Clearfield, Inc.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

Net sales for the three months ended June 30, 2026, all of which were to Broadband Service Providers, were $43,864,000, an increase of approximately 13%, or $5,109,000 from net sales of $38,755,000 for the three months ended June 30, 2025. The Company recorded $999,000 in international sales for the three months ended June 30, 2026 versus $1,341,000 for the three months ended June 30, 2025. The Company allocates sales from external customers to geographic areas based on the location to which the product is transported. International sales represented 2% and 3% of total net sales for the three months ended June 30, 2026 and 2025, respectively. Net sales to Legacy customers were $0 in the three months ended June 30, 2026 versus $570,000 in the three months ended June 30, 2025.

Previous wording

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

Current wording

The increase in net sales for the three months ended June 30, 2026, of $5,109,000 compared to the three months ended June 30, 2025, was primarily driven by increased sales to Large Regional Service Provider customers of $4,025,000, up 58%, Community Broadband customers of $2,379,000, up 13%, and National Carrier customers of $1,157,000, up 54%, partially offset by decreased sales to MSO customers of $1,540,000, down 17%, Legacy customers of $570,000, down 100%, and International customers of $343,000, down 26%. The increase in sales in the Large Regional, Community Broadband, and National Carrier customer markets for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, is due to increased demand in the quarter to customers in these segments. The decrease in sales to Legacy customers is due to the divestiture of the Company’s former build-to-print copper cable assemblies business in September 2025.

Previous wording

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

Current wording

Selling, general and administrative expenses for the three months ended June 30, 2026, were $11,373,000 in comparison to $12,149,000 for the three months ended June 30, 2025, a decrease of $776,000, or 6%. The decrease is due to a reduction of $1,710,000 of performance-based compensation accruals during the quarter, reflecting lower projected expense under the Company's incentive compensation programs. This was partially offset by higher wages and benefit related expense of $755,000.

Previous wording

Loss from continuing operations for the six months ended March 31, 2026 was $3,893,000 compared to loss from continuing operations of $364,000 for the six months ended March 31, 2025, an increase of approximately 970%. The increase is the result of decreased net sales and increased selling, general and administrative expenses as explained above.

Current wording

Income from continuing operations for the three months ended June 30, 2026, was $2,571,000 compared to income from continuing operations of $1,527,000 for the three months ended June 30, 2025, an increase of approximately 68%. The increase in income from continuing operations is the result of increased gross profit and decreased selling, general and administrative expenses as explained above.

Previous wording

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

Current wording

Net investment income for the three months ended June 30, 2026, was $1,363,000 compared to $1,588,000 for the three months ended June 30, 2025. The decrease in net investment income is due to decreased interest income driven by lower interest rates earned on investments during the quarter.

Previous wording

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

Current wording

The Company recorded an income tax expense of $934,000 and $787,000 for the three months ended June 30, 2026, and 2025, respectively. We record our quarterly provision for income taxes based on our estimated annual effective tax rate for the year. The income tax rate for the three months ended June 30, 2026, was 23.7% compared to 25.3% for the three months ended June 30, 2025. The income tax rate for the three months ended June 30, 2026, approximated the Company's estimated annual effective tax rate, reflecting state income taxes and the nondeductibility of certain executive compensation under Section 162(m) of the Internal Revenue Code being partially offset by the impact of research and development tax credits. The income tax rate for the three months ended June 30, 2025, was higher than the statutory rate primarily due to the nondeductibility of certain executive compensation under Section 162(m) of the Internal Revenue Code and discrete tax items, including excess tax shortfall from the vesting of restricted stock.

Previous wording

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

Current wording

The Company’s net loss from discontinued operations for the three months ended June 30, 2026, was $0, or $0.00 per basic and diluted share compared to net loss from discontinued operations for the three months ended June 30, 2025, of $722,000, or $(0.05) per basic and diluted share. The decrease in net loss from discontinued operations is due to the sale of the Nestor Cables business in the first quarter of fiscal 2026.

