OPTICAL CABLE CORP

Previous wording

This Form 10-Q may contain certain forward-looking information within the meaning of the federal securities laws. The forward-looking information may include, among other information, (i) statements concerning our outlook for the future, (ii) statements of belief, anticipation or expectation, (iii) future plans, strategies or anticipated events, and (iv) similar information and statements concerning matters that are not historical facts. Such forward-looking information is subject to known and unknown variables, uncertainties, contingencies and risks that may cause actual events or results to differ materially from our expectations. Such known and unknown variables, uncertainties, contingencies and risks (collectively, “factors”) may also adversely affect Optical Cable Corporation and its subsidiaries (collectively, the “Company” or “OCC®”), the Company’s future results of operations and future financial condition, and/or the future equity value of the Company. Factors that could cause or contribute to such differences from our expectations or that could adversely affect the Company include, but are not limited to: the level of sales to key customers, including distributors; timing of certain projects and purchases by key customers; the economic conditions affecting network service providers; corporate and/or government spending on information technology; actions by competitors; fluctuations in the price of raw materials (including optical fiber, copper, gold and other precious metals, plastics and other materials); fluctuations in transportation costs; our dependence on customized equipment for the manufacture of certain of our products in certain production facilities; our ability to protect our proprietary manufacturing technology; market conditions influencing prices or pricing in one or more of the markets in which we participate, including the impact of increased competition; our dependence on a limited number of suppliers for certain product components; the loss of or conflict with one or more key suppliers or customers; an adverse outcome in any litigation, claims and other actions, and potential litigation, claims and other actions against us; an adverse outcome in any regulatory reviews and audits and potential regulatory reviews and audits; adverse changes in state tax laws and/or positions taken by state taxing authorities affecting us; technological changes and introductions of new competing products; changes in end-user preferences for competing technologies relative to our product offering; economic conditions that affect the telecommunications sector, the data communications sector, certain technology sectors and/or certain industry market sectors (for example, commercial/enterprise, military, industrial, broadcast, mining, petrochemical, renewable energy and wireless carrier industry market sectors); economic conditions that affect U.S.-based manufacturers; economic conditions or changes in relative currency strengths (for exampl…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This Form 10-Q may contain certain forward-looking information within the meaning of the federal securities laws. The forward-looking information may include, among other information, (i) statements concerning our outlook for the future, (ii) statements of belief, anticipation or expectation, (iii) future plans, strategies or anticipated events, and (iv) similar information and statements concerning matters that are not historical facts. Such forward-looking information is subject to known and unknown variables, uncertainties, contingencies and risks that may cause actual events or results to differ materially from our expectations. Such known and unknown variables, uncertainties, contingencies and risks (collectively, “factors”) may also adversely affect Optical Cable Corporation and its subsidiaries (collectively, the “Company” or “OCC®”), the Company’s future results of operations and future financial condition, and/or the future equity value of the Company. Factors that could cause or contribute to such differences from our expectations or that could adversely affect the Company include, but are not limited to: the level of sales to key customers, including distributors; timing of certain projects and purchases by key customers; the economic conditions affecting network service providers; corporate and/or government spending on information technology; actions by competitors; fluctuations in the price of raw materials (including optical fiber, copper, gold and other precious metals, plastics and other materials); fluctuations in transportation costs; our dependence on customized equipment for the manufacture of certain of our products in certain production facilities; our ability to protect our proprietary manufacturing technology; market conditions influencing prices or pricing in one or more of the markets in which we participate, including the impact of increased competition; our dependence on a limited number of suppliers for certain product components; the loss of or conflict with one or more key suppliers or customers; an adverse outcome in any litigation, claims, and other actions or disputes, and potential litigation, claims, and other actions or disputes against us or with us; an adverse outcome in any regulatory reviews and audits and potential regulatory reviews and audits; adverse changes in state tax laws and/or positions taken by state taxing authorities affecting us; technological changes and introductions of new competing products; changes in end-user preferences for competing technologies relative to our product offering; economic conditions that affect the telecommunications sector, the data communications sector, certain technology sectors and/or certain industry market sectors (for example, commercial/enterprise, military, industrial, broadcast, mining, petrochemical, renewable energy and wireless carrier industry market sectors); economic conditions that affect U.S.-based manufacturers; economic conditions or changes in re…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Summary of Company Performance for First Quarter of Fiscal Year 2024

Current wording

Summary of Company Performance for Second Quarter of Fiscal Year 2024

Previous wording

Net sales to customers in the United States decreased 17.9% and net sales to customers outside of the United States decreased 22.1% in the first quarter of fiscal year 2024, compared to the same period last year. We can experience fluctuations in sales from quarter to quarter in the various markets (both industries and geographies) in which we operate for various reasons.

