UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

Form 10-Q

 

 

 

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

For the quarterly period ended January 31, 2016

 

Commission file number: 0-13301

 

 

 

RF INDUSTRIES, LTD.

(Exact name of registrant as specified in its charter)

 

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

 

 

(858) 549-6340
(Registrant’s telephone number, including area code)

 

 

 

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

 

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

 

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

 

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

 

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

 

The number of shares of the issuer’s Common Stock, par value $0.01 per share, outstanding as of March 16, 2016 was 8,725,274.

 

 

 

 

 

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)

 

   January 31,   October 31, 
   2016   2015 
   (Unaudited)   (Note 1) 
ASSETS          
           
CURRENT ASSETS          
Cash and cash equivalents  $5,766   $7,595 
Trade accounts receivable, net of allowance for doubtful accounts of $79 and $30   3,865    3,980 
Inventories   7,020    6,928 
Other current assets   1,341    728 
Deferred tax assets   427    426 
TOTAL CURRENT ASSETS   18,419    19,657 
           
Property and equipment:          
Equipment and tooling   3,250    3,215 
Furniture and office equipment   786    936 
    4,036    4,151 
Less accumulated depreciation   3,207    3,230 
Total property and equipment   829    921 
           
Goodwill   5,913    5,913 
Amortizable intangible assets, net   4,096    4,268 
Non-amortizable intangible assets   1,387    1,387 
Note receivable from stockholder   67    67 
Other assets   205    39 
TOTAL ASSETS  $30,916   $32,252 

 

 2 

 

 

Item 1: Financial Statements (continued)

 

RF INDUSTRIES, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

 

   January 31,   October 31, 
   2016   2015 
   (Unaudited)   (Note 1) 
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
CURRENT LIABILITIES          
Accounts payable  $1,649   $1,493 
Accrued expenses   2,269    2,868 
TOTAL CURRENT LIABILITIES   3,918    4,361 
           
Deferred tax liabilities   1,143    1,143 
Other long-term liabilities   377    377 
TOTAL LIABILITIES   5,438    5,881 
           
COMMITMENTS AND CONTINGENCIES          
           
STOCKHOLDERS’ EQUITY          
Common stock - authorized 20,000,000 shares of $0.01 par value; 8,718,914 and 8,713,664 shares issued and outstanding at January 31, 2016 and October 31, 2015, respectively   87    87 
Additional paid-in capital   19,200    19,129 
Retained earnings   6,191    7,155 
TOTAL STOCKHOLDERS' EQUITY   25,478    26,371 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $30,916   $32,252 

 

See Notes to Unaudited Condensed Consolidated Financial Statements.

 

 3 

 

 

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 January 31, 
   2016   2015 
         
Net sales  $6,984   $6,894 
Cost of sales   4,908    4,394 
           
Gross profit   2,076    2,500 
           
Operating expenses:          
Engineering   198    217 
Selling and general   2,489    2,257 
Totals   2,687    2,474 
           
Operating income (loss)   (611)   26 
           
Other income   -    5 
           
Income (loss) from continuing operations before benefit for income taxes   (611)   31 
Benefit for income taxes   (256)   (21)
           
Income (loss) from continuing operations   (355)   52 
           
Income from discontinued operations, net of tax   2    13 
           
Net income (loss)  $(353)  $65 
           
Earnings (loss) per share          
Basic          
Continuing operations  $(0.04)  $0.01 
Discontinued operations   0.00    0.00 
Net income (loss) per share  $(0.04)  $0.01 
           
Earnings (loss) per share          
Diluted          
Continuing operations  $(0.04)  $0.01 
Discontinued operations   0.00    0.00 
Net income (loss) per share  $(0.04)  $0.01 
           
Weighted average shares outstanding          
Basic   8,716,712    8,286,831 
Diluted   8,716,712    8,667,771 

 

See Notes to Unaudited Condensed Consolidated Financial Statements.

 

 4 

 

 

Item 1: Financial Statements (continued)

 

RF INDUSTRIES, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)

   Three Months Ended January 31, 
   2016   2015 
OPERATING ACTIVITIES:          
Net income (loss)  $(353)  $65 
Adjustments to reconcile net income (loss) to net cash used in operating activities:          
Bad debt expense   20    5 
Accounts receivable write-off   -    4 
Depreciation and amortization   272    190 
Stock-based compensation expense   52    50 
Loss on disposal of fixed assets   40    - 
Changes in operating assets and liabilities:          
Trade accounts receivable   94    (151)
Inventories   (349)   (234)
Other current assets   (613)   (288)
Other long-term assets   (167)   - 
Accounts payable   156    23 
Customer deposit   -    (6)
Income taxes payable   (65)   (77)
Accrued expenses   (600)   (218)
Net cash used in operating activities   (1,513)   (637)
           
INVESTING ACTIVITIES:          
Restricted cash   -    (300)
Acquisition of business (Comnet), net of cash acquired $541   -    (2,249)
Proceeds from sale of fixed assets   22    - 
Proceeds from sale of inventory   322    - 
Capital expenditures   (70)   (34)
Net cash provided by (used in) investing activities   274    (2,583)
           
FINANCING ACTIVITIES:          
Proceeds from exercise of stock options   20    2 
Dividends paid   (610)   (578)
Net cash used in financing activities   (590)   (576)
           
Net decrease in cash and cash equivalents   (1,829)   (3,796)
           
Cash and cash equivalents, beginning of period   7,595    14,718 
           
Cash and cash equivalents, end of period  $5,766   $10,922 
           
Supplemental cash flow information – income taxes paid  $165   $104 
Noncash investing and financing activities:          
Stock issuance for acquisition of business (Comnet)  $-   $1,060 

 

See Notes to Unaudited Condensed Consolidated Financial Statements.

 

 5 

 

 

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 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, 2015 has been derived from, and certain terms used herein are defined in, the audited financial statements of the Company as of October 31, 2015 included in the Company’s Annual Report on Form 10-K (“Form 10-K”) for the year ended October 31, 2015 that was previously filed with the Securities and Exchange Commission (“SEC”). Operating results for the three-month period ended January 31, 2016 are not necessarily indicative of the results that may be expected for the year ending October 31, 2016. The unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended October 31, 2015.

 

Principles of consolidation

 

The accompanying unaudited condensed consolidated financial statements for the periods ending on or before October 31, 2015 include the accounts of RF Industries, Ltd., Cables Unlimited, Inc. (“Cables Unlimited”), Comnet Telecom Supply, Inc. (“Comnet”), a wholly-owned subsidiary that RF Industries, Ltd. acquired effective November 1, 2014, and Rel-Tech Electronics, Inc. (“Rel-Tech”), a wholly-owned subsidiary that RF Industries, Ltd. acquired effective June 1, 2015. The unaudited condensed consolidated financial statements for the three months ended January 31, 2016 include the accounts of RF Industries, Ltd., Cables Unlimited, Comnet and Rel-Tech. For periods ending on or before January 31, 2015, references herein to the “Company” shall refer to RF Industries, Ltd., Cables Unlimited and Comnet, and for all periods after October 31, 2015, references to the “Company” shall refer to RF Industries, Ltd., Cables Unlimited, Comnet and Rel-Tech, collectively. All intercompany balances and transactions have been eliminated in consolidation.

 

Revenue recognition

 

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

 

Note 2 - Business acquisitions

 

Rel-Tech Electronics, Inc.

 

On June 5, 2015, the Company purchased 100% of the issued and outstanding shares of Rel-Tech pursuant to a Stock Purchase Agreement. Rel-Tech was wholly-owned by Wilfred D. LeBlanc Jr., Ralph Palumbo and their respective wives. Rel-Tech is a Milford, Connecticut based manufacturer and supplier of custom cable assemblies and wiring harnesses. At the closing, RF Industries, Ltd. paid the sellers $3,100,000, which consisted of $2,100,000 in cash and 50,467 shares of the Company’s unregistered common stock valued at $200,000 based on a per share price of $3.96 (the volume weighted average price of the Company’s common stock during the five trading days before the closing date) and, if certain financial targets are met by Rel-Tech over a three-year period, agreed to pay additional cash earn-out payments of up to $800,000. Rel-Tech will operate as a stand-alone subsidiary for at least the next two years. Mr. Palumbo will serve as President of Rel-Tech at a base salary of $150,000 per year. Mr. Palumbo will also be entitled to earn an annual bonus of up to 50% of his base salary. Rel-Tech has also entered into employment agreements to retain five key managers.

 

The acquisition was accounted for in accordance with the acquisition method of accounting. The acquired assets and assumed liabilities were recorded by the Company at their estimated fair values. The Company determined the estimated fair values with the assistance of appraisals or valuations performed by an independent third party specialist. Rel-Tech offers a full range of value-added services including product design, prototyping, stocking, bill of materials management, consignment and fulfillment programs. Rel-Tech provides engineered solutions to many leasing OEMs and markets its products to customers in commercial as well as military arenas. All assembly is performed at the Rel-Tech’s facilities. These products and services supplement and enhance the existing markets of RF Industries without incurring substantially more costs than incurred in the purchase of Rel-Tech. These factors, among others, contributed to a purchase price in excess of the estimated fair value of Rel-Tech’s net identifiable assets acquired and, as a result, we have recorded goodwill in connection with this acquisition. We do not expect the goodwill recorded to be deductible for income tax purposes.

 

 6 

 

 

Although the closing occurred on June 5, 2015, the acquisition of Rel-Tech is deemed to have become effective for financial accounting purposes as of June 1, 2015. Accordingly Rel-Tech’s financial results have been included in the results of the Custom Cabling Manufacturing and Assembly segment for the period ended January 31, 2016.

 

The following table summarizes the components of the estimated purchase price at fair value at June 1, 2015:

 

Cash consideration paid  $2,100,000 
RF Industries, Ltd. common shares issued (50,467 shares)   200,000 
Earn-out   610,000 
Total purchase price  $2,910,000 

 

The following table summarizes the final allocation of the estimated purchase price at fair value at June 1, 2015:

 

Current assets  $1,637,000 
Fixed assets   68,000 
Other assets   17,000 
Intangible assets   1,425,000 
Goodwill   833,000 
Deferred tax liabilities   (489,000)
Non-interest bearing liabilities   (581,000)
Net assets  $2,910,000 

 

The results of Rel-Tech’s operations subsequent to June 1, 2015 have been included in the Company’s condensed consolidated results of operations. All costs related to the acquisition of Rel-Tech have been expensed as incurred. For the period ended January 31, 2016, Rel-Tech contributed $1.5 million of revenue.

 

The following unaudited pro forma financial information presents the combined operating results of the Company and Rel-Tech as if the acquisition had occurred as of the beginning of the earliest period presented. Pro forma data is subject to various assumptions and estimates and is presented for informational purposes only. This pro forma data does not purport to represent or be indicative of the consolidated operating results that would have been reported had the transaction been completed as described herein, and the data should not be taken as indicative of future consolidated operating results.

 

Pro forma financial information is presented in the following table:

 

   Three Months Ended January 31, 
   2015 
     
Revenue  $8,467,000 
Net income   73,000 
      
Earnings per share     
     Basic  $0.01 
     Diluted  $0.01 

 

CompPro Product Line

 

On May 19, 2015, the Company purchased the CompPro braided product line (“CompPro”), including the intellectual property rights to that product line, for a total purchase price of $700,000 cash. CompPro utilizes a patented compression technology that offers revolutionary advantages for a water-tight connection, easier installation, and improved system reliability on braided cables. CompPro is used by wireless network operators, installers and distributors in North America and other parts of the world. Included in the purchase is inventory, designs, intellectual property rights and the rights to manufacture and sell CompPro products. Financial results for sales of the CompPro products are included in the results of the RF Connector and Cable Assembly segment beginning in the Company’s fiscal quarter ended October 31, 2015.

 

The acquisition was accounted for in accordance with the acquisition method of accounting. The acquired assets were recorded by the Company at their estimated fair values. The Company determined the estimated fair values with the assistance of appraisals or valuations performed by an independent third party specialist. These above factors, among others, contributed to a purchase price in excess of the estimated fair value of CompPro’s net identifiable assets acquired and, as a result, the Company recorded goodwill in connection with this transaction. 

 

Goodwill acquired was allocated to the Company’s Connector and Cable Assembly segment as part of the purchase price allocation. The Company expects the goodwill recorded to be deductible for income tax purposes. Acquired amortizable intangible assets are being amortized on a straight-line basis over their estimated useful lives ranging from three to seven years.

 

The following table summarizes the components of the estimated purchase price at fair value at May 19, 2015:

 

Cash consideration paid  $700,000 
Total purchase price  $700,000 

 

The following table summarizes the final allocation of the estimated purchase price at fair value at May 19, 2015:

 

 7 

 

 

Current assets  $186,300 
Fixed assets   67,500 
Intangible assets   321,200 
Goodwill   125,000 
Net assets  $700,000 

 

The results of CompPro’s sales subsequent to May 19, 2015 have been included in the Company’s consolidated results of operations. All costs related to the acquisition of CompPro have been expensed as incurred.

 

Comnet Telecom Supply, Inc.

 

The Company purchased 100% of the issued and outstanding shares of Comnet from Robert Portera, the sole shareholder of Comnet. Comnet is 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. Comnet is a New York corporation that was formed in 1993. For income tax purposes, both parties have agreed to make an election under Internal Revenue Code 338(h) (10). At the closing, RF Industries, Ltd. paid Mr. Portera $4,150,000 in cash and stock, and agreed to pay him up to an additional $1,360,000 in cash as an earn-out over the next two years if Comnet meets certain financial milestones in the next two years. The purchase price paid at the closing consisted of $3,090,000 in cash (of which $300,000 has been deposited into a bank escrow account for one year as security for the seller’s indemnification obligations under the stock purchase agreement) and 252,381 shares of RF Industries, Ltd.’s unregistered common stock, which shares were valued at $1,060,000 based on a per share price of $4.20 (the volume weighted average price of the common stock during the five trading days before the closing date). Comnet will be operated as a stand-alone subsidiary for at least the next two years. The Company entered into a two-year employment agreement with Mr. Portera pursuant to which Mr. Portera will be the President of Comnet and receive a base salary of $210,000 per year. Mr. Portera will also be entitled to earn an annual bonus of up to 50% of his base salary. Since the acquisition of Comnet was effective for financial accounting purposes as of November 1, 2014 with an effective closing date of January 20, 2015, Comnet’s financial results have been included in the results of the Custom Cabling Manufacturing and Assembly segment for the entire fiscal year ended October 31, 2015.

