RF Industries, Ltd.
Annual Report 2024

 
 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
 
 
FOR ANNUAL AND TRANSITION REPORTS
 
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended October 31, 2024
 
or
 
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ______________ to ________________.
 
Commission File Number 0-13301
 
RF INDUSTRIES, LTD.
(Name of registrant as specified in its charter)
 
Nevada
88-0168936
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
 
16868 Via Del Campo Court, Suite 200
San Diego, California
92127
(Address of principal executive offices)
(Zip Code)
(858) 549-6340
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
 
 
 
Common Stock, $0.01 par value per share
RFIL
NASDAQ Global Market
 
Securities registered pursuant to Section 12(g) of the Act:  None
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☒ No
 
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.    ☒ Yes    ☐ No
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files).   ☒ Yes     ☐ No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company,
or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth
company” in Rule 12b-2 of the Exchange Act.
 
Large Accelerated Filer ☐
Accelerated Filer ☐
Non-accelerated Filer ☒
Smaller reporting company ☒
Emerging Growth Company ☐
 
 
1

 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. ☐
 
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included
in the filing reflect the correction of an error to previously issued financial statements. ☐
 
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     ☐ Yes    ☒ No
 
The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the
common equity was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter was approximately $25.9 million.
 
On January 10, 2025, the Registrant had 10,544,431 outstanding shares of Common Stock, $.01 par value.
 
2

 
  
 
Forward-Looking Statements:
 
Certain statements in this Annual Report on Form 10-K (this “Annual Report”), and other oral and written statements made by the Company from
time to time are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, including those that
discuss strategies, goals, outlook or other non-historical matters, or projected revenues, income, returns or other financial measures. In some cases forward-
looking statements can be identified by terminology such as “may,” “will,” “should,” “except,” “plan,” “anticipate,” “believe,” “estimate,” “predict,”
“potential” or “continue,” the negative of such terms or other comparable terminology. These forward-looking statements are subject to numerous risks and
uncertainties that may cause actual results to differ materially from those contained in such statements. Among the most important of these risks and
uncertainties are the ability of the Company to meet customer demand through pricing and product offerings and efficient inventory and distribution
channel management, to continue to source our raw materials and products from our suppliers and manufacturers, particularly those in Asia, the market
demand for our products, which market demand is dependent in large part on the state of the telecommunications industry, the Company’s ability to
continue as a going concern, the Company’s ability to remain in compliance with its existing capital loan terms and financial covenants and whether plans
to develop 4G and 5G networks accelerate as expected, as well as our ability to meet any such demand, the effect of future business acquisitions and
dispositions, the incurrence of impairment charges, and competition.
 
Important factors which may cause actual results to differ materially from the forward-looking statements are described in the Section entitled
“Risk Factors” in this Form 10-K, and other risks identified from time to time in the Company’s filings with the Securities and Exchange Commission. The
Company assumes no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting such
forward-looking statements.
 
Summary Risk Factors
 
Our business is subject to numerous risks and uncertainties, including those highlighted in Part I, Item 1A titled “Risk Factors.” These risks include, but are
not limited to, the following:
 
Risks Related to Our Business
 
• We are heavily dependent upon wireless and broadband communications providers.
 
• The acquisition of Microlab will affect both the Company’s liquidity and its capital resources in the near future.
 
• We entered into a new credit facility, which replaced a loan agreement we previously entered into to fund our acquisition of Microlab, which
may expose us to additional risks, including risks associated with the inability to repay the loan on a timely basis.
 
• Due to the nature of our business, we need continued access to capital, which if not available to us or if not available on favorable terms, could
harm our ability to operate or expand our business.
 
• If our third-party contract manufacturers are unable to manufacture and deliver a sufficient quantity of high-quality products on a timely and
cost-efficient basis, our net revenue and profitability would be harmed and our reputation may suffer.
 
• Our business strategy to expand through acquisitions of other businesses could increase operating costs and expose us to additional risks.
 
• Global economic conditions and any related impact on our supply chain and the markets where we do business could adversely affect our results
of operations.
 
• Our business, financial condition and results of operations could be harmed by the effects of outbreaks of COVID-19 or similar public health
crises.
 
• Our dependence on third-party manufacturers increases the risk that we will not have an adequate supply of products or that our product costs
will be higher than expected.
 
• An impairment in the carrying value of goodwill, trade names and other long-lived assets could negatively affect our consolidated results of
operations and net worth.
 
• Changes in technology may reduce the demand for some of our products.
 
• If the manufacturers of our coaxial connectors or other products discontinue the manufacturing processes needed to meet our demands or fail to
upgrade their technologies, we may face production delays.
 
3

 
 
• Our dependence upon independent distributors to sell and market our products exposes us to the risk that such distributors may decrease their
sales of our products or terminate their relationship with us.
 
• A material portion of our sales is dependent upon a few principal customers, the loss of whom could materially negatively affect our total sales.
 
• Difficult conditions in the global economy may adversely affect our business and results of operations.
 
• Because the markets in which we compete are highly competitive, a failure to effectively compete could result in an immediate and substantial
loss of market share.
 
• If the industries into which we sell our products experience recession or other cyclical effects impacting the budgets of our customers, our
operating results could be negatively impacted.
 
• Because we sell our products to foreign customers, we are exposed to all of the risks associated with international sales, including foreign
currency exposure.
 
• The inability to hire or retain certain key professionals, management and staff could adversely affect our business, financial condition and results
of operations.
 
• We have few patent rights in the technology employed in our products, which may limit our ability to compete.
 
• Claims by other companies that we infringe their intellectual property could adversely affect our business
 
• A cyber incident could result in information theft, data corruption, operational disruption, and/or financial loss.
 
Risks Related to Our Common Stock
 
• Volatility of trading prices of our stock could result in a loss on an investment in our stock.
 
• Failure to maintain an effective system of internal control over financial reporting or to remediate weaknesses could materially harm our
revenues, erode stockholder confidence in our ability to pursue business and report our financial results/condition, and negatively affect the trading price of
our common stock.
 
• While we have in the past paid dividends, no assurance can be given that we will declare or pay cash dividends in the future.
 
• Future sales of our common stock in the public market could cause our stock price to fall.
 
• Provisions of our certificate of incorporation and bylaws and Nevada law may make a takeover more difficult.
 
• We are a “smaller reporting company” and we have elected to comply with certain reduced reporting and disclosure requirements which could
make our common stock less attractive to investors.
 
PART I
 
ITEM 1.
BUSINESS
 
General
 
RF Industries, Ltd. (together with subsidiaries, the “Company”, “we”, “us”, or “our”) is a national manufacturer and marketer of interconnect
products and systems, including high-performance components such as RF connectors and adapters, dividers, directional couplers and filters, coaxial
cables, data cables, wire harnesses, fiber optic cables, custom cabling, energy-efficient cooling systems and integrated small cell enclosures. Through our
manufacturing and production facilities, we provide a wide selection of interconnect products and solutions primarily to telecommunications carriers and
equipment manufacturers, wireless and network infrastructure carriers and manufacturers and to various original equipment manufacturers (“OEMs”) in
several market segments. We also design, engineer, manufacture and sell energy-efficient cooling systems and integrated small cell solutions and related
components.
 
We operate through two reporting segments: (i) the RF Connector and Cable Assembly (“RF Connector”) segment, and (ii) the Custom Cabling
Manufacturing and Assembly (“Custom Cabling”) segment. The RF Connector segment primarily designs, manufactures, markets and distributes a broad
range of RF connector, adapter, coupler, divider, and cable products, including coaxial passives and cable assemblies that are used in telecommunications
and information technology, OEM markets and other end markets. 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, 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 5G small cell integrated enclosures.
 
4

 
 
Recent Events
 
In February 2022, we entered into a loan agreement (the “BofA Loan Agreement”) providing for a revolving line of credit (the “BofA Revolving
Credit Facility”) in the amount of $3.0 million and a $17.0 million term loan (the “BofA Term Loan”, and together with the BofA Revolving Credit
Facility, the “BofA Credit Facility”) with Bank of America, N.A. (“BofA”). Amounts outstanding under the BofA Revolving Credit Facility bore interest at
a rate of 2.0% plus the Bloomberg Short-Term Bank Yield Index Rate. All amounts outstanding pursuant to the BofA Credit Facility were repaid by us and
the BofA Loan Agreement was terminated in connection with us entering into a new loan and security agreement (the “EBC Credit Agreement”) with
Eclipse Business Capital, as administrative agent (“EBC”) on March 15, 2024. Borrowings under the BofA Credit Facility were secured by a security
interest in certain assets of the Company and were subject to certain loan covenants. The BofA Credit Facility required the maintenance of certain financial
covenants, including: (i) consolidated debt to EBITDA ratio not to exceed 3.00 to 1.00 (the “Debt Test”); (ii) consolidated fixed charge coverage ratio of at
least 1.25 to 1.00 (the “FCCR Test”); and (iii) consolidated minimum EBITDA of at least $600,000 for the discrete quarter ended January 31, 2022. In
addition, the BofA Credit Facility contained customary affirmative and negative covenants.
 
On September 12, 2023, we entered into Amendment No. 1 and Waiver to the BofA Loan Agreement (“Loan Amendment No. 1”) with BofA,
which, among other matters, provided for a one-time waiver of our failure to comply with (i) the Debt Test for the period ended July 31, 2023 and (ii) the
FCCR Test for the period ended July 31, 2023. Loan Amendment No. 1 also waived testing for compliance with the Debt Test and FCCR Test for the
quarterly periods ending October 31, 2023, January 31, 2024, April 30, 2024 and July 31, 2024. Further, pursuant to Loan Amendment No. 1, we were
required to maintain (i) (a) until September 21, 2023, minimum liquidity (week-end cash balance plus availability from the BofA Revolving Credit
Facility) of $4.0 million, and (b) from September 22, 2023 and thereafter, liquidity equal to the greater of (1) $4.0 million or (2) 80% of the liquidity that
had been forecast for this date at the fourth week of the forecast and (ii) minimum EBITDA of ($400,000), $500,000, $1.0 million, and $1.0 million for the
quarters ending October 31, 2023, January 31, 2024, April 30, 2024, and July 31, 2024, respectively.
 
On January 26, 2024, we entered into Amendment No. 2 to the BofA Loan Agreement (“Loan Amendment No. 2”) with BofA, which, among
other matters, eliminated the requirement to maintain minimum EBITDA of $500,000 for the quarter ending January 31, 2024. Under Loan Amendment
No. 2, the line of credit available to the Company under the BofA Revolving Credit Facility was lowered from $3.0 million to $500,000. Further, Loan
Amendment No. 2 required that we maintain from September 22, 2023 and thereafter, liquidity of at least $2.0 million, rather than the greater of
$4.0 million or 80% of the forecast liquidity as was required under Loan Amendment No. 1. Under Loan Amendment No. 2, the Company would have
been required to pay an additional fee equal to 1% of the collective outstanding principal balances of the BofA Revolving Credit Facility and BofA Term
Loan if the BofA Credit Facility was not repaid in full on or before March 1, 2024. This additional fee, if applicable, would have been due on March 2,
2024. Further, Loan Amendment No. 2 required that the Company make an additional principal payment of $1.0 million on the BofA Term Loan on March
1, 2024, in addition to the existing monthly payments due on the BofA Term Loan. In connection with Loan Amendment No. 2, we paid BofA a
$500,000 paydown on the BofA Revolving Credit Facility, thereby reducing the outstanding balance from $1.0 million to $500,000. Loan Amendment No.
2 was considered a modification under Accounting Standards Codification (“ASC”) 470, Debt.
 
On February 29, 2024, we entered into Amendment No. 3 to the BofA Loan Agreement (“Loan Amendment No. 3”) with BofA, which, among
other matters, deferred the requirement that the Company make an additional principal payment of $1.0 million on the BofA Term Loan, from March 1,
2024, as was required under Loan Amendment No. 2, to April 1, 2024. Further, Loan Amendment No. 3 reduced the additional fee the Company was
required to pay BofA on March 2, 2024 from 1% of the collective outstanding principal balances of the BofA Revolving Credit Facility and BofA Term
Loan as of March 1, 2024 as required under Loan Amendment No. 2, to 0.50% of the collective outstanding principal balances of the BofA Revolving
Credit Facility and BofA Term Loan as of March 1, 2024. Additionally, Loan Amendment No. 3 required the Company to pay BofA a fee equal to 0.50%
of the collective outstanding principal balances of the BofA Revolving Credit Facility and BofA Term Loan as of March 1, 2024, if the BofA Credit
Facility was not repaid in full on or before April 2, 2024 (the “April 2024 Fee”). The April 2024 Fee, if applicable, would have been due on April 2, 2024.
We were not required to pay the April 2024 Fee based on our repayment of the BofA Credit Facility prior to April 2, 2024. Under Loan Amendment No. 3,
the Company was required to maintain liquidity of at least $2.0 million and pay the remaining outstanding balance of $500,000 on the BofA Revolving
Credit Facility by March 1, 2024, as required under Loan Amendment No. 2. Loan Amendment No. 3 was considered a modification under ASC 470, Debt.
 
On March 15, 2024, we entered into the EBC Credit Agreement and used proceeds from the initial drawings under the EBC Credit Facilities (as
defined below) to repay in full outstanding obligations under the BofA Loan Agreement and to pay fees, premiums, costs and expenses, including fees
payable in connection with the EBC Credit Agreement. The BofA Loan Agreement was terminated upon entry into the EBC Credit Agreement and is no
longer in effect.
 
5

 
 
The EBC Credit Agreement provides for (i) a senior secured revolving loan facility of up to $15.0 million (the “EBC Revolving Loan Facility”)
and (ii) a senior secured revolving credit facility of up to $1.0 million (the “EBC Additional Line” and, together with the EBC Revolving Loan Facility, the
“EBC Credit Facilities”) (with a $3.0 million swingline loan sublimit). On June 14, 2024, the parties entered into a First Amendment to the EBC Credit
Agreement (the “First Amendment”) providing for a modified EBC Additional Line of $1.0 million through July 12, 2024, $666,666.67 from July 13, 2024
through August 11, 2024 and $333,333.34 from August 12, 2024 through September 10, 2024. Availability of borrowings under the EBC Credit Facilities
will be based upon a borrowing base formula and periodic borrowing base certifications valuing certain of our accounts receivable and inventories, as
reduced by certain reserves, if any.
 
In the absence of an Event of Default (as defined in the EBC Credit Agreement) or certain other events (including the inability of EBC to
determine the secured overnight financing rate “SOFR”), borrowings under (a) the EBC Revolving Loan Facility accrue interest at a rate of the one-month
term SOFR reference rate plus an adjustment of 0.11448% (“Adjusted Term SOFR”) plus 5.00%, and (b) the EBC Additional Line accrues interest at a rate
of Adjusted Term SOFR plus 6.50%, in each case subject to a floor of 2.00% for Adjusted Term SOFR. We will be required to pay a commitment fee of
0.50% per annum for the unused portion of the EBC Revolving Loan Facility. In addition to the foregoing unused commitment fee, we are required to pay
certain other administrative fees pursuant to the terms of the EBC Credit Agreement.
 
Borrowings under the EBC Credit Agreement are secured by a security interest in certain assets of the Company and are subject to certain loan
covenants. The EBC Credit Facilities require the maintenance of certain financial covenants, including (i) Excess Availability (as defined in the EBC Credit
Agreement) of at least, as of any date of determination, an amount equal to the greater of (a) $1.0 million and (b) 10% of the Adjusted Borrowing Base (as
defined in the EBC Credit Agreement), unless as of the last day of the most recent month for which the monthly financial statements and the related
compliance certificate have been or are required to have been delivered to EBC, the Fixed Charge Coverage Ratio (as defined in the EBC Credit
Agreement) for the 12 consecutive calendar month period then ended is greater than 1.10 to 1.00; and (ii) a capital expenditure limitation limiting the
aggregate cost of all Capital Expenditure (as defined in the EBC Credit Agreement) to $2.5 million during any fiscal year. In addition, the EBC Credit
Facilities contain customary affirmative and negative covenants.
 
Strategy
 
Our overall strategy is to provide our customers with a broad selection of products, rapid and high-quality service, and custom design capabilities,
all at competitive prices. Specifically, our strategy is the following:
 
Provide rapid and flexible design and manufacturing services. Over the past few years we have focused our organization on providing a
standardized portfolio, allowing for quick-turn readily available products, while having the capabilities, flexible design and manufacturing services to
customize our offering to address customer specific requirements or applications.
 
Competitive pricing. Our manufacturing and distribution arrangements have been designed to lower costs and enable us to offer prices on both our
standard and custom manufactured products that are competitive with the marketplace, all while keeping quality as a priority.
 
Leverage our manufacturing and distribution capabilities and facilities. Our strategy is to operate our manufacturing and distribution locations to
best provide our customers with a competitively priced, high-quality product offering delivered with a fast turnaround time. As part of this strategy, we
utilize a “one-company” approach to production and distribution locations and allocate our resources based on each location’s production specialization
capabilities, its proximity to the shipment destination, and other factors. Using this “one-company” approach, our goal is to leverage available capacity and
shorten delivery times, while potentially providing lower shipping costs. We operate manufacturing and distribution locations in California, and in the
Northeastern United States.
 
Integrate marketing and selling efforts. Our strategy is to integrate and cross-sell our various historical and acquired product lines. We have been
integrating our marketing and sales efforts, thereby expanding the number and type of products we can offer to our existing client base, while also using
this cross-sell approach to win new customers.
 
Broad range of immediately available products. Our strategy is to provide a high level of availability where we stock a large selection of standard
products that are available for immediate delivery, including availability from multiple distributors. Additionally, we augment this “on-the-shelf”
availability of several cable assembly and interconnect products with fast-turn production and assembly providing better lead times for our customers.
 
Targeted focus of product lines. Our strategy is to focus on passive products rather than manufacturing and selling operating or active components
or products. Our product line focus remains on supporting and leveraging our distribution channels with our core passive interconnect and cable assemblies
offering, while in parallel we continue to expand our portfolio of integrated solutions to address key end customer and market applications. As we have
grown in recent years, we have placed a specific emphasis on expanding our product lines to offer more of the bill of materials required to deploy specific
connectivity systems and applications in key markets, such as wireless and public safety communications.
 
Increase long-term relationships with customers. Our goal is to establish long-term relationships with the customers who have used us for
specialized projects by having our solutions built into the customer’s product specifications and bills of materials. As we remain focused on maintaining
and expanding our national distributor relationships through our dedicated sales and account management teams, we have invested in targeted business
development efforts to assist in getting more closely aligned with the requirements of strategic end customers.
 
6

 
 
Grow through strategic and targeted acquisitions. We will continue to consider strategic acquisitions of companies or technologies that can
increase our customer penetration and/or diversify our customer base, supplement our management team, expand our product offerings, and/or expand our
footprint in relevant market segments.
 
Operations
 
We currently conduct operations through our six divisions with our product areas divided into two reporting segments.
 
RF Connector and Cable Assembly Segment
 
Our RF Connector segment consists of the RF Connector and Cable Assembly division (“RF Connector division”) that is based at our
headquarters in San Diego, California with expansion in New Jersey through our acquisition of Microlab. The RF Connector division is primarily engaged
in the design, manufacture and distribution of coaxial connector solutions for companies that design, build, operate, maintain and use a variety of
connectivity/communication applications. Coaxial connector products consist primarily of connectors which, when attached to a coaxial cable, facilitate the
transmission of analog and digital signals in various frequencies. Although most of the connectors are designed to fit standard cable products, the RF
Connector division also sells custom connectors specifically designed and manufactured to suit its customers’ requirements. Additionally, during fiscal year
2023 the Company integrated the former C Enterprises division into the RF Connector division and San Diego headquarters. The business and assets of C
Enterprises, L.P. were acquired on March 15, 2019, bringing to the Company the Corning Cable Systems CAH ConnectionsSM Gold Program member as
an authorized manufacturer of fiber optic products that are backed by Corning Cable Systems’ extended warranty. This acquisition added the capabilities to
design, develop and manufacture connectivity solutions including custom copper and fiber cable assemblies sold to telecommunications and data
communications distributors.
 
The Microlab division is included in the RF Connector segment. Microlab was acquired in March 2022, and is based in Parsippany, New Jersey.
Microlab designs and manufactures high-performance RF and Microwave products enabling signal distribution and deployment of in-building DAS
(distributed antenna systems), wireless base stations and small cell networks. Manufacturing operations are performed at Microlab’s facilities in New
Jersey.
 
The RF Connector division typically carries over 1,500 different types of connectors, adapters, tools, and test and measurements kits. This
division’s connectors are used in thousands of different devices, products and types of equipment. Since the RF Connector division’s standard connectors
can be used in a number of different products and devices, the discontinuation of one product typically does not make our connectors obsolete.
Accordingly, most connectors that we carry can be marketed for a number of years. Furthermore, because our connector products are not dependent on any
single line of products or any market segment, our overall sales of connectors tend to fluctuate less when there are material changes or disruption to a single
product line or market segment.
 
Cable assembly products manufactured and sold by the RF Connector division consist of various types of coaxial cables that are attached to
connectors (usually our connectors) for use in a variety of communications applications. Cable assemblies manufactured for the RF Connector division are
primarily manufactured at our San Diego, California facilities using state-of-the-art automation equipment and are sold through distributors or directly to
major OEM accounts. Our cable assembly portfolio consists of both standard and custom cable assemblies designed for specific customer requirements. We
offer a line of cable assemblies with over 100,000 cable product combinations.
 
We design our connectors at our headquarters in San Diego, California, and Microlab designs and manufactures a wide selection of components
and integrated subsystems for signal conditioning and distribution in the wireless infrastructure markets as well as for use in medical devices. However,
most of the connectors are manufactured for us by third-party foreign manufacturers located in Asia.
 
Custom Cabling Manufacturing and Assembly Segment
 
The Custom Cabling segment currently consists of three wholly-owned subsidiaries located in the Northeastern United States. Our plan is to
integrate certain aspects of the manufacturing, sales and marketing functions of these divisions so as to better address overlapping market opportunities and
to more efficiently manufacture, market, and ship products to our customers.
 
The three divisions that comprise the current Custom Cabling segment consist of the following:
 
Cables Unlimited, Inc. Cables Unlimited, Inc. (“Cables Unlimited”) is a custom cable manufacturer located in Yaphank, New York, that we
acquired in 2011. Cables Unlimited is a Corning Cable Systems CAH ConnectionsSM Gold Program member, authorized to manufacture fiber optic
products that are backed by Corning Cable Systems’ extended warranty. Cables Unlimited designs, develops and manufactures custom connectivity
solutions for the industrial, defense, telecommunications and wireless markets.  The products sold by Cables Unlimited include custom and standard copper
and fiber optic cable assemblies, adapters and electromechanical wiring harnesses for communications, computer, LAN, automotive fiber optic and medical
equipment.
 
7

 
 
Rel-Tech Electronics, Inc. Rel-Tech Electronics, Inc. (“Rel-Tech”) was acquired in June 2015. Rel-Tech’s offices and manufacturing facilities are
located in Milford, Connecticut. Rel-Tech is a designer and manufacturer of cable assemblies and wiring harnesses for blue chip industrial, oilfield,
instrumentation, medical and military customers. Wire and cable assembly products include custom wire harnesses, ribbon cable, electromechanical and
kitted assemblies, and networking and communications cabling.
 
Schroff Technologies International, Inc. Schroff Technologies International, Inc. (“Schrofftech”) was acquired in November 2019. Schrofftech is a
Rhode Island based manufacturer and marketer of intelligent thermal cooling control systems, along with pole-ready wireless small cell shrouds and
enclosures, custom designed for plug-and-play installation. These products are typically used by telecommunications companies across the U.S. and
Canada.
 
Product Description
 
We produce a large variety of interconnect products and assemblies that are used in telecommunications and a range of other industries. The
products that we offer and sell consist of the following:
 
Connector and Cable Products
 
We design, manufacture and market a broad range of coaxial connectors, adapters and cable assemblies fornumerous applications in commercial,
industrial, automotive, transportation, scientific, aerospace and military markets.
 
There are numerous applications for these connectors, some of which include digital applications, 2.5G, 3G, 4G, 5G, LTE, Wi-Fi and other
broadband wireless infrastructure, GPS, mobile radio products, aircraft, video surveillance systems, cable assemblies and test equipment. Users of our
connectors include telecommunications companies, circuit board manufacturers, OEMs, consumer electronics manufacturers, audio and video product
manufacturers and installers, and satellite companies. We market over 1,500 types of connectors, adapters, tools, assembly, test and measurement kits,
which range in price from under $1 to over $1,000 per unit. The kits satisfy a variety of applications including, but not limited to, lab operations, site
requirements and adapter needs.
 
We also design and sell a variety of connector tools and hand tools that are assembled into kits used by lab and field technicians, research and
development technicians and engineers. These tools are manufactured for us by outside contractors. Tool products are carried as an accommodation to our
customers and have not materially contributed to our revenues.
 
We market and manufacture cable assemblies in a variety of sizes and combinations of RF coaxial connectors and coaxial cabling. Cabling is
purchased from a variety of major unaffiliated suppliers and is assembled predominately with our connectors as complete cable assemblies. Coaxial cable
assemblies have numerous applications including low PIM, Wi-Fi and wireless local area networks, wide area networks, internet systems, cellular systems
including 2.5G, 3G, 4G, 5G, LTE, DAS and Small Cell installations, TV/dish network systems, test equipment, military/aerospace (mil-standard and COTS
(Commercial Off–The-Shelf)) and entertainment systems. Cable assemblies are manufactured to customer requirements.
 
We carry thousands of separate types of connectors, most of which are available in standard sizes and configurations and that are also offered by
other companies. However, we also have some proprietary products, including the CompPro product line, OptiFlex cables, and the Schrofftech telecom
shelter cooling and control system products. CompPro is a patented compression technology that offers advantages for a water-tight, ruggedized
connection, providing easier installation, and improved system reliability on braided cables. CompPro is used by wireless network operators, installers and
distributors in North America and other parts of the world. OptiFlex is a hybrid fiber optic and DC power cabling solution that we designed and
manufactured, and the Schrofftech products are energy efficient cooling/temperature control and filtration systems for use in telecom shelters, outdoor
enclosures and battery/power rooms.
 
Passive RF Products
 
We design and manufacture high-performance RF and microwave high-performance components such as dividers, directional couplers and filters
enabling signal distribution and deployment of in-building DAS (distributed antenna systems), wireless base stations and small cell networks.
 
Fiber Optic Products
 
Cables Unlimited is a Corning Cable Systems CAH Connections SM Gold Program member that is authorized to manufacture fiber optic products
that are backed by Corning Cable Systems’ extended warranty. Through our Cables Unlimited division, we offer a broad range of interconnect products and
systems that have the ability to combine radio frequency and fiber optic interconnect components, with various connectors and power cables through
customized solutions for these customers. Cables Unlimited also manufactures OptiFlex, a custom designed hybrid fiber optic and DC power cabling
solution manufactured for wireless service providers engaged in upgrading their cell towers. The custom hybrid cable is significantly lighter and possesses
greater flexibility than cables previously used for wireless service.
 
8

 
 
The former C Enterprises, now integrated into the RF Connector division, is a Corning Cable Systems CAH Connections SM Gold Program
member, authorized to manufacture fiber optic products that are backed by Corning Cable Systems’ extended warranty. C Enterprises designs, develops and
manufactures connectivity solutions to telecommunications and data communications distributors.
 
Other Cabling Products
 
We design, manufacture, and sell cable assemblies and wiring harnesses for industrial, oilfield, instrumentation, medical, and military customers.
Wire and cable assembly products include custom wire harnesses, ribbon cable, electromechanical and kitted assemblies, networking and communications
cabling. DIN and Mini DIN connector assemblies include power cord, coaxial, Mil-spec and testing.
 
