10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________

Form 10-Q

_____________________

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended January 31, 2014

Commission file number: 0-13301

_______________________

RF INDUSTRIES, LTD.

(Exact name of registrant as specified in its charter)

Nevada	88-0168936
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
7610 Miramar Road, Building 6000 San Diego, California	92126
(Address of principal executive offices)	(Zip Code)

(858) 549-6340

(Registrant’s telephone number, including area code)

______________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.) Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ¨ Accelerated filer  ¨ Non-accelerated filer  ¨ Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes  ¨ No  x

The number of shares of the issuer’s Common Stock, par value $0.01 per share, outstanding as of March 5, 2014 was 8,187,803.

Part I. FINANCIAL INFORMATION

Item 1: Financial Statements

RF INDUSTRIES, LTD. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

	January 31,		October 31,
	2014		2013
	(Unaudited)		(Note 1)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	12,777	$	11,881
Trade accounts receivable, net of allowance for doubtful accounts of $84 and $103		2,521		3,160
Inventories		6,030		5,995
Other current assets		960		1,552
Deferred tax assets		322		322
TOTAL CURRENT ASSETS		22,610		22,910
Property and equipment:
Equipment and tooling		2,508		2,500
Furniture and office equipment		761		759
		3,269		3,259
Less accumulated depreciation		2,300		2,206
Total property and equipment		969		1,053
Goodwill		3,076		3,076
Amortizable intangible assets, net		1,352		1,407
Non-amortizable intangible assets		410		410
Note receivable from stockholder		67		67
Other assets		23		30
TOTAL ASSETS	$	28,507	$	28,953

2

Item 1: Financial Statements (continued)

RF INDUSTRIES, LTD. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

	January 31,		October 31,
	2014		2013
	(Unaudited)		(Note 1)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	589	$	792
Accrued expenses		1,178		1,741
Customer deposit		51		51
TOTAL CURRENT LIABILITIES		1,818		2,584
Deferred tax liabilities		950		950
TOTAL LIABILITIES		2,768		3,534
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Common stock - authorized 20,000,000 shares of $0.01 par value; 8,184,887 and 8,075,124 shares issued and outstanding at January 31, 2014 and October 31, 2013, respectively		82		81
Additional paid-in capital		16,330		15,706
Retained earnings		9,327		9,632
TOTAL STOCKHOLDERS' EQUITY		25,739		25,419
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	28,507	$	28,953

See Notes to Unaudited Condensed Consolidated Financial Statements.

3

Item 1: Financial Statements (continued)

RF INDUSTRIES, LTD. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(In thousands, except share and per share amounts)

	Three Months Ended January 31,
	2014		2013
Net sales	$	5,850	$	9,896
Cost of sales		3,268		5,331
Gross profit		2,582		4,565
Operating expenses:
Engineering		256		289
Selling and general		1,987		2,258
Totals		2,243		2,547
Operating income		339		2,018
Other income – interest/dividends		7		3
Income from continuing operations before provision for income taxes		346		2,021
Provision for income taxes		82		564
Income from continuing operations		264		1,457
Income from discontinued operations, net of tax		1		25
Net income	$	265	$	1,482
Earnings per share
Basic
Continuing operations	$	0.03	$	0.21
Discontinued operations		0.00		0.00
Net income per share	$	0.03	$	0.21
Earnings per share
Diluted
Continuing operations	$	0.03	$	0.19
Discontinued operations		0.00		0.00
Net income per share	$	0.03	$	0.19
Weighted average shares outstanding
Basic		8,143,640		7,074,095
Diluted		8,817,351		8,004,166

See Notes to Unaudited Condensed Consolidated Financial Statements.

4

Item 1: Financial Statements (continued)

RF INDUSTRIES, LTD. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)

	Three Months Ended January 31,
	2014		2013
OPERATING ACTIVITIES:
Net income	$	265	$	1,482
Adjustments to reconcile net income to net cash provided by operating activities:
Bad debt (recovery) expense		(15)		24
Accounts receivable write-off		4		-
Depreciation and amortization		149		159
Stock-based compensation expense		47		33
Excess tax benefit from stock-based compensation		(237)		(236)
Changes in operating assets and liabilities:
Trade accounts receivable		650		(636)
Inventories		(35)		247
Other current assets		592		(310)
Other long-term assets		7		-
Accounts payable		(203)		(373)
Customer deposit		-		51
Income taxes prepaid (payable)		237		(41)
Accrued expenses		(563)		260
Other long-term liabilities		-		(10)
Net cash provided by operating activities		898		650
INVESTING ACTIVITIES:
Capital expenditures		(10)		(43)
Net cash used in investing activities		(10)		(43)
FINANCING ACTIVITIES:
Proceeds from exercise of stock options		341		1,314
Excess tax benefit from exercise of stock options		237		236
Dividends paid		(570)		(700)
Net cash provided by financing activities		8		850
Net increase in cash and cash equivalents		896		1,457
Cash and cash equivalents, beginning of period		11,881		5,492
Cash and cash equivalents, end of period	$	12,777	$	6,949
Supplemental cash flow information – income taxes paid	$	-	$	603

See Notes to Unaudited Condensed Consolidated Financial Statements.

5

RF INDUSTRIES, LTD. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Unaudited interim condensed consolidated financial statements

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments, which are normal and recurring, have been included in order to make the information not misleading. Information included in the consolidated balance sheet as of October 31, 2013 has been derived from, and certain terms used herein are defined in, the audited financial statements of the Company as of October 31, 2013 included in the Company’s Annual Report on Form 10-K (“Form 10-K”) for the year ended October 31, 2013 that was previously filed with the Securities and Exchange Commission (“SEC”). Operating results for the three month period ended January 31, 2014 are not necessarily indicative of the results that may be expected for the year ending October 31, 2014. The unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended October 31, 2013.

Principles of consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of RF Industries, Ltd. and its wholly owned subsidiary, Cables Unlimited, Inc. (“Cables Unlimited”), collectively (the “Company”). All intercompany balances and transactions have been eliminated in consolidation.

Revenue recognition

Four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. The Company recognizes revenue from product sales after purchase orders are received which contain a fixed price and the products are shipped. Most of the Company’s products are sold to continuing customers with established credit histories.

Reclassifications

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported consolidated net income.

Note 2 - Discontinued operations

During 2013, the Company sold its RF Neulink and RadioMobile divisions, which together used to comprise the Company’s RF Wireless segment, as discussed below. As part of the RF Wireless segment, RF Neulink was engaged in the sale of wireless data products, such as transmitter and receiver modules and standard or smart programmable modems, for use in certain high-speed wireless connection markets, and RadioMobile was engaged in the sale of complete hardware and software solutions for wireless mobile data management applications. Given the Company’s focus on the higher growth and higher margin components of its business, the Company decided to sell RF Neulink and RadioMobile in order to reduce operating costs and focus its resources on more profitable divisions. Accordingly, during 2013, the RF Neulink and RadioMobile divisions had met the criteria to be accounted for as discontinued operations. The operations of both RF Neulink and RadioMobile have been reclassified from the ongoing operations of the Company as a result of the sale of these businesses, and the Company will not have any continuing involvement in the operations of RF Neulink and RadioMobile after the disposal transactions, as detailed in the subsequent paragraphs.

Effective July 31, 2013, the Company closed an Asset Purchase Agreement (the “RF Neulink Agreement”) with Raveon Technologies Corporation (“Raveon”), whereby Raveon acquired the assets related to the RF Neulink business, primarily consisting of inventory, certain intellectual property and licenses, customer lists and trademarks. Pursuant to the RF Neulink Agreement, no purchase price was paid at the closing. Rather, the purchase price for the RF Neulink business will consist of cash payments made by Raveon to the Company under the following circumstances: (i) for each RF Neulink inventory item that Raveon sells, Raveon is required to pay the Company the assigned value of that inventory item. This arrangement continues until the earlier of three years from the closing date or the date all inventory items are sold; and (ii) Raveon is required to pay the Company a royalty based on Raveon’s use of RF Neulink’s tradename or trademark, its customer list or its intellectual property. The royalty, which ranges from 5% to 10% of Raveon’s sales of such RF Neulink-related products, may not exceed $450,000 in the aggregate, and will not be payable on sales of inventory items. For the three months ended January 31, 2014, the Company recognized approximately $4,000 of royalty income related to the RF Neulink Agreement, which amount has been included within discontinued operations.

6

Effective October 29, 2013, the Company closed an Asset Purchase Agreement (the “RadioMobile Agreement”) with RadioMobile, Inc. (“Purchaser”), a new company formed by the former manager of the Company’s RadioMobile division, whereby the Purchaser acquired the assets related to the RadioMobile business, primarily consisting of inventory, certain equipment, certain intellectual property and licenses, customer lists and trademarks, in return for the Purchaser’s three-year agreement to pay the Company 10.0% of all net revenues up to $2.0 million. Additionally, as part of the RadioMobile Agreement, all former RadioMobile employees were terminated by the Company and re-hired by the Purchaser, and the Company permitted Purchaser to continue to use its office space, rent-free, through the end of the lease, which expires on March 31, 2014. There is no obligation from Purchaser if inventory is never sold. Other closing costs amounted to approximately $0.2 million. For the three months ended January 31, 2014, the Company recognized approximately $4,000 of royalty income related to the RadioMobile Agreement, which amount has been included within discontinued operations.

The following summarized financial information related to the RF Neulink and RadioMobile divisions is segregated from continuing operations and reported as discontinued operations for the three months ended January 31, 2014 and 2013 (in thousands):

	Three Months Ended January 31,
	2014		2013
Net sales	$	8	$	613
Cost of sales		-		242
Gross profit		8		371
Operating expenses		6		329
Operating income		2		42
Provision for income taxes		1		17
Income from discontinued operations, net of tax	$	1	$	25

Note 3 - Inventories and major vendors

Inventories, consisting of materials, labor and manufacturing overhead, are stated at the lower of cost or market. Cost has been determined using the weighted average cost method. Inventories consist of the following (in thousands): 

	January 31,  2014		October 31,  2013
Raw materials and supplies	$	2,006	$	1,913
Work in process		35		15
Finished goods		3,989		4,067
Totals	$	6,030	$	5,995

Purchases of inventory from two major vendors during the three months ended January 31, 2014 represented 19% and 15% of total inventory purchases. There were no purchases in excess of 10% of total inventory purchases from vendors during the three months ended January 31, 2013. The Company has arrangements with these vendors to purchase product based on purchase orders periodically issued by the Company.