 

The acquisition was accounted for in accordance with the acquisition method of accounting. The acquired assets and assumed liabilities were recorded by the Company at their estimated fair values. The Company determined the estimated fair values with the assistance of appraisals or valuations performed by an independent third party specialist. The products manufactured and supplied by Comnet include fiber optic cables, cabling technologies, custom patch cord assemblies, data center consoles and other data center equipment. These products supplement and enhance the existing markets of RF Industries as well as tap into new data center markets that the Company would not have been able to enter without incurring substantially more costs than incurred in the purchase of Comnet. The capital and other resources required to enhance the Company’s fiber optics market and enter the data center market would have greatly exceeded the purchase price of $4.15 million (excluding the potential earn-out). These factors, among others, contributed to a purchase price in excess of the estimated fair value of Comnet’s net identifiable assets acquired and, as a result, the Company recorded goodwill in connection with this transaction. 

 

Goodwill acquired was allocated to the Company’s operating segment and Comnet reporting unit as part of the purchase price allocation. The Company expects the goodwill recorded to be deductible for income tax purposes. Acquired amortizable intangible assets are being amortized on a straight-line basis over their estimated useful lives ranging from three to eight years.

 

The following table summarizes the components of the estimated purchase price at fair value at November 1, 2014:

 

Cash consideration paid  $3,090,000 
RF Industries, Ltd. common shares issued (252,381 shares)   1,060,000 
Earn-out   1,235,000 
Total purchase price  $5,385,000 

 

The following table summarizes the final allocation of the purchase price at fair value at November 1, 2014:

 

Current assets  $1,875,000 
Fixed assets   150,000 
Intangible assets   2,910,000 
Goodwill   1,879,000 
Non-interest bearing liabilities   (1,429,000)
Net assets  $5,385,000 

 

 8 

 

 

The results of Comnet’s operations subsequent to November 1, 2014 have been included in the Company’s consolidated results of operations. All costs related to the acquisition of Comnet have been expensed as incurred. For the period ended January 31, 2016, Comnet contributed $2.2 million of revenue.

 

The Company recognized a $318,000 credit to selling, general and administrative expenses as a result of the revaluation of the earn-out liability as it relates to the acquisition of Comnet as of October 31, 2015.

 

Note 3 - Discontinued operations

 

During 2013, the Company sold its RF Neulink and RadioMobile divisions, which together had comprised the Company’s RF Wireless segment. The divisions were sold pursuant to asset purchase agreements, whereby no purchase price was paid at the closing. Rather, the agreements stipulated royalty payments from each of the purchasers over a three year period. For the three months ended January 31, 2016, the Company recognized approximately $1,600 of royalty income for the RF Neulink, which amounts have been included within discontinued operations. For the three months ended January 31, 2015, the Company recognized approximately $19,000 and $2,000 of royalty income for the RF Neulink and RadioMobile divisions, respectively, which amount has been included within discontinued operations.

 

Note 4 - Sale of Aviel Electronics division

 

On December 22, 2015, the Company sold the assets of its Aviel Electronics division at a gain of approximately $35,000. The terms of the sale included $150,000 cash due upon closing and a $250,000 secured promissory note ($83,000 recorded in other current assets and $167,000 in other assets) with principal and interest (at 5%) payable over a three-year period. Aviel Electronics’ sales and loss from continuing operations before provision for income taxes of $86,000 and $40,000, respectively, were included in the Company’s RF Connector and Cable Assembly segment from November 1, 2015 through the date of sale on December 22, 2015. Aviel Electronics’ sales and income from continuing operations before provision for income taxes, were $252,000 and $26,000, respectively, for the three months ended January 31, 2015.

 

The sale of the Aviel Electronics division does not represent a strategic shift that has a major effect on the Company’s operations and financial results. Accordingly, the financial results from the sale of Aviel Electronics were reported in income from continuing operations. 

 

Note 5 - Inventories and major vendors

 

Inventories are stated at the lower of cost or market, with cost determined using the weighted average cost method of accounting. Cost includes materials, labor, and manufacturing overhead related to the purchase and production of inventories. We regularly review inventory quantities on hand, future purchase commitments with our suppliers, and the estimated utility of our inventory. If our review indicates a reduction in utility below carrying value due to damage, physical deterioration, obsolescence, changes in price levels, or other causes, we reduce our inventory to a new cost basis through a charge to cost of sales in the period in which it occurs. The determination of market value and the estimated volume of demand used in the lower of cost or market analysis require significant judgment.

 

In June 2015, the Company acquired Rel-Tech, a company that currently values its inventories using specific identification (last purchase price) on a FIFO basis. The Company intends to convert the inventory valuation principles used by Rel-Tech to the weighted average cost sometime during fiscal 2016. Inventories consist of the following (in thousands): 

 

   January 31, 2016   October 31, 2015 
         
Raw materials and supplies  $3,168   $2,671 
Work in process   164    270 
Finished goods   3,688    3,987 
           
Totals  $7,020   $6,928 

 

Purchases of inventory from two major vendors during the three months ended January 31, 2016 represented 14% and 12% of total inventory purchases. Purchases of inventory from two major vendors during the three months ended January 31, 2015 represented 12% and 10% of total inventory purchases. The Company has arrangements with these vendors to purchase product based on purchase orders periodically issued by the Company.

 

Note 6 - Other current assets

 

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

 

 9 

 

 

   January 31, 2016   October 31, 2015 
         
Prepaid expense  $1,114   $548 
Notes receivable   83    - 
Other   144    180 
           
Totals  $1,341   $728 

 

Long-term portion of notes receivable of $167,000 is recorded in other assets.

 

Note 7 - Earnings per share

 

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares outstanding increased by the effects of assuming that other potentially dilutive securities (such as stock options) outstanding during the period had been exercised and the treasury stock method had been applied. Potentially dilutive securities totaling 1,138,510 and 617,310 for the three months ended January 31, 2016 and 2015, respectively, were excluded from the calculation of diluted per share amounts because of their anti-dilutive effect.

 

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

 

   Three Months Ended January 31, 
   2016   2015 
         
Weighted average shares outstanding for basic earnings (loss) per share   8,716,712    8,286,831 
           
Add effects of potentially dilutive securities-assumed exercise of stock options   -    380,940 
           
Weighted average shares outstanding for diluted earnings (loss) per share   8,716,712    8,667,771 

 

Note 8 - Stock-based compensation and equity transactions

 

The Company’s current stock incentive plan provides for the granting of qualified and nonqualified options to the Company’s officers, directors and employees. Incentive stock options granted to the Company’s employees during the three months ended January 31, 2015 vest and are exercisable equally over three years and expire in five years from date of grant. During the three months ended January 31, 2015, the Company granted a total of 127,558 incentive stock options to Company employees. The Company satisfies the exercise of options by issuing previously unissued common shares. No options were granted to Company employees during the three months ended January 31, 2016.

 

The weighted average fair value of employee and non-employee directors’ stock options granted by the Company during the three months ended January 31, 2015 was estimated to be $1.00 per share using the Black-Scholes option pricing model with the following assumptions:

 

Risk-free interest rate  0. 88%
Dividend yield  6.35%
Expected life of the option   3.5 years 
Volatility factor  47.4%

 

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 2015 option grants. The expected life represents the period of time that options granted are expected to be outstanding. The risk-free rate is based on the U.S. Treasury rate with a maturity date corresponding to the options’ expected life. The dividend yield is based upon the historical dividend yield.

  

Issuances of common stock by the Company

 

During the three months ended January 31, 2015, the Company issued 252,381 shares of common stock valued at $1,060,000 to the former owner of Comnet as part of the purchase price of the Comnet acquisition. The Comnet acquisition is more fully described in Note 2 of this report.  

 

 10 

 

 

Company stock option plans

 

Descriptions of the Company’s stock option plans are included in Note 8 of the Company’s Annual Report on Form 10-K for the year ended October 31, 2015. A summary of the status of the options granted under the Company’s stock option plans as of January 31, 2016 and the changes in options outstanding during the three months then ended is presented in the table that follows:

 

       Weighted 
       Average 
   Shares   Exercise Price 
Outstanding at November 1, 2015   1,240,100   $2.64 
Options granted   51,192   $4.42 
Options exercised   (5,250)  $3.72 
Options canceled or expired   (21,703)  $5.42 
Options outstanding at January 31, 2016   1,264,339   $3.43 
Options exercisable at January 31, 2016   773,321   $3.03 
Options vested and expected to vest at January 31, 2016   1,257,911   $3.66 

 

Weighted average remaining contractual life of options outstanding as of January 31, 2016: 5.04 years

 

Weighted average remaining contractual life of options exercisable as of January 31, 2016: 3.45 years

 

Weighted average remaining contractual life of options vested and expected to vest as of January 31, 2016: 5.03 years

 

Aggregate intrinsic value of options outstanding at January 31, 2016: $1.2 million

 

Aggregate intrinsic value of options exercisable at January 31, 2016: $1.2 million

 

Aggregate intrinsic value of options vested and expected to vest at January 31, 2016: $1.2 million

 

As of January 31, 2016, $654,000 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 5.65 years.

 

Non-employee directors receive $30,000 annually, which amount is paid one-half in cash and one-half through the grant of non-qualified stock options to purchase shares of the Company’s common stock. During the quarter ended January 31, 2016, the Company granted each of its three non-employee directors 51,192 options. The number of stock options granted to each director was determined by dividing $15,000 by the fair value of a stock option grant using the Black-Scholes model ($0.87 per share). These options vest ratably over fiscal year 2016.

 

Stock option expense

 

During the three months ended January 31, 2016 and 2015, stock-based compensation expense totaled $52,000 and $50,000, respectively. For the three months ended January 31, 2016 and 2015, stock-based compensation classified in cost of sales amounted to $10,000 and $15,000, respectively, and stock-based compensation classified in selling and general expense amounted to $42,000 and $35,000, respectively.

 

Note 9 - Concentrations of credit risk

 

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company maintains its cash and cash equivalents with high-credit quality financial institutions. At January 31, 2016, the Company had cash and cash equivalent balances in excess of federally insured limits in the amount of approximately $4.9 million.

 

Two customers accounted for approximately 14% and 13% of the Company’s net sales for the three-month period ended January 31, 2016. One customer accounted for approximately 17% of the Company’s net sales for the three-month period ended January 31, 2015. At January 31, 2016, these customers’ accounts receivable balance accounted for approximately 17% and 15% of the Company’s total net accounts receivable balances. At October 31, 2015, these customers’ accounts receivable balances accounted for approximately 19%. 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 which 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. As of January 31, 2016, the Company had three segments based upon this evaluation - RF Connector and Cable Assembly, Custom Cabling Manufacturing and Assembly and Medical Cabling and Interconnector. As discussed in Note 17 below, the Company has decided to close the Medical Cabling and Interconnect segment.

 

 11 

 

 

During the fiscal quarter ended January 31, 2016, the RF Connector and Cable Assembly segment consisted of two divisions, the Custom Cabling Manufacturing and Assembly segment was composed of three divisions and the Medical Cabling and Interconnector segment consisted of one division. The five divisions that meet the quantitative thresholds for segment reporting are Connector and Cable Assembly, Cables Unlimited, Comnet, Bioconnect and Rel-Tech. The other division aggregated into the RF Connector and Cable Assembly segment and into the Custom Cabling Manufacturing and Assembly segment has similar products that are marketed to their respective customer base and production and product development processes that are similar in nature. The specific customers are different for each division; however, there is some overlapping of product sales to them. The methods used to distribute products are similar within each division aggregated.

 

Management identifies the Company’s segments based on strategic business units that are, in turn, based along market lines. These strategic business units offer products and services to different markets in accordance with their customer base and product usage. For segment reporting purposes, the Company aggregated the Connector and Cable Assembly and Aviel (until the time of sale) divisions into the RF Connector and Cable Assembly segment, and the Cables Unlimited, Comnet and Rel-Tech division constituted the Custom Cabling Manufacturing and segment. The Bioconnect division comprised the Medical Cabling and Interconnector segment.

 

As reviewed by the Company’s chief operating decision maker, the Company evaluates the performance of each segment based on income or loss before income taxes. The Company charges depreciation and amortization directly to each division within the segment. 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 months ended January 31, 2016 and 2015 (in thousands):

 

   Three Months Ended January 31, 
   2016   2015 
         
United States  $6,692   $6,596 
Foreign Countries:          
Canada   71    114 
Israel   62    52 
Mexico   97    94 
All Other   62    38 
    292    298 
           
Totals  $6,984   $6,894 

 

Net sales, income (loss) from continuing operations before benefit for income taxes and other related segment information for the three months ended January 31, 2016 and 2015 are as follows (in thousands): 

  

   RF Connector   Custom Cabling   Medical         
   and   Manufacturing and   Cabling and         
2016  Cable Assembly   Assembly   Interconnector   Corporate   Total 
Net sales  $1,956   $4,828   $200   $-   $6,984 
                          
Loss from continuing operations before benefit for income taxes   (415)   (118)   (78)   -    (611)
Depreciation and amortization   46    220    6    -    272 
                          
2015                         
Net sales  $2,701   $3,617   $576   $-   $6,894 
                          
Income (loss) from continuing operations before benefit for income taxes   65    (164)   125    5    31 
Depreciation and amortization   41    144    5    -    190 

 

 12 

 

 

Note 11 - Income tax benefit

 

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 benefit for income taxes was 42% and 68% of income (loss) before income taxes for the three months ended January 31, 2016 and 2015, respectively. The decrease in the effective income tax rate from period to period was primarily driven by an increased ratio of book income (loss) to discrete benefits from R&D credits related to the change in tax law in both periods.

 

The Company recorded income from discontinued operations, net of tax, as disclosed in Note 3.

 

The total amount of unrecognized tax benefits was $0 as of January 31, 2016 and October 31, 2015. The total balance of accrued interest and penalties related to uncertain tax positions was $0 as of January 31, 2016 and October 31, 2015. The Company recognizes interest and penalties related to uncertain tax positions, if any, as a component of income tax expense and the accrued interest and penalties, if any, are included in deferred and other long-term liabilities in the Company's condensed consolidated balance sheets. There were no material interest or penalties included in income tax expense for the three months ended January 31, 2016.

 

Note 12 - Intangible assets

 

Intangible assets consist of the following (in thousands): 

 

   January 31, 2016   October 31, 2015 
Amortizable intangible assets:        
Non-compete agreements (estimated lives 3 - 5  years)  $310   $310 
Accumulated amortization   (231)   (212)
    79    98 
           
Customer relationships (estimated lives 7 - 15 years)   5,099    5,099 
Accumulated amortization   (1,237)   (1,101)
    3,862    3,998 
           
Backlog (estimated life 1  year)   134    134 
Accumulated amortization   (114)   (100)
    20    34 
           
Patents (estimated life 14 years)   142    142 
Accumulated amortization   (7)   (4)
    135    138 
           
Totals  $4,096   $4,268 
           
Non-amortizable intangible assets:          
Trademarks  $1,387   $1,387 

 

 Note 13 - Accrued expenses

 

Accrued expenses consist of the following (in thousands):

 

   January 31, 2016   October 31, 2015 
         
Wages payable  $762   $978 
Accrued receipts   502    438 
Earn-out liability   675    1,150 
Other current liabilities   330    302 
           
Totals  $2,269   $2,868 

 

 13 

 

 

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

 

Non-current portion of earn-out liability of $377,000 is recorded in other long-term liabilities.