Telecommunications Thermal Control Systems and Shrouds
 
We engineer, design, manufacture and sell intelligent thermal control systems for outdoor telecommunications equipment. The thermal control
systems, which can be controlled offsite using networked software at the telecommunication company’s own data center, maintain the interior temperature
of telecommunications and other networking equipment. We also design and sell integrated shrouds and enclosures for small cell deployments that reduce
installation time and improve aesthetics by eliminating the exterior cabling used with current configurations.
 
Foreign Sales
 
Net sales to foreign customers accounted for $6,014,000 (or approximately 9%) of our net sales, and $6,387,000 (or approximately 9%) of our net
sales for the fiscal years ended October 31, 2024 and 2023, respectively. The majority of the export sales during these periods were to Canada.
 
We do not own, or directly operate any manufacturing operations or sales offices in foreign countries.
 
Distribution and Marketing
 
We currently sell our products through independent warehousing distributors and through our in-house marketing and sales team. Sales through
independent distributors accounted for approximately 35% of our net sales for the fiscal year ended October 31, 2024. Our agreements with most of the
distributors are nonexclusive and generally may be terminated by either party upon 30-60 days’ written notice. The Company directly sells certain of its
products to large, national telecommunication equipment and solution providers who include the Company’s products in their own product offerings.
 
Manufacturing
 
We contract with outside third parties for the manufacture of a significant portion of our coaxial connectors. However, virtually all of the RF cable
assemblies sold during the fiscal year ended October 31, 2024 were assembled at the International Organization for Standardization (“ISO”) approved
factories in San Diego, California and Parsippany, New Jersey. We procure our raw cable from manufacturers with ISO-approved factories in the United
States, China, and Taiwan. The Company primarily relies on several third-party partners for the manufacture of its coaxial connectors, tools and other
passive components and receives bulk cable from multiple manufacturing plants. Although we do not have manufacturing contracts with these
manufacturers for our connectors and cable products, we do have long-term purchasing relationships. There are certain risks associated with our
dependence on third-party manufacturers for some of our products. See “Risk Factors” below. We have in-house design engineers who create the
engineering drawings for fabrication and assembly of connectors and cable assemblies. Accordingly, the third-party manufacturers are not primarily
responsible for design work related to the manufacture of our connectors and cable assemblies. Although our current facilities are set up to manufacture
certain lines of products, manufacturing of certain products is often shifted to other facilities to alleviate capacity limitations or to address a customer’s
product manufacturing schedule requirements.
 
We manufacture custom cable assemblies, adapters and electromechanical wiring harnesses and other products through Cables Unlimited at its
Yaphank, New York manufacturing facility. The Yaphank facility is an ISO-approved factory. Cables Unlimited is a Corning Cable Systems CAH
Connections SM Gold Program member, authorized to manufacture fiber optic products and assemblies that are backed by Corning Cable Systems’
extended warranty.
 
The Milford, Connecticut facility of Rel-Tech is an ISO-approved manufacturing facility that is primarily used to manufacture cable assemblies,
electromechanical assemblies, wiring harnesses and other similar products. 
 
The products sold by Schrofftech are designed and manufactured at its ISO-approved manufacturing facility in North Kingstown, Rhode Island.
Schrofftech’s products are manufactured and tested in accordance with the ETL Listing standards.
 
Microlab designs and manufactures a wide selection of RF components and integrated subsystems in our design and manufacturing facility in
Parsippany, New Jersey.
 
9

 
 
Raw Materials
 
Connector materials are typically made of commodity metals such as copper, brass and zinc and include small applications of precious materials,
including silver and gold. The RF Connector division purchases most of its connector products from contract manufacturers located in Asia and the United
States. We believe that the raw materials used in our products are readily available and that we are not currently dependent on any supplier for our raw
materials. We do not currently have any long-term purchase or supply agreements with our connector suppliers. The Custom Cabling divisions obtain
coaxial connectors from the RF Connector division. We believe there are numerous domestic and international suppliers of other coaxial connectors that we
may utilize for any of our cabling products.
 
The Cables Unlimited, Rel-Tech, Schrofftech, and former C Enterprises divisions purchase largely all of the raw materials used in their products
from sources located in the United States. Fiber optic cables are available from various manufacturers located throughout the United States, however,
Cables Unlimited purchases most of its fiber optic cables from Corning Cables Systems LLC. The Company believes that the raw materials used by Cables
Unlimited in its products are readily available and that Cables Unlimited is not currently dependent on any supplier for its raw materials except where
Corning Extended Warranty certification is required. Neither Cables Unlimited nor Rel-Tech Electronics currently have any long-term purchase or supply
agreements with their connector and cable suppliers.
 
Backlog
 
As of October 31, 2024, our estimated backlog of unfilled firm orders was approximately $19.5 million compared with backlog of approximately
$16.1 million as of October 31, 2023. Orders typically fluctuate from quarter to quarter based on customer demand and general business conditions and, in
particular, for project-based orders from wireless carrier customers for custom cable assemblies at our Cables Unlimited division. Since purchase orders are
submitted from customers based on the estimated 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 shipment delays and to cancellation from customers, although we have not historically experienced
material cancellations of purchase orders.
 
It is expected that a substantial portion of the backlog will be filled within the next 12 months. Most of the orders that we receive, particularly in
the RF Connector segment, generally have short lead times. Therefore, backlog may not be indicative of future demand.
 
Human Capital
 
As of October 31, 2024, we employed 302 full-time employees, of whom 64 were in accounting, administration, sales and management, 225 were
in manufacturing, distribution and assembly, and 13 were engineers engaged in design, engineering and research and development. The employees were
based at our facilities in San Diego, California (144 employees), Yaphank, New York (60 employees), Milford, Connecticut (50 employees), Parsippany,
New Jersey (42 employees), and North Kingstown, Rhode Island (6 employees). We also occasionally hire part-time employees. We believe that we have a
good relationship with our employees.
 
Patents, Trademarks and Licenses
 
We own ten U.S. patents related to the CompPro Product Line that we acquired in May 2015. The CompPro Product Line utilizes a patented
compression technology that offers revolutionary advantages for a water-tight connection, easier installation, and improved system reliability on braided
cables. The CompPro Product Line is used by wireless network operators, installers and distributors in North America and other parts of the world. 
 
Our Schrofftech subsidiary owns eight issued patents on its proprietary telecom shelter cooling and control system technology and its equipment
room ventilation controls.  Schrofftech has also filed one pending patent application related to ventilation and control equipment and controls. 
 
The trademarks we own include the “CompPro” registered trademark associated with the compression cable product line and the “OptiFlex™” as
a trademark for its hybrid cable wireless tower cable solution.  Each of our subsidiaries also use various trademarks (and associated logos and trade names)
in their operations, although none of these trademarks have been registered.
 
Because the RF Connector division carries thousands of separate types of connectors and other products, most of which are available in standard
sizes and configurations and are also offered by our competitors, we do not believe that our cables and connector business or competitive position is
dependent on patent protection. 
 
Under agreements with Corning Cables Systems LLC, Cables Unlimited and C Enterprises are permitted to advertise that they are Corning Cables
System CAH Connections SM Gold Program members.
 
With the acquisition of Microlab, three additional relevant patents were added to our portfolio regarding GPS signal repeaters, RF System
Monitoring, and RF Tappers. Additional filings are also pending for RF system conditioning.
 
10

 
 
Warranties and Terms
 
We warrant our products to be free from defects in material and workmanship for varying warranty periods, depending upon the product. Products
are generally warranted to the dealer for one year, with the dealer responsible for any additional warranty it may make. The RF Connector products are
warranted for the useful life of the connectors. Although we have not experienced any significant warranty claims to date, there can be no assurance that we
will not be subjected to such claims in the future.
 
We usually sell to customers on 30 to 60-day terms pursuant to invoices and do not generally grant extended payment terms. Generally, customers
may delay, cancel, reduce, or return products after shipment subject to a restocking charge.
 
Under their agreements with Corning Cables Systems LLC, Cables Unlimited and C Enterprises are authorized to manufacture optic cable
assemblies that are backed by Corning Cables Systems’ extended warranty (referred to as the “Gold Certified Warranty”).
 
Competition
 
The industries in which we operate are highly competitive, and we compete with thousands of companies that range from large multinational
corporations, most of which have greater assets and financial resources, to local manufacturers. Competition is generally based on breadth of product
offering, product innovation, price, quality, delivery, performance and customer service. In addition, rapid technological changes occurring in the
communications industry could also lead to the entry of new competitors of all sizes against whom we may not be able to successfully compete.  There can
be no assurance that we will be able to compete successfully against existing or new competition, and the inability to do so may result in price reductions,
reduced margins, or loss of market share, any of which could have an adverse effect on our business, financial condition and results of operations.
 
Government Regulations
 
Our products are designed to meet all known existing or proposed governmental regulations. We believe that we currently meet existing standards
for approvals by government regulatory agencies for our principal products.
 
Our products are Restriction on Hazardous Substances (“RoHS”) compliant.
 
Environmental Regulations
 
We are subject to various laws and governmental regulations concerning environmental matters and employee safety and health matters in the
United States. Compliance with these federal, state, and local laws and regulations related to protection of the environment and employee safety and health
has had no material effect on our business. There were no material capital expenditures for environmental projects in fiscal year 2024, and there are no
material expenditures planned for such purposes in fiscal year 2025.
 
Investor Information
 
Our principal executive office is currently located at 16868 Via Del Campo Court, Suite 200, San Diego, California. RF Industries, Ltd. was
incorporated in the State of Nevada on November 1, 1979, completed its initial public offering in March 1984 under the name Celltronics, Inc., and
changed its name to RF Industries, Ltd. in November 1990. Unless the context requires otherwise, references to the “Company” in this report include RF
Industries, Ltd. and our six wholly-owned subsidiaries, Cables Unlimited, Inc., Rel-Tech Electronics, Inc., C Enterprises, Inc., Schroff Technologies
International, Inc., and Microlab/FXR LLC.
 
The Company’s principal Internet website is located at http://www.rfindustries.com. The Company’s annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K and amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities
and Exchange Act of 1934, as amended (the “Exchange Act”), and other information related to the Company, are available, free of charge, on that website
as soon as reasonably practicable after we electronically file those documents with, or otherwise furnish them to, the Securities and Exchange Commission
(“SEC”). Reports filed with the SEC are also available on the SEC’s website at www.sec.gov. The Company’s Internet website and the information
contained therein, or connected thereto, are not and are not intended to be incorporated into this Annual Report.
 
ITEM 1A
RISK FACTORS
 
Investors should carefully consider the risks described below and all other information in this Form 10-K. The risks and uncertainties described
below are not the only ones facing us. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair
our business and operations.
 
If any of the following risks actually occur, our business, financial condition or results of operations could be materially adversely affected. In
such case, the trading price of our common stock could decline and investors may lose all or part of their investment in our common stock.
 
11

 
 
Risks Related to Our Business
 
We are heavily dependent upon wireless and broadband communications providers.
 
Most of our revenues and profitability have in recent years been generated from products that we sell, directly or through our distributors, to the
wireless and broadband communications industries. In addition, we also sell connectors, cables and other products to companies that incorporate these
products into their own wireless and broadband communications products. As a result, our business is heavily dependent upon the wireless and broadband
markets. Demand for our products in these markets depends primarily on capital spending by operators for constructing, rebuilding or upgrading their
telecommunication systems. The amount of this capital spending and, therefore, our sales and profitability, will be affected by a variety of factors affecting
the telecommunications companies, including general economic conditions, consolidation within the telecommunications industry and the financial
condition of operators. Although we sell many products into many different markets other than the telecommunications marketplace, because a major
portion of our revenues has historically been derived from direct and indirect sales to wireless and broadband communications companies, our financial
condition and results of operations are heavily influenced by the health and growth of the wireless and broadband markets, all of which is beyond our
control.
 
The acquisition of Microlab will affect both the Company’s liquidity and its capital resources in the near future.
 
On March 1, 2022, we purchased Microlab from Wireless Telecom Group, Inc. for $24,250,000, subject to certain post-closing adjustments. We
funded $17 million of the cash purchase price from the funds obtained under the term loan obtained from Bank of America, N.A. (the “Credit Facility
Lender”) and paid the remaining amount of the cash purchase price with $7.3 million cash on hand, thereby reducing the amount of cash available for
future acquisitions, for investments in the expansion of our existing businesses and assets, or as a reserve for unanticipated financial requirements.
 
We entered into a new credit facility, which replaced a loan agreement we previously entered into to fund our acquisition of Microlab, which may
expose us to additional risks, including risks associated with the inability to repay the loan on a timely basis.
 
On March 15, 2024, we entered into a new loan and security agreement (the “EBC Credit Agreement”), with Eclipse Business Capital as
administrative agent (“EBC”) providing for (i) a senior secured revolving loan facility of up to $15.0 million (the “EBC Revolving Loan Facility”) and (ii)
a senior secured revolving credit facility of up to $1.0 million (the “EBC Additional Line” and, together with the EBC Revolving Loan Facility, the “EBC
Credit Facilities”) (with a $3.0 million swingline loan sublimit). Pursuant to the terms of the First Amendment to the EBC Credit Agreement entered into
by the parties on June 14, 2024, the EBC Additional Line was modified to provide for $1.0 million through July 12, 2024, $666,666.67 from July 13, 2024
through August 11, 2024 and $333,333.34 from August 12, 2024 through September 10, 2024. Availability of borrowings under the EBC Credit Facilities
will be based upon a borrowing base formula and periodic borrowing base certifications valuing certain of our accounts receivable and inventories, as
reduced by certain reserves, if any. We used proceeds from the initial drawings under the EBC Credit Facilities to repay in full outstanding obligations
under the loan agreement (the “BofA Loan Agreement”) previously entered into by us and Bank of America, N.A. (“BofA”) used to fund our acquisition of
Microlab. Additional proceeds from the initial drawings under the EBC Credit Facilities were used to pay fees, premiums, costs and expenses, including
fees payable in connection with the EBC Credit Agreement. The BofA Loan Agreement was terminated upon entry into the EBC Credit Agreement and is
no longer in effect.
 
In the absence of an Event of Default (as defined in the EBC Credit Agreement) or certain other events (including the inability of EBC to
determine the secured overnight financing rate “SOFR”), borrowings under (a) the EBC Revolving Loan Facility accrue interest at a rate of the one-month
term SOFR reference rate plus an adjustment of 0.11448% (“Adjusted Term SOFR”) plus 5.00%, and (b) the EBC Additional Line accrues interest at a rate
of Adjusted term SOFR plus 6.50%, in each case subject to a floor of 2.00% for Adjusted Term SOFR. We will be required to pay a commitment fee of
0.50% per annum for the unused portion of the EBC Revolving Loan Facility. In addition to the foregoing unused commitment fee, we are required to pay
certain other administrative fees pursuant to the terms of the EBC Credit Agreement.
 
Our failure to comply with the terms of the EBC Credit Agreement could result in a default under the agreement. EBC may accelerate the payment
terms of the EBC Credit Agreement upon the occurrence of certain events of default set forth therein. Any event that could require us to repay debt prior to
its due date could have a material adverse impact on our financial condition and results of operations and may affect our ability to continue as a going
concern. Further, any renegotiation, refinancing or additional indebtedness that we incur in the future may subject us to further covenants.
 
Our ability to comply with terms contained in the EBC Credit Agreement may be affected by events beyond our control, including prevailing
economic, financial and industry conditions. Even if we are able to comply with all of the applicable covenants and terms, the restrictions on our ability to
manage our business in our sole discretion could adversely affect our business by, among other things, limiting our ability to take advantage of financings,
mergers, acquisitions and other corporate opportunities that we believe would be beneficial to us. In addition, our obligations under the EBC Credit
Agreement are secured, on a first-priority basis, and such security interests could be enforced by EBC in the event of default by us.
 
12

 
 
Due to the nature of our business, we need continued access to capital, which if not available to us or if not available on favorable terms, could harm
our ability to operate or expand our business.
 
Our business requires capital that is not financed by trade creditors when our business is expanding. If cash from available sources is insufficient
or cash is used for unanticipated needs, we may require additional capital sooner than anticipated.
 
We believe that our existing sources of liquidity, including cash resources and cash provided by operating activities will provide sufficient
resources to meet our working capital and cash requirements for at least the next twelve months; however, there can be no assurance that our cash resources
will fund our operating plan for the period anticipated by us, especially if there is a material adverse impact on our business from unforeseen events or a
desire to reduce our outstanding indebtedness.  Any such events could have an effect on our liquidity and our ability to continue as a going concern in the
future, and result in a need to raise additional capital. Alternatively, we could decide to liquidate assets, raise capital or incur additional indebtedness to
fund strategic initiatives or operating activities, particularly if we pursue additional acquisitions. In the event we are required, or elect, to raise additional
funds, we may be unable to do so on favorable terms, or at all, and may incur expenses in raising the additional funds and increase our interest rate
exposure, and any future indebtedness could adversely affect our operating results and severely limit our ability to plan for, or react to, changes in our
business or industry. Further, under the EBC Credit Agreement, we are limited by financial and other negative covenants in our credit arrangements. If we
cannot raise funds on acceptable terms, we may be unable to continue as a going concern and may not be able to take advantage of future opportunities or
respond to competitive pressures or unanticipated requirements. Any inability to raise additional capital when required could have an adverse effect on our
business and operating results. 
 
In the event that we are unable to pay our obligations on the EBC Credit Facilities on a timely basis, maintain the financial covenants under the
EBC Credit Agreement, as amended, including the Excess Availability requirements and capital expenditure limitation, or otherwise default on our
obligations under the EBC Credit Agreement, EBC will have a right to foreclose on personal property of the Company and certain of its subsidiaries.
 
We depend on third-party contract manufacturers for a majority of our connector manufacturing needs. If they are unable to manufacture and deliver
a sufficient quantity of high-quality products on a timely and cost-efficient basis, our net revenue and profitability would be harmed and our reputation
may suffer.
 
Substantially all of the RF Connector division’s connector products are manufactured by third-party contract manufacturers. We rely on them to
procure components for RF connectors and in certain cases to design, assemble and test the products on a timely and cost-efficient basis. If our contract
manufacturers are unable to complete design work on a timely basis, we will experience delays in product development and our ability to compete may be
harmed. In addition, because some of our manufacturers have manufacturing facilities in Taiwan and China, their ability to provide us with adequate
supplies of high-quality products on a timely and cost-efficient basis is subject to a number of additional risks and uncertainties, including political, social
and economic instability and factors that could impact the shipment of supplies. Further, health crises, including epidemics or pandemics, such as the
COVID-19 pandemic, and government and business responses thereto, could affect our manufacturers, including by resulting in quarantines and/or
closures, which could result in potential closures and disruptions to our manufacturing needs. If our manufacturers are unable to provide us with adequate
supplies of high-quality products on a timely and cost-efficient basis, our operations would be disrupted and our net revenue and profitability would suffer.
Moreover, if our third-party contract manufacturers cannot consistently produce high-quality products that are free of defects, we may experience a higher
rate of product returns, which would also reduce our profitability and may harm our reputation and brand.
 
Our third-party contract manufacturers are based in Asia. Recently, our third-party contract manufacturers have been subject to various supply
chain disruptions. These supply chain disruptions have slowed the delivery of products to us and have increased the price of certain materials due to the
significant increase in costs of raw materials and shipping costs. Our ability to produce and timely deliver our products may be materially impacted in the
future if these supply chain disruptions continue or worsen. In addition, because of the rising cost, we may be forced to increase the price of our products to
our customers, or we may have to reduce our gross margins on the products that we sell. Because some of our custom manufacturing contracts call for
deliveries over a longer period of time, cost increases during the term of these agreements at times cannot be passed through to our customers and therefore
will have to be borne by us.
 
We do not currently have any long-term supply agreements with any of our contract manufacturers, and such manufacturers could stop
manufacturing products for us at any time. Although we believe that we could locate alternate contract manufacturers if any of our manufacturers
terminated our business, our operations could be impacted until alternate manufacturers are found.
 
Our business strategy to expand through acquisitions of other businesses could increase operating costs and expose us to additional risks.
 
As part of our plan to operate businesses that are profitable and that reflect the changing market, we from time to time sell unprofitable divisions
and purchase new businesses. Such recent transactions include the purchase of our new C Enterprises and Schrofftech subsidiaries in 2019 and Microlab in
2022. In addition, we have previously disclosed that, as part of our growth strategy, we intend to make additional acquisitions of businesses in the future.
While we believe that restructuring our operations and acquiring other businesses will benefit us in the longer term, these acquisitions have in the short
term caused us to incur additional legal, accounting and administrative expenses, including the cost of integrating the various accounting systems of our
new subsidiaries, upgrading our information systems, and the cost of managing various divisions in separate locations and states. We may in the future
make additional acquisitions. Accordingly, we will be subject to numerous risks associated with the acquisition of additional businesses, including:
 
 
●
diversion of management’s attention;
 
13

 
 
 
●
the effect on our financial statements of the amortization of acquired intangible assets;
 
 
●
the cost associated with acquisitions and the integration of acquired operations;
 
 
●
we may not be able to secure capital to finance future acquisitions to the extent additional debt or equity is needed; and
 
 
●
assumption of unknown liabilities, or other unanticipated events or circumstances.
 
Any of these risks could materially harm our business, financial condition and results of operations. There can be no assurance that any business
that we acquire will achieve anticipated revenues or operating results.
 
In addition to the normal risks associated with purchasing a new business and operating at a new location, the Company’s acquisition of Microlab
in 2022 reduced our cash on hand by over $7.3 million and we took on $17 million of indebtedness and related financial covenants under the BofA Term
Loan. In March 2024, we entered into the EBC Credit Agreement, which replaced the BofA Term Loan. The new credit facility requires the maintenance of
certain financial covenants, including Excess Availability requirements ad capital expenditure limitations. A breach of any of the covenants could result in
a default under the credit facility. Upon the occurrence of an event of default under the credit facility, the commercial bank could terminate all
commitments to extend further credit and elect to declare amounts outstanding thereunder to be immediately due and payable.  The credit facility is secured
by a lien on substantially all personal property of the Company and certain of its subsidiaries.
 
Global economic conditions and any related impact on our supply chain and the markets where we do business could adversely affect our results of
operations.
 
The uncertain state of the global economy (including the current conflict between Russia and Ukraine and related economic and other retaliatory
measures taken by the United States, European Union and others, and more recently between Israel and Hamas) continues to impact businesses around the
world. Deteriorating economic conditions or financial uncertainty in any of the markets in which we sell our products could reduce business confidence and
adversely impact spending patterns, and thereby could adversely affect our sales and results of operations. In challenging and uncertain economic
environments such as the current one, we cannot predict whether or when such circumstances may improve or worsen, or what impact, if any, such
circumstances could have on our business, financial condition and results of operations, or on the price of our common stock.
 
Recent inflationary pressures have increased the cost of energy and raw materials and may adversely affect our results of operations. If inflation
continues to rise and further impact the cost of energy and raw materials, we may not be able to offset cost increases to our products through price
adjustments without negatively impacting consumer demand, which could adversely affect our sales and results of operations.
 
Our business, financial condition and results of operations could be harmed by the effects of outbreaks of COVID-19 or similar public health crises.
 
We are subject to risks associated with public health threats, including outbreaks associated with COVID-19 and its variants, which have had and
may continue to have an adverse impact on certain aspects of our business. While most countries have removed or reduced the restrictions initially
implemented in response to COVID-19, the extent to which the COVID-19 pandemic or another public health crisis impact our business, results of
operations, and financial condition will depend on future developments which are highly uncertain and are difficult to predict. These developments include,
but are not limited to, future resurgences of the virus and its variants, actions taken to contain the virus or address its impact, the timing, distribution, and
efficacy of vaccines and other treatments, and the imposition of government lockdowns, quarantine and physical distancing requirements.
 
Our dependence on third-party manufacturers increases the risk that we will not have an adequate supply of products or that our product costs will be
higher than expected.
 
The risks associated with our dependence upon third parties which develop and manufacture and assemble the Company’s products include:
 
 
●
reduced control over delivery schedules and quality;
 
 
 
 
●
risks of inadequate manufacturing yields and excessive costs;
 
 
 
 
●
the potential lack of adequate capacity during periods of excess demand; and
 
 
 
 
●
potential increases in prices due to raw material and/or labor costs.
 
14

 
 
These risks may lead to increased costs or delay product delivery, which would harm our profitability and customer relationships.
 
An impairment in the carrying value of goodwill, trade names and other long-lived assets could negatively affect our consolidated results of operations
and net worth.
 
Goodwill and indefinite-lived intangible assets, such as trade names, are recorded at fair value at the time of acquisition and are not amortized, but
are reviewed for impairment annually or more frequently if impairment indicators arise. In evaluating the potential for impairment of goodwill and trade
names, we make assumptions regarding future operating performance, business trends and market and economic conditions. There are inherent
uncertainties related to these factors and in applying these factors to the assessment of goodwill and trade name recoverability. Goodwill reviews are
prepared using estimates of fair value based on the estimated present value of future discounted cash flows. We could be required to evaluate the
recoverability of goodwill or trade names prior to the annual assessment upon unexpected significant declines in operating results, the divestiture of a
significant component of our business or other factors.
 
No assurance can be given that events or circumstances will not change regarding the carrying value of goodwill of the Cables Unlimited,
Microlab, Rel-Tech, C-Enterprises and Schrofftech subsidiaries or the CompPro product line. Should we in the future determine that the carrying value of
the goodwill associated with some or all of these assets no longer is recoverable, we will have to record additional impairment losses. In the event that we
have to record material impairment charges on the Cables Unlimited, Microlab, Rel-Tech, C-Enterprises or Schrofftech subsidiaries or the CompPro
product line, such future charges could materially reduce future earnings, which would negatively affect our stock price.
 
Changes in technology may reduce the demand for some of our products.
 
The wireless and telecommunications industry is rapidly changing. Changes in the product demands by telecommunications and other
infrastructure companies may make certain of our current products obsolete. Accordingly, we must quickly and efficiently react to technological
developments and provide new products to meet the shifting demands of our customers. Our failure to successfully introduce new or enhanced products on
a timely and cost-competitive basis could have a material adverse effect on the results of our operations and financial condition.
 
If the manufacturers of our coaxial connectors or other products discontinue the manufacturing processes needed to meet our demands or fail to
upgrade their technologies, we may face production delays.
 
Our coaxial connector and other product requirements typically represent a small portion of the total production of the third-party manufacturers.
As a result, we are subject to the risk that a third-party manufacturer will cease production of some of our products or fail to continue to advance the
process design technologies on which the manufacturing of our products are based. Each of these events could increase our costs or harm our ability to
deliver products on time or develop new products.
 
Our dependence upon independent distributors to sell and market our products exposes us to the risk that such distributors may decrease their sales of
our products or terminate their relationship with us.
 
Our sales efforts are primarily effected through independent distributors. Although we have entered into written agreements with most of the
distributors, the agreements are nonexclusive and generally may be terminated by either party upon 30-60 days’ written notice. Our distributors are not
within our control, are not obligated to purchase products from us, and may also sell other lines of products. There can be no assurance that these
distributors will continue their current relationships with us or that they will not give higher priority to the sale of other products, which could include
products of competitors. A reduction in sales efforts or discontinuance of sales of our products by our distributors would lead to reduced sales and could
materially adversely affect our financial condition, results of operations and business. Selling through indirect channels such as distributors may limit our
contact with our ultimate customers and our ability to assure customer satisfaction.
 
A material portion of our sales is dependent upon a few principal customers, the loss of whom could materially negatively affect our total sales.
 
