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 April 30, 2019

Commission file number: 000-13301

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)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	RFIL	NASDAQ Global Market

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 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 such files.) Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  o	Accelerated filer  o	Non-accelerated filer  x	Smaller reporting company x
			Emerging growth company  o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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

The number of shares of the issuer’s Common Stock, par value $0.01 per share, outstanding as of May 29, 2019 was 9,360,351.

Part I. FINANCIAL INFORMATION

Item 1: Financial Statements

RF INDUSTRIES, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

	April 30,		October 31,
	2019		2018
	(Unaudited)		(Note 1)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	13,856	$	16,334
Trade accounts receivable, net of allowance for doubtful accounts of $37 and $88, respectively		7,938		4,255
Inventories		7,932		7,113
Other current assets		736		828
TOTAL CURRENT ASSETS		30,462		28,530
Property and equipment:
Equipment and tooling		3,412		3,210
Furniture and office equipment		850		822
		4,262		4,032
Less accumulated depreciation		3,613		3,473
Total property and equipment		649		559
Goodwill		1,340		1,340
Amortizable intangible assets, net		1,229		1,367
Non-amortizable intangible assets		657		657
Other assets		68		49
TOTAL ASSETS	$	34,405	$	32,502

See Notes to Unaudited Condensed Consolidated Financial Statements.

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Item 1: Financial Statements (continued)

RF INDUSTRIES, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

	April 30,		October 31,
	2019		2018
	(Unaudited)		(Note 1)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	1,580	$	1,342
Accrued expenses		3,078		3,377
TOTAL CURRENT LIABILITIES		4,658		4,719
Other long-term liabilities		87		-
TOTAL LIABILITIES		4,745		4,719
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Common stock - authorized 20,000,000 shares of $0.01 par value; 9,360,351 and 9,291,201 shares issued and outstanding at April 30, 2019 and October 31, 2018, respectively		94		93
Additional paid-in capital		21,522		20,974
Retained earnings		8,044		6,716
TOTAL STOCKHOLDERS' EQUITY		29,660		27,783
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	34,405	$	32,502

See Notes to Unaudited Condensed Consolidated Financial Statements.

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Item 1: Financial Statements (continued)

RF INDUSTRIES, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(In thousands, except share and per share amounts)

	Three Months Ended April 30,				Six Months Ended April 30,
	2019		2018		2019		2018
Net sales	$	13,626	$	20,515	$	24,273	$	28,482
Cost of sales		9,532		12,867		17,033		18,370
Gross profit		4,094		7,648		7,240		10,112
Operating expenses:
Engineering		332		631		652		952
Selling and general		2,400		3,057		4,439		4,842
Total operating expenses		2,732		3,688		5,091		5,794
Operating income		1,362		3,960		2,149		4,318
Other income		14		4		35		6
Income from continuing operations before provision for income taxes		1,376		3,964		2,184		4,324
Provision for income taxes		315		799		483		855
Income from continuing operations		1,061		3,165		1,701		3,469
Income from discontinued operations, net of tax		-		39		-		189
Consolidated net income	$	1,061	$	3,204	$	1,701	$	3,658
Earnings per share
Basic
Continuing operations	$	0.11	$	0.35	$	0.18	$	0.39
Discontinued operations		0.00		0.00		0.00		0.02
Net income per share	$	0.11	$	0.35	$	0.18	$	0.41
Earnings per share
Diluted
Continuing operations	$	0.11	$	0.34	$	0.17	$	0.38
Discontinued operations		0.00		0.00		0.00		0.02
Net income per share	$	0.11	$	0.34	$	0.17	$	0.40
Weighted average shares outstanding
Basic		9,356,660		9,053,838		9,332,665		8,965,672
Diluted		9,837,964		9,386,194		9,837,718		9,244,725

See Notes to Unaudited Condensed Consolidated Financial Statements.

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Item 1: Financial Statements (continued)

RF INDUSTRIES, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(In thousands, except share amounts)

2019
					Additional
	Common Stock				Paid-In		Retained
	Shares		Amount		Capital		Earnings			Total
Balance, November 1, 2018		9,291,201	$	93	$	20,974	$	6,716		$	27,783
Exercise of stock options		69,150		1		356		-			357
Stock-based compensation expense		-		-		192		-			192
Dividends		-		-		-		(373	)		(373	)
Consolidated net income		-		-		-		1,701			1,701
Balance, April 30, 2019		9,360,351	$	94	$	21,522	$	8,044		$	29,660

2018
					Additional
	Common Stock				Paid-In		Retained
	Shares		Amount		Capital		Earnings			Total
Balance, November 1, 2017		8,872,246	$	89	$	19,654	$	1,600		$	21,343
Exercise of stock options		272,627		3		410		-			413
Stock-based compensation expense		-		-		132		-			132
Dividends		-		-		-		(360	)		(360	)
Consolidated net income		-		-		-		3,658			3,658
Balance, April 30, 2018		9,144,873	$	92	$	20,196	$	4,898		$	25,186

See Notes to Unaudited Condensed Consolidated Financial Statements.

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Item 1: Financial Statements (continued)

RF INDUSTRIES, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)

	Six Months Ended April 30,
	2019			2018
OPERATING ACTIVITIES:
Consolidated net income	$	1,701		$	3,658
Income from discontinued operations		-			189
Income from continuing operations		1,701			3,469
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Bad debt expense		7			51
Depreciation and amortization		278			254
Stock-based compensation expense		192			132
Deferred income taxes		-			10
Changes in operating assets and liabilities:
Trade accounts receivable		(2,375	)		(8,021	)
Inventories		(345	)		(1,036	)
Other current assets		167			(12	)
Other long-term assets		-			21
Accounts payable		(721	)		4,704
Accrued expenses		(786	)		1,881
Income tax receivable		-			442
Other long-term liabilities		76			-
Net cash provided by (used in) operating activities from continuing operations		(1,806	)		1,895
Net cash provided by operating activities from discontinued operations		-			546
INVESTING ACTIVITIES:
Proceeds from landlord for tenant improvements		-			34
Capital expenditures		(199	)		(78	)
Purchase of C Enterprises, net of cash acquired of $143		(457	)		-
Net cash used in investing activities from continuing operations		(656	)		(44	)
Net cash used in investing activities from discontinued operations		-			(1	)
FINANCING ACTIVITIES:
Proceeds from exercise of stock options		357			413
Dividends paid		(373	)		(360	)
Net cash provided by (used in) financing activities		(16	)		53
Net increase (decrease) in cash and cash equivalents		(2,478	)		2,449
Cash and cash equivalents of continuing operations, beginning of period		16,334			6,039
Cash and cash equivalents, end of period		13,856			8,488
Less: cash and cash equivalents of discontinued operations		-			1,383
Cash and cash equivalents of continuing operations, end of period	$	13,856		$	7,105
Supplemental cash flow information – income taxes paid	$	255		$	384

See Notes to Unaudited Condensed Consolidated Financial Statements.

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RF INDUSTRIES, LTD. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Unaudited interim condensed consolidated financial statements

The accompanying unaudited condensed consolidated financial statements of RF Industries, Ltd. and its divisions and three wholly-owned subsidiaries (collectively, hereinafter the “Company”) 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, 2018 has been derived from, and certain terms used herein are defined in, the audited consolidated financial statements of the Company as of October 31, 2018 included in the Company’s Annual Report on Form 10-K (“Form 10-K”) for the year ended October 31, 2018 that was previously filed with the Securities and Exchange Commission (“SEC”). Operating results for the six months ended April 30, 2019 are not necessarily indicative of the results that may be expected for the year ending October 31, 2019. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended October 31, 2018.

Principles of consolidation

The accompanying unaudited condensed consolidated financial statements for the periods ended on or before January 31, 2019 include the accounts of RF Industries, Ltd. and its two wholly-owned subsidiaries, Cables Unlimited, Inc. (“Cables Unlimited”) and Rel-Tech Electronics, Inc. (“Rel-Tech”). The unaudited condensed consolidated financial statements for the three and six months ended April 30, 2019 include the accounts of RF Industries, Ltd., Cables Unlimited, Rel-Tech, and C Enterprises, Inc. (“C Enterprises”), a wholly-owned subsidiary that RF Industries, Ltd. formed for the sole purpose of acquiring the business and assets of C Enterprises, L.P. The acquisition of the business and assets of C Enterprises, L.P. was completed on March 15, 2019. For all periods on or before January 31, 2019, references herein to the “Company” shall refer to RF Industries, Ltd., Cables Unlimited, and Rel-Tech, and for all periods after January 31, 2019, references to the “Company” shall refer to RF Industries, Ltd., Cables Unlimited, Rel-Tech, and C Enterprises, collectively. All intercompany balances and transactions have been eliminated in consolidation.

Reclassifications

Certain amounts in the prior period condensed consolidated financial statements and notes have been reclassified to conform to the current period presentation of continuing operations and discontinued operations (see Note 3). These reclassifications had no effect on reported consolidated net income.

Revenue recognition

On November 1, 2018, the Company adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contacts with Customers (Topic 606) (“ASC 606”) applying the modified retrospective method. The core principle of ASC 606 is that revenue should be recorded in an amount that reflects the consideration to which we expect to be entitled in exchange for goods or services promised to customers. Under ASC 606, the Company follows a five-step model to: (1) identify the contract with our customer; (2) identify our performance obligations in our contract; (3) determine the transaction price for our contract; (4) allocate the transaction price to our performance obligations; and (5) recognize revenue when (or as) each performance obligation is satisfied. In accordance with this accounting principle, the Company recognizes revenue using the output method at a point in time when finished goods have been transferred to the customer and there are no other obligations to customers after the title of the goods have transferred. Title of goods are transferred based on shipping terms for each customer – for shipments with terms of FOB Shipping Point, title is transferred upon shipment; for shipments with terms of FOB Destination, title is transferred upon delivery.

Recent accounting standards

Recently issued accounting pronouncements not yet adopted:

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases. This ASU requires lessees to recognize most leases on their balance sheets related to the rights and obligations created by those leases. The ASU also requires additional qualitative and quantitative disclosures related to the nature, timing and uncertainty of cash flows arising from leases. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact the adoption of this new standard will have on its Consolidated Financial Statements.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other, which simplifies the accounting for goodwill impairments by eliminating step 2 from the goodwill impairment test. Instead, if “the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.” The guidance is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the impact the adoption of this new standard will have on its Consolidated Financial Statements.

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Recently issued accounting pronouncements adopted:

In May 2014, the FASB issued ASC 606. This guidance superseded Topic 605, Revenue Recognition, in addition to other industry-specific guidance. The new standard requires a company to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services.  In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, as a revision to ASU 2014-09, which revised the effective date to fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted but not prior to periods beginning after December 15, 2016 (i.e., the original adoption date per ASU 2014-09). In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations, which clarifies certain aspects of the principal-versus-agent guidance, including how an entity should identify the unit of accounting for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements, such as service transactions. The amendments also reframe the indicators to focus on evidence that an entity is acting as a principal rather than as an agent. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing, which clarifies how an entity should evaluate the nature of its promise in granting a license of intellectual property, which will determine whether it recognizes revenue over time or at a point in time. The amendments also clarify when a promised good or service is separately identifiable (i.e., distinct within the context of the contract) and allow entities to disregard items that are immaterial in the context of a contract. On November 1, 2018, the Company adopted ASC 606 applying the modified retrospective method. The Company has performed a review of ASC 606 as compared to its previous accounting policies for our product revenue and did not identify any material impact to revenue. Therefore, there was no adjustment to retained earnings for a cumulative effect. The necessary changes to business processes and controls to effectively review and account for any new contracts under this standard have been implemented.

Note 2 - Business Acquisition

On March 15, 2019, through C Enterprises, Inc., its newly formed subsidiary, the Company purchased the business and assets of C Enterprises L.P., a California based designer and manufacturer of quality connectivity solutions to telecommunications and data communications distributors. In consideration for the C Enterprises business and assets, the Company paid $600,000 in cash and assumed certain liabilities. The acquisition was determined not to be material and was accounted for in accordance with the acquisition method of accounting, and the acquired assets and assumed liabilities were recorded by the Company at their estimated fair values in accordance with ASC 805, Business Combinations. There were no intangible assets identified as part of the acquisition.

The results of C Enterprises, Inc.’s operations subsequent to March 15, 2019 have been included in the results of the Custom Cabling Manufacturing and Assembly segment (“Custom Cabling segment”) as well as in the Company’s consolidated statements of operations. Costs related to the acquisition of C Enterprises were approximately $100,000 and have been expensed as incurred and categorized in selling and general expenses. For the period ended April 30, 2019, C Enterprises, Inc.’s contributed $1.7 million of revenue.