Note 4 - Earnings per share

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares outstanding increased by the effects of assuming that other potentially dilutive securities (such as stock options) outstanding during the period had been exercised and the treasury stock method had been applied. Potentially dilutive securities totaling 122,069 and 138,280 for the three months ended January 31, 2014 and 2013, respectively, were excluded from the calculation of diluted per share amounts because of their anti-dilutive effect.

The following table summarizes the computation of basic and diluted weighted average shares outstanding:

	Three Months Ended January 31,
	2014	2013
Weighted average shares outstanding for basic earnings per share	8,143,640	7,074,095
Add effects of potentially dilutive securities-assumed exercise of stock options	673,711	930,071
Weighted average shares for diluted earnings per share	8,817,351	8,004,166

7

Note 5 - Stock-based compensation and equity transactions

The Company’s current stock incentive plan provides for the granting of qualified and nonqualified options to the Company’s officers, directors and employees. Incentive stock options granted to the Company’s employees during the three months ended January 31, 2014 vest and are exercisable equally over three years and expire in five years from date of grant. During the three months ended January 31, 2014, the Company granted a total of 99,323 incentive stock options to company employees. The Company satisfies the exercise of options by issuing previously unissued common shares.

The weighted average fair value of employee and non-employee directors stock options granted by the Company during the three months ended January 31, 2014 and 2013 was estimated to be $1.89 and $1.01 per share, respectively, using the Black-Scholes option pricing model with the following assumptions:

	2014		2013
Risk-free interest rate	0.69	%	0.36	%
Dividend yield	4.09	%	4.45	%
Expected life of the option	3.5 years		3.5 years
Volatility factor	49.2	%	42.5	%

Expected volatilities are based on historical volatility of the Company’s stock price and other factors. The Company used the historical method to calculate the expected life of the 2014 option grants. The expected life represents the period of time that options granted are expected to be outstanding. The risk-free rate is based on the U.S. Treasury rate with a maturity date corresponding to the options’ expected life. The dividend yield is based upon the historical dividend yield.

Issuances of common stock by the Company

During the three months ended January 31, 2014, the Company issued 109,763 shares of common stock and received net proceeds of $341,000 in connection with the exercise of employee stock options.

Company stock option plans

Descriptions of the Company’s stock option plans are included in Note 8 of the Company’s Annual Report on Form 10-K for the year ended October 31, 2013. A summary of the status of the options granted under the Company’s stock option plans as of January 31, 2014 and the changes in options outstanding during the three months then ended is presented in the table that follows:

		Weighted
		Average
	Shares	Exercise Price
Outstanding at November 1, 2013	988,215	$	2.24
Options granted	122,903	$	6.84
Options exercised	(109,763)	$	3.12
Options canceled or expired	(1,836)	$	4.05
Options outstanding at January 31, 2014	999,519	$	2.70
Options exercisable at January 31, 2014	658,978	$	1.78
Options vested and expected to vest at January 31, 2014	989,331	$	2.67

Weighted average remaining contractual life of options outstanding as of January 31, 2014: 4.83 years

Weighted average remaining contractual life of options exercisable as of January 31, 2014: 4.91 years

Weighted average remaining contractual life of options vested and expected to vest as of January 31, 2014: 4.83 years

Aggregate intrinsic value of options outstanding at January 31, 2014: $3.9 million

Aggregate intrinsic value of options exercisable at January 31, 2014: $3.2 million

Aggregate intrinsic value of options vested and expected to vest at January 31, 2014: $3.2 million

As of January 31, 2014, $380,000 of expense with respect to nonvested share-based arrangements has yet to be recognized which is expected to be recognized over a weighted average period of 2.96 years.

8

Non-employee directors receive $30,000 annually, which amount is paid one-half in cash and one-half through the grant of non-qualified stock options to purchase shares of the Company’s common stock. During the quarter ended January 31, 2014, the Company granted each of its three non-employee directors 7,860 options. The number of stock options granted to each director was determined by dividing $15,000 by the fair value of a stock option grant using the Black Scholes model ($1.91 per share). These options vest ratably over fiscal year 2014.

Stock option expense

During the three months ended January 31, 2014 and 2013, stock-based compensation expense totaled $47,000 and $33,000, respectively. For the three months ended January 31, 2014 and 2013, stock-based compensation classified in cost of sales amounted to $9,000 and $9,000, respectively, and stock-based compensation classified in selling and general expense amounted to $38,000 and $24,000, respectively.

Note 6 - Concentrations of credit risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company maintains its cash and cash equivalents with high-credit quality financial institutions. At January 31, 2014, the Company had cash and cash equivalent balances in excess of Federally insured limits in the amount of approximately $12.4 million.

One customer accounted for approximately 35% and 53% of the Company’s net sales for the three month periods ended January 31, 2014 and 2013, respectively. At January 31, 2014 and October 31, 2013, this customer’s account receivable balance accounted for approximately 24% and 27%, respectively, of the Company’s total net accounts receivable balances.  Although this customer has been an on-going major customer of the Company continuously during the past 15 years, the written agreements with this customer do not have any minimum purchase obligations and the customer could stop buying the Company’s products at any time and for any reason. A reduction, delay or cancellation of orders from this customer or the loss of this customer could significantly reduce the Company’s future revenues and profits.

Sales of one product line accounted for $1.1 million or 18% of net sales and $3.6 million or 34% of net sales for the three months ended January 31, 2014 and 2013, respectively. The Company has a standard written purchase order with this customer and, therefore, this customer does not have any minimum purchase obligations and could stop buying the product at any time. A reduction, delay or cancellation of orders for this product or the loss of this customer could significantly reduce the Company’s revenues and profits.

Note 7 - Segment information

The Company aggregates operating divisions into operating segments which have similar economic characteristics and divisions are similar in the majority of the following areas: (1) the nature of the product and services; (2) the nature of the production process; (3) the type or class of customer for their products and services; (4) the methods used to distribute their products or services; (5) if applicable, the nature of the regulatory environment. The Company currently has three segments - RF Connector and Cable Assembly, Cables Unlimited and Medical Cabling and Interconnector based upon this evaluation. During 2013, the Company disposed of its RF Wireless segment.

  The RF Connector and Cable Assembly segment is comprised of two divisions, whereas the Cables Unlimited segment and the Medical Cabling and Interconnector segment are each comprised of one division. The three divisions that meet the quantitative thresholds for segment reporting are Connector and Cable Assembly, Cables Unlimited and Bioconnect. The other division aggregated into the RF Connector and Cable Assembly segment has similar products that are marketed to their respective customer base and production and product development processes that are similar in nature. The specific customers are different for each division; however, there is some overlapping of product sales to them. The methods used to distribute products are similar within each division aggregated.

Management identifies the Company’s segments based on strategic business units that are, in turn, based along market lines. These strategic business units offer products and services to different markets in accordance with their customer base and product usage. For segment reporting purposes, the Company aggregates the Connector and Cable Assembly and Aviel divisions into the RF Connector and Cable Assembly segment, while the Cables Unlimited division constitutes the Cables Unlimited segment. The Bioconnect Division comprises the Medical Cabling and Interconnector segment.

As reviewed by the Company’s chief operating decision maker, the Company evaluates the performance of each segment based on income or loss before income taxes. The Company charges depreciation and amortization directly to each division within the segment. Effective beginning with the second quarter of 2013, the Company changed its measurement of segment profit or loss whereby certain corporate costs, previously attributed to the RF Connector and Cable Assembly segment, have been allocated to each of the segments. Certain amounts in the 2013 segment tables have been reclassified to conform to the 2014 presentation to reflect all segment information on a comparable basis. Additionally, with the sale and discontinuation of the RF Neulink and RadioMobile divisions during 2013, the segment information has been adjusted as these divisions are reflected within discontinued operations. Accounts receivable, inventory, property and equipment, goodwill and intangible assets are the only assets identified by segment. Except as discussed above, the accounting policies for segment reporting are the same as for the Company as a whole.

9

Substantially all of the Company’s operations are conducted in the United States; however, the Company derives a portion of its revenue from export sales. The Company attributes sales to geographic areas based on the location of the customers. The following table presents the sales of the Company by geographic area for the three months ended January 31, 2014 and 2013 (in thousands):

	Three Months Ended January 31,
	2014		2013
United States	$	5,448	$	9,436
Foreign Countries:
Canada		102		148
Israel		65		97
Mexico		122		191
All Other		113		24
		402		460
Totals	$	5,850	$	9,896

Net sales, income (loss) from continuing operations before provision for income taxes and other related segment information for the three months ended January 31, 2014 and 2013 are as follows (in thousands): 

	RF Connector				Medical
	and		Cables		Cabling and
	Cable Assembly		Unlimited		Interconnector		Corporate		Total
2014
Net sales	$	2,972	$	2,127	$	751	$	-	$	5,850
Income (loss) from continuing operations before provision for income taxes		368		(167)		140		5		346
Depreciation and amortization		49		92		8		-		149
2013
Net sales	$	3,817	$	5,392	$	687	$	-	$	9,896
Income from continuing operations before provision for income taxes		551		1,312		157		1		2,021
Depreciation and amortization		32		86		40		1		159

Note 8 -Income tax provision

The Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates, to determine its quarterly provision for income taxes. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter.

The provision for income taxes was 24% and 28% of income from continuing operations before income taxes for the three months ended January 31, 2014 and 2013, respectively. The decrease in the effective income tax rate from period to period was primarily driven by a decrease in the rate resulting from the reversal of cumulative compensation expense related to disqualifying disposition of incentive stock options.

The total amount of unrecognized tax benefits was $0 as of January 31, 2014 and October 31, 2013. The gross liability for income taxes related to unrecognized tax benefits, if any, is included in other long-term liabilities in the Company's condensed consolidated balance sheets.