We generate much of our revenue from a limited number of customers. For the year ended October 31, 2024, a wireless carrier customer and a
distributor customer both accounted for less than 10% of total sales, and approximately 15% and 10% of the total net accounts receivable balance,
respectively. For the year ended October 31, 2023, a different wireless carrier customer accounted for approximately 10% of total sales and had no accounts
receivable. The same distributor customer accounted for less than 10% of sales and approximately 10% of total net accounts receivable, while another
distributor customer accounted for approximately 10% of total sales and for 11% of the total net accounts receivable balance. Although the distributors
have been on-going major customers of the Company and the wireless carrier is a newer customer to the Company, the written agreements with these
customers do not have any minimum purchase obligations and they could stop buying our products at any time and for any reason. A reduction, delay, or
cancellation of orders from these customers or the loss of these customers could significantly reduce our future revenues and profits. Adverse events
affecting our principal customers could also negatively affect our ability to retain their business and obtain new orders, which could adversely affect our
revenue and results of operations.
 
15

 
 
Difficult conditions in the global economy may adversely affect our business and results of operations.
 
A prolonged economic downturn, both in the U.S. and worldwide, could lead to lower sales or reduced sales growth, reduced prices, lower gross
margins, and increased bad debt risks, all of which could adversely affect our results of operations, financial condition and cash flows. Slowing economic
activity, particularly in the telecommunication and data communication and wireless communications industries that represent our largest target market,
may adversely impact the demand for our products. If the current economic condition in the U.S. deteriorates, our results could be adversely affected as
demand for wireless products lessens. There could also be a number of other adverse follow-on effects on our business from a deterioration of economic
conditions or from a credit crisis, including insolvency of certain key distributors, key suppliers, contract manufacturers and customers.
 
Because the markets in which we compete are highly competitive, a failure to effectively compete could result in an immediate and substantial loss of
market share.
 
The markets in which we operate are highly competitive and we expect that competition will increase in these markets. In particular, the wireless
and telecommunications markets in which most of our products are sold are intensely competitive. A failure to effectively compete in these markets could
result in an immediate and substantial loss of revenues and market share. Because most of our sales are derived from products that are neither proprietary
nor can be used to distinguish us from our competitors, our ability to compete successfully in these markets depends on a number of factors, including:
 
 
●
product quality;
 
●
reliability;
 
●
customer support;
 
●
time-to-market;
 
●
price;
 
●
market acceptance of competitors’ products; and
 
●
general economic conditions.
 
Our revenues may suffer if we are not able to effectively satisfy our customers in each of the foregoing ways. In addition, our competitors or
customers may offer enhancements to their existing products or offer new products based on new technologies, industry standards or customer
requirements that have the potential to replace or provide lower cost or higher performance alternatives to our products. The introduction of enhancements
or new products by our competitors could render our existing and future products obsolete or unmarketable.
 
Many of our competitors have significantly greater financial and other resources. In certain circumstances, our customers or potential customers
have internal or may in the future institute manufacturing capabilities with which we may compete.
 
If the industries into which we sell our products experience recession or other cyclical effects impacting the budgets of our customers, our operating
results could be negatively impacted.
 
The primary customers for our connector and cable products are in the wireless communications industries. Any significant downturn in our
customers’ markets, in particular, or in general economic conditions which result in the reduction of budgets would likely result in a reduction in demand
for our products and services and could harm our business. Historically, the communications industry has been cyclical, affected by both economic
conditions and industry-specific cycles. Depressed general economic conditions and cyclical downturns in the communications industry have each had an
adverse effect on sales of communications equipment, OEMs and their suppliers, including us. No assurance can be given that the wireless communications
industry will not experience a material downturn in the near future. Any cyclical downturn in the communications industry could have a material adverse
effect on us.
 
Because we sell our products to foreign customers, we are exposed to risks associated with international sales, including foreign currency exposure.
 
Sales to customers located outside the United States, either directly or through U.S. and foreign distributors, accounted for approximately 9% and
9% of our net sales during the years ended October 31, 2024 and 2023, respectively. International revenues are subject to a number of risks, including:
 
 
●
longer accounts receivable payment cycles;
 
●
difficulty in enforcing agreements and in collecting accounts receivable;
 
●
tariffs and other restrictions on foreign trade;
 
●
economic and political instability; and the
 
●
burdens of complying with a wide variety of foreign laws.
 
16

 
 
Our foreign sales are also affected by general economic conditions in international markets. A prolonged economic downturn in our foreign
markets could have an adverse effect on our business. There can be no assurance that the factors described above will not have an adverse material effect
on our future international revenues and, consequently, on our financial condition, results of operations and business.
 
Since sales made to foreign customers have historically been in U.S. dollars, previously we have not been exposed to the risks of foreign currency
fluctuations. However, with the acquisition of Microlab, sales made to certain foreign customers were denominated in the currencies of the countries where
sales are made and for the fiscal years ended October 31, 2024 and 2023, we recognized $33,000 in foreign currency exchange gain and $0.1 million in
foreign currency exchange gain at time of collection, respectively.
 
The inability to hire or retain certain key professionals, management and staff could adversely affect our business, financial condition and results of
operations.
 
Our future success depends largely upon the continued service of our executive officers and other key management and technical personnel, and
on our ability to continue to identify, attract, retain and motivate them. However, other than the employment agreement we have entered into with Mr.
Dawson, the Company’s Chief Executive Officer, we currently do not have any other written employment agreements with our executive officers and
managers. The market for employees in our industry is extremely competitive and the cost for new employees may exceed the cost of existing employees.
The loss of key management and technical personnel could have an adverse effect on our business, financial position and results of operations.
 
We have few patent rights in the technology employed in our products, which may limit our ability to compete.
 
We own patents related to the CompPro proprietary product line, the Schrofftech telecom shelter cooling products and control systems, and patents
recently acquired from Microlab relating to GPS signal repeaters as well as RF broadband non directional tap couplers. We have additional filings pending
for RF system monitoring and GPS systems. Other than these existing and prospective patents, we do not hold any other United States or foreign patents.
Historically, we have not sought to protect our rights in the technology that we develop or that our third-party contract manufacturers develop for us by
means of the patent laws, and as a result, competitors can and do sell most of the same products as us, and we have not tried to prevent or restrict such
competition. 
 
We may determine that we need to litigate or arbitrate to enforce our contract and intellectual property rights, protect our trade secrets or
determine the validity and scope of proprietary rights of others. As a result of any such litigation or arbitration, we could lose our ability to enforce one or
more patents or other intellectual property rights. Any action we take to enforce our contract or intellectual property rights could be costly and could absorb
significant management time and attention, which, in turn, could negatively impact our results of operations and cash flows. Further, even a positive
resolution to our enforcement efforts may take time to conclude, which may reduce our revenues and cash resources available for other purposes, such as
research and development, in the periods prior to conclusion.
 
Claims by other companies that we infringe their intellectual property could adversely affect our business 
 
Companies may assert patent, copyright or other intellectual property claims against our products or products using our technologies or other
technologies used in our industry, which claims could result in our involvement in litigation. We may not prevail in such litigation given, among other
factors, the complex technical issues and inherent uncertainties in intellectual property litigation. If any of our products were found to infringe another
company’s intellectual property, we could be subject to an injunction or be required to redesign our products, or to license such intellectual property or pay
damages or other compensation to such other company (any of which could be costly). If we are unable to redesign our products, license such intellectual
property used in our products or otherwise distribute our products (e.g., through a licensed supplier), we could be prohibited from making and selling our
products. 
 
Similarly, our suppliers could be found to infringe another company’s intellectual property, and such suppliers could then be enjoined from
providing products or services to us.
 
A cyber incident could result in information theft, data corruption, operational disruption, and/or financial loss.
 
Businesses have become increasingly dependent on digital technologies to conduct day-to-day operations. Additionally, we may be exposed to
increased cybersecurity risks as a result of remote working requirements imposed on us as a result of the COVID-19 pandemic. At the same time, cyber
incidents, including deliberate attacks or unintentional events, have increased. A cyberattack could include gaining unauthorized access to digital systems
for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruption or result in denial of service on
websites. We depend on digital technology, including information systems and related infrastructure, to process and record financial and operating data, and
communicate with our employees and business partners. Our technologies, systems, networks, and those of our business partners may become the target of
cyberattacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of proprietary
and other information, or other disruption of our business operations. Although to date we have not experienced any material losses relating to
cyberattacks, there can be no assurance that we will not suffer such losses in the future. Cyberattacks are increasing in their frequency, sophistication and
intensity. As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance its protective
measures or to investigate and remediate any information security vulnerabilities. In addition, our liability insurance may not be sufficient in type or
amount to cover us against claims related to security breaches, cyberattacks and other related breaches.
 
17

 
 
Risks Related to Our Common Stock
 
Volatility of trading prices of our stock could result in a loss on an investment in our stock.
 
As a company with a relatively small public float, we may experience greater stock price volatility, price run-ups, lower trading volume and less
liquidity than large-capitalization companies. The market price of our common stock has varied greatly, and the trading volume of our common stock has
historically fluctuated greatly as well. These fluctuations often occur independently of our performance or any of our announcements. Factors that may
result in such fluctuations include:
 
 
●
any shortfall in revenues or net income from revenues or net income expected by securities analysts, or a net loss in our quarterly or annual
operations;
 
 
●
fluctuations in our financial results or the results of other communications-related companies, including those of our direct competitors;
 
 
●
general conditions in the connector and communications industries;
 
 
●
changes in our revenue growth rates or the growth rates of our competitors;
 
 
●
sales of large blocks of our common stock; and
 
 
●
conditions in the financial markets in general.
 
In addition, the stock market may, from time to time, experience extreme price and volume fluctuations, which may be unrelated to the operating
performance of any specific company. Accordingly, the market prices of our common stock may be expected to experience significant fluctuations in the
future.
 
Failure to maintain an effective system of internal control over financial reporting or to remediate weaknesses could materially harm our revenues,
erode stockholder confidence in our ability to pursue business and report our financial results/condition, and negatively affect the trading price of our
common stock.
 
As a public reporting company, we are required to establish and maintain effective internal control over financial reporting. Failure to establish
such internal control, or any failure of such internal control once established, could adversely impact our public disclosures regarding our business,
financial condition or results of operations. Any failure of our internal control over financial reporting could also prevent us from maintaining accurate
accounting records and discovering accounting errors and financial frauds.
 
Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 require annual assessment of our internal control over
financial reporting. The standards that must be met for management to assess the internal control over financial reporting as effective are complex, and
require significant documentation, testing and possible remediation to meet the detailed standards. Any assessment by management that there are
weaknesses in our internal control over financial reporting may raise concerns for investors. Any actual or perceived weaknesses and conditions that need
to be addressed in the internal controls over financial reporting (including those weaknesses identified in periodic reports), or disclosure of management’s
assessment of the internal controls over financial reporting may have an adverse impact on the price of our common stock.
 
As of October 31, 2024 and 2023, we determined that our internal control over financial reporting was effective. However, no assurance can be
given that there will not be failures in our internal controls in future periods.   
 
While we have in the past paid dividends, no assurance can be given that we will declare or pay cash dividends in the future.
 
During fiscal 2024, we did not make any dividend distributions to our stockholders. Dividends are declared and paid at the discretion of the Board
of Directors subject to applicable laws, and depend on a number of factors, including our financial condition, results of operations, capital requirements,
plans for future acquisitions, contractual restrictions, general business conditions and other factors that our Board of Directors may deem relevant.
Therefore, even if our operations return to their prior level of profitability, any decision to pay dividends in the future will depend on various other factors
that the Board may consider relevant. Accordingly, no assurance can be given that we will once again pay dividends in the future. If we do not pay a cash
dividend, our stockholders will not realize a return on their investment in the common stock except to the extent of any appreciation in the value of the
common stock. 
 
18

 
 
Future sales of our common stock in the public market could cause our stock price to fall.
 
As a smaller capitalized company, the average trading volume of our shares of common stock is relatively small. As a result, sales of a significant
number of shares, or the perception that significant sales could occur, could result in a decline in our stock price. These sales, or the possibility that these
sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.
 
As of October 31, 2024, we had 10,544,431 shares of common stock outstanding. In addition, we had outstanding options for the purchase of
874,816 shares of common stock, the exercise of which would increase the number of common stock outstanding. The issuance and subsequent sale of the
shares underlying these stock options could depress the trading price of our common stock. As of October 31, 2024, we also had 1,299,269 shares available
for future grant as stock options or restricted shares, the issuance and sale of which could also impact our stock price.
 
Provisions of our certificate of incorporation and bylaws and Nevada law may make a takeover more difficult.
 
There are provisions in our basic corporate documents and under Nevada law that could discourage, delay or prevent a change in control, even if a
change in control may be regarded as beneficial to some or all of our stockholders.
 
We are a “smaller reporting company” and we have elected to comply with certain reduced reporting and disclosure requirements which could make
our common stock less attractive to investors.
 
We are a “smaller reporting company,” as defined in the Regulation S-K of the Securities Act of 1933, as amended, which allows us to take
advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not smaller reporting
companies, including (1) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, and (2)
reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. In addition, we are only required to provide
two years of audited financial statements in our SEC reports. We cannot predict if investors will find our common stock less attractive because we may rely
on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock
and our stock price may be more volatile. Our independent registered public accounting firm is not required to formally attest to the effectiveness of our
internal control over financial reporting until we are no longer a “smaller reporting company”. We cannot assure you that there will not be material
weaknesses or significant deficiencies in our internal controls in the future.
 
ITEM 1B.
UNRESOLVED STAFF COMMENTS
 
Not applicable.
 
ITEM 1C.
CYBERSECURITY
 
Risk Management and Strategy
 
The Company has adopted policies and implemented certain controls and procedures that allow its management to assess, identify and manage
material risks from cybersecurity threats and for its Board of Directors, through its Audit Committee, to actively oversee the strategic direction, objectives,
and effectiveness of the Company’s cybersecurity risk management framework. 
 
The Company’s processes are integrated into its overall enterprise risk management program and compliments the Company’s enterprise-wide risk
assessment architecture, as implemented by the Company’s management and as overseen by the Company’s Board of Directors through its Audit
Committee. The Company has in the past, and may continue to do so in the future, engage third-party consultants, to review and assess the Company’s
information technology and security.
 
The Company seeks to address cybersecurity risks through a cross-functional approach that is focused on preserving the confidentiality, security,
and availability of the information that the Company collects and stores by identifying, preventing, and mitigating cybersecurity threats and effectively
responding to cybersecurity incidents when they occur. 
 
To identify and assess material risks from cybersecurity threats, we follow best practices in routine network and endpoint auditing, vulnerability
assessments, penetration testing, and other forms of security auditing. We continuously monitor endpoint activity and network traffic for unusual or
prohibited behavior to prevent, identify, and contain malicious actions.
 
We have developed incident response plans by using the information gained through testing and monitoring to manage any identified
vulnerabilities and further improve our cybersecurity preparedness and response infrastructure. Such plans set forth the actions to be taken in responding to
and recovering from cybersecurity incidents, which include triage, assessing the severity of incidents, escalation protocols, containment of incidents,
investigation of incidents, and remediation. We also regularly perform phishing tests of our employees and provide annual privacy and security training for
all employees. Our security training incorporates awareness of cyber threats including but not limited to malware, ransomware, and social engineering
attacks, password hygiene and incident reporting processes.
 
19

 
 
We review our cybersecurity risk framework and related policies annually with senior management to help identify areas for continued focus and
improvement. We also engage third party experts to review and assess our processes to ensure they are robust and consistent with the current security
landscape. The data center where we host our critical data is SOC II complaint.
 
The Company has also implemented processes to identify, monitor and address material risks from cybersecurity threats associated with our use of
third-party service providers, including those in our supply chain or who have access to our systems, data or facilities that house such systems or data by
discussing issues to be addressed and recommending securities measures to be improved where possible. 
 
 Although in the periods reported we have not experienced any material cybersecurity incidents and the expenses we have incurred from
cybersecurity incidents, including penalties and settlements, were immaterial, we may experience such incidents in the future and the scope and impact of
any such future incidents cannot be predicted. To prepare for any such event, we have a full Disaster Recovery plan in place that is tested annually to
ensure resilience against a myriad of threats.
 
Governance
 
Role of the Board of Directors and the Audit Committee
 
As part of the Board of Directors’ role in overseeing the Company’s enterprise risk management program, which includes our cybersecurity risk
management framework, the Board is responsible for exercising oversight of management’s identification and management of, and planning for, material
cybersecurity risks that may reasonably be expected to impact the Company. While the full Board has overall responsibility for risk oversight, the Board
has delegated oversight responsibility related to risks from cybersecurity threats to the Audit Committee. The Audit Committee is responsible for
overseeing the strategic direction, objectives, and effectiveness of the Company’s cybersecurity risk management framework, taking into account the
Company’s risk exposures and progress of its risk management processes. The Audit Committee is informed of the Company’s cybersecurity risk
management and receives an overview of its cybersecurity program from management at least quarterly, which covers topics including, among others,
recent cybersecurity risk landscape and trends, data security posture, results from third-party assessments, training and vulnerability testing, our incident
response plan, material cybersecurity risks, whether developing or actual, as well as the steps management has taken to respond to such risks, emerging
cybersecurity regulations, technologies and best practices. Material cybersecurity risks are also discussed during separate Board meetings as part of the
Board’s risk oversight generally. 
 
Role of Management
 
Our Chief Financial Officer is responsible for management’s oversight of cybersecurity governance, decision-making, risk management,
awareness, and compliance across the Company. Our Chief Financial Officer works to employ a cybersecurity program designed to protect the Company’s
information systems from cybersecurity threats and to respond to incidents in accordance with the Company’s incident response plan and other policies and
procedures. 
 
In the event of a material cybersecurity incident or investigation, management will, in compliance with escalation protocols in place, promptly
report to the Audit Committee and the Board, as appropriate, in accordance with the Company’s incident response plan, and other policies and determine
the timing of action, and necessary response.
 
The Company places a high priority on safeguarding its data, systems, and infrastructure from cybersecurity threats. To manage this critical aspect
of operations, the Company partners with a third-party IT provider that specializes in cybersecurity services. Established in 1997, this provider brings over
two decades of expertise in managing and mitigating cyber risks, including network security, vulnerability assessments, and incident response planning.
The provider’s comprehensive approach ensures the protection of the Company’s sensitive information and critical systems, while also adhering to industry
best practices and regulatory requirements. By leveraging the expertise of its third-party IT provider, the Company is able to implement robust
cybersecurity measures that support operational continuity and reduce exposure to potential security incidents.
 
ITEM 2.
DESCRIPTION OF PROPERTY
 
We currently lease 86,952 square feet of space for our corporate headquarters and RF connector and cable assembly manufacturing facilities in
San Diego, California. On June 27, 2023, we entered into a Managed Client Agreement with RGN-MCA San Diego II, LLC (“IWG”) pursuant to which
IWG agreed to provide managed services for flexible workspaces under the “Regus” brand for 39,979 square feet on the 1st and 2nd floor(s) of the adjacent
and vacant office spaces of our corporate headquarters. We occupy 46,973 square feet of office, warehouse and manufacturing space that house our
corporate administration, sales and marketing, and engineering departments.  The buildings are also used for production and warehousing by our RF
Connector segment. We also lease 38,200 square feet of office and commercial lab space in Parsippany, New Jersey, where we operate the Microlab
division. Additionally, we lease spaces in three other locations in the United States that house the administration offices and manufacturing facilities for our
Custom Cabling segment.  The table below shows a summary of the square footage of these locations as of October 31, 2024:
 
Lease Location
Square Footage
Milford, CT
13,750
North Kingstown, RI
7,000
Yaphank, NY
24,500
 
20

 
 
ITEM 3.
LEGAL PROCEEDINGS
 
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is
subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. As of the date of
this report, we are not subject to any proceeding that is not in the ordinary course of business or that is material to the financial condition of our business.
 
 
ITEM 4.
MINE SAFETY DISCLOSURES
 
Not applicable.
 
PART II
 
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
 
Market Information. RF Industries, Ltd.’s common stock is listed on The Nasdaq Global Market and is traded under the “RFIL” trading symbol.
 
Stockholders. As of October 31, 2024, there were 250 holders of our common stock according to the records of our transfer agent, Continental
Stock Transfer & Trust Company, New York, New York, not including holders who hold their stock in “street name.”
 
Issuer Purchases of Equity Securities. We did not repurchase any of our equity securities during the fourth quarter of fiscal 2024.
 
Recent Sales of Unregistered Securities. There were no previously unreported sales of equity securities by us that were not registered under the
Securities Act during fiscal 2024.
 
Dividend Policy. Due to the current economic uncertainty and other financial considerations, our Board did not issue any dividend payments in
fiscal year 2024. In the past our Board has approved dividend payments, but no assurance can be given if, or when the Board will resume dividend
payments. The declaration and amount of any actual cash dividend are in the sole discretion of the Board and are subject to numerous factors that ordinarily
affect dividend policy, including the results of our operations and financial position, as well as general economic and business conditions. Accordingly, if
and when any dividends will be declared in the future will be determined by our Board based on the Company’s future operations and on the Board’s
decision regarding the use of any future earnings.
 
ITEM 6.
RESERVED
 
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
CRITICAL ACCOUNTING ESTIMATES
 
The consolidated financial statements and related disclosures have been prepared in accordance with U.S. generally accepted accounting
principles (“GAAP”). The preparation of these consolidated financial statements requires us to make significant accounting estimates that affect the
reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. We evaluate our estimates, including
those related to bad debts, allowances for slow-moving or obsolete inventory and contingencies, on an ongoing basis. We base our estimates on historical
experience and on various other assumptions that are believed to be appropriate under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates
under different assumptions or conditions.
 
Critical accounting estimates are those that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a
material impact on our statement of operations and financial position. For the fiscal year ended October 31, 2024 the critical accounting estimates identified
are described below: 
 
21

 
 
Impairment Assessments of Finite-life Intangibles and Other Long-Lived Assets
 
We assess property, plant and equipment and intangible assets, which are considered definite-lived assets, for impairment. Definite-lived assets are
reviewed when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We measure
recoverability of these assets by comparing the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If property and
equipment and intangible assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset
exceeds its fair market value.
 
We amortize our intangible assets with definite useful lives over their estimated useful lives and review these assets for impairment.
 
Impairment Assessment of Goodwill and Indefinite-lived Intangibles
 
We test our goodwill and trademarks and indefinite-lived intangible assets for impairment at least annually or more frequently if events or changes
in circumstances indicate these assets may be impaired. These events or circumstances require significant judgment and could include a significant change
in the business climate, legal factors, operating performance indicators, competition and sale or disposition of all or a portion of a division. This analysis
requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of
growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital.
 
We test goodwill for impairment at the reporting unit level. The goodwill impairment guidance in US GAAP provides entities an option to perform
a qualitative assessment to determine whether further impairment testing is necessary. The qualitative assessment requires significant judgments by
management about macro-economic conditions including our operating environment, industry and other market considerations, entity-specific events
related to financial performance or loss of key personnel, and other events that could negatively impact the financial results and cash flows of the reporting
unit. If the qualitative assessment results in a conclusion that it is more likely than not that the fair value of the reporting unit is less than its carrying
amount, a quantitative  impairment test is performed. The quantitative assessment compares the fair value of the reporting unit with its carrying value,
including goodwill. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, the amount by which the carrying value exceeds the
fair value is recognized as an impairment loss.
 
We estimate the fair value of our reporting units using the income approach based upon a discounted cash flow ("DCF") model. The income
approach requires the use of many assumptions and estimates including future revenues, expenses, capital expenditures, and working capital, as well as
discount factors and income tax rates. The discount rates used in the DCF model were based on a weighted-average cost of capital (“WACC”) determined
from relevant market comparisons, adjusted for specific reporting unit risks (primarily the uncertainty of achieving forecasted operating cash flows). A
terminal value growth rate was applied to the final year of the forecasted period, which reflects our estimate of stable, perpetual growth in cash flows from
the reporting unit. We then calculated a present value of the respective cash flows for each reporting unit to arrive at an estimate of fair value under the
income approach. Finally, we compared the total of our estimates of all reporting units fair values to our total market capitalization to assess the
reasonableness of our reporting units fair value.
 
Key assumptions of the cash flow forecast included in the DCF model are expected revenues, expenses, capital expenditures, and working capital,
as well as discount factors and income tax rates as they are subject to a high degree of judgement and complexity. We make every effort to forecast future
financial performance as accurately as possible with the information available to management at the time the forecast is developed.
 
There are inherent uncertainties in our cash flow forecast and it requires management to anticipate risks to the forecast such as execution of sales
strategy, production execution, industry related make-buy decisions, and global market conditions. Changes in these estimates and assumptions could
materially affect the future results of our tests for goodwill impairment. We continuously monitor and evaluate relevant events and circumstances that could
impact our significant assumptions used in testing goodwill, including macroeconomic conditions, industry and market considerations, financial
performance and expectations of forecasted financial performance and cash flows, and changes in our stock price in relation to the carrying value of its
reporting units, among other relevant factors. It is possible that future changes in such circumstances, or in the inputs and assumptions used in estimating
the fair value of our reporting units, could require us to perform an interim impairment assessment and record an impairment charge.
 
In addition to the DCF, we use also the market approach, which compares the reporting unit fair value to the fair value of publicly traded
companies and recent sale transactions involving similar businesses.
 
As part of our goodwill impairment testing, as of October 31, 2024 and April 30, 2024, we performed a quantitative impairment test analysis for
our Microlab reporting unit.  In the DCF model, we utilized a discount rate that we believe represents the risks that our businesses face, considering their
sizes, the current economic environment, and other industry data we believe is appropriate. The discount rates for Microlab were 17.0%, and 18.0% at
October 31, 2024 and April 30, 2024, respectively. We assigned a 75% weight to the indicated fair value under the DCF model and 25% weight to the
indicated fair value under the market approach in deriving a fair value of $21.6 million and $23.4 million for the Microlab reporting unit at October 31,
2024 and April 30, 2024, respectively.
 
These quantitative tests at October 31, 2024 and April 30, 2024 indicated that the Microlab reporting unit had an estimated fair value in excess of
its carrying value of 8.9% and 8.6%, respectively, and no impairment was recorded.
 
As of October 31, 2024, Microlab has a carrying value of $19.8 million, which includes $5.6 million in goodwill and $10.3 million in net
amortizable intangible assets.
 
22

 
 
Valuation Allowance on Deferred Income Taxes
 
We record a tax provision (benefit) for the anticipated tax consequences of the reported results of operations. Income taxes are accounted for under
the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary
differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carryforwards. Deferred tax assets
and liabilities are measured using the currently enacted tax rates as of the date of the financial statements that apply to taxable income in effect for the years
in which those tax assets are expected to be realized or settled.
 
We assess all positive and negative evidence in determining if a valuation allowance is required to be recorded against the deferred tax assets.
Further, we evaluated future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of
recent operations. In making such judgements, significant weight is given to evidence that can be objectively verified, which includes the recent trend of
losses.  As of October 31, 2024, we recorded a valuation allowance of $3.8 million against its federal and combined state deferred tax assets.
 
The change in valuation allowance was an increase of $3.8 million and $0.1 million for fiscal 2024 and 2023, respectively.
 
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
 
For recently issued accounting pronouncements that may affect us, see Note 1 of Notes to Consolidated Financial Statements.
 
OVERVIEW
 
During the periods covered by this Annual Report, we marketed a variety of connector products, including connectors and cables, standard and
custom cable assemblies, wiring harnesses and fiber optic cable products to numerous industries for use in thousands of products.  We aggregate our
operating divisions into two reportable segments that have similar economic characteristics and are similar in the majority of the following areas: (1) the
nature of the product and services; (2) the nature of the production process; (3) the type or class of customer for their products and services; (4) the methods
used to distribute their products or services; and (5) if applicable, the nature of the regulatory environment. Our two reportable segments are the RF
Connector and Cable Assembly (“RF Connector”) segment and the Custom Cabling Manufacturing and Assembly (“Custom Cabling”) segment – based
upon this evaluation.
 