Note 3 - Discontinued operations

On October 31, 2018, the Company sold all of the assets and liabilities of its subsidiary, Comnet Telecom Supply, Inc. (“Comnet”), to RAP Acquisition Inc., a New Jersey corporation. Comnet was a New Jersey-based manufacturer and supplier of telecommunications and data products, including fiber optic cables, cabling technologies, custom patch cord assemblies, data center consoles, and other data center equipment. This division was one of the three subsidiaries in the Company’s Custom Cabling Manufacturing Assembly segment. For the three months ended April 30, 2018, the Company recognized pretax income of $57,000 from the discontinued operations of Comnet, and income tax expense of $18,000. The major line items constituting the income from discontinued operations of Comnet for the three months ended April 30, 2018 are as follows (in thousands):

	Three Months Ended April 30, 2018
Major line items constituting pretax income from discontinued operations:
Net sales	$	1,866
Cost of sales		(1,429	)
Gross profit		437
Selling, general and administrative expense		(380	)
Pretax income from discontinued operations		57
Provision for income taxes		18
Income from discontinued operations	$	39

For the six months ended April 30, 2018, the Company recognized pretax income of $253,000 from the discontinued operations of Comnet, and income tax expense of $64,000. The major line items constituting the income from discontinued operations of Comnet for the six months ended April 30, 2018 are as follows (in thousands):

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	Six Months Ended April 30, 2018
Major line items constituting pretax income from discontinued operations:
Net sales	$	4,240
Cost of sales		(3,194	)
Gross profit		1,046
Selling, general and administrative expense		(793	)
Pretax income from discontinued operations		253
Provision for income taxes		64
Income from discontinued operations	$	189

Note 4 - Inventories and major vendors

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

	April 30, 2019		October 31, 2018
Raw materials and supplies	$	3,442	$	2,711
Work in process		687		603
Finished goods		3,803		3,799
Totals	$	7,932	$	7,113

Two vendors accounted for 11% and 10% of inventory purchases for the three months ended April 30, 2019. For the six months ended April 30, 2019, one of these vendors accounted for 14% of inventory purchases, and a different vendor accounted for 13% of inventory purchases. For the three months ended April 30, 2018, one vendor accounted for 51% of inventory purchases. This same vendor accounted for 45% of inventory purchases for the six months ended April 30, 2018. The Company has arrangements with these vendors to purchase products based on purchase orders periodically issued by the Company.

Note 5 - Other current assets

Other current assets consist of the following (in thousands): 

	April 30, 2019		October 31, 2018
Prepaid taxes	$	102	$	335
Prepaid expense		464		228
Notes receivable, current portion		-		20
Other		170		245
Totals	$	736	$	828

Note 6 - Accrued expenses

Accrued expenses consist of the following (in thousands):

	April 30, 2019		October 31, 2018
Wages payable	$	1,168	$	1,705
Accrued receipts		1,295		1,271
Other current liabilities		615		401
Totals	$	3,078	$	3,377

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

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Note 7 - Earnings per share

Basic earnings per share is computed by dividing consolidated net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing consolidated 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 issuable securities totaling 121,015 and 475,105 shares for the three months ended April 30, 2019 and 2018, respectively, and 121,015 and 563,838 shares for the six months ended April 30, 3019, 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 April 30,				Six Months Ended April 30,
	2019		2018		2019		2018
Weighted average shares outstanding for basic earnings per share		9,356,660		9,053,838		9,332,665		8,965,672
Add effects of potentially dilutive securities-assumed exercise of stock options		481,304		332,356		505,053		279,053
Weighted average shares outstanding for diluted earnings per share		9,837,964		9,386,194		9,837,718		9,244,725

Note 8 - Stock-based compensation and equity transactions

On December 13, 2017, the Company granted 80,000 incentive stock options to an employee. These options vested 8,000 shares on the date of grant, and the balance vests as to 8,000 shares per year thereafter on each of the next nine anniversaries of December 13, 2017, and expire ten years from the date of grant. On December 3, 2018, the Company granted each of two employees 25,000 incentive stock options. These options vested 5,000 each on the date of grant, and the balance vests as to 5,000 shares each per year thereafter on each of the next four anniversaries of December 3, 2018, and expire ten years from the date of grant. On December 3, 2018, the Company also granted one employee 10,000 incentive stock options. These options vested 2,000 shares on the date of grant, and the balance vests as to 2,000 shares per year thereafter on each of the next four anniversaries of December 3, 2018, and expire ten years from the date of grant. On March 8, 2019, the Company granted one employee 25,000 incentive stock options. These options vested 5,000 on the date of grant, and the balance vests as to 5,000 shares per year thereafter on each of the next four anniversaries of March 8, 2019, and expire ten years from the date of grant. No other options were granted to Company employees during the three and six months ended April 30, 2019 and 2018.

The weighted average fair value of employee and non-employee directors’ stock options granted by the Company during the six months ended April 30, 2019 and 2018 was estimated to be $8.17 and $2.44, respectively, per share, using the Black-Scholes option pricing model with the following assumptions:

	Six Months Ended April 30,
	2019			2018
Risk-free interest rate		2.88	%		1.87	%
Dividend yield		0.98	%		3.28	%
Expected life of the option		5.96 years			4.54 years
Volatility factor		55.25	%		46.83	%

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 2019 and 2018 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.

Company stock option plans

Descriptions of the Company’s stock option plans are included in Note 9 of the Company’s Annual Report on Form 10-K for the year ended October 31, 2018. A summary of the status of the options granted under the Company’s stock option plans as of April 30, 2019 and the changes in options outstanding during the six months then ended is presented in the table that follows:

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				Weighted
				Average
	Shares			Exercise Price
Outstanding at November 1, 2018		942,366		$	3.09
Options granted		121,015		$	8.17
Options exercised		(69,150	)	$	5.16
Options canceled or expired		(5,250	)	$	6.82
Options outstanding at April 30, 2019		988,981		$	3.55
Options exercisable at April 30, 2019		698,815		$	3.19
Options vested and expected to vest at April 30, 2019		987,922		$	3.55

Weighted average remaining contractual life of options outstanding as of April 30, 2019: 4.23 years

Weighted average remaining contractual life of options exercisable as of April 30, 2019: 2.94 years

Weighted average remaining contractual life of options vested and expected to vest as of April 30, 2019: 4.22 years

Aggregate intrinsic value of options outstanding at April 30, 2019: $4,108,000

Aggregate intrinsic value of options exercisable at April 30, 2019: $3,119,000

Aggregate intrinsic value of options vested and expected to vest at April 30, 2019: $4,093,000

As of April 30, 2019, $550,000 of expense with respect to nonvested share-based arrangements has yet to be recognized but is expected to be recognized over a weighted average period of 5.43 years.

Non-employee directors receive a compensation package of $50,000 annually, which 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, 2019, the Company granted each of its five non-employee directors 7,203 non-qualified stock options. The options have an exercise price of $8.07 per share. The number of stock options granted to each director was determined by dividing $25,000 by the fair value of a stock option grant using the Black-Scholes model ($3.471 per share). These options vest ratably over fiscal year 2019 and expire five years from the date of grant. Effective November 1, 2018, in addition to the compensation received for serving on the Board of Directors, the Chairman of each committee of the Board will receive $15,000 per year in cash for services rendered as Chairman. During the quarter ended April 30, 2019, the Company did not grant any non-qualified stock options.

Stock option expense

During the six months ended April 30, 2019 and 2018, stock-based compensation expense totaled $192,000 and $132,000, respectively, and was classified in selling and general expenses. During the three months ended April 30, 2019 and 2018, stock-based compensation expense totaled $78,000 and $57,000, respectively, and was classified in selling and general expenses.

Note 9 - Concentrations of credit risk

Financial instruments that 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 April 30, 2019, the Company had cash and cash equivalent balances in excess of federally insured limits in the amount of approximately $11.7 million.

Two customers, a distributor and an equipment manufacturer, accounted for approximately 32% and 10%, respectively, of the Company’s net sales for the six-month period ended April 30, 2019. These two customers’ accounts receivable balances accounted for 18% and 10% of the total net accounts receivable balance at April 30, 2019. For the three-month period ended April 30, 2019, the same distributor and a different equipment manufacturer accounted for approximately 28% and 14%, respectively, of the Company’s net sales. At April 30, 2019, this equipment manufacturer’s accounts receivable balance accounted for approximately 21% of the total net accounts receivable balance, with one other distributor customer’s accounts receivable balance accounting for approximately 15% of the total net accounts receivable balance.

For the six-month period ended April 30, 2018, one customer who is a distributor, accounted for approximately 68% of the Company’s net sales. This same customer accounted for approximately 76% of the Company’s net sales for the three-month period ended April 30, 2018. At April 30, 2018, this customer’s accounts receivable balance accounted for approximately 80% of the total net accounts receivable balance.

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Although these customers have been on-going major customers of the Company, the written agreements with these customers do not have any minimum purchase obligations and they could stop buying the Company’s products at any time and for any reason. A reduction, delay or cancellation of orders from these customers or the loss of these customers could significantly reduce the Company’s future revenues and profits.

Note 10 - Segment information

The Company aggregates operating divisions into operating segments that have similar economic characteristics primarily in 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. Based upon this evaluation, as of April 30, 2019, the Company had two segments – RF Connector and Cable Assembly (“RF Connector segment”) and Custom Cabling Manufacturing and Assembly (“Custom Cabling segment”).

As of April 30, 2019, the RF Connector segment consisted of one division and the Custom Cabling segment was composed of three divisions. The four divisions that met the quantitative thresholds for segment reporting are the RF Connector and Cable Assembly division (“RF Connector division”), Cables Unlimited, Rel-Tech, and C Enterprises. While each segment had similar products and services, with one major exception, there was little overlapping of these services to their customer base. In addition, sales or product and services for the RF Connector segment were primarily through the distribution channel while the Custom Cabling segment sales were through a combination of distribution and direct to the end customer.

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 RF Connector division constitutes the RF Connector segment, and the Cables Unlimited, Rel-Tech, and C Enterprises divisions constitute the Custom Cabling 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. 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 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 and six months ended April 30, 2019 and 2018 (in thousands):

	Three Months Ended April 30,				Six Months Ended April 30,
	2019		2018		2019		2018
United States	$	13,451	$	20,376	$	23,921	$	28,137
Foreign Countries:
Canada		113		125		278		280
Mexico		-		-		-		39
All Other		62		14		74		26
		175		139		352		345
Totals	$	13,626	$	20,515	$	24,273	$	28,482

Net sales, income (loss) from continuing operations before provision for income taxes and other related segment information for the three months ended April 30, 2019 and 2018 are as follows (in thousands):

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	RF Connector			Custom Cabling
	and			Manufacturing and
	Cable Assembly			Assembly		Corporate		Total
2019
Net sales	$	3,341		$	10,285	$	-	$	13,626
Income from continuing operations before provision for income taxes		257			1,105		14		1,376
Depreciation and amortization		45			96		-		141
Total assets		6,972			12,773		14,660		34,405
2018
Net sales	$	2,734		$	17,781	$	-	$	20,515
Income (loss) from continuing operations before provision for income taxes		(482	)		4,443		3		3,964
Depreciation and amortization		43			84		-		127
Total assets		6,368			15,077		14,298		35,743

Net sales, income (loss) from continuing operations before provision for income taxes and other related segment information for the six months ended April 30, 2019 and 2018 are as follows (in thousands):

	RF Connector			Custom Cabling
	and			Manufacturing and
	Cable Assembly			Assembly		Corporate		Total
2019
Net sales	$	6,599		$	17,674	$	-	$	24,273
Income from continuing operations before provision for income taxes		537			1,611		36		2,184
Depreciation and amortization		90			188		-		278
Total assets		6,972			12,773		14,660		34,405
2018
Net sales	$	5,364		$	23,118	$	-	$	28,482
Income (loss) from continuing operations before provision for income taxes		(639	)		4,957		6		4,324
Depreciation and amortization		87			167		-		254
Total assets		6,368			15,077		14,298		35,743

Note 11 - Income taxes

On December 22, 2017, the U.S. President signed the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act, among other things, lowered the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allowed us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. As a result, we previously recorded a provisional estimate of the effect of the Tax Act in our financial statements. In the first quarter of 2019, we completed our analysis to determine the effect of the Tax Act and recorded no additional adjustments as of December 22, 2018.

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 (benefit) 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 23% and 20% of income before income taxes for the three months ended April 30, 2019 (the “fiscal 2019 quarter”) and 2018 (the “fiscal 2018 quarter”), respectively, and 22% and 20% of income before income taxes for the six months ended April 30, 2019 and 2018. The increase in the effective tax rate from period to period was primarily driven by the elimination of the benefit from the domestic production activities deduction and the one-time benefit recorded in the prior year related to the reduction in the Company’s deferred tax liability due to the change in the federal tax rate, both as a result of the Tax Act. The Company recorded income from discontinued operations, net of tax, as disclosed in Note 3.