The total balance of accrued interest and penalties related to uncertain tax positions was $0 as of January 31, 2014 and October 31, 2013. The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense and the accrued interest and penalties are included in deferred and other long-term liabilities in the Company's condensed consolidated balance sheets. There were no material interest or penalties included in income tax expense for the three months ended January 31, 2014 and 2013.

10

Note 9 - Intangible assets

Intangible assets are comprised of the following (in thousands): 

	January 31, 2014		October 31, 2013
Amortizable intangible assets:
Non-compete agreements (estimated life 5 years)	$	200	$	200
Accumulated amortization		(105)		(95)
		95		105
Customer relationships (estimated life 9.6 years)		1,730		1,730
Accumulated amortization		(473)		(428)
		1,257		1,302
Totals	$	1,352	$	1,407
Non-amortizable intangible assets:
Trademarks	$	410	$	410

Note 10 - Accrued expenses and other long-term liabilities

Accrued expenses consist of the following (in thousands):

	January 31, 2014		October 31, 2013
Wages payable	$	651	$	1,188
Accrued receipts		426		376
Other current liabilities		101		177
Totals	$	1,178	$	1,741

Accrued receipts represent purchased inventory for which invoices have not been received.

Note 11 - Cash dividend and declared dividends

The Company paid dividends of $0.07 per share during the three months ended January 31, 2014 for a total of $570,000. The Company paid dividends of $0.10 per share during the three months ended January 31, 2013 for a total of $700,000.

Note 12- Legal proceedings

On May 24, 2013, a former employee of the Company filed a complaint with the San Diego, California office of the U.S. Department of Labor-OSHA alleging retaliatory employment practices in violation of the whistleblower provisions of the Sarbanes-Oxley Act. The complaint alleges that the former employee was terminated in November 2012 in retaliation for making disclosures relating to fraudulent accounting practices and lack of compliance with U.S. GAAP; violations of multiple Securities and Exchange Commission rules and regulations; and fraud against the shareholders. The complaint does not seek any specified amount of damages, but does seek various forms of relief, including the following: Reinstatement of the former employee’s employment, or in the alternative, an award for lost future wages, benefits and pension; back pay and bonuses; compensatory monetary damages in an amount to be determined; reasonable attorney’s fees; and all costs of litigation. The Company disputes the employee’s claims. The lawsuit is currently ongoing and is being defended by the Company’s insurance carrier’s appointed law firm under the Company’s employment practices liability insurance policy.

Note 13 - Subsequent events

At its March 7, 2014 meeting, the Board of Directors of the Company declared a quarterly cash dividend of $0.07 per share to be paid on April 15, 2014 to stockholders of record on March 30, 2014.

11

Item 2:   Management’s Discussion and Analysis of Financial Condition and Results of Operations 

This report contains forward-looking statements. These statements relate to future events or the Company’s future financial performance. In some cases, you can identify forward-looking statements 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 statements are only predictions. Actual events or results may differ materially.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither the Company, nor any other person, assumes responsibility for the accuracy and completeness of the forward-looking statements. The Company is under no obligation to update any of the forward-looking statements after the filing of this Quarterly Report on Form 10-Q to conform such statements to actual results or to changes in its expectations.

The following discussion should be read in conjunction with the Company’s unaudited condensed consolidated financial statements and the related notes and other financial information appearing elsewhere in this Form 10-Q. 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 the Company’s 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 the Company’s Annual Report filed on Form 10-K for the year ended October 31, 2013 and other reports and filings made with the Securities and Exchange Commission.

Critical Accounting Policies

The unaudited condensed consolidated financial statements of the Company are prepared in conformity with accounting principles generally accepted in the United States of America (“U. S. GAAP”). U.S. GAAP requires the Company to make certain estimates and judgments that may affect the financial statements. One of the accounting policies that involves significant judgments and estimates concerns our inventory valuation. Inventories are valued at their weighted average cost. Certain items in inventory may be considered obsolete or excess and, as such, we periodically review our inventories for excess and slow moving items and make provisions as necessary to properly reflect inventory value. Because inventories have, during the past few years, represented up to one-third of our total assets, any reduction in the value of our inventories would require us to take write-offs that would affect our net worth and future earnings.

Another accounting policy that involves significant judgments and estimates is our accounts receivable allowance valuation, which requires us to make estimates about matters that are inherently uncertain. The Company routinely assesses the financial strength of its customers and maintains an allowance for doubtful accounts that management believes will adequately provide for credit losses.

Another critical accounting policy that involves significant judgments and estimates is management’s assessment of non-amortizable intangible assets for impairments. We review our non-amortizable intangible asset for impairment annually in the fourth quarter at the reporting unit level. Each quarter, we also analyze whether any indicators of impairment exist.

Another critical accounting policy that involves significant judgments and estimates is management’s assessment of goodwill for impairment, which requires us to make assumptions and judgments regarding expected future cash flows. We review our goodwill for impairment annually in the fourth quarter at the reporting unit level. Each quarter, we also analyze whether any indicators of impairment exist.

The Company uses the Black-Scholes model to value stock option grants. This valuation is affected by the Company’s stock price as well as assumptions regarding a number of inputs which involve significant judgments and estimates. These inputs include the expected term of employee stock options, the expected volatility of the stock price, the risk-free interest rate and expected dividends.

 Overview

The Company primarily engages in the design, manufacture, and marketing of interconnect products and systems, including coaxial and specialty cables, fiber optic cables and connectors, and electrical and electronic specialty cables. The Company’s connectivity solutions are used across diversified, high growth markets including wireless carriers and infrastructure and medical and industrial companies.

Liquidity and Capital Resources

Management believes that existing current assets and the amount of cash it anticipates it will generate from current operations will be sufficient to fund the anticipated liquidity and capital resource needs of the Company for at least twelve months. The Company does not, however, currently have any commercial banking arrangements providing for loans, credit facilities or similar matters should the Company need to obtain additional capital. Management believes that its existing assets and the cash expected to be generated from operations will be sufficient during the current fiscal year based on the following:

· As of January 31, 2014, the Company had cash and cash equivalents equal to $12.8 million.

12

· As of January 31, 2014, the Company had $22.6 million in current assets and $1.8 million in current liabilities.

· As of January 31, 2014, the Company had no outstanding indebtedness (other than accounts payable, accrued expenses and income taxes payable).

The Company does not anticipate needing material additional capital equipment in the next twelve months. In the past, the Company has financed some of its equipment and furnishings requirements through capital leases. No additional capital equipment purchases have been currently identified that would require significant additional leasing or capital expenditures during the next twelve months. Management also believes that based on the Company’s current financial condition, the absence of outstanding bank debt and recent operating results, the Company would be able to obtain bank loans to finance its expansion, if necessary, although there can be no assurance any bank loan would be obtainable or, if obtained, would be on favorable terms or conditions.

The Company generated cash from operating activities of $898,000 during the three months ended January 31, 2014 primarily due to net income of $265,000 for the three months ended January 31, 2014 and $685,000 for changes in operating assets and liabilities, which were offset by excess tax benefit from stock-based compensation of $237,000 and other non-cash charges of $185,000.

As of January 31, 2014, the Company had a total of $12.8 million of cash and cash equivalents compared to a total of $11.9 million of cash and cash equivalents as of October 31, 2013. As of January 31, 2014, the Company had working capital of $20.8 million and a current ratio of approximately 12:1.

Results of Operations

Three Months Ended January 31, 2014 vs. Three Months Ended January 31, 2013

Net sales for the three months ended January 31, 2014 (the “fiscal 2014 quarter”) decreased by 41% or $4.0 million to $5.9 million from $9.9 million for the three months ended January 31, 2013 (the “fiscal 2013 quarter”) primarily due to a significant decrease in net sales at the Company’s Cables Unlimited segment. The Cables Unlimited segment generated $2.1 million of sales in the fiscal 2014 quarter, a decrease of $3.3 million or 61%, over the fiscal 2013 quarter. Most of the revenues generated by Cables Unlimited in both the fiscal 2013 quarter and the fiscal 2014 quarter were generated by the sale of a single line of new cabling products. The decrease in net sales at Cables Unlimited was primarily due to a decline in demand for this new line of cabling products. Orders for Cables Unlimited’s new cabling product are primarily dependent upon the number of cellular telephone sites that are being retrofitted for 4G technologies and, to a lesser extent, on the availability of other competing products.Accordingly, the future demand for this product cannot be accurately estimated. Also contributing to the overall decrease in sales during the fiscal 2014 quarter was a decrease in sales of $845,000 or 22% at the RF Connector and Cable Assembly segment, which generated sales of $3.0 million during the fiscal 2014 quarter compared to $3.8 million during the fiscal 2013 quarter. The decrease in net sales at the RF Connector and Cable Assembly segment is attributable to an industry-wide softening of demand for RF cable and connector products. The Medical Cabling and Interconnector segment generated revenues of $751,000, an increase of $64,000 or 9% over the prior comparable period. The increase in medical cabling revenue was due to increased sales from existing customers.

The Company’s gross profit as a percentage of sales decreased by 2% to 44% during the fiscal 2014 quarter compared to 46% in the fiscal 2013 quarter primarily due to a decline in gross margins at the Cables Unlimited segment. Gross margins for the Cables Unlimited products decreased primarily due to certain fixed manufacturing costs spread over a lower revenue base, as well as lower pricing due to increased competition and a change in customers. This decrease was partially offset by increases at the RF Connector and Cable Assembly and the Medical Cabling and Interconnector segments during the fiscal 2014 quarter due to increased efficiencies.

Engineering expenses decreased $33,000 or 11% in the fiscal 2014 quarter to $256,000 compared to $289,000 in the fiscal 2013 quarter due to decreased salary expense related to engineering activities. Engineering expenses represent costs incurred relating to the ongoing development of new products.

Selling and general expenses decreased $271,000, or 12%, in the fiscal 2014 quarter to $2.0 million from $2.3 million in the comparable quarter of the prior fiscal year. The decrease in selling and general expenses was primarily because the fiscal 2013 quarter included lump-sum bonus payments to senior management, as well as increased legal and consulting fees during the fiscal 2013 quarter in connection with the termination and replacement of an employee.

