OCC 10-K & 10-Q changes, risk factors and insider trading

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; economic conditions that affect the telecommunications sector, the data communications sector, certain technology sectors and/or certain industry market sectors (for example, including, but not limited to: commercialenterprise/enterprise,commercial, data center, and various specialty markets, including military, industrial, broadcast, mining, petrochemical, renewable energy, data centersenergy and wireless carrier industry market sectors); corporate and/or government spending on information technology; actions by competitors; fluctuations in the price and/or availability of raw materials or products (includingincluding, but not limited to, optical fiber, copper, gold and other precious metals, plastics andplastics, other materials and products); 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 U.S.-based manufacturers; economic conditions or changes in relative currency strengths (for example, the strengthening of the U.S. dollar relative to certain foreign currencies), and import and/or export tariffs imposed by the U.S. and other countries that affect certain geographic markets, industry market sectors, and/or the economy as a whole; changes in demand for our products from certain competitors for which we provide private label connectivity products; changes in the mix of products sold during any given period (due to, among other things, seasonality or varying strength or weaknesses in particular markets in which we participate) which may impact gross profits and gross profit margins or net sales; variations in orders and production volumes affecting fixed-costs coverage and production efficiencies which may impact gross profits and gross profit margins; variations in orders and production volumes of hybrid cables (fiber and copper) with high copper content, which tend to have lower gross profit margins; significant variations in sales resulting from: (i) high volatility within various geographic markets, within targeted markets and industries, for certain types of products, and/or with certain customers (whether related to the market generally or to specific customers’ business in particular), (ii) market variations in existing product inventory levels available, generally or in certain markets, impacting sales orders for products, (iii) timing of large sales orders, and (iv) sales concentration among a limited number of customers in certain markets, particularly the wireless carrier market; terrorist attacks or acts of war, any current or potential future military conflicts, and acts of civil unrest; cold wars and economic sanctions as a result of these activities; changes in the level of spending by the United States government, including, but not limited to military spending; ability to recruit and retain key personnel (including production personnel); poor labor relations; increasing labor costs; delays, extended lead times and/or changes in availability of needed raw materials or products (including, but not limited to, optical fiber), equipment and/or supplies; shipping and other logistics challenges; impact of inflation on costs, including raw materials and labor, and ability to pass along any increased costs to customers; impact of import and/or export tariffs imposed by the U.S. and other countries on costs, and ability to pass along any increased costs to customers; impact of higher interest rates increasing the cost of capital; impact of cybersecurity risks and incidents and the related actual or potential costs and consequences of such risks and incidents, including costs and regulations to limit such risks; the impact of data privacy laws, including any applicable international privacy laws, and the related actual or potential costs and consequences; the impact of changes in accounting policies and related costs of compliance, including changes by the Securities and Exchange Commission (“SEC”), the Public Company Accounting Oversight Board (“PCAOB”), the Financial Accounting Standards Board (“FASB”), and/or the International Accounting Standards Board (“IASB”); our ability to continue to successfully comply with, and the cost of compliance with, the provisions of Section 404 of the Sarbanes-Oxley Act of 2002 or any revisions to that act which apply to us; the impact of changes and potential changes in federal or state laws and regulations adversely affecting our business and/or which result in increases in our direct and indirect costs, including our direct and indirect costs of compliance with such laws and regulations; rising healthcare costs; impact of new or changed government laws and regulations on healthcare costs; the impact of changes in state or federal tax laws and regulations increasing our costs and/or impacting the net return to investors owning our shares; any changes in the status of our compliance with covenants, if any, with our lenders; our continued ability to maintain and/or secure future debt financing and/or equity financing to adequately finance our ongoing operations; the impact of any redemption of redeemable common stock; the impact of future consolidation among competitors and/or among customers adversely affecting our position with our customers and/or our market position; actions by customers or suppliers adversely affecting us in reaction to the expansion of our product offering in any manner, including, but not limited to, by offering products that compete with our customers or suppliers, and/or by entering into alliances with, making investments in or with, and/or acquiring parties that compete with and/or have conflicts with our customers or suppliers; voluntary or involuntary delisting of the Company’s common stock from any exchange on which it is traded; the deregistration by the Company from SEC reporting requirements as a result of the small number of holders of the Company’s common stock; adverse reactions by customers, vendors or other service providers to unsolicited proposals regarding the ownership or management of the Company; the additional costs of considering, responding to and possibly defending our position on unsolicited proposals regarding the ownership or management of the Company; direct and indirect impacts of weather, natural disasters and/or epidemic, pandemic or endemic diseases in the areas of the world in which we operate, market our products and/or acquire raw materials or products including, but not limited to: impacts on demand for our products, impacts on supply chains, impacts on our manufacturing capabilities, labor constraints impacting our production volumes and costs, and other impacts on our sales and/or costs; any present or future government mandates, travel restrictions, shutdowns or other regulations regarding any epidemic, pandemic or endemic diseases; an increase in the number of shares of the Company’s common stock issued and outstanding; economic downturns generally and/or in one or more of the markets in which we operate; changes in market demand, exchange rates, productivity, market dynamics, market confidence, macroeconomic and/or other economic conditions in the areas of the world in which we operate and market our products; and our success in managing the risks involved in the foregoing.