Current wording

Net sales to customers in the United States decreased 17.7% and net sales to customers outside of the United States decreased 18.5% in the second quarter of fiscal year 2024, compared to the same period last year. We can experience fluctuations in sales from quarter to quarter in the various markets (both industries and geographies) in which we operate for various reasons.

Previous wording

Additionally, net sales for the first quarter of fiscal year 2024 were negatively impacted by various macroeconomic pressures, risks and uncertainties in our industry. While certain of our markets continue to show signs of softness (including our enterprise and wireless carrier markets), we believe there are positive indicators in certain of our other markets. Overall, we expect our net sales to begin to grow compared to the first quarter of fiscal year 2024 during fiscal year 2024.

Current wording

Additionally, net sales for the second quarter of fiscal year 2024 were negatively impacted by various macroeconomic pressures, risks and uncertainties in our industry—which we believe is consistent with weakness being experienced in our industry generally. While certain of our markets continue to show signs of softness (including our enterprise and wireless carrier markets), we believe there are positive indicators in certain of our other markets. Overall, we expect our net sales to begin to grow compared to the first half of fiscal year 2024.

Previous wording

While production volume decreased during the first quarter of fiscal year 2024 compared to the same period last year, we have not implemented reductions in production personnel like others in our industry have done—including manufacturers and distributors. Our planned restraint in this regard is consistent with our view of expected opportunities as we continue fiscal year 2024, as well as considering the time it takes to train new production personnel in certain areas of our production operations.

Current wording

While production volume decreased during the second quarter of fiscal year 2024 compared to the same period last year, we have not implemented reductions in production personnel like others in our industry have done—with various personnel reductions at manufacturers and distributors. Our planned restraint in this regard is consistent with our view of expected opportunities as we continue fiscal year 2024, as well as considering the time it takes to train new production personnel in certain areas of our production operations.

Previous wording

The decrease in SG&A expenses during the first quarter of fiscal year 2024 compared to the same period last year was primarily the result of decreases in employee and contracted sales personnel related costs totaling $210,000 and shipping costs totaling $107,000. Included in employee and contracted sales personnel related costs are employee incentives and commissions which decreased due to decreased net sales and the financial results during the first quarter of fiscal year 2024. Shipping costs decreased primarily due to the decrease in net sales.

Current wording

The decrease in SG&A expenses during the second quarter of fiscal year 2024 compared to the same period last year was primarily the result of decreases in employee and contracted sales personnel-related costs totaling $248,000 and shipping costs totaling $108,000. Included in employee and contracted sales personnel-related costs are employee incentives and commissions which decreased due to decreased net sales and the financial results during the second quarter of fiscal year 2024. Shipping costs decreased primarily due to the decrease in net sales.

Previous wording

We recognized royalty expense, net of royalty income, totaling $7,000 during the first quarter of fiscal years 2024 and 2023. Royalty expense and/or income may fluctuate based on sales of related licensed products and estimates of amounts for non-licensed product sales, if any.

Current wording

We recognized royalty expense, net of royalty income, totaling $7,000 during the second quarter of fiscal years 2024 and 2023. Royalty expense and/or income may fluctuate based on sales of related licensed products and estimates of amounts for non-licensed product sales, if any.

Previous wording

We recognized $14,000 of amortization expense, associated with intangible assets, during the first quarter of fiscal year 2024, compared to $13,000 for the first quarter of fiscal year 2023.

Current wording

We recognized $14,000 of amortization expense, associated with intangible assets, during the second quarter of fiscal years 2024 and 2023.

Previous wording

We recognized other expense, net in the first quarter of fiscal year 2024 of $19,000, compared to $203,000 in the first quarter of fiscal year 2023.