The provision for income taxes during the fiscal 2014 quarter was $82,000 (or an effective tax rate of approximately 24%), compared to $564,000 in the fiscal quarter 2013 (or an effective tax rate of approximately 28%). The significant decrease in the fiscal 2014 quarter provision for tax is due to the significantly lower income before provision for income taxes during the period. Additionally, the reduction in the effective tax rate is attributable to the impact of the tax benefit to the Company of disqualifying incentive stock option dispositions during the fiscal 2014 quarter, which result in a tax deduction to the Company. Management believes that this trend may not continue for the remainder of fiscal year 2014 and, accordingly, anticipates that the effective tax rate will increase.

13

Income from discontinued operations, net of tax, during the fiscal 2014 quarter was $1,000 compared to $25,000 in the fiscal 2013 quarter. During fiscal 2013, the Company sold its RadioMobile and RF Neulink divisions and, accordingly, the results of these divisions are included in discontinued operations for all periods presented.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Nothing to report.

Item 4. Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the 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.

As required by Securities and Exchange Commission Rule 13a-15(b), the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the fiscal quarter covered by this report. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of January 31, 2014.

There has been no change in the Company’s internal control over financial reporting during the quarter ended January 31, 2014 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

Nothing to report.

Item 1A. Risk Factors

The discussion of our business and operations should be read together with the risk factors contained in Item 1A of our Annual Report on Form 10-K for the fiscal year ended October 31, 2013 filed with the SEC, which describe various risks and uncertainties to which we are or may become subject. These risks and uncertainties have the potential to affect our business, financial condition, results of operations, cash flows, strategies or prospects in a material and adverse manner. There have been no material changes from the risk factors previously disclosed in the above-mentioned periodic report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Nothing to report.

Item 3. Defaults upon Senior Securities

Nothing to report.

Item 4. Mine Safety Disclosures

Nothing to report.

Item 5. Other Information

 Nothing to report.

14

Item 6. Exhibits

Exhibit
Number
31.1:	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2:	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1:	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2:	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1:	Press Release dated March 13, 2014 announcing the financial results for the fiscal quarter ended January 31, 2014.

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	RF INDUSTRIES, LTD.
Date: March 13, 2014	By:	/s/ Howard F. Hill
		Howard F. Hill
		Chief Executive Officer

Date: March 13, 2014	By:	/s/ Mark Turfler
		Mark Turfler
		Chief Financial Officer

15

EX-31.1

Exhibit 31.1

CERTIFICATIONS PURSUANT TO

SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Howard F. Hill, certify that:

1. I have reviewed this report on Form 10-Q for the quarter ended January 31, 2014 of RF Industries, Ltd.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period for which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and to the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 13, 2014	/s/ Howard F. Hill
	Howard F. Hill
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS PURSUANT TO

SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Mark Turfler, certify that:

1. I have reviewed this report on Form 10-Q for the quarter ended January 31, 2014 of RF Industries, Ltd.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period for which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and to the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 13, 2014	/s/ Mark Turfler
	Mark Turfler
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. § 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of RF Industries, Ltd. (the “Company”) on Form 10-Q for the quarter ended January 31, 2014, as filed with the Securities and Exchange Commission (the “Report”), I, Howard F. Hill, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 13, 2014	/s/ Howard F. Hill
	Howard F. Hill
	Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. § 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of RF Industries, Ltd. (the “Company”) on Form 10-Q for the quarter ended January 31, 2014, as filed with the Securities and Exchange Commission (the “Report”), I, Mark Turfler, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 13, 2014	/s/ Mark Turfler
	Mark Turfler
	Chief Financial Officer

EX-99.1

RF INDUSTRIES, LTD. For Immediate Release

Investor Contact:	Company Contact:
John Nesbett/Jennifer Belodeau	Howard Hill, Chief Executive Officer
Institutional Marketing Services (IMS)	(858) 549-6340
(203) 972-9200	rfi@rfindustries.com
jnesbett@institutionalms.com

RF Industries Reports First Fiscal Quarter Results

-  As Forecasted, Company Remains Profitable on Lower Sales For The Quarter –

-  Quarterly Dividend of $0.07 Per Share–

-  Balance Sheet Remains Strong with $12.8 Million in Cash and No Debt -

San Diego, California, March 13, 2014 – RF Industries, Ltd. (NASDAQ: RFIL) announced results for the first fiscal quarter ended January 31, 2014.

RF Industries reported net sales of $5.9 million in the first quarter of fiscal 2014, a decrease of 41% compared to net sales of $9.9 million in the first quarter of fiscal 2013. The Company saw a significant decrease in revenues from its Cables Unlimited subsidiary, where first quarter sales decreased by 61% to $2.1 million. The Company reported operating income of $0.3 million in the first quarter of fiscal 2014 as compared to operating income of $2.0 million in the prior year’s period. Income from continuing operations was $0.3 million or $0.03 per basic and per diluted share in the first quarter of fiscal 2014 as compared to $1.5 million or $0.21 per basic and $0.19 per diluted share in the first quarter of 2013.

At January 31, 2014, RF Industries reported cash and cash equivalents of nearly $13 million, no long term debt, and a current ratio of 12 to 1.

Howard Hill, Chief Executive Officer, commented, “Our reduced first quarter sales and marginal profitability were in line with the guidance we previously provided. We were able to proactively adjust our cost structure to maintain profitability which has been a corporate priority for 20 years. Consolidated revenues in the first quarter of 2014 were impacted by a significant decline in revenues in our Cables Unlimited division as a result of the decrease in demand for its OptiFlex™ fiber optic cabling solution for cell towers. The OptiFlex™ fiber optic cabling solution was specifically developed for wireless service providers who are engaged in upgrading their cell towers to handle 4G technologies. Accordingly, orders for the OptiFlex™ cables will fluctuate as cell towers are upgraded. However, since Cables Unlimited has a reputation as an innovative designer and developer of fiber connectivity solutions, we expect its range of capabilities will result in other leading edge solutions for our existing and new customers. We also experienced softening demand during the most recent quarter in our RF Connector and Cable Assembly division, which resulted in a $0.8 million reduction in net sales as compared to the 2013 fiscal quarter. We believe that the harsh winter weather contributed to the sales decrease at both Cables Unlimited and our RF Connector and Cable Assembly divisions. Sales to date in the second quarter of fiscal 2014 at Cables Unlimited and our RF Connector and Cable Assembly division are below the comparable quarter last year. However, we are optimistic about our long-term prospects from both our existing products as well as the new products we are developing. Our Medical Cabling segment reported a 9% increase in revenues as compared to the first quarter of fiscal 2013, primarily due to increased sales to existing customers.”

“As we’ve stated previously, demand for wireless connectivity is rapidly changing and growing, with consumers expecting full connectivity in almost any location or situation. Our goal is to continue to develop state-of-the-art, customized connectivity solutions for new and existing customers that allow our customers to remain competitive in this space. We have dealt before with ebbs and flows in our business as new products are developed and rolled out, and while we’re not pleased with the revenue decline in our first quarter, we are focusing our efforts to execute on our ability to provide innovative, customized connectivity solutions to meet the needs of the marketplace.”

Mr. Hill further commented, “Our Company has maintained its strong cash position and has no debt, so the cash generated from operations allows us to return capital to our shareholders through dividends such as the one we recently announced, and/or stock repurchases, while also allowing us to consider strategic transactions.”

Conference Call Information

RF Industries will host a conference call today, March 13 at 12:00 noon Eastern Time to discuss its fiscal first quarter 2014 results. To participate, callers should dial (877) 407-9210 and international callers may dial (201) 689-8049. A simultaneous webcast of the conference call can be accessed from the Investor Information page at www.rfindustries.com.

A replay of the call will be available until April 13, 2014 and may be accessed by dialing (877) 660-6853. International callers should call (201) 612-7415. Callers should use conference i.d. 13577047.

About RF Industries

RF Industries is a leading designer and manufacturer of innovative interconnect products and complex cable assemblies across diversified, high growth markets including wireless carriers & infrastructure, medical and industrial. The Company’s products include RF connectors, coaxial and custom cable assemblies, fiber optic cables, wiring harnesses and medical wiring.  The Company’s leading edge connectivity solutions are used throughout the growing and evolving wireless infrastructure. The Company has reported 20 consecutive years of profitability and is headquartered in San Diego, California with operations in Las Vegas, Nevada and Yaphank, New York. Please visit the RF Industries website at www.rfindustries.com.     

Forward-Looking Statements

This press release contains forward-looking statements with respect to future events which are subject to a number of factors that could cause actual results to differ materially. Factors that could cause or contribute to such differences include, but are not limited to: changes in the telecommunications industry; the operations of the Cables Unlimited division; and the Company’s reliance on certain distributors for a significant portion of anticipated revenues. Further discussion of these and other potential risk factors may be found in the Company’s public filings with the Securities and Exchange Commission (www.sec.gov) including its Form 10-K. All forward-looking statements are based upon information available to the Company on the date they are published and the Company undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or new information after the date of this release.