Dollar amounts presented in the following discussion have been rounded to the nearest hundred thousand, except in the case of amounts less than one million and except in the case of the table set forth in the “Results of Operations” section, the amounts which in which both cases have been rounded to the nearest thousand.

Optical Cable Corporation (or OCC®) is a leading manufacturer of a broad range of fiber optic and copper data communication cabling and connectivity solutions primarily for the enterprise market andenterprise, data center marketscenter, and various harsh environment and specialty markets (collectively, the non-carrier markets), and also the wireless carrier market,markets, offering integrated suites of high quality products which operate as a system solution or seamlessly integrate with other components. Our product offerings include designs for uses ranging from enterprise networks, data centers, residential, campus and Passive Optical LAN (POL) installations to customized products for specialty applications and harsh environments, including military, industrial, mining, petrochemical, renewable energy and broadcast applications. Our products include fiber optic and copper cabling, hybrid cabling (which includes fiber optic and copper elements in a single cable), fiber optic and copper connectors, specialty fiber optic, copper and hybrid connectors, fiber optic and copper patch cords, pre-terminated fiber optic and copper cable trunks and assemblies, racks, cabinets, data center and datacom enclosures, patch panels, face plates, multimedia boxes, fiber optic reels and accessories and other cable and connectivity management accessories, and are designed to meet the most demanding needs of end-users, delivering a high degree of reliability and outstanding performance characteristics.

Founded in 1983, Optical Cable Corporation is headquartered in Roanoke, Virginia with offices, manufacturing and warehouse facilities located in Roanoke, Virginia, near Asheville, North Carolina, and near Dallas, Texas. We primarily manufacture our fiber optic cables at our Roanoke facility which is ISO 9001:2015 registered, primarily manufacture our enterprise connectivity products at our Asheville facility which is ISO 9001:2015 registered, and manufacture enterprise connectivity products and primarily manufacture our harsh environment and specialty connectivity products at our Dallas facility which is ISO 9001:2015 registered and MIL-STD-790G certified.

OCC designs, develops and manufactures, and markets and sells, fiber optic and hybrid cables for a broad range of enterprise, data center, harsh environment, wireless carrier and other specialty markets and applications. We refer to these products as our fiber optic cable offering. OCC designs, develops and manufactures, and markets and sells, fiber and copper connectivity products for a broad range of enterprise, commercial, data center, and residential applications. We refer to these products as our enterprise connectivity product offering. OCC designs, develops and manufactures, and markets and sells, a broad range of specialty fiber optic connectors and connectivity solutions principally for use in military, harsh environment and other specialty applications. We refer to these products as our harsh environment and specialty connectivity product offering.

Optical Cable Corporation entered into a strategic collaboration agreement with Lightera, LLC (“Lightera”) on July 7, 2025 to expand product offerings and solutions—especially for the data center and enterprise sectors. As part of this strategic collaboration, OCC and Lightera have combined portions of the product portfolios of both companies to deliver additional integrated cabling and connectivity solution offerings, which includes certain Lightera products being offered and sold by OCC. In connection with this strategic collaboration, Lightera purchased 642,199 redeemable restricted shares of common stock from OCC, which represent approximately 7.3% of OCC’s outstanding common shares as of AprilJuly 30,31, 2026.