Current wording

We recognized other expense, net in the second quarter of fiscal year 2024 of $293,000, compared to other income, net of $1.4 million in the second quarter of fiscal year 2023.

Previous wording

Other expense, net for the fiscal quarter ended January 31, 2024 is comprised primarily of interest expense and other miscellaneous items, partially offset by gain on insurance proceeds for damage to property and equipment totaling $235,000. The decrease in other expense, net during the first quarter of fiscal year 2024 compared to the same period last year was primarily due to the gain on insurance proceeds.

Current wording

Other expense, net for the second quarter of fiscal year 2024 is comprised primarily of interest expense and other miscellaneous items. The change in other expense, net during the second quarter of fiscal year 2024 compared to the same period last year was primarily due to gain on insurance proceeds received in the second quarter of fiscal year 2023 for damage to property and equipment totaling $1.7 million, partially offset by interest expense and other miscellaneous items, that did not recur in fiscal year 2024.

Previous wording

We reported a loss before income taxes of $1.4 million for the first quarter of fiscal year 2024, compared to income before income taxes of $842,000 for the first quarter of fiscal year 2023. The change was primarily due to the decrease in gross profit of $2.8 million, partially offset by the decrease in SG&A expenses of $362,000 and the gain on insurance proceeds for damage to property and equipment of $235,000.

Current wording

We reported a loss before income taxes of $1.6 million for the second quarter of fiscal year 2024, compared to income before income taxes of $2.5 million for the second quarter of fiscal year 2023. The change was primarily due to the decrease in gross profit of $2.7 million and gain on insurance proceeds received in the second quarter of fiscal year 2023 for damage to property and equipment of $1.7 million, partially offset by the decrease in SG&A expenses of $343,000.

Previous wording

Income tax expense totaled $7,000 in the first quarter of fiscal year 2024, compared to $32,000 in the first quarter of fiscal year 2023. Our effective tax rate was less than negative one percent for the first quarter of fiscal year 2024 and 3.9% for the first quarter of fiscal year 2023.

Current wording

Income tax expense totaled $7,000 in the second quarter of fiscal year 2024, compared to $75,000 in the second quarter of fiscal year 2023. Our effective tax rate was less than negative one percent for the second quarter of fiscal year 2024 and 3.0% for the second quarter of fiscal year 2023.

Previous wording

If we generate sufficient income before taxes in subsequent periods such that U.S. GAAP would permit us to conclude that the removal of any valuation allowance against our net deferred tax asset is appropriate, then during the period in which such determination is made, we will recognize the non-cash benefit of such removal of the valuation allowance in income tax expense on our consolidated statement of operations, which will increase net income and will also increase the net deferred tax asset on our consolidated balance sheet. If we do not generate sufficient income before taxes in subsequent periods such that U.S. GAAP would permit us to conclude that the reduction or removal of any valuation allowance against our net deferred tax asset is appropriate, then no such non-cash benefit would be realized. There can be no assurance regarding any future realization of the benefit by us of all or part of our net deferred tax assets. As of October 31, 2023, the valuation allowance against our total gross deferred tax assets totaled $4.0 million.

Current wording

If we generate sufficient income before taxes in subsequent periods such that U.S. GAAP would permit us to conclude that the removal of any valuation allowance against our net deferred tax asset is appropriate, then during the period in which such determination is made, we will recognize the non-cash benefit of such removal of the valuation allowance in income tax expense on our consolidated statement of operations, which will increase net income and will also increase the net deferred tax asset on our consolidated balance sheet. If we do not generate sufficient income before taxes in subsequent periods such that U.S. GAAP would permit us to conclude that the reduction or removal of any valuation allowance against our net deferred tax asset is appropriate, then no such non-cash benefit would be realized. There can be no assurance regarding any future realization of the benefit by us of all or part of our net deferred tax assets.

Previous wording

Net loss for the first quarter of fiscal year 2024 was $1.4 million, or $0.18 per share, compared to net income of $810,000, or $0.10 per share, for the first quarter of fiscal year 2023. This change was primarily due to the decrease in income before income taxes of $2.3 million.