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The Company had $90,000 and $58,000 of unrecognized tax benefits, inclusive of interest and penalties, as of April 30, 2019 and October 31, 2018, respectively. The unrecognized tax benefits, if recognized, would result in a net tax benefit of $15,000 as of April 30, 2019.

Note 12 - Intangible assets

Intangible assets consist of the following (in thousands):

	April 30, 2019			October 31, 2018
Amortizable intangible assets:
Customer relationships (estimated lives 7 - 15 years)	$	2,879		$	2,879
Accumulated amortization		(1,752	)		(1,619	)
		1,127			1,260
Patents (estimated life 14 years)		142			142
Accumulated amortization		(40	)		(35	)
		102			107
Totals	$	1,229		$	1,367
Non-amortizable intangible assets:
Trademarks	$	657		$	657

Amortization expense for the six months ended April 30, 2019 and the year ended October 31, 2018 was $138,000 and $275,000, respectively. As of April 30, 2019, the weighted-average amortization period for the amortizable intangible assets is 10.98 years.

Note 13 - Commitments

The Company currently leases its corporate headquarters and RF connector and cable assembly manufacturing facilities in San Diego, California. On June 5, 2017, the Company entered into a fifth amendment to its lease for its facility in San Diego, California. As a result, the Company now leases a total of approximately 21,908 square feet of office, warehouse and manufacturing space at its San Diego location. The term of the lease expires on July 31, 2022, and the rental payments under the lease currently are $22,721 per month. The San Diego lease also requires the payment of the Company’s pro rata share of real estate taxes and insurance, maintenance and other operating expenses related to the facilities.

(i) On June 9, 2017, the Cables Unlimited division entered into an amendment to its lease with K&K Unlimited, as landlord, under which Cables Unlimited leases its 12,000 square foot manufacturing facility in Yaphank, New York, to extend the term of the lease to June 30, 2018. Cables Unlimited’s monthly rent expense under the amended lease remains at $13,000 per month, plus payments of all utilities, janitorial expenses, routine maintenance costs and costs of insurance for Cables Unlimited’s business operations and equipment. The landlord is a company controlled by Darren Clark, the former owner and current President of Cables Unlimited. On June 6, 2018, Cables Unlimited extended its lease with K&K Unlimited for an additional three years to June 30, 2021, under the same terms and conditions.

(ii) On July 25, 2017, the Rel-Tech Electronic division entered into a lease for approximately 13,750 square feet located in Milford, Connecticut. Rel-Tech’s current net monthly rent expense under the lease is $8,707 per month for these facilities. The new lease expires in August 2019.

(iii) On November 1, 2018, the Cables Unlimited division entered into a lease agreement with 100 Bellport Avenue, LLC, as landlord, for approximately 7,500 square feet located in Yaphank, New York, with a monthly rent expense of $5,625. On February 1, 2019, Cables Unlimited entered into an amendment to this lease to expand the leased space by an additional 5,000 square feet and increase the monthly rent expense by $3,750, resulting in a total rent expense of $9,375 per month. The lease expires on October 31, 2019.

(iv) The newly acquired C Enterprises division leases approximately 24,014 square feet of office, warehouse, and manufacturing space located in Vista, California. The term of the lease expires on June 30, 2023, and the rental payments under the lease currently are $17,770 per month, plus payments of real estate taxes, management fee, property insurance and other operating expenses related to the facilities.

As of April 30, 2019, the aggregate monthly rental for all of the Company’s facilities is approximately $71,000 per month, plus utilities, maintenance and insurance.

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Note 14 - Cash dividend and declared dividends

The Company paid dividends of $0.02 per share during the three months ended April 30, 2019 and 2018 for a total of $187,000 and $183,000, respectively. The Company paid dividends of $0.02 per share during the six months ended April 30, 2019 and 2018 for a total of $373,000 and $360,000, respectively.

Note 15 - Subsequent event

On June 7, 2019, the Board of Directors of the Company declared a quarterly cash dividend of $0.02 per share to be paid on July 15, 2019 to stockholders of record on June 30, 2019.

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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, 2018 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 accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these consolidated financial statements requires us to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. We evaluate our estimates, including those related to bad debts, inventory reserves and contingencies on an ongoing basis. We base our estimates on historical experience and on various other assumptions that are believed to be appropriate under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Additionally, on November 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contacts with Customers (Topic 606) (“ASC 606”) applying the modified retrospective method. The core principle of ASC 606 is that revenue should be recorded in an amount that reflects the consideration to which we expect to be entitled in exchange for goods or services promised to customers. Under ASC 606, the Company follows a five-step model to: (1) identify the contract with our customer; (2) identify our performance obligations in our contract; (3) determine the transaction price for our contract; (4) allocate the transaction price to our performance obligations; and (5) recognize revenue when (or as) each performance obligation is satisfied. In accordance with this accounting principle, the Company recognizes revenue using the output method at a point in time when finished goods have been transferred to the customer and there are no other obligations to customers after the title of the goods have transferred. Title of goods are transferred based on shipping terms for each customer – for shipments with terms of FOB Shipping Point, title is transferred upon shipment; for shipments with terms of FOB Destination, title is transferred upon delivery. The Company has performed a review of ASC 606 as compared to its previous accounting policies for our product revenue and did not identify any material impact to revenue. Therefore, there was no adjustment to retained earnings for a cumulative effect. The necessary changes to business processes and controls to effectively review and account for any new contracts under this standard have been implemented.

On March 15, 2019, through C Enterprises, Inc. (“C Enterprises”), its newly formed subsidiary, the Company purchased the business and assets of C Enterprises L.P., a California based designer and manufacturer of quality connectivity solutions to telecommunications and data communications distributors. The acquisition was determined not to be material and was accounted for in accordance with the acquisition method of accounting, and the acquired assets and assumed liabilities were recorded by the Company at their estimated fair values in accordance with ASC 805, Business Combinations.

Inventories

Inventories are stated at the lower of cost or net realizable value, with cost determined using the weighted average cost method of accounting. 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-fourth 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.

Allowance for Doubtful Accounts

The Company records its allowance for doubtful accounts based upon its assessment of various factors. The Company considers historical experience, the age of the accounts receivable balance, credit quality of the Company’s customers, current economic conditions and other factors that may affect a customer’s ability to pay.

Long-Lived Assets Including Goodwill

The Company assesses property, plant and equipment and intangible assets, which are considered definite-lived assets, for impairment. Definite-lived assets are reviewed when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We measure recoverability of these assets by comparing the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If property and equipment and intangible assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair market value.

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The Company amortizes its intangible assets with definite useful lives over their estimated useful lives and reviews these assets for impairment.

We test our goodwill and trademarks and indefinite-lived assets for impairment at least annually or more frequently if events or changes in circumstances indicate these assets may be impaired. These events or circumstances requires significant judgment and could include a significant change in the business climate, legal factors, operating performance indicators, competition and sale or disposition of all or a portion of a division. This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital.

Income Taxes

The Company records a tax provision for the anticipated tax consequences of the reported results of operations. Income taxes are accounted for under the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates as of the date of the financial statements that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

The calculation of the tax provision involves significant judgment in estimating the impact of uncertainties in the application of GAAP and complex tax laws. Resolution of these uncertainties in a manner inconsistent with management’s expectations could have a material impact on the Company’s financial condition and operating results.

Stock-based Compensation

The Company uses the Black-Scholes model to value the 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

RF Industries, Ltd. (together with subsidiaries, the “Company”) is a national manufacturer and marketer of interconnect products and systems, including coaxial and specialty cables and connectors, fiber optic cables and connectors, and electrical and electronic specialty cables and components. Through its manufacturing and production facilities, the Company provides a wide selection of interconnect products and solutions primarily to telecommunications carriers and equipment manufacturers, wireless and network infrastructure carriers and manufacturers and to various original equipment manufacturers (OEMs) in several market segments.

The Company operates through two reporting segments: (i) the RF Connector and Cable Assembly (“RF Connector”) segment, and (ii) the Custom Cabling Manufacturing and Assembly (“Custom Cabling”) segment. The RF Connector segment primarily designs, manufactures, markets and distributes a broad range of connector and cable products, including coaxial connectors and cable assemblies that are integrated with coaxial connectors, used in telecommunications and information technology OEM markets and other end markets. The Custom Cabling segment designs, manufactures, markets and distributes custom copper and fiber cable assemblies, complex hybrid fiber optic and power solution cables, electromechanical wiring harnesses, and wiring harnesses for a broad range of applications in a diverse set of end markets. The two segments were determined based on the aggregation of operating divisions that have similar economic characteristics and 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; and (5) if applicable, the nature of the regulatory environment. On March 15, 2019, through C Enterprises, Inc. (“C Enterprises”), its newly formed subsidiary, the Company purchased the business and assets of C Enterprises L.P., a California based designer and manufacturer of quality connectivity solutions to telecommunications and data communications distributors. The results of C Enterprises’ operations subsequent to March 15, 2019 have been included in the results of the Custom Cabling segment. The acquisition was accounted for and performed in accordance with ASC 805, Business Combinations. 

For the six months ended April 30, 2019, most of the Company’s revenues were generated from the Custom Cabling segment from the sale of fiber optics cable, copper cabling, custom patch cord assemblies, and wiring harnesses (which accounted for 73% of the Company’s total sales for the six months ended April 30, 2019). Revenues from the RF Connector segment were generated from the sales of RF connector products and connector cable assemblies and accounted for 27% of the Company’s total sales for the six months ended April 30, 2019.

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 from the date of this filing. Management believes that its existing assets and the cash expected to be generated from operations, including its current backlog of unfulfilled orders, will be sufficient during the current fiscal year based on the following:

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· As of April 30, 2019, the Company had cash and cash equivalents equal to $13.9 million.

· As of April 30, 2019, the Company had $30.5 million in current assets and $4.7 million in current liabilities.

· As of April 30, 2019, the Company had no outstanding indebtedness for borrowed funds.

As of April 30, 2019, the Company had a total of $13.9 million of cash and cash equivalents compared to a total of $16.3 million of cash and cash equivalents as of October 31, 2018. As of April 30, 2019, the Company had working capital of $25.8 million and a current ratio of approximately 6.5:1.

During the fiscal year ended October 31, 2018, the Company’s backlog increased significantly to $11 million as of October 31, 2018. Since the end of fiscal year 2018, the Company has filled most of the October 31, 2018 backlog. However, the Company has continued to receive additional bookings while maintaining its level of shipments. As a result, the Company had $10 million of backlog as of the current quarter ended April 30, 2019. Since purchase orders are submitted from customers based on the timing of their requirements, the Company’s ability to predict orders in future periods or trends in future periods is limited. Furthermore, purchase orders may be subject to cancellation from customers, although the Company has not historically experienced material cancellations of purchase orders. As a result of the Company’s backlog balance as of April 30, 2019, the Company’s liquidity and available capital resources are expected to continue to improve during the balance of the current fiscal year.

The Company used cash of $2.6 million during the six months ended April 30, 2019 due largely to an increase in sales, which resulted in increased inventory purchases and an increase in outstanding accounts receivables as of quarter-end. Net income of $1.7 million, with an added increase in cash from noncash credits of $0.3 million from depreciation and amortization and $0.2 million from stock-based compensation expense, was offset by an increase in accounts receivable ($2.4 million) and inventories ($0.3 million) as well as a decrease in accrued expenses primarily due to the payout of prior year bonuses ($0.8 million) and an increase in accounts payable ($0.7 million).

The Company used $0.8 million during the six months ended April 30, 2019 for capital expenditures and the purchase of the assets and business of C Enterprises. In addition, during the six months ended April 30, 2019, the Company paid $0.4 million of cash as dividends. These net cash outlays were partially offset by $0.4 million that the Company received from the exercise of stock options.

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, its current backlog of unfulfilled orders and its anticipated future operations, the Company would be able to finance its expansion, if necessary.

From time to time, the Company may undertake acquisitions of other companies or product lines in order to diversify its product and solutions offerings and customer base. Conversely, the Company may undertake the disposition of a division or product line due to changes in the Company’s business strategy or market conditions. Acquisitions may require the outlay of cash, which may reduce the Company’s liquidity and capital resources while dispositions may increase the Company’s cash position, liquidity and capital resources. For example, on March 15, 2019, the Company purchased all of the assets of C Enterprises for $600,000 in cash and the assumption of certain liabilities. C Enterprises is a California based designer, manufacturer, and distributor of fiber and copper custom cables and cable assembles, and other related products used in the data center, networking, and wireless markets. If the Company acquires other businesses in the future for a purchase price payable in whole or in part in cash, its future liquidity and capital resources could be adversely affected. The Company has previously announced its intention to make additional acquisitions in order to expand its product offerings and customer base.