The RF Connector segment was comprised of three divisions while the Custom Cabling segment was comprised of three divisions. The six
divisions that met the quantitative thresholds for segment reporting in the fiscal year ended October 31, 2024 were the RF Connector and Cable Assembly
division, Cables Unlimited, Rel-Tech, C Enterprises, Schrofftech, and Microlab.
 
Revenues generated from the Custom Cabling segment were from the sale of fiber optics cable, copper cabling, custom patch cord assemblies, and
wiring harnesses, which collectively accounted for 42% of the Company’s total sales, and revenues from the RF Connector segment were generated from
the sales of RF connector products and cable assemblies and accounted for 58% of total sales for fiscal 2024. The RF Connector segment mostly sells
standardized products regularly used by customers and, therefore, has a more stable revenue stream when compared to the Custom Cabling segment. The
Custom Cabling segment mostly designs, manufactures, and sells customized cabling and wireless-related equipment under larger project-based purchase
orders. Accordingly, the Custom Cabling segment is more dependent upon larger project orders, and its revenues, therefore, may be more volatile than the
revenues of the RF Connector segment.
 
23

 
 
Financial Condition
 
The following table presents certain key measures of financial condition as of October 31, 2024 and 2023 (in thousands, except percentages):
 
 
 
2024
   
2023
 
 
 
Amount
    % Total Assets    
Amount
    % Total Assets  
 
     
       
       
       
 
Cash and cash equivalents
  $
839     
1.2%  $
4,897     
6.0%
Current assets
   
29,113     
41.0%   
36,040     
43.8%
Current liabilities
   
18,090     
25.5%   
12,511     
15.2%
Working capital
   
11,023     
15.5%   
23,529     
28.6%
Property and equipment, net
   
4,813     
6.8%   
4,924     
6.0%
Total assets
   
71,046     
100.0%   
82,278     
100.0%
Stockholders' equity
   
34,066     
47.9%   
39,762     
48.3%
 
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 operating losses in fiscal 2024. During this 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. We intend to continue to pursue additional improvement and cost reduction
measures, as well as organic growth in revenue and profitability.
 
As of October 31, 2024, we had a total of $0.8 million of cash and cash equivalents compared to a total of $4.9 million of cash and cash
equivalents as of October 31, 2023. As of October 31, 2024, we had working capital of $11.0 million and a current ratio of approximately 1.6:1 with
current assets of $29.1 million and current liabilities of $18.1 million. The $12.5 million decrease in working capital is primarily the result of the change in
debt classification resulting from the EBC Revolving Loan Facility. 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 October 31, 2024, we had $19.5 million of backlog, compared to $16.1 million as of October 31, 2023. The increase in backlog relates
primarily to the increase in Direct Air Cooling and small cell requirements. 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.
 
As of October 31, 2024, we generated $3.2 million of cash in our operating activities. This net inflow of cash is primarily related to an increase in
inventories of $4.0 million as a result of better inventory management and supply chain conditions improving allowing us to carry less inventory on hand,
$2.5 million from depreciation and amortization, $0.9 million from stock-based compensation expense, $0.7 million in other current assets, $0.6 million
from change in accounts payable, $0.4 million from right-of-use assets and $0.1 million from amortization of debt issuance costs. The cash usage was
primarily due to the net loss of $6.6 million, the change in accounts receivable of $1.8 million resulting from a 16% increase in sales in Q4 2024 as
compared to Q4 2023 and the change in accrued expenses of $0.3 million. The cash generated by other current assets represents $0.7 million, which
primarily consists of $0.4 million of prepaid taxes and $0.3 million of prepaid expenses.  We also recorded a non-cash item of $2.7 million from deferred
income taxes.
 
As of October 31, 2024, we also spent $0.7 million on capital expenditures, $13.2 million in BofA Term Loan payments, $0.5 million of debt
issuance cost, and drew $7.2 million on EBC Revolving Loan Facility.
 
Our goal to expand and grow our business both organically and through acquisitions may require material additional capital equipment. In the
past, we have purchased all additional equipment, or financed some of our equipment and furnishings requirements through capital leases. At this time, we
have not identified any additional capital equipment purchases that would require significant additional leasing or capital expenditures during the next 12
months. We also believe that based on our current financial condition, our current backlog of unfulfilled orders, and our anticipated future operations, we
would be able to finance our expansion, if necessary.
 
From time to time, we may undertake acquisitions of other companies or product lines in order to diversify our product and solutions offerings and
customer base. Conversely, we may undertake the disposition of a division or product line due to changes in our business strategy or market
conditions. Acquisitions may require the outlay of cash, which may reduce our liquidity and capital resources while dispositions may increase our cash
position, liquidity and capital resources. Since our goal is to continue to expand our operations and accelerate our growth through future acquisitions, we
may use some of our current capital resources to fund acquisitions we may undertake in the future.
 
24

 
 
Results of Operations
 
The following summarizes the key components of our consolidated results of operations for the fiscal years ended October 31, 2024 and 2023 (in
thousands, except percentages):
 
 
 
2024
   
2023
 
 
 
Amount
   
% of Net
Sales
   
Amount
   
% of Net
Sales
 
 
     
       
       
       
 
Net sales
  $
64,857     
100.0%  $
72,168     
100.0%
Cost of sales
   
45,986     
70.9%   
52,631     
72.9%
Gross profit
   
18,871     
29.1%   
19,537     
27.1%
Engineering expenses
   
2,782     
4.3%   
3,151     
4.4%
Selling and general expenses
   
18,912     
29.2%   
20,183     
28.0%
Operating loss
   
(2,823)   
-4.4%   
(3,797)   
-5.3%
Other loss
   
(980)   
-1.5%   
(453)   
-0.6%
Loss before provision (benefit) from
income taxes
   
(3,803)   
-5.9%   
(4,250)   
-5.9%
Provision (benefit) from income taxes
   
2,796     
4.3%   
(1,172)   
-1.6%
Consolidated net loss
   
(6,599)   
-10.2%   
(3,078)   
-4.3%
 
Net sales for the year ended October 31, 2024 of $64.9 million decreased by 10.1%, or $7.3 million, compared to the year ended October 31,
2023. The decrease in net sales is attributable to the RF Connector segment, which decreased by $8.0 million, or 17.4%, to $37.9 million compared to
$45.9 million in fiscal 2023, primarily due to decreased sales to some of our distributor customers based on lower levels of inventory kept on hand in the
channel, and the lower carrier capital expenditure environment, leading to fewer carrier DAS projects involving approved RF components. Net sales for
fiscal 2024 at the Custom Cabling segment increased by $0.8 million, or 3.1%, to $27.0 million compared to $26.2 million in fiscal 2023, primarily due to
an increase in small cell deployment and Direct Air Cooling applications.
 
Gross profit for fiscal 2024 decreased by $0.6 million to $18.9 million and gross margins increased to 29.1% of sales from 27.1% of sales in fiscal
2023. The decrease in gross profit was primarily a result of the decrease in sales, while gross margins increased due to product mix and other cost-savings
initiatives.
 
Engineering expenses decreased by $0.4 million to $2.8 million for fiscal 2024 compared to $3.2 million in fiscal 2023. The decrease was
primarily the result of advances in product development and other cost-savings initiatives. Engineering expenses represent costs incurred relating to the
ongoing research and development of new products.
 
Selling and general expenses decreased by $1.3 million to $18.9 million (29.2% of sales) compared to $20.2 million (28.0% of sales) in fiscal
2023 primarily due to a decrease in variable compensation related to commissions and bonuses, resulting from lower sales. We also realized cost savings
from restructuring, coupled with reduced general office and IT expenses. We incurred one-time charges of $0.2 million relating to consulting spend,
severance, and an inventory appraisal in fiscal 2024.
 
For fiscal 2024, we recorded a pretax income for the Custom Cabling segment of $1.1 million and a pretax loss for the RF Connector segment of
$3.7 million, as compared to $1.5 million loss and $1.5 million loss, respectively, for fiscal 2023. The pretax income at the Custom Cabling segment was
primarily due to the increase of Direct Air Cooling sales and margin along with cost saving initiatives realized throughout the year. The decrease in the
pretax net income at the RF Connector segment was primarily due to the decrease in sales related to carrier DAS projects involving approved RF
components.
 
The provision (benefit) for income taxes was $2.8 million or 73.5% and ($1.2 million) or (27.5%) of income before income taxes for fiscal 2024
and 2023, respectively. The fiscal 2024 effective tax rate differed from the statutory federal rate of 21% primarily as a result of the tax benefit from
research and development tax credits, the change in valuation allowance and state taxes.
 
For fiscal 2024, net loss was $6.6 million and fully diluted loss per share was $0.63 as compared to a net loss of $3.1 million and fully diluted loss
per share of $0.30 for fiscal 2023. For fiscal 2024, the diluted weighted average shares outstanding was 10,481,835 as compared to 10,283,449 for fiscal
2023.
 
25

 
 
Inflation and Rising Costs
 
The cost to manufacture the Company’s products is influenced by the cost of raw materials and labor. The Company has recently experienced
higher costs as a result of the increasing cost of labor and the increasing cost of raw materials. The cost of raw materials is due in part to a shortage in the
availability of certain products, the higher cost of shipping, and inflation. Labor costs have risen recently as a result of increases in the minimum wage laws
and an increased demand for workers. The Company may, from time to time, try to offset these cost increases by increasing the prices of its products.
However, because the prices of certain of the Company’s products, particularly those under longer-term manufacturing contracts for communications
related products, are fixed until the goods are manufactured and delivered, implementing price increases frequently is often not feasible.
 
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
Not applicable to a “smaller reporting company” as defined in Item 10(f)(1) of SEC Regulation S-K.
 
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
The Company’s financial statements required by this item are set forth as a separate section of this Annual Report on Form 10-K and incorporated
by reference in this Item 8. The following Financial Statements of the Company with related Notes and Report of Independent Registered Public
Accounting Firm are attached hereto as pages F-1 to F-23 and filed as part of this Annual Report:
 
 
●
Report of CohnReznick LLP, Independent Registered Public Accounting Firm
 
 
●
Consolidated Balance Sheets as of October 31, 2024 and 2023
 
 
●
Consolidated Statements of Operations for the years ended October 31, 2024 and 2023
 
 
●
Consolidated Statements of Stockholders’ Equity for the years ended October 31, 2024 and 2023
 
 
●
Consolidated Statements of Cash Flows for the years ended October 31, 2024 and 2023
 
 
●
Notes to Consolidated Financial Statements
 
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 
None
 
ITEM 9A.
CONTROLS AND PROCEDURES
 
Evaluation of Disclosure Controls and Procedures
 
We maintain disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) that are designed to assure that information required
to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and
Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.
 
In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed
and operated, can provide reasonable assurance only of achieving the desired control objectives, and we necessarily are required to apply our judgment in
weighing the costs and benefits of possible new or different controls and procedures. Limitations are inherent in all control systems, so no evaluation of
controls can provide absolute assurance that all control issues and any fraud have been detected. Because of the inherent limitations, we regularly review
our system of internal control over financial reporting and make changes to our processes and systems to improve controls and increase efficiency, and to
maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating
activities, and migrating processes.
 
As required by Exchange Act Rule 13a-15(b), as of the end of the period covered by this report, we, under the supervision and with the
participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures. Based on
this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at a
reasonable assurance level as of October 31, 2024.
 
Management’s Report on Internal Control over Financial Reporting
 
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, and for performing
an assessment of the effectiveness of internal control over financial reporting. Internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
accounting principles generally accepted in the United States of America.
 
26

 
 
Our system of internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and
expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial
statements.
 
Under the supervision and with the participation of the Company’s management, including our Chief Executive Officer and our Chief Financial
Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in “Internal Control-
Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the above evaluation,
management has concluded that our internal control over financial reporting was effective as of October 31, 2024.
 
This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over
financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to rules of the
Securities and Exchange Commission that permit us to provide only management’s report in this Annual Report.
 
Changes in Internal Controls
 
There were no changes in our internal control over financial reporting during the most recent fiscal quarter ended October 31, 2024 that materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
Inherent Limitations of Internal Controls
 
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.
 
 
ITEM 9B.
OTHER INFORMATION
 
During the quarter ended October 31, 2024, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or
terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.
 
 
 
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
 
Not applicable.
 
PART III
 
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 
Set forth below is information regarding the Company’s directors, including information furnished by them as to their principal occupations for
the last five years, and their ages as of January 21, 2025. Other than Robert Dawson, our current Chief Executive Officer, all of the directors are
“independent directors” as defined by the listing standards of the NASDAQ Stock Market, and the Board of Directors (the “Board”) has determined that
such independent directors have no relationship with the Company that would interfere with the exercise of their independent judgment in carrying out the
responsibilities of a director.
 
Name
 
Age
 
Director Since
Mark K. Holdsworth, Chairman
 
59
 
2020
Sheryl Cefali
 
62
 
2019
Robert Dawson
 
51
 
2018
Gerald T. Garland
 
74
 
2017
Kay L. Tidwell
 
47
 
2022
 
Mark K. Holdsworth was appointed to the Board on December 31, 2020 and currently serves as the Chair of the Board. Mr. Holdsworth is the
Managing Partner of The Holdsworth Group, LLC (“THG”), which he founded in 2019. THG is a capital partner, advisor, and curator of alternative
investments for family offices and corporations worldwide. From 1999-2018, Mr. Holdsworth was a Co-Founder, Managing Partner and Operating Partner
of Tennenbaum Capital Partners, LLC (“TCP”), a Los Angeles-based private multi-strategy investment firm that was acquired by BlackRock, Inc. in
August 2018, and was a Managing Director of BlackRock until April 2019. Mr. Holdsworth is currently a director of Parsons Corporation (NYSE: PSN),
where he previously held the position of Chair of the Corporate Governance and Responsibility Committee, and was a former member of the Executive
Committee. Mr. Holdsworth earned a Bachelor of Arts degree from Pomona College, a Bachelor of Science degree (with Honors) from the California
Institute of Technology and a Master of Business Administration degree from Harvard Business School.
 
27

 
 
Sheryl Cefali was appointed to the Board in 2019 and currently serves as the Chair of the Compensation Committee and a committee member on
the Audit Committee and the Nominating and Corporate Governance Committee. Ms. Cefali is a Managing Director in the Duff & Phelps Opinions
Practice of Kroll, LLC. Ms. Cefali has over 30 years of experience rendering fairness and solvency opinions and determining valuations of companies and
securities. She is a member of the Fairness and Solvency Opinion Senior Review Committee at Duff & Phelps. Prior to joining Duff & Phelps in 1990, she
was a Vice President with Houlihan Lokey. Ms. Cefali received her M.B.A. with a concentration in finance from the University of Southern California and
her B.A. degree from the University of California at Santa Barbara.
 
Robert Dawson has been the Company’s Chief Executive Officer since July 17, 2017, and served as the Company’s President from July 2017 until
February 2024. Effective July 21, 2018, Mr. Dawson was appointed to the Company’s Board to also serve as a director. Prior to joining RF Industries on
July 17, 2017, Mr. Dawson was President and CEO of Vision Technology Services, an information technology consulting and project management
company that was acquired by BG Staffing. He spent 2007-2013 at TESSCO Technologies, a publicly traded distributor of wireless products and services.
At TESSCO Mr. Dawson held multiple executive roles in sales, marketing, product management and strategy culminating with being Vice President of
Sales, responsible for TESSCO’s sales organization and leading a team delivering more than $700 million in sales. He joined TESSCO through the 2007
acquisition of NetForce Solutions, a technology training and consulting firm that he co-founded in 2000 and led as the Chief Executive Officer through
seven years of growth before being acquired by TESSCO. Mr. Dawson received his Bachelor's degree in Business Administration from Hillsdale College.
 
Gerald T. Garland has been a Board member since 2017 and currently serves as Chair of the Audit Committee and a committee member on the
Compensation Committee. He is currently the CEO and Co-Founder of Life, Leadership and Legacy, LLC. Mr. Garland is also currently Vice Chairman of
the World Trade Center Institute and serves on the Executive Committee of the board. From 2003 until 2015, Mr. Garland served as Senior Vice President
of Solutions Development and Product Management and SVP of the Commercial Division for TESSCO Technologies, a publicly traded value-added
distributor and solutions provider for the wireless industry. He was previously Director of Business Development at American Express Tax and Business
Services from 2002 to 2003, where he was involved in an expanded asset recovery capability for Fortune 1000 companies. From 2000 to 2001, he was
Chief Financial Officer at Mentor Technologies, a developer of on-line, CISCO certification training products. Mr. Garland was Chief Financial Officer and
Treasurer at TESSCO Technologies from 1993 to 1999, during which he oversaw the company’s initial public offering as well as TESSCO’s significant
sales expansion. Prior to joining TESSCO, Mr. Garland held leadership positions at Bank of America and Stanley Black & Decker. Mr. Garland received
his M.B.A., with a concentration in Finance from Loyola University and his Bachelor of Science in Business Management and Accounting from Towson
University. Mr. Garland was a board member for SOZO Children from 2011 through 2020 and a Senior Adviser from 2020 to present.
 
Kay L. Tidwell was appointed to the Board in 2022 and serves as the Chair of the Nominating and Corporate Governance Committee and a
committee member on the Compensation Committee. Ms. Tidwell is the Executive Vice President, General Counsel and Chief Risk Officer of Hudson
Pacific Properties Inc. (“Hudson Pacific”). She joined Hudson Pacific in 2010 and is responsible for the Company’s corporate legal function, overseeing
corporate governance matters, SEC and NYSE compliance, insurance and litigation, as well as managing outside counsel. Prior to Hudson Pacific, Ms.
Tidwell was an attorney at Latham & Watkins LLP (“Latham and Watkins”), where she began her legal career in the Los Angeles office, advising on a
wide variety of corporate and securities matters, including Hudson Pacific’s IPO. Ms. Tidwell also worked as the U.S. associate in the German offices of
Latham and Watkins. She received a Bachelor of Arts degree in English, magna cum laude, from Yale College and earned a Juris Doctor degree from Yale
Law School.
 
The Company believes that Messrs. Holdsworth, Dawson and Garland and Ms. Cefali and Tidwell have the following qualifications as members
of the Board of Directors:
 
Mark K. Holdsworth: Mr. Holdsworth has significant experience in investment banking and investment management. In addition, Mr. Holdsworth
has experience in serving on the boards of directors of major public companies and as the Chair of a Corporate Governance and Responsibility Committee.
 
Sheryl Cefali: Ms. Cefali has over 30 years of experience rendering fairness and solvency opinions and determining valuations of companies and
securities. Ms. Cefali is currently a Managing Director at Kroll, LLC, as well as a member of that firm’s Fairness and Solvency Opinions Senior Review
Committee.
 
Robert Dawson: Mr. Dawson has significant leadership experience in sales, marketing, product management and strategy for a leading publicly
traded distributor of wireless products and services. Mr. Dawson also served as President and CEO of an information technology consulting and project
management company and was a co-founder of a successful telecom and wireless technology training and consulting firm that he led for seven years of
growth until it was acquired. 
 
Gerald T. Garland: Mr. Garland has significant leadership experience in financial management, product management, sales management,
solutions development and global sourcing. Mr. Garland has significant industry experience having served as the Chief Financial Officer and Senior Vice
President for a leading publicly traded distributor and solutions provider of wireless products and services for over 18 years. Mr. Garland has also held
senior leadership positions with Bank of America, Stanley Black & Decker and American Express Tax and Business Services.
 
28

 
 
Kay L. Tidwell: Ms. Tidwell has experience advising public companies as a former attorney at Latham and Watkins. In her current role as
Executive Vice President, General Counsel and Risk Officer of Hudson Pacific, she also has relevant corporate governance compliance and risk
management experience.
 
Management
 
Robert Dawson, 51, has been the Company’s Chief Executive Officer since July 17, 2017, and served as the Company’s President from July 2017
until February 2024. Effective July 21, 2018, Mr. Dawson was appointed to the Company’s Board to also serve as a director. See preceding section for
information regarding Mr. Dawson.
 
Peter Yin, 42, Chief Financial Officer, was appointed as the Company’s Interim Chief Financial Officer and Corporate Secretary effective July 11,
2020, promoted to Chief Financial Officer on January 12, 2021 and additionally appointed Treasurer on December 10, 2021. Mr. Yin, a Certified Public
Accountant and a Certified Fraud Examiner, joined the Company in September 2014 and served as the Company’s Senior Vice President, Finance &
Operations since November 2019. Prior to joining the Company, Mr. Yin worked at Sony Corporation of America in Corporate Audit from 2010 to 2014,
and at Grant Thornton in the Assurance practice from 2006 to 2010. Mr. Yin received a Bachelor’s degree in Accountancy from the University of San
Diego.
 
Ray Bibisi, 60, joined the Company as Chief Revenue Officer in January 2020, was promoted to Chief Operating Officer effective in May 2022,
and was appointed as President effective in February 2024. Prior to joining the Company, he spent over 30 years at Radio Frequency Systems, where he
concurrently held the roles of Vice President of Sales and General Manager of North America, and was a member of the Global Governing Executive
Committee, and concurrently also oversaw operations, finance, supply chain, and research and development.
 
Board of Director Meetings
 
During the fiscal year ended October 31, 2024, the Board held eight meetings. During the fiscal year ended October 31, 2024, each member of the
Board attended at least 75% of the meetings of the Board and of the Board committees on which they served.
 
Board Age Limitation Policy
 
In December 2020, the Board adopted a policy that no individual shall be eligible to be nominated by the Board for election or re-election as a
member of the Board if, at the time of the nomination, the individual has attained the age of 75 years.
 
Board Committees
 
During fiscal 2024, the Board maintained three committees: the Compensation Committee, the Audit Committee, and the Nominating and
Corporate Governance Committee.
 
The Audit Committee meets periodically with the Company’s management and independent registered public accounting firm to, among other
things, review the results of the annual audit and quarterly reviews and discuss the financial statements. The Audit Committee also hires the independent
registered public accounting firm, and receives and considers the accountant’s comments as to controls, adequacy of staff and management performance
and procedures. The Audit Committee is also authorized to review related party transactions for potential conflicts of interest and to conduct internal
investigations into whistleblower complaints, and to oversee the Company’s cybersecurity risk, policies and procedures. The Audit Committee currently
consists of Mr. Garland (Chair), Ms. Cefali, and Mr. Holdsworth. Each of the current members of the Audit Committee is a non-employee director and is
independent as defined under the NASDAQ Stock Market’s listing standards. In addition, each of the members of the Audit Committee has significant
knowledge of financial matters, and Mr. Garland is an “audit committee financial expert.” The Audit Committee met five times during fiscal 2024.
 
The Compensation Committee currently consists of Ms. Cefali (Chair), Mr. Garland, and Ms. Tidwell, each of whom is a non-employee director
and is independent as defined under the NASDAQ Stock Market’s listing standards. The Compensation Committee is responsible for considering and
recommending to the Board the compensation arrangements for senior management. As part of its other responsibilities, the Compensation Committee
provides general oversight of our compensation structure and, if deemed necessary, retains and approves the terms of the retention of compensation
consultants and other compensation experts. Other specific duties and responsibilities of the Compensation Committee include reviewing the performance
of executive officers; reviewing and approving objectives relevant to executive officer compensation; recommending equity-based and incentive
compensation plans; and recommending compensation policies and practices for service on our Board and its committees and for the Chair of our Board.
The Compensation Committee works primarily with our Chief Executive Officer to gather internal data and solicit management’s recommendations
regarding compensation. However, the Compensation Committee determines the compensation for each of our individual officers outside the presence of
the affected officer. The Compensation Committee also advises and consults with other non-executive board members as it determines appropriate
regarding compensation issues. The Compensation Committee held seven meetings during fiscal 2024.
 
29

 
 
The Nominating and Corporate Governance Committee is responsible for developing and recommending corporate governance guidelines to the
Board, identifying qualified individuals to become directors, recommending selected nominees to serve on the Board, and performing and overseeing the
annual evaluation of the Board and its committees. The Nominating and Corporate Governance Committee currently consists of Ms. Tidwell (Chair), Mr.
Holdsworth, and Ms. Cefali, each of whom is a non-employee director and is independent as defined under the NASDAQ Stock Market’s listing standards.
During fiscal 2022 Mr. Fink served on the Committee until he resigned as a director as of September 6, 2022 and Ms. Tidwell joined as of September 8,
2022. The Nominating and Corporate Governance Committee held four meetings during fiscal 2024.
 
The Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee, each operate pursuant to a written
charter, which charters are available on our website on www.rfindustries.com.
 
Code of Business Conduct and Ethics
 
We have adopted a Code of Business Conduct and Ethics (the “Code”) that applies to all of our Directors, officers and employees, including its
principal executive officer and principal financial officer. The Code is posted on our website at www.rfindustries.com. We intend to disclose any
amendments to the Code by posting such amendments on its website. In addition, any waivers of the Code for Directors or executive officers of the
Company will be disclosed in a report on Form 8-K.
 
Insider Trading Arrangements and Policies
 
The Company has insider trading policies and procedures that govern the purchase, sale and other dispositions of its securities by directors,
officers and employees, as well as by the Company itself. The Company believes these policies and procedures are reasonably designed to promote
compliance with insider trading laws, rules and regulations and applicable listing standards.
 
ITEM 11.
EXECUTIVE COMPENSATION
 
The following table discloses the compensation awarded to, earned by, paid to or accrued to our named executive officers for services rendered to
us for the years ended October 31, 2024 and 2023.
 
30

 
 
Summary Compensation Table
 
 
 
   
 
     
 
     
 
     
 
   
   
 
   
   
 
   
  Nonqualified      
 
     
 
 
 
 
   
 
     
 
     
 
     
 
   
   
 
   
 
Non-Equity    
 
Deferred
     
 
     
 
 
 
 
   
 
     
 
     
 
   
Stock
   
 
Option    
 
Incentive
Plan
   
  Compensation   
All Other
     
 
 
 
 
 
Salary     Severance   
Bonus    
Awards    
 
Awards    
  Compensation   
 
Earnings
    Compensation   
Total
 
Name and Principal Position
Year  
($)
   
($)
   
($)
   
($)
   
 
($)
   
 
($)
   
 
($)
   
($) (3)
   
($)
 
Robert D. Dawson
 
     
       
       
       
   
     
   
     
   
     
       
       
 
Chief Executive Officer and
Director (1)
2024     400,000     
-     
-      220,580  (4)     205,264  (5)    
15,000  (11)   
-     
69,231      910,075 
 
2023     443,333     
-     
-      177,863  (6)     204,240  (6)    
-  (12)   
-     
69,231      894,667 
Peter Yin
 
     
       
       
       
   
     
   
     
   
     
       
       
 
Chief Financial Officer
2024     285,000     
-     
-     
62,858  (7)    
73,309  (7)    
15,000  (11)   
-     
21,317      457,484 
 
2023     283,333     
-     
-     
63,525  (8)    
72,942  (8)    
-  (12)   
-     
35,803      455,603 
Ray Bibisi
 
     
       
       
       
   
     
   
     
   
     
       
       
 
President and Chief Operating
Officer (2)
2024     242,500     
-     
-     
62,858  (9)    
73,309  (9)    
15,000  (11)   
-     
28,702      422,369 
 
2023     218,333     
-     
-     
30,493  (10)   
35,012  (10)   
-  (12)   
-     
24,799      308,637 
 
 
(1) Effective November 1, 2023, Mr. Dawson’s annual salary was $445,000, of which $45,000 was issued through restricted shares on November 1,
2023 in order to conserve cash.
 
 
(2) Effective February 1, 2024, Mr. Bibisi’s annual salary increased to $250,000.  For the fiscal year ended October 31, 2024, Mr. Bibisi was paid
$242,500. On February 29, 2024, Mr. Bibisi was promoted to President adding to his role as Chief Operating Officer.
 