Current wording

Net loss for the second quarter of fiscal year 2024 was $1.6 million, or $0.21 per share, compared to net income of $2.4 million, or $0.31 per share, for the second quarter of fiscal year 2023. This change was primarily due to the decrease in income before income taxes of $4.1 million, which includes a $1.7 million decrease in gain on insurance proceeds, net.

Previous wording

Consolidated net sales for the first quarter of fiscal year 2024 decreased 18.8% to $14.9 million, compared to net sales of $18.3 million for the same period last year. We experienced a decrease in net sales primarily in our enterprise and wireless carrier markets in the first quarter of fiscal year 2024, compared to the same period last year. We believe this is consistent with weakness being experienced in our industry generally and in certain of our target markets.

Current wording

Consolidated net sales for the first half of fiscal year 2024 were $31.0 million, a decrease of 18.3% compared to net sales of $37.9 million for the same period last year. We experienced a decrease in net sales in both our enterprise and specialty markets, including the wireless carrier market, in the first half of fiscal year 2024, compared to the same period last year. We believe this is consistent with weakness being experienced in our industry generally and in certain of our target markets.

Previous wording

The first quarter of fiscal year 2023 was positively impacted by our higher than typical sales order backlog/forward load of more than $12.0 million that existed at the end of fiscal year 2022, while our sales order backlog/forward load at the end of fiscal year 2023 had returned to more normal levels at approximately $5.4 million. At the end of the first quarter of fiscal year 2024, our sales order backlog/forward load remains at a more typical level of approximately $5.0 million.

Current wording

The first half of fiscal year 2023 was positively impacted by our higher-than-typical sales order backlog/forward load of more than $12.0 million that existed at the end of fiscal year 2022, while our sales order backlog/forward load at the end of fiscal year 2023 had returned to more normal levels at approximately $5.4 million. At the end of the first half of fiscal year 2024, our sales order backlog/forward load remains at a more typical level of approximately $5.6 million.

Previous wording

Our gross profit was $3.7 million in the first quarter of fiscal year 2024, a decrease of 43.1% compared to gross profit of $6.5 million in the first quarter of fiscal year 2023. Gross profit margin, or gross profit as a percentage of net sales, was 25.0% in the first quarter of fiscal year 2024 compared to 35.7% in the first quarter of fiscal year 2023.

Current wording

Our gross profit was $7.8 million in the first half of fiscal year 2024, a decrease of 41.7% compared to gross profit of $13.3 million in the first half of fiscal year 2023. Gross profit margin was 25.0% in the first half of fiscal year 2024 compared to 35.1% in the first half of fiscal year 2023.

Previous wording

Gross profit margin for the first quarter of fiscal 2024 was negatively impacted by lower volumes, as fixed charges were spread over lower sales, as well as decreased plant efficiency, as fewer sales and lower backlog impacted the flow of products through our manufacturing facilities—the impact of operating leverage. Additionally, our gross profit margin percentages are heavily dependent upon product mix on a quarterly basis and may vary based on changes in product mix.

Current wording

Gross profit margin for the first half of fiscal 2024 was negatively impacted by lower volumes, as fixed charges were spread over lower sales, as well as decreased plant efficiency, as fewer sales and lower backlog impacted the flow of products through our manufacturing facilities—the impact of operating leverage. Additionally, our gross profit margin percentages are heavily dependent upon product mix on a quarterly basis and may vary based on changes in product mix.

Previous wording

SG&A expenses decreased to $5.1 million during the first quarter of fiscal year 2024, compared to $5.5 million during the first quarter of fiscal year 2023. SG&A expenses as a percentage of net sales were 34.3% in the first quarter of fiscal year 2024, compared to 29.8% in the first quarter of fiscal year 2023, as fixed SG&A expenses were spread over lower net sales.

Current wording

SG&A expenses decreased 6.3% to $10.4 million during the first half of fiscal year 2024, compared to $11.1 million for the same period last year. SG&A expenses as a percentage of net sales were 33.6% in the first half of fiscal year 2024, compared to 29.3% in the first half of fiscal year 2023, as fixed SG&A expenses were spread over lower net sales.

Previous wording

We reported a loss from operations of $1.4 million for the first quarter of fiscal year 2024, compared to income from operations of $1.0 million for the first quarter of fiscal year 2023.

Current wording

We reported a loss from operations of $2.7 million for the first half of fiscal year 2024, compared to income from operations of $2.1 million for the first half of fiscal year 2023.