Summary of Company Performance for SecondThird Quarter of Fiscal Year 2026

We sell our products internationally and domestically to our customers which include major distributors, various regional and smaller distributors, original equipment manufacturersmanufacturers, value-added resellers, and value-added resellers.others. All of our sales to customers outside of the United States are denominated in U.S. dollars. We can experience fluctuations in the percentage of net sales to customers outside of the United States and in the United States from period to period based on the timing of large orders, coupled with the impact of increases and decreases in sales to customers in various regions of the world. Sales outside of the U.S. can also be impacted by fluctuations in the exchange rate of the U.S. dollar compared to other currencies, as well as import and/or export tariffs imposed by the U.S. and other countries.

Cost of goods sold consists of the cost of materials,materials and products, product warranty costs andcosts, compensation costs, and overhead and other costs related to our manufacturing operations. The largest percentage of costs included in cost of goods sold is attributable to costs of materials.materials and products.

Selling, general and administrative expenses (“SG&A expenses”) consist of the compensation costs for sales and marketing personnel, shipping costs, trade show expenses, customer support expenses, travel expenses, advertising, bad debt expense, the compensation costs for administration and management personnel, legal, accounting, advisory and professional fees, costs incurred to settle litigation or claims and other actions against us, and other costs associated with our operations.

Three Months Ended AprilJuly 30,31, 2026 and 2025

Consolidated net sales for the secondthird quarter of fiscal year 2026 increased 26.6%22.0% to $22.2$24.3 million, compared to net sales of $17.5$19.9 million for the same period last year, and increased 35.2%9.4% compared to net sales of $16.4$22.2 million during the firstsecond quarter of fiscal year 2026. We experienced an increase in net sales in both our enterpriseenterprise, data center, and specialty markets during the secondthird quarter of fiscal year 2026, compared to the same period last year.

Net sales to customers outside of the United States increased 45.3%28.8% and net sales to customers in the United States increased 21.2%20.3% in the secondthird quarter of fiscal year 2026, 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.

We continue to see general market improvementsgrowth opportunities in our industry, both domestically and internationally, with strength specifically in our enterprise, data centercenter, and severe dutyspecialty markets.

At the end of the secondthird quarter of fiscal year 2026, our sales order backlog/forward load was $13.3$13.5 million compared to $13.3 million as of April 30, 2026, $10.4 million as of January 31, 2026, and when compared to $7.3 million as of October 31, 2025.

Our gross profit increased 42.4%43.9% to $7.6$9.1 million in the secondthird quarter of fiscal year 2026, compared to gross profit of $5.3$6.3 million in the secondthird quarter of fiscal year 2025, and increased 41.4%19.8% compared to $5.4$7.6 million for the firstsecond quarter of fiscal year 2026.

Gross profit margin, or gross profit as a percentage of net sales, increased to 34.2%37.4% in the secondthird quarter of fiscal year 2026, compared to 30.4%31.7% in the secondthird quarter of fiscal year 2025, and compared to 32.7%34.2% for the firstsecond quarter of fiscal year 2026, as we benefited from our operating leverage.

Gross profit margin for the secondthird quarter of fiscal 2026, when compared to the same period last year, was positively impacted by higher volumes, as fixed charges were spread over higher sales—the impact of our strong manufacturing 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.

SG&A expenses increased to $6.3$7.0 million, or 9.2%,21.4%, during the secondthird quarter of fiscal year 2026, when compared to $5.7 million during the secondthird quarter of fiscal year 2025. SG&A expenses as a percentage of net sales were 28.2%28.7% in the secondthird quarter of fiscal year 2026, compared to 32.7%28.8% in the secondthird quarter of fiscal year 2025—the impact of our strong SG&A operating leverage.2025. By comparison, SG&A expenses as a percentage of net sales were 33.8%28.2% during the firstsecond quarter of fiscal year 2026.

The increase in SG&A expenses during the secondthird quarter of fiscal year 2026, compared to the same period last year, was primarily the result of increases in employee costs and contracted sales personnel-related costs totaling $288,000$941,000 and shipping costs totaling $77,000.$179,000. Included in employee costs and contracted sales personnel-related costs are compensation costs and sales incentives. Compensation costs increased due to new hires, net of terminations, and certain rate increases.increases and performance incentives. Sales incentives and shipping costs increased primarily due to increases in net sales.

