selling, general and administrative expenses as described above.

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Net investment income in fiscal year 2025 was $6,549,000 compared to $7,472,000 for fiscal year 2024. The decrease in interest income is due to lower interest rates earned, partially offset by a higher average investments balance for the year ended September 30, 2025. The Company invests its excess cash primarily in Federal Deposit Insurance Company (“FDIC”) backed bank certificates of deposit, United States (“U.S.”) treasury securities, and money market funds and accounts. We expect interest income to decrease slightly in fiscal year 2026 due to lower expected market interest rates.

Income tax expense for fiscal year 2025 was $2,357,000 compared to income tax benefit of $3,248,000 for fiscal year 2024. The increase in tax expense of $5,605,000 from the year ended September 30, 2024, is due to the increase in pretax book income for fiscal year 2025. The income tax expense rate decreased to 27.2% for fiscal year 2025 from 27.6% for fiscal year 2024 due to changes in state tax, foreign tax and increased section 162(m) deduction. Our provision for income taxes includes current U.S. federal and state current and deferred tax expense.

Net income from continuing operations for fiscal year 2025 was $6,310,000 or $0.45 per basic and diluted share compared to net loss of $8,514,000 or $(0.58) per basic and diluted share for fiscal year 2024.

Net loss from discontinued operations for fiscal year 2025 was $3,947,000 or $(1.03) per basic and diluted share compared to net loss of $3,939,000 or $(0.27) per basic and diluted share for fiscal year 2024. Net loss from impairment of discontinued operations for fiscal year 2025 was $10,413,000. See Note 11 for further details regarding the impairment charges related to the Nestor Cables business.

Year ended September 30, 2024, compared to year ended September 30, 2023

The Company’s net sales for fiscal year 2024 decreased 44%, or $100,154,000, to $125,568,000 from net sales of $225,722,000 in fiscal year 2023. The Company allocates sales from external customers to geographic areas based on the location to which the product is transported. Accordingly, international sales represented 2% and 3% of net sales for the years ended September 30, 2024, and 2023, respectively.

The decrease in net sales for fiscal year 2024 of $100,154,000 compared to fiscal year 2023 is attributable to decreased demand across the Company’s core markets. Sales to the Community Broadband market decreased 41%, or $45,703,000, from $111,708,000 in fiscal year 2023 to $66,005,000 in fiscal year 2024. Sales to Clearfield’s MSO/Cable TV market decreased 49%, or $22,182,000, from $45,669,000 in fiscal year 2023 to $23,487,000 in fiscal year 2024. Sales to the Large Regional market decreased 57% or $28,596,000, to $21,293,000 in fiscal 2024 from $49,889,000 in fiscal 2023. Sales to National Carriers decreased 2%, or $187,000, from $8,954,000 in fiscal year 2023 to $8,767,000 in fiscal year 2024. The decrease in sales to these customers was due to a lull in demand for fiber connectivity products as customers digest their larger than normal inventory levels built up during the pandemic which were purchased over the previous years.

Cost of sales for fiscal year 2024 was $99,721,000, a decrease of $46,144,000, or 32%, from $145,865,000 in fiscal year 2023. Gross profit decreased 68%, or $54,010,000, from $79,857,000 for fiscal year 2023 to $25,847,000 for fiscal year 2024. The decrease in gross profit was due to lower net sales and lower gross profit margin in fiscal year 2024. Gross profit percent was 20.6% in fiscal year 2024 compared to 35.4% for fiscal year 2023. Gross profit margin was negatively affected by unabsorbed overhead in our manufacturing facilities due to lower levels of demand. The Company’s gross profit was also negatively impacted by an increase in inventory write-downs of $4,748,000 during the fiscal year ended September 30, 2024. Inventory write-downs are primarily due to excess inventory due to the lull in demand while customers draw down their existing products previously purchased during the period of long lead time supply chain created by the pandemic. The Company expects to operate at gross profit percentage levels at or below these levels for several quarters until revenue levels increase, which is expected to bring improved margins.

Selling, general and administrative expense for fiscal year 2024 was $45,081,000, an increase of $2,801,000, or 7%, compared to $42,280,000 for fiscal year 2023. The increase was due to increased performance-based compensation of $1,395,000, increased stock-based compensation of $819,000, and increased professional fees of $1,086,000.