Previous wording

Total assets decreased $3.4 million, or 7.7%, to $40.5 million at January 31, 2024, from $43.9 million at October 31, 2023. This decrease was primarily due to a $1.2 million decrease in cash, a $1.3 million decrease in trade accounts receivable, net, and a $744,000 decrease in inventories. Further detail regarding the decrease in cash is provided in our discussion of “Liquidity and Capital Resources.” The decrease in trade accounts receivable, net resulted from the decrease in net sales in the first quarter of fiscal year 2024 when compared to the fourth quarter of fiscal year 2023. Inventories decreased largely as the result of the timing of certain raw material purchases and decreases in work in process levels related to lower levels of open orders at the end of the first quarter of fiscal year 2024 when compared to the fourth quarter of fiscal year 2023.

Current wording

Total assets decreased $4.0 million, or 9.1%, to $39.9 million at April 30, 2024, from $43.9 million at October 31, 2023. This decrease was primarily due to a $430,000 decrease in trade accounts receivable, net, and a $2.3 million decrease in inventories. The decrease in trade accounts receivable, net resulted from the decrease in net sales in the second quarter of fiscal year 2024 when compared to the fourth quarter of fiscal year 2023. Inventories decreased largely as the result of the timing of certain raw material purchases as well as lower replenishment rates due to lower sales and the timing of sales of stock inventory.

Previous wording

Total liabilities decreased $2.0 million, or 10.5%, to $17.1 million at January 31, 2024, from $19.2 million at October 31, 2023. The decrease in total liabilities was primarily due to a decrease in accounts payable and accrued expenses, including accrued compensation and payroll taxes, totaling $1.0 million, primarily resulting from the timing of certain vendor and payroll related payments, and net repayments on our Revolver totaling $864,000.

Current wording

Total liabilities decreased $1.1 million, or 5.8%, to $18.0 million at April 30, 2024, from $19.2 million at October 31, 2023. The decrease in total liabilities was primarily due to a decrease in accounts payable and accrued expenses, including accrued compensation and payroll taxes, totaling $649,000, primarily resulting from the timing of certain vendor and payroll related payments, and net repayments on our Revolver totaling $278,000.

Previous wording

Total shareholders’ equity at January 31, 2024 decreased $1.4 million in the first quarter of fiscal year 2024 resulting from a net loss of $1.4 million.

Current wording

Total shareholders’ equity at April 30, 2024 decreased $2.9 million in the first half of fiscal year 2024 resulting primarily from a net loss of $3.0 million.

Previous wording

Our cash totaled $221,000 as of January 31, 2024, a decrease of $1.2 million compared to $1.5 million as of October 31, 2023. The decrease in cash for the three months ended January 31, 2024 primarily resulted from net cash used in operating activities of $261,000, capital expenditures of $80,000 and cash used in financing activities of $906,000 (including an $864,000 net reduction in our Revolver). Our total cash of $1.5 million at October 31, 2023 was higher than is typically the case due to a short-term timing difference between the borrowings under our Revolver and expenditures as of October 31, 2023. Under the terms of our Revolver, cash receipts are swept daily to reduce the Revolver balance outstanding.

Current wording

Our cash totaled $1.1 million as of April 30, 2024, a decrease of $379,000 compared to $1.5 million as of October 31, 2023. The decrease in cash for the six months ended April 30, 2024 primarily resulted from net cash used in financing activities of $474,000 (including a $278,000 net reduction in our Revolver) and capital expenditures of $236,000, partially offset by cash provided by operating activities of $113,000 and insurance proceeds, net totaling $219,000.

Previous wording

On January 31, 2024, we had working capital of $25.1 million compared to $27.3 million on October 31, 2023. The ratio of current assets to current liabilities as of January 31, 2024 was 4.7 to 1.0 compared to 4.5 to 1.0 as of October 31, 2023. The decrease in working capital was primarily due to the decrease in cash of $1.2 million, the decrease in trade accounts receivable, net of $1.3 million and the decrease in inventories of $744,000, partially offset by the decrease in accounts payable and accrued expenses, including accrued compensation and payroll taxes, totaling $1.0 million. The increase in the current ratio was primarily due to the fact that current assets decreased 9.1% while current liabilities decreased 13.4%.