 
(3) Represents accrued vacation.
 
 
(4) On November 1, 2023, Mr. Dawson was granted 15,202 shares of restricted stock valued at $44,998 in lieu of cash. On January 11, 2024, Mr.
Dawson was granted 58,333 shares of restricted stock valued at $175,582.
 
 
(5) On January 11, 2024, Mr. Dawson was granted options to purchase 116,667 shares of common stock at an exercise price of $3.01 (the closing
price of the Company’s common stock on the date of grant) valued at $205,264.
 
 
(6) On January 11, 2023, Mr. Dawson was granted 31,818 shares of restricted stock valued at $173,749 and options to purchase 63,636 shares of
common stock at an exercise price of $5.46 (the closing price of the Company’s common stock on the date of grant) valued at $204,240.
 
 
(7) On January 11, 2024, Mr. Yin was granted 20,883 shares of restricted stock valued at $62,858 and options to purchase 41,667 shares of common
stock at an exercise price of $3.01 (the closing price of the Company’s common stock on the date of grant) valued at $73,309.
 
 
(8) On January 11, 2023, Mr. Yin was granted 11,364 shares of restricted stock valued at $62,055 and options to purchase 22,727 shares of common
stock at an exercise price of $5.46 (the closing price of the Company’s common stock on the date of grant) valued at $72,942.
 
 
(9) On January 11, 2024, Mr. Bibisi was granted 20,883 shares of restricted stock valued at $62,858 and options to purchase 41,667 shares of common
stock at an exercise price of $3.01 (the closing price of the Company’s common stock on the date of grant) valued at $73,309.
 
 
(10) On January 11, 2023, Mr. Bibisi was granted 5,455 shares of restricted stock valued at $29,788 and options to purchase 10,909 shares of common
stock at an exercise price of $5.46 (the closing price of the Company’s common stock on the date of grant) valued at $35,012.
 
 
(11)  On April 16, 2024, the Board adopted an incentive compensation plan for officers (including the named executive officers) and senior managers
of the Company pursuant to which officers and managers were entitled to cash bonuses based upon (i) the Company’s achievement of specified
corporate goals and (ii) the satisfaction of subjective personal performance and contribution goals established for that participant. The personal
bonus target for Mr. Dawson was 75% and Mr. Yin and Mr. Bibisi was 50% of their respective annual base salaries.  The Board determined that
each of these officers achieved a portion of their respective subjective personal performance and contribution goals, and therefore earned a bonus
based on the achievement of these goals for the fiscal year ended October 31, 2024.
 
 
(12)On March 9, 2023, the Board adopted an incentive compensation plan for officers (including the named executive officers) and senior managers of
the Company pursuant to which officers and managers were entitled to cash bonuses based upon (i) the Company’s achievement of specified
corporate goals and (ii) the satisfaction of subjective personal performance and contribution goals established for that participant. The personal
bonus target for Mr. Dawson was 75% and Mr. Yin and Mr. Bibisi was 50% of their respective annual base salaries.  The Board determined that
each of these officers did not achieve the established goals, and therefore did not earn a bonus of their respective salary for the fiscal year ended
October 31, 2023.
 
31

 
 
2024 Option Grants
 
On January 11, 2024, we granted incentive stock options to Mr. Dawson for the purchase of 116,667 shares, Mr. Yin for the purchase of 41,667
shares, and Mr. Bibisi for the purchase of 41,667 shares. The incentive stock options vest over four years as follows: (i) one-quarter of the options shall vest
on January 11, 2025 and (ii) the remaining options shall vest in 12 equal quarterly installments over the next three years. All incentive stock options expire
10 years from the date of grant. No other options were granted to the named executive officers during the year ended October 31, 2024.
 
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 options shall vest on April 16, 2025 and (ii) the remaining and options shall vest in 12 equal quarterly
installments over the next three years.
 
Holdings of Previously Awarded Equity
 
Equity awards held as of October 31, 2024 by each of our named executive officers were issued under our 2020 Equity Incentive Plan, as amended
(the “2020 Equity Incentive Plan”) and 2010 Stock Incentive Plan. The following table sets forth outstanding equity awards held by our named executive
officers as of October 31, 2024:
 
Outstanding Equity Awards As Of October 31, 2024
 
 
 
Option Awards
Name
 
Number of
Securities
Underlying
Unexercised
Options
(#) Exercisable    
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable    
Equity Incentive
Plan
Awards: Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
   
 
Option
Exercise
Price
($)
 
Option
Expiration
Date
Robert D. Dawson
   
25,000.00       
     
-   
   
1.90 
7/17/2027
 
   
42,000.00     
      
-   
   
6.40 
1/9/2030
 
   
39,375.00       
     
2,625.00  (1)    
4.98 
1/12/2031
 
   
50,000.00       
     
-   
   
8.69 
7/16/2031
 
   
32,084.00       
     
14,583.00  (2)    
7.11 
1/10/2032
 
   
27,841.00       
     
35,795.00  (3)    
5.46 
1/11/2033
 
   
-       
     
116,667.00  (4)    
3.01 
1/11/2034
 
     
       
       
   
     
   
Peter Yin
   
32,000.00       
     
24,000.00  (5)    
2.40 
1/6/2030
 
   
3,752.00       
     
-   
   
6.40 
1/9/2030
 
   
9,375.00       
     
625.00  (1)    
4.98 
1/12/2031
 
   
29,792.00       
     
13,542.00  (2)    
7.11 
1/10/2032
 
   
9,943.00       
     
12,784.00  (3)    
5.46 
1/11/2033
 
   
-       
     
41,667.00  (4)    
3.01 
1/11/2034
 
     
       
       
   
     
   
Ray Bibisi
   
50,000.00       
     
-   
   
6.74 
1/6/1930
 
   
10,000.00       
     
-   
   
6.40 
1/9/1930
 
   
7,031.00       
     
469.00  (1)    
4.98 
1/12/2031
 
   
5,500.00       
     
2,500.00  (2)    
7.11 
1/10/2032
 
   
4,773.00       
     
6,136.00  (3)    
5.46 
1/11/2033
 
   
-       
     
41,667.00  (4)    
3.01 
1/11/2034
 
(1)
Vests over four years as follows: (i) one-quarter shall vest on January 12, 2022; and (ii) the remaining options shall vest in twelve equal quarterly
installments over the next three years, commencing with the first quarter following January 12, 2022.
(2)
Vests over four years as follows: (i) one-quarter shall vest on January 10, 2023; and (ii) the remaining options shall vest in twelve equal quarterly
installments over the next three years, commencing with the first quarter following January 10, 2023.
(3)
Vests over four years as follows: (i) one-quarter shall vest on January 11, 2024; and (ii) the remaining options shall vest in twelve equal quarterly
installments over the next three years, commencing with the first quarter following January 11, 2024.
(4)
Vests over four years as follows: (i) one-quarter shall vest on January 11, 2025; and (ii) the remaining options shall vest in twelve equal quarterly
installments over the next three years, commencing with the first quarter following January 11, 2025.
(5)
Vests as to 8,000 shares annually following grant on December 13, 2017.
 
32

 
 
During the fiscal year ended October 31, 2024, we did not adjust or amend the exercise price of stock options awarded to the named executive
officers.
 
Employment Agreements; Incentive Plan; Change of Control Arrangements
 
Employment Agreements
 
Robert Dawson.  On July 16, 2021, the Company entered into an employment agreement (the “CEO Employment Agreement”) with Robert D.
Dawson, pursuant to which he continues to serve as the Company’s Chief Executive Officer.  The CEO Employment Agreement became effective on July
17, 2021 and replaced Mr. Dawson’s prior employment agreement that expired on July 17, 2021.  The initial term of the CEO Employment Agreement
ended on January 31, 2023, after which the CEO Employment Agreement automatically renews for an additional one (1) year period, unless either Mr.
Dawson or the Company provides the other party with written notice of non-renewal at least ninety (90) days prior to the date of automatic renewal.
 
Under the CEO Employment Agreement, the Company agreed to pay Mr. Dawson an annual base salary of $425,000. Mr. Dawson will also be
eligible to participate in the Company’s annual bonus plan, pursuant to which he will have the opportunity to earn a year-end bonus equal to fifty percent
(50%) of his annual base salary. Under the CEO Employment Agreement, if Mr. Dawson’s employment is terminated by the Company for any reason other
than for “cause”, the Company is obligated to Mr. Dawson for (x) an amount equal to one year’s base salary as in effect at such time, and (y) the estimated
pro rata portion of his target bonus that was earned through the date of termination, and the vesting period of all of Mr. Dawson’s unvested stock options
and all unvested time-based restricted stock grants will automatically be fully accelerated as of the termination date. The foregoing provisions will not
apply if Mr. Dawson voluntarily terminates his employment with the Company or is terminated for cause. Mr. Dawson’s annual base salary for fiscal year
2024 was $445,000, of which $45,000 was issued through restricted shares on November 1, 2023.
 
Also, effective July 17, 2021, Mr. Dawson received a fully vested, 10-year immediately exercisable stock option to purchase 50,000 shares of the
Company’s common stock. The exercise price of this option is $8.69, which was the closing price on the date of the CEO Employment Agreement. The
CEO Employment Agreement also provided that the vesting schedule of the remaining unvested portion of an option that was granted to him in 2017 was
revised. On July 17, 2017, Mr. Dawson received stock options to purchase 100,000 shares of the Company’s common stock (the “2017 Option”). The
award has an exercise price of $1.90 and vests as to 10,000 shares per year on each anniversary of July 17, 2017 (with 10,000 shares having vested on July
17, 2017) while he is employed by the Company. As of July 17, 2021, 50,000 shares remained unvested under the 2017 Option. Under the revised vesting
schedule, provided Mr. Dawson is still employed by the Company, 25,000 shares of those unvested options under the 2017 Option vested on July 17, 2022,
and the remaining 25,000 shares will vest on July 17, 2023.
 
Upon a Change of Control Transaction (as defined in the CEO Employment Agreement), all of Mr. Dawson’s time-based stock options and shares
of restricted stock shall immediately vest, whether or not his employment is terminated. If, at the time of a Change of Control Transaction, Mr. Dawson’s
employment is terminated by the Company for any reason other than cause (as defined in the CEO Employment Agreement), Mr. Dawson will be entitled
to receive a change of control cash payment in an amount equal to 12 months of his base salary.
 
Peter Yin. Mr. Yin was promoted to Chief Financial Officer on January 12, 2021. Mr. Yin is currently employed on an at-will basis without written
employment agreement. Mr. Yin’s annual base salary for the fiscal year 2024 was $285,000.
 
Ray Bibisi. Mr. Bibisi was appointed to Chief Operating Officer in May 2022 and was promoted to President in February 2024, and is currently
employed on an at-will basis without written employment agreement. Mr. Bibisi’s annual base salary for fiscal year 2024 was $250,000.
 
Adoption of Fiscal Year 2024 Management Incentive Equity and Cash Compensation Plan
 
On April 16, 2024, the Board adopted an annual incentive compensation plan for officers (including the Company’s named executive officers) and
certain senior managers of the Company and its subsidiaries for the fiscal year ended October 31, 2024 (the “2024 Compensation Plan”). Under the 2024
Compensation Plan, each participant (i) received an equity award as a long-term incentive, and (ii) is eligible to receive a cash payment after the end of the
fiscal year as a short-term incentive.
 
Equity Awards. In order to provide long-term incentives to the Company’s officers and managers, on January 11, 2024, the Board granted
participating officers and managers shares of restricted stock and options to purchase the Company’s common stock pursuant to the Company’s 2020
Equity Incentive Plan. Provided the participating officer or manager is still employed with the Corporation or its subsidiaries on the following dates, the
shares of restricted stock and the options shall 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, commencing with the first
quarter following January 11, 2025. The options have a 10-year term and an exercise price of $3.01 per share (which was the closing price of the
Company’s common stock on the date of grant).
 
33

 
 
Mr. Dawson, the Company’s Chief Executive Officer, was granted 58,333 shares of restricted stock and options to purchase 116,667 shares of
common stock at an exercise price of $3.01 per share (the closing price of the Company’s common stock on the date of grant); Mr. Yin, the Company’s
Chief Financial Officer, was granted 20,833 shares of restricted stock and options to purchase 41,667 shares of common stock at an exercise price of $3.01
per share; and Mr. Bibisi, the Company’s President and Chief Operating Officer, was granted 20,833 shares of restricted stock and options to purchase
41,667 shares of common stock at an exercise price of $3.01 per share.
 
Cash Incentives. Under the 2024 Compensation Plan, cash incentive bonuses, if any, will be paid to certain officers and senior managers based
upon (i) the Company’s achievement of specified financial goals and (ii) the Board’s discretionary review of each participant’s performance during fiscal
2024. The subjective performance of each officer will be evaluated and determined by the Compensation Committee, in its sole discretion, after
consultation with the Company’s Chief Executive Officer, other than with respect to the performance of the Chief Executive Officer.
 
The minimum, target and maximum cash bonus payable to the Chief Executive Officer is, respectively, 0%, 75% and 112.5% of his annual base
salary, depending on achievement of the specified goals. For the other participants, the minimum bonus is 0%, the target bonuses range from 15% to 50%
of base pay, and the maximum cash bonus payable ranges from to 22.5% to 75% of the recipient’s fiscal 2024 annual base salary.
 
For the Chief Executive Officer and other employees, bonuses will be weighted and based on (i) the Company’s achievement of certain fiscal 2024
revenues (weighted 30%), (ii) fiscal 2024 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) (weighted 50%), (iii) adjusted
EBITDA, less interest expense on a per share basis (weighted 10%), and (iv) a subjective evaluation of each individual’s performance (weighted 10%).
 
For the Chief Financial Officer, President and Chief Operating Officer, bonuses will be weighted and based on (i) the Company’s achievement of
certain fiscal 2024 revenues (weighted 20%), (ii) fiscal 2024 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) (weighted
50%), (iii) adjusted EBITDA, less interest expense on a per share basis (weighted 10%), and (iv) a subjective evaluation of each individual’s performance
(weighted 20%).
 
The calculation of adjusted EBITDA will exclude the impact of one-time charges related to any business acquisitions or dispositions effected
during the year, severance payments, moving costs, the impact of the Federal Paycheck Protection Program loans the Company has received, earn-out
payments or reversals, other non-recurring items, executive bonus payments and equity compensation expenses accrued to management. The Board and the
Compensation Committee reserve the right to modify these goals, criteria and target percentage at any time, and to grant bonuses to the participants even if
the performance goals are not met. In addition, the Board and Compensation Committee may modify the bonus plan targets to reflect significant changes in
Company’s business, including changes due to acquisitions or dispositions of businesses or product lines. The 2024 bonuses will be paid within 75 days
after the end to the fiscal year to participating officers and managers who are employed with the Company or its subsidiaries on the date of payment.
 
Change of Control Arrangements
 
As described in “Employment Agreements; Incentive Plan; Change of Control Arrangements--Employment Agreements--Robert Dawson,” above,
Mr. Dawson is entitled to a cash payment and the acceleration of the vesting of certain of his options upon a Change of Control Transaction (as defined in
his current employment agreement).
 
The outstanding stock options currently owned by the Company’s principal officers (including Messrs. Dawson, Yin and Bibisi) and division
managers provide that, immediately prior to a change of control (as defined), all unvested stock options will become fully vested and exercisable. In
addition, the shares of restricted stock granted to each of the non-executive directors for his/her services to be rendered during the current year, shall also
become fully vested upon a change of control event.
 
The Company has no other change of control payment agreements that are currently in effect.
 
Compensation of Directors
 
Under the compensation policies adopted by the Compensation Committee, directors who also are officers and/or employees of the Company do
not receive any compensation for serving on the Board. On September 6, 2023, the Board determined that the compensation payable to directors as Board
fees for the next year ending with the 2024 annual meeting of stockholders will be $90,000 ($40,000 in cash and $50,000 in restricted stock). On October
30, 2023, in an effort to conserve cash of the Company, the Board approved the reallocation of $20,000 in cash compensation to instead be reallocated to
restricted stock thereby providing for $20,000 in annual cash compensation and $70,000 in restricted stock ("Director Compensation Reallocation”). In
addition, effective September 6, 2023, the Board determined that additional chair fees and committee member fees would be paid in cash as follows:
 
 
 
Chair
   
Member
 
Board
  $
15,000*       
 
Audit Committee
  $
8,000    $
5,000 
Compensation Committee
  $
6,000    $
5,000 
Nominating and Corporate Governance Committee
  $
4,000    $
4,000 
 
*The Chairperson of the Board agreed to reduce his chair fee from $25,000 to $15,000 in fiscal year 2024 to help the Company conserve cash.  On
September 5, 2024, the Board agreed to reinstate the Chairperson’s chair fee back to $25,000.
 
34

 
 
Based on the reallocation of cash compensation to equity compensation, the Company made two restricted stock grants to the directors as part of
their Board equity fees. On September 6, 2023, Mr. Holdsworth, Ms. Cefali, Mr. Cohenour (who resigned from the Board and all committees of the Board
effective October 31, 2023), Mr. Garland, and Ms. Tidwell were each granted 13,333 shares of restricted stock (“Initial Director Grant”), which was
determined by dividing the $50,000 fee by the closing price of the Company’s common stock on the date of grant ($3.75). The restricted stock fees for the
Initial Director Grant vest on the earlier of (i) one year from the date of grant, or (ii) the Company’s next annual meeting of stockholders. On November 1,
2023, Mr. Holdsworth, Ms. Cefali, Mr. Garland, and Ms. Tidwell were each granted 6,756 shares of restricted stock (“Second Director Grant”), which was
determined by dividing the amount of the reallocated $20,000 fee by the closing price of the Company’s common stock on the date of grant ($2.96). The
restricted stock fees for the Second Director Grant vest in four equal installments beginning on January 31, 2024 and quarterly thereafter until fully vested.
 
DIRECTOR COMPENSATION FOR 2024
 
 
 
Fees
     
 
     
 
     
 
     
 
 
 
 
Earned or
     
 
     
 
     
 
     
 
 
 
 
Paid in
   
Stock
   
Option
   
All Other
     
 
 
Name
 
Cash
   
Awards (1)
   
Awards
    Compensation   
Total
 
 
     
       
       
       
       
 
Sheryl Cefali
  $
40,000    $
70,000    $
-    $
-    $
110,000 
Gerald T. Garland
  $
38,000    $
70,000    $
-    $
-    $
108,000 
Mark K. Holdsworth
  $
44,000    $
70,000    $
-    $
-    $
114,000 
Kay L. Tidwell
  $
33,000    $
70,000    $
-    $
-    $
103,000 
 
(1)
On September 6, 2023, Mr. Holdsworth, Ms. Cefali, Mr. Garland, and Ms. Tidwell were each granted 13,333 shares of restricted stock (“Initial
Director Grant”), which was determined by dividing the $50,000 fee by the closing price of the Company’s common stock on the date of grant
($3.75). The restricted stock fees for the Initial Director Grant vest on the earlier of (i) one year from the date of grant, or (ii) the Company’s next
annual meeting of stockholders. On November 1, 2023, Mr. Holdsworth, Ms. Cefali, Mr. Garland, and Ms. Tidwell were each granted 6,756 shares
of restricted stock (“Second Director Grant”), which was determined by dividing the amount of the reallocated $20,000 fee by the closing price of
the Company’s common stock on the date of grant ($2.96). The restricted stock fees for the Second Director Grant vest in four equal installments
beginning on January 31, 2024 and quarterly thereafter until fully vested.
 
On September 5, 2024, the Board determined that the compensation payable to directors as Board fees for the next year ending with the 2025
annual meeting of stockholders will be $90,000 ($40,000 in cash and $50,000 in restricted stock). In addition, effective September 5, 2024, the Board
determined that additional chair fees and committee member fees would be paid in cash as follows:
 
 
  Chair
    Member
 
Board
  $
25,000*       
 
Audit Committee
  $
8,000    $
5,000 
Compensation Committee
  $
6,000    $
5,000 
Nominating and Corporate Governance Committee
  $
4,000    $
4,000 
 
*The Board reinstated the chair fee for the Chairperson of the Board from $15,000 back to $25,000.
 
The restricted stock fees vest on the earlier of (i) one year from the date of grant, or (ii) the Company’s next annual meeting of stockholders.  The
number of restricted shares granted to each director was 13,476 determined by dividing the amount of the fee by the closing price of the Company’s
common stock from the date of grant ($3.71).  Accordingly, on September 5, 2024, Mr. Holdsworth, Ms. Cefali, Mr. Garland, and Ms. Tidwell were each
granted 13,476 shares of restricted stock.  The cash fees vest in four equal quarterly installments paid in arrears commencing November 1, 2024.
 
35

 
 
Granting of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information
 
We do not grant equity awards in anticipation of the release of material nonpublic information that is likely to result in changes to the price of our
common stock, and do not time the public release of such information based on award grant dates. During the last completed fiscal year, we have not made
awards to any named executive officer during the period beginning four business days before and ending one business day after the filing of a period report
on Form 10-Q or Form 10-K or the filing or furnishing of a current report on Form 8-K, and we have not timed the disclosure of material nonpublic
information for the purpose of affecting the value of executive compensation.
 
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
 
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
The following table sets forth certain information regarding the ownership of the Company’s Common Stock as of January 21, 2025 for: (i) each
director; (ii) the Company’s named executive officers; (iii) all executive officers and directors of the Company as a group; and (iv) all those known by the
Company to be beneficial owners of more than 5% of the Common Stock. As of January 21, 2025, there were 10,544,431 shares of Common Stock issued
and outstanding. Except to the extent indicated in the footnotes to the following table, the person or entity listed has sole voting and dispositive power with
respect to the shares that are deemed beneficially owned by the person or entity, subject to community property laws, where applicable. Unless otherwise
indicated, the address for each listed beneficial owner is c/o RF Industries, Ltd., 16868 Via Del Campo Court, Suite 200, San Diego, CA 92127.
 
 
 
Number of Shares
 
Percentage
Name and Address of Beneficial Owner
 
Beneficially Owned (1)
 
Beneficially Owned
 
 
 
 
 
 
Mark K. Holdsworth
 
862,259
(2)
 
8.2%
 
 
 
 
 
 
Robert D. Dawson
 
520,419
(3)
 
4.8%
 
 
 
 
 
 
Peter Yin
 
232,726
(4)
 
2.2%
 
 
 
 
 
 
Gerald T. Garland
 
134,044 
 
1.3%
 
 
 
 
 
 
Ray Bibisi
 
127,339
(5)
 
1.2%
 
 
 
 
 
 
Sheryl Cefali
 
72,753 
 
*
 
 
 
 
 
 
Kay L. Tidwell
 
41,050 
 
*
 
 
 
 
 
 
All Directors and Officers as a Group (7 Persons)
 
1,990,590
(6)
 
18.1%
 
 
 
 
 
 
Greater than 5% stockholders
 
 
 
 
 
 
 
 
 
 
 
Punch & Associates Investment Management, Inc.
 
 
 
 
 
7701 France Ave. So., Suite 300
 
 
 
 
 
Edina, MN 55435
 
994,266
(7)
 
9.4%
 
 
 
 
 
 
Hytek International, Ltd
 
 
 
 
 
9642 Penshurst Trace
 
 
 
 
 
Charlotte, North Carolina 28210
 
751,000
(8)
 
7.1%
 
 
 
 
 
 
Affiliates of THG Securities Fund, L.P.
140 S. Lake Ave., Suite 304
Pasadena, CA 91101
 
821,389
(2)
 
7.8%
 
* Less than 1%
 
 
(1)
Shares of common stock that could be acquired by a beneficial owner upon exercise of an option within 60 days from January 21, 2025 are
considered outstanding for the purpose of computing the percentage of shares beneficially owned by such owner, but are not considered to be
outstanding for any other purpose.
 
36

 
 
 
(2) Mr. Holdsworth is the founder of The Holdsworth Group, LLC, which is a managing member of THG Securities Advisors, LLC (the “Manager”),
the general partner and the investment manager of THG Securities Fund, L.P. (the “Fund”). Mr. Levenick is a member of the Manager, the general
partner and the investment manager of the Fund. In such capacity, each of Messrs. Holdsworth and Levenick exercise voting and investment
power over all of the shares held by the Fund and may be deemed to be a beneficial owner of all of these shares. The amount of beneficial shares
owned in the table reflect the following:
 
(# of Shares)
 
Mark K.
Holdsworth
   
Zachary
Levenick
   
THG Securities
Fund, L.P.
 
Sole voting power
 
78,662
   
12,550
   
-
 
Shared voting power
 
629,352
   
629,352
   
629,352
 
Sole investment power
 
78,662
   
12,550
   
-
 
Shared investment power
 
629,352
   
629,352
   
629,352
 
Information based solely on SEC Filing (Filing Date)
 
SC 13D/A
(04/24/2023)
   
SC 13D/A
(04/24/2023)
   
SC 13D/A
(04/24/2023)
 
 
 
(3)
Includes 254,985 shares that Mr. Dawson has the right to acquire upon exercise of options.
 
 
 
 
(4)
Includes 127,782 shares that Mr. Yin has the right to acquire upon exercise of options.
 
 
 
 
(5)
Includes 89,371 shares that Mr. Bibisi has the right to acquire upon exercise of options.
 
 
 
 
(6)
Includes 472,138 shares that the directors and officers have the right to acquire upon exercise of options.
 
 
 
 
(7)
Based on a Schedule 13G/A filed with the SEC by Punch & Associates Investment Management, Inc. on February 14, 2024.
 
 
 
 
(8)
Based on the list of record holders maintained by the Company’s transfer agent and representation from Hytek International Ltd’s
representatives.
 
 
EQUITY COMPENSATION PLAN INFORMATION
 
The following table provides information as of October 31, 2024 with respect to the shares of Company common stock that may be issued under
the Company’s existing equity compensation plans:
 
 
 
A
   
B
   
C
 
Plan Category
 
Number of Securities to
be Issued Upon Exercise
of Outstanding Options
   
Weighted Average
Exercise Price of
Outstanding Options ($)
   
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected in
Column A)
 
Equity compensation plans approved by security holders    
874,816     
5.10     
1,299,269 
Equity compensation plans not approved by security
holders
   
-     
-     
- 
Total
   
874,816     
5.10     
1,299,269 
 
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
 
None.
 
ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES
 
Audit Fees
 
The following is a summary of the fees billed to the Company by CohnReznick LLP, the Company’s independent registered public accounting
firm, for professional services rendered related to the fiscal years ended October 31, 2024 and 2023:
 
Fee Category
 
2024
   
2023
 
Audit Fees
  $
325,405    $
390,918 
Audit-Related Fees
   
-     
- 
Tax Fees
   
-     
- 
All Other Fees
   
-     
- 
Total Fees
  $
325,405    $
390,918 
 
Audit Fees. Consists of fees billed for professional services rendered for the audit of the Company’s annual financial statements and review of the
interim financial statements included in quarterly reports and services that are normally provided by CohnReznick LLP in connection with statutory and
regulatory filings or engagements.
 
37

 
 
Audit-Related Fees. Consists of fees billed for assurance and related services that are reasonably related to the performance of the audit and
review of the Company’s financial statements and are not reported under “Audit Fees.” We did not incur such audit-related fees from CohnReznick LLP
during fiscal 2024 and 2023.
 
Tax Fees. Includes fees associated with tax compliance at international locations, domestic and international tax advice and planning and
assistance with tax audits and appeals.
 
All Other Fees. Includes the aggregate fees recognized for professional services provide by CohnReznick LLP, other than those services described
above, including services related to other permissible advisory services.
 