Previous wording

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

Current wording

Net sales for the nine months ended June 30, 2026, all of which were to Broadband Service Providers, were $112,596,000, an increase of approximately 3%, or $3,522,000, from net sales of $109,074,000 for the nine months ended June 30, 2025. The Company recorded $3,435,000 in international sales for the nine months ended June 30, 2026 versus $2,484,000 for the nine months ended June 30, 2025. The Company allocates sales from external customers to geographic areas based on the location to which the product is transported. Accordingly, international sales represented 3% and 2% of total net sales for the nine months ended June 30, 2026 and June 30, 2025, respectively. Net sales to Legacy customers were $0 in the nine months ended June 30, 2026 versus $1,769,000 in the nine months ended June 30, 2025.

Previous wording

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

Current wording

The increase in net sales for the nine months ended June 30, 2026, of $3,522,000 compared to the nine months ended June 30, 2025, was primarily driven by increased sales to Community Broadband customers of $4,034,000, up 8%, Large Regional Service Provider customers of $3,361,000, up 13%, International customers of $950,000, up 38%, and National Carrier customers of $728,000, up 10%, partially offset by decreased sales to MSO customers of $3,783,000, down 17%, and Legacy customers of $1,769,000, down 100%. The increase in sales to Community Broadband, Large Regional, International, and National Carrier customer markets for the nine months ended June 30, 2026, as compared to the nine months ended June 30, 2025, was due to increased demand to customers in these segments. In addition, the decrease in sales to Legacy customers is due to the divestiture of the Company’s former build-to-print copper cable assemblies business in September 2025.

Previous wording

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

Current wording

Selling, general and administrative expenses increased $2,667,000, or 8%, to $37,815,000 for the nine months ended June 30, 2026, from $35,148,000 for the nine months ended June 30, 2025. The increase is due to higher wages and benefit related expense of $2,151,000, increased IT maintenance and services of $558,000, increased employee travel related expense of $359,000, and increased stock-based compensation of $227,000, partially offset by lower performance-based compensation accruals of $1,204,000. The lower performance-based compensation accruals reflect lower projected expense under the Company's incentive compensation programs.

Previous wording

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

Current wording

Loss from continuing operations for the nine months ended June 30, 2026 was $1,322,000** **compared to income from continuing operations of $1,164,000 for the nine months ended June 30, 2025, a decrease of approximately 214%. The decrease is the result of decreased gross profit margin and increased selling, general and administrative expenses as explained above.

Previous wording

Net investment income for the six months ended March 31, 2026, was $2,911,000 compared to $3,332,000 for the six months ended March 31, 2025. The decrease in interest income is due to lower interest rates on investments during the six months ended March 31, 2026.

Current wording

Net investment income for the nine months ended June 30, 2026, was $4,274,000 compared to $4,920,000 for the nine months ended June 30, 2025. The decrease in interest income is due to lower interest rates on investments during the nine months ended June 30, 2026.

Previous wording

The Company recorded an income tax benefit of $177,000 and income tax expense of $775,000 for the six months ended March 31, 2026, and 2025, respectively. We record our quarterly provision for income taxes based on our estimated annual effective tax rate for the year. The decrease in tax expense of $952,000 for the six months ended March 31, 2026, compared to six months ended March 31, 2025, is primarily due to increased loss from continuing operations. The income tax rate for the six months ended March 31, 2026, was 18.0% compared to 26.1% for the six months ended March 31, 2025. The income tax rate for the six months ended March 31, 2026, was lower than the statutory rate primarily due to discrete tax benefits recognized during the period, including excess tax benefits from the vesting of restricted stock, which reduced the income tax benefit recognized. The income tax rate for the six months ended March 31, 2025, was higher than the statutory rate primarily due to discrete tax items, including excess tax shortfall from the vesting of restricted stock.

