R F Industries Ltd: Form 10-Q for the period ended Jan 31, 2026

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q (this “Quarterly Report”), and other oral and written statements made by RF Industries, Ltd., together with its five wholly-owned subsidiaries (collectively, hereinafter the “Company”, ”we”, “us”, or “our”), from time to time are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, including those that discuss strategies, goals, outlook or other non-historical matters, including the potential for expansion of our business or the completion of acquisitions, or projected revenues, income, returns or other financial measures. In some cases forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “except,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of such terms or other comparable terminology. These forward-looking statements are subject to numerous risks and uncertainties that may cause actual results to differ materially from those contained in such statements. Among the most important of these risks and uncertainties are the ability of the Company to meet customer demand through pricing and product offerings and efficient inventory and distribution channel management, to continue to source our raw materials and products from our suppliers and manufacturers, particularly those in Asia, the market demand for our products, which market demand is dependent in large part on the state of the telecommunications industry, the Company’s ability to continue as a going concern, the Company’s ability to remain in compliance with its existing capital loan terms and financial covenants and whether plans to develop 5G networks accelerate as expected, as well as our ability to meet any such demand, our ability to finance the expansion of our business or complete acquisitions, the effect of future business acquisitions and dispositions, the incurrence of impairment charges, and competition.

Important factors which may cause actual results to differ materially from the forward-looking statements are described in the Sections entitled “Risk Factors” in this Quarterly Report and in our Annual Report filed on Form 10-K for the year ended October 31, 2025, and other risks identified from time to time in the Company’s filings with the Securities and Exchange Commission. The Company assumes no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes and other financial information appearing elsewhere in this Quarterly Report. Readers are also urged to carefully review and consider the various disclosures made by the Company which attempt to advise interested parties of the factors which affect our business, including without limitation the disclosures made under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under the caption “Risk Factors,” and the audited consolidated financial statements and related notes included in our Annual Report filed on Form 10-K for the year ended October 31, 2025 and our other reports and filings made with the Securities and Exchange Commission (“SEC”).

Critical Accounting Estimates

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (the “MD&A”) is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these condensed consolidated financial statements requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, net revenue and expenses, and the disclosure of contingent liabilities. Management believes that there have been no material changes during the three months ended January 31, 2026 to the items that we disclosed as our critical accounting estimates in the MD&A in our Annual Report on Form 10-K for the fiscal year ended October 31, 2025.

Overview

RF Industries, Ltd. (together with subsidiaries, the “Company,” “we”, “us”, or “our”) is a national manufacturer and marketer of interconnect products and systems. We market a variety of connector products, including connectors and cables, standard and custom cable assemblies, wiring harnesses and fiber optic cable products to numerous industries for use in thousands of applications. We previously aggregated our operating divisions into two reportable segments, the RF Connector and Cable Assembly (“RF Connector”) segment and the Custom Cabling Manufacturing and Assembly (“Custom Cabling”) segment. During the fourth quarter of fiscal 2025, we completed changes to the structure of our organization in connection with broader restructuring initiatives, including consolidation of manufacturing operations, headcount reductions, and the transition of our sales organization to a unified, customer‑centric model. As a result of these changes, our previous RF Connector and Custom Cabling operating segments were combined into a single reportable segment.

For the three months ended January 31, 2026, revenues generated from our interconnect products were 36% of the Company’s total sales, revenues from our custom cabling products were 34% of the Company’s total sales and revenues from our integrated systems were 30% of total sales. Our interconnect products are primarily standardized products regularly used by customers and, therefore, have a more stable revenue stream when compared to our other offerings. Our custom cabling products are more customized cabling and wire-related equipment under larger project-based purchase orders. The integrated systems solutions are a blend of standardized offerings where we expect a more stable revenue stream with several more customized solutions that tend to be purchased in large project-based orders.

Our corporate headquarters are located at 16868 Via Del Campo Court, Suite 200, San Diego, CA 92127. Our phone number is (858) 549-6340.