Current wording

On April 30, 2024, we had working capital of $24.3 million compared to $27.3 million on October 31, 2023. The ratio of current assets to current liabilities as of April 30, 2024 was 4.4 to 1.0, compared to 4.5 to 1.0 as of October 31, 2023. The decrease in working capital and in the current ratio was primarily due to the decrease in cash of $379,000, the decrease in trade accounts receivable, net of $430,000, and the decrease in inventories of $2.3 million, partially offset by the decrease in accounts payable and accrued expenses, including accrued compensation and payroll taxes, totaling $649,000.

Previous wording

As of January 31, 2024 and October 31, 2023, we had outstanding loan balances under our Revolver totaling $7.5 million and $8.3 million, respectively. As of January 31, 2024 and October 31, 2023, we had other outstanding bank loan balances, excluding our Revolver, totaling $2.7 million.

Current wording

As of April 30, 2024 and October 31, 2023, we had outstanding loan balances under our Revolver totaling $8.0 million and $8.3 million, respectively. As of April 30, 2024 and October 31, 2023, we had other outstanding bank loan balances, excluding our Revolver, totaling $2.7 million.

Previous wording

Net cash used in operating activities was $261,000 in the first quarter of fiscal year 2024, compared to $630,000 for the first quarter of fiscal year 2023. Net cash used in operating activities during the first quarter of fiscal year 2024 primarily resulted from the cash flow impact of decreases in accounts payable and accrued expenses, including accrued compensation and payroll taxes, totaling $1.2 million and adjustments to reconcile a net loss of $1.4 million to net cash used in operating activities for the gain on insurance proceeds totaling $235,000, partially offset by decreases in the cash flow impact of trade accounts receivable, net totaling $1.3 million, decreases in inventories totaling $744,000 and certain other adjustments to reconcile a net loss of $1.4 million to net cash used in operating activities including depreciation and amortization of $213,000 and share-based compensation expense of $159,000.

Current wording

Net cash provided by operating activities was $113,000 in the first half of fiscal year 2024, compared to net cash used in operating activities of $1.5 million for the first half of fiscal year 2023. Net cash provided by operating activities during the first half of fiscal year 2024 primarily resulted from certain adjustments to reconcile a net loss of $3.0 million to net cash provided by operating activities including depreciation and amortization of $431,000 and share-based compensation expense of $251,000. Additionally, the cash flow impact of decreases in accounts receivable, net of $447,000 and decreases in inventories of $2.3 million further contributed to net cash provided by operating activities. All of the aforementioned factors positively affecting cash provided by operating activities were partially offset by the cash flow impact of decreases in accounts payable and accrued expenses, including accrued compensation and payroll taxes, of $639,000 and an adjustment to reconcile a net loss of $3.0 million to net cash provided by operating activities for gain on insurance proceeds, net totaling $219,000.

Previous wording

Net cash used in operating activities during the first quarter of fiscal year 2023 primarily resulted from an increase in inventories totaling $2.8 million, partially offset by certain adjustments to reconcile net income of $810,000 to net cash used in operating activities including depreciation and amortization of $248,000 and share-based compensation expense of $135,000. Additionally, the cash flow impact of decreases in trade accounts receivable, net of $1.1 million and increases in accounts payable and accrued expenses of $120,000 further contributed to offset net cash used in operating activities.

Current wording

Net cash used in operating activities during the first half of fiscal year 2023 primarily resulted from an increase in inventories totaling $3.7 million, the cash flow impact of increases in trade accounts receivable, net totaling $358,000, and an adjustment to reconcile net income of $3.2 million to net cash used in operating activities for the gain on insurance proceeds received for damage to property and equipment totaling $1.7 million, partially offset by certain other adjustments to reconcile net income of $3.2 million to net cash used in operating activities including depreciation and amortization of $497,000 and share-based compensation expense of $290,000.

Previous wording

Net cash used in investing activities totaled $80,000 in the first quarter of fiscal year 2024, compared to $106,000 in the first quarter of fiscal year 2023. Net cash used in investing activities during the first quarter of fiscal years 2024 and 2023 resulted primarily from purchases of property and equipment and deposits for the purchase of property and equipment.