Current wording

The Company recorded an income tax expense of $757,000 and $1,562, 000 for the nine months ended June 30, 2026, and 2025, respectively. We record our quarterly provision for income taxes based on our estimated annual effective tax rate for the year. The decrease in tax expense of $805,000 for the nine months ended June 30, 2026, compared to nine months ended June 30, 2025, is primarily due to lower pre-tax income from continuing operations. The income tax rate for the nine months ended June 30, 2026, was 25.6% compared to 25.7% for the nine months ended June 30, 2025. The income tax rate for the nine months ended June 30, 2026, was higher than the statutory rate primarily due to state income taxes and the nondeductibility of certain executive compensation under Section 162(m) of the Internal Revenue Code, both of which increased the effective tax rate, partially offset by the impact of research and development tax credits, which decreased the income tax expense recognized during the period. The income tax rate for the nine months ended June 30, 2025, was higher than the statutory rate primarily due to discrete tax items, including excess tax shortfall from the vesting of restricted stock.

Previous wording

The Company’s net loss from continuing operations for the six months ended March 31, 2026, was $805,000 or $(0.06) per basic share and diluted share. The Company’s net income for the six months ended March 31, 2025, was $2,193,000, or $0.16 per basic share and diluted share. The basic and diluted loss per share for the six months ended March 31, 2026, as compared to the net income for the six months ended March 31, 2025, was due to decreased sales and increased selling, general and administrative expenses as detailed above.

Current wording

The Company’s net income from continuing operations for the nine months ended June 30, 2026, was $2,195,000 or $0.16 per basic share and diluted share. The Company’s net income from continuing operations for the nine months ended June 30, 2025, was $4,522,000, or $0.32 per basic share and diluted share. The lower basic and diluted income per share for the nine months ended June 30, 2026, as compared to the nine months ended June 30, 2025, was due to decreased gross profit margin, decreased investment income, and increased selling, general and administrative expenses as detailed above.

Previous wording

The Company’s net loss from discontinued operations for the six months ended March 31, 2026, was $337,000, or $(0.02) per basic and diluted share compared to net loss from discontinued operations for the six months ended March 31, 2025, of $2,772,000, or $(0.20) per basic and diluted share. The decrease in net loss from discontinued operations is due to the sale of the Nestor Cables business in the first quarter of fiscal 2026.

Current wording

The Company’s net loss from discontinued operations for the nine months ended June 30, 2026, was $337,000, or $(0.02) per basic and diluted share compared to net loss from discontinued operations for the nine months ended June 30, 2025, of $3,494,000, or $(0.25) per basic and diluted share. The decrease in net loss from discontinued operations is due to the sale of the Nestor Cables business in the first quarter of fiscal 2026.

Previous wording

As of March 31, 2026, our principal source of liquidity was our cash, cash equivalents, short-term investments and long-term investments. These sources total $147,073,000 as of March 31, 2026, compared to $165,799,000 as of September 30, 2025. Additionally, we have a line of credit for $40 million that has no outstanding borrowing as of March 31, 2026. The line of credit is secured by certain of the Company’s assets and matures July 24, 2026. We are in compliance with the debt covenants related to the line of credit. Our excess cash is invested mainly in CDs backed by the FDIC, Treasuries, and money market funds. We believe the combined balances of short-term cash and investments, along with long-term investments and available bank lines of credit, provide a more accurate indication of our available liquidity.

Current wording

As of June 30, 2026, our principal source of liquidity was our cash, cash equivalents, short-term investments and long-term investments. These sources total $155,119,000 as of June 30, 2026, compared to $165,799,000 as of September 30, 2025. Additionally, we have a line of credit for $40 million that has no outstanding borrowing as of June 30, 2026. The line of credit is secured by certain of the Company’s assets and matures November 21, 2026. We are in compliance with the debt covenants related to the line of credit. Our excess cash is invested mainly in CDs backed by the FDIC, Treasuries, and money market funds. We believe the combined balances of short-term cash and investments, along with long-term investments and available bank lines of credit, provide a more accurate indication of our available liquidity.