  

Note 14 - Line of credit

 

In March 2014, the Company entered into an agreement for a line of credit (“LOC”) in the amount of $5.0 million. Amounts outstanding under the LOC shall bear interest at a rate of 3.0% plus LIBOR (“base interest rate”), with interest payable on the last day of each month. All principal outstanding under the LOC which is not bearing interest at a base interest rate shall bear interest at Union Bank’s Reference Rate, as defined, which rate shall vary. Borrowings under the LOC are secured by a security interest in certain assets of the Company. The LOC contains certain loan covenants as described in the agreement. Failure to maintain the loan covenants shall constitute an event of default resulting in all outstanding amounts of principal and interest becoming immediately due and payable. All outstanding principal and interest is due and payable on June 30, 2016. As of January 31, 2016, no amounts were outstanding under the LOC.

 

Note 15 - Commitments

 

In April 2014, the Company amended its lease for its facility in San Diego, California, extending the term of the lease and reducing its square footage. The amended lease expires in March 2017 and requires minimum annual rental payments (starting at approximately $19,000 per month) that are subject to fixed annual increases. The minimum annual rentals under this lease are being charged to expense on a straight-line basis over the lease term. 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. As of January 31, 2016, the aggregate remaining minimum lease payments under this lease totaled $280,000.

 

The Cables Unlimited division leases an approximately 12,000 square foot facility located in Yaphank, New York. The lease for this space expires June 30, 2016. However, Cables Unlimited has a one-time option to extend the term of the lease for an additional five-year term. Cables Unlimited’s monthly rent expense under the lease is $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 of Cables Unlimited and a current director of the Company.

 

In March 2015, the Company amended its lease for its approximately 4,500 square foot facility located in Las Vegas, Nevada to extend the term of the lease to April 2016. The Las Vegas facility is used by the Company’s Aviel Electronics division. Aviel’s monthly rent expense under the lease is $4,270 per month. As a result of the sale of Aviel as of December 22, 2015, the Company has no further commitment.

 

The newly acquired Comnet Telecom division leases approximately 15,000 square feet in two suites located in East Brunswick, New Jersey. Comnet’s monthly rent expense under the leases is approximately $11,655 per month for these facilities which expires in September 2017.

 

The newly acquired Rel-Tech Electronic division leases approximately 13,750 square feet located in Milford, Connecticut. Rel-Tech’s net monthly rent expense under the lease is approximately $8,307 per month for these facilities which expires in August 2017.

 

Note 16 - Cash dividend and declared dividends

 

The Company paid dividends of $0.07 per share during the three months ended January 31, 2016 for a total of $610,000. The Company paid dividends of $0.07 per share during the three months ended January 31, 2015 for a total of $578,000.

 

Note 17 - Subsequent events

 

On March 3, 2016, the Board of Directors of the Company declared a quarterly cash dividend of $0.02 per share to be paid on April 15, 2016 to stockholders of record on March 31, 2016.

 

On March 3, 2016, the Board of Directors also approved the closure of the Company’s Bioconnect division which comprised the entire operations of the Company’s Medical Cabling and Interconnect segment. The closure is part of the Company’s on-going plan to close or dispose of underperforming divisions that are not part of the Company’s core operations.

 

 14 

 

 

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, 2015 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.

 

Inventories

 

Inventories are stated at the lower of cost or market, 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-third of our total assets, any reduction in the value of our inventories would require us to take write-offs that would affect our net worth and future earnings. In June 2015, the Company acquired Rel-Tech Electronics, Inc. (“Rel-Tech”), a company that currently values inventories using specific identification (last purchase price) on a FIFO basis. The Company intends to convert the inventory valuation principles used by Rel-Tech to the weighted average cost method sometime during fiscal 2016.

 

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 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. We have made no material adjustments to our long-lived assets in any of the years presented.

 

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

 

In addition, 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. No goodwill or trademark impairments have been identified in any of the years presented.

 

 15 

 

 

Earn-out Liability

 

The purchase agreement for the Comnet and Rel-Tech acquisitions provides for earn-out payments.  The earn-out liability is valued at its fair value using the Monte Carlo simulation model and is included as a component of the total purchase price.  The earn-outs will be revalued quarterly and any resulting increase or decrease will be recorded into selling, general and administrative expenses. Any changes in the assumed timing and amount of the probability of payment scenarios could impact the fair value. Significant judgment is employed in determining the appropriateness of the assumptions used in calculating the fair value of the earn-out as of the acquisition date. Accordingly, changes in the assumptions can materially impact the amount of contingent consideration expense we record in future periods. The Comnet and Rel-Tech acquisitions are more fully described in Note 2 of this report.  

 

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 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

 

The Company primarily engages in the design, manufacture, and marketing of interconnect products and systems, including coaxial and specialty cables, fiber optic cables and connectors, and electrical and electronic specialty cables. The Company’s connectivity solutions are used across diversified, high growth markets including wireless carriers and infrastructure and industrial companies. The Company’s operations are currently conducted through various divisions and three wholly-owned subsidiaries.

 

During its recently completed fiscal year ended October 31, 2015, RF Industries acquired two companies and a new line of cabling products, as follows:

 

Comnet Telecom Supply, Inc. (“Comnet”). The Company formally purchased all of the issued and outstanding shares of Comnet from Robert Portera, its sole shareholder, on January 20, 2015. However, the purchase was effective for accounting purposes as of November 1, 2014. Comnet is 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.

 

CompPro Product Line. On May 19, 2015, the Company purchased the CompPro braided product line for a total purchase price of $700,000 cash. Included in the purchase is inventory, designs, intellectual property rights and the rights to manufacture and sell CompPro products.

 

Rel-Tech Electronics, Inc. (“Rel-Tech”). On June 5, 2015, the Company purchased 100% of the issued and outstanding shares of Rel-Tech. Rel-Tech is a Milford, Connecticut-based manufacturer and supplier of custom cable assemblies and wiring harnesses.

 

On December 22, 2015, the Company sold the assets of its Aviel Electronics division at a gain of approximately $35,000. The terms of the sale included $150,000 cash due upon closing and a $250,000 secured promissory note with principal and interest (at 5%) payable over a three-year period. Aviel Electronics sales and loss from continuing operations before provision for income taxes of $86,000 and $40,000, respectively, through the date of sale on December 22, 2015 were included in the Company’s RF Connector and Cable Assembly segment for the three months ended January 31, 2016.

.

 16 

 

 

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. Additionally, the Company has access to a line of credit in the amount of $5.0 million, of which the full amount is available as of January 31, 2016, should the Company need to obtain additional capital. Management believes that its existing assets and the cash expected to be generated from operations will be sufficient during the current fiscal year based on the following:

 

·As of January 31, 2016, the Company had cash and cash equivalents equal to $5.8 million.

 

·As of January 31, 2016, the Company had $18.4 million in current assets and $3.9 million in current liabilities.

 

As of January 31, 2016, the Company had a total of $5.8 million of cash and cash equivalents compared to a total of $7.6 million of cash and cash equivalents as of October 31, 2015. As of January 31, 2016, the Company had working capital of $14.5 million and a current ratio of approximately 4.7:1.

 

The Company used $1.5 million cash from operating activities for the three months ended January 31, 2016. The decrease in cash from operating activities was due in part to a net loss of $353,000, purchase of inventories and other current assets, and payment of certain accrued expense. The increase in other current and long-term assets results from the $250,000 note that the Company received in the sale of the Aviel division while the decrease in accrued expenses was primarily for the $581,000 payment of an earn-out and incentive bonus to the President of the Comnet division. These decreases were partially offset by non cash charges such as $272,000 for depreciation and amortization related to the acquisitions of Comnet, Rel-Tech and CompPro, $52,000 of stock-based compensation expense, $40,000 from the write-off of software related to the implementation of a new ERP system and $20,000 from an increase in the Company’s accounts receivable reserve.

 

During the three-month period ended January 31, 2016, the Company generated $274,000 from investing activities, primarily related to the sale of Aviel’s inventories and fixed assets, which amount was partially offset by $70,000 of capital expenditures.

 

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 and recent operating results, as well as access to its line of credit that expires in June 2016, the Company would be able to finance its expansion, if necessary.

 

As part of its announced business plan, the Company may from time to time acquire other companies or product lines in the future in order to diversify its product and customer base. Any future acquisitions may require the Company to make cash payments, which payments may reduce the Company’s future liquidity and capital resources.

 

In April 2014, the Company announced that it may repurchase up to 500,000 shares of the Company’s common stock in open market transactions. The share repurchase program may be suspended or terminated at any time. No shares were repurchased during the fiscal quarter ended January 31, 2016. In addition, during the three-month period covered by this Quarterly Report, the Company also paid $610,000 of dividends to its stockholders. In order to improve the Company’s ability to acquire other companies or product lines in the future, and to maintain a sufficient level of liquidity, for the fiscal quarter ending April 30, 2016, the Company reduced its quarterly dividend from $0.07 per share to $0.02 per share.

 

Results of Operations

 

Three Months Ended January 31, 2016 vs. Three Months Ended January 31, 2015

 

Net sales of $7.0 million increased by 1% or $90,000 for the three months ended January 31, 2016 (the “fiscal 2016 quarter”) when compared to the three months ended January 31, 2015 (the “fiscal 2015 quarter”). Fiscal 2016 quarter results includes net sales generated from the Company’s newly acquired Rel-Tech Electronics division which contributed $1.5 million of net sales during the quarter. The Company did not own Rel-Tech in the fiscal 2015 quarter. Excluding the net sales that were generated by newly acquired Rel-Tech, the aggregate net sales of the Company’s other divisions decreased by $1.5 million during the fiscal 2016 quarter compared to the fiscal quarter 2015. The Company’s “Custom Cabling Manufacturing and Assembly” segment (which consisted of Cables Unlimited, Comnet and Rel-Tech during the fiscal 2016 quarter) generated $4.8 million of net sales for fiscal 2016 quarter to become the Company’s largest operating segment. While net sales in the Custom Cabling Manufacturing and Assembly segment increased due to the acquisition of Rel-Tech, net sales net sales at Comnet were flat for fiscal 2016 quarter when compared to fiscal 2015 quarter while net sales at Cables Unlimited decreased to $1.1 million for the same period. The decrease in net sales at Cables Unlimited was due to a continuing decline in the sale of Cables Unlimited’s Optiflex line of special purpose cables and a decline in orders for other fiber optic products. For the fiscal 2016 quarter year, the RF Connector and Cable Assembly segment had net sales of $2.0 million, a decline of $0.7 million or 26% from net sales of $2.7 million for the fiscal 2015 quarter. The Company believes that the decrease in net sales at the RF Connector and Cable Assembly segment is attributable to a continuing industry-wide softening of demand for RF cable and connector products. In addition, during the fiscal 2016 quarter, the Company sold the assets of the Aviel division which also contributed to the decline in sales in the RF Connector and Cable Assembly segment. The Medical Cabling and Interconnect segment generated net sales of $0.2 million in the fiscal 2016 quarter, a decrease of $0.4 or 65% over the prior year’s comparable period. The decrease in medical cabling revenue was primarily due to decreased purchases by Bioconnect’s principal customers. Because of Bioconnect’s decreasing operations, in March 2016 the Company decided to close that division and to wind down its operations.

 

 17 

 

 

The Company’s gross profit as a percentage of sales in the fiscal 2016 quarter decreased by 6% to 30% compared to 36% in the fiscal 2015 quarter. The decrease in gross margins is primarily due to the decline in 1) higher margin connector sales at the Company’s RF Connector and Cable Assembly division, higher margin Optiflex sales at Cables Unlimited, and higher margin sales at Bioconnect, and 2) certain fixed manufacturing costs at the Company’s RF Connector and Cable Assembly segment spread over a lower revenue base. Historically, the RF Connector and Cable Assembly segment operated with gross margins above 45%. However, Comnet and Rel-Tech’s gross margins historically have been lower than those of the RF Connector and Cable Assembly segment and the Company in general. Since sales at the RF Connector and Cable Assembly segment have been decreasing and the Custom Cabling Manufacturing and Assembly segment now generates a majority of the Company’s net sales, the Company’s aggregate gross margins have decreased and are expected to remain below historical rates in the future.

 

Engineering expenses decreased $19,000 or 8% for the fiscal 2016 quarter to $198,000 compared to $217,000 for the fiscal 2015 quarter due to decreased salary expense related to engineering activities. Engineering expenses represent costs incurred relating to the ongoing development of new products.

 

Selling and general expenses increased by $232,000, or 10%, during the fiscal 2016 quarter to $2.5 million from $2.3 million in the prior year. The increase in selling and general expenses was primarily due to additional expenses of approximately $174,000 incurred by the Company’s newly acquired Rel-Tech subsidiary which subsidiary was not owned, and which expenses therefore were not incurred during the fiscal 2015 quarter. Excluding the addition of the selling and general expenses attributable to Rel-Tech, the selling and general expenses of the Company for the fiscal 2016 quarter compared to the fiscal 2015 quarter increased $71,000 or 3%, due to an increase in sales and marketing efforts.

 

The benefit for income taxes was 42% and 68% of loss before income taxes for the three months ended January 31, 2016 and January 31, 2015, respectively. The decrease in the effective income tax rate from period to period was primarily driven by an increased ratio of book income (loss) to discrete benefits from R&D credits related to the change in tax law in both periods.

 

Income from discontinued operations, net of tax, during the fiscal 2016 quarter was $2,000 compared to $13,000 in the fiscal 2015 quarter. During the fiscal year ended October 31, 2013, the Company sold its RadioMobile and RF Neulink divisions and, accordingly, the results of these divisions are included in discontinued operations for all periods presented.

 

For the fiscal 2016 quarter, the Company incurred an operating loss of $611,000 and a net loss of $353,000, compared to income from operations of $26,000 and net income of $52,000 in the fiscal 2015 quarter. The losses in the fiscal 2016 quarter are attributable to a reduction in the Company’s gross margins and an increase in selling and general expenses. In part to address these losses, the Company has recently disposed of, or terminated two underperforming divisions. In December 2015 the Company sold its Aviel division, and in March 2016, the Company decided to discontinue its Bioconnet medical cabling division. In addition, the Company intends to focus its marketing efforts on the rapidly developing Distributed Antenna Systems (DAS) market in order to increase its net sales of its core products and to increase its margins.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

Nothing to report.