We are currently evaluating the financial impact of the import tariffs that were recently enacted in the U.S. and abroad. While we do not believe that the financial impact on the Company of the enacted tariffs will be material, we recognize that there is uncertainty related to potential costs related to these actions.

Results of Operations

On October 31, 2018, the Company sold all of the shares of Comnet Telecom Supply, Inc. (“Comnet”), a wholly-owned subsidiary that was part of the Company’s Custom Cabling segment. Accordingly, the Company’s results of operations for the both three and six month periods ended April 30, 2018 have been adjusted to remove the results of Comnet; the operating results of Comnet in 2018 are reported in the attached condensed consolidated financial statements as discontinued operations on the statement of operations. During the three months ended April 30, 2018, Comnet had net sales of $1.9 million and income from continuing operations before provision for income taxes of $0.1 million. During the six months ended April 30, 2018, Comnet had net sales of $4.2 million and income from continuing operations before provision for income taxes of $0.3 million. Comnet was sold as part of the Company’s business transformation toward a one company culture and operating structure to more efficiently leverage its capabilities across the entire business; Comnet’s business did not match the Company’s go-to-market strategy since it operated with a different sales model and margin profile than the rest of the Company.

On March 15, 2019, the Company acquired the assets and business of C Enterprises, L.P. The C Enterprises business is now conducted by the Company through its new C Enterprises, Inc. subsidiary. The Company paid $600,000 of cash, and assumed certain liabilities for the purchase of the C Enterprises business. The financial results of C Enterprises during the period from March 15, 2019 to April 30, 2019 are included in the results of operations for 2019.

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Three Months Ended April 30, 2019 vs. Three Months Ended April 30, 2018

Net sales of $13.6 million decreased by 34%, or $6.9 million, for the three months ended April 30, 2019 (the “fiscal 2019 quarter”) when compared to the three months ended April 30, 2018 (the “fiscal 2018 quarter”). Net sales for the fiscal 2019 quarter at the Company’s Custom Cabling segment decreased by $7.5 million, or 42%, when compared to the fiscal 2018 quarter. The year-over-year decline in sales was primarily due to the largest series of orders the Company has ever received in the 2018 fiscal quarter, which orders significantly enhanced net sales in the second quarter of fiscal 2018. The net sales at the Company’s Custom Cabling segment in the fiscal 2019 second quarter were supplemented by $1.7 million of net sales that the Company generated from its newly acquired C Enterprises subsidiary. The Company did not own C Enterprises in the 2018 fiscal year. However, net sales at the Company’s Custom Cabling segment for the second quarter ended April 30, 2019 increased over the first quarter ended January 31, 2019. Even excluding the additional net sales generated by C Enterprises in the second quarter of fiscal 2019, net sales in the Company’s Custom Cabling segment increased by $0.7 million over the first quarter of fiscal 2019. Net sales for the fiscal 2019 quarter at the RF Connector segment increased by $0.6 million, or 22%, to $3.3 million as compared to $2.7 million for the fiscal 2018 quarter.

Gross profit for the fiscal 2019 quarter decreased $3.6 million to $4.1 million primarily due to the decrease in net sales. Gross margins decreased to 30% of net sales from 37% of net sales in the fiscal 2018 quarter primarily due to the higher cost of outsourcing at the Custom Cabling segment.

Engineering expenses decreased $0.3 million during the fiscal 2019 quarter to $0.3 million compared to $0.6 million for the fiscal 2018 quarter due to higher compensation expense related to engineering activities in the fiscal 2018 quarter to support the higher net sales in the fiscal 2018 quarter. Engineering expenses represent costs incurred relating to the ongoing development of new products.

Selling and general expenses decreased $0.7 million to $2.4 million compared to $3.1 million in the second quarter last year due to higher compensation expenses in the fiscal 2018 quarter as a result of the higher sales at the Custom Cabling segment. Selling and general expenses as a percentage of sales increased to 18% of sales compared to 15% of sales in the second quarter last year partially due to one-time costs of $100,000 related to the acquisition of C Enterprises in the fiscal 2019 quarter, and partially due to the absorption of the selling and general expenses of the newly acquired C Enterprises.

For the fiscal 2019 quarter, income (loss) from continuing operations for the Custom Cabling segment and the RF Connector segment was $1.1 million and $0.3 million, respectively, as compared to $4.4 million and ($0.5) million for the comparable second quarter last year. The decrease in income from continuing operations at the Custom Cabling segment was primarily due to the higher sales in the fiscal 2018 quarter, while the RF Connector segment had an increase in income (loss) from continuing operations due in part to the increase in sales and an increase in gross margins.

The provision for income taxes was 23% and 20% of income before income taxes for the three months ended April 30, 2019 and 2018, respectively. The increase in the effective income tax rate from period to period was primarily driven by the elimination of the benefit from the domestic production activities deduction and the one-time benefit recorded in the prior year related to the reduction in the Company’s deferred tax liability due to the change in the federal tax rate, both as a result of the Tax Act.

On December 22, 2017, the U.S. President signed the Tax Act, among other things, lowered the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allowed us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. As a result, we previously recorded a provisional estimate of the effect of the Tax Act in our financial statements. In the second quarter of 2019, we completed our analysis to determine the effect of the Tax Act and recorded no additional adjustments as of December 22, 2018.

All of the income from discontinued operations, net of tax, during the fiscal 2018 quarter represents the results from the operations of Comnet Telecom Supply, Inc., a former subsidiary of the Company that was discontinued on October 31, 2018.

For the fiscal 2019 quarter, net income was $1.1 million and fully diluted earnings per share (EPS) was $0.11 per share as compared to an income from continuing operations of $3.2 million and fully diluted EPS of $0.34 per share for the fiscal 2018 quarter. For the fiscal 2019 quarter, the diluted weighted average shares outstanding was 9,837,964 as compared to 9,386,194 for the fiscal 2018 quarter.

Six Months Ended April 30, 2019 vs. Six Months Ended April 30, 2018

Net sales of $24.3 million decreased by 15%, or $4.2 million, for the six months ended April 30, 2019 (the “fiscal 2019 six month period”) when compared to the six months ended April 30, 2018 (the “fiscal 2018 six month period”). The decrease in net sales is attributable to a decrease in net sales at the Company’s Custom Cabling segment. Net sales for the fiscal 2019 six month period at the Company’s Custom Cabling segment decreased $5.4 million, or 24%, to $17.7 million when compared to the fiscal 2018 six month period net sales of $23.1 million. The year-over-year decline in sales was a result of the largest series of orders that the Company has ever received, which orders it received in the year ago six month period ended April 30, 2018. Net sales for the fiscal 2019 six month period at the RF Connector segment increased by $1.2 million, or 23%, to $6.6 million as compared to $5.4 million for the fiscal 2018 six month period.

19

The Company’s gross profit as a percentage of sales in the fiscal 2019 six month period decreased by 6% to 30% compared to 36% in the fiscal 2018 six month period due primarily to the substantially higher revenues at the Custom Cabling division in the fiscal 2018 six month period.

Engineering expenses decreased $0.3 million during the fiscal 2019 six month period to $0.7 million compared to $1.0 million for the fiscal 2018 six month period due to higher compensation expense related to engineering activities to support the higher net sales in the fiscal 2018 six month period. Engineering expenses represent costs incurred relating to the ongoing development of new products.

Selling and general expenses decreased by $0.4 million during the fiscal 2019 six month period to $4.4 million from $4.8 million in the fiscal 2018 six month period. The decrease in selling and general expenses was primarily due to the higher compensation resulting from the higher net sales in the fiscal 2018 six month period. Selling and general expenses as a percentage of sales increased to 18% for the fiscal 2019 six month period as compared to 17% for the fiscal 2018 six month period partially due to one-time costs of $100,000 related to the acquisition of C Enterprises in the fiscal 2019 quarter, and partially due to the absorption of the selling and general expenses of the newly acquired C Enterprises.

For the fiscal 2019 six month period, income (loss) from continuing operations for the Custom Cabling segment and the RF Connector segment was $1.6 million and $0.5 million, respectively, as compared to $5.0 million and $(0.6) million for the comparable six months last year. The decrease in income from continuing operations at the Custom Cabling segment was primarily due to the higher sales in the fiscal 2018 six month period, while the increase at RF Connector was primarily due in part to the increase in sales and an increase in gross margins.

The provision for income taxes was 22% and 20% of income before income taxes for the six months ended April 30, 2019 and 2018, respectively. The decrease in the effective income tax rate from period to period was primarily driven by the elimination of the benefit from the domestic production activities deduction and the one-time benefit recorded in the prior year related to the reduction in the Company’s deferred tax liability due to the change in the federal tax rate, both as a result of the Tax Act.

All of the income from discontinued operations, net of tax, during the fiscal 2018 six month period represents the results from the operations of Comnet Telecom Supply, Inc., a former subsidiary of the Company that was discontinued on October 31, 2018.

For the fiscal 2019 six month period, net income was $1.7 million and fully diluted EPS was $0.17 per share as compared to an income from continuing operations of $3.5 million and fully diluted EPS of $0.38 per share for the fiscal 2018 six month period.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Nothing to report.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

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

As required by Exchange Act Rule 13a-15(b), as of the end of the period covered by this report, management, under the supervision and with the participation of our then Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures. Based on this evaluation, management concluded that the Company’s disclosure controls and procedures were effective as of that date.

There has been no change in the Company’s internal control over financial reporting during the quarter ended April 30, 2019 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

20

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. As of the date of this report, we are not subject to any proceeding that is not in the ordinary course of business or that is material to the financial condition of our business.

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, 2018 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

Noting to report.

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.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Schema.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF	XBRL Taxonomy Extension Definition Linkbase.
101.LAB	XBRL Taxonomy Extension Label Linkbase.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.

21

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: June 12, 2019	By:	/s/ Robert Dawson
		Robert Dawson President and Chief Executive Officer
Date: June 12, 2019	By:	/s/ Mark Turfler
		Mark Turfler Chief Financial Officer

22

EX-31.1

Exhibit 31.1

CERTIFICATIONS PURSUANT TO

SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Robert Dawson, certify that:

1. I have reviewed this report on Form 10-Q for the quarter ended April 30, 2019 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: June 12, 2019	/s/ Robert Dawson
	Robert Dawson
	President and 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 April 30, 2019 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: June 12, 2019	/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 April 30, 2019, as filed with the Securities and Exchange Commission (the “Report”), I, Robert Dawson, 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: June 12, 2019	/s/ Robert Dawson
	Robert Dawson
	President and 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 April 30, 2019, 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: June 12, 2019	/s/ Mark Turfler
	Mark Turfler
	Chief Financial Officer

XML

Document and Entity Information - shares	6 Months Ended
	Apr. 30, 2019	May 29, 2019
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Apr. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Entity Registrant Name	R F INDUSTRIES LTD
Entity Central Index Key	0000740664
Current Fiscal Year End Date	--10-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Trading Symbol	RFIL
Entity Common Stock, Shares Outstanding		9,360,351
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Small Business	true

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Apr. 30, 2019	Oct. 31, 2018
CURRENT ASSETS
Cash and cash equivalents	$ 13,856	$ 16,334
Trade accounts receivable, net of allowance for doubtful accounts of $37 and $88, respectively	7,938	4,255
Inventories	7,932	7,113
Other current assets	736	828
TOTAL CURRENT ASSETS	30,462	28,530
Property and equipment:
Equipment and tooling	3,412	3,210
Furniture and office equipment	850	822
Property, Plant and Equipment, Gross	4,262	4,032
Less accumulated depreciation	3,613	3,473
Total property and equipment	649	559
Goodwill	1,340	1,340
Amortizable intangible assets, net	1,229	1,367
Non-amortizable intangible assets	657	657
Other assets	68	49
TOTAL ASSETS	34,405	32,502
CURRENT LIABILITIES
Accounts payable	1,580	1,342
Accrued expenses	3,078	3,377
TOTAL CURRENT LIABILITIES	4,658	4,719
Other long-term liabilities	87	0
TOTAL LIABILITIES	4,745	4,719
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock - authorized 20,000,000 shares of $0.01 par value; 9,360,351 and 9,291,201 shares issued and outstanding at April 30, 2019 and October 31, 2018, respectively	94	93
Additional paid-in capital	21,522	20,974
Retained earnings	8,044	6,716
TOTAL STOCKHOLDERS' EQUITY	29,660	27,783
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 34,405	$ 32,502

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Apr. 30, 2019	Oct. 31, 2018
Trade accounts receivable, allowance for doubtful accounts	$ 37	$ 88
Common stock, authorized	20,000,000	20,000,000
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares issued	9,360,351	9,291,201
Common stock, shares outstanding	9,360,351	9,291,201