Loss from continuing operations for fiscal year 2024 was $19,234,000 compared to income from continuing operations of $37,577,000 for fiscal year 2023. The decrease is attributable to lower sales and gross profit due to excess supply of fiber products and also higher unabsorbed overhead related to expanded manufacturing capacities.

Net investment income in fiscal year 2024 was $7,472,000 compared to $5,199,000 for fiscal year 2023. The increase in interest income is due to a higher average investments balance and higher interest rates earned for the year ended September 30, 2024. The higher overall investments balance is a result of the Company’s capital raise of approximately $130,000,000 completed late in the first fiscal quarter of 2023 and cash generated from operations in fiscal 2024. The Company invests its excess cash primarily in Federal Deposit Insurance Company (“FDIC”) backed bank certificates of deposit, United States (“U.S.”) treasury securities, and money market funds and accounts.

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Income tax benefit for fiscal year 2024 was $3,248,000 compared to income tax expense of $8,883,000 for fiscal year 2023. The decrease in tax expense of $12,131,000 from the year ended September 30, 2023, is due to the decrease in pretax book income for fiscal year 2024. The increase in the income tax expense rate to 27.6% for fiscal year 2024 from 20.9% for fiscal year 2023 is due to changes in state tax, foreign tax and decreased excess tax benefits from stock option exercises and restricted stock vesting, resulting in a shortfall in the current period. Our provision for income taxes includes current U.S. federal, state and foreign current and deferred tax expense.

Net loss from continuing operations for fiscal year 2024 was $8,514,000 or $(0.58) per basic and diluted share compared to net income of $33,723,000 or $2.25 per basic and diluted share for fiscal year 2023.

Net loss from discontinued operations for fiscal year 2024 was $3,939,000 or $(0.27) per basic and diluted share compared to net loss of $1,190,000 or $(0.08) per basic and diluted share for fiscal year 2023.

Liquidity and Capital Resources

As of September 30, 2025, the Company had combined consolidated balances of cash, cash equivalents, short-term and long-term investments of $165,799,000 compared to $153,478,000 as of September 30, 2024. Additionally, we have a line of credit for $40 million that has no outstanding borrowing as of September 30, 2025. The line of credit is secured by certain of the Company’s U.S. assets and matures April 25, 2026. We are in compliance with the debt covenants related to the line of credit. Our excess cash is invested mainly in certificates of deposit backed by the FDIC, U.S. Treasury securities, and money market funds. We believe the combined balances of short-term cash and investments, along with long-term investments and available bank lines of credit, provide a more accurate indication of our available liquidity.

We believe our existing cash equivalents and short-term investments, along with cash flow from operations and line of credit, will be sufficient to meet our working capital and investment requirements beyond the next 12 months. The Company intends on utilizing its available cash and assets primarily for its continued organic growth and potential future strategic transactions, as well as execution of the share repurchase program adopted by our board of directors, as detailed above.

Operating Activities

Net cash provided by operations for the fiscal year ended September 30, 2025, totaled $26,553,000. Cash provided by operations included net income from continuing operations of $6,310,000 for the fiscal year ended September 30, 2025, non-cash income and expenses for depreciation and amortization of $6,121,000, stock-based compensation of $4,597,000, increase of $4,244,000 in deferred tax assets, amortization of discount on investments of $1,777,000 in addition to changes in operating assets and liabilities providing and using cash. Changes in operating assets and liabilities providing cash include a decrease in net inventories of $13,643,000, a decrease in other assets of $173,000, and an increase in accounts payable and accrued expenses of $5,562,000, due to timing of payments. The decrease in inventory is due to lower inventory purchases during fiscal year 2025 as the Company utilized inventory on hand to fulfill customer orders to support sales demand. Changes in operating assets and liabilities using cash include an increase in accounts receivable of $3,548,000. The increase in accounts receivable is due to higher net sales in fiscal 2025 compared to the prior year. Days sales outstanding (“DSO”), which measures how quickly receivables are collected, increased five days from 35 to 40 from September 30, 2024, to September 30, 2025.