 

Item 4. 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. 

 

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, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. 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 January 31, 2016 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

  

 Part II. OTHER INFORMATION

 

Item 1. Legal Proceedings

 

Nothing to report.

 

 18 

 

 

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, 2015 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.
     
99.1:   Press Release dated March 21, 2016 announcing the financial results for the fiscal quarter ended January 31, 2016.
     
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.

 

 

 19 

 

 

SIGNATURES

 

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

     
  RF INDUSTRIES, LTD.
     
Date: March 21, 2016 By: /s/ Johnny Walker
    Johnny Walker
    Chief Executive Officer

 

Date: March 21, 2016 By: /s/ Mark Turfler
    Mark Turfler
    Chief Financial Officer

 

 20 

 



 

Exhibit 31.1

 

CERTIFICATIONS PURSUANT TO

SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

 

I, Johnny Walker, certify that:

 

1. I have reviewed this report on Form 10-Q for the quarter ended January 31, 2016 of RF Industries, Ltd.;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Date: March 21, 2016   /s/ Johnny Walker      
  Johnny Walker
  Chief Executive Officer

 

 

 



 

Exhibit 31.2

 

CERTIFICATIONS PURSUANT TO

SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

 

I, Mark Turfler, certify that:

 

1. I have reviewed this report on Form 10-Q for the quarter ended January 31, 2016 of RF Industries, Ltd.;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Date: March 21, 2016   /s/ Mark Turfler      
  Mark Turfler
  Chief Financial Officer

 

 



 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO

 

18 U.S.C. § 1350,

 

AS ADOPTED PURSUANT TO

 

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of RF Industries, Ltd. (the “Company”) on Form 10-Q for the quarter ended January 31, 2016, as filed with the Securities and Exchange Commission (the “Report”), I, Johnny Walker, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

 

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

 

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

 

Date: March 21, 2016   /s/ Johnny Walker
  Johnny Walker
  Chief Executive Officer

 

 

 



 

Exhibit 32.2

 

CERTIFICATION PURSUANT TO

 

18 U.S.C. § 1350,

 

AS ADOPTED PURSUANT TO

 

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of RF Industries, Ltd. (the “Company”) on Form 10-Q for the quarter ended January 31, 2016, as filed with the Securities and Exchange Commission (the “Report”), I, Mark Turfler, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

 

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

 

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

 

Date: March 21, 2016   /s/ Mark Turfler
  Mark Turfler
  Chief Financial Officer

 

 

 

 



 

Exhibit 99.1

 

    FOR IMMEDIATE RELEASE
 

Company Contact:

Johnny Walker 

President/CEO 

(858) 549-6340 

rfi@rfindustries.com 

 

Investor Contact:

Robert Jacobs 

Jacobs Consulting 

(310) 927 3108 

robert.jacobs@jacobscon.com 

 

 

RF Industries Reports First Quarter Results

 

Declares Quarterly Cash Dividend of $0.02 per Common Share

 

San Diego, California, March 21, 2016 -- RF Industries, Ltd. (NASDAQ: RFIL) today announced results for the fiscal first quarter ended January 31, 2016.

 

First Quarter Results

Sales for the fiscal first quarter 2016 increased 1%, or $100,000, to $7.0 million compared to sales of $6.9 million for the same quarter last year. However, the Company incurred a net loss for the fiscal first quarter 2016 of $353,000, or $0.04 per diluted share, compared to net income of $65,000, or $0.01 per diluted share, in the same quarter last year. The net loss was primarily the result of the operating loss incurred by the Company’s Connectors and Cable Assembly, Cables Unlimited and Bioconnect divisions and to a lesser extent, to a decrease in gross margins across all divisions. First quarter 2016 results include sales from the Company’s new Rel-Tech Electronics subsidiary, which contributed sales of $1.5 million during the first quarter of fiscal 2016. The Company did not own Rel-Tech in the first fiscal quarter 2015.

 

Gross profit for the first quarter 2016 was $2.1 million, or 30% of sales, compared to gross profit of $2.5 million, or 36% of sales in the first quarter last year. The decline in gross profit is the result of lower sales and lower gross margins from both the RF Connector and Cable Assembly and the Medical Cabling and Interconnector segments compared to the first quarter last fiscal year. Gross margin was also affected by the typically higher volume, lower margin sales prevalent in the Custom Cabling Manufacturing and Assembly Segment.

 

Selling and general expenses increased by $232,000 the first quarter 2016 compared to the same quarter last year. The increase in selling and general expenses is primarily attributable to the additional expenses incurred at Rel-Tech, a division that the Company did not own in the comparable quarter in 2015. Excluding Rel-Tech, selling and general expenses increased approximately $84,000 in the first quarter, compared to the same quarter last year, primarily due to an increase in sales and marketing efforts.

 

CEO Comments

Johnny Walker, President and CEO said, "First quarter sales, which is typically our seasonally weakest quarter, in combination with the continuing weakness in the wireless infrastructure market, negatively impacted sales and margins at the Connector and Cable Assembly and the Cables Unlimited divisions. We sold our Aviel Division, which had not materially contributed to our net sales or net income, on December 22, 2015 for a gain of approximately $35,000. We believe that the disposition of the non-core divisions will allow us to focus on developing additional markets for our primary line of products. We also believe that there are significant growth opportunities in the Distributed Antenna Systems (DAS) market, specifically in the Public Safety sector."

 

(more)

 

 

 

7610 Miramar Road, San Diego, CA 92126-4202 $ (858) 549-6340 $ (800) 233-1728 $ FAX (858) 549-6345

E-mail: rfi@rfindustries.com $ Internet: www.rfindustries.com

 

 

 

 

RF Industries Reports First Quarter Results

March 21, 2016

Page Two

 

DAS is an in-building solution providing internal wireless cellular, public safety, or any other RF signals throughout a structure. The public safety requirement is being driven by the International Fire Code which requires first responder in-building coverage standards and new building codes adopted by jurisdictions throughout the country. These in-building antenna systems utilize a large quantity of products currently marketed by RF Industries and are being installed in office buildings, hotels, hospitals, sports centers and gaming centers throughout the United States. The Company is a sponsoring member of the Safer Building Coalition (SaferBuildings.org), an organization closely involved in reviewing standards and procedures for public safety DAS market applications.

 

Mr. Walker further stated: "DAS installations include custom fiber solutions, coaxial cabling assemblies, plenum cables and a number of additional passive products that are currently being designed and manufactured by our existing divisions. These DAS product offerings will provide additional revenue opportunities for our other divisions."

 

"To fund future acquisitions and to improve our ability to properly address all markets, our Board of Directors has decided to reduce the quarterly cash dividend in favor of allocating our cash resources to the expansion of our sales staff, supporting our current businesses and to increase our penetration of the rapidly growing Public Safety DAS market."

 

Financial Data; Dividends

At January 31, 2016, the Company reported working capital of $14.5 million, including cash and cash equivalents of $5.8 million, a current ratio of approximately 4.7-to-1, no long-term debt and stockholders' equity of $25.5 million. During the first quarter, the Company paid out cash dividends of $0.07 per share, or $610,000, to common stock shareholders.

 

At its March 3, 2016 meeting, the Company’s Board of Directors declared a quarterly cash dividend of $0.02 per common share, payable April 15, 2016 to shareholders of record on March 31, 2016. All cash dividends are made at the discretion of our board of directors, subject to applicable laws, and depend on a number of factors, including our financial condition, results of operations, capital requirements, plans for future acquisitions, contractual restrictions, general business conditions and other factors that our board of directors may deem relevant.

 

On March 3, 2016 the Board of Directors also approved the closure of the Company’s Bioconnect division which comprised the entire operations of the Company’s Medical Cabling and Interconnector segment. The closure is part of the Company’s on-going plan to close or dispose of underperforming divisions that are not part of the Company’s core operations.

 

About RF Industries

RF Industries is a leading designer and manufacturer of innovative interconnect products and complex cable assemblies across diversified, high growth markets including wireless carriers & infrastructure, and industrial. The Company's products include RF connectors, coaxial and custom cable assemblies, fiber optic cables, and wiring harnesses. The Company's connectivity products are used throughout the growing and evolving wireless infrastructure. Through its newly acquired Rel-Tech Electronics, Inc. and Comnet Telecom Supply, Inc. subsidiaries, the Company also manufactures and sells other cabling technologies and data center equipment solutions. The Company is headquartered in San Diego, California with operations in Yaphank, New York, and East Brunswick, New Jersey and Milford, Connecticut. Please visit the RF Industries website at www.rfindustries.com.

 

Forward-Looking Statements

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

 

 

(tables attached)

 

 

7610 Miramar Road, San Diego, CA 92126-4202 $ (858) 549-6340 $ (800) 233-1728 $ FAX (858) 549-6345

E-mail: rfi@rfindustries.com $ Internet: www.rfindustries.com 

 

 

 

RF INDUSTRIES, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED) (in thousands, except share and per share amounts)

 

   Three Months Ended 
   January 31, 
   2016   2015 
Net sales  $6,984   $6,894 
Cost of sales   4,908    4,394 
Gross profit   2,076    2,500 
           
Operating expenses:          
Engineering   198    217 
Selling and general   2,489    2,257 
Total Operating Expenses   2,687    2,474 
           
Operating income (loss)   (611)   26 
           
Other income   --    5 
Income (loss) from continuing operations before benefit for income taxes   (611)   31 
           
Benefit for income taxes   (256)   (21)
Income (loss) from continuing operations   (355)   52 
           
Income from discontinued operations, net of tax   2    13 
Net income (loss)  $(353)  $65 
           
Earnings (loss) per basic share:          
Continuing operations  $(0.04)  $0.01 
Discontinued operations   0.00    0.00 
Net income (loss) per basic share  $(0.04)  $0.01 
           
Earnings (loss) per diluted share:          
Continuing operations  $(0.04)  $0.01 
Discontinued operations   0.00    0.00 
Net (loss) income per diluted share  $(0.04)  $0.01 
           
Weighted average shares outstanding:          
Basic   8,716,712    8,286,831 
Diluted   8,716,712    8,667,771 

 

 

 

 

RF INDUSTRIES, LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

 

   Jan. 31,   Oct. 31, 
   2016   2015 
       (audited) 
         
ASSETS          
           
CURRENT ASSETS          
Cash and cash equivalents  $5,766   $7,595 
Trade accounts receivable, net   3,865    3,980 
Inventories   7,020    6,928 
Other current assets   1,341    728 
Deferred tax assets   427    426 
TOTAL CURRENT ASSETS   18,419    19,657 
Property and equipment, net   829    921 
Goodwill   5,913    5,913 
Amortizable intangible assets, net   4,096    4,268 
Non-amortizable intangible assets   1,387    1,387 
Note receivable from stockholder   67    67 
Other assets   205    39 
TOTAL ASSETS  $30,916   $32,252 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
CURRENT LIABILITIES          
Accounts payable  $1,649   $1,493 
Accrued expenses   2,269    2,868 
TOTAL CURRENT LIABILITIES   3,918    4,361 
Deferred tax liabilities   1,143    1,143 
Other long-term liabilities   377    377 
TOTAL LIABILITIES   5,438    5,881 
           
COMMITTMENTS AND CONTINGENCIES          
           
STOCKHOLDERS' EQUITY          
Common stock, authorized 20,000,000 shares of $0.01          
par value; 8,718,914 and 8,713,664 shares issued and          
outstanding at January 31, 2016 and October 31, 2015, respectively   87    87 
Additional paid-in capital   19,200    19,129 
Retained earnings   6,191    7,155 
TOTAL STOCKHOLDERS' EQUITY   25,478    26,371 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $30,916   $32,252 

 

 

 

 



v3.3.1.900
Document And Entity Information - shares
3 Months Ended
Jan. 31, 2016
Mar. 16, 2016
Document Information [Line Items]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Jan. 31, 2016  
Document Fiscal Year Focus 2016  
Document Fiscal Period Focus Q1  
Entity Registrant Name R F INDUSTRIES LTD  
Entity Central Index Key 0000740664  
Current Fiscal Year End Date --10-31  
Entity Filer Category Smaller Reporting Company  
Trading Symbol RFIL  
Entity Common Stock, Shares Outstanding   8,725,274


v3.3.1.900
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Jan. 31, 2016
Oct. 31, 2015
CURRENT ASSETS    
Cash and cash equivalents $ 5,766 $ 7,595
Trade accounts receivable, net of allowance for doubtful accounts of $79 and $30 3,865 3,980
Inventories 7,020 6,928
Other current assets 1,341 728
Deferred tax assets 427 426
TOTAL CURRENT ASSETS 18,419 19,657
Property and equipment:    
Equipment and tooling 3,250 3,215
Furniture and office equipment 786 936
Total 4,036 4,151
Less accumulated depreciation 3,207 3,230
Total property and equipment 829 921
Goodwill 5,913 5,913
Amortizable intangible assets, net 4,096 4,268
Non-amortizable intangible assets 1,387 1,387
Note receivable from stockholder 67 67
Other assets 205 39
TOTAL ASSETS 30,916 32,252
CURRENT LIABILITIES    
Accounts payable 1,649 1,493
Accrued expenses 2,269 2,868
TOTAL CURRENT LIABILITIES 3,918 4,361
Deferred tax liabilities 1,143 1,143
Other long-term liabilities 377 377
TOTAL LIABILITIES $ 5,438 $ 5,881
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY    
Common stock - authorized 20,000,000 shares of $0.01 par value; 8,718,914 and 8,713,664 shares issued and outstanding at January 31, 2016 and October 31, 2015, respectively $ 87 $ 87
Additional paid-in capital 19,200 19,129
Retained earnings 6,191 7,155
TOTAL STOCKHOLDERS' EQUITY 25,478 26,371
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 30,916 $ 32,252


v3.3.1.900
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
$ in Thousands
Jan. 31, 2016
Oct. 31, 2015
Trade accounts receivable, allowance for doubtful accounts $ 79 $ 30
Common stock, authorized 20,000,000 20,000,000
Common stock, par value $ 0.01 $ 0.01
Common stock, shares issued 8,718,914 8,713,664
Common stock, shares outstanding 8,718,914 8,713,664


v3.3.1.900
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
$ in Thousands
3 Months Ended
Jan. 31, 2016
Jan. 31, 2015
Net sales $ 6,984 $ 6,894
Cost of sales 4,908 4,394
Gross profit 2,076 2,500
Operating expenses:    
Engineering 198 217
Selling and general 2,489 2,257
Totals 2,687 2,474
Operating income (loss) (611) 26
Other income 0 5
Income (loss) from continuing operations before benefit for income taxes (611) 31
Benefit for income taxes (256) (21)
Income (loss) from continuing operations (355) 52
Income from discontinued operations, net of tax 2 13
Net income (loss) $ (353) $ 65
Earnings (loss) per share Basic    
Continuing operations (in dollars per share) $ (0.04) $ 0.01
Discontinued operations (in dollars per share) 0.00 0.00
Net income (loss) per share (in dollars per share) (0.04) 0.01
Earnings (loss) per share Diluted    
Continuing operations (in dollars per share) (0.04) 0.01
Discontinued operations (in dollars per share) 0.00 0.00
Net income (loss) per share (in dollars pe share) $ (0.04) $ 0.01
Weighted average shares outstanding    
Basic (in shares) 8,716,712 8,286,831
Diluted (in shares) 8,716,712 8,667,771