We recognized royalty expense, net of royalty income, totaling $7,000 during the secondthird quarter of fiscal years 2026 and 2025. 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.

We recognized $14,000 of amortization expense, associated with intangible assets, during the secondthird quarter of fiscal years 2026 and 2025.

Income (Loss) from Operations

We reported income from operations of $1.3$2.1 million for the secondthird quarter of fiscal year 2026, compared to a loss from operations of $429,000$562,000 for the secondthird quarter of fiscal year 2025. The change was primarily due to the increase in gross profit of $2.3$2.8 million, partially offset by the increase in SG&A expenses of $527,000.$1.2 million.

We recognized other expense, net in the secondthird quarter of fiscal year 2026 of $245,000, compared to $254,000$256,000 in the secondthird quarter of fiscal year 2025. Other expense, net for the secondthird quarter of fiscal years 2026 and 2025 is comprised of interest expense and other miscellaneous items.

Income (Loss) Before Income Taxes

We reported income before income taxes of $1.1$1.9 million for the secondthird quarter of fiscal year 2026, compared to a loss before income taxes of $683,000$306,000 for the secondthird quarter of fiscal year 2025. The change was primarily a result of the increase in income from operations of $1.7$1.5 million.

Income tax expense totaled $4,000$9,000 in the secondthird quarter of fiscal year 2026, compared to $15,000$4,000 in the secondthird quarter of fiscal year 2025. Our effective tax rate was less than one percent for the secondthird quarter of fiscal year 2026 and negative 2.2%1.5% for the secondthird quarter of fiscal year 2025.

Net Income (Loss)

Net income for the secondthird quarter of fiscal year 2026 was $1.1$1.9 million, or $0.12$0.21 per share, compared to a net loss of $698,000,$302,000, or $0.09$0.04 per share, for the secondthird quarter of fiscal year 2025. This change was primarily due to the increase in income before income taxes of $1.7$1.6 million.

SixNine Months Ended AprilJuly 30,31, 2026 and 2025

Consolidated net sales for the first halfnine months of fiscal year 2026 were $38.6$62.9 million, an increase of 16.1%18.3% compared to net sales of $33.3$53.2 million for the same period last year. We experienced an increase in net sales in both our enterpriseenterprise, data center, and specialty markets in the first halfnine months of fiscal year 2026, compared to the same period last year.

Net sales to customers outside of the United States increased 32.4%31.1% and net sales to customers in the United States increased 11.4%14.8% in the first halfnine months of fiscal year 2026, 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.

We continue to see general market improvementsgrowth opportunities in our industry, both domestically and internationally, with strength specifically in our enterprise, data centercenter, and severe dutyspecialty markets.

At the end of the first halfnine months of fiscal year 2026, our sales order backlog/forward load increased to $13.3$13.5 million when compared to $13.3 million as of April 30, 2026, $10.4 million as of January 31, 2026, and when compared to $7.3 million as of October 31, 2025.

Our gross profit was $13.0$22.1 million in the first halfnine months of fiscal year 2026, an increase of 30.1%35.5% compared to gross profit of $10.0$16.3 million in the first halfnine months of fiscal year 2025. Gross profit margin increased to 33.5%35.0% in the first halfnine months of fiscal year 2026 compared to 29.9%30.6% in the first halfnine months of fiscal year 2025.

Gross profit margin for the first halfnine months of fiscal 2026, when compared to the same period last year, was positively impacted by higher volumes, as fixed charges were spread over higher sales— the impact of our manufacturing 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.

SG&A expenses increased 5.6%10.9% to $11.8$18.8 million during the first halfnine months of fiscal year 2026, compared to $11.2$16.9 million for the same period last year. SG&A expenses as a percentage of net sales were 30.6%29.9% in the first halfnine months of fiscal year 2026 compared to 33.6%31.8% for the first halfnine months of fiscal year 2025—the impact of our SG&A operating leverage.2025.

The increase in SG&A expenses during the first halfnine months of fiscal year 2026 compared to the same period last year was primarily the result of increases in employee costs and contracted sales personnel-related costs totaling $390,000$1.3 million and shipping costs totaling $164,000.$343,000. Included in employee costs and contracted sales personnel-related costs are compensation costs and sales incentives. Compensation costs increased due to new hires, net of terminations, and certain rate increases.increases and performance incentives. Sales incentives and shipping costs increased primarily due to increases in net sales.