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Apr. 30, 2019	Apr. 30, 2018	Apr. 30, 2019	Apr. 30, 2018
Net sales	$ 13,626	$ 20,515	$ 24,273	$ 28,482
Cost of sales	9,532	12,867	17,033	18,370
Gross profit	4,094	7,648	7,240	10,112
Operating expenses:
Engineering	332	631	652	952
Selling and general	2,400	3,057	4,439	4,842
Total operating expenses	2,732	3,688	5,091	5,794
Operating income	1,362	3,960	2,149	4,318
Other income	14	4	35	6
Income from continuing operations before provision for income taxes	1,376	3,964	2,184	4,324
Provision for income taxes	315	799	483	855
Income from continuing operations	1,061	3,165	1,701	3,469
Income from discontinued operations, net of tax	0	39	0	189
Consolidated net income	$ 1,061	$ 3,204	$ 1,701	$ 3,658
Earnings per share
Continuing operations	$ 0.11	$ 0.35	$ 0.18	$ 0.39
Discontinued operations	0.00	0.00	0.00	0.02
Net income per share	0.11	0.35	0.18	0.41
Earnings per share
Continuing operations	0.11	0.34	0.17	0.38
Discontinued operations	0.00	0.00	0.00	0.02
Net income per share	$ 0.11	$ 0.34	$ 0.17	$ 0.40
Weighted average shares outstanding
Basic	9,356,660	9,053,838	9,332,665	8,965,672
Diluted	9,837,964	9,386,194	9,837,718	9,244,725

XML

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Retained Earnings
Balance at Oct. 31, 2017	$ 21,343	$ 89	$ 19,654	$ 1,600
Balance (in shares) at Oct. 31, 2017		8,872,246
Exercise of stock options	413	$ 3	410	0
Exercise of stock options (in shares)		272,627
Stock-based compensation expense	132	$ 0	132	0
Dividends	(360)	0	0	(360)
Consolidated net income	3,658	0	0	3,658
Balance at Apr. 30, 2018	25,186	$ 92	20,196	4,898
Balance (in shares) at Apr. 30, 2018		9,144,873
Balance at Oct. 31, 2018	27,783	$ 93	20,974	6,716
Balance (in shares) at Oct. 31, 2018		9,291,201
Exercise of stock options	357	$ 1	356	0
Exercise of stock options (in shares)		69,150
Stock-based compensation expense	192	$ 0	192	0
Dividends	(373)	0	0	(373)
Consolidated net income	1,701	0	0	1,701
Balance at Apr. 30, 2019	$ 29,660	$ 94	$ 21,522	$ 8,044
Balance (in shares) at Apr. 30, 2019		9,360,351

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Apr. 30, 2019	Apr. 30, 2018	Apr. 30, 2019	Apr. 30, 2018
OPERATING ACTIVITIES:
Consolidated net income	$ 1,061	$ 3,204	$ 1,701	$ 3,658
Income from discontinued operations	0	39	0	189
Income from continuing operations	1,061	3,165	1,701	3,469
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Bad debt expense			7	51
Depreciation and amortization	141	127	278	254
Stock-based compensation expense			192	132
Deferred income taxes			0	10
Changes in operating assets and liabilities:
Trade accounts receivable			(2,375)	(8,021)
Inventories			(345)	(1,036)
Other current assets			167	(12)
Other long-term assets			0	21
Accounts payable			(721)	4,704
Accrued expenses			(786)	1,881
Income tax receivable			0	442
Other long-term liabilities			76	0
Net cash provided by (used in) operating activities from continuing operations			(1,806)	1,895
Net cash provided by operating activities from discontinued operations			0	546
INVESTING ACTIVITIES:
Proceeds from landlord for tenant improvements			0	34
Capital expenditures			(199)	(78)
Purchase of C Enterprises, net of cash acquired of $143			(457)	0
Net cash used in investing activities from continuing operations			(656)	(44)
Net cash used in investing activities from discontinued operations			0	(1)
FINANCING ACTIVITIES:
Proceeds from exercise of stock options			357	413
Dividends paid	(187)	(183)	(373)	(360)
Net cash provided by (used in) financing activities			(16)	53
Net increase (decrease) in cash and cash equivalents			(2,478)	2,449
Cash and cash equivalents of continuing operations, beginning of period			16,334	6,039
Cash and cash equivalents, end of period	13,856	8,488	13,856	8,488
Less: cash and cash equivalents of discontinued operations	0	1,383	0	1,383
Cash and cash equivalents of continuing operations, end of period	$ 13,856	$ 7,105	13,856	7,105
Supplemental cash flow information – income taxes paid			$ 255	$ 384

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) $ in Thousands	6 Months Ended
	Apr. 30, 2019 USD ($)
Purchase of C Enterprises, Cash Acquired from Acquisition	$ 143

XML

Unaudited interim condensed consolidated financial statements

6 Months Ended

Apr. 30, 2019

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 of RF Industries, Ltd. and its divisions and three wholly-owned subsidiaries (collectively, hereinafter the “Company”) 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, 2018 has been derived from, and certain terms used herein are defined in, the audited consolidated financial statements of the Company as of October 31, 2018 included in the Company’s Annual Report on Form 10-K (“Form 10-K”) for the year ended October 31, 2018 that was previously filed with the Securities and Exchange Commission (“SEC”). Operating results for the six months ended April 30, 2019 are not necessarily indicative of the results that may be expected for the year ending October 31, 2019. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended October 31, 2018.

Principles of consolidation

The accompanying unaudited condensed consolidated financial statements for the periods ended on or before January 31, 2019 include the accounts of RF Industries, Ltd. and its two wholly-owned subsidiaries, Cables Unlimited, Inc. (“Cables Unlimited”) and Rel-Tech Electronics, Inc. (“Rel-Tech”). The unaudited condensed consolidated financial statements for the three and six months ended April 30, 2019 include the accounts of RF Industries, Ltd., Cables Unlimited, Rel-Tech, and C Enterprises, Inc. (“C Enterprises”), a wholly-owned subsidiary that RF Industries, Ltd. formed for the sole purpose of acquiring the business and assets of C Enterprises, L.P. The acquisition of the business and assets of C Enterprises, L.P. was completed on March 15, 2019. For all periods on or before January 31, 2019, references herein to the “Company” shall refer to RF Industries, Ltd., Cables Unlimited, and Rel-Tech, and for all periods after January 31, 2019, references to the “Company” shall refer to RF Industries, Ltd., Cables Unlimited, Rel-Tech, and C Enterprises, collectively. All intercompany balances and transactions have been eliminated in consolidation.

Reclassifications

Certain amounts in the prior period condensed consolidated financial statements and notes have been reclassified to conform to the current period presentation of continuing operations and discontinued operations (see Note 3). These reclassifications had no effect on reported consolidated net income.

Revenue recognition

On November 1, 2018, the Company adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contacts with Customers (Topic 606) (“ASC 606”) applying the modified retrospective method. The core principle of ASC 606 is that revenue should be recorded in an amount that reflects the consideration to which we expect to be entitled in exchange for goods or services promised to customers. Under ASC 606, the Company follows a five-step model to: (1) identify the contract with our customer; (2) identify our performance obligations in our contract; (3) determine the transaction price for our contract; (4) allocate the transaction price to our performance obligations; and (5) recognize revenue when (or as) each performance obligation is satisfied. In accordance with this accounting principle, the Company recognizes revenue using the output method at a point in time when finished goods have been transferred to the customer and there are no other obligations to customers after the title of the goods have transferred. Title of goods are transferred based on shipping terms for each customer – for shipments with terms of FOB Shipping Point, title is transferred upon shipment; for shipments with terms of FOB Destination, title is transferred upon delivery.

Recent accounting standards

Recently issued accounting pronouncements not yet adopted:

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases. This ASU requires lessees to recognize most leases on their balance sheets related to the rights and obligations created by those leases. The ASU also requires additional qualitative and quantitative disclosures related to the nature, timing and uncertainty of cash flows arising from leases. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact the adoption of this new standard will have on its Consolidated Financial Statements.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other, which simplifies the accounting for goodwill impairments by eliminating step 2 from the goodwill impairment test. Instead, if “the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.” The guidance is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the impact the adoption of this new standard will have on its Consolidated Financial Statements.

Recently issued accounting pronouncements adopted:

In May 2014, the FASB issued ASC 606. This guidance superseded Topic 605, Revenue Recognition, in addition to other industry-specific guidance. The new standard requires a company to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services.  In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, as a revision to ASU 2014-09, which revised the effective date to fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted but not prior to periods beginning after December 15, 2016 (i.e., the original adoption date per ASU 2014-09). In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations, which clarifies certain aspects of the principal-versus-agent guidance, including how an entity should identify the unit of accounting for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements, such as service transactions. The amendments also reframe the indicators to focus on evidence that an entity is acting as a principal rather than as an agent. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing, which clarifies how an entity should evaluate the nature of its promise in granting a license of intellectual property, which will determine whether it recognizes revenue over time or at a point in time. The amendments also clarify when a promised good or service is separately identifiable (i.e., distinct within the context of the contract) and allow entities to disregard items that are immaterial in the context of a contract. On November 1, 2018, the Company adopted ASC 606 applying the modified retrospective method. The Company has performed a review of ASC 606 as compared to its previous accounting policies for our product revenue and did not identify any material impact to revenue. Therefore, there was no adjustment to retained earnings for a cumulative effect. The necessary changes to business processes and controls to effectively review and account for any new contracts under this standard have been implemented.

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Business Acquisition

6 Months Ended

Apr. 30, 2019

Business Combinations [Abstract]

Business Acquisition

Note 2 - Business Acquisition

On March 15, 2019, through C Enterprises, Inc., its newly formed subsidiary, the Company purchased the business and assets of C Enterprises L.P., a California based designer and manufacturer of quality connectivity solutions to telecommunications and data communications distributors. In consideration for the C Enterprises business and assets, the Company paid $600,000 in cash and assumed certain liabilities. The acquisition was determined not to be material and was accounted for in accordance with the acquisition method of accounting, and the acquired assets and assumed liabilities were recorded by the Company at their estimated fair values in accordance with ASC 805, Business Combinations. There were no intangible assets identified as part of the acquisition.

The results of C Enterprises, Inc.’s operations subsequent to March 15, 2019 have been included in the results of the Custom Cabling Manufacturing and Assembly segment (“Custom Cabling segment”) as well as in the Company’s consolidated statements of operations. Costs related to the acquisition of C Enterprises were approximately $100,000 and have been expensed as incurred and categorized in selling and general expenses. For the period ended April 30, 2019, C Enterprises, Inc.’s contributed $1.7 million of revenue.

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Discontinued operations

6 Months Ended

Apr. 30, 2019

Discontinued Operations and Disposal Groups [Abstract]

Discontinued operations

Note 3 - Discontinued operations

On October 31, 2018, the Company sold all of the assets and liabilities of its subsidiary, Comnet Telecom Supply, Inc. (“Comnet”), to RAP Acquisition Inc., a New Jersey corporation. Comnet was a New Jersey-based manufacturer and supplier of telecommunications and data products, including fiber optic cables, cabling technologies, custom patch cord assemblies, data center consoles, and other data center equipment. This division was one of the three subsidiaries in the Company’s Custom Cabling Manufacturing Assembly segment. For the three months ended April 30, 2018, the Company recognized pretax income of $57,000 from the discontinued operations of Comnet, and income tax expense of $18,000. The major line items constituting the income from discontinued operations of Comnet for the three months ended April 30, 2018 are as follows (in thousands):

	Three Months Ended April 30, 2018
Major line items constituting pretax income from discontinued operations:
Net sales	$	1,866
Cost of sales		(1,429	)
Gross profit		437
Selling, general and administrative expense		(380	)
Pretax income from discontinued operations		57
Provision for income taxes		18
Income from discontinued operations	$	39

For the six months ended April 30, 2018, the Company recognized pretax income of $253,000 from the discontinued operations of Comnet, and income tax expense of $64,000. The major line items constituting the income from discontinued operations of Comnet for the six months ended April 30, 2018 are as follows (in thousands):

	Six Months Ended April 30, 2018
Major line items constituting pretax income from discontinued operations:
Net sales	$	4,240
Cost of sales		(3,194	)
Gross profit		1,046
Selling, general and administrative expense		(793	)
Pretax income from discontinued operations		253
Provision for income taxes		64
Income from discontinued operations	$	189

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Inventories and major vendors

6 Months Ended

Apr. 30, 2019

Inventory Disclosure [Abstract]

Inventories and major vendors

Note 4 - Inventories and major vendors

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

	April 30, 2019		October 31, 2018
Raw materials and supplies	$	3,442	$	2,711
Work in process		687		603
Finished goods		3,803		3,799
Totals	$	7,932	$	7,113

Two vendors accounted for 11% and 10% of inventory purchases for the three months ended April 30, 2019. For the six months ended April 30, 2019, one of these vendors accounted for 14% of inventory purchases, and a different vendor accounted for 13% of inventory purchases. For the three months ended April 30, 2018, one vendor accounted for 51% of inventory purchases. This same vendor accounted for 45% of inventory purchases for the six months ended April 30, 2018. The Company has arrangements with these vendors to purchase products based on purchase orders periodically issued by the Company.