v3.3.1.900
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
3 Months Ended
Jan. 31, 2016
Jan. 31, 2015
OPERATING ACTIVITIES:    
Net income (loss) $ (353) $ 65
Adjustments to reconcile net income (loss) to net cash used in operating activities:    
Bad debt expense 20 5
Accounts receivable write-off 0 4
Depreciation and amortization 272 190
Stock-based compensation expense 52 50
Loss on disposal of fixed assets 40 0
Changes in operating assets and liabilities:    
Trade accounts receivable 94 (151)
Inventories (349) (234)
Other current assets (613) (288)
Other long-term assets (167) 0
Accounts payable 156 23
Customer deposit 0 (6)
Income taxes payable (65) (77)
Accrued expenses (600) (218)
Net cash used in operating activities (1,513) (637)
INVESTING ACTIVITIES:    
Restricted cash 0 (300)
Acquisition of business (Comnet), net of cash acquired $541 0 (2,249)
Proceeds from sale of fixed assets 22 0
Proceeds from sale of inventory 322 0
Capital expenditures (70) (34)
Net cash provided by (used in) investing activities 274 (2,583)
FINANCING ACTIVITIES:    
Proceeds from exercise of stock options 20 2
Dividends paid (610) (578)
Net cash used in financing activities (590) (576)
Net decrease in cash and cash equivalents (1,829) (3,796)
Cash and cash equivalents, beginning of period 7,595 14,718
Cash and cash equivalents, end of period 5,766 10,922
Supplemental cash flow information - income taxes paid 165 104
Noncash investing and financing activities:    
Stock issuance for acquisition of business (Comnet) $ 0 $ 1,060


v3.3.1.900
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended
Jan. 31, 2016
Jan. 31, 2015
Cash Acquired from Acquisition $ 541 $ 0


v3.3.1.900
Unaudited interim condensed consolidated financial statements
3 Months Ended
Jan. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Unaudited interim condensed consolidated financial statements
Note 1 - Unaudited interim condensed consolidated financial statements
 
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments, which are normal and recurring, have been included in order to make the information not misleading. Information included in the consolidated balance sheet as of October 31, 2015 has been derived from, and certain terms used herein are defined in, the audited financial statements of the Company as of October 31, 2015 included in the Company’s Annual Report on Form 10-K (“Form 10-K”) for the year ended October 31, 2015 that was previously filed with the Securities and Exchange Commission (“SEC”). Operating results for the three-month period ended January 31, 2016 are not necessarily indicative of the results that may be expected for the year ending October 31, 2016. The unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended October 31, 2015.
 
Principles of consolidation
 
The accompanying unaudited condensed consolidated financial statements for the periods ending on or before October 31, 2015 include the accounts of RF Industries, Ltd., Cables Unlimited, Inc. (“Cables Unlimited”), Comnet Telecom Supply, Inc. (“Comnet”), a wholly-owned subsidiary that RF Industries, Ltd. acquired effective November 1, 2014, and Rel-Tech Electronics, Inc. (“Rel-Tech”), a wholly-owned subsidiary that RF Industries, Ltd. acquired effective June 1, 2015. The unaudited condensed consolidated financial statements for the three months ended January 31, 2016 include the accounts of RF Industries, Ltd., Cables Unlimited, Comnet and Rel-Tech. For periods ending on or before January 31, 2015, references herein to the “Company” shall refer to RF Industries, Ltd., Cables Unlimited and Comnet, and for all periods after October 31, 2015, references to the “Company” shall refer to RF Industries, Ltd., Cables Unlimited, Comnet and Rel-Tech, collectively. All intercompany balances and transactions have been eliminated in consolidation.
 
Revenue recognition
 
Four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the fee is fixed and determinable; and (4) collectability is reasonably assured. The Company recognizes revenue from product sales after purchase orders are received which contain a fixed price and the products are shipped. Most of the Company’s products are sold to continuing customers with established credit histories.


v3.3.1.900
Business acquisitions
3 Months Ended
Jan. 31, 2016
Business Combinations [Abstract]  
Business Acquisition
Note 2 - Business acquisitions
 
Rel-Tech Electronics, Inc.
 
On June 5, 2015, the Company purchased 100% of the issued and outstanding shares of Rel-Tech pursuant to a Stock Purchase Agreement. Rel-Tech was wholly-owned by Wilfred D. LeBlanc Jr., Ralph Palumbo and their respective wives. Rel-Tech is a Milford, Connecticut based manufacturer and supplier of custom cable assemblies and wiring harnesses. At the closing, RF Industries, Ltd. paid the sellers $3,100,000, which consisted of $2,100,000 in cash and 50,467 shares of the Company’s unregistered common stock valued at $200,000 based on a per share price of $3.96 (the volume weighted average price of the Company’s common stock during the five trading days before the closing date) and, if certain financial targets are met by Rel-Tech over a three-year period, agreed to pay additional cash earn-out payments of up to $800,000. Rel-Tech will operate as a stand-alone subsidiary for at least the next two years. Mr. Palumbo will serve as President of Rel-Tech at a base salary of $150,000 per year. Mr. Palumbo will also be entitled to earn an annual bonus of up to 50% of his base salary. Rel-Tech has also entered into employment agreements to retain five key managers.
 
The acquisition was accounted for in accordance with the acquisition method of accounting. The acquired assets and assumed liabilities were recorded by the Company at their estimated fair values. The Company determined the estimated fair values with the assistance of appraisals or valuations performed by an independent third party specialist. Rel-Tech offers a full range of value-added services including product design, prototyping, stocking, bill of materials management, consignment and fulfillment programs. Rel-Tech provides engineered solutions to many leasing OEMs and markets its products to customers in commercial as well as military arenas. All assembly is performed at the Rel-Tech’s facilities. These products and services supplement and enhance the existing markets of RF Industries without incurring substantially more costs than incurred in the purchase of Rel-Tech. These factors, among others, contributed to a purchase price in excess of the estimated fair value of Rel-Tech’s net identifiable assets acquired and, as a result, we have recorded goodwill in connection with this acquisition. We do not expect the goodwill recorded to be deductible for income tax purposes.
 
Although the closing occurred on June 5, 2015, the acquisition of Rel-Tech is deemed to have become effective for financial accounting purposes as of June 1, 2015. Accordingly Rel-Tech’s financial results have been included in the results of the Custom Cabling Manufacturing and Assembly segment for the period ended January 31, 2016.
 
The following table summarizes the components of the estimated purchase price at fair value at June 1, 2015:
 
Cash consideration paid
 
$
2,100,000
 
RF Industries, Ltd. common shares issued (50,467 shares)
 
 
200,000
 
Earn-out
 
 
610,000
 
Total purchase price
 
$
2,910,000
 
 
The following table summarizes the final allocation of the estimated purchase price at fair value at June 1, 2015:
 
Current assets
 
$
1,637,000
 
Fixed assets
 
 
68,000
 
Other assets
 
 
17,000
 
Intangible assets
 
 
1,425,000
 
Goodwill
 
 
833,000
 
Deferred tax liabilities
 
 
(489,000)
 
Non-interest bearing liabilities
 
 
(581,000)
 
Net assets
 
$
2,910,000
 
 
The results of Rel-Tech’s operations subsequent to June 1, 2015 have been included in the Company’s condensed consolidated results of operations. All costs related to the acquisition of Rel-Tech have been expensed as incurred. For the period ended January 31, 2016, Rel-Tech contributed $1.5 million of revenue. 
 
The following unaudited pro forma financial information presents the combined operating results of the Company and Rel-Tech as if the acquisition had occurred as of the beginning of the earliest period presented. Pro forma data is subject to various assumptions and estimates and is presented for informational purposes only. This pro forma data does not purport to represent or be indicative of the consolidated operating results that would have been reported had the transaction been completed as described herein, and the data should not be taken as indicative of future consolidated operating results.
 
Pro forma financial information is presented in the following table:
 
 
 
Three Months Ended January 31,
 
 
 
2015
 
 
 
 
 
 
Revenue
 
$
8,467,000
 
Net income
 
 
73,000
 
 
 
 
 
 
Earnings per share
 
 
 
 
Basic
 
$
0.01
 
Diluted
 
$
0.01
 
 
CompPro Product Line
 
On May 19, 2015, the Company purchased the CompPro braided product line (“CompPro”), including the intellectual property rights to that product line, for a total purchase price of $700,000 cash. CompPro utilizes a patented compression technology that offers revolutionary advantages for a water-tight connection, easier installation, and improved system reliability on braided cables. CompPro is used by wireless network operators, installers and distributors in North America and other parts of the world. Included in the purchase is inventory, designs, intellectual property rights and the rights to manufacture and sell CompPro products. Financial results for sales of the CompPro products are included in the results of the RF Connector and Cable Assembly segment beginning in the Company’s fiscal quarter ended October 31, 2015.
 
The acquisition was accounted for in accordance with the acquisition method of accounting. The acquired assets were recorded by the Company at their estimated fair values. The Company determined the estimated fair values with the assistance of appraisals or valuations performed by an independent third party specialist. These above factors, among others, contributed to a purchase price in excess of the estimated fair value of CompPro’s net identifiable assets acquired and, as a result, the Company  recorded goodwill in connection with this transaction. 
 
Goodwill acquired was allocated to the Company’s Connector and Cable Assembly segment as part of the purchase price allocation. The Company expects the goodwill recorded to be deductible for income tax purposes. Acquired amortizable intangible assets are being amortized on a straight-line basis over their estimated useful lives ranging from three to seven years.
 
The following table summarizes the components of the estimated purchase price at fair value at May 19, 2015:
 
Cash consideration paid
 
$
700,000
 
Total purchase price
 
$
700,000
 
 
The following table summarizes the final allocation of the estimated purchase price at fair value at May 19, 2015:
 
Current assets
 
$
186,300
 
Fixed assets
 
 
67,500
 
Intangible assets
 
 
321,200
 
Goodwill
 
 
125,000
 
Net assets
 
$
700,000
 
 
The results of CompPro’s sales subsequent to May 19, 2015 have been included in the Company’s consolidated results of operations. All costs related to the acquisition of CompPro have been expensed as incurred.
 
Comnet Telecom Supply, Inc.
 
The Company purchased 100% of the issued and outstanding shares of Comnet from Robert Portera, the sole shareholder of Comnet. Comnet is 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. Comnet is a New York corporation that was formed in 1993. For income tax purposes, both parties have agreed to make an election under Internal Revenue Code 338(h) (10). At the closing, RF Industries, Ltd. paid Mr. Portera $4,150,000 in cash and stock, and agreed to pay him up to an additional $1,360,000 in cash as an earn-out over the next two years if Comnet meets certain financial milestones in the next two years. The purchase price paid at the closing consisted of $3,090,000 in cash (of which $300,000 has been deposited into a bank escrow account for one year as security for the seller’s indemnification obligations under the stock purchase agreement) and 252,381 shares of RF Industries, Ltd.’s unregistered common stock, which shares were valued at $1,060,000 based on a per share price of $4.20 (the volume weighted average price of the common stock during the five trading days before the closing date). Comnet will be operated as a stand-alone subsidiary for at least the next two years. The Company entered into a two-year employment agreement with Mr. Portera pursuant to which Mr. Portera will be the President of Comnet and receive a base salary of $210,000 per year. Mr. Portera will also be entitled to earn an annual bonus of up to 50% of his base salary. Since the acquisition of Comnet was effective for financial accounting purposes as of November 1, 2014 with an effective closing date of January 20, 2015, Comnet’s financial results have been included in the results of the Custom Cabling Manufacturing and Assembly segment for the entire fiscal year ended October 31, 2015.
 
The acquisition was accounted for in accordance with the acquisition method of accounting. The acquired assets and assumed liabilities were recorded by the Company at their estimated fair values. The Company determined the estimated fair values with the assistance of appraisals or valuations performed by an independent third party specialist. The products manufactured and supplied by Comnet include fiber optic cables, cabling technologies, custom patch cord assemblies, data center consoles and other data center equipment. These products supplement and enhance the existing markets of RF Industries as well as tap into new data center markets that the Company would not have been able to enter without incurring substantially more costs than incurred in the purchase of Comnet. The capital and other resources required to enhance the Company’s fiber optics market and enter the data center market would have greatly exceeded the purchase price of $4.15 million (excluding the potential earn-out). These factors, among others, contributed to a purchase price in excess of the estimated fair value of Comnet’s net identifiable assets acquired and, as a result, the Company recorded goodwill in connection with this transaction. 
 
Goodwill acquired was allocated to the Company’s operating segment and Comnet reporting unit as part of the purchase price allocation. The Company expects the goodwill recorded to be deductible for income tax purposes. Acquired amortizable intangible assets are being amortized on a straight-line basis over their estimated useful lives ranging from three to eight years.
 
The following table summarizes the components of the estimated purchase price at fair value at November 1, 2014:
 
Cash consideration paid
 
$
3,090,000
 
RF Industries, Ltd. common shares issued (252,381 shares)
 
 
1,060,000
 
Earn-out
 
 
1,235,000
 
Total purchase price
 
$
5,385,000
 
 
The following table summarizes the final allocation of the purchase price at fair value at November 1, 2014:
 
Current assets
 
$
1,875,000
 
Fixed assets
 
 
150,000
 
Intangible assets
 
 
2,910,000
 
Goodwill
 
 
1,879,000
 
Non-interest bearing liabilities
 
 
(1,429,000)
 
Net assets
 
$
5,385,000
 
 
The results of Comnet’s operations subsequent to November 1, 2014 have been included in the Company’s consolidated results of operations. All costs related to the acquisition of Comnet have been expensed as incurred. For the period ended January 31, 2016, Comnet contributed $2.2 million of revenue.
 