Net cash provided by operations for the fiscal year ended September 30, 2024, totaled $17,770,000. Cash provided by operations included net loss from continuing operations of $8,514,000 for the fiscal year ended September 30, 2024, non-cash income and expenses for depreciation and amortization of $5,924,000, stock-based compensation of $4,375,000, amortization of discount on investments of $4,406,000, in addition to changes in operating assets and liabilities using cash. Changes in operating assets and liabilities providing cash include a decrease in net inventories of $26,458,000, a decrease in accounts receivable of $6,473,000, and an increase in accounts payable and accrued expenses of $264,000. The decrease in inventory is due to lower inventory purchases during fiscal year 2024 as the Company utilized inventory on hand to fulfill customer orders to support sales demand, as well as higher excess inventory charges taken in fiscal year 2024. The decrease in accounts receivable is due to lower net sales in fiscal 2024 compared to the prior year. DSO decreased 12 days from 47 to 35 from September 30, 2023 to September 30, 2024. Changes in operating assets and liabilities using cash include an increase in other assets of $9,456,000. The increase in other assets is related to prepaid expenses including value added taxes related to cross border inventory transfers.

21

Net cash provided by operations for the fiscal year ended September 30, 2023, totaled $24,596,000. Cash provided by operations included net income from continuing operations of $33,723,000 for the fiscal year ended September 30, 2023, non-cash expenses for depreciation and amortization of $4,595,000, stock-based compensation of $3,578,000, amortization of discount on investments of $3,512,000, in addition to changes in operating assets and liabilities using and providing cash. Changes in operating assets and liabilities using cash include an increase in net inventories of $11,145,000 and a decrease in accounts payable and accrued expenses of $27,425,000. The increase in inventory is a result of additional stocking levels to support the Company’s anticipated customer demand, as well as stocking of long lead time components to limit manufacturing delays due to raw material component shortages and supply chain delays experienced during the pandemic. The decrease in accounts payable is due to lower purchasing activity of inventory near the end of the period in response to lower demand from customers, as well as lower performance-based compensation accruals as of September 30, 2023. Also, changes in operating assets and liabilities providing cash include a decrease in accounts receivable of $27,090,000, due to lower net sales in the Company’s fourth quarter of fiscal 2023 compared to the prior year. DSO remained consistent as it decreased two days from 49 to 47 from September 30, 2022, to September 30, 2023.

Net cash provided by operating activities of discontinued operations for the fiscal year ended September 30, 2025, totaled $2,897,000. Cash provided by operations included net loss from discontinued operations of $3,947,000, non-cash income and expenses for depreciation and amortization of $1,351,000, deferred tax assets of $5,788,000, and stock-based compensation of $451,000, in addition to changes in operating assets and liabilities using cash of $746,000. Net cash provided by operating activities of discontinued operations for the fiscal year ended September 30, 2024, totaled $4,453,000. Cash provided by operations included net loss from discontinued operations of $3,939,000, non-cash income and expenses for depreciation and amortization of $1,478,000, deferred tax assets of $721,000, and stock-based compensation of $267,000, in addition to changes in operating assets and liabilities providing cash of $7,369,000. Net cash used in operating activities of discontinued operations for the fiscal year ended September 30, 2023, totaled $6,172,000. Cash used in operations included net loss from discontinued operations of $1,190,000 and non-cash expenses for depreciation and amortization of $1,456,000, in addition to changes in operating assets and liabilities using cash of $6,328,000.

Investing Activities

We invest our excess cash in money market accounts, U.S. Treasury securities, money market funds, and bank certificates of deposit in denominations across numerous banks. We believe we obtain a competitive rate of return given the economic climate and relative risk profile of these investments. For the fiscal year ended September 30, 2025, the Company received proceeds from maturities of investments of $115,866,000 and used cash to purchase $119,074,000 of investments in certificates of deposit below FDIC insured levels and U.S. Treasuries. The Company used $4,743,000 in cash to purchase fixed and intangible assets. The Company received proceeds from the sale of inventory and property, plant and equipment of $900,000 related to the Company’s former build-to-print copper cable assemblies business. The result is cash used in investing activities of $7,048,000 in fiscal year 2025. In fiscal year 2026, the Company intends to continue investing in necessary information technology, manufacturing equipment, and facility needs.