(tables attached)

RF INDUSTRIES, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)

	January 31,		October 31,
	2014		2013
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	12,777	$	11,881
Trade accounts receivable, net		2,521		3,160
Inventories		6,030		5,995
Other current assets		960		1,552
Deferred tax assets		322		322
TOTAL CURRENT ASSETS		22,610		22,910
Property and equipment, net		969		1,053
Goodwill		3,076		3,076
Amortizable intangible assets, net		1,352		1,407
Non-amortizable intangible assets		410		410
Note receivable from stockholder		67		67
Other assets		23		30
TOTAL ASSETS	$	28,507	$	28,953
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	589	$	792
Accrued expenses		1,178		1,741
Customer deposit		51		51
TOTAL CURRENT LIABILITIES		1,818		2,584
Deferred tax liabilities		950		950
TOTAL LIABILITIES		2,768		3,534
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Common stock - authorized 20,000,000 shares of $0.01 par value; 8,184,887 and 8,075,124 shares issued and outstanding at January 31, 2014 and October 31, 2013, respectively		82		81
Additional paid-in capital		16,330		15,706
Retained earnings		9,327		9,632
TOTAL STOCKHOLDERS' EQUITY		25,739		25,419
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	28,507	$	28,953

RF INDUSTRIES, LTD. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(in thousands, except share and per share amounts)

	Three Months Ended January 31,
	2014		2013
Net sales	$	5,850	$	9,896
Cost of sales		3,268		5,331
Gross profit		2,582		4,565
Operating expenses:
Engineering		256		289
Selling and general		1,987		2,258
Totals		2,243		2,547
Operating income		339		2,018
Other income – interest/dividends		7		3
Income from continuing operations before provision for income taxes		346		2,021
Provision for income taxes		82		564
Income from continuing operations		264		1,457
Income from discontinued operations, net of tax		1		25
Net income	$	265	$	1,482
Earnings per share
Basic
Continuing operations	$	0.03	$	0.21
Discontinued operations		0.00		0.00
Net income per share	$	0.03	$	0.21
Earnings per share
Diluted
Continuing operations	$	0.03	$	0.19
Discontinued operations		0.00		0.00
Net income per share	$	0.03	$	0.19
Weighted average shares outstanding
Basic		8,143,640		7,074,095
Diluted		8,817,351		8,004,166

XML

Components of Intangible Assets (Detail) (USD $)	Jan. 31, 2014	Oct. 31, 2013
Intangible Assets [Line Items]
Amortizable intangible assets, net	$ 1,352,000	$ 1,407,000
Non-amortizable intangible assets, trade marks	410,000	410,000
Non-compete agreements (estimated life 5 years)
Intangible Assets [Line Items]
Amortizable intangible assets, gross	200,000	200,000
Amortizable intangible assets, accumulated amortization	(105,000)	(95,000)
Amortizable intangible assets, net	95,000	105,000
Customer relationships (estimated life 9.6 years)
Intangible Assets [Line Items]
Amortizable intangible assets, gross	1,730,000	1,730,000
Amortizable intangible assets, accumulated amortization	(473,000)	(428,000)
Amortizable intangible assets, net	$ 1,257,000	$ 1,302,000

XML

Computation of Weighted Average Fair Value of Employee Stock Options using Black-Scholes Option Pricing Model Assumptions (Detail)	3 Months Ended
	Jan. 31, 2014	Jan. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	0.69%	0.36%
Dividend yield	4.09%	4.45%
Expected life of the option	3 years 6 months	3 years 6 months
Volatility factor	49.20%	42.50%

XML

Accrued expenses and other long-term liabilities (Tables)

3 Months Ended

Jan. 31, 2014

Payables and Accruals [Abstract]

Accrued Expenses

Accrued expenses consist of the following (in thousands):

	January 31, 2014		October 31, 2013
Wages payable	$	651	$	1,188
Accrued receipts		426		376
Other current liabilities		101		177
Totals	$	1,178	$	1,741

XML

Cash dividend and declared dividends - Additional Information (Detail) (USD $)	3 Months Ended
	Jan. 31, 2014	Jan. 31, 2013
Dividends Payable [Line Items]
Dividends paid	$ 570,000	$ 700,000
Dividends Paid
Dividends Payable [Line Items]
Dividends paid, per share	$ 0.07	$ 0.10
Dividends paid	$ 570,000	$ 700,000

XML

Net Sales, Income (Loss) Before Provision for Income Taxes and Other Related Segment Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jan. 31, 2014	Jan. 31, 2013
Segment Reporting Information [Line Items]
Net sales	$ 5,850	$ 9,896
Income from continuing operations before provision for income taxes	346	2,021
Depreciation and amortization	149	159
RF Connectors and Cable Assembly
Segment Reporting Information [Line Items]
Net sales	2,972	3,817
Income from continuing operations before provision for income taxes	368	551
Depreciation and amortization	49	32
Cables Unlimited
Segment Reporting Information [Line Items]
Net sales	2,127	5,392
Income from continuing operations before provision for income taxes	(167)	1,312
Depreciation and amortization	92	86
Medical Cabling and Interconnector
Segment Reporting Information [Line Items]
Net sales	751	687
Income from continuing operations before provision for income taxes	140	157
Depreciation and amortization	8	40
Corporate
Segment Reporting Information [Line Items]
Net sales	0	0
Income from continuing operations before provision for income taxes	5	1
Depreciation and amortization	$ 0	$ 1

XML

Earnings per share

3 Months Ended

Jan. 31, 2014

Earnings Per Share [Abstract]

Earnings per share

Note 4 - Earnings per share

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares outstanding increased by the effects of assuming that other potentially dilutive securities (such as stock options) outstanding during the period had been exercised and the treasury stock method had been applied. Potentially dilutive securities totaling 122,069 and 138,280 for the three months ended January 31, 2014 and 2013, respectively, were excluded from the calculation of diluted per share amounts because of their anti-dilutive effect.

The following table summarizes the computation of basic and diluted weighted average shares outstanding:

	Three Months Ended January 31,
	2014	2013
Weighted average shares outstanding for basic earnings per share	8,143,640	7,074,095
Add effects of potentially dilutive securities-assumed exercise of stock options	673,711	930,071
Weighted average shares for diluted earnings per share	8,817,351	8,004,166

XML

Subsequent events - Additional Information (Detail) (Subsequent Event, USD $)	1 Months Ended
	Apr. 15, 2014
Subsequent Event
Subsequent Event [Line Items]
Dividends paid, per share	$ 0.07
Dividends payable, record date	Mar. 30, 2014

XML

Inventories and major vendors - Additional Information (Detail)	3 Months Ended		3 Months Ended
	Jan. 31, 2013	Jan. 31, 2014	Jan. 31, 2014 Vendor One	Jan. 31, 2014 Vendor Two
Schedule of Inventory [Line Items]
Purchases of connector products, percentage	10.00%		19.00%	15.00%
Number of major vendors		2

XML

Components of Inventories (Detail) (USD $) In Thousands, unless otherwise specified	Jan. 31, 2014	Oct. 31, 2013
Schedule of Inventory [Line Items]
Raw materials and supplies	$ 2,006	$ 1,913
Work in process	35	15
Finished goods	3,989	4,067
Totals	$ 6,030	$ 5,995

XML

Earnings per share - Additional Information (Detail)	3 Months Ended
	Jan. 31, 2014	Jan. 31, 2013
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded from computation of diluted per share amount	122,069	138,280

XML

Computation of Basic and Diluted Weighted Average Shares Outstanding (Detail)	3 Months Ended
	Jan. 31, 2014	Jan. 31, 2013
Weighted Average Number of Shares Outstanding [Line Items]
Weighted average shares outstanding for basic earnings per share	8,143,640	7,074,095
Add effects of potentially dilutive securities-assumed exercise of stock options	673,711	930,071
Weighted average shares for diluted earnings per share	8,817,351	8,004,166

XML

Inventories and major vendors

3 Months Ended

Jan. 31, 2014

Inventory Disclosure [Abstract]

Inventories and major vendors

Note 3 - Inventories and major vendors

Inventories, consisting of materials, labor and manufacturing overhead, are stated at the lower of cost or market. Cost has been determined using the weighted average cost method. Inventories consist of the following (in thousands): 

	January 31,  2014		October 31,  2013
Raw materials and supplies	$	2,006	$	1,913
Work in process		35		15
Finished goods		3,989		4,067
Totals	$	6,030	$	5,995

Purchases of inventory from two major vendors during the three months ended January 31, 2014 represented 19% and 15% of total inventory purchases. There were no purchases in excess of 10% of total inventory purchases from vendors during the three months ended January 31, 2013. The Company has arrangements with these vendors to purchase product based on purchase orders periodically issued by the Company.

XML

Stock-based compensation and equity transactions - Additional Information (Detail) (USD $)	3 Months Ended
	Jan. 31, 2014	Jan. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average remaining life of options outstanding	4 years 9 months 29 days
Weighted average remaining contractual life of options exercisable	4 years 10 months 28 days
Weighted average life of options vested and expected to vest	4 years 9 months 29 days
Aggregate intrinsic value of options outstanding	$ 3,900,000
Aggregate intrinsic value of options exercisable	3,200,000
Aggregate intrinsic value of options vested and expected to vest	3,200,000
Non-vested stock-based arrangements yet to be recognized	380,000
Stock based arrangements yet to be recognized, weighted average period expected to be recognized	2 years 11 months 16 days
Weighted average fair value of stock options under Black-Scholes pricing model	$ 1.89	$ 1.01
Proceeds from exercise of stock options	341,000	1,314,000
Non-employee director annual grant	30,000
Options granted for each non-employee director	7,860
Value of stock option issued	15,000
Fair value of stock option	$ 1.91
Stock based compensation expense	47,000	33,000
Incentive stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Incentive stock options	99,323
Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of common stock for exercise of stock option	109,763
Cost of Sales
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation expense	9,000	9,000
Selling, General and Administrative Expenses
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation expense	$ 38,000	$ 24,000

XML

Components of Intangible Assets (Parenthetical) (Detail)	3 Months Ended	12 Months Ended
	Jan. 31, 2014	Oct. 01, 2013
Non-compete agreements (estimated life 5 years)
Intangible Assets [Line Items]
Amortizable intangible assets, estimated life	5 years	5 years
Customer relationships (estimated life 9.6 years)
Intangible Assets [Line Items]
Amortizable intangible assets, estimated life	9 years 7 months 6 days	9 years 7 months 6 days

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Jan. 31, 2014	Oct. 31, 2013
CURRENT ASSETS
Cash and cash equivalents	$ 12,777	$ 11,881
Trade accounts receivable, net of allowance for doubtful accounts of $84 and $103	2,521	3,160
Inventories	6,030	5,995
Other current assets	960	1,552
Deferred tax assets	322	322
TOTAL CURRENT ASSETS	22,610	22,910
Property and equipment:
Equipment and tooling	2,508	2,500
Furniture and office equipment	761	759
Total	3,269	3,259
Less accumulated depreciation	2,300	2,206
Total property and equipment	969	1,053
Goodwill	3,076	3,076
Amortizable intangible assets, net	1,352	1,407
Non-amortizable intangible assets	410	410
Note receivable from stockholder	67	67
Other assets	23	30
TOTAL ASSETS	28,507	28,953
CURRENT LIABILITIES
Accounts payable	589	792
Accrued expenses	1,178	1,741
Customer deposit	51	51
TOTAL CURRENT LIABILITIES	1,818	2,584
Deferred tax liabilities	950	950
TOTAL LIABILITIES	2,768	3,534
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Common stock - authorized 20,000,000 shares of $0.01 par value; 8,184,887 and 8,075,124 shares issued and outstanding at January 31, 2014 and October 31, 2013, respectively	82	81
Additional paid-in capital	16,330	15,706
Retained earnings	9,327	9,632
TOTAL STOCKHOLDERS' EQUITY	25,739	25,419
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 28,507	$ 28,953

XML

Unaudited interim condensed consolidated financial statements

3 Months Ended

Jan. 31, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Unaudited interim condensed consolidated financial statements

Note 1 - Unaudited interim condensed consolidated financial statements

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments, which are normal and recurring, have been included in order to make the information not misleading. Information included in the consolidated balance sheet as of October 31, 2013 has been derived from, and certain terms used herein are defined in, the audited financial statements of the Company as of October 31, 2013 included in the Company’s Annual Report on Form 10-K (“Form 10-K”) for the year ended October 31, 2013 that was previously filed with the Securities and Exchange Commission (“SEC”). Operating results for the three month period ended January 31, 2014 are not necessarily indicative of the results that may be expected for the year ending October 31, 2014. The unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended October 31, 2013.