The Company recognized a $318,000 credit to selling, general and administrative expenses as a result of the revaluation of the earn-out liability as it relates to the acquisition of Comnet as of October 31, 2015.


v3.3.1.900
Discontinued operations
3 Months Ended
Jan. 31, 2016
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued operations
Note 3 - Discontinued operations
 
During 2013, the Company sold its RF Neulink and RadioMobile divisions, which together had comprised the Company’s RF Wireless segment. The divisions were sold pursuant to asset purchase agreements, whereby no purchase price was paid at the closing. Rather, the agreements stipulated royalty payments from each of the purchasers over a three year period. For the three months ended January 31, 2016, the Company recognized approximately $1,600 of royalty income for the RF Neulink, which amounts have been included within discontinued operations. For the three months ended January 31, 2015, the Company recognized approximately $19,000 and $2,000 of royalty income for the RF Neulink and RadioMobile divisions, respectively, which amount has been included within discontinued operations.


v3.3.1.900
Sale of Aviel Electronics division
3 Months Ended
Jan. 31, 2016
Sale of Aviel Electronics Division [Abstract]  
Sale of Aviel Electronics division
Note 4 - Sale of Aviel Electronics division
 
On December 22, 2015, the Company sold the assets of its Aviel Electronics division at a gain of approximately $35,000. The terms of the sale included $150,000 cash due upon closing and a $250,000 secured promissory note ($83,000 recorded in other current assets and $167,000 in other assets) with principal and interest (at 5%) payable over a three-year period. Aviel Electronics’ sales and loss from continuing operations before provision for income taxes of $86,000 and $40,000, respectively, were included in the Company’s RF Connector and Cable Assembly segment from November 1, 2015 through the date of sale on December 22, 2015. Aviel Electronics’ sales and income from continuing operations before provision for income taxes, were $252,000 and $26,000, respectively, for the three months ended January 31, 2015.
 
The sale of the Aviel Electronics division does not represent a strategic shift that has a major effect on the Company’s operations and financial results. Accordingly, the financial results from the sale of Aviel Electronics were reported in income from continuing operations.


v3.3.1.900
Inventories and major vendors
3 Months Ended
Jan. 31, 2016
Inventory Disclosure [Abstract]  
Inventories and major vendors
Note 5 - Inventories and major vendors
 
Inventories are stated at the lower of cost or market, with cost determined using the weighted average cost method of accounting. Cost includes materials, labor, and manufacturing overhead related to the purchase and production of inventories. We regularly review inventory quantities on hand, future purchase commitments with our suppliers, and the estimated utility of our inventory. If our review indicates a reduction in utility below carrying value due to damage, physical deterioration, obsolescence, changes in price levels, or other causes, we reduce our inventory to a new cost basis through a charge to cost of sales in the period in which it occurs. The determination of market value and the estimated volume of demand used in the lower of cost or market analysis require significant judgment.
 
In June 2015, the Company acquired Rel-Tech, a company that currently values its inventories using specific identification (last purchase price) on a FIFO basis. The Company intends to convert the inventory valuation principles used by Rel-Tech to the weighted average cost sometime during fiscal 2016. Inventories consist of the following (in thousands): 
 
 
 
January 31, 2016
 
October 31, 2015
 
 
 
 
 
 
 
Raw materials and supplies
 
$
3,168
 
$
2,671
 
Work in process
 
 
164
 
 
270
 
Finished goods
 
 
3,688
 
 
3,987
 
 
 
 
 
 
 
 
 
Totals
 
$
7,020
 
$
6,928
 
 
Purchases of inventory from two major vendors during the three months ended January 31, 2016 represented 14% and 12% of total inventory purchases. Purchases of inventory from two major vendors during the three months ended January 31, 2015 represented 12% and 10% of total inventory purchases. The Company has arrangements with these vendors to purchase product based on purchase orders periodically issued by the Company.


v3.3.1.900
Other current assets
3 Months Ended
Jan. 31, 2016
Other current assets [Abstract]  
Other current assets
Note 6 - Other current assets
 
Other current assets consist of the following (in thousands): 
 
 
 
January 31, 2016
 
October 31, 2015
 
 
 
 
 
 
 
Prepaid expense
 
$
1,114
 
$
548
 
Notes receivable
 
 
83
 
 
-
 
Other
 
 
144
 
 
180
 
 
 
 
 
 
 
 
 
Totals
 
$
1,341
 
$
728
 
 
Long-term portion of notes receivable of $167,000 is recorded in other assets.


v3.3.1.900
Earnings per share
3 Months Ended
Jan. 31, 2016
Earnings Per Share [Abstract]  
Earnings per share
Note 7 - Earnings per share
 
Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares outstanding increased by the effects of assuming that other potentially dilutive securities (such as stock options) outstanding during the period had been exercised and the treasury stock method had been applied. Potentially dilutive securities totaling 1,138,510 and 617,310 for the three months ended January 31, 2016 and 2015, respectively, were excluded from the calculation of diluted per share amounts because of their anti-dilutive effect.
 
The following table summarizes the computation of basic and diluted weighted average shares outstanding:
 
 
 
Three Months Ended January 31,
 
 
 
2016
 
2015
 
 
 
 
 
 
 
Weighted average shares outstanding for basic earnings (loss) per share
 
 
8,716,712
 
 
8,286,831
 
 
 
 
 
 
 
 
 
Add effects of potentially dilutive securities-assumed exercise of stock options
 
 
-
 
 
380,940
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding for diluted earnings (loss) per share
 
 
8,716,712
 
 
8,667,771
 


v3.3.1.900
Stock-based compensation and equity transactions
3 Months Ended
Jan. 31, 2016
Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]  
Stock-based compensation and equity transactions
Note 8 - Stock-based compensation and equity transactions
 
The Company’s current stock incentive plan provides for the granting of qualified and nonqualified options to the Company’s officers, directors and employees. Incentive stock options granted to the Company’s employees during the three months ended January 31, 2015 vest and are exercisable equally over three years and expire in five years from date of grant. During the three months ended January 31, 2015, the Company granted a total of 127,558 incentive stock options to Company employees. The Company satisfies the exercise of options by issuing previously unissued common shares. No options were granted to Company employees during the three months ended January 31, 2016.
 
The weighted average fair value of employee and non-employee directors’ stock options granted by the Company during the three months ended January 31, 2015 was estimated to be $1.00 per share using the Black-Scholes option pricing model with the following assumptions:
 
Risk-free interest rate
 
 
0. 88
%
Dividend yield
 
 
6.35
%
Expected life of the option
 
 
3.5 years
 
Volatility factor
 
 
47.4
%
 
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 2015 option grants. The expected life represents the period of time that options granted are expected to be outstanding. The risk-free rate is based on the U.S. Treasury rate with a maturity date corresponding to the options’ expected life. The dividend yield is based upon the historical dividend yield.
  
Issuances of common stock by the Company
 
During the three months ended January 31, 2015, the Company issued 252,381 shares of common stock valued at $1,060,000 to the former owner of Comnet as part of the purchase price of the Comnet acquisition. The Comnet acquisition is more fully described in Note 2 of this report.  
 
Company stock option plans
 
Descriptions of the Company’s stock option plans are included in Note 8 of the Company’s Annual Report on Form 10-K for the year ended October 31, 2015. A summary of the status of the options granted under the Company’s stock option plans as of January 31, 2016 and the changes in options outstanding during the three months then ended is presented in the table that follows:
 
 
 
 
 
Weighted
 
 
 
 
 
Average
 
 
 
Shares
 
Exercise Price
 
Outstanding at November 1, 2015
 
 
1,240,100
 
$
2.64
 
Options granted
 
 
51,192
 
$
4.42
 
Options exercised
 
 
(5,250)
 
$
3.72
 
Options canceled or expired
 
 
(21,703)
 
$
5.42
 
Options outstanding at January 31, 2016
 
 
1,264,339
 
$
3.43
 
Options exercisable at January 31, 2016
 
 
773,321
 
$
3.03
 
Options vested and expected to vest at January 31, 2016
 
 
1,257,911
 
$
3.66
 
 
Weighted average remaining contractual life of options outstanding as of January 31, 2016: 5.04 years
 
Weighted average remaining contractual life of options exercisable as of January 31, 2016: 3.45 years
 
Weighted average remaining contractual life of options vested and expected to vest as of January 31, 2016: 5.03 years
 
Aggregate intrinsic value of options outstanding at January 31, 2016: $1.2 million
 
Aggregate intrinsic value of options exercisable at January 31, 2016: $1.2 million
 
Aggregate intrinsic value of options vested and expected to vest at January 31, 2016: $1.2 million
 
As of January 31, 2016, $654,000 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 5.65 years.
 
Non-employee directors receive $30,000 annually, which amount is paid one-half in cash and one-half through the grant of non-qualified stock options to purchase shares of the Company’s common stock. During the quarter ended January 31, 2016, the Company granted each of its three non-employee directors 51,192 options. The number of stock options granted to each director was determined by dividing $15,000 by the fair value of a stock option grant using the Black-Scholes model ($0.87 per share). These options vest ratably over fiscal year 2016.
 
Stock option expense
 
During the three months ended January 31, 2016 and 2015, stock-based compensation expense totaled $52,000 and $50,000, respectively. For the three months ended January 31, 2016 and 2015, stock-based compensation classified in cost of sales amounted to $10,000 and $15,000, respectively, and stock-based compensation classified in selling and general expense amounted to $42,000 and $35,000, respectively.


v3.3.1.900
Concentrations of credit risk
3 Months Ended
Jan. 31, 2016
Risks and Uncertainties [Abstract]  
Concentrations of credit risk
Note 9 - Concentrations of credit risk
 
Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company maintains its cash and cash equivalents with high-credit quality financial institutions. At January 31, 2016, the Company had cash and cash equivalent balances in excess of federally insured limits in the amount of approximately $4.9 million.
 
Two customers accounted for approximately 14% and 13% of the Company’s net sales for the three-month period ended January 31, 2016. One customer accounted for approximately 17% of the Company’s net sales for the three-month period ended January 31, 2015. At January 31, 2016, these customers’ accounts receivable balance accounted for approximately 17% and 15% of the Company’s total net accounts receivable balances. At October 31, 2015, these customers’ accounts receivable balances accounted for approximately 19%. 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.


v3.3.1.900
Segment information
3 Months Ended
Jan. 31, 2016
Segment Reporting [Abstract]  
Segment information
Note 10 - Segment information
   
The Company aggregates operating divisions into operating segments which 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. As of January 31, 2016, the Company had three segments based upon this evaluation - RF Connector and Cable Assembly, Custom Cabling Manufacturing and Assembly and Medical Cabling and Interconnector. As discussed in Note 17 below, the Company has decided to close the Medical Cabling and Interconnect segment.
 
During the fiscal quarter ended January 31, 2016, the RF Connector and Cable Assembly segment consisted of two divisions, the Custom Cabling Manufacturing and Assembly segment was composed of three divisions and the Medical Cabling and Interconnector segment consisted of one division. The five divisions that meet the quantitative thresholds for segment reporting are Connector and Cable Assembly, Cables Unlimited, Comnet, Bioconnect and Rel-Tech. The other division aggregated into the RF Connector and Cable Assembly segment and into the Custom Cabling Manufacturing and Assembly segment has similar products that are marketed to their respective customer base and production and product development processes that are similar in nature. The specific customers are different for each division; however, there is some overlapping of product sales to them. The methods used to distribute products are similar within each division aggregated.
 
Management identifies the Company’s segments based on strategic business units that are, in turn, based along market lines. These strategic business units offer products and services to different markets in accordance with their customer base and product usage. For segment reporting purposes, the Company aggregated the Connector and Cable Assembly and Aviel (until the time of sale) divisions into the RF Connector and Cable Assembly segment, and the Cables Unlimited, Comnet and Rel-Tech division constituted the Custom Cabling Manufacturing and segment. The Bioconnect division comprised the Medical Cabling and Interconnector segment.
 
As reviewed by the Company’s chief operating decision maker, the Company evaluates the performance of each segment based on income or loss before income taxes. The Company charges depreciation and amortization directly to each division within the segment. 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 months ended January 31, 2016 and 2015 (in thousands):
 
 
 
Three Months Ended January 31,
 
 
 
2016
 
2015
 
 
 
 
 
 
 
United States
 
$
6,692
 
$
6,596
 
Foreign Countries:
 
 
 
 
 
 
 
Canada
 
 
71
 
 
114
 
Israel
 
 
62
 
 
52
 
Mexico
 
 
97
 
 
94
 
All Other
 
 
62
 
 
38
 
 
 
 
292
 
 
298
 
 
 
 
 
 
 
 
 
Totals
 
$
6,984
 
$
6,894
 
 
Net sales, income (loss) from continuing operations before benefit for income taxes and other related segment information for the three months ended January 31, 2016 and 2015 are as follows (in thousands): 
  
 
 
RF Connector
 
Custom Cabling
 
Medical
 
 
 
 
 
 
 
and
 
Manufacturing and
 
Cabling and
 
 
 
 
 
2016
 
Cable Assembly
 
Assembly
 
Interconnector
 
Corporate
 
Total
 
Net sales
 
$
1,956
 
$
4,828
 
$
200
 
$
-
 
$
6,984
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss from continuing operations before benefit for income taxes
 
 
(415)
 
 
(118)
 
 
(78)
 
 
-
 
 
(611)
 
Depreciation and amortization
 
 
46
 
 
220
 
 
6
 
 
-
 
 
272
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
2,701
 
$
3,617
 
$
576
 
$
-
 
$
6,894
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) from continuing operations before benefit for income taxes
 
 
65
 
 
(164)
 
 
125
 
 
5
 
 
31
 
Depreciation and amortization
 
 
41
 
 
144
 
 
5
 
 
-
 
 
190
 


v3.3.1.900
Income tax benefit
3 Months Ended
Jan. 31, 2016
Income Tax Disclosure [Abstract]  
Income tax benefit
Note 11 - Income tax benefit
 
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 benefit for income taxes was 42% and 68% of income (loss) before income taxes for the three months ended January 31, 2016 and 2015, respectively. The decrease in the effective income tax rate from period to period was primarily driven by an increased ratio of book income (loss) to discrete benefits from R&D credits related to the change in tax law in both periods.
 
The Company recorded income from discontinued operations, net of tax, as disclosed in Note 3.
 