We recognized royalty expense, net of royalty income, totaling $13,000$20,000 during the first halfnine months of fiscal years 2026 and 2025. Royalty income and/or expense may fluctuate based on sales of related licensed products and estimates of amounts for non-licensed product sales, if any.

We recognized $28,000$41,000 of amortization expense, associated with intangible assets, during the first halfnine months of fiscal years 2026, compared to $27,000 in the first half of fiscal year2026 and 2025.

We reported income from operations of $1.1$3.2 million for the first halfnine months of fiscal year 2026, compared to a loss from operations of $1.3 million$719,000 for the first halfnine months of fiscal year 2025. The change was primarily due to the increase in gross profit of $3.0$5.8 million, partially offset by the increase in SG&A expenses of $625,000.$1.9 million.

We recognized other expense, net in the first halfnine months of fiscal year 2026 of $455,000,$700,000, compared to $497,000$753,000 in the first halfnine months of fiscal year 2025. Other expense, net for the first halfnine months of fiscal years 2026 and 2025 is comprised of interest expense and other miscellaneous items.

We reported income before income taxes of $640,000$2.5 million for the first halfnine months of fiscal year 2026, compared to a loss before income taxes of $1.8$1.5 million for the first halfnine months of fiscal year 2025. The change was primarily a result of the increase in income from operations of $2.4$3.9 million.

Income tax benefit totaled $17,000$9,000 in the first halfnine months of fiscal year 2026, compared to income tax expense of $27,000$31,000 in the first halfnine months of fiscal year 2025. Our effective tax rate was less than negative 2.7%one percent for the first halfnine months of fiscal year 2026 and negative 1.5%2.1% for the first halfnine months of fiscal year 2025.

Net income for the first halfnine months of fiscal year 2026 was $657,000,$2.5 million, or $0.07$0.28 per share, compared to a net loss of $1.8$1.5 million, or $0.23$0.19 per share, for the first halfnine months of fiscal year 2025. This change was primarily due to the increase in income before income taxes of $2.4$4.0 million.

Total assets increased $2.4$4.8 million, or 5.9%,12.0%, to $42.4$44.9 million at AprilJuly 30,31, 2026, from $40.1 million at October 31, 2025. This increase was primarily due to a $798,000$1.6 million increase in trade accounts receivable, net and an increase in inventories of $1.5$3.1 million. The increase in trade accounts receivable, net resulted primarily from the increase in net sales in the secondthird quarter of fiscal year 2026 when compared to the fourth quarter of fiscal year 2025. Inventories increased largely as a result of the timing of certain raw material purchases and theincreases replenishmentin andwork timingin ofprocess saleslevels ofrelated stockto inventory.pending shipments.

Total liabilities increased $1.7$2.1 million, or 9.1%,11.3%, to $20.2$20.6 million at AprilJuly 30,31, 2026, from $18.5 million at October 31, 2025. The increase in total liabilities was primarily due to an $882,000 increase in accrued compensation and payroll taxes, resulting from increased employee incentives in response to higher net sales and improved financial performance, and a $704,000 increase in note payable, revolver - current totaling $1.7 million,current, resulting from net proceeds on our Revolver.

As of AprilJuly 30,31, 2026, the aggregate redemption value of the redeemable restricted common stock increased to $7.0$9.5 million.million from $5.1 million as of October 31, 2025. The Company records the value of the redeemable restricted common stock at the average stock closing price for the ten days preceding the balance sheet date multiplied by the total number of the redeemable shares.

Total shareholders’ equity at AprilJuly 30,31, 2026 decreased $1.3$1.8 million in the first halfnine months of fiscal year 2026 resulting primarily from the reduction in retained earnings caused by the $1.9$4.5 million increase in the aggregate redemption value of the redeemable restricted common stock as of AprilJuly 30,31, 2026, partially offset by net income of $657,000.$2.5 million.

Our primary capital needs have been to fund working capital requirements through our Revolver.requirements. Our primary source of capital for this purpose has been existing cash, cash provided by operations, and borrowings under our Revolver (see “Credit Facilities” below).