For the fiscal year ended September 30, 2024, the Company received proceeds from maturities of investments of $162,064,000 and used cash to purchase $159,393,000 of investments in certificates of deposit below FDIC insured levels and U.S. Treasuries. The Company used $7,985,000 in cash to purchase fixed and intangible assets. The result is cash used in investing activities of $5,269,000 in fiscal year 2024.

For the fiscal year ended September 30, 2023, the Company received proceeds from maturities of investments of $107,060,000 and used cash to purchase $210,923,000 of investments in certificates of deposit below FDIC insured levels and U.S. Treasuries. The Company used $7,439,000 in cash to purchase fixed and intangible assets. The result is cash used in investing activities of $111,302,000 in fiscal year 2023.

Net cash used in investing activities of discontinued operations for the fiscal years ended September 30, 2025, 2024, and 2023 totaled $1,796,000, $1,627,000, and $945,000, respectively, driven by cash used to purchase fixed and intangible assets.

Financing Activities

For the fiscal year ended September 30, 2025, the Company used cash to repurchase $16,530,000 of our common stock on the open market under our stock repurchase program. In connection with the stock repurchase, the Company paid $123,000 of U.S. Federal excise taxes during fiscal year 2025. We received $595,000 from employees’ purchase of stock through our Employee Stock Purchase Plan (“ESPP”). The Company used $689,000 related to share withholding for exercise and taxes associated with the issuance of common stock upon cashless exercise of stock options. The Company also used cash of $494,000 to pay for taxes as a result of employees’ vesting of restricted shares using share withholding. As a result, the net cash used for financing activities during fiscal year 2025 was $17,241,000.

For the fiscal year ended September 30, 2024, the Company used cash to repurchase $33,374,000 of our common stock on the open market under our stock repurchase program. In connection with the stock repurchase, the Company accrued $316,000 of U.S. Federal excise taxes to be paid during fiscal year 2025. We received $586,000 from employees’ purchase of stock through our Employee Stock Purchase Plan (“ESPP”). The Company also used cash of $493,000 to pay for taxes as a result of employees’ vesting of restricted shares using share withholding. As a result, the net cash used for financing activities during fiscal year 2024 was $33,289,000.

22

For the fiscal year ended September 30, 2023, the Company received $130,262,000 of net proceeds through the issuance of common stock in the first quarter of fiscal 2023. The Company also received $611,000 from employees’ purchase of stock through our ESPP and $954,000 related to issuance of stock as payment for incentive compensation. The Company used $16,700,000 to pay down in full the then-outstanding principal on our line of credit, which was originally drawn in the fourth quarter of fiscal 2022 to fund the acquisition of Nestor Cables. The Company also used $491,000 related to share withholding for exercise and taxes associated with the issuance of common stock upon cashless exercise of stock options and used $1,220,000 to pay for taxes as a result of employees’ vesting of restricted shares using share withholding. As a result, the net cash provided by financing activities during fiscal year 2023 was $113,416,000.

Net cash provided by financing activities of discontinued operations for the fiscal year ended September 30, 2025, totaled $3,000,000, driven by net borrowings and repayments from the factoring liability held by Nestor Cables. Net cash used in financing activities of discontinued operations for the fiscal year ended September 30, 2024, totaled $3,617,000, driven by net borrowings and repayments from the factoring liability held by Nestor Cables. Net cash provided by financing activities of discontinued operations for the fiscal year ended September 30, 2023, totaled $1,586,000, driven by net borrowings and repayments from the factoring liability held by Nestor Cables.

Operating Leases

We have entered into various non-cancelable operating lease agreements for office equipment at our office and manufacturing spaces in Minnesota and Mexico expiring at various dates through April 2029. Certain of these leases have escalating rent payment provisions. We recognize rent expense under such leases on a straight-line basis over the term of the lease. Please see Note 9. Leases in the consolidated financial statements for further details regarding the terms of our leases.