The total amount of unrecognized tax benefits was $0 as of January 31, 2016 and October 31, 2015. The total balance of accrued interest and penalties related to uncertain tax positions was $0 as of January 31, 2016 and October 31, 2015. The Company recognizes interest and penalties related to uncertain tax positions, if any, as a component of income tax expense and the accrued interest and penalties, if any, are included in deferred and other long-term liabilities in the Company's condensed consolidated balance sheets. There were no material interest or penalties included in income tax expense for the three months ended January 31, 2016.


v3.3.1.900
Intangible assets
3 Months Ended
Jan. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible assets
Note 12 - Intangible assets
 
Intangible assets consist of the following (in thousands): 
 
 
 
January 31, 2016
 
October 31, 2015
 
Amortizable intangible assets:
 
 
 
 
 
Non-compete agreements (estimated lives 3 - 5  years)
 
$
310
 
$
310
 
Accumulated amortization
 
 
(231)
 
 
(212)
 
 
 
 
79
 
 
98
 
 
 
 
 
 
 
 
 
Customer relationships (estimated lives 7 - 15 years)
 
 
5,099
 
 
5,099
 
Accumulated amortization
 
 
(1,237)
 
 
(1,101)
 
 
 
 
3,862
 
 
3,998
 
 
 
 
 
 
 
 
 
Backlog (estimated life 1  year)
 
 
134
 
 
134
 
Accumulated amortization
 
 
(114)
 
 
(100)
 
 
 
 
20
 
 
34
 
 
 
 
 
 
 
 
 
Patents (estimated life 14 years)
 
 
142
 
 
142
 
Accumulated amortization
 
 
(7)
 
 
(4)
 
 
 
 
135
 
 
138
 
 
 
 
 
 
 
 
 
Totals
 
$
4,096
 
$
4,268
 
 
 
 
 
 
 
 
 
Non-amortizable intangible assets:
 
 
 
 
 
 
 
Trademarks
 
$
1,387
 
$
1,387
 


v3.3.1.900
Accrued expenses
3 Months Ended
Jan. 31, 2016
Payables and Accruals [Abstract]  
Accrued expenses and other long-term liabilities
  Note 13 - Accrued expenses
 
Accrued expenses consist of the following (in thousands):
 
 
 
January 31, 2016
 
October 31, 2015
 
 
 
 
 
 
 
Wages payable
 
$
762
 
$
978
 
Accrued receipts
 
 
502
 
 
438
 
Earn-out liability
 
 
675
 
 
1,150
 
Other current liabilities
 
 
330
 
 
302
 
 
 
 
 
 
 
 
 
Totals
 
$
2,269
 
$
2,868
 
 
Accrued receipts represent purchased inventory for which invoices have not been received.
 
Non-current portion of earn-out liability of $377,000 is recorded in other long-term liabilities.


v3.3.1.900
Line of credit
3 Months Ended
Jan. 31, 2016
Debt Disclosure [Abstract]  
Line of credit
Note 14 - Line of credit
 
In March 2014, the Company entered into an agreement for a line of credit (“LOC”) in the amount of $5.0 million. Amounts outstanding under the LOC shall bear interest at a rate of 3.0% plus LIBOR (“base interest rate”), with interest payable on the last day of each month. All principal outstanding under the LOC which is not bearing interest at a base interest rate shall bear interest at Union Bank’s Reference Rate, as defined, which rate shall vary. Borrowings under the LOC are secured by a security interest in certain assets of the Company. The LOC contains certain loan covenants as described in the agreement. Failure to maintain the loan covenants shall constitute an event of default resulting in all outstanding amounts of principal and interest becoming immediately due and payable. All outstanding principal and interest is due and payable on June 30, 2016. As of January 31, 2016, no amounts were outstanding under the LOC.


v3.3.1.900
Commitments
3 Months Ended
Jan. 31, 2016
Commitments and Contingencies Disclosure [Abstract]  
Commitments
Note 15 - Commitments
 
In April 2014, the Company amended its lease for its facility in San Diego, California, extending the term of the lease and reducing its square footage. The amended lease expires in March 2017 and requires minimum annual rental payments (starting at approximately $19,000 per month) that are subject to fixed annual increases. The minimum annual rentals under this lease are being charged to expense on a straight-line basis over the lease term. 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. As of January 31, 2016, the aggregate remaining minimum lease payments under this lease totaled $280,000.
 
The Cables Unlimited division leases an approximately 12,000 square foot facility located in Yaphank, New York. The lease for this space expires June 30, 2016. However, Cables Unlimited has a one-time option to extend the term of the lease for an additional five-year term. Cables Unlimited’s monthly rent expense under the lease is $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 of Cables Unlimited and a current director of the Company.
 
In March 2015, the Company amended its lease for its approximately 4,500 square foot facility located in Las Vegas, Nevada to extend the term of the lease to April 2016. The Las Vegas facility is used by the Company’s Aviel Electronics division. Aviel’s monthly rent expense under the lease is $4,270 per month. As a result of the sale of Aviel as of December 22, 2015, the Company has no further commitment.
 
The newly acquired Comnet Telecom division leases approximately 15,000 square feet in two suites located in East Brunswick, New Jersey. Comnet’s monthly rent expense under the leases is approximately $11,655 per month for these facilities which expires in September 2017.
 
The newly acquired Rel-Tech Electronic division leases approximately 13,750 square feet located in Milford, Connecticut. Rel-Tech’s net monthly rent expense under the lease is approximately $8,307 per month for these facilities which expires in August 2017.


v3.3.1.900
Cash dividend and declared dividends
3 Months Ended
Jan. 31, 2016
Cash Dividend And Dividends Declaration [Abstract]  
Cash dividend and declared dividends
Note 16 - Cash dividend and declared dividends
 
The Company paid dividends of $0.07 per share during the three months ended January 31, 2016 for a total of $610,000. The Company paid dividends of $0.07 per share during the three months ended January 31, 2015 for a total of $578,000.


v3.3.1.900
Subsequent events
3 Months Ended
Jan. 31, 2016
Subsequent Events [Abstract]  
Subsequent events
Note 17 - Subsequent events
 
On March 3, 2016, the Board of Directors of the Company declared a quarterly cash dividend of $0.02 per share to be paid on April 15, 2016 to stockholders of record on March 31, 2016.
 
On March 3, 2016, the Board of Directors also approved the closure of the Company’s Bioconnect division which comprised the entire operations of the Company’s Medical Cabling  and Interconnect segment. The closure is part of the Company’s on-going plan to close or dispose of underperforming divisions that are not part of the Company’s core operations.


v3.3.1.900
Business acquisitions (Tables)
3 Months Ended
Jan. 31, 2016
Rel-Tech Electronics, Inc  
Components of Purchase Price at Fair Value
 
The following table summarizes the components of the estimated purchase price at fair value at June 1, 2015:
 
Cash consideration paid
 
$
2,100,000
 
RF Industries, Ltd. common shares issued (50,467 shares)
 
 
200,000
 
Earn-out
 
 
610,000
 
Total purchase price
 
$
2,910,000
 
Allocation of Purchase Price at Fair Value
The following table summarizes the final allocation of the estimated purchase price at fair value at June 1, 2015:
 
Current assets
 
$
1,637,000
 
Fixed assets
 
 
68,000
 
Other assets
 
 
17,000
 
Intangible assets
 
 
1,425,000
 
Goodwill
 
 
833,000
 
Deferred tax liabilities
 
 
(489,000)
 
Non-interest bearing liabilities
 
 
(581,000)
 
Net assets
 
$
2,910,000
 
Business Acquisition, Pro Forma Information
Pro forma financial information is presented in the following table:
 
 
 
Three Months Ended January 31,
 
 
 
2015
 
 
 
 
 
 
Revenue
 
$
8,467,000
 
Net income
 
 
73,000
 
 
 
 
 
 
Earnings per share
 
 
 
 
Basic
 
$
0.01
 
Diluted
 
$
0.01
 
CompPro Product Line  
Components of Purchase Price at Fair Value
The following table summarizes the components of the estimated purchase price at fair value at May 19, 2015:
 
Cash consideration paid
 
$
700,000
 
Total purchase price
 
$
700,000
 
Allocation of Purchase Price at Fair Value
The following table summarizes the final allocation of the estimated purchase price at fair value at May 19, 2015:
 
Current assets
 
$
186,300
 
Fixed assets
 
 
67,500
 
Intangible assets
 
 
321,200
 
Goodwill
 
 
125,000
 
Net assets
 
$
700,000
 
Comnet Telecom Supply Inc  
Components of Purchase Price at Fair Value
The following table summarizes the components of the estimated purchase price at fair value at November 1, 2014:
 
Cash consideration paid
 
$
3,090,000
 
RF Industries, Ltd. common shares issued (252,381 shares)
 
 
1,060,000
 
Earn-out
 
 
1,235,000
 
Total purchase price
 
$
5,385,000
 
Allocation of Purchase Price at Fair Value
The following table summarizes the final allocation of the purchase price at fair value at November 1, 2014:
 
Current assets
 
$
1,875,000
 
Fixed assets
 
 
150,000
 
Intangible assets
 
 
2,910,000
 
Goodwill
 
 
1,879,000
 
Non-interest bearing liabilities
 
 
(1,429,000)
 
Net assets
 
$
5,385,000
 


v3.3.1.900
Inventories and major vendors (Tables)
3 Months Ended
Jan. 31, 2016
Inventory Disclosure [Abstract]  
Components of Inventories
In June 2015, the Company acquired Rel-Tech, a company that currently values its inventories using specific identification (last purchase price) on a FIFO basis. The Company intends to convert the inventory valuation principles used by Rel-Tech to the weighted average cost sometime during fiscal 2016. Inventories consist of the following (in thousands): 
 
 
 
January 31, 2016
 
October 31, 2015
 
 
 
 
 
 
 
Raw materials and supplies
 
$
3,168
 
$
2,671
 
Work in process
 
 
164
 
 
270
 
Finished goods
 
 
3,688
 
 
3,987
 
 
 
 
 
 
 
 
 
Totals
 
$
7,020
 
$
6,928
 


v3.3.1.900
Other current assets (Tables)
3 Months Ended
Jan. 31, 2016
Other current assets [Abstract]  
Schedule of other current assets
Other current assets consist of the following (in thousands): 
 
 
 
January 31, 2016
 
October 31, 2015
 
 
 
 
 
 
 
Prepaid expense
 
$
1,114
 
$
548
 
Notes receivable
 
 
83
 
 
-
 
Other
 
 
144
 
 
180
 
 
 
 
 
 
 
 
 
Totals
 
$
1,341
 
$
728
 


v3.3.1.900
Earnings per share (Tables)
3 Months Ended
Jan. 31, 2016
Earnings Per Share [Abstract]  
Computation of Basic and Diluted Weighted Average Shares Outstanding
The following table summarizes the computation of basic and diluted weighted average shares outstanding:
 
 
 
Three Months Ended January 31,
 
 
 
2016
 
2015
 
 
 
 
 
 
 
Weighted average shares outstanding for basic earnings (loss) per share
 
 
8,716,712
 
 
8,286,831
 
 
 
 
 
 
 
 
 
Add effects of potentially dilutive securities-assumed exercise of stock options
 
 
-
 
 
380,940
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding for diluted earnings (loss) per share
 
 
8,716,712
 
 
8,667,771
 


v3.3.1.900
Stock-based compensation and equity transactions (Tables)
3 Months Ended
Jan. 31, 2016
Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]  
Computation of Weighted Average Fair Value of Employee Stock Options using Black-Scholes Option Pricing Model Assumptions
The weighted average fair value of employee and non-employee directors’ stock options granted by the Company during the three months ended January 31, 2015 was estimated to be $1.00 per share using the Black-Scholes option pricing model with the following assumptions:
 
Risk-free interest rate
 
 
0. 88
%
Dividend yield
 
 
6.35
%
Expected life of the option
 
 
3.5 years
 
Volatility factor
 
 
47.4
%
Summary of Status of Options Granted under Stock Option Plans and Changes in Options Outstanding
A summary of the status of the options granted under the Company’s stock option plans as of January 31, 2016 and the changes in options outstanding during the three months then ended is presented in the table that follows:
 
 
 
 
 
Weighted
 
 
 
 
 
Average
 
 
 
Shares
 
Exercise Price
 
Outstanding at November 1, 2015
 
 
1,240,100
 
$
2.64
 
Options granted
 
 
51,192
 
$
4.42
 
Options exercised
 
 
(5,250)
 
$
3.72
 
Options canceled or expired
 
 
(21,703)
 
$
5.42
 
Options outstanding at January 31, 2016
 
 
1,264,339
 
$
3.43
 
Options exercisable at January 31, 2016
 
 
773,321
 
$
3.03
 
Options vested and expected to vest at January 31, 2016
 
 
1,257,911
 
$
3.66
 


v3.3.1.900
Segment information (Tables)
3 Months Ended
Jan. 31, 2016
Segment Reporting [Abstract]  
Sales by Geographic Area
The following table presents the sales of the Company by geographic area for the three months ended January 31, 2016 and 2015 (in thousands):
 
 
 
Three Months Ended January 31,
 
 
 
2016
 
2015
 
 
 
 
 
 
 
United States
 
$
6,692
 
$
6,596
 
Foreign Countries:
 
 
 
 
 
 
 
Canada
 
 
71
 
 
114
 
Israel
 
 
62
 
 
52
 
Mexico
 
 
97
 
 
94
 
All Other
 
 
62
 
 
38
 
 
 
 
292
 
 
298
 
 
 
 
 
 
 
 
 
Totals
 
$
6,984
 
$
6,894
 
Net Sales, Income (Loss) Before Provision for Income Taxes and Other Related Segment Information
Net sales, income (loss) from continuing operations before benefit for income taxes and other related segment information for the three months ended January 31, 2016 and 2015 are as follows (in thousands): 
  
 
 
RF Connector
 
Custom Cabling
 
Medical
 
 
 
 
 
 
 
and
 
Manufacturing and
 
Cabling and
 
 
 
 
 
2016
 
Cable Assembly
 
Assembly
 
Interconnector
 
Corporate
 
Total
 
Net sales
 
$
1,956
 
$
4,828
 
$
200
 
$
-
 
$
6,984
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss from continuing operations before benefit for income taxes
 
 
(415)
 
 
(118)
 
 
(78)
 
 
-
 
 
(611)
 
Depreciation and amortization
 
 
46
 
 
220
 
 
6
 
 
-
 
 
272
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
2,701
 
$
3,617
 
$
576
 
$
-
 
$
6,894
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) from continuing operations before benefit for income taxes
 
 
65
 
 
(164)
 
 
125
 
 
5
 
 
31
 
Depreciation and amortization
 
 
41
 
 
144
 
 
5
 
 
-
 
 
190
 


v3.3.1.900
Intangible assets (Tables)
3 Months Ended
Jan. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]  
Components of Intangible Assets
Intangible assets consist of the following (in thousands): 
 
 
 
January 31, 2016
 
October 31, 2015
 
Amortizable intangible assets:
 
 
 
 
 
Non-compete agreements (estimated lives 3 - 5  years)
 
$
310
 
$
310
 
Accumulated amortization
 
 
(231)
 
 
(212)
 
 
 
 
79
 
 
98
 
 
 
 
 
 
 
 
 
Customer relationships (estimated lives 7 - 15 years)
 
 
5,099
 
 
5,099
 
Accumulated amortization
 
 
(1,237)
 
 
(1,101)
 
 
 
 
3,862
 
 
3,998
 
 
 
 
 
 
 
 
 
Backlog (estimated life 1  year)
 
 
134
 
 
134
 
Accumulated amortization
 
 
(114)
 