Principles of consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of RF Industries, Ltd. and its wholly owned subsidiary, Cables Unlimited, Inc. (“Cables Unlimited”), collectively (the “Company”). All intercompany balances and transactions have been eliminated in consolidation.

Revenue recognition

Four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. The Company recognizes revenue from product sales after purchase orders are received which contain a fixed price and the products are shipped. Most of the Company’s products are sold to continuing customers with established credit histories.

Reclassifications

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported consolidated net income.

XML

Concentration of Credit Risk - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended				12 Months Ended	3 Months Ended
	Jan. 31, 2014	Jan. 31, 2014 Sales Revenue, Goods, Net	Jan. 31, 2013 Sales Revenue, Goods, Net	Jan. 31, 2014 Accounts Receivable	Oct. 31, 2013 Accounts Receivable	Jan. 31, 2014 Optiflex Customer Concentration Risk	Jan. 31, 2013 Optiflex Customer Concentration Risk
Concentration Risk [Line Items]
Cash, FDIC insured amount	$ 12.4
Concentration risk, percentage		35.00%	53.00%	24.00%	27.00%	18.00%	34.00%
Concentration agreement with major customer	15 years
Sales revenue, goods, net						$ 1.1	$ 3.6

XML

Stock-based compensation and equity transactions (Tables)

3 Months Ended

Jan. 31, 2014

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Computation of Weighted Average Fair Value of Employee Stock Options using Black-Scholes Option Pricing Model Assumptions

The weighted average fair value of employee and non-employee directors stock options granted by the Company during the three months ended January 31, 2014 and 2013 was estimated to be $1.89 and $1.01 per share, respectively, using the Black-Scholes option pricing model with the following assumptions:

	2014		2013
Risk-free interest rate	0.69	%	0.36	%
Dividend yield	4.09	%	4.45	%
Expected life of the option	3.5 years		3.5 years
Volatility factor	49.2	%	42.5	%

Summary of Status of Options Granted under Stock Option Plans and Changes in Options Outstanding

A summary of the status of the options granted under the Company’s stock option plans as of January 31, 2014 and the changes in options outstanding during the three months then ended is presented in the table that follows:

		Weighted
		Average
	Shares	Exercise Price
Outstanding at November 1, 2013	988,215	$	2.24
Options granted	122,903	$	6.84
Options exercised	(109,763)	$	3.12
Options canceled or expired	(1,836)	$	4.05
Options outstanding at January 31, 2014	999,519	$	2.70
Options exercisable at January 31, 2014	658,978	$	1.78
Options vested and expected to vest at January 31, 2014	989,331	$	2.67

XML

Sales by Geographic Area (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jan. 31, 2014	Jan. 31, 2013
Revenue, Major Customer [Line Items]
Sales revenue	$ 5,850	$ 9,896
United States
Revenue, Major Customer [Line Items]
Sales revenue	5,448	9,436
Canada
Revenue, Major Customer [Line Items]
Sales revenue	102	148
Israel
Revenue, Major Customer [Line Items]
Sales revenue	65	97
Mexico
Revenue, Major Customer [Line Items]
Sales revenue	122	191
All other
Revenue, Major Customer [Line Items]
Sales revenue	113	24
Foreign Countries, total
Revenue, Major Customer [Line Items]
Sales revenue	$ 402	$ 460

XML

Intangible assets (Tables)

3 Months Ended

Jan. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Components of Intangible Assets

Intangible assets are comprised of the following (in thousands): 

	January 31, 2014		October 31, 2013
Amortizable intangible assets:
Non-compete agreements (estimated life 5 years)	$	200	$	200
Accumulated amortization		(105)		(95)
		95		105
Customer relationships (estimated life 9.6 years)		1,730		1,730
Accumulated amortization		(473)		(428)
		1,257		1,302
Totals	$	1,352	$	1,407
Non-amortizable intangible assets:
Trademarks	$	410	$	410

XML

Discontinued operations

3 Months Ended

Jan. 31, 2014

Discontinued Operations and Disposal Groups [Abstract]

Discontinued operations

Note 2 - Discontinued operations

During 2013, the Company sold its RF Neulink and RadioMobile divisions, which together used to comprise the Company’s RF Wireless segment, as discussed below. As part of the RF Wireless segment, RF Neulink was engaged in the sale of wireless data products, such as transmitter and receiver modules and standard or smart programmable modems, for use in certain high-speed wireless connection markets, and RadioMobile was engaged in the sale of complete hardware and software solutions for wireless mobile data management applications. Given the Company’s focus on the higher growth and higher margin components of its business, the Company decided to sell RF Neulink and RadioMobile in order to reduce operating costs and focus its resources on more profitable divisions. Accordingly, during 2013, the RF Neulink and RadioMobile divisions had met the criteria to be accounted for as discontinued operations. The operations of both RF Neulink and RadioMobile have been reclassified from the ongoing operations of the Company as a result of the sale of these businesses, and the Company will not have any continuing involvement in the operations of RF Neulink and RadioMobile after the disposal transactions, as detailed in the subsequent paragraphs.

Effective July 31, 2013, the Company closed an Asset Purchase Agreement (the “RF Neulink Agreement”) with Raveon Technologies Corporation (“Raveon”), whereby Raveon acquired the assets related to the RF Neulink business, primarily consisting of inventory, certain intellectual property and licenses, customer lists and trademarks. Pursuant to the RF Neulink Agreement, no purchase price was paid at the closing. Rather, the purchase price for the RF Neulink business will consist of cash payments made by Raveon to the Company under the following circumstances: (i) for each RF Neulink inventory item that Raveon sells, Raveon is required to pay the Company the assigned value of that inventory item. This arrangement continues until the earlier of three years from the closing date or the date all inventory items are sold; and (ii) Raveon is required to pay the Company a royalty based on Raveon’s use of RF Neulink’s tradename or trademark, its customer list or its intellectual property. The royalty, which ranges from 5% to 10% of Raveon’s sales of such RF Neulink-related products, may not exceed $450,000 in the aggregate, and will not be payable on sales of inventory items. For the three months ended January 31, 2014, the Company recognized approximately $4,000 of royalty income related to the RF Neulink Agreement, which amount has been included within discontinued operations.

Effective October 29, 2013, the Company closed an Asset Purchase Agreement (the “RadioMobile Agreement”) with RadioMobile, Inc. (“Purchaser”), a new company formed by the former manager of the Company’s RadioMobile division, whereby the Purchaser acquired the assets related to the RadioMobile business, primarily consisting of inventory, certain equipment, certain intellectual property and licenses, customer lists and trademarks, in return for the Purchaser’s three-year agreement to pay the Company 10.0% of all net revenues up to $2.0 million. Additionally, as part of the RadioMobile Agreement, all former RadioMobile employees were terminated by the Company and re-hired by the Purchaser, and the Company permitted Purchaser to continue to use its office space, rent-free, through the end of the lease, which expires on March 31, 2014. There is no obligation from Purchaser if inventory is never sold. Other closing costs amounted to approximately $0.2 million. For the three months ended January 31, 2014, the Company recognized approximately $4,000 of royalty income related to the RadioMobile Agreement, which amount has been included within discontinued operations.

The following summarized financial information related to the RF Neulink and RadioMobile divisions is segregated from continuing operations and reported as discontinued operations for the three months ended January 31, 2014 and 2013 (in thousands):

	Three Months Ended January 31,
	2014		2013
Net sales	$	8	$	613
Cost of sales		-		242
Gross profit		8		371
Operating expenses		6		329
Operating income		2		42
Provision for income taxes		1		17
Income from discontinued operations, net of tax	$	1	$	25

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jan. 31, 2014	Oct. 31, 2013
Trade accounts receivable, allowance for doubtful accounts	$ 84	$ 103
Common stock, authorized	20,000,000	20,000,000
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares issued	8,184,887	8,075,124
Common stock, shares outstanding	8,184,887	8,075,124

XML

Legal proceedings

3 Months Ended

Jan. 31, 2014

Legal Matters And Contingencies [Abstract]

Legal proceedings

Note 12- Legal proceedings

On May 24, 2013, a former employee of the Company filed a complaint with the San Diego, California office of the U.S. Department of Labor-OSHA alleging retaliatory employment practices in violation of the whistleblower provisions of the Sarbanes-Oxley Act. The complaint alleges that the former employee was terminated in November 2012 in retaliation for making disclosures relating to fraudulent accounting practices and lack of compliance with U.S. GAAP; violations of multiple Securities and Exchange Commission rules and regulations; and fraud against the shareholders. The complaint does not seek any specified amount of damages, but does seek various forms of relief, including the following: Reinstatement of the former employee’s employment, or in the alternative, an award for lost future wages, benefits and pension; back pay and bonuses; compensatory monetary damages in an amount to be determined; reasonable attorney’s fees; and all costs of litigation. The Company disputes the employee’s claims. The lawsuit is currently ongoing and is being defended by the Company’s insurance carrier’s appointed law firm under the Company’s employment practices liability insurance policy.