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Other current assets

6 Months Ended

Apr. 30, 2019

Other current assets [Abstract]

Other current assets

Note 5 - Other current assets

Other current assets consist of the following (in thousands): 

	April 30, 2019		October 31, 2018
Prepaid taxes	$	102	$	335
Prepaid expense		464		228
Notes receivable, current portion		-		20
Other		170		245
Totals	$	736	$	828

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Accrued expenses

6 Months Ended

Apr. 30, 2019

Payables and Accruals [Abstract]

Accrued expenses

Note 6 - Accrued expenses

Accrued expenses consist of the following (in thousands):

	April 30, 2019		October 31, 2018
Wages payable	$	1,168	$	1,705
Accrued receipts		1,295		1,271
Other current liabilities		615		401
Totals	$	3,078	$	3,377

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

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Earnings per share

6 Months Ended

Apr. 30, 2019

Earnings Per Share [Abstract]

Earnings per share

Note 7 - Earnings per share

Basic earnings per share is computed by dividing consolidated net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing consolidated 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 issuable securities totaling 121,015 and 475,105 shares for the three months ended April 30, 2019 and 2018, respectively, and 121,015 and 563,838 shares for the six months ended April 30, 3019, 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 April 30,				Six Months Ended April 30,
	2019		2018		2019		2018
Weighted average shares outstanding for basic earnings per share		9,356,660		9,053,838		9,332,665		8,965,672
Add effects of potentially dilutive securities-assumed exercise of stock options		481,304		332,356		505,053		279,053
Weighted average shares outstanding for diluted earnings per share		9,837,964		9,386,194		9,837,718		9,244,725

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Stock-based compensation and equity transactions

6 Months Ended

Apr. 30, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-based compensation and equity transactions

Note 8 - Stock-based compensation and equity transactions

On December 13, 2017, the Company granted 80,000 incentive stock options to an employee. These options vested 8,000 shares on the date of grant, and the balance vests as to 8,000 shares per year thereafter on each of the next nine anniversaries of December 13, 2017, and expire ten years from the date of grant. On December 3, 2018, the Company granted each of two employees 25,000 incentive stock options. These options vested 5,000 each on the date of grant, and the balance vests as to 5,000 shares each per year thereafter on each of the next four anniversaries of December 3, 2018, and expire ten years from the date of grant. On December 3, 2018, the Company also granted one employee 10,000 incentive stock options. These options vested 2,000 shares on the date of grant, and the balance vests as to 2,000 shares per year thereafter on each of the next four anniversaries of December 3, 2018, and expire ten years from the date of grant. On March 8, 2019, the Company granted one employee 25,000 incentive stock options. These options vested 5,000 on the date of grant, and the balance vests as to 5,000 shares per year thereafter on each of the next four anniversaries of March 8, 2019, and expire ten years from the date of grant. No other options were granted to Company employees during the three and six months ended April 30, 2019 and 2018.

The weighted average fair value of employee and non-employee directors’ stock options granted by the Company during the six months ended April 30, 2019 and 2018 was estimated to be $8.17 and $2.44, respectively, per share, using the Black-Scholes option pricing model with the following assumptions:

	Six Months Ended April 30,
	2019			2018
Risk-free interest rate		2.88	%		1.87	%
Dividend yield		0.98	%		3.28	%
Expected life of the option		5.96 years			4.54 years
Volatility factor		55.25	%		46.83	%

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 2019 and 2018 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.

Company stock option plans

Descriptions of the Company’s stock option plans are included in Note 9 of the Company’s Annual Report on Form 10-K for the year ended October 31, 2018. A summary of the status of the options granted under the Company’s stock option plans as of April 30, 2019 and the changes in options outstanding during the six months then ended is presented in the table that follows:

				Weighted
				Average
	Shares			Exercise Price
Outstanding at November 1, 2018		942,366		$	3.09
Options granted		121,015		$	8.17
Options exercised		(69,150	)	$	5.16
Options canceled or expired		(5,250	)	$	6.82
Options outstanding at April 30, 2019		988,981		$	3.55
Options exercisable at April 30, 2019		698,815		$	3.19
Options vested and expected to vest at April 30, 2019		987,922		$	3.55

Weighted average remaining contractual life of options outstanding as of April 30, 2019: 4.23 years

Weighted average remaining contractual life of options exercisable as of April 30, 2019: 2.94 years

Weighted average remaining contractual life of options vested and expected to vest as of April 30, 2019: 4.22 years

Aggregate intrinsic value of options outstanding at April 30, 2019: $4,108,000

Aggregate intrinsic value of options exercisable at April 30, 2019: $3,119,000

Aggregate intrinsic value of options vested and expected to vest at April 30, 2019: $4,093,000

As of April 30, 2019, $550,000 of expense with respect to nonvested share-based arrangements has yet to be recognized but is expected to be recognized over a weighted average period of 5.43 years.

Non-employee directors receive a compensation package of $50,000 annually, which 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, 2019, the Company granted each of its five non-employee directors 7,203 non-qualified stock options. The options have an exercise price of $8.07 per share. The number of stock options granted to each director was determined by dividing $25,000 by the fair value of a stock option grant using the Black-Scholes model ($3.471 per share). These options vest ratably over fiscal year 2019 and expire five years from the date of grant. Effective November 1, 2018, in addition to the compensation received for serving on the Board of Directors, the Chairman of each committee of the Board will receive $15,000 per year in cash for services rendered as Chairman. During the quarter ended April 30, 2019, the Company did not grant any non-qualified stock options.

Stock option expense

During the six months ended April 30, 2019 and 2018, stock-based compensation expense totaled $192,000 and $132,000, respectively, and was classified in selling and general expenses. During the three months ended April 30, 2019 and 2018, stock-based compensation expense totaled $78,000 and $57,000, respectively, and was classified in selling and general expenses.

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Concentrations of credit risk

6 Months Ended

Apr. 30, 2019

Risks and Uncertainties [Abstract]

Concentrations of credit risk

Note 9 - Concentrations of credit risk

Financial instruments that 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 April 30, 2019, the Company had cash and cash equivalent balances in excess of federally insured limits in the amount of approximately $11.7 million.

Two customers, a distributor and an equipment manufacturer, accounted for approximately 32% and 10%, respectively, of the Company’s net sales for the six-month period ended April 30, 2019. These two customers’ accounts receivable balances accounted for 18% and 10% of the total net accounts receivable balance at April 30, 2019. For the three-month period ended April 30, 2019, the same distributor and a different equipment manufacturer accounted for approximately 28% and 14%, respectively, of the Company’s net sales. At April 30, 2019, this equipment manufacturer’s accounts receivable balance accounted for approximately 21% of the total net accounts receivable balance, with one other distributor customer’s accounts receivable balance accounting for approximately 15% of the total net accounts receivable balance.

For the six-month period ended April 30, 2018, one customer who is a distributor, accounted for approximately 68% of the Company’s net sales. This same customer accounted for approximately 76% of the Company’s net sales for the three-month period ended April 30, 2018. At April 30, 2018, this customer’s accounts receivable balance accounted for approximately 80% of the total net accounts receivable balance.

Although these customers have been on-going major customers of the Company, the written agreements with these customers do not have any minimum purchase obligations and they could stop buying the Company’s products at any time and for any reason. A reduction, delay or cancellation of orders from these customers or the loss of these customers could significantly reduce the Company’s future revenues and profits.

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Segment information

6 Months Ended

Apr. 30, 2019

Segment Reporting [Abstract]

Segment information

Note 10 - Segment information

The Company aggregates operating divisions into operating segments that have similar economic characteristics primarily in 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. Based upon this evaluation, as of April 30, 2019, the Company had two segments – RF Connector and Cable Assembly (“RF Connector segment”) and Custom Cabling Manufacturing and Assembly (“Custom Cabling segment”).

As of April 30, 2019, the RF Connector segment consisted of one division and the Custom Cabling segment was composed of three divisions. The four divisions that met the quantitative thresholds for segment reporting are the RF Connector and Cable Assembly division (“RF Connector division”), Cables Unlimited, Rel-Tech, and C Enterprises. While each segment had similar products and services, with one major exception, there was little overlapping of these services to their customer base. In addition, sales or product and services for the RF Connector segment were primarily through the distribution channel while the Custom Cabling segment sales were through a combination of distribution and direct to the end customer.

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 RF Connector division constitutes the RF Connector segment, and the Cables Unlimited, Rel-Tech, and C Enterprises divisions constitute the Custom Cabling 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. 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 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 and six months ended April 30, 2019 and 2018 (in thousands):

	Three Months Ended April 30,				Six Months Ended April 30,
	2019		2018		2019		2018
United States	$	13,451	$	20,376	$	23,921	$	28,137
Foreign Countries:
Canada		113		125		278		280
Mexico		-		-		-		39
All Other		62		14		74		26
		175		139		352		345
Totals	$	13,626	$	20,515	$	24,273	$	28,482

Net sales, income (loss) from continuing operations before provision for income taxes and other related segment information for the three months ended April 30, 2019 and 2018 are as follows (in thousands):

	RF Connector			Custom Cabling
	and			Manufacturing and
	Cable Assembly			Assembly		Corporate		Total
2019
Net sales	$	3,341		$	10,285	$	-	$	13,626
Income from continuing operations before provision for income taxes		257			1,105		14		1,376
Depreciation and amortization		45			96		-		141
Total assets		6,972			12,773		14,660		34,405
2018
Net sales	$	2,734		$	17,781	$	-	$	20,515
Income (loss) from continuing operations before provision for income taxes		(482	)		4,443		3		3,964
Depreciation and amortization		43			84		-		127
Total assets		6,368			15,077		14,298		35,743

Net sales, income (loss) from continuing operations before provision for income taxes and other related segment information for the six months ended April 30, 2019 and 2018 are as follows (in thousands):

	RF Connector			Custom Cabling
	and			Manufacturing and
	Cable Assembly			Assembly		Corporate		Total
2019
Net sales	$	6,599		$	17,674	$	-	$	24,273
Income from continuing operations before provision for income taxes		537			1,611		36		2,184
Depreciation and amortization		90			188		-		278
Total assets		6,972			12,773		14,660		34,405
2018
Net sales	$	5,364		$	23,118	$	-	$	28,482
Income (loss) from continuing operations before provision for income taxes		(639	)		4,957		6		4,324
Depreciation and amortization		87			167		-		254
Total assets		6,368			15,077		14,298		35,743

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Income taxes

6 Months Ended

Apr. 30, 2019

Income Tax Disclosure [Abstract]

Income taxes

Note 11 - Income taxes

On December 22, 2017, the U.S. President signed the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act, among other things, lowered the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allowed us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. As a result, we previously recorded a provisional estimate of the effect of the Tax Act in our financial statements. In the first quarter of 2019, we completed our analysis to determine the effect of the Tax Act and recorded no additional adjustments as of December 22, 2018.

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 (benefit) 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 23% and 20% of income before income taxes for the three months ended April 30, 2019 (the “fiscal 2019 quarter”) and 2018 (the “fiscal 2018 quarter”), respectively, and 22% and 20% of income before income taxes for the six months ended April 30, 2019 and 2018. The increase in the effective tax rate from period to period was primarily driven by the elimination of the benefit from the domestic production activities deduction and the one-time benefit recorded in the prior year related to the reduction in the Company’s deferred tax liability due to the change in the federal tax rate, both as a result of the Tax Act. The Company recorded income from discontinued operations, net of tax, as disclosed in Note 3.

The Company had $90,000 and $58,000 of unrecognized tax benefits, inclusive of interest and penalties, as of April 30, 2019 and October 31, 2018, respectively. The unrecognized tax benefits, if recognized, would result in a net tax benefit of $15,000 as of April 30, 2019.

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Intangible assets

6 Months Ended

Apr. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible assets

Note 12 - Intangible assets

Intangible assets consist of the following (in thousands):

	April 30, 2019			October 31, 2018
Amortizable intangible assets:
Customer relationships (estimated lives 7 - 15 years)	$	2,879		$	2,879
Accumulated amortization		(1,752	)		(1,619	)
		1,127			1,260
Patents (estimated life 14 years)		142			142
Accumulated amortization		(40	)		(35	)
		102			107
Totals	$	1,229		$	1,367
Non-amortizable intangible assets:
Trademarks	$	657		$	657

Amortization expense for the six months ended April 30, 2019 and the year ended October 31, 2018 was $138,000 and $275,000, respectively. As of April 30, 2019, the weighted-average amortization period for the amortizable intangible assets is 10.98 years.