Pre-Approval Policies and Procedures
 
The Audit Committee is required to review and approve the proposed retention of independent auditors to perform any proposed auditing and non-
auditing services as outlined in its charter. The Audit Committee has not established policies and procedures separate from its charter concerning the pre-
approval of auditing and non-auditing related services. As required by Section 10A of the Exchange Act, our Audit Committee has authorized all auditing
and non-auditing services provided by CohnReznick LLP during fiscal 2024 and fiscal 2023 and the fees paid for such services.
 
ITEM 15.
EXHIBITS
 
The Company’s consolidated financial statements and related notes thereto are listed and included in this Annual Report on Form 10-K beginning on page
F-1. The following exhibits are filed as part of this Annual Report:
 
3.1
Amended and Restated Articles of Incorporation (previously filed as an exhibit to the Company’s Form 8-K, dated August 31, 2012, which exhibit
is incorporated herein by reference)
 
 
3.2
Amended and Restated Bylaws (previously filed as an exhibit to the Company’s Form 10-Q, for the quarterly period ended April 30, 2023, which
exhibit is incorporated herein by reference)
 
 
4.1
Description of Registrant’s Securities (as previously filed as an exhibit to the Company’s Form 10-K for the year ended October 31, 2022, which
exhibit is incorporated herein by reference)
 
10.1
Single Tenant Commercial Lease, dated June 15, 2011, between K&K and RF Industries, Ltd. regarding the Company’s lease in Yaphank, New
York (previously filed as an exhibit to the Company’s Form 10- K for the year ended October 31, 2011, which exhibit is incorporated herein by
reference)
 
10.2#
Form of 2010 Stock Incentive Plan (previously filed as an exhibit to the Company’s Registration Statement on Form S-8, filed on September 20,
2010, which exhibit is incorporated herein by reference)
 
10.3#
Form of Stock Option Agreement for the Company’s 2010 Stock Incentive Plan (previously filed as an exhibit to the Company’s Registration
Statement on Form S-8, filed on September 20, 2010, which exhibit is incorporated herein by reference)
 
10.4
Stock Purchase Agreement, dated January 20, 2014, between RF Industries, Ltd. and Robert A. Portera (previously filed as an exhibit to the
Company’s Form 8-K, dated January 21, 2015, which exhibit is incorporated herein by reference)
 
10.5
Stock Purchase Agreement, dated June 5, 2015, between RF Industries, Ltd., Rel-Tech Electronics, Inc., and the Shareholders. (previously filed as
an exhibit to the Company’s Form 8-K, dated June 5, 2015, which exhibit is incorporated herein by reference)
 
 
10.6
Multi-Tenant Industrial Gross Lease, effective December 1, 2007, between Rel-Tech Electronics, Inc. and D’Amato Investments, LLC regarding
the Company’s lease in Milford, CT, as amended to date (previously filed as an exhibit to the Company’s Form 8-K, dated May 1, 2014, which
exhibit is incorporated herein by reference)
 
38

 
 
10.7
Amendment To Lease, by and between K & K Unlimited and Cables Unlimited, Inc., dated June 9, 2017 (previously filed as an exhibit to the
Company’s Form 8-K, dated June 9, 2017, which exhibit is incorporated herein by reference)
 
 
10.8
Lease Agreement by and between D’Amato Investments, LLC and Rel-Tech Electronics, Inc., dated July 25, 2017 (previously filed as an
exhibit to the Company’s Form 8-K, dated July 28, 2017, which exhibit is incorporated herein by reference)
 
 
10.9#
Form of Indemnification Agreement (previously filed as an exhibit to the Company’s Form 8-K, dated September 12, 2017, which is
incorporated herein by reference)
 
 
10.10
Amendment To Lease, by and between K & K Unlimited and Cables Unlimited, Inc., dated June 6, 2018 (previously filed as an exhibit to the
Company’s Form 8-K, dated June 6, 2018, which exhibit is incorporated herein by reference)
 
 
10.11
Stock Purchase Agreement between RF Industries, Ltd. and RAP Acquisition Inc., dated October 31, 2018 (previously filed as an exhibit to the
Company’s Form 8-K, dated October 31, 2018, which exhibit is incorporated herein by reference)
 
 
10.12#
Option Agreement Amendment - 2010 Stock Incentive Plan (previously filed as an exhibit to the Company’s Form 10-K for the year ended
October 31, 2018, which exhibit is incorporated herein by reference)
 
 
10.13
Stock Purchase Agreement between RF Industries, Ltd., DRC Technologies, Inc. and Stockholders of DRC Technologies, Inc., dated November
4, 2019 (previously filed as an exhibit to the Company’s Form 8-K, dated November 5, 2019, which exhibit is incorporated herein by reference)
 
 
10.14#
2020 Equity Incentive Plan (previously filed as an exhibit to the Company’s Registration Statement on Form S-8, filed on September 14, 2020,
which exhibit is incorporated herein by reference)
 
 
10.15
Amendment To Lease, by and between K&K Unlimited and Cables Unlimited, Inc., dated June 30, 2021 (previously filed as an exhibit to the
Company’s Form 8-K, filed on July 2, 2021, which exhibit is incorporated herein by reference)
 
 
10.16#
Employment Agreement, dated July 16, 2021, by and between RF Industries, Ltd. and Robert D. Dawson (previously filed as an exhibit to the
Company’s Form 8-K, dated July 20, 2021, which exhibit is incorporated herein by reference)
 
 
10.17
Membership Interest Purchase Agreement dated as of December 16, 2021 by and among RF Industries, Ltd., Wireless Telecom Group, Inc., and
Microlab/FXR LLC (previously filed as an exhibit to the Company’s Form 8-K, filed December 17, 2021, which exhibit is incorporated herein
by reference.)
 
39

 
 
10.18
AIRCRE Standard Industrial/Commercial Single-Tenant Lease – Net by and between RF Industries, Ltd. and Sorrento West Properties, Inc.,
dated February 1, 2022, together with addenda thereto (previously filed as an exhibit to the Company’s Form 8-K, dated February 7, 2022,
which exhibit is incorporated herein by reference)
 
 
10.19
Loan Agreement dated as of February 25, 2022, between Bank of America, N.A. and RF Industries, Ltd. (previously filed as an exhibit to the
Company’s Form 8-K, dated March 2, 2022, which exhibit is incorporated herein by reference)
 
 
10.20
Lease by and between RF Industries, Ltd. and Monarch Owner LLC, dated October 19, 2022, together with addenda thereto, for the property at
300 Interpace Parkway, Suite B100, Parsippany, New Jersey 07054 (previously filed as an exhibit to the Company’s Form 8-K, dated October
20, 2022, which exhibit is incorporated herein by reference)
 
 
10.21
Lease by and between RF Industries, Ltd. and Monarch Owner LLC, dated October 19, 2022, together with addenda thereto, for the property at
300 Interpace Parkway, Suite B200, Parsippany, New Jersey 07054 (previously filed as an exhibit to the Company’s Form 8-K, dated October
20, 2022, which exhibit is incorporated herein by reference)
 
 
10.22
First Amendment to Lease, dated October 31, 2022 by and between RF Industries, Ltd. and Sorrento West Properties, Inc. (previously filed as
an exhibit to the Company’s Form 10-K for the year ended October 31, 2022, which exhibit is incorporated herein by reference)
 
 
10.23
Third Amendment to Lease, dated July 11, 2023, by and between Sorrento West Properties, Inc. and RF Industries, Ltd. (previously filed as an
exhibit to the Company’s Form 8-K, dated July 13, 2023, which exhibit is incorporated herein by reference)
 
 
10.24*
Managed Client Agreement, dated June 27, 2023, between RF Industries, Ltd. and RGN-MCA San Diego II, LLC (previously filed as an exhibit
to the Company’s Form 10-K for the year ended October 31, 2023, which exhibit is incorporated herein by reference)
 
 
10.25
Amendment No. 1 and Waiver to Loan Agreement, dated September 12, 2023, between Bank of America, N.A. and RF Industries, Ltd.
(previously filed as an exhibit to the Company’s Form 10-Q for the quarterly period ended July 31, 2023, which exhibit is incorporated herein
by reference)
 
 
10.26
Amendment No. 2 To Loan Agreement, dated January 26, 2024, between Bank of America, N.A. and RF Industries, Ltd. (previously filed as an
exhibit to the Company’s Form 10-K for the year ended October 31, 2024, which exhibit is incorporated herein by reference)
 
 
10.27
Amendment No. 3 to Loan Agreement, dated February 29, 2024, between Bank of America, N.A. and RF Industries, Ltd. (previously filed as an
exhibit to the Company’s Form 8-K, dated March 1, 2024, which exhibit is incorporated herein by reference)
 
 
10.28
Loan and Security Agreement, dated March 15, 2024, by and among RF Industries, Ltd., its subsidiaries, the lenders and Eclipse Business
Capital LLC (previously filed as an exhibit to the Company’s Form 10-Q for the quarterly period ended January 31, 2024, which exhibit is
incorporated herein by reference)
 
 
10.29
First Amendment to Loan and Security Agreement, dated June 14, 2024, by and among RF Industries, Ltd., its subsidiaries, the lenders and
Eclipse Business Capital LLC (previously filed as an exhibit to the Company’s Form 10-Q for the quarterly period ended July 31, 2024, which
exhibit is incorporated herein by reference)
 
10.30#
Amendment No. 1 to RF Industries, Ltd. 2020 Equity Incentive Plan (Amended) (previously filed as an exhibit to the Company’s Registration
Statement on Form S-8, filed on October 24, 2024, which exhibit is incorporated herein by reference)
 
19
Insider Trading Policy
 
 
21.1
List of Subsidiaries
 
 
23.1
Consent of Independent Registered Public Accounting Firm CohnReznick LLP
 
 
31.1
Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
31.2
Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
32.1**
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350
 
 
32.2**
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350
 
 
97
RF Industries, Ltd. Policy for Recovery of Erroneously Awarded Incentive Compensation (previously filed as an exhibit to the Company’s Form
10-K for the year ended October 31, 2023, which exhibit is incorporated herein by reference)
 
40

 
 
EX-101.INS
Inline XBRL Instance Document
 
 
EX-101.SCH
Inline XBRL Taxonomy Extension Schema
 
 
EX-101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase
 
 
EX-101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase
 
 
EX-101.LAB
Inline XBRL Taxonomy Extension Label Linkbase
 
 
EX-101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase
 
 
EX-104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101 attachments)
_________________________________________
#
Indicates a management contract or compensatory plan or arrangement.
*
Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.
**
This certification is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act, or otherwise subject to the liability of that section.
Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent that RF Industries, Ltd. specifically incorporates it by reference.
 
41

 
 
Stockholders of the Company may obtain a copy of any exhibit referenced in this Annual Report on Form 10-K by writing to: Secretary, RF Industries,
Ltd., 16868 Via Del Campo Court, Suite 200, San Diego, CA 92127. The written request must specify the stockholder’s good faith representation that such
stockholder is a stockholder of the Company.
 
ITEM 16.         FORM 10-K SUMMARY
 
We may voluntarily include a summary of information required by Form 10-K under this Item 16. We have elected not to include such summary
information.
 
42

 
 
 
 
 
RF INDUSTRIES, LTD. AND SUBSIDIARIES
 
 
 
Index
 
 
 
Page
 
  
Report of Independent Registered Public Accounting Firm (PCAOB ID 596)
 
F-2
 
  
Consolidated Balance Sheets October 31, 2024 and 2023
 
F-4 – F-5
 
  
Consolidated Statements of Operations Years Ended October 31, 2024 and 2023
 
F-6
 
  
Consolidated Statements of Stockholders’ Equity Years Ended October 31, 2024 and 2023
 
F-7
 
  
Consolidated Statements of Cash Flows Years Ended October 31, 2024 and 2023
 
F-8
 
  
Notes to Consolidated Financial Statements
 
F-9 – F-23
 
*       *       *
 
F-1

 
 
Report of Independent Registered Public Accounting Firm
 
To the Board of Directors and
Stockholders of RF Industries, Ltd.
 
Opinion on the Financial Statements
 
We have audited the accompanying consolidated balance sheets of RF Industries, Ltd. and Subsidiaries (the “Company”) as of October 31, 2024 and 2023,
and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the two years in the period ended October 31, 2024,
and the related consolidated notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements
present fairly, in all material respects, the financial position of the Company as of October 31, 2024 and 2023, and the results of its operations and its cash
flows for each of the years in the two-year period ended October 31, 2024, in conformity with accounting principles generally accepted in the United States
of America.
 
Basis for Opinion
 
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
 
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not
required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an
understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal
control over financial reporting. Accordingly, we express no such opinion.
 
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis
for our opinion.
 
Critical Audit Matters
 
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were
communicated or required to be communicated to the audit committee and that: (1) related to accounts or disclosures that are material to the consolidated
financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not
alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below,
providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
 
 
Evaluation of Goodwill impairment for the Microlab reporting unit (Note 1 to the Consolidated Financial Statements)
 
As disclosed in the consolidated financial statements, the Company has goodwill of $8.1 million as of October 31, 2024, and approximately 69.5% of
goodwill resides in the Microlab reporting unit. At October 31, 2024, the Company performed a quantitative goodwill impairment assessment on its
Microlab reporting unit by comparing the fair value of the reporting unit to its carrying amount, including goodwill. The Company estimated the fair value
of this reporting unit using a combination of a discounted cash flows analysis and market-based valuation methodologies.
 
Significant judgment is exercised by the Company in estimating the fair value of the Microlab reporting unit for purposes of the October 31,2024 goodwill
impairment test, specifically:
 
●
The fair value estimate of each reporting unit is sensitive to assumptions such as the discount rate, revenue and expense growth rates, and the
forecasted cash flow terminal growth rate.
 
●
These assumptions are affected by such factors as expected future market or economic conditions.
 
Given these factors, auditing management’s quantitative impairment tests for goodwill was challenging, subjective, and complex and required a high degree
of auditor judgment.
 
F-2

 
 
How Our Audit Addressed the Critical Audit Matter
 
Our audit procedures related to the fair value of goodwill included the following procedures:
 
●
We gained an understanding of and evaluated the design and implementation of the Company’s internal controls that address the risk of material
misstatement related to goodwill impairment;
 
●
We gained an understanding of the process to estimate future cashflows, including methods, data, and significant assumptions used, in developing
the discounted cashflow analysis as well as tested the reasonableness of the underlying data used by the Company in its forecasts;
 
●
We evaluated management’s significant accounting policies related to impairment of goodwill;
 
●
We evaluated management’s forecasted revenues and cash flows by comparing the forecasts to the underlying business strategies and growth
plans; and
 
●
With the assistance of our firm’s valuation professionals with specialized skills and knowledge in valuation methods and models, we tested the
Company’s discounted cash flow models, including certain assumptions including the terminal value and discount rates.
 
 
/s/ CohnReznick LLP
 
We are uncertain as to the year CohnReznick LLP became the Company’s auditor as 1995 is the earliest year of which we have knowledge.
 
Tysons, Virginia
January 21, 2025
 
F-3

 
 
 
RF INDUSTRIES, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
OCTOBER 31, 2024 AND 2023
(In thousands, except share and per share amounts)
 
 
 
October 31,
   
October 31,
 
 
 
2024
   
2023
 
 
     
       
 
ASSETS
     
       
 
 
     
       
 
CURRENT ASSETS
     
       
 
Cash and cash equivalents
  $
839    $
4,897 
Trade accounts receivable, net of allowance for credit losses of $159 and $244, respectively
   
12,119     
10,277 
Inventories
   
14,725     
18,730 
Other current assets
   
1,430     
2,136 
TOTAL CURRENT ASSETS
   
29,113     
36,040 
 
     
       
 
Property and equipment:
     
       
 
Equipment and tooling
   
4,825     
4,796 
Furniture and office equipment
   
6,300     
5,631 
 
   
11,125     
10,427 
Less accumulated depreciation
   
6,312     
5,503 
Total property and equipment, net
   
4,813     
4,924 
 
     
       
 
Operating lease right-of-use assets, net
   
15,265     
15,689 
Goodwill
   
8,085     
8,085 
Amortizable intangible assets, net
   
11,908     
13,595 
Non-amortizable intangible assets
   
1,174     
1,174 
Deferred tax assets
   
-     
2,494 
Other assets
   
688     
277 
TOTAL ASSETS
  $
71,046    $
82,278 
 
F-4

 
 
RF INDUSTRIES, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
OCTOBER 31, 2024 AND 2023
(In thousands, except share and per share amounts)
 
 
 
October 31,
   
October 31,
 
 
 
2024
   
2023
 
 
     
       
 
LIABILITIES AND STOCKHOLDERS' EQUITY
     
       
 
 
     
       
 
CURRENT LIABILITIES
     
       
 
Accounts payable
  $
3,798    $
3,201 
Accrued expenses
   
4,247     
4,572 
Line of credit
   
8,197     
1,000 
Current portion of Term Loan
   
-     
2,424 
Current portion of operating lease liabilities
   
1,848     
1,314 
TOTAL CURRENT LIABILITIES
   
18,090     
12,511 
 
     
       
 
Operating lease liabilities
   
18,680     
19,284 
Term Loan, net of debt issuance cost
   
-     
10,721 
Deferred tax liabilities
   
210     
- 
TOTAL LIABILITIES
   
36,980     
42,516 
 
     
       
 
COMMITMENTS AND CONTINGENCIES
   
     
 
 
     
       
 
STOCKHOLDERS’ EQUITY
     
       
 
Common stock - authorized 20,000,000 shares of $0.01 par value; 10,544,431 and 10,343,223 shares issued
and outstanding at October 31, 2024 and 2023, respectively
   
106     
104 
Additional paid-in capital
   
26,988     
26,087 
Retained earnings
   
6,972     
13,571 
TOTAL STOCKHOLDERS' EQUITY
   
34,066     
39,762 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  $
71,046    $
82,278 
 
See Notes to Consolidated Financial Statements.
 
F-5

 
 
 
RF INDUSTRIES, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED OCTOBER 31, 2024 AND 2023
(In thousands, except share and per share amounts)
 
 
 
Twelve Months Ended October 31,
 
 
 
2024
   
2023
 
 
     
       
 
Net sales
  $
64,857    $
72,168 
Cost of sales
   
45,986     
52,631 
 
     
       
 
Gross profit
   
18,871     
19,537 
 
     
       
 
Operating expenses:
     
       
 
Engineering
   
2,782     
3,151 
Selling and general
   
18,912     
20,183 
Total operating expenses
   
21,694     
23,334 
 
     
       
 
Operating loss
   
(2,823)    
(3,797)
 
     
       
 
Other expense
   
(980)    
(453)
 
     
       
 
Loss before provision (benefit) for income taxes
   
(3,803)    
(4,250)
Provision (benefit) for income taxes
   
2,796     
(1,172)
 
     
       
 
Consolidated net loss
  $
(6,599)   $
(3,078)
 
     
       
 
Loss per share:
     
       
 
Basic
  $
(0.63)   $
(0.30)
Diluted
  $
(0.63)   $
(0.30)
 
     
       
 
Weighted average shares outstanding:
     
       
 
Basic
   
10,481,835     
10,283,449 
Diluted
   
10,481,835     
10,283,449 
 
See Notes to Consolidated Financial Statements.
 
F-6

 
 
 
RF INDUSTRIES, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
YEARS ENDED OCTOBER 31, 2024 AND 2023
(In thousands, except share amounts)
 
 
   
 
     
 
   
Additional      
 
     
 
 
 
 
Common Stock
   
Paid-In
   
Retained
     
 
 
 
 
Shares
   
Amount
   
Capital
   
Earnings
   
Total
 
Balance, November 1, 2022
   
10,193,287    $
102    $
25,118    $
16,649    $
41,869 
 
   
        
       
       
       
 
Exercise of stock options
   
45,000     
-     
85     
-     
85 
 
     
       
       
       
       
 
Stock-based compensation expense
   
-     
-     
898     
-     
898 
 
     
       
       
       
       
 
Issuance of restricted stock
   
107,424     
2     
(2)    
-     
- 
 
     
       
       
       
       
 
Tax withholding related to vesting of restricted stock
   
(2,488)    
-     
(12)    
-     
(12)
 
     
       
       
       
       
 
Consolidated net loss
   
-     
-     
-     
(3,078)    
(3,078)
 
     
       
       
       
       
 
Balance, October 31, 2023
   
10,343,223     
104     
26,087     
13,571     
39,762 
 
     
       
       
       
       
 
Stock-based compensation expense
   
-     
-     
924     
-     
924 
 
     
       
       
       
       
 
Issuance of restricted stock
   
206,229     
2     
(2)    
-     
- 
 
     
       
       
       
       
 
Tax withholding related to vesting of restricted stock
   
(5,021)    
-     
(21)    
-     
(21)
 
     
       
       
       
       
 
Consolidated net loss
   
-     
-     
-     
(6,599)    
(6,599)
 
     
       
       
       
       
 
Balance, October 31, 2024
   
10,544,431    $
106    $
26,988    $
6,972    $
34,066 
 
See Notes to Consolidated Financial Statements.
 
F-7

 
 
 
RF INDUSTRIES, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED OCTOBER 31, 2024 AND 2023
(In thousands)
 
 
 
Twelve Months Ended October 31,
 
 
 
2024
   
2023
 
OPERATING ACTIVITIES:
     
       
 
Consolidated net loss
  $
(6,599)   $
(3,078)
 
     
       
 
Adjustments to reconcile consolidated net loss to net cash provided by operating activities:
     
       
 
Bad debt expense
   
5     
102 
Depreciation and amortization
   
2,536     
2,433 
Stock-based compensation expense
   
924     
898 
Amortization of debt issuance cost
   
113     
9 
Tax payments related to shares cancelled for vested restricted stock awards
   
(21)    
(12)
Deferred income taxes
   
2,703     
(677)
Extinguishment of debt issuance cost
   
14     
- 
Changes in operating assets and liabilities:
     
       
 
Trade accounts receivable
   
(1,847)    
4,433 
Inventories
   
4,005     
2,323 
Other current assets
   
706     
3,713 
Right-of-use assets
   
355     
1,477 
Other long-term assets
   
(1)    
18 
Accounts payable
   
597     
(2,451)
Accrued expenses
   
(325)    
(4,244)
Income taxes payable
   
-     
(759)
Net cash provided by operating activities
   
3,165     
4,185 
 
     
       
 
INVESTING ACTIVITIES:
     
       
 
Capital expenditures
   
(738)    
(2,483)
Net cash used in investing activities
   
(738)    
(2,483)
 
     
       
 
FINANCING ACTIVITIES:
     
       
 
Proceeds from exercise of stock options
   
-     
87 
Debt issuance cost
   
(520)    
- 
Line of credit payments
   
(44,256)    
(1,000)
Line of credit draws
   
51,453     
2,000 
Term Loan payments
   
(13,162)    
(2,424)
Net cash used in financiing activities
   
(6,485)    
(1,337)
 
     
       
 
Net decrease in cash and cash equivalents
   
(4,058)    
365 
 
     
       
 
Cash and cash equivalents, beginning of period
   
4,897     
4,532 
 
     
       
 
Cash and cash equivalents, end of period
  $
839    $
4,897 
 
     
       
 
Supplemental cash flow information – income taxes paid
  $
64    $
642 
 
   
      
  
Supplemental cash flow information – interest paid
  $
883    $
529 
 
See Notes to Consolidated Financial Statements.
 
F-8

 
 
RF INDUSTRIES, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
Note 1 – Business activities and summary of significant accounting policies
 
Business activities
 
RF Industries, Ltd., together with its six wholly-owned subsidiaries (collectively, hereinafter the “Company”, ”we”, “us”, or “our”), primarily
engages in the design, manufacture, and marketing of interconnect products and systems, including coaxial and specialty cables, fiber optic cables and
connectors, and electrical and electronic specialty cables. For internal operating and reporting purposes, and for marketing purposes, as of the end of the
fiscal year ended October 31, 2024, we classified our operations into the following six divisions/subsidiaries: (i) The RF Connector and Cable Assembly
division designs, manufactures and distributes coaxial connectors and cable assemblies that are integrated with coaxial connectors; (ii) Cables Unlimited,
Inc., the subsidiary that manufactures custom and standard cable assemblies, complex hybrid fiber optic power solution cables, adapters, and
electromechanical wiring harnesses for communication, computer, LAN, automotive and medical equipment; (iii) Rel-Tech Electronics, Inc., the subsidiary
that designs and manufacturers cable assemblies and wiring harnesses for blue chip industrial, oilfield, instrumentation and military customers; (iv) C
Enterprises, Inc., the subsidiary that designs and manufactures quality connectivity solutions to telecommunications and data communications distributors;
(v) Schroff Technologies International, Ltd., the subsidiary that manufactures and markets intelligent thermal control systems used by telecommunications
companies across the U.S. and Canada, and shrouds for small cell integration and installation, and (vi) Microlab, the subsidiary that designs and
manufactures high-performance RF and Microwave products enabling signal distribution and deployment of in-building DAS (distributed antenna
systems), wireless base stations and small cell networks. The Cables Unlimited and C Enterprises divisions are Corning Cables Systems CAH
ConnectionsSM Gold Program members that are authorized to manufacture fiber optic cable assemblies that are backed by Corning Cables Systems’
extended warranty.
 
Use of estimates 
 
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America
(“GAAP”) requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results may differ from
those estimates.
 
Principles of consolidation
 
The accompanying consolidated financial statements include the accounts of RF Industries, Ltd., Cables Unlimited, Inc. (“Cables Unlimited”),
Rel-Tech Electronics, Inc. (“Rel-Tech”), C Enterprises, Inc. (“C Enterprises”), Schroff Technologies International, Ltd. (“Schrofftech”), and Microlab/FXR
LLC (“Microlab”), wholly-owned subsidiaries of RF Industries, Ltd. All intercompany balances and transactions have been eliminated in consolidation.
 
Cash equivalents
 
The Company considers all highly-liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
 
F-9

 
 
Revenue recognition
 
On November 1, 2018, we adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606),
(“ASC 606”) applying the modified retrospective method. The core principle of ASC 606 is that revenue should be recorded in an amount that reflects the
consideration to which we expect to be entitled in exchange for goods or services promised to customers. Under ASC 606, we follow a five-step model to:
(1) identify the contract with our customer; (2) identify our performance obligations in our contract; (3) determine the transaction price for our contract; (4)
allocate the transaction price to our performance obligations; and (5) recognize revenue when (or as) each performance obligation is satisfied. In
accordance with this accounting principle, we recognize revenue using the output method at a point in time when finished goods have been transferred to
the customer and there are no other obligations to customers after the title of the goods have transferred. Title of goods are transferred based on shipping
terms for each customer – for shipments with terms of FOB Shipping Point, title is transferred upon shipment; for shipments with terms of FOB
Destination, title is transferred upon delivery.
 
Inventories
 
Inventories are stated at the lower of cost or net realizable value, with cost determined using the weighted average cost of accounting. Cost
includes materials, labor, and manufacturing overhead related to the purchase and production of inventories. We regularly review inventory quantities on
hand, future purchase commitments with our suppliers, and the estimated utility of our inventory. If our review indicates a reduction in utility below
carrying value due to damage, physical deterioration, obsolescence, changes in price levels, or other causes, we reduce our inventory to a new cost basis
through a charge to cost of sales in the period in which it occurs. The determination of market value and the estimated volume of demand used in the lower
of cost or market analysis requires significant judgment.
 
Property and equipment
 
Equipment, tooling and furniture are recorded at cost and depreciated over their estimated useful lives (generally three to five years) using the
straight-line method. Expenditures for repairs and maintenance are charged to operations in the period incurred.
 
Goodwill
 
Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible and intangible
assets acquired. Goodwill is not amortized, but is subject to impairment analysis at least once annually, which we perform in October, or more frequently
upon the occurrence of an event or when circumstances indicate that a reporting unit’s carrying amount is greater than its fair value.
 