XML

Document And Entity Information	3 Months Ended
	Jan. 31, 2014	Mar. 05, 2014
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jan. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1
Trading Symbol	RFIL
Entity Common Stock, Shares Outstanding		8,187,803
Entity Registrant Name	R F INDUSTRIES LTD
Entity Central Index Key	0000740664
Current Fiscal Year End Date	--10-31
Entity Filer Category	Smaller Reporting Company

XML

Subsequent events

3 Months Ended

Jan. 31, 2014

Subsequent Events [Abstract]

Subsequent events

Note 13 - Subsequent events

At its March 7, 2014 meeting, the Board of Directors of the Company declared a quarterly cash dividend of $0.07 per share to be paid on April 15, 2014 to stockholders of record on March 30, 2014.

XML

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Jan. 31, 2014	Jan. 31, 2013
Net sales	$ 5,850	$ 9,896
Cost of sales	3,268	5,331
Gross profit	2,582	4,565
Operating expenses:
Engineering	256	289
Selling and general	1,987	2,258
Totals	2,243	2,547
Operating income	339	2,018
Other income - interest/dividends	7	3
Income from continuing operations before provision for income taxes	346	2,021
Provision for income taxes	82	564
Income from continuing operations	264	1,457
Income from discontinued operations, net of tax	1	25
Net income	$ 265	$ 1,482
Basic
Continuing operations	$ 0.03	$ 0.21
Discontinued operations	$ 0.00	$ 0.00
Net income per share	$ 0.03	$ 0.21
Diluted
Continuing operations	$ 0.03	$ 0.19
Discontinued operations	$ 0.00	$ 0.00
Net income per share	$ 0.03	$ 0.19
Weighted average shares outstanding
Basic	8,143,640	7,074,095
Diluted	8,817,351	8,004,166

XML

Segment information

3 Months Ended

Jan. 31, 2014

Segment Reporting [Abstract]

Segment information

Note 7 - Segment information

The Company aggregates operating divisions into operating segments which have similar economic characteristics and divisions are similar in the majority of the following areas: (1) the nature of the product and services; (2) the nature of the production process; (3) the type or class of customer for their products and services; (4) the methods used to distribute their products or services; (5) if applicable, the nature of the regulatory environment. The Company currently has three segments - RF Connector and Cable Assembly, Cables Unlimited and Medical Cabling and Interconnector based upon this evaluation. During 2013, the Company disposed of its RF Wireless segment.

  The RF Connector and Cable Assembly segment is comprised of two divisions, whereas the Cables Unlimited segment and the Medical Cabling and Interconnector segment are each comprised of one division. The three divisions that meet the quantitative thresholds for segment reporting are Connector and Cable Assembly, Cables Unlimited and Bioconnect. The other division aggregated into the RF Connector and Cable Assembly segment has similar products that are marketed to their respective customer base and production and product development processes that are similar in nature. The specific customers are different for each division; however, there is some overlapping of product sales to them. The methods used to distribute products are similar within each division aggregated.

Management identifies the Company’s segments based on strategic business units that are, in turn, based along market lines. These strategic business units offer products and services to different markets in accordance with their customer base and product usage. For segment reporting purposes, the Company aggregates the Connector and Cable Assembly and Aviel divisions into the RF Connector and Cable Assembly segment, while the Cables Unlimited division constitutes the Cables Unlimited segment. The Bioconnect Division comprises the Medical Cabling and Interconnector segment.

As reviewed by the Company’s chief operating decision maker, the Company evaluates the performance of each segment based on income or loss before income taxes. The Company charges depreciation and amortization directly to each division within the segment. Effective beginning with the second quarter of 2013, the Company changed its measurement of segment profit or loss whereby certain corporate costs, previously attributed to the RF Connector and Cable Assembly segment, have been allocated to each of the segments. Certain amounts in the 2013 segment tables have been reclassified to conform to the 2014 presentation to reflect all segment information on a comparable basis. Additionally, with the sale and discontinuation of the RF Neulink and RadioMobile divisions during 2013, the segment information has been adjusted as these divisions are reflected within discontinued operations. Accounts receivable, inventory, property and equipment, goodwill and intangible assets are the only assets identified by segment. Except as discussed above, the accounting policies for segment reporting are the same as for the Company as a whole.

 

Substantially all of the Company’s operations are conducted in the United States; however, the Company derives a portion of its revenue from export sales. The Company attributes sales to geographic areas based on the location of the customers. The following table presents the sales of the Company by geographic area for the three months ended January 31, 2014 and 2013 (in thousands):

	Three Months Ended January 31,
	2014		2013
United States	$	5,448	$	9,436
Foreign Countries:
Canada		102		148
Israel		65		97
Mexico		122		191
All Other		113		24
		402		460
Totals	$	5,850	$	9,896

Net sales, income (loss) from continuing operations before provision for income taxes and other related segment information for the three months ended January 31, 2014 and 2013 are as follows (in thousands): 

	RF Connector				Medical
	and		Cables		Cabling and
	Cable Assembly		Unlimited		Interconnector		Corporate		Total
2014
Net sales	$	2,972	$	2,127	$	751	$	-	$	5,850
Income (loss) from continuing operations before provision for income taxes		368		(167)		140		5		346
Depreciation and amortization		49		92		8		-		149
2013
Net sales	$	3,817	$	5,392	$	687	$	-	$	9,896
Income from continuing operations before provision for income taxes		551		1,312		157		1		2,021
Depreciation and amortization		32		86		40		1		159

XML

Concentration of Credit Risk

3 Months Ended

Jan. 31, 2014

Risks and Uncertainties [Abstract]

Concentration of Credit Risk

Note 6 - Concentrations of credit risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company maintains its cash and cash equivalents with high-credit quality financial institutions. At January 31, 2014, the Company had cash and cash equivalent balances in excess of Federally insured limits in the amount of approximately $12.4 million.

One customer accounted for approximately 35% and 53% of the Company’s net sales for the three month periods ended January 31, 2014 and 2013, respectively. At January 31, 2014 and October 31, 2013, this customer’s account receivable balance accounted for approximately 24% and 27%, respectively, of the Company’s total net accounts receivable balances.  Although this customer has been an on-going major customer of the Company continuously during the past 15 years, the written agreements with this customer do not have any minimum purchase obligations and the customer could stop buying the Company’s products at any time and for any reason. A reduction, delay or cancellation of orders from this customer or the loss of this customer could significantly reduce the Company’s future revenues and profits.

Sales of one product line accounted for $1.1 million or 18% of net sales and $3.6 million or 34% of net sales for the three months ended January 31, 2014 and 2013, respectively. The Company has a standard written purchase order with this customer and, therefore, this customer does not have any minimum purchase obligations and could stop buying the product at any time. A reduction, delay or cancellation of orders for this product or the loss of this customer could significantly reduce the Company’s revenues and profits.

XML

Segment information (Tables)

3 Months Ended

Jan. 31, 2014

Segment Reporting [Abstract]

Sales by Geographic Area

The following table presents the sales of the Company by geographic area for the three months ended January 31, 2014 and 2013 (in thousands):

	Three Months Ended January 31,
	2014		2013
United States	$	5,448	$	9,436
Foreign Countries:
Canada		102		148
Israel		65		97
Mexico		122		191
All Other		113		24
		402		460
Totals	$	5,850	$	9,896

Net Sales, Income (Loss) Before Provision for Income Taxes and Other Related Segment Information

Net sales, income (loss) from continuing operations before provision for income taxes and other related segment information for the three months ended January 31, 2014 and 2013 are as follows (in thousands): 

	RF Connector				Medical
	and		Cables		Cabling and
	Cable Assembly		Unlimited		Interconnector		Corporate		Total
2014
Net sales	$	2,972	$	2,127	$	751	$	-	$	5,850
Income (loss) from continuing operations before provision for income taxes		368		(167)		140		5		346
Depreciation and amortization		49		92		8		-		149
2013
Net sales	$	3,817	$	5,392	$	687	$	-	$	9,896
Income from continuing operations before provision for income taxes		551		1,312		157		1		2,021
Depreciation and amortization		32		86		40		1		159

XML

Discontinued operations (Tables)

3 Months Ended

Jan. 31, 2014

Discontinued Operations and Disposal Groups [Abstract]

Summary Financial Information Related to RF Neulink

The following summarized financial information related to the RF Neulink and RadioMobile divisions is segregated from continuing operations and reported as discontinued operations for the three months ended January 31, 2014 and 2013 (in thousands):

	Three Months Ended January 31,
	2014		2013
Net sales	$	8	$	613
Cost of sales		-		242
Gross profit		8		371
Operating expenses		6		329
Operating income		2		42
Provision for income taxes		1		17
Income from discontinued operations, net of tax	$	1	$	25

XML

Accrued expenses and other long-term liabilities

3 Months Ended

Jan. 31, 2014

Payables and Accruals [Abstract]

Accrued expenses and other long-term liabilities

Note 10 - Accrued expenses and other long-term liabilities

Accrued expenses consist of the following (in thousands):

	January 31, 2014		October 31, 2013
Wages payable	$	651	$	1,188
Accrued receipts		426		376
Other current liabilities		101		177
Totals	$	1,178	$	1,741

Accrued receipts represent purchased inventory for which invoices have not been received.

XML

Income tax provision

3 Months Ended

Jan. 31, 2014

Income Tax Disclosure [Abstract]

Income tax provision

Note 8 -Income tax provision

The Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates, to determine its quarterly provision for income taxes. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter.

The provision for income taxes was 24% and 28% of income from continuing operations before income taxes for the three months ended January 31, 2014 and 2013, respectively. The decrease in the effective income tax rate from period to period was primarily driven by a decrease in the rate resulting from the reversal of cumulative compensation expense related to disqualifying disposition of incentive stock options.

The total amount of unrecognized tax benefits was $0 as of January 31, 2014 and October 31, 2013. The gross liability for income taxes related to unrecognized tax benefits, if any, is included in other long-term liabilities in the Company's condensed consolidated balance sheets.