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Commitments

6 Months Ended

Apr. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments

Note 13 - Commitments

The Company currently leases its corporate headquarters and RF connector and cable assembly manufacturing facilities in San Diego, California. On June 5, 2017, the Company entered into a fifth amendment to its lease for its facility in San Diego, California. As a result, the Company now leases a total of approximately 21,908 square feet of office, warehouse and manufacturing space at its San Diego location. The term of the lease expires on July 31, 2022, and the rental payments under the lease currently are $22,721 per month. The San Diego lease also requires the payment of the Company’s pro rata share of real estate taxes and insurance, maintenance and other operating expenses related to the facilities.

(i) On June 9, 2017, the Cables Unlimited division entered into an amendment to its lease with K&K Unlimited, as landlord, under which Cables Unlimited leases its 12,000 square foot manufacturing facility in Yaphank, New York, to extend the term of the lease to June 30, 2018. Cables Unlimited’s monthly rent expense under the amended lease remains at $13,000 per month, plus payments of all utilities, janitorial expenses, routine maintenance costs and costs of insurance for Cables Unlimited’s business operations and equipment. The landlord is a company controlled by Darren Clark, the former owner and current President of Cables Unlimited. On June 6, 2018, Cables Unlimited extended its lease with K&K Unlimited for an additional three years to June 30, 2021, under the same terms and conditions.

(ii) On July 25, 2017, the Rel-Tech Electronic division entered into a lease for approximately 13,750 square feet located in Milford, Connecticut. Rel-Tech’s current net monthly rent expense under the lease is $8,707 per month for these facilities. The new lease expires in August 2019.

(iii) On November 1, 2018, the Cables Unlimited division entered into a lease agreement with 100 Bellport Avenue, LLC, as landlord, for approximately 7,500 square feet located in Yaphank, New York, with a monthly rent expense of $5,625. On February 1, 2019, Cables Unlimited entered into an amendment to this lease to expand the leased space by an additional 5,000 square feet and increase the monthly rent expense by $3,750, resulting in a total rent expense of $9,375 per month. The lease expires on October 31, 2019.

(iv) The newly acquired C Enterprises division leases approximately 24,014 square feet of office, warehouse, and manufacturing space located in Vista, California. The term of the lease expires on June 30, 2023, and the rental payments under the lease currently are $17,770 per month, plus payments of real estate taxes, management fee, property insurance and other operating expenses related to the facilities.

As of April 30, 2019, the aggregate monthly rental for all of the Company’s facilities is approximately $71,000 per month, plus utilities, maintenance and insurance.

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Cash dividend and declared dividends

6 Months Ended

Apr. 30, 2019

Cash Dividend And Dividends Declaration [Abstract]

Cash dividend and declared dividends

Note 14 - Cash dividend and declared dividends

The Company paid dividends of $0.02 per share during the three months ended April 30, 2019 and 2018 for a total of $187,000 and $183,000, respectively. The Company paid dividends of $0.02 per share during the six months ended April 30, 2019 and 2018 for a total of $373,000 and $360,000, respectively.

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Subsequent event

6 Months Ended

Apr. 30, 2019

Subsequent Events [Abstract]

Subsequent events

Note 15 - Subsequent event

On June 7, 2019, the Board of Directors of the Company declared a quarterly cash dividend of $0.02 per share to be paid on July 15, 2019 to stockholders of record on June 30, 2019.

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Discontinued operations (Tables)

6 Months Ended

Apr. 30, 2019

Discontinued Operations and Disposal Groups [Abstract]

Summary Constituting the income (loss) of Discontinued Operations

The major line items constituting the income from discontinued operations of Comnet for the three months ended April 30, 2018 are as follows (in thousands):

	Three Months Ended April 30, 2018
Major line items constituting pretax income from discontinued operations:
Net sales	$	1,866
Cost of sales		(1,429	)
Gross profit		437
Selling, general and administrative expense		(380	)
Pretax income from discontinued operations		57
Provision for income taxes		18
Income from discontinued operations	$	39

The major line items constituting the income from discontinued operations of Comnet for the six months ended April 30, 2018 are as follows (in thousands):

	Six Months Ended April 30, 2018
Major line items constituting pretax income from discontinued operations:
Net sales	$	4,240
Cost of sales		(3,194	)
Gross profit		1,046
Selling, general and administrative expense		(793	)
Pretax income from discontinued operations		253
Provision for income taxes		64
Income from discontinued operations	$	189

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Inventories and major vendors (Tables)

6 Months Ended

Apr. 30, 2019

Inventory Disclosure [Abstract]

Components of Inventories

Inventories consist of the following (in thousands):

	April 30, 2019		October 31, 2018
Raw materials and supplies	$	3,442	$	2,711
Work in process		687		603
Finished goods		3,803		3,799
Totals	$	7,932	$	7,113

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Other current assets (Tables)

6 Months Ended

Apr. 30, 2019

Other current assets [Abstract]

Schedule of other current assets

Other current assets consist of the following (in thousands): 

	April 30, 2019		October 31, 2018
Prepaid taxes	$	102	$	335
Prepaid expense		464		228
Notes receivable, current portion		-		20
Other		170		245
Totals	$	736	$	828

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Accrued expenses (Tables)

6 Months Ended

Apr. 30, 2019

Payables and Accruals [Abstract]

Accrued expenses

Accrued expenses consist of the following (in thousands):

	April 30, 2019		October 31, 2018
Wages payable	$	1,168	$	1,705
Accrued receipts		1,295		1,271
Other current liabilities		615		401
Totals	$	3,078	$	3,377

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Earnings per share (Tables)

6 Months Ended

Apr. 30, 2019

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 April 30,				Six Months Ended April 30,
	2019		2018		2019		2018
Weighted average shares outstanding for basic earnings per share		9,356,660		9,053,838		9,332,665		8,965,672
Add effects of potentially dilutive securities-assumed exercise of stock options		481,304		332,356		505,053		279,053
Weighted average shares outstanding for diluted earnings per share		9,837,964		9,386,194		9,837,718		9,244,725

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Stock-based compensation and equity transactions (Tables)

6 Months Ended

Apr. 30, 2019

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

Black-Scholes option pricing model with the following assumptions:

	Six Months Ended April 30,
	2019			2018
Risk-free interest rate		2.88	%		1.87	%
Dividend yield		0.98	%		3.28	%
Expected life of the option		5.96 years			4.54 years
Volatility factor		55.25	%		46.83	%

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 April 30, 2019 and the changes in options outstanding during the six months then ended is presented in the table that follows:

				Weighted
				Average
	Shares			Exercise Price
Outstanding at November 1, 2018		942,366		$	3.09
Options granted		121,015		$	8.17
Options exercised		(69,150	)	$	5.16
Options canceled or expired		(5,250	)	$	6.82
Options outstanding at April 30, 2019		988,981		$	3.55
Options exercisable at April 30, 2019		698,815		$	3.19
Options vested and expected to vest at April 30, 2019		987,922		$	3.55

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Segment information (Tables)

6 Months Ended

Apr. 30, 2019

Segment Reporting [Abstract]

Sales by Geographic Area

The following table presents the sales of the Company by geographic area for the three and six months ended April 30, 2019 and 2018 (in thousands):

	Three Months Ended April 30,				Six Months Ended April 30,
	2019		2018		2019		2018
United States	$	13,451	$	20,376	$	23,921	$	28,137
Foreign Countries:
Canada		113		125		278		280
Mexico		-		-		-		39
All Other		62		14		74		26
		175		139		352		345
Totals	$	13,626	$	20,515	$	24,273	$	28,482

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 April 30, 2019 and 2018 are as follows (in thousands):

	RF Connector			Custom Cabling
	and			Manufacturing and
	Cable Assembly			Assembly		Corporate		Total
2019
Net sales	$	3,341		$	10,285	$	-	$	13,626
Income from continuing operations before provision for income taxes		257			1,105		14		1,376
Depreciation and amortization		45			96		-		141
Total assets		6,972			12,773		14,660		34,405
2018
Net sales	$	2,734		$	17,781	$	-	$	20,515
Income (loss) from continuing operations before provision for income taxes		(482	)		4,443		3		3,964
Depreciation and amortization		43			84		-		127
Total assets		6,368			15,077		14,298		35,743

Net sales, income (loss) from continuing operations before provision for income taxes and other related segment information for the six months ended April 30, 2019 and 2018 are as follows (in thousands):

	RF Connector			Custom Cabling
	and			Manufacturing and
	Cable Assembly			Assembly		Corporate		Total
2019
Net sales	$	6,599		$	17,674	$	-	$	24,273
Income from continuing operations before provision for income taxes		537			1,611		36		2,184
Depreciation and amortization		90			188		-		278
Total assets		6,972			12,773		14,660		34,405
2018
Net sales	$	5,364		$	23,118	$	-	$	28,482
Income (loss) from continuing operations before provision for income taxes		(639	)		4,957		6		4,324
Depreciation and amortization		87			167		-		254
Total assets		6,368			15,077		14,298		35,743

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Intangible assets (Tables)

6 Months Ended

Apr. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible assets

Intangible assets consist of the following (in thousands):

	April 30, 2019			October 31, 2018
Amortizable intangible assets:
Customer relationships (estimated lives 7 - 15 years)	$	2,879		$	2,879
Accumulated amortization		(1,752	)		(1,619	)
		1,127			1,260
Patents (estimated life 14 years)		142			142
Accumulated amortization		(40	)		(35	)
		102			107
Totals	$	1,229		$	1,367
Non-amortizable intangible assets:
Trademarks	$	657		$	657

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Business Acquisition - Additional Information (Detail) - USD ($)		3 Months Ended			6 Months Ended
	Mar. 15, 2019	Apr. 30, 2019	Apr. 30, 2019	Apr. 30, 2018	Apr. 30, 2019	Apr. 30, 2018
Business Acquisitions [Line Items]
Revenues		$ 13,626,000		$ 20,515,000	$ 24,273,000	$ 28,482,000
C Enterprises Inc [Member]
Business Acquisitions [Line Items]
Payments to Acquire Businesses, Net of Cash Acquired	$ 600,000
Revenues			$ 1,700,000		$ 1,700,000
C Enterprises Inc [Member] | Selling And General Expenses [Member]
Business Acquisitions [Line Items]
Business Combination, Acquisition Related Costs	$ 100,000

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Continuing operations and reported as discontinued operations (Details) - Comnet Telecom Division [Member] - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Apr. 30, 2018	Apr. 30, 2018
Major line items constituting pretax income from discontinued operations:
Net sales	$ 1,866	$ 4,240
Cost of sales	(1,429)	(3,194)
Gross profit	437	1,046
Selling, general and administrative expense	(380)	(793)
Pretax income from discontinued operations	57	253
Provision for income taxes	18	64
Income from discontinued operations	$ 39	$ 189

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Discontinued operations - Additional Information (Detail) - Comnet Telecom Division [Member] - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Apr. 30, 2018	Apr. 30, 2018
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Discontinued Operation, Tax Effect of Discontinued Operation	$ 18	$ 64
Discontinued Operation, Income (Loss) from Discontinued Operation, before Income Tax	$ 57	$ 253

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Inventories and major vendors - Components of Inventories (Detail) - USD ($) $ in Thousands	Apr. 30, 2019	Oct. 31, 2018
Inventory [Line Items]
Raw materials and supplies	$ 3,442	$ 2,711
Work in process	687	603
Finished goods	3,803	3,799
Totals	$ 7,932	$ 7,113

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Inventories and major vendors - Additional Information (Detail)	3 Months Ended		6 Months Ended
	Apr. 30, 2019	Apr. 30, 2018	Apr. 30, 2019	Apr. 30, 2018
Vendor One
Inventory [Line Items]
Concentration Risk, Percentage	11.00%	51.00%	14.00%	45.00%
Vendor Two And Vendor Three [Member]
Inventory [Line Items]
Concentration Risk, Percentage	10.00%
Three Vendors [Member]
Inventory [Line Items]
Concentration Risk, Percentage			13.00%

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Other current assets (Detail) - USD ($) $ in Thousands	Apr. 30, 2019	Oct. 31, 2018
Prepaid taxes	$ 102	$ 335
Prepaid expense	464	228
Notes receivable, current portion	0	20
Other	170	245
Totals	$ 736	$ 828

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Accrued expenses (Detail) - USD ($) $ in Thousands	Apr. 30, 2019	Oct. 31, 2018
Schedule Of Accrued Liabilities [Line Items]
Wages payable	$ 1,168	$ 1,705
Accrued receipts	1,295	1,271
Other current liabilities	615	401
Totals	$ 3,078	$ 3,377