We assess whether a goodwill impairment exists using both qualitative and quantitative assessments at the reporting level. Our qualitative
assessment involves determining whether events or circumstances exist that indicate it is more likely than not that the fair value of a reporting unit is less
than its carrying amount, including goodwill. If based on this qualitative assessment we determine it is not more likely than not that the fair value of a
reporting unit is less than its carrying amount, we will not perform a quantitative assessment.
 
Under the quantitative assessment, the goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying
amount. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss should be recognized in an amount equal to that excess, limited
to the total amount of goodwill allocated to that reporting unit.
 
We test our goodwill, trademarks and other indefinite-lived assets for impairment at least annually or more frequently if events or changes in
circumstances indicate these assets may be impaired. These events or circumstances require significant judgment and could include a significant change in
the business climate, legal factors, operating performance indicators, competition and sale or disposition of all or a portion of a division. This analysis
requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of
growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital.
 
As of October 31, 2024 and 2023, we performed a quantitative impairment test analysis for the Microlab reporting unit.
 
No goodwill impairment was recorded in the years ended October 31, 2024 and 2023.
 
Goodwill by reporting unit and reportable segment as of October 31, 2024 and 2023, is as follows:
Reporting Unit
 
Reportable Segment
 
Amount
 
Cables Unlimited
 
Custom Cabling
  $
382,685 
Rel-Tech
 
Custom Cabling
   
832,556 
Schrofftech
 
Custom Cabling
   
1,127,189 
RF Connector and Cable Assembly
 
RF Connector
   
125,000 
Microlab
 
RF Connector
   
5,617,139 
 
 
 
  $
8,084,569 
 
F-10

 
 
Long-lived assets
 
We assess property, plant and equipment and intangible assets, which are considered definite-lived assets, for impairment. Definite-lived assets are
reviewed when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We measure
recoverability of these assets by comparing the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If property and
equipment and intangible assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset
exceeds its fair market value.
 
We amortize our intangible assets with definite useful lives over their estimated useful lives and review these assets for impairment whenever
there are impairment indicators.
 
We test our goodwill, trademarks and other indefinite-lived assets for impairment at least annually or more frequently if events or changes in
circumstances indicate these assets may be impaired. These events or circumstances require significant judgment and could include a significant change in
the business climate, legal factors, operating performance indicators, competition and sale or disposition of all or a portion of a division. This analysis
requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of
growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital.
 
As of October 31, 2024 and as of April 30, 2024, we performed an impairment test analysis for the Microlab goodwill reporting unit, as of
October 31, 2023, we performed an impairment test analysis for the Microlab reporting unit and as of July 31, 2023, we performed an impairment test
analysis for the Schrofftech reporting unit. As noted above, we test our goodwill, trademarks, and indefinite-lived intangible assets for impairment at least
annually, which we have traditionally done in the fourth quarter, or on an interim basis when events or changes in circumstances suggest these assets may
be impaired. Impairment is measured as the excess of the carrying value of the goodwill or indefinite-lived intangible asset over its fair value.
 
Impairment may result from a number of factors, including performance deterioration, negative cash flows from operations and/or changes in
anticipated future cash flows, changes in business plans, adverse economic or market conditions, or other factors beyond our control. The amount of any
impairment must be expensed as a charge to operations. Microlab’s operating results were below forecast for the fiscal year ended October 31, 2024 and the
three and six-months ended April 30, 2024 triggered an impairment analysis. Microlab’s operating results were below forecast for the fiscal year ended
October 31, 2023 and, Schrofftech’s operating results were below forecast for the three and nine-month ended July 31, 2023 triggered impairment
analyses. 
 
As of October 31, 2024, Microlab has a carrying value of $19.8 million, which includes $5.6 million in goodwill and $10.3 million in net
amortizable intangible assets. The analyses performed included a blend of the income approach (discounted cash flow method) and market approach
(guideline public company method) to reach an estimate of Microlab reporting unit fair value of $21.6 which is in excess of the reporting unit's carrying
amount.
 
The analyses performed in blending the income approach and the market approach incorporates several significant judgments and assumptions
about projected revenue and expenses growth, future operating margins, discount rates and the selection of guideline public companies. There are inherent
uncertainties related to these assumptions and our judgment in applying them to the impairment analysis. Changes in certain events or circumstances could
result in changes to our estimated fair values, and may result in future write-downs to the carrying values of these assets. Impairment charges could
adversely affect our financial results, financial ratios and could limit our ability to obtain financing in the future.
 
No impairment was recorded for the years ended October 31, 2024 or 2023.
 
Fair value measurement
 
We measure at fair value certain financial assets and liabilities. Fair value is defined as the price that would be received to sell an asset or transfer
a liability in an orderly transaction between market participants at the measurement date. GAAP specifies a hierarchy of valuation techniques based on
whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources,
while unobservable inputs reflect our market assumptions. These two types of inputs have created the following fair-value hierarchy:
 
Level 1— Quoted prices for identical instruments in active markets;
 
Level 2— Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and
model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and
 
Level 3— Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
 
As of October 31, 2024 and 2023, the carrying amounts reflected in the accompanying consolidated balance sheets for cash and cash equivalents,
accounts receivable, and accounts payable approximated their carrying value due to their short-term nature.
 
F-11

 
 
Intangible assets
 
Intangible assets consist of the following as of October 31, 2024 and 2023 (in thousands): 
 
 
 
2024
   
2023
 
Amortizable intangible assets:
     
       
 
Non-compete agreement (estimated life five years)
  $
423    $
423 
Accumulated amortization
   
(423)    
(378)
 
   
-     
45 
 
     
       
 
Customer relationships (estimated lives 7 - 15 years)
   
6,058     
6,058 
Accumulated amortization
   
(3,848)    
(3,461)
 
   
2,210     
2,597 
 
     
       
 
Backlog (estimated life one - two years)
   
327     
327 
Accumulated amortization
   
(327)    
(327)
 
   
-     
- 
 
     
       
 
Patents (estimated life 10 - 14 years)
   
368     
368 
Accumulated amortization
   
(208)    
(176)
 
   
160     
192 
 
     
       
 
Tradename (estimated life 15 years)
   
1,700     
1,700 
Accumulated amortization
   
(302)    
(189)
 
   
1,398     
1,511 
 
     
       
 
Proprietary technology (estimated life 10 years)
   
11,100     
11,100 
Accumulated amortization
   
(2,960)    
(1,850)
 
   
8,140     
9,250 
 
     
       
 
Totals
  $
11,908    $
13,595 
 
     
       
 
Non-amortizable intangible assets:
     
       
 
Trademarks
  $
1,174    $
1,174 
 
Amortization expense was $1,688,000 and $1,701,000 for the years ended October 31, 2024 and 2023, respectively. The weighted-average
amortization period for the amortizable intangible assets is 7.62 years.
 
There was no impairment to trademarks for the years ended October 31, 2024 and 2023.
 
Estimated amortization expense related to finite-lived intangible assets is as follows (in thousands):
 
Year ending
     
 
October 31,
 
Amount
 
2025
  $
1,643 
2026
   
1,643 
2027
   
1,643 
2028
   
1,643 
2029
   
1,639 
Thereafter
   
3,697 
Total
  $
11,908 
 
F-12

 
 
Advertising
 
We expense the cost of advertising and promotions as incurred. Advertising costs charged to operations were approximately $361,000 and $76,000
in 2024 and 2023, respectively.
 
Research and development
 
Research and development costs are expensed as incurred. Our research and development expenses relate to engineering activities, which consist
of the design and development of new products for specific customers, as well as the design and engineering of new or redesigned products for the industry
in general. During the years ended October 31, 2024 and 2023, we recognized $2,782,000 and $3,151,000 in engineering expenses, respectively.
 
Income taxes
 
We account for income taxes under the asset and liability method, based on the income tax laws and rates in the jurisdictions in which operations
are conducted and income is earned. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts and the tax bases of assets and liabilities. Developing the provision (benefit) for income taxes requires
significant judgment and expertise in federal, international and state income tax laws, regulations and strategies, including the determination of deferred tax
assets and liabilities and, if necessary, any valuation allowances that may be required for deferred tax assets. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to be realized. Management’s judgments and tax strategies are subject to audit by various
taxing authorities.
 
We have adopted the provisions of ASC 740-10, which clarifies the accounting for uncertain tax positions. ASC 740-10 requires that we recognize
the benefit of tax positions taken or expected to be taken in its tax returns in the consolidated financial statements when it is more likely than not that the
position will be sustained upon examination by authorities. We recognize interest and penalties related to certain uncertain tax positions as a component of
income tax expense and the accrued interest and penalties are included in deferred and income taxes payable in our consolidated balance sheets. See Note 7
to the consolidated financial statements included in this report for more information on the Company’s accounting for uncertain tax positions.
 
Stock options
 
For stock option grants to employees, we recognize compensation expense based on the estimated fair value of the options at the date of grant.
Stock-based employee compensation expense is recognized on a straight-line basis over the requisite service period. We issue previously unissued common
shares upon the exercise of stock options.
 
For the fiscal years ended October 31, 2024 and 2023, charges related to stock-based compensation amounted to approximately $924,000 and
$898,000, respectively, and is classified in selling and general expense.
 
Earnings per share
 
Basic earnings per share is calculated by dividing net (loss) income applicable to common stockholders by the weighted average number of
common shares outstanding during the period. The calculation of diluted earnings per share is similar to that of basic earnings per share, except that the
denominator is increased to include the number of additional common shares that would have been outstanding if all potentially dilutive common shares,
principally those issuable upon the exercise of stock options, were issued and the treasury stock method had been applied during the period. The greatest
number of shares potentially issuable upon the exercise of stock options in any period for the years ended October 31, 2024 and 2023, that were not
included in the computation because they were anti-dilutive, totaled 874,816 and 811,135, respectively.
 
F-13

 
 
The following table summarizes the computation of basic and diluted earnings per share:
 
 
 
2024
   
2023
 
Numerators:
     
       
 
Consolidated net loss (A)
  $
(6,599,000)   $
(3,078,000)
 
     
       
 
Denominators:
     
       
 
Weighted average shares outstanding for basic earnings per share (B)
   
10,481,835     
10,283,449 
Add effects of potentially dilutive securities - assumed exercise of stock options
   
-     
- 
 
     
       
 
Weighted average shares outstanding for diluted earnings per share (C)
   
10,481,835     
10,283,449 
 
     
       
 
Basic loss per share (A)/(B)
  $
(0.63)   $
(0.30)
 
     
       
 
Diluted loss per share (A)/(C)
  $
(0.63)   $
(0.30)
 
Recent accounting standards
 
Recently issued accounting pronouncements adopted:
 
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-13, Financial Instruments
—Credit Losses, which requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount
expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to
present the net carrying value at the amount expected to be collected on the financial asset. The guidance is effective for fiscal years beginning after
December 15, 2019. In November 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), which pushes back the
effective date for public business entities that are smaller reporting companies, as defined by the SEC, to fiscal years beginning after December 15, 2022.
The guidance was effective for the Company beginning on November 1, 2023 and the adoption of this standard had no material impact on the Company’s
condensed consolidated financial statements or related disclosures.
 
Recently issued accounting pronouncements not yet adopted:
 
In November 2023, the FASB issued 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.
ASU 2023-07 is effective for our fiscal year ending October 31, 2025, and for interim periods within our fiscal year ending October 31, 2026, with early
adoption permitted. We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures.
 
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to expand the disclosure
requirements for income taxes, specifically related to the effective tax rate reconciliation and income taxes paid. ASU 2023-09 is effective for our fiscal
year ending October 31, 2026, with early adoption permitted. We are currently evaluating the potential effect that the updated standard will have on our
financial statement disclosures.
 
Note 2 – Concentrations of credit risk
 
Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents and accounts
receivable. We maintain our cash and cash equivalents with high-credit quality financial institutions. At October 31, 2024, we had cash and cash equivalent
balances in excess of federally insured limits in the amount of approximately $668,000.
 
Sales from each customer that were 10% or greater of net sales were as follows:
 
 
 
October 31,
 
 
 
2024
   
2023
 
Wireless provider
   
*     
10%
Distributor A
   
*     
10%
 
* Less than 10%
 
For the year ended October 31, 2024, a wireless carrier customer and a distributor customer both accounted for less than 10% of total sales, and
approximately 15% and 10% of the total net accounts receivable balance, respectively. For the year ended October 31, 2023, a different wireless carrier
customer accounted for approximately 10% of total sales and had no accounts receivable. The same distributor customer accounted for less than 10% of
sales and approximately 10% of total net accounts receivable, while another distributor customer accounted for approximately 10% of total sales and for
11% of the total net accounts receivable balance. Although the distributors have been on-going major customers of the Company and the wireless carrier is
a newer customer to the Company, the written agreements with these customers do not have any minimum purchase obligations and they could stop buying
our products at any time and for any reason. A reduction, delay, or cancellation of orders from these customers or the loss of these customers could
significantly reduce our future revenues and profits.
 
F-14

 
  
 
Note 3 – Inventories and major vendors
 
Inventories, consisting of materials, labor and manufacturing overhead, are stated at the lower of cost or net realizable value. Cost has been
determined using the weighted average cost method.  Inventories consist of the following (in thousands): 
 
 
 
2024
   
2023
 
 
     
       
 
Raw materials and supplies
  $
10,886    $
12,957 
Work in process
   
530     
439 
Finished goods
   
3,309     
5,334 
 
     
       
 
Totals
  $
14,725    $
18,730 
 
No vendors accounted for 10% of inventory purchases during the fiscal year ended October 31, 2024, and one vendor accounted for 15% of
inventory purchases for the fiscal year ended October 31, 2023. We have arrangements with our vendors to purchase products based on purchase orders that
we periodically issue.
 
 
Note 4 – Other current assets
 
Other current assets consist of the following (in thousands): 
 
 
 
2024
   
2023
 
 
     
       
 
Prepaid taxes
  $
262    $
642 
Prepaid expense
   
699     
953 
Deposits
   
329     
374 
Other
   
140     
167 
 
     
       
 
Totals
  $
1,430    $
2,136 
 
 
 
Note 5 – Accrued expenses and other long-term liabilities
 
Accrued expenses consist of the following (in thousands):
 
 
 
2024
   
2023
 
 
     
       
 
Wages payable
  $
2,357    $
2,461 
Accrued receipts
   
762     
1,131 
Other accrued expenses
   
1,128     
980 
 
     
       
 
Totals
  $
4,247    $
4,572 
 
Accrued receipts represent purchased inventory for which invoices have not been received.
 
F-15

 
  
 
Note 6 – Segment information
 
We aggregate operating divisions into two reporting segments that have similar economic characteristics primarily in the following areas: (1) the
nature of the product and services; (2) the nature of the production process; (3) the type or class of customer for their products and services; (4) the methods
used to distribute their products or services; and (5) if applicable, the nature of the regulatory environment. Based upon this evaluation, as of October 31,
2024, 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 for purposes of management and resource allocation, C Enterprises has now been
included in the RF Connector segment.  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 2022 for
comparative purposes. Prior to the transition, C Enterprises was included in the Custom Cabling segment.
 
The RF Connector segment consists of three divisions and the Custom Cabling segment consists of three divisions. While each segment has
similar products and services, there was little overlapping of these services to their customer base. The biggest difference in our reporting segments is in the
channels of sales: sales or product and services for the RF Connector segment were primarily through the distribution channel, while the Custom Cabling
segment sales were through a combination of distribution and direct to the end customer.
 
Management identifies segments based on strategic business units that are, in turn, based along market lines. These strategic business units offer
products and services to different markets in accordance with their customer base and product usage. For segment reporting purposes, the RF Connector, C
Enterprises and Microlab divisions constitutes the RF Connector segment, and the Cables Unlimited, Rel-Tech, and Schrofftech divisions constitute the
Custom Cabling segment.
 
As reviewed by our chief operating decision maker, we evaluate the performance of each reporting segment based on income or loss before
income taxes. We charge depreciation and amortization directly to each division within the segment. Accounts receivable, inventory, property and
equipment, right-of-use assets, goodwill and intangible assets are the only assets identified by segment. Except as discussed above, the accounting policies
for segment reporting are the same for the Company as a whole.
 
All of our operations are conducted in the United States; however, we derive a portion of our revenue from export sales. We attribute sales to
geographic areas based on the location of the customers. The following table presents the sales by geographic area for the years ended October 31, 2024
and 2023 (in thousands):
 
 
 
2024
   
2023
 
 
     
       
 
United States
  $
58,843    $
65,781 
Foreign Countries:
     
       
 
Canada
   
3,825     
2,183 
Italy
   
248     
1,802 
China
   
531     
310 
United Kingdom
   
523     
393 
All Other
   
887     
1,699 
 
   
6,014     
6,387 
 
     
       
 
Totals
  $
64,857    $
72,168 
 
F-16

 
 
Net sales, income (loss) before provision (benefit) for income taxes and other related segment information for the years ended October 31, 2024
and 2023 are as follows (in thousands): 
 
 
  RF Connector   
Custom
Cabling
     
 
 
   
 
 
 
 
and
   
Manufacturing
and
     
 
 
   
 
 
2024
 
Cable
Assembly
   
Assembly
   
Corporate
 
 
Total
 
Net sales
  $
37,871    $
26,986    $
- 
  $
64,857 
(Loss) income before provision (benefit) from income taxes
   
(3,720)    
1,097     
(1,180
)
(1)   
(3,803)
Depreciation and amortization
   
2,132     
404     
- 
   
2,536 
Total assets
   
47,537     
20,552     
2,957 
   
71,046 
Expenditures for Segment Assets
   
704     
34     
- 
   
738 
 
     
       
       
 
     
 
2023
     
       
       
 
     
 
Net sales
  $
45,941    $
26,227    $
- 
  $
72,168 
Loss before benefit from income taxes
   
(1,463)    
(1,479)    
(1,307
)
(1)   
(4,250)
Depreciation and amortization
   
1,932     
501     
- 
   
2,433 
Total assets
   
55,466     
17,009     
9,803 
   
82,278 
Expenditures for Segment Assets
   
2,396     
87     
- 
   
2,483 
 
 
(1) Corporate charges are primarily interest expense and non-cash and other one-time expense
 
Note 7 – Income tax provision (benefit)
 
The provision (benefit) for income taxes for the fiscal years ended October 31, 2024 and 2023 consists of the following (in thousands):
 
 
 
2024
   
2023
 
Current:
     
       
 
Federal
  $
-    $
(501)
State
   
93     
6 
 
   
93     
(495)
 
     
       
 
Deferred:
     
       
 
Federal
   
1,942     
(438)
State
   
761     
(239)
 
   
2,703     
(677)
 
     
       
 
 
  $
2,796    $
(1,172)
 
Income tax at the federal statutory rate is reconciled to our actual net provision (benefit) for income taxes as follows (in thousands, except
percentages):
 
 
 
2024
   
2023
 
 
   
 
   
% of Pretax      
 
   
% of Pretax  
 
 
Amount
   
Loss
   
Amount
   
Income
 
 
     
       
       
       
 
U.S. federal statutory tax rate
  $
(799)    
21.0%  $
(893)    
21.0%
State and local taxes, net of federal tax benefit
   
(170)    
4.5%   
(212)    
5.0%
Permanent differences
   
14     
-0.4%   
15     
-0.4%
Stock options
   
45     
-1.2%   
88     
-2.1%
R&D credits
   
(102)    
2.7%   
(238)    
5.6%
Uncertain tax position reserves
   
3     
-0.1%   
13     
-0.3%
Return-to-provision adjustments
   
(34)    
0.9%   
(69)    
1.6%
Change in the valuation allowance on deferred tax assets
   
3,839     
-100.9%   
124     
-2.9%
Income tax expense
  $
2,796     
-73.5%  $
(1,172)    
27.5%
 
F-17

 
 
The significant components of deferred income taxes were as follows (in thousands):
 
 
 
2024
   
2023
 
 
     
       
 
Deferred Tax Assets:
     
       
 
Allowance for obsolete and slow moving inventory
  $
522    $
434 
Allowance for credit losses
   
39     
63 
Compensation accruals
   
264     
275 
Stock-based compensation awards
   
328     
213 
Uniform capitalization
   
277     
208 
Lease liability
   
5,221     
5,177 
Others
   
55     
94 
Capitalized Section 174 Costs
   
1,209     
864 
Research and development tax credit
   
282     
128 
163(j) interest carryforward
   
347     
118 
Gross deferred tax assets
   
8,544     
7,574 
Valuation allowance
   
(3,962)   
(124)
Total deferred tax assets
   
4,582     
7,450 
 
     
       
 
Deferred Tax Liabilities:
     
       
 
Amortization / intangible assets
   
(172)   
(192)
ROU assets
   
(3,880)   
(3,942)
Depreciation / equipment and furnishings
   
(740)   
(822)
Gross deferred tax liabilities
   
(4,792)   
(4,956)
Net deferred tax asset/(liabilities)
  $
(210)  $
2,494 
 
Deferred income tax assets and liabilities are recorded for differences between the financial statement and tax basis of the assets and liabilities that
will result in taxable or deductible amounts in the future based on enacted laws and rates applicable to the periods in which the differences are expected to
affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. 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 October 31, 2024. 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 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 recorded a partial valuation allowance of $3.8 million against
its federal and combined state deferred tax assets as of October 31, 2024. The change in valuation allowance was $3.8 million and $0.1 million for fiscal
2024 and 2023, respectively.
 
At October 31, 2024, the Company has gross state net operating loss (NOL) carryforwards of $0.6 million. The state NOL carryforwards of $0.6
million will begin to expire in 2029 unless previously utilized. At October 31, 2024, the Company also has IRC 163(j) interest carryforwards of $1.5
million, which will carry forward indefinitely. At October 31, 2024, the Company also has US federal and state research and development credit
carryforwards of $0.1 million and $0.3 million, respectively. The federal credit carryforwards will begin to expire in 2044 unless previously utilized. The
state credit carryforwards of $0.2 million will begin to expire in 2029 unless previously utilized and the remainder will carry forward indefinitely.
 
The provision (benefit) for income taxes was $2.8 million or (73.5%) and ($1.2 million) or 27.5% of income before income taxes for fiscal 2024
and 2023, respectively. The fiscal 2024 effective tax rate differed from the statutory federal rate of 21% primarily as a result of the tax benefit from
research and development tax credits, the change in valuation allowance for deferred tax assets and state taxes as shown in the effective tax rate
reconciliation table above.
 
The Company recognizes the benefit of tax positions taken or expected to be taken in its tax returns in the consolidated financial statements when
it is more likely than not that the position will be sustained upon examination by authorities. Recognized tax positions are measured at the largest amount of
benefit that is greater than 50% likely of being realized upon settlement.         
 
F-18

 
 
A reconciliation of the beginning and ending balance to total uncertain tax positions in fiscal years ended October 31, 2024 and 2023 are as
follows:
 
 
 
2024
   
2023
 
Balance, at beginning of year
  $
178    $
121 
Increase for tax positions related to the current year
   
47     
78 
Increase (decrease) for tax positions related to prior years
   
(10)   
2 
Statute of limitations expirations
   
(29)   
(23)
Balance, at end of year
  $
186    $
178 
 
We had gross unrecognized tax benefits of $186,000 and $178,000 attributable to U.S. federal and state research tax credits as of October 31, 2024
and 2023, respectively. During fiscal 2024, the increase in our gross unrecognized tax benefit was primarily related to increased federal and state research
tax credits being generated. The uncertain tax benefit of $81,000 is recorded as a reduction to deferred tax assets and the remainder is recorded in income
taxes payable in our consolidated balance sheet and if recognized in the future would impact our effective tax rate. We recognize interest and penalties
related to uncertain tax positions in income tax expense. We recognized expense of approximately $28,000 and $20,000 during the years ended October 31,
2024 and 2023, respectively. We believe that an adequate provision has been made for any adjustments that may result from tax examinations. However, it
is possible that certain changes may occur within the next twelve months, but we do not anticipate that our accrual for uncertain tax positions will change
by a material amount over the next twelve-month period.
 
We are subject to taxation in the United States and state jurisdictions. Our tax years for October 31, 2021 and forward are subject to examination
by the United States and October 31, 2020 and forward with state tax authorities.
 
 
Note 8 – Stock options
 
Incentive and non-qualified stock option plans
 
On July 22, 2020, the Company’s Board of Directors adopted the 2020 Equity Incentive Plan (the “2020 Plan”). In September 2020, the
Company’s stockholders approved the 2020 Plan by vote as required by NASDAQ. An aggregate of 1,250,000 shares of common stock was set aside and
reserved for issuance under the 2020 Plan. At its annual meeting held on September 5, 2024, the Company’s stockholders approved an amendment to the
2020 Plan to increase the number of shares of common stock available for issuance under the plan by 1,000,000 shares. As of October 31, 2024, 1,299,269
shares of common stock were remaining for future grants of stock options under the 2020 Plan.
 
Additional disclosures related to stock option plans  
 
On January 11, 2023, we granted a total of 54,092 shares of restricted stock and 108,181 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 10, 2024 and (ii) the remaining restricted shares and options shall vest in 12 equal quarterly installments over the next three years.
Also on January 11, 2023, we granted another manager 50,000 incentive stock options. As of October 31, 2023, the 50,000 incentive stock options granted
to manager were cancelled and forfeited as the manager was no longer employed. All incentive stock options expire 10 years from the date of grant.
 
On August 29, 2023, we granted one employee 10,000 incentive stock options. These options vested with respect to 2,500 shares on the date of
grant, and the remaining shares vests in equal installments thereafter on each of the next three anniversaries of August 29, 2023. The options expire 10
years from the date of grant.
 
On January 11, 2024, we granted incentive stock options to Mr. Dawson for the purchase of 116,667 shares, Mr. Yin for the purchase of 41,667
shares, and Mr. Bibisi for the purchase of 41,667 shares. The incentive stock options vest over four years as follows: (i) one-quarter of the options shall vest
on January 11, 2025 and (ii) the remaining options shall vest in 12 equal quarterly installments over the next three years. All incentive stock options expire
10 years from the date of grant. No other options were granted to the named executive officers during the year ended October 31, 2024.
 
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 options shall vest on April 16, 2025 and (ii) the remaining 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 fiscal 2024.
 
The fair value of each option granted in 2024 and 2023 was estimated on the grant date using the Black-Scholes option pricing model with the
following assumptions:
 
 
 
2024
   
2023
 
Weighted average volatility
   
53.16%   
54.27%
Expected dividends
   
0.00%   
0.00%
Expected term (in years)
   
7.0     
7.0 
Risk-free interest rate
   
4.00%   
3.78%
Weighted average fair value of options granted during the year
  $
1.76    $
3.15 
Weighted average fair value of options vested during the year
  $
2.88    $
2.80 
 
F-19

 
 
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 2024 and 2023 option grants. The expected life represents the period of time that options granted are expected to be outstanding. The risk-free
rate is based on the U.S. Treasury rate with a maturity date corresponding to the options’ expected life. The dividend yield is based upon the historical
dividend yield on the Company’s common stock.
 