Previous wording

Net cash used in operating activities totaled $2,512,000 for the six months ended March 31, 2026. This consisted of net loss from continuing operations of $805,000, non-cash expenses for depreciation and amortization of $3,190,000, stock-based compensation of $2,589,000, amortization of premium and discounts on investments of $270,000, and increased deferred income taxes of $536,000, in addition to changes in operating assets and liabilities providing and using cash. Changes in operating assets and liabilities providing cash include a decrease in inventories of $5,111,000. The decrease in inventory is due to the Company utilizing existing inventory on hand to fulfill customer orders to support sales demand. Changes in operating assets and liabilities using cash include an increase in accounts receivable of $2,874,000, other assets of $2,876,000, and a decrease in accounts payable and accrued expenses of $6,041,000, due to timing of payments and the payment of fiscal year 2025 incentive compensation accruals during the six months ended March 31, 2026. The increase in accounts receivable is due to the timing of sales, which were concentrated near the end of the reporting period during the six months ended March 31, 2026. The increase in other assets is due to overpayment of income taxes and increase in prepaid expenses. Days sales outstanding, which measures how quickly receivables are collected, increased 12 days from 39 to 51 from March 31, 2025 to March 31, 2026.

Current wording

Net cash provided by operating activities totaled $7,345,000 for the nine months ended June 30, 2026. This consisted of net income from continuing operations of $2,195,000, non-cash expenses for depreciation and amortization of $4,743,000, stock-based compensation of $3,616,000, amortization of premium and discounts on investments of $334,000, and decreased deferred income taxes of $398,000, in addition to changes in operating assets and liabilities providing and using cash. Changes in operating assets and liabilities providing cash include a decrease in inventories of $8,640,000. The decrease in inventory is due to the Company utilizing existing inventory on hand to fulfill customer orders to support sales demand. Changes in operating assets and liabilities using cash include an increase in accounts receivable of $4,064,000, other assets of $2,910,000, and a decrease in accounts payable and accrued expenses of $4,939,000, due to timing of payments and the payment of fiscal year 2025 incentive compensation accruals during the nine months ended June 30, 2026. The increase in accounts receivable is due to the timing of sales, which were concentrated near the end of the reporting period during the nine months ended June 30, 2026. The increase in other assets is due to income tax payments and increase in prepaid expenses. Days sales outstanding, which measures how quickly receivables are collected, increased seven days from 37 to 44 from June 30, 2025 to June 30, 2026.

Previous wording

Net cash provided by operating activities totaled $12,450,000 for the six months ended March 31, 2025. This consisted of a net income from continuing operations of $2,193,000, non-cash expenses for depreciation and amortization of $3,061,000, stock-based compensation of $2,221,000, amortization of discounts on investments of $1,202,000 and increased deferred income taxes of $188,000, in addition to changes in operating assets and liabilities providing and using cash. The change in operating assets and liabilities providing cash include a decrease in inventory of $11,980,000 and an increase in accounts payable and accrued expenses of $2,168,000 due to timing of payments. The decrease in inventory was due to decreased inventory purchases during the six months ending March 31, 2025, as the Company utilized inventory on hand to fulfill customer orders and achieve lower stocking levels. The change in operating assets and liabilities using cash was due to an increase in accounts receivable of $4,543,000 and other assets of $3,240,000. The increase in accounts receivable is due to the timing of sales, which were concentrated near the end of the reporting period during the six months ended March 31, 2025. The increase in other assets is due to the recognition of a deferred tax asset and increase in prepaid expenses. Days sales outstanding decreased two days from 41 to 39 from March 31, 2024 to March 31, 2025.