The total balance of accrued interest and penalties related to uncertain tax positions was $0 as of January 31, 2014 and October 31, 2013. The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense and the accrued interest and penalties are included in deferred and other long-term liabilities in the Company's condensed consolidated balance sheets. There were no material interest or penalties included in income tax expense for the three months ended January 31, 2014 and 2013.

XML

Intangible assets

3 Months Ended

Jan. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible assets

Note 9 - Intangible assets

Intangible assets are comprised of the following (in thousands): 

	January 31, 2014		October 31, 2013
Amortizable intangible assets:
Non-compete agreements (estimated life 5 years)	$	200	$	200
Accumulated amortization		(105)		(95)
		95		105
Customer relationships (estimated life 9.6 years)		1,730		1,730
Accumulated amortization		(473)		(428)
		1,257		1,302
Totals	$	1,352	$	1,407
Non-amortizable intangible assets:
Trademarks	$	410	$	410

XML

Cash dividend and declared dividends

3 Months Ended

Jan. 31, 2014

Cash Dividend And Dividends Declaration [Abstract]

Cash dividend and declared dividends

Note 11 - Cash dividend and declared dividends

The Company paid dividends of $0.07 per share during the three months ended January 31, 2014 for a total of $570,000. The Company paid dividends of $0.10 per share during the three months ended January 31, 2013 for a total of $700,000.

XML

Summary of Status of Options Granted under Stock Option Plans and Changes in Options Outstanding (Detail) (Stock Option, USD $)	3 Months Ended
	Jan. 31, 2014
Stock Option
Shares
Options outstanding at November 1, 2013	988,215
Options granted	122,903
Options exercised	(109,763)
Options canceled or expired	(1,836)
Options outstanding at January 31, 2014	999,519
Options exercisable at January 31, 2014	658,978
Options vested and expected to vest at January 31, 2014	989,331
Weighted average exercise price
Options outstanding at November 1, 2013	$ 2.24
Options granted	$ 6.84
Options exercised	$ 3.12
Options canceled or expired	$ 4.05
Options outstanding at January 31, 2014	$ 2.70
Options exercisable at January 31, 2014	$ 1.78
Options vested and expected to vest at January 31, 2014	$ 2.67

XML

Earnings per share (Tables)

3 Months Ended

Jan. 31, 2014

Earnings Per Share [Abstract]

Computation of Basic and Diluted Weighted Average Shares Outstanding

The following table summarizes the computation of basic and diluted weighted average shares outstanding:

	Three Months Ended January 31,
	2014	2013
Weighted average shares outstanding for basic earnings per share	8,143,640	7,074,095
Add effects of potentially dilutive securities-assumed exercise of stock options	673,711	930,071
Weighted average shares for diluted earnings per share	8,817,351	8,004,166

XML

Discontinued operations - Additional Information (Detail) (USD $)	3 Months Ended
	Jan. 31, 2014
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Lease expiration date	Mar. 31, 2014
Assets Sold Under Agreements To Repurchase Other Assets Costs	$ 200,000
Radio Mobile, Inc
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Royalty revenue	4,000
Assets Sold under Agreements to Repurchase, Interest Rate	10.00%
Assets Sold Under Agreements To Repurchase Net Revenue	2,000,000
Maximum
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Concentration risk, percentage	10.00%
Minimum
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Concentration risk, percentage	5.00%
RF Neulink
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Royalty revenue	4,000
Raveon | Maximum
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Finite-Lived Intangible Assets, Gross	$ 450,000

XML

Accrued Expenses (Detail) (USD $) In Thousands, unless otherwise specified	Jan. 31, 2014	Oct. 31, 2013
Schedule of Accrued Liabilities [Line Items]
Wages payable	$ 651	$ 1,188
Accrued receipts	426	376
Other current liabilities	101	177
Totals	$ 1,178	$ 1,741

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jan. 31, 2014	Jan. 31, 2013
OPERATING ACTIVITIES:
Net income	$ 265	$ 1,482
Adjustments to reconcile net income to net cash provided by operating activities:
Bad debt (recovery) expense	(15)	24
Accounts receivable write-off	4	0
Depreciation and amortization	149	159
Stock-based compensation expense	47	33
Excess tax benefit from stock-based compensation	(237)	(236)
Changes in operating assets and liabilities:
Trade accounts receivable	650	(636)
Inventories	(35)	247
Other current assets	592	(310)
Other long-term assets	7	0
Accounts payable	(203)	(373)
Customer deposit	0	51
Income taxes prepaid (payable)	237	(41)
Accrued expenses	(563)	260
Other long-term liabilities	0	(10)
Net cash provided by operating activities	898	650
INVESTING ACTIVITIES:
Capital expenditures	(10)	(43)
Net cash used in investing activities	(10)	(43)
FINANCING ACTIVITIES:
Proceeds from exercise of stock options	341	1,314
Excess tax benefit from exercise of stock options	237	236
Dividends paid	(570)	(700)
Net cash provided by financing activities	8	850
Net increase in cash and cash equivalents	896	1,457
Cash and cash equivalents, beginning of period	11,881	5,492
Cash and cash equivalents, end of period	12,777	6,949
Supplemental cash flow information - income taxes paid	$ 0	$ 603

XML

Stock-based compensation and equity transactions

3 Months Ended

Jan. 31, 2014

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Stock-based compensation and equity transactions

Note 5 - Stock-based compensation and equity transactions

The Company’s current stock incentive plan provides for the granting of qualified and nonqualified options to the Company’s officers, directors and employees. Incentive stock options granted to the Company’s employees during the three months ended January 31, 2014 vest and are exercisable equally over three years and expire in five years from date of grant. During the three months ended January 31, 2014, the Company granted a total of 99,323 incentive stock options to company employees. The Company satisfies the exercise of options by issuing previously unissued common shares.

The weighted average fair value of employee and non-employee directors stock options granted by the Company during the three months ended January 31, 2014 and 2013 was estimated to be $1.89 and $1.01 per share, respectively, using the Black-Scholes option pricing model with the following assumptions:

	2014		2013
Risk-free interest rate	0.69	%	0.36	%
Dividend yield	4.09	%	4.45	%
Expected life of the option	3.5 years		3.5 years
Volatility factor	49.2	%	42.5	%

Expected volatilities are based on historical volatility of the Company’s stock price and other factors. The Company used the historical method to calculate the expected life of the 2014 option grants. The expected life represents the period of time that options granted are expected to be outstanding. The risk-free rate is based on the U.S. Treasury rate with a maturity date corresponding to the options’ expected life. The dividend yield is based upon the historical dividend yield.

Issuances of common stock by the Company

During the three months ended January 31, 2014, the Company issued 109,763 shares of common stock and received net proceeds of $341,000 in connection with the exercise of employee stock options.

Company stock option plans

Descriptions of the Company’s stock option plans are included in Note 8 of the Company’s Annual Report on Form 10-K for the year ended October 31, 2013. A summary of the status of the options granted under the Company’s stock option plans as of January 31, 2014 and the changes in options outstanding during the three months then ended is presented in the table that follows:

		Weighted
		Average
	Shares	Exercise Price
Outstanding at November 1, 2013	988,215	$	2.24
Options granted	122,903	$	6.84
Options exercised	(109,763)	$	3.12
Options canceled or expired	(1,836)	$	4.05
Options outstanding at January 31, 2014	999,519	$	2.70
Options exercisable at January 31, 2014	658,978	$	1.78
Options vested and expected to vest at January 31, 2014	989,331	$	2.67

Weighted average remaining contractual life of options outstanding as of January 31, 2014: 4.83 years

Weighted average remaining contractual life of options exercisable as of January 31, 2014: 4.91 years

Weighted average remaining contractual life of options vested and expected to vest as of January 31, 2014: 4.83 years

Aggregate intrinsic value of options outstanding at January 31, 2014: $3.9 million

Aggregate intrinsic value of options exercisable at January 31, 2014: $3.2 million

Aggregate intrinsic value of options vested and expected to vest at January 31, 2014: $3.2 million

As of January 31, 2014, $380,000 of expense with respect to nonvested share-based arrangements has yet to be recognized which is expected to be recognized over a weighted average period of 2.96 years.

 

Non-employee directors receive $30,000 annually, which amount is paid one-half in cash and one-half through the grant of non-qualified stock options to purchase shares of the Company’s common stock. During the quarter ended January 31, 2014, the Company granted each of its three non-employee directors 7,860 options. The number of stock options granted to each director was determined by dividing $15,000 by the fair value of a stock option grant using the Black Scholes model ($1.91 per share). These options vest ratably over fiscal year 2014.

Stock option expense

During the three months ended January 31, 2014 and 2013, stock-based compensation expense totaled $47,000 and $33,000, respectively. For the three months ended January 31, 2014 and 2013, stock-based compensation classified in cost of sales amounted to $9,000 and $9,000, respectively, and stock-based compensation classified in selling and general expense amounted to $38,000 and $24,000, respectively.

XML

Summary of Financial Information Related to RF Neulink (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jan. 31, 2014	Jan. 31, 2013
Summary Financial Information Related to RF Neulink [Line Items]
Income from discontinued operations, net of tax	$ (1)	$ (25)
RF Neulink
Summary Financial Information Related to RF Neulink [Line Items]
Net sales	8	613
Cost of sales	0	242
Gross profit	8	371
Operating expenses	6	329
Operating income	2	42
Provision for income taxes	1	17
Income from discontinued operations, net of tax	$ 1	$ 25

XML

Income tax provision - Additional Information (Detail) (USD $)	3 Months Ended
	Jan. 31, 2014	Jan. 31, 2013	Oct. 31, 2013
Income Taxes [Line Items]
Provision for income tax as percentage of income before income taxes	24.00%	28.00%
Unrecognized tax benefits	$ 0		$ 0
Accrued interest and penalties related to uncertain tax positions	$ 0		$ 0

XML

Inventories and major vendors (Tables)

3 Months Ended

Jan. 31, 2014

Inventory Disclosure [Abstract]

Components of Inventories

 Inventories consist of the following (in thousands): 

	January 31,  2014		October 31,  2013
Raw materials and supplies	$	2,006	$	1,913
Work in process		35		15
Finished goods		3,989		4,067
Totals	$	6,030	$	5,995