Liquidity and Capital Resources

Historically, we have been able to fund our liquidity and other capital requirements from funds we generated from operations. We generated operating income during the three months ended January 31, 2026. The cost-cutting measures that were implemented to reduce our operating expenses and to help drive positive operating cash flow and increase liquidity continue to be realized. These cost-cutting efforts included consolidating facilities and recognizing the related operating efficiencies and synergies in our production operations. We intend to continue to pursue additional continuous improvement and cost reduction measures, as well as organic growth in revenue and profitability.

As of January 31, 2026, we had a total of $5.1 million of cash and cash equivalents compared to a total of $5.1 million of cash and cash equivalents as of October 31, 2025. As of January 31, 2026, we had working capital of $14.6 million and a current ratio of approximately 1.8:1 with current assets of $33.0 million and current liabilities of $18.4 million. We believe that the amount of cash remaining, plus the amount available to us under the EBC Revolving Loan Facility, will be sufficient to fund our anticipated liquidity needs for at least the next 12 months from the date of filing of this Quarterly Report.

As of January 31, 2026, we had $14.4 million of backlog, compared to $15.5 million as of October 31, 2025. The decrease in backlog relates primarily to shipments made against orders in our interconnect and integrated systems product offerings. Our backlog may fluctuate from period to period based on customer demand, general business conditions, and particularly the timing of project-based orders from large customers, which impacts our integrated systems offer. Since purchase orders are submitted by customers based on the timing of their requirements, our ability to predict orders in future periods or trends in future periods is limited. Furthermore, purchase orders may be subject to cancellation from customers, although we have not historically experienced material cancellations of purchase orders.

In the three months ended January 31, 2026, we generated $0.9 million of cash in our operating activities. This net inflow of cash is primarily related to the change in accounts receivable of $1.7 million, $0.6 million from depreciation and amortization, $0.3 million from stock-based compensation expense, the change in other current assets of $0.3 million, income taxes receivable of $31,000, $23,000 from amortization of debt issuance costs, bad debt expense of $14,000 and deferred income taxes of $3,000. The cash usage was primarily due to the change in accrued expenses of $1.7 million, the change in accounts payable of $0.1 million, right-of-use assets of $0.1 million, the net loss of $50,000, $46,000 tax payments on cancelled shares of restricted stock and an increase in inventories of $41,000.

During the three months ended January 31, 2026, we also spent $218,000 on capital expenditures, repaid $0.7 million on the revolving credit facility with EBC, paid $0.1 million in debt issuance cost, and received $0.2 million in proceeds from the exercise of stock options.

Our goal to expand and grow our business both organically and through acquisitions may require material additional capital equipment. In the past, we have purchased all additional equipment or financed some of our equipment and furnishings requirements through capital leases. At this time, we have not identified any additional capital equipment purchases that would require significant additional leasing or capital expenditures during the next 12 months. We also believe that based on our current financial condition, our current backlog of unfulfilled orders, and our anticipated future operations, we would be able to finance our expansion, if necessary. However, there can be no assurance that our cash resources will fund our operating plan, including any organic expansion or acquisitions, for the period anticipated by us, especially if there is a material adverse impact on our business from unforeseen events.

From time to time, we may undertake acquisitions of other companies or product lines in order to diversify our product and solutions offerings and customer base. Conversely, we may undertake the disposition of a division or product line due to changes in our business strategy or market conditions. Acquisitions may require the outlay of cash, which may reduce our liquidity and capital resources while dispositions may increase our cash position, liquidity and capital resources. Since our goal is to continue to expand our operations and accelerate our growth through future acquisitions, we may use some of our current capital resources to fund acquisitions we may undertake in the future.