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Earnings per share - Computation of Basic and Diluted Weighted Average Shares Outstanding (Detail) - shares	3 Months Ended		6 Months Ended
	Apr. 30, 2019	Apr. 30, 2018	Apr. 30, 2019	Apr. 30, 2018
Earnings Per Share [Line Items]
Weighted average shares outstanding for basic earnings per share	9,356,660	9,053,838	9,332,665	8,965,672
Add effects of potentially dilutive securities-assumed exercise of stock options	481,304	332,356	505,053	279,053
Weighted average shares outstanding for diluted earnings per share	9,837,964	9,386,194	9,837,718	9,244,725

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Earnings per share - Additional Information (Detail) - shares	3 Months Ended		6 Months Ended
	Apr. 30, 2019	Apr. 30, 2018	Apr. 30, 2019	Apr. 30, 2018
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	121,015	475,105	121,015	563,838

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Stock-based compensation and equity transactions - Summary of fair value of employee and non-employee directors' stock options (Detail)	6 Months Ended
	Apr. 30, 2019	Apr. 30, 2018
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Risk-free interest rate	2.88%	1.87%
Dividend yield	0.98%	3.28%
Expected life of the option	5 years 11 months 15 days	4 years 6 months 14 days
Volatility factor	55.25%	46.83%

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Stock-based compensation and equity transactions - Summary of status of options granted under stock option plans and changes in options outstanding (Detail) - Stock Option	6 Months Ended
	Apr. 30, 2019 $ / shares shares
Shares
Outstanding at November 1, 2018 | shares	942,366
Options granted | shares	121,015
Options exercised | shares	(69,150)
Options canceled or expired | shares	(5,250)
Options outstanding at April 30, 2019 | shares	988,981
Options exercisable at April 30, 2019 | shares	698,815
Options vested and expected to vest at April 30, 2019 | shares	987,922
Weighted Average Exercise Price
Outstanding at November 1, 2018 | $ / shares	$ 3.09
Options granted | $ / shares	8.17
Options exercised | $ / shares	5.16
Options canceled or expired | $ / shares	6.82
Options outstanding at April 30, 2019 | $ / shares	3.55
Options exercisable at April 30, 2019 | $ / shares	3.19
Options vested and expected to vest at April 30, 2019 | $ / shares	$ 3.55

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Stock-based compensation and equity transactions - Additional Information (Detail) - USD ($)				3 Months Ended			6 Months Ended
	Mar. 08, 2019	Dec. 03, 2018	Dec. 13, 2017	Apr. 30, 2019	Jan. 31, 2019	Apr. 30, 2018	Apr. 30, 2019	Apr. 30, 2018	Dec. 13, 2018	Nov. 01, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average remaining life of options outstanding							4 years 2 months 23 days
Weighted average remaining contractual life of options exercisable							2 years 11 months 8 days
Weighted average life of options vested and expected to vest							4 years 2 months 19 days
Aggregate intrinsic value of options outstanding				$ 4,108,000			$ 4,108,000
Aggregate intrinsic value of options exercisable				3,119,000			3,119,000
Aggregate intrinsic value of options vested and expected to vest				4,093,000			4,093,000
Non-vested stock-based arrangements yet to be recognized				550,000			$ 550,000
Stock based arrangements yet to be recognized, weighted average period expected to be recognized							5 years 5 months 4 days
Non-employee director annual grant				$ 50,000			$ 50,000
Share-based Compensation							$ 192,000	$ 132,000
Nonqualified Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of stock option per share					$ 3.471
Share-based Goods and Nonemployee Services Transaction, Quantity of Securities Issued					7,203
Share Based Goods And Non Employee Services Transaction Value Of Stock Option Issued					$ 25,000
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period					5 years
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price					$ 8.07
Board of Directors Chairman [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Amount Payable Annually for Services Rendered										$ 15,000
Incentive stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares	5,000		8,000
Share-based compensation arrangement by share-based payment award, options, grants in period, gross	25,000		80,000
Sharebased Compensation Arrangement By Sharebased Payment Award Options Vested Period	5 years		10 years
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	10 years		10 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number	5,000		8,000						8,000
Incentive stock options | One Employee [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares		2,000
Share-based compensation arrangement by share-based payment award, options, grants in period, gross		10,000
Sharebased Compensation Arrangement By Sharebased Payment Award Options Vested Period		5 years
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period		10 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number		2,000
Incentive stock options | Two Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares		5,000
Share-based compensation arrangement by share-based payment award, options, grants in period, gross		25,000
Sharebased Compensation Arrangement By Sharebased Payment Award Options Vested Period		5 years
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period		10 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number		5,000
Employee And Non-Employee Directors [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of stock option per share				$ 8.17		$ 2.44	$ 8.17	$ 2.44
Selling, General and Administrative Expenses
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation				$ 78,000		$ 57,000	$ 192,000	$ 132,000

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Concentrations of credit risk - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Apr. 30, 2019	Apr. 30, 2018	Apr. 30, 2019	Apr. 30, 2018
Concentration Risk [Line Items]
Cash, FDIC insured amount	$ 11.7		$ 11.7
Sales Revenue, Goods, Net | Distributor
Concentration Risk [Line Items]
Concentration risk, percentage	28.00%	76.00%	32.00%	68.00%
Sales Revenue, Goods, Net | Equipment Manufacturer
Concentration Risk [Line Items]
Concentration risk, percentage			10.00%
Sales Revenue, Goods, Net | Equipment Manufacturer Two
Concentration Risk [Line Items]
Concentration risk, percentage	14.00%
Accounts Receivable | Distributor
Concentration Risk [Line Items]
Concentration risk, percentage			18.00%	80.00%
Accounts Receivable | Distributor Two
Concentration Risk [Line Items]
Concentration risk, percentage	15.00%
Accounts Receivable | Equipment Manufacturer
Concentration Risk [Line Items]
Concentration risk, percentage			10.00%
Accounts Receivable | Equipment Manufacturer Two
Concentration Risk [Line Items]
Concentration risk, percentage	21.00%

XML

Sales by geographic area (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Apr. 30, 2019	Apr. 30, 2018	Apr. 30, 2019	Apr. 30, 2018
Revenue, Major Customer [Line Items]
Sales revenue	$ 13,626	$ 20,515	$ 24,273	$ 28,482
United States
Revenue, Major Customer [Line Items]
Sales revenue	13,451	20,376	23,921	28,137
Canada
Revenue, Major Customer [Line Items]
Sales revenue	113	125	278	280
Mexico
Revenue, Major Customer [Line Items]
Sales revenue	0	0	0	39
All Other
Revenue, Major Customer [Line Items]
Sales revenue	62	14	74	26
Foreign Countries, total
Revenue, Major Customer [Line Items]
Sales revenue	$ 175	$ 139	$ 352	$ 345

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Net sales, income (loss) before provision for income taxes and other related segment information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Apr. 30, 2019	Apr. 30, 2018	Apr. 30, 2019	Apr. 30, 2018	Oct. 31, 2018
Segment Reporting Information [Line Items]
Net sales	$ 13,626	$ 20,515	$ 24,273	$ 28,482
Income from continuing operations before provision for income taxes	1,376	3,964	2,184	4,324
Depreciation and amortization	141	127	278	254
Total assets	34,405	35,743	34,405	35,743	$ 32,502
RF Connector and Cable Assembly
Segment Reporting Information [Line Items]
Net sales	3,341	2,734	6,599	5,364
Income from continuing operations before provision for income taxes	257	(482)	537	(639)
Depreciation and amortization	45	43	90	87
Total assets	6,972	6,368	6,972	6,368
Custom Cabling Manufacturing and Assembly
Segment Reporting Information [Line Items]
Net sales	10,285	17,781	17,674	23,118
Income from continuing operations before provision for income taxes	1,105	4,443	1,611	4,957
Depreciation and amortization	96	84	188	167
Total assets	12,773	15,077	12,773	15,077
Corporate
Segment Reporting Information [Line Items]
Net sales	0	0	0	0
Income from continuing operations before provision for income taxes	14	3	36	6
Depreciation and amortization	0	0	0	0
Total assets	$ 14,660	$ 14,298	$ 14,660	$ 14,298

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Income taxes - Additional Information (Detail) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Apr. 30, 2019	Apr. 30, 2018	Apr. 30, 2019	Apr. 30, 2018	Oct. 31, 2018	Oct. 31, 2017
Income Taxes [Line Items]
Provision for income tax as percentage of income (loss) before income taxes	23.00%	20.00%	22.00%	20.00%
Unrecognized tax benefits	$ 90,000		$ 90,000		$ 58,000
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent					21.00%	35.00%
Income Tax Expense (Benefit)	$ 315,000	$ 799,000	$ 483,000	$ 855,000

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Intangible assets (Detail) - USD ($) $ in Thousands	Apr. 30, 2019	Oct. 31, 2018
Intangible Assets [Line Items]
Amortizable intangible assets, net	$ 1,229	$ 1,367
Non-amortizable intangible assets, Trademarks	657	657
Customer relationships (estimated lives 7 - 15 years)
Intangible Assets [Line Items]
Amortizable intangible assets, gross	2,879	2,879
Amortizable intangible assets, Accumulated amortization	(1,752)	(1,619)
Amortizable intangible assets, net	1,127	1,260
Patents (estimated life 14 years)
Intangible Assets [Line Items]
Amortizable intangible assets, gross	142	142
Amortizable intangible assets, Accumulated amortization	(40)	(35)
Amortizable intangible assets, net	$ 102	$ 107

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Intangible assets (Parenthetical) (Detail)	6 Months Ended
	Apr. 30, 2019
Customer relationships (estimated lives 7 - 15 years) | Maximum [Member]
Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	15 years
Customer relationships (estimated lives 7 - 15 years) | Minimum [Member]
Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	7 years
Patents (estimated life 14 years)
Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	14 years

XML

Intangible assets - Additional Information (Detail) - USD ($)	6 Months Ended	12 Months Ended
	Apr. 30, 2019	Oct. 31, 2018
Intangible Assets [Line Items]
Amortization expense	$ 138,000	$ 275,000
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	10 years 11 months 23 days

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Commitments - Additional Information (Detail)			1 Months Ended				6 Months Ended
	Jun. 06, 2018	Jun. 09, 2017 USD ($) ft²	Feb. 03, 2019 USD ($) ft²	Nov. 02, 2018 USD ($) ft²	Jul. 25, 2017 USD ($) ft²	Jun. 05, 2017 USD ($) ft²	Apr. 30, 2019 USD ($) ft²
Commitments And Contingencies [Line Items]
Operating Leases, Rent Expense, Minimum Rentals							$ 71,000
Commitments [Member] | C Enterprises Inc [Member]
Commitments And Contingencies [Line Items]
Area of Land | ft²							24,014
Operating Leases, Rent Expense							$ 17,770
Lease Expiration Date							Jun. 30, 2023
San Diego, California [Member]
Commitments And Contingencies [Line Items]
Area of Land | ft²						21,908
Operating Leases, Rent Expense						$ 22,721
Lease Expiration Date						Jul. 31, 2022
Milford, Connecticut [Member] | Commitments [Member]
Commitments And Contingencies [Line Items]
Area of Land | ft²					13,750
Operating Leases, Rent Expense					$ 8,707
Lease Expiration Date					Aug. 31, 2019
NEW YORK | Commitments [Member] | Bellport Avenue [Member]
Commitments And Contingencies [Line Items]
Operating Leases, Rent Expense			$ 9,375
NEW YORK | Commitments [Member] | K&K Unlimited [Member]
Commitments And Contingencies [Line Items]
Area of Land | ft²		12,000
Operating Leases, Rent Expense		$ 13,000
Lease Expiration Date		Jun. 30, 2018
Additional Lease Expiration Date	Jun. 30, 2021
NEW YORK | Commitments [Member] | 100 Bellport Avenue, LLC [Member]
Commitments And Contingencies [Line Items]
Area of Land | ft²				7,500
Operating Leases, Rent Expense				$ 5,625
Lease Expiration Date				Oct. 31, 2019
NEW YORK | Commitments [Member] | Amendment [Member] | Bellport Avenue [Member]
Commitments And Contingencies [Line Items]
Area of Land | ft²			5,000
Operating Leases, Rent Expense			$ 3,750
Lease Expiration Date			Oct. 31, 2019

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Cash dividend and declared dividends - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Apr. 30, 2019	Apr. 30, 2018	Apr. 30, 2019	Apr. 30, 2018
Dividends Payable [Line Items]
Dividends paid, per share	$ 0.02	$ 0.02	$ 0.02	$ 0.02
Dividends paid	$ 187	$ 183	$ 373	$ 360

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Subsequent event - Additional Information (Detail) - Subsequent Event	Jun. 07, 2019 $ / shares
Subsequent Event [Line Items]
Dividends Payable, Amount Per Share	$ 0.02
Dividends payable, record date	Jun. 30, 2019