Critical Accounting Estimates

In preparing our financial statements, we make estimates, assumptions and judgments that can have a significant impact on our sales, income from operations and net income, as well as on the value of certain assets and liabilities on our consolidated balance sheets. We believe there are several accounting policies that are critical to an understanding of our historical and future performance, as these policies affect the reported amounts of sales, expenses and significant estimates and judgments applied by management. While there are a number of accounting policies, methods and estimates affecting our financial statements, areas that are particularly significant include:

●    Stock-based compensation

●    Impairment of long-lived assets, intangible assets and goodwill

●    Valuation of inventory

Stock-Based Compensation

We measure stock-based compensation expense for all share-based payment awards granted to employees and directors based on the fair value of those awards on the grant date. The determination of fair value includes estimates of the fair value of our common stock. These estimates impact the amount of compensation expense recognized over the requisite service period of the award. For restricted stock awards and performance stock units (PSUs), fair value is determined using the closing market price of our common stock on the grant date. For PSUs, we also make judgments regarding the probability of achieving performance targets, which can significantly affect the timing and amount of expense recognized. For stock options, we use the Black-Scholes option-pricing model to estimate fair value. The use of this model requires the input of subjective assumptions such as, expected volatility, expected term, risk-free interest rate, and expected dividend yield. The expected terms of the options are based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected life at grant date. Volatility is based on historical and expected future volatility of the Company’s stock. The Company has not historically issued any dividends and does not expect to in the future. Forfeitures for both option and restricted stock grants are estimated at the time of the grant and revised in subsequent periods if actual forfeitures differ from estimates.

Changes in any of the above assumptions could materially affect the amount of stock-based compensation expense recorded in future periods. We periodically review our valuation assumptions and update them as necessary. If actual results differ significantly from our estimates or if we modify the underlying assumptions, the amount of stock-based compensation expense could differ materially from the amounts currently recognized or disclosed.

23

Impairment of Long-Lived Assets, Intangible Assets and Goodwill

The Company’s long-lived assets as of September 30, 2025, consisted primarily of property, plant and equipment, right of use lease assets, patents, intangibles, and goodwill. The Company reviews the carrying amount of its property, plant and equipment, right of use lease assets, and intangible assets if events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. When this review indicates the carrying amount of an asset or asset group exceeds the sum of the future undiscounted cash flows expected to be generated by the assets, the Company recognizes an asset impairment charge against operations for the amount by which the carrying amount of the impaired asset exceeds its fair value.

Determining fair values of property, plant, and equipment, right of use lease assets, and intangible assets using a discounted cash flow method involves significant judgment and requires the Company to make significant estimates and assumptions, including long-term projections of cash flows, market conditions and appropriate discount rates. Judgments are based on historical experience, current market trends, consultations with external valuation specialists and other information. If facts and circumstances change, the use of different estimates and assumptions could result in a materially different outcome. The Company generally develops these forecasts based on recent sales data for existing products, planned timing of new product launches or acquisitions, and estimated future growth of the FTTP market.

Goodwill represents the excess purchase price over the fair value of tangible net assets acquired in acquisitions after amounts have been allocated to intangible assets. Goodwill is tested for impairment annually at fiscal year-end, or more frequently when events or changes in circumstances indicate that the asset might be impaired. Examples of such events or circumstances include, but are not limited to, a significant adverse change in legal or business climate, an adverse regulatory action or unanticipated competition. The Company assesses qualitative factors to determine whether the existence of events or circumstances would indicate that it is more likely than not that the fair value of the reporting unit is less than its carrying amount.

If after assessing the totality of events or circumstances, the Company were to determine that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, then the Company would perform a quantitative test that compares the fair value to its carrying value to determine the amount of any impairment.

If the carrying amount of a reporting unit exceeds its fair value, the Company would measure the possible goodwill impairment loss based on an allocation of the estimate of fair value of the reporting unit to all of the underlying assets and liabilities of the reporting unit, including any previously unrecognized intangible assets. The excess of the fair value of a reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. An impairment loss is recognized to the extent that a reporting unit's recorded goodwill exceeds the implied fair value of goodwill. An impairment loss would be based on significant estimates and judgments, and if the facts and circumstances change, a potential impairment could have a material impact on the Company’s financial statements.