Current wording

Net cash provided by operating activities totaled $22,423,000 for the nine months ended June 30, 2025. This consisted of net income from continuing operations of $4,522,000, non-cash expenses for depreciation and amortization of $4,763,000, stock-based compensation of $3,417,000 and amortization of premium and discounts on investments of $1,556,000, in addition to changes in operating assets and liabilities providing and using cash. The change in operating assets and liabilities providing cash include a decrease in inventory of $15,070,000 and an increase in accounts payable and accrued expenses of $2,493,000 due to timing of payments. The decrease in inventory was due to decreased inventory purchases during the nine months ending June 30, 2025, as the Company utilized inventory on hand to fulfill customer orders and achieve lower stocking levels. The change in operating assets and liabilities using cash was due to an increase in accounts receivable of $2,501,000 and other assets of $3,785,000. The increase in accounts receivable is due to the timing of sales, which were concentrated near the end of the reporting period during the nine months ended June 30, 2025. The increase in other assets is due to the recognition of a deferred tax asset and increase in prepaid expenses. Days sales outstanding decreased one day from 38 to 37 from June 30, 2024 to June 30, 2025.

Previous wording

Net cash provided by operating activities of discontinued operations for the six months ended March 31, 2026, totaled $1,380,000. Cash provided by operations included net loss from discontinued operations of $337,000 and non-cash expenses for depreciation and amortization of $136,000, in addition to changes in operating assets and liabilities providing cash of $1,580,000.

Current wording

Net cash provided by operating activities of discontinued operations for the nine months ended June 30, 2026, totaled $1,380,000. Cash provided by operations included net loss from discontinued operations of $337,000 and non-cash expenses for depreciation and amortization of $136,000, in addition to changes in operating assets and liabilities providing cash of $1,580,000.

Previous wording

Net cash used in operating activities of discontinued operations for the six months ended March 31, 2025, totaled $2,252,000. Cash used in operations included net loss from discontinued operations of $2,772,000, non-cash income and expenses for depreciation and amortization of $650,000, deferred tax assets of $703,000, and stock-based compensation of $206,000, in addition to changes in operating assets and liabilities providing cash of $367,000.

Current wording

Net cash used in operating activities of discontinued operations for the nine months ended June 30, 2025, totaled $4,307,000. Cash used in operations included net loss from discontinued operations of $3,494,000, non-cash income and expenses for depreciation and amortization of $1,003,000, deferred tax assets of $157,000, and stock-based compensation of $328,000, in addition to changes in operating assets and liabilities using cash of $1,987,000.

Previous wording

We invest our excess cash in money market accounts, Treasuries, money market funds, and bank CDs. We believe we obtain a competitive rate of return given the economic climate and relative risk profile of these investments. During the six months ended March 31, 2026, we received proceeds from the maturity of investment securities of $58,660,000 and used cash to purchase $52,009,000 of investment securities. Purchases of property, plant, and equipment, mainly related to manufacturing equipment and intangible assets, consumed $2,007,000 of cash during the six months ended March 31, 2026. Cash used of $1,012,000 during the six months ended March 31, 2026, was attributable to the disposition of the Nestor Cables business and reflects cash paid for transaction-related costs directly associated with the sale.

Current wording

We invest our excess cash in money market accounts, Treasuries, money market funds, and bank CDs. We believe we obtain a competitive rate of return given the economic climate and relative risk profile of these investments. During the nine months ended June 30, 2026, we received proceeds from the maturity of investment securities of $79,710,000 and used cash to purchase $70,241,000 of investment securities. Purchases of property, plant, and equipment, mainly related to manufacturing equipment and intangible assets, consumed $2,917,000 of cash during the nine months ended June 30, 2026. Cash used of $1,012,000 during the nine months ended June 30, 2026, was attributable to the disposition of the Nestor Cables business and reflects cash paid for transaction-related costs directly associated with the sale.

Previous wording

During the six months ended March 31, 2025, we received proceeds from the maturity of investment securities of $75,176,000 and used cash to purchase $59,234,000 of investment securities. Purchases of property, plant, and equipment, mainly related to manufacturing equipment and intangible assets, consumed $3,074,000 of cash during the six months ended March 31, 2025.