Results of Operations

Three Months Ended January 31, 2026 vs. Three Months Ended January 31, 2025

Net sales for the three months ended January 31, 2026 (the “fiscal 2026 quarter”) decreased by 1.1%, or $0.2 million, to $19.0 million as compared to the three months ended January 31, 2025 (the “fiscal 2025 quarter”). The decrease in net sales is attributable mainly to the integrated systems product offering, which decreased by $3.4 million, or 37.4%, to $5.7 million compared to $9.1 million in the fiscal 2025 quarter, primarily driven by a decrease in small cell and thermal cooling offerings to our tier one customers due to the usual seasonality and timing of orders based on budget cycles. Net sales of the custom cabling product offering increased by $1.7 million, or 36.2% to $6.4 million compared to $4.7 million in the fiscal 2025 quarter, primarily driven by increased market penetration into the aerospace and industrial industries. The interconnect product offering increased by $1.5 million, or 27.8%, to $6.9 million compared to $5.4 million, primarily driven by higher customer demand for fiber applications.

Gross profit for the fiscal 2026 quarter increased by $0.4 million to $6.1 million compared to $5.7 million in the fiscal 2025 quarter, and gross margins increased to 32.3% of sales compared to 29.8% of sales in the fiscal 2025 quarter. The increases in gross profit and gross margins were primarily related to the overall product mix and new market penetration.

Engineering expenses increased by $0.2 million to $0.9 million in the fiscal 2026 quarter compared to $0.7 million in the fiscal 2025 quarter. The increase was the result of new product development and resource investment. Engineering expenses represent costs incurred relating to the ongoing research and development of current and new products.

Selling and general expenses increased by $0.1 million to $5.1 million (26.8% of sales) compared to $5.0 million (25.9% of sales) in the fiscal 2025 quarter primarily due to an increase in personnel-related expenses as a result of merit increases, benefit costs and continued labor market pressures.

For the fiscal 2026 and 2025 quarters, we recorded income tax provisions of $34,000 and $36,000, respectively. The effective tax rate was (425.0%) for the fiscal 2026 quarter, compared to (17.2%) for the fiscal 2025 quarter. The change in the effective tax rate from the fiscal 2026 quarter to fiscal 2025 quarter was primarily driven by the ratio of forecasted tax expense compared to the near break-even year-to-date loss, the effects of the change in valuation allowance, research and development credits, unrecognized tax benefits, state income taxes, and other expected permanent differences.

For the fiscal 2026 quarter, net loss was $50,000 and fully diluted loss per share was $0.00, compared to a net loss of $0.2 million and fully diluted loss per share of $0.02 for the fiscal 2025 quarter. For the fiscal 2026 quarter, the diluted weighted average shares outstanding were 10,736,090 as compared to 10,560,922 for the fiscal 2025 quarter.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required under this Item.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) that are designed to assure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide reasonable assurance only of achieving the desired control objectives, and we necessarily are required to apply our judgment in weighing the costs and benefits of possible new or different controls and procedures. Limitations are inherent in all control systems, so no evaluation of controls can provide absolute assurance that all control issues and any fraud have been detected. Because of the inherent limitations, we regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls and increase efficiency, and to maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes.

As required by Exchange Act Rule 13a-15(b), as of the end of the period covered by this report, we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of January 31, 2026.

Changes in Internal Control Over Financial Reporting

During the first quarter of fiscal 2026, there were no changes in the internal control over financial reporting as such term is defined in Rule 13a-15(f) of the Exchange Act, that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Our business, financial condition and operating results are affected by a number of factors, whether currently known or unknown, including risks specific to us or our industry, as well as risks that affect businesses in general. In addition to the information and risk factors set forth in this Quarterly Report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended October 31, 2025, filed with the SEC on January 14, 2026 (the “Annual Report”). The risks disclosed in such Annual Report and in this Quarterly Report could materially adversely affect our business, financial condition, cash flows, or results of operations and thus our stock price. We believe there have been no material changes in our risk factors from those disclosed in the Annual Report. However, additional risks and uncertainties not currently known or which we currently deem to be immaterial may also materially adversely affect our business, financial condition, or results of operations.

These risk factors may be important to understanding other statements in this Quarterly Report and should be read in conjunction with the unaudited condensed consolidated financial statements and related notes in Part I, Item 1, “Financial Statements” and Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report. Because of such risk factors, as well as other factors affecting the Company’s financial condition and operating results, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.