Current wording

Net cash used in investing activities totaled $17,000 in the first half of fiscal year 2024, compared to net cash provided by investing activities of $1.5 million in the first half of fiscal year 2023. Net cash used in investing activities during the first half of fiscal year 2024 resulted primarily from purchases of property and equipment and deposits for the purchase of property and equipment totaling $236,000, partially offset by net insurance proceeds of $219,000. Net cash provided by investing activities during the first half of fiscal year 2023 resulted primarily from the net insurance proceeds received for damage to property and equipment totaling $1.7 million, partially offset by purchases of property and equipment and deposits for the purchase of property and equipment totaling $230,000.

Previous wording

Net cash used in financing activities totaled $906,000 for the first quarter of fiscal year 2024, compared to net cash provided by financing activities of $707,000 in the first quarter of fiscal year 2023. Net cash used in financing activities in the first quarter of fiscal year 2024 resulted primarily from net repayments on our revolving line of credit totaling $864,000. Net cash provided by financing activities in the first quarter of fiscal year 2023 resulted primarily from net proceeds on our revolving line of credit totaling $823,000, partially offset by principal payments on long-term debt totaling $83,000.

Current wording

Net cash used in financing activities totaled $474,000 for the first half of fiscal year 2024, compared to net cash provided by financing activities of $1.7 million in the first half of fiscal year 2023. Net cash used in financing activities in the first half of fiscal year 2024 resulted primarily from net repayments on our revolving line of credit totaling $278,000. Net cash provided by financing activities in the first half of fiscal year 2023 resulted primarily from net proceeds on our revolving line of credit totaling $2.0 million, partially offset by principal payments on long-term debt totaling $168,000.

Previous wording

The Virginia Real Estate Loan is with Northeast Bank and is payable in monthly installments of principal and interest. Principal is calculated using the unpaid balance of the loan and a two hundred forty (240) month amortization schedule. Interest is computed on the aggregate principal balance outstanding at a rate equal to the Prime Rate, adjusted monthly on the fifth day of each calendar month in accordance with changes to the Prime Rate, provided, however, that the interest rate is never less than 8.5% per annum on the basis of a 360-day year times the actual number of days elapsed. The maturity date is May 5, 2026.

Current wording

The Virginia Real Estate Loan is with Northeast Bank and is payable in monthly installments of principal and interest. Principal is calculated using the unpaid balance of the loan and a two hundred forty (240) month amortization schedule. Interest is computed on the aggregate principal balance outstanding at a rate equal to the Prime Rate, adjusted monthly on the fifth day of each calendar month in accordance with changes to the Prime Rate, provided, however, that the interest rate is never less than 8.5% per annum on the basis of a 360-day year times the actual number of days elapsed. The Prime Rate was 8.5% per annum at April 30, 2024 and October 31, 2023. The maturity date of the Virginia Real Estate Loan is May 5, 2026.

Previous wording

The maximum aggregate principal amount subject to the Revolver is $18.0 million. Interest accrues on the daily balance at the per annum rate of 1.5% above the Prime Rate in effect from time to time, but not less than 4.75% (the “Applicable Rate”). In the event of a default, interest may become 6.0% above the Applicable Rate. As of January 31, 2024, the Revolver accrued interest at the prime lending rate plus 1.5% (resulting in a 10.0% rate at January 31, 2024). The termination date of the Revolver is July 24, 2025 and the loan may be extended in one year periods subject to the agreement of SLR.

Current wording

The maximum aggregate principal amount subject to the Revolver is $18.0 million. Interest accrues on the daily balance at the per annum rate of 1.5% above the Prime Rate in effect from time to time, but not less than 4.75% (the “Applicable Rate”). As a result, the Revolver accrued interest at a 10.0% rate at April 30, 2024 and October 31, 2023. In the event of a default, interest may become 6.0% above the Applicable Rate. The termination date of the Revolver is July 24, 2025 and the loan may be extended in one year periods subject to the agreement of SLR.

Previous wording

As of January 31, 2024, we had $7.5 million of outstanding borrowings on our Revolver and $2.3 million in available credit.

Current wording

As of April 30, 2024, we had $8.0 million of outstanding borrowings on our Revolver and $2.0 million in available credit.