Current wording

During the nine months ended June 30, 2025, we received proceeds from the maturity of investment securities of $95,976,000 and used cash to purchase $78,697,000 of investment securities. Purchases of property, plant, and equipment, mainly related to manufacturing equipment and intangible assets, consumed $3,529,000 of cash during the nine months ended June 30, 2025.

Previous wording

Net cash for investing activities of discontinued operations was zero for the six months ended March 31, 2026. Net cash used in investing activities of discontinued operations for the six months ended March 31, 2025, totaled $1,648,000, driven by cash used to purchase fixed and intangible assets.

Current wording

Net cash for investing activities of discontinued operations was zero for the nine months ended June 30, 2026. Net cash used in investing activities of discontinued operations for the nine months ended June 30, 2025, totaled $1,692,000, driven by cash used to purchase fixed and intangible assets.

Previous wording

For the six months ended March 31, 2026, we used cash to repurchase $12,597,000 of our common stock on the open market under our stock repurchase program, which includes U.S. Federal excise taxes. We received $239,000 from employees’ participation and purchase of stock through our ESPP and used $1,001,000 for payment of withholding taxes for vesting of restricted stock grants. The Company used $63,000 related to payment of taxes associated with the issuance of common stock upon cashless exercise of stock options.

Current wording

For the nine months ended June 30, 2026, we used cash to repurchase $13,494,000 of our common stock on the open market under our stock repurchase program, which includes U.S. Federal excise taxes. We received $513,000 from employees’ participation and purchase of stock through our ESPP and used $1,019,000 for payment of withholding taxes for vesting of restricted stock grants. The Company used $142,000 related to payment of taxes associated with the issuance of common stock upon cashless exercise of stock options.

Previous wording

For the six months ended March 31, 2025, we used cash to repurchase $11,015,000 of our common stock on the open market under our stock repurchase program, which includes U.S. Federal excise taxes. We received $301,000 from employees’ participation and purchase of stock through our ESPP and used $494,000 for payment of withholding taxes for vesting of restricted stock grants. The Company used $12,000 related to payment of taxes associated with the issuance of common stock upon cashless exercise of stock options.

Current wording

For the nine months ended June 30, 2025, we used cash to repurchase $16,665,000 of our common stock on the open market under our stock repurchase program, which includes U.S. Federal excise taxes. We received $595,000 from employees’ participation and purchase of stock through our ESPP and used $494,000 for payment of withholding taxes for vesting of restricted stock grants. The Company used $133,000 related to payment of taxes associated with the issuance of common stock upon cashless exercise of stock options.

Previous wording

Net cash used in financing activities of discontinued operations for the six months ended March 31, 2026, totaled $1,196,000, driven by net borrowings and repayments from the factoring liability held by Nestor Cables. Net cash provided by financing activities of discontinued operations for the six months ended March 31, 2025, totaled $2,465,000, driven by net borrowings and repayments from the factoring liability held by Nestor Cables.

Current wording

Net cash used in financing activities of discontinued operations for the nine months ended June 30, 2026, totaled $1,196,000, driven by net borrowings and repayments from the factoring liability held by Nestor Cables. Net cash provided by financing activities of discontinued operations for the nine months ended June 30, 2025, totaled $4,337,000, driven by net borrowings and repayments from the factoring liability held by Nestor Cables.

Previous wording

These accounting estimates are described in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K for the year ended September 30, 2025. Management made no changes to the Company’s critical accounting estimates during the three and six months ended March 31, 2026.

Current wording

These accounting estimates are described in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K for the year ended September 30, 2025. Management made no changes to the Company’s critical accounting estimates during the three and nine months ended June 30, 2026.

Previous wording

In applying its critical accounting estimates, management reassesses its estimates each reporting period based on available information. Changes in these estimates did not have a significant impact on earnings for the three and six months ended March 31, 2026.

Current wording

In applying its critical accounting estimates, management reassesses its estimates each reporting period based on available information. Changes in these estimates did not have a significant impact on earnings for the three and nine months ended June 30, 2026.