Additional information regarding all of our outstanding stock options at October 31, 2024 and 2023 and changes in outstanding stock options in
2024 and 2023 follows:
 
 
 
2024
   
2023
 
 
 
Shares or
   
Weighted
   
Shares or
   
Weighted
 
 
 
Price Per
   
Average
   
Price Per
   
Average
 
 
 
Share
    Exercise Price   
Share
    Exercise Price 
Outstanding at beginning of year
   
754,186    $
6.04     
691,005    $
5.87 
Options granted
   
245,001    $
3.01     
168,181    $
5.36 
Options exercised
   
-    $
-     
(45,000)   $
1.90 
Options canceled or expired
   
(124,371)   $
6.42     
(60,000)   $
5.33 
Options outstanding at end of year
   
874,816    $
5.10     
754,186    $
6.04 
 
     
       
       
       
 
Options exercisable at end of year
   
478,986    $
5.95     
479,588    $
6.10 
 
     
       
       
       
 
Options vested and expected to vest at end of year
   
874,816    $
5.10     
748,358    $
6.13 
 
     
       
       
       
 
Option price range at end of year
 
  $1.90
- $8.69     
       $1.90
- $8.69     
  
 
     
       
       
       
 
Aggregate intrinsic value of options exercised during year
  $
-       
    $
144,005       
 
 
Weighted average remaining contractual life of options outstanding as of October 31, 2024: 6.42 years
 
Weighted average remaining contractual life of options exercisable as of October 31, 2024: 4.91 years
 
Weighted average remaining contractual life of options vested and expected to vest as of October 31, 2024: 6.42 years
 
Aggregate intrinsic value of options outstanding at October 31, 2024: $73,000
 
Aggregate intrinsic value of options exercisable at October 31, 2024: $50,000
 
Aggregate intrinsic value of options vested and expected to vest at October 31, 2024: $73,000
 
As of October 31, 2024, $904,000 and $704,000 of expense 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 1.2 and 1.1 years, respectively.
 
F-20

 
 
 
Note 9 – Retirement plan
 
We have a 401(k) plan available to our employees. For the years ended October 31, 2024 and 2023, we contributed and recognized as an expense
of $533,000 and $567,000, respectively, which amounts represented 3% of eligible employee earnings under the Company’s Safe Harbor Non-elective
Employer Contribution Plan.
 
 
Note 10 – Term Loan and Line of credit
 
In February 2022, we entered into a loan agreement (the “BofA Loan Agreement”) providing for a revolving line of credit (the “BofA Revolving
Credit Facility”) in the amount of $3.0 million and a $17.0 million term loan (“BofA Term Loan”, and together with the BofA Revolving Credit Facility,
the “BofA Credit Facility”) with Bank of America, N.A. (“BofA”). Amounts outstanding under the BofA Revolving Credit Facility bore interest at a rate of
2.0% plus the Bloomberg Short-Term Bank Yield Index Rate. All amounts outstanding pursuant to the BofA Credit Facility were repaid by us and the
BofA Loan Agreement was terminated in connection with us entering into a new loan and security agreement (the “EBC Credit Agreement”) with Eclipse
Business Capital, as administrative agent (“EBC”) on March 15, 2024. Borrowings under the BofA Credit Facility were secured by a security interest in
certain assets of the Company and were subject to certain loan covenants. The BofA Credit Facility required the maintenance of certain financial covenants,
including: (i) consolidated debt to EBITDA ratio not to exceed 3.00 to 1.00 (the “Debt Test”); (ii) consolidated fixed charge coverage ratio of at least 1.25
to 1.00 (the “FCCR Test”); and (iii) consolidated minimum EBITDA of at least $600,000 for the discrete quarter ended January 31, 2022. In addition, the
BofA Credit Facility contained customary affirmative and negative covenants.
 
On September 12, 2023, we entered into Amendment No. 1 and Waiver to the BofA Loan Agreement (“Loan Amendment No. 1”) with BofA,
which, among other matters, provided for a one-time waiver of our failure to comply with (i) the Debt Test for the period ended July 31, 2023 and (ii) the
FCCR Test for the period ended July 31, 2023. Loan Amendment No. 1 also waived testing for compliance with the Debt Test and FCCR Test for the
quarterly periods ending October 31, 2023, January 31, 2024, April 30, 2024 and July 31, 2024. Further, pursuant to Loan Amendment No. 1, we were
required to maintain (i) (a) until September 21, 2023, minimum liquidity (week-end cash balance plus availability from the BofA Revolving Credit
Facility) of $4.0 million, and (b) from September 22, 2023 and thereafter, liquidity equal to the greater of (1) $4.0 million or (2) 80% of the liquidity that
had been forecast for this date at the fourth week of the forecast and (ii) minimum EBITDA of ($400,000), $500,000, $1.0 million, and $1.0 million for the
quarters ending October 31, 2023, January 31, 2024, April 30, 2024, and July 31, 2024, respectively.
 
On January 26, 2024, we entered into Amendment No. 2 to the BofA Loan Agreement (“Loan Amendment No. 2”) with BofA, which, among
other matters, eliminated the requirement to maintain minimum EBITDA of $500,000 for the quarter ending January 31, 2024. Under Loan Amendment
No. 2, the line of credit available to the Company under the BofA Revolving Credit Facility was lowered from $3.0 million to $500,000. Further, Loan
Amendment No. 2 required that we maintain from September 22, 2023 and thereafter, liquidity of at least $2.0 million, rather than the greater of $4.0
million or 80% of the forecast liquidity as was required under Loan Amendment No. 1. Under Loan Amendment No. 2, the Company would have been
required to pay an additional fee equal to 1% of the collective outstanding principal balances of the BofA Revolving Credit Facility and BofA Term Loan if
the BofA Credit Facility was not repaid in full on or before March 1, 2024. This additional fee, if applicable, would have been due on March 2, 2024.
Further, Loan Amendment No. 2 required that the Company make an additional principal payment of $1.0 million on the BofA Term Loan on March 1,
2024, in addition to the existing monthly payments due on the BofA Term Loan. In connection with Loan Amendment No. 2, we paid BofA a $500,000
paydown on the BofA Revolving Credit Facility, thereby reducing the outstanding balance from $1.0 million to $500,000. Loan Amendment No. 2 was
considered a modification under ASC 470, Debt.
 
On February 29, 2024, we entered into Amendment No. 3 to the BofALoan Agreement (“Loan Amendment No. 3”) with BofA, which, among
other matters, deferred the requirement that the Company make an additional principal payment of $1.0 million on the BofA Term Loan, from March 1,
2024, as was required under Loan Amendment No. 2, to April 1, 2024. Further, Loan Amendment No. 3 reduced the additional fee the Company was
required to pay BofA on March 2, 2024 from 1% of the collective outstanding principal balances of the BofA Revolving Credit Facility and BofA Term
Loan as of March 1, 2024 as required under Loan Amendment No. 2, to 0.50% of the collective outstanding principal balances of the BofA Revolving
Credit Facility and BofA Term Loan as of March 1, 2024. Additionally, Loan Amendment No. 3 required the Company to pay BofA a fee equal to 0.50%
of the collective outstanding principal balances of the BofA Revolving Credit Facility and BofA Term Loan as of March 1, 2024, if the BofA Credit
Facility was not repaid in full on or before April 2, 2024 (the “April 2024 Fee”). The April 2024 Fee, if applicable, would have been due on April 2, 2024.
We were not required to pay the April 2024 Fee based on our repayment of the BofA Credit Facility prior to April 2, 2024. Under Loan Amendment No. 3,
the Company was required to maintain liquidity of at least $2.0 million and pay the remaining outstanding balance of $500,000 on the BofA Revolving
Credit Facility by March 1, 2024, as required under Loan Amendment No. 2. Loan Amendment No. 3 was considered a modification under ASC 470, Debt.
 
F-21

 
 
On March 15, 2024, we entered into the EBC Credit Agreement and used proceeds from the initial drawings under the EBC Credit Facilities (as
defined below) to repay in full outstanding obligations under the BofA Loan Agreement and to pay fees, premiums, costs and expenses, including fees
payable in connection with the EBC Credit Agreement. The BofA Loan Agreement was terminated upon entry into the EBC Credit Agreement and is no
longer in effect.
 
The EBC Credit Agreement provides for (i) a senior secured revolving loan facility of up to $15.0 million (the “EBC Revolving Loan Facility”)
and (ii) a senior secured revolving credit facility of up to $1.0 million (the “EBC Additional Line” and, together with the EBC Revolving Loan Facility, the
“EBC Credit Facilities”) (with a $3.0 million swingline loan sublimit). On June 14, 2024, the parties entered into a First Amendment to the EBC Credit
Agreement (the “First Amendment”) providing for a modified EBC Additional Line of $1.0 million through July 12, 2024, $666,666.67 from July 13, 2024
through August 11, 2024 and $333,333.34 from August 12, 2024 through September 10, 2024. Availability of borrowings under the EBC Credit Facilities
will be based upon a borrowing base formula and periodic borrowing base certifications valuing certain of our accounts receivable and inventories, as
reduced by certain reserves, if any.
 
In the absence of an Event of Default (as defined in the EBC Credit Agreement) or certain other events (including the inability of EBC to
determine the secured overnight financing rate “SOFR”), borrowings under (a) the EBC Revolving Loan Facility accrue interest at a rate of the one-month
term SOFR reference rate plus an adjustment of 0.11448% (“Adjusted Term SOFR”) plus 5.00%, and (b) the EBC Additional Line accrue interest at a rate
of Adjusted Term SOFR plus 6.50%, in each case subject to a floor of 2.00% for Adjusted Term SOFR. We will be required to pay a commitment fee of
0.50% per annum for the unused portion of the EBC Revolving Loan Facility. In addition to the foregoing unused commitment fee, we are required to pay
certain other administrative fees pursuant to the terms of the EBC Credit Agreement.
 
Borrowings under the EBC Credit Agreement are secured by a security interest in certain assets of the Company and are subject to certain loan
covenants. The EBC Credit Facilities require the maintenance of certain financial covenants, including (i) Excess Availability (as defined in the EBC Credit
Agreement) of at least, as of any date of determination, an amount equal to the greater of (a) $1.0 million and (b) 10% of the Adjusted Borrowing Base (as
defined in the EBC Credit Agreement), unless as of the last day of the most recent month for which the monthly financial statements and the related
compliance certificate have been or are required to have been delivered to EBC, the Fixed Charge Coverage Ratio (as defined in the EBC Credit
Agreement) for the twelve consecutive calendar month period then ended is greater than 1.10 to 1.00; and (ii) a capital expenditure limitation limiting the
aggregate cost of all Capital Expenditure (as defined in the EBC Credit Agreement) to $2.5 million during any fiscal year. In addition, the EBC Credit
Facilities contain customary affirmative and negative covenants.
 
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 $412,000 and were included as part of our other long-term assets balance.
 
As of October 31, 2024, our outstanding borrowings under the EBC Credit Agreement were $8,197,000. In accordance with ASC 470-10-45,
Other Presentations Matters - General, we have classified the outstanding borrowings as part of current liabilities.
 
 
Note 11 – Related party transactions
 
A portion of our operating space is leased from K&K Unlimited, a company controlled by Darren Clark, the former owner and current President
of Cables Unlimited. Cables Unlimited monthly rent expense under the lease was $16,000 through May 30, 2024 then the monthly expense increased to
$18,000 for the remainder of the year. The monthly payments also include all utilities, janitorial expense, routine maintenance costs, and costs of insurance
for Cables Unlimited’s business operations and equipment. During the fiscal years ended October 31, 2024 and 2023, we paid a total of $218,000 and
$208,000 under the leases, respectively.
 
During fiscal 2023, we paid royalties to Elmec Ltd. (“Elmec”), a European-based company that owns the intellectual property that is used in
Schrofftech’s products. One third of Elmec is jointly owned by David Therrien and Richard DeFelice, two of the former owners and current President and
Vice President, respectively, of Schrofftech. For the year ended October 31, 2023, we paid a total of $24,000 of royalty payments to Elmec. The expenses
related to these transactions are included in cost of goods sold. There were no royalty payments made for the year ended October 31, 2024.
 
F-22

 
  
 
Note 12 – Cash dividend and declared dividends
 
We did not pay or declare any dividends during fiscal year 2024, nor during fiscal year 2023.
 
 
Note 13 – 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 the corporate headquarters, RF
Connector division manufacturing facilities, Cables Unlimited, Rel-Tech, and C Enterprises 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 five 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 of $16,000 to $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 years
ended October 31, 2024 and 2023 were as follows (in thousands):
 
 
  Fiscal Year Ended     Fiscal Year Ended 
 
  October 31, 2024     October 31, 2023  
Operating lease cost
  $
2,956    $
2,872 
 
Other information related to leases was as follows (in thousands):
 
 
 
October 31, 2024    
October 31, 2023  
Supplemental Cash Flows Information
     
       
 
Right-of-use assets obtained in exchange for lease obligations:
     
       
 
Operating leases
  $
1,078    $
6,479 
 
     
       
 
Weighted Average Remaining Lease Term
     
       
 
Operating leases (in months)
   
100.92     
114.26 
 
     
       
 
Weighted Average Discount Rate
     
       
 
Operating leases
   
6.99%   
6.96%
 
Future minimum lease payments under non-cancellable leases as of October 31, 2024 were as follows (in thousands):
 
Year ended October 31,
  Operating Leases  
 
     
 
2025
  $
3,227 
2026
   
3,228 
2027
   
3,169 
2028
   
2,997 
Thereafter
   
14,878 
Total future minimum lease payments
   
27,499 
Less imputed interest
   
(6,971)
Total
  $
20,528 
 
 
Reported as of October 31, 2024
  Operating Leases  
Current portion of operating lease liabilities
  $
1,848 
Operating lease liabilities
   
18,680 
Total
  $
20,528 
 
As of October 31, 2024, operating lease right-of-use asset was $15.3 million and operating lease liability totaled $20.5 million, of which $1.8
million is classified as current. There were no finance leases as of October 31, 2024 or 2023.
 
 
F-23

 
 
SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
 
 
RF INDUSTRIES, LTD.
 
 
Date: January 21, 2025
By:
/s/ ROBERT D. DAWSON
 
Robert D. Dawson
Chief Executive Officer
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
 
Date: January 21, 2025
By:     /s/ ROBERT D. DAWSON
 
Robert D. Dawson, Director and Chief Executive Officer
(Principal Executive Officer)
 
Date: January 21, 2025
By:     /s/ PETER YIN
 
Peter Yin, Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
 
 
 
 
Date: January 21, 2025
By:     /s/ MARK K. HOLDSWORTH
Mark Holdsworth, Chairman of the Board of Directors
 
 
Date: January 21, 2025
By:     /s/ SHERYL CEFALI
Sheryl Cefali, Director
 
 
Date: January 21, 2025
By:     /s/ GERALD T. GARLAND
Gerald Garland, Director
 
 
Date: January 21, 2025
By:     /s/ KAY L. TIDWELL
Kay L. Tidwell, Director
 
43

Exhibit 19
 
RF INDUSTRIES, LTD.
INSIDER TRADING POLICY
(revised June, 2023)
 
This policy outlines the procedures that all RF Industries, Ltd. (the “Company”) personnel must follow in connection with any trading (purchase or sale) of
Company securities. This policy arises from our responsibilities as a public company. Failure to comply with these policies could result in a serious
violation of the securities laws by you and/or the Company which can involve both civil and criminal penalties. It is important that you review our policy
carefully.
 
It is also our policy that Company personnel may not trade in the securities of other publicly traded companies (directly or through others), including our
vendors, customers and partners, when in possession of material non-public information relating to those companies obtained in the course of working for
the Company.
 
What is an Insider?
 
An “insider” is a person who possesses, or has access to material information concerning the Company that has not been fully disclosed to the public (see
below for definitions of “material information” and “full disclosure”).
 
Why This Policy? Insiders may be subject to criminal prosecution and civil liability for trading (purchase or sale) in Company stock when they know
material information concerning the Company that has not been fully disclosed to the public. Criminal prosecution for insider trading can and often does
result in prison sentences for the violator. Civil actions may be brought by private plaintiffs or the Securities and Exchange Commission (“SEC”) which
may seek a penalty of up to three times the profits made or losses avoided by the violator. In addition to the potential criminal and civil liabilities, the
Company may be able to recover all profits made by an insider, plus collect other damages. Finally, insider trading can cause a substantial loss of
confidence in the Company and its stock on the part of the public and the securities markets. This could have a significant adverse impact on the Company
and its shareholders.
 
Tipping. Insider trading laws are not limited to trading by the insider alone; it is also illegal to advise others to trade on the basis of undisclosed material
information, whether or not you derive any benefit from someone else’s actions. Liability in such cases can extend both to the “tippee” (the person to whom
the insider disclosed inside information) and to the “tipper” (the insider himself).
 
Applicability of Policy
 
This policy applies to all transactions in Company securities by “insiders.” As a rule of thumb, insiders are:
 
 
●
Members of the Board of Directors and officers of the Company or its subsidiaries, and
 
 
●
Any employee or former employee of the Company or its subsidiaries who knows material information regarding the Company that has not been
fully disclosed to the public.
 
 

 
 
 
 
►
This policy also applies to the immediate families (direct family living in the same household) of such insiders. Although immediate
family is narrowly defined, an employee should be especially careful with respect to family or to unrelated persons living in the same
household, as well as friends.
 
 
►  A person can be an insider for a limited time with respect to certain material information even though he or she is not an officer or
director. For example, an administrative assistant who knows that a major contract award has just been received may be an insider with
respect to that information until the news has been fully disclosed to the public.
 
 
●
Contractors, suppliers and other personnel who have access to material non-public information relating to the Company, as applicable.
 
What is Nonpublic Information and Full Disclosure?
 
Material information is “nonpublic” if it has not been widely disseminated to the general public through a report filed with the SEC or through major
newswire services, national news services or financial news services.
 
Full disclosure to the public generally means a press release followed by publication in the media, for example, a news wire or The Wall Street Journal. (A
speech to an audience, a TV or radio appearance, or an article in an obscure magazine generally does not qualify as full disclosure.) Full disclosure means
that the securities markets have had the opportunity to digest the news. Generally, 24 hours following publication or release to a national wire service is
regarded as sufficient for the dissemination and interpretation of material information.
 
Definition of Material Information
 
It is not possible to define all categories of material information. In general, information should be regarded as material if there is a likelihood that it
would be considered important by an investor in making a decision regarding the purchase or sale of Company stock. In simple terms, material
information is any type of information which could reasonably be expected to affect the market price of the Company’s securities. Both positive and
negative information may be material. Common examples of information that will frequently be regarded as material are:
 
 
●
Projections of future earnings or losses;
 
 
●
Changed expectations regarding quarterly revenues or earnings, or earnings that are inconsistent with the consensus expectations of the investment
community;
 
 
●
Unanticipated and substantial changes in the level of sales, orders or expenses;
 
 
●
Significant changes or developments in supplies or inventory, including significant product defects, recalls or product returns;
 
 
●
Significant new products or discoveries;
 
 
●
Information covering major corporate partnering transactions, leasing arrangements, or the gain or loss of a substantial licensor or licensee;
 
2

 
 
 
●
A pending or proposed merger, acquisition, or similar transaction;
 
 
●
News of a significant sale of assets or the disposition of a subsidiary;
 
 
●
Changes in dividend policies, the declaration of a stock split, new debt or equity offerings and similar matters;
 
 
●
Changes in senior management and membership of the Board of Directors; and
 
 
●
Impending bankruptcy or financial liquidity problems.
 
If Unsure, Ask. If you have questions as to the materiality of information, you should contact your manager, our Chief Financial Officer (CFO) or the
Company’s legal counsel for clarification.
 
Specific Obligations
 
1.    Prohibition on Trading. Any employee or other person associated with the Company who knows of any “material information” (defined
above) concerning the Company that has not been disclosed to the public must refrain from trading (purchase or sale), and must refrain from advising
others to trade, in Company securities until the second business day after public disclosure of such information is made.
 
2.    Trading Windows. Officers, directors and designated employees can only buy or sell stock outside of “black-out” periods, i.e. during an “open
window.” The window restrictions apply to senior management, all finance and accounting personnel, employees who have received stock grants from the
company, and any employee who has access to inside information on a regular basis (for example, receipt of monthly financial or sales highlights).  The
standard black-out periods begin on the 15th day in the month before the end of a fiscal quarter or fiscal year and end one business day after public release
of quarterly or annual financial results for that fiscal period.
 
 
●
This period may be shortened by the Company on a case-by-case basis depending on the circumstances. Additional black-out periods also may be
imposed by the Company on officers and directors to the extent necessary or desirable to comply with securities or other laws, and the Company
will notify those persons in such an event.
 
 
●
The CFO or other designated officer will notify employees when the window closes each quarter and when it opens. If unsure of whether you are
covered by the window or whether the window is closed or open, you should inquire with your manager or the CFO.
 
3.    Officer and Director Additional Obligations. Members of the Board of Directors, Executive Officers and other designated key employees have
additional obligations that include (a) obtaining pre-clearance approval for all trades, even during an open window, and refraining from other transactions.
(See the Appendix to this Policy.) Any employee who believes that he or she would be regarded as an insider, and who is contemplating a transaction in
Company stock and is unsure of the applicability of this policy should review that policy, and talk to their manager or the CFO prior to executing a
transaction. Officers and directors should be particularly careful, since avoiding the appearance of engaging in stock transactions on the basis of material
undisclosed information can be as important as avoiding a transaction actually based on such information.
 
3

 
 
4.    No Size of Transaction or Similar Exception. It does not matter that the “insider” may have decided to engage in a transaction before learning
of the undisclosed material information or that delaying the transaction might result in economic loss. It is also irrelevant that publicly disclosed
information about the Company might, even aside from the undisclosed material information, provide a substantial basis for engaging in the transaction.
Nor are there are limits on the size of a transaction that will trigger insider trading liability; relatively small trades have in the past occasioned SEC
investigations and lawsuits.
 
You simply cannot trade in Company stock while in possession of undisclosed material information about the Company. The only exceptions to the policy
are as follows:
 
 
●
Exercise of a stock option under one of the Company’s stock option plans if you “hold” (do not sell) the shares upon exercise. This exception does
not include a subsequent sale of the shares acquired pursuant to the exercise of the option, including a “same-day” or broker-assisted cashless
exercise of an option or any other market sale for the purpose of generating the cash needed to pay the exercise price of an option.
 
 
●
Any transaction specifically approved in writing in advance by our Chief Executive Officer. (See the Policy Appendix.)
 
Violation of the laws against insider trading can result in both civil and criminal penalties and may result in termination of your employment by the
Company. Therefore, please carefully review the Company’s insider trading policy and strictly comply with it.
 
5.    Insider Trading Compliance Officers. The Company’s Chief Executive Officer shall act as the Company’s Insider Trading Compliance Officer
(the “Compliance Officer”); provided, however, that if the Chief Executive Officer is a party to a proposed trade, transaction or inquiry relating to this
Policy, the Company’s Chief Financial Officer and Chairman of the Board of Directors shall act as the Compliance Officer with respect to such proposed
trade, transaction or inquiry. The Compliance Officer may delegate his or her authority to act as the Compliance Officer as he or she deem necessary or
appropriate in his or her sole discretion. The duties and powers of the Compliance Officer and his or her delegees may include the following:
 
●    Administering, monitoring and enforcing compliance with this Policy.
 
●    Responding to all inquiries relating to this Policy.
 
●    Designating and announcing special trading blackout periods during which specified persons may trade in Company securities.
 
●    Providing copies of this Policy and other appropriate materials to all current and new directors, officers and employees, and such other persons
as the Compliance Officer determines have access to material nonpublic information concerning the Company.
 
●    Administering, monitoring and enforcing compliance with federal and state insider trading laws and regulations.
 
4

 
 
●    Assisting in the preparation and filing of all required SEC reports filed by Section 16 Insiders relating to their trading in Company securities,
including Forms 3, 4, 5 and 144 and Schedules 13D and 13G.
 
●    Maintaining as Company records originals or copies of all documents required by the provisions of this Policy, and copies of all required SEC
reports relating to insider trading, including Forms 3, 4, 5 and 144 and Schedules 13D and 13G.
 
●    Revising this Policy as necessary to reflect changes in applicable insider trading laws and regulations (to be reported to and considered by the
Nominating and Corporate Governance Committee of the Board of Directors of the Company at its next meeting).
 
●    Maintaining the accuracy of the list of roles/titles of Section 16 officers, and updating such list periodically as necessary to reflect additions or
deletions.
 
●    Designing and requiring training about the obligations of this Policy as the Compliance Officer considers appropriate.
 
The Compliance Officer may designate one or more individuals who may perform the Compliance Officer’s duties under this Policy in the event
that a Compliance Officer is unable or unavailable to perform such duties.
 
5

 
 
ACKNOWLEDGMENT AND CERTIFICATION
 
The undersigned hereby acknowledges and certifies that the undersigned:
 
 
●
Has received, read and understands the RF Industries Ltd.’s Insider Trading Policy.*
 
 
●
Understands that the Company’s Chief Financial Officer and the Company’s counsel are available to answer any questions the undersigned has
regarding the policy.
 
 
●
Will continue to comply fully with the Insider Trading Policy.
 
 
Date:                                      
Signature:                                                      
 
 
 
 
 
Print Name:                                                   
 
 
*Officers, Directors and Designated Key Employees are Required to Read and Acknowledge the Appendix to the Document.
 
6

Exhibit 21.1
 
Subsidiaries
 
RF Industries, Ltd. owns 100% of the capital stock of each of the following subsidiaries:
 
 
●
Cables Unlimited, Inc., a New York corporation
 
●
Rel-Tech Electronics, Inc., a Connecticut corporation
 
●
C Enterprises, Inc., a California corporation
 
●
Schroff Technologies International, Inc., a Rhode Island corporation
 
●
Microlab/FXR LLC, a New Jersey limited liability company
 
 

Exhibit 23.1
 
Consent of Independent Registered Public Accounting Firm
 
We consent to the incorporation by reference in the registration statements on Form S-3 (No. 333-260851) and Form S-8 (Nos. 333-282821, 333-
248791, 333-207569, 333-114932, 333-62188, 333-169490, 333-205748 and 333-220561) of RF Industries, Ltd. and Subsidiaries, of our report dated
January 21, 2025 on our audits of the consolidated financial statements of RF Industries, Ltd. and Subsidiaries as of October 31, 2024 and 2023 and for the
years then ended, included in this Annual Report on Form 10-K of RF Industries, Ltd. and Subsidiaries for the year ended October 31, 2024.
 
/s/ CohnReznick LLP
 
Tysons, Virginia
January 21, 2025
 
 

Exhibit 31.1
CERTIFICATIONS PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
 
I, Robert D. Dawson, certify that:
 
1. I have reviewed this report on Form 10-K for the fiscal year ended October 31, 2024 of RF Industries, Ltd.;
 
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
 
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
 
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles;
 
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,
the registrant’s internal control over financial reporting; and
 
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and to the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
 
 
 
   
Date: January 21, 2025
  /s/ Robert D. Dawson      
 
Robert D. Dawson
Chief Executive Officer
 
 

Exhibit 31.2
 
CERTIFICATIONS PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
 
I, Peter Yin, certify that:
 
1. I have reviewed this report on Form 10-K for the fiscal year ended October 31, 2024 of RF Industries, Ltd.;
 
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
 
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
 
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles;
 
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,
the registrant’s internal control over financial reporting; and
 
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and to the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
 
 
   
Date: January 21, 2025
  /s/ Peter Yin      
 
Peter Yin
 
Chief Financial Officer
(Principal Financial Officer)
 
 

Exhibit 32.1
 
CERTIFICATION PURSUANT TO
 
18 U.S.C. § 1350,
 
AS ADOPTED PURSUANT TO
 
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the Annual Report of RF Industries, Ltd. (“Company”) on Form 10-K for the fiscal year ended October 31, 2024, as filed with
the Securities and Exchange Commission (the “Report”), I, Robert D. Dawson, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
 
 
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
 
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.
 
 
   
Date: January 21, 2025
  /s/ Robert D. Dawson
 
Robert D. Dawson
 
Chief Executive Officer
 
 

Exhibit 32.2
 
CERTIFICATION PURSUANT TO
 
18 U.S.C. § 1350,
 
AS ADOPTED PURSUANT TO
 
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the Annual Report of RF Industries, Ltd. (“Company”) on Form 10-K for the fiscal year ended October 31, 2024, as filed with
the Securities and Exchange Commission (the “Report”), I, Peter Yin, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
 
 
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
 
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.
 
 
   
Date: January 21, 2025
  /s/ Peter Yin
 
Peter Yin
 
Chief Financial Officer