No impairment of the goodwill or intangible assets related to continuing operations has occurred during the years ended September 30, 2025, 2024, and 2023, respectively. Refer to Note 11 for discussion of the discontinued operations and impairment of assets held for sale of the Nestor Cables business.

Valuation of Inventory

The Company maintains a material amount of inventory to support its manufacturing operations and customer demand. This inventory is stated at average cost, subject to the lower of cost or net realizable value. The determination of the valuation of inventory requires management to make significant estimates and judgments about future product demand, product life cycles, and the recoverability of inventory costs.

We evaluate inventory levels on a quarterly basis, considering factors such as historical usage, forecasted demand, production lead times, and product aging. When actual demand differs from our expectations, we may be required to record additional write-downs or, conversely, recognize a reduction in previously established write-downs once the product is sold. Because of the inherent uncertainty involved in forecasting future product demand and product life cycles, actual results could differ materially from these estimates.

Management believes the methodologies and assumptions used to estimate the valuation of inventory are appropriate and consistently applied; however, changes in product mix, customer demand, or technological obsolescence could materially impact future results of operations and financial condition.

24

Recently Adopted Accounting Pronouncements

Refer to Note 1 to the Company’s consolidated financial statements for a discussion of recently adopted accounting pronouncements.

New Accounting Pronouncements Not Yet Adopted

Refer to Note 1 to the Company’s consolidated financial statements for a discussion of new accounting pronouncements not yet adopted.

Quarterly Information

As a result of the retrospective changes associated with the sale of the Nestor Cables business, which are reflected as discontinued operations for all periods presented, the following table sets forth selected consolidated quarterly financial information that have been adjusted to reflect these presentation changes.

Three Months Ended

(In thousands, except per share data)

September 30, 2025

June 30, 2025

March 31, 2025

December 31, 2024

Net sales

$

41,060

$

38,755

$

40,621

$

29,698

Gross profit

$

14,225

$

13,676

$

13,961

$

8,675

Income (loss) from continuing operations before income taxes

$

2,583

$

3,115

$

3,271

$

(302

)

(Loss) from discontinued operations before income taxes

$

(17,367

)

$

(137

)

$

(1,488

)

$

(2,030

)

Net (loss) income

$

(9,077

)

$

1,606

$

1,327

$

(1,906

)

Basic (loss) earnings per share:

Continuing operations

$

0.13

$

0.17

$

0.18

$

(0.02

)

Discontinued operations

(0.78

)

(0.06

)

(0.09

)

(0.11

)

Basic (loss) earnings per share

$

(0.65

)

$

0.11

$

0.09

$

(0.13

)

Diluted (loss) earnings per share:

Continuing operations

$

0.13

$

0.17

$

0.18

$

(0.02

)

Discontinued operations

(0.78

)

(0.06

)

(0.09

)

(0.11

)

Diluted (loss) earnings per share

$

(0.65

)

$

0.11

$

0.09

$

(0.13

)

Three Months Ended

(In thousands, except per share data)

September 30, 2024

June 30, 2024

March 31, 2024

December 31, 2023

Net sales

$

36,197

$

33,670

$

27,600

$

28,101

Gross profit

$

9,635

$

9,175

$

2,313

$

4,724

Income (loss) from continuing operations before income taxes

$

(641

)

$

(445

)

$

(6,800

)

$

(3,876

)

(Loss) from discontinued operations before income taxes

$

(678

)

$

(280

)

$

(1,193

)

$

(2,343

)

Net (loss) income

$

(827

)

$

(447

)

$

(5,911

)

$

(5,268

)

Basic (loss) earnings per share:

Continuing operations

$

(0.01

)

$

(0.01

)

$

(0.34

)

$

(0.22

)

Discontinued operations

(0.04

)

(0.03

)

(0.06

)

(0.13

)

Basic (loss) earnings per share

$

(0.05

)

$

(0.04

)

$

(0.40

)

$

(0.35

)

Diluted (loss) earnings per share:

Continuing operations

$

(0.01

)

$

(0.01

)

$

(0.34

)

$

(0.22

)

Discontinued operations

(0.04

)

(0.03

)

(0.06

)

(0.13

)

Diluted (loss) earnings per share

$

(0.05

)

$

(0.04

)

$

(0.40

)

$

(0.35

)