OPTICAL CABLE CORP

Disclosure Controls and Procedures.

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, and reported within the time period specified in the rules and forms of the Securities and Exchange Commission (the “SEC”). Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to management, including the chief executive officer and the chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Therefore, it is not expected that disclosure controls and procedures will prevent all errors or even all instances of fraud.

The Company maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to be effective in providing reasonable assurance that information required to be disclosed in reports under the Exchange Act are recorded, processed and summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to management to allow for timely decisions regarding required disclosure.

In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, will be detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. The design of any system of controls is based, in part, upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

As of October 31, 2024, the Company completed an evaluation, under the supervision and with the participation of management, including the chief executive officer and the chief financial officer (principal accounting officer and principal financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures.

Management’s Annual Report on Internal Control Over Financial Reporting.

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f) under the Exchange Act). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles and 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 the assets of the Company; (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 receipts and expenditures are being made only in accordance with authorizations of our management and directors of the Company; 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.

Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Further, the evaluation of the effectiveness of internal control over financial reporting was made as of a specific date, and continued effectiveness in future periods is subject to the risks that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies and procedures may decline. Management conducted an evaluation of the design and effectiveness of the Company’s system of internal control over financial reporting as of October 31, 2024, based on the framework set forth in “Internal Control - Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

In connection with the restatement of the Company’s financial statements included in its Annual Report filed with this Form 10-K, management, including the chief executive officer and chief financial officer, have evaluated the effectiveness of internal control over financial reporting and concluded that the Company did not maintain effective internal control over financial reporting as of October 31, 2024 because of a material weakness in the Company’s internal control over financial reporting described herein related to the classification of outstanding balances on its Revolver. Notwithstanding the material weakness described herein, management has concluded that the restated and revised audited financial statements included in the Annual Report filed with this report on Form 10-K are fairly stated in all material respects in accordance with U.S. GAAP for each of the periods presented herein.

In connection with the restatement described in Note 20 – Restatement of Previously Issued Financial Statements to the accompanying financial statements included in the Annual Report filed with this report on Form 10-K, management identified a material weakness in internal control over financial reporting related to the classification of an asset or a liability as either long-term or current. This material weakness resulted in a misclassification of the Company’s Revolver balance as a noncurrent liability instead of a current liability as of October 31, 2023 and for the following interim periods within fiscal year 2024 and 2023: January 31, 2024 and 2023, April 30, 2024 and 2023, and July 31, 2024 and 2023.

To respond to this material weakness, we plan to devote significant effort and resources to the remediation and improvement of internal control over financial reporting as it relates to the classification of assets and liabilities as either long-term or current. While the Company has processes to identify and appropriately apply applicable accounting requirements, we plan to improve these processes with respect to balance sheet classification issues. Our plans at this time include developing a checklist to document our review of asset and liability classification as either long-term or current as of the end of each reporting period, with additional focus on the review and interpretation of relevant literature for any significant new agreements or transactions that may impact such classifications during a reporting period, and documenting the performance of both internal and external consultations, if any, related to such matters. The elements of the remediation plan can only be accomplished over time, and there is no assurance that these initiatives will ultimately have the intended effects.

Restatement of Previously Issued Financial Statements

On December 20, 2024, the Company revised its prior position on the classification of the outstanding balance under our Revolver as a noncurrent liability and concluded that the previously issued financial statements for the year ended October 31, 2023 and for the quarters ended January 31, 2024 and 2023, April 30, 2024 and 2023, and July 31, 2024 and 2023 (the “restated periods”) should not be relied on because of a misclassification of balances outstanding on our Revolver as a noncurrent liability instead of a current liability. The Company has restated the classification of the outstanding balance under our Revolver from a noncurrent liability to a current liability in the financial statements for the restated periods in the Company’s Annual Report for fiscal year 2024 included with this report on Form 10-K (the “Restatement”). On December 23, 2024, the Company also filed with the SEC a current report on Form 8-K regarding the Restatement. The non-cash, balance sheet only adjustments to the financial statements do not impact the amounts previously reported as total assets, total liabilities or total shareholders’ equity. Further, the adjustments do not impact previously reported consolidated statements of operations, consolidated statements of shareholders’ equity or consolidated statements of cash flows. There also was no impact on any covenants with lenders as a result of the adjustments, as the Company’s borrowing arrangements do not include financial covenants that would be impacted by the classification of the Revolver balance.

Changes in Internal Control Over Financial Reporting.

There were no changes in the Company’s internal controls over financial reporting during the fourth quarter of the fiscal year covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. In light of the restatement of our financial statements included in the Annual Report filed with this report on Form 10-K, we plan to improve these processes with respect to balance sheet classification issues. Our plans at this time include developing a checklist to document our review of asset and liability classification as either long-term or current as of the end of each reporting period, with additional focus on the review and interpretation of relevant literature for any significant new agreements or transactions that may impact such classifications during a reporting period, and documenting the performance of both internal and external consultations, if any, related to such matters. The elements of our remediation plan can only be accomplished over time, and there is no assurance that these initiatives will ultimately have the intended effects.