Our cash totaled $146,000$297,000 as of AprilJuly 30,31, 2026, aan decreaseincrease of $92,000$59,000 compared to $238,000 as of October 31, 2025. The decreaseincrease in cash for the sixnine months ended AprilJuly 30,31, 2026 primarily resulted from net cash usedprovided inby operating activities of $1.4 million$148,000 and financing activities of $363,000, partially offset by capital expenditures of $211,000, partially offset by net cash provided by financing activities of $1.5 million.$425,000.

On AprilJuly 30,31, 2026, we had working capital of $17.1$19.2 million compared to $13.9 million on October 31, 2025. The ratio of current assets to current liabilities as of AprilJuly 30,31, 2026 was 2.12.2 to 1.0, compared to 1.8 to 1.0 as of October 31, 2025. The increase in working capital and in the current ratio was primarily due to the increase in trade accounts receivable, net of $798,000,$1.6 million, the increase in inventories totaling $1.5$3.1 million and the decrease in current installments of long-term debt totaling $2.5 million, resulting from the reclassification of the long-term portion of the refinanced term loan, partially offset by the increase in accrued compensation and payroll taxes totaling $882,000 and the note payable, revolver – current totaling $1.7 million, resulting from net proceeds on our Revolver.$704,000.

As of AprilJuly 30,31, 2026 and October 31, 2025, we had outstanding loan balances under our Revolver totaling $7.3$6.3 million and $5.6 million, respectively. As of AprilJuly 30,31, 2026 and October 31, 2025, we had other outstanding bank loan balances, excluding our Revolver, totaling $2.7 million and $2.6 million, respectively.million.

Net cash provided by operating activities was $148,000 in the first nine months of fiscal year 2026, compared to $617,000 for the first nine months of fiscal year 2025. Net cash provided by operating activities during the first halfnine months of fiscal year 20252026 primarily resulted from certain adjustments to reconcile a net lossincome of $1.8$2.5 million to net cash provided by operating activitiesactivities, including depreciation and amortization of $424,000 and$585,000, share-based compensation expense of $186,000.$388,000, Additionally,and the cash flow impact of decreases in tradeaccrued accountscompensation receivable,and netpayroll oftaxes $1.9totaling million$882,000, partially offset by an increase in inventories totaling $3.1 million, and the cash flow impact of increases in trade accounts payable and accrued expenses of $2.1 million further contributed toreceivable, net cash provided by operating activities. All of the aforementioned factors positively affecting cash provided by operating activities were partially offset by increases in inventories totaling $332,000.$1.6 million.

Net cash used in investing activities totaled $237,000$451,000 in the first halfnine months of fiscal year 2026, compared to $143,000$234,000 in the first halfnine months of fiscal year 2025. Net cash used in investing activities during the first halfnine months of fiscal years 2026 and 2025 resulted primarily from purchases of property and equipment and deposits for the purchase of property and equipment.

Net cash provided by financing activities totaled $1.5 million$363,000 for the first halfnine months of fiscal year 2026, compared to net cash used in financing activities of $2.0 million$206,000 in the first halfnine months of fiscal year 2025. Net cash provided by financing activities in the first halfnine months of fiscal years 2026 resulted primarily from net proceeds from our revolving line of credit totaling $1.7$704,000, million.partially offset by payroll taxes withheld and remitted totaling $206,000 related to the vesting of operational performance-based restricted stock. Net cash used in financing activities in the first halfnine months of fiscal year 2025 resulted primarily from the issuance of redeemable restricted common stock, net of $1.9 million, partially offset by repayments on our revolving line of credit totaling $1.8$1.9 million.million and payroll taxes withheld and remitted totaling $107,000 related to the vesting of operational performance-based restricted stock.

On April 30, 2026, weWe entered into the Term Loan consisting of a Business Loan Agreement (the “Loan Agreement”) with Freedom First Federal Credit Union (“Freedom First”). on April 30, 2026. In connection with the Loan Agreement, we also executed a Promissory Note dated April 30, 2026, in the original principal amount of $2,650,000. Coinciding with our entering the Loan Agreement with Freedom First, we paid the full outstanding balance of our existing Virginia Real Estate Loan with Northeast Bank, which had a maturity date of May 5, 2026.