 
(100)
 
 
 
 
20
 
 
34
 
 
 
 
 
 
 
 
 
Patents (estimated life 14 years)
 
 
142
 
 
142
 
Accumulated amortization
 
 
(7)
 
 
(4)
 
 
 
 
135
 
 
138
 
 
 
 
 
 
 
 
 
Totals
 
$
4,096
 
$
4,268
 
 
 
 
 
 
 
 
 
Non-amortizable intangible assets:
 
 
 
 
 
 
 
Trademarks
 
$
1,387
 
$
1,387
 


v3.3.1.900
Accrued expenses (Tables)
3 Months Ended
Jan. 31, 2016
Payables and Accruals [Abstract]  
Accrued expenses and other long-term liabilities
Accrued expenses consist of the following (in thousands):
 
 
 
January 31, 2016
 
October 31, 2015
 
 
 
 
 
 
 
Wages payable
 
$
762
 
$
978
 
Accrued receipts
 
 
502
 
 
438
 
Earn-out liability
 
 
675
 
 
1,150
 
Other current liabilities
 
 
330
 
 
302
 
 
 
 
 
 
 
 
 
Totals
 
$
2,269
 
$
2,868
 


v3.3.1.900
Components of purchase price at fair value (Detail) - USD ($)
1 Months Ended 3 Months Ended
Jun. 02, 2015
Nov. 02, 2014
May. 19, 2015
Jan. 31, 2016
Cash consideration paid       $ 2,100,000
Rel-Tech Electronics, Inc        
Cash consideration paid $ 2,100,000     $ 3,100,000
RF Industries, Ltd. common shares issued 200,000      
Earn-out 610,000      
Total purchase price $ 2,910,000      
CompPro Product Line        
Cash consideration paid     $ 700,000  
Total purchase price     $ 700,000  
Comnet Telecom Supply Inc        
Cash consideration paid   $ 3,090,000    
RF Industries, Ltd. common shares issued   1,060,000    
Earn-out   1,235,000    
Total purchase price   $ 5,385,000    


v3.3.1.900
Components of purchase price at fair value (parenthetical) (Detail) - shares
3 Months Ended
Jun. 02, 2015
Jan. 31, 2016
Rel-Tech Electronics, Inc    
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares 50,467  
Comnet Telecom Supply Inc    
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares   252,381


v3.3.1.900
Allocation of purchase price at fair value (Detail) - USD ($)
Jun. 02, 2015
May. 19, 2015
Nov. 02, 2014
Rel-Tech Electronics, Inc      
Current assets $ 1,637,000    
Fixed assets 68,000    
Other assets 17,000    
Intangible assets 1,425,000    
Goodwill 833,000    
Deferred tax liabilities (489,000)    
Non-interest bearing liabilities (581,000)    
Net assets $ 2,910,000    
CompPro Product Line      
Current assets   $ 186,300  
Fixed assets   67,500  
Intangible assets   321,200  
Goodwill   125,000  
Net assets   $ 700,000  
Comnet Telecom Supply Inc      
Current assets     $ 1,875,000
Fixed assets     150,000
Intangible assets     2,910,000
Goodwill     1,879,000
Non-interest bearing liabilities     (1,429,000)
Net assets     $ 5,385,000


v3.3.1.900
Business acquisitions, Pro Forma Information (Detail) - Rel-Tech Electronics, Inc [Member]
3 Months Ended
Jan. 31, 2016
USD ($)
$ / shares
Revenue | $ $ 8,467,000
Net income | $ $ 73,000
Earnings per share  
Basic | $ / shares $ 0.01
Diluted | $ / shares $ 0.01


v3.3.1.900
Business acquisitions - Additional Information (Detail) - USD ($)
1 Months Ended 3 Months Ended 12 Months Ended
Jun. 02, 2015
Nov. 02, 2014
May. 19, 2015
Jan. 31, 2016
Jan. 31, 2015
Oct. 31, 2015
Jun. 05, 2015
Payments to Acquire Businesses, Gross       $ 2,100,000      
Revenues       6,984,000 $ 6,894,000    
Selling, General and Administrative Expense       2,489,000 $ 2,257,000    
Rel-Tech Electronics, Inc              
Business Acquisition, Additional Payment In Cash       $ 800,000      
Business Acquisition Unregistered Common Stock Shares       50,467      
Business Acquisition Unregistered Common Stock Value       $ 200,000      
Business Acquisition, Percentage of Voting Interests Acquired             100.00%
Payments to Acquire Businesses, Gross $ 2,100,000     $ 3,100,000      
Business Combination, Consideration Transferred 610,000            
Business Acquisition, Share Price       $ 3.96      
Revenues       $ 1,500,000      
Business Acquisition Cost Of Acquired Entity Purchases Price $ 2,910,000            
Rel-Tech Electronics, Inc | Palumbo              
Salary Payable To President       150,000      
CompPro Product Line              
Payments to Acquire Businesses, Gross     $ 700,000        
Business Acquisition Cost Of Acquired Entity Purchases Price     $ 700,000        
Comnet Telecom Supply Inc              
Business Acquisition Cost Of Acquired Entity Purchase Price value       1,060,000      
Business Acquisition, Additional Payment In Cash       $ 300,000      
Business Acquisition Unregistered Common Stock Shares       252,381      
Business Acquisition, Percentage of Voting Interests Acquired       100.00%      
Payments to Acquire Businesses, Gross   $ 3,090,000          
Business Combination, Consideration Transferred   1,235,000          
Revenues       $ 2,200,000      
Business Acquisition Cost Of Acquired Entity Purchases Price   $ 5,385,000          
Selling, General and Administrative Expense           $ 318,000  
Comnet Telecom Supply Inc | Mr. Portera              
Business Acquisition Cost Of Acquired Entity Purchase Price value       4,150,000      
Business Acquisition, Additional Payment In Cash       1,360,000      
Business Combination, Consideration Transferred       $ 210,000      
Business Acquisition, Share Price       $ 4.20      
Business Acquisition Cost Of Acquired Entity Purchases Price       $ 4,150,000      


v3.3.1.900
Discontinued operations - Additional Information (Detail) - USD ($)
3 Months Ended
Jan. 31, 2016
Jan. 31, 2015
Radio Mobile, Inc    
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]    
Royalty revenue   $ 2,000
RF Neulink    
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]    
Royalty revenue $ 1,600 $ 19,000


v3.3.1.900
Sale of Aviel Electronics division - Additional Information (Detail) - USD ($)
1 Months Ended 3 Months Ended
Dec. 22, 2015
Jan. 31, 2016
Jan. 31, 2015
Discontinued Operation, Intra-Entity Amounts, Discontinued Operation after Disposal, Revenue     $ 252,000
Aviel Electronics Division [Member]      
Gain (Loss) on Disposition of Assets, Total $ 35,000    
Disposal Group, Including Discontinued Operation, Cash and Cash Equivalents $ 150,000    
Discontinued Operation, Intra-Entity Amounts, Discontinued Operation after Disposal, Revenue   $ 86,000  
Income (Loss) from Continuing Operations before Interest Expense, Interest Income, Income Taxes, Extraordinary Items, Noncontrolling Interests, Net   40,000 $ 26,000
Aviel Electronics Division [Member] | Notes Payable, Other Payables [Member]      
Debt Instrument, Term 3 years    
Debt Instrument, Interest Rate, Stated Percentage 5.00%    
Promissory Note [Member] | Aviel Electronics Division [Member] | Other Current Assets [Member]      
Disposal Group, Including Discontinued Operation, Accounts Payable   83,000  
Promissory Note [Member] | Aviel Electronics Division [Member] | Other Assets [Member]      
Disposal Group, Including Discontinued Operation, Accounts Payable   $ 167,000  
Promissory Note [Member] | Aviel Electronics Division [Member] | Notes Payable, Other Payables [Member]      
Disposal Group, Including Discontinued Operation, Accounts Payable $ 250,000    


v3.3.1.900
Components of Inventories (Detail) - USD ($)
$ in Thousands
Jan. 31, 2016
Oct. 31, 2015
Inventory [Line Items]    
Raw materials and supplies $ 3,168 $ 2,671
Work in process 164 270
Finished goods 3,688 3,987
Totals $ 7,020 $ 6,928


v3.3.1.900
Inventories and major vendors - Additional Information (Detail) - Supplier Concentration Risk [Member]
3 Months Ended
Jan. 31, 2016
Jan. 31, 2015
Vendor One    
Inventory [Line Items]    
Purchases of connector products, percentage 14.00% 12.00%
Vendor Two    
Inventory [Line Items]    
Purchases of connector products, percentage 12.00% 10.00%


v3.3.1.900
Other current assets (Details) - USD ($)
$ in Thousands
Jan. 31, 2016
Oct. 31, 2015
Prepaid expense $ 1,114 $ 548
Notes receivable 83 0
Other 144 180
Totals $ 1,341 $ 728


v3.3.1.900
Other current assets - Additional Information (Detail) - USD ($)
$ in Thousands
3 Months Ended
Jan. 31, 2016
Jan. 31, 2015
Increase (Decrease) In Other Noncurrent Assets $ 167 $ 0


v3.3.1.900
Computation of Basic and Diluted Weighted Average Shares Outstanding (Detail) - shares
3 Months Ended
Jan. 31, 2016
Jan. 31, 2015
Weighted average shares outstanding for basic earnings (loss) per share 8,716,712 8,286,831
Add effects of potentially dilutive securities-assumed exercise of stock options 0 380,940
Weighted average shares outstanding for diluted earnings (loss) per share 8,716,712 8,667,771


v3.3.1.900
Earnings per share - Additional Information (Detail) - shares
3 Months Ended
Jan. 31, 2016
Jan. 31, 2015
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount 1,138,510 617,310


v3.3.1.900
Computation of weighted average fair value of employee stock options using black-scholes option pricing model assumptions (Detail)
3 Months Ended
Jan. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Risk-free interest rate 0.88%
Dividend yield 6.35%
Expected life of the option 3 years 6 months
Volatility factor 47.40%


v3.3.1.900
Summary of status of options granted under stock option plans and changes in options outstanding (Detail)
3 Months Ended
Jan. 31, 2016
$ / shares
shares
Shares  
Options Outstanding at beginning of year | shares 1,240,100
Options granted | shares 51,192
Options exercised | shares (5,250)
Options canceled or expired | shares (21,703)
Options outstanding at end of year | shares 1,264,339
Options exercisable at end of year | shares 773,321
Options vested and expected to vest at end of year | shares 1,257,911
Weighted Average Exercise Price  
Options outstanding at beginning of year | $ / shares $ 2.64
Options granted | $ / shares 4.42
Options exercised | $ / shares 3.72
Options canceled or expired | $ / shares 5.42
Options outstanding at end of year | $ / shares 3.43
Options exercisable at end of year | $ / shares 3.03
Options vested and expected to vest at end of year | $ / shares $ 3.66


v3.3.1.900
Stock-based compensation and equity transactions - Additional Information (Detail) - USD ($)
3 Months Ended
Jan. 31, 2016
Jan. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Weighted average remaining life of options outstanding 5 years 14 days  
Weighted average remaining contractual life of options exercisable 3 years 5 months 12 days 3 years
Weighted average life of options vested and expected to vest 5 years 11 days 5 years
Aggregate intrinsic value of options outstanding $ 1,200,000  
Aggregate intrinsic value of options exercisable 1,200,000  
Aggregate intrinsic value of options vested and expected to vest 1,200,000  
Non-vested stock-based arrangements yet to be recognized $ 654,000  
Stock based arrangements yet to be recognized, weighted average period expected to be recognized 5 years 7 months 24 days  
Stock Issued During Period, Value, Stock Options Exercised   $ 1,060,000
Non-employee director annual grant $ 30,000  
Options granted for each non-employee director 51,192  
Value of stock option issued $ 15,000  
Fair value of stock option $ 0.87  
Stock based compensation expense $ 52,000 $ 50,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value   $ 1.00
Proceeds from Issuance of Common Stock   $ 252,381
Employee | Incentive stock options    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Share-based compensation arrangement by share-based payment award, options, grants in period, gross   127,558
Cost of Sales    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Stock based compensation expense 10,000 $ 15,000
Selling, General and Administrative Expenses    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Stock based compensation expense $ 42,000 $ 35,000


v3.3.1.900
Concentrations of credit risk - Additional Information (Detail) - USD ($)
$ in Millions
1 Months Ended 3 Months Ended
Oct. 31, 2015
Jan. 31, 2016
Jan. 31, 2015
Concentration Risk [Line Items]      
Cash, FDIC insured amount   $ 4.9  
Sales Revenue, Goods, Net      
Concentration Risk [Line Items]      
Concentration risk, percentage     17.00%
Sales Revenue, Goods, Net | Customer One [Member]      
Concentration Risk [Line Items]      
Concentration risk, percentage   14.00%  
Sales Revenue, Goods, Net | Customer Two [Member]      
Concentration Risk [Line Items]      
Concentration risk, percentage   13.00%  
Accounts Receivable      
Concentration Risk [Line Items]      
Concentration risk, percentage 19.00%    
Accounts Receivable | Customer One [Member]      
Concentration Risk [Line Items]      
Concentration risk, percentage   17.00%  
Accounts Receivable | Customer Two [Member]      
Concentration Risk [Line Items]      
Concentration risk, percentage   15.00%  


v3.3.1.900
Sales by geographic area (Detail) - USD ($)
$ in Thousands
3 Months Ended
Jan. 31, 2016
Jan. 31, 2015
Revenue, Major Customer [Line Items]    
Sales revenue $ 6,984 $ 6,894
United States    
Revenue, Major Customer [Line Items]    
Sales revenue 6,692 6,596
Canada    
Revenue, Major Customer [Line Items]    
Sales revenue 71 114
Israel    
Revenue, Major Customer [Line Items]    
Sales revenue 62 52
Mexico    
Revenue, Major Customer [Line Items]    
Sales revenue 97 94
All other    
Revenue, Major Customer [Line Items]    
Sales revenue 62 38
Foreign Countries, total    
Revenue, Major Customer [Line Items]    
Sales revenue $ 292 $ 298


v3.3.1.900
Net sales, income (loss) before provision for income taxes and other related segment information (Detail) - USD ($)
$ in Thousands
3 Months Ended
Jan. 31, 2016
Jan. 31, 2015
Segment Reporting Information [Line Items]    
Net sales $ 6,984 $ 6,894
Income (loss) from continuing operations before benefit for income taxes (611) 31
Depreciation and amortization 272 190
RF Connector and Cable Assembly    
Segment Reporting Information [Line Items]    
Net sales 1,956 2,701
Income (loss) from continuing operations before benefit for income taxes (415) 65
Depreciation and amortization 46 41
Custom Cabling Manufacturing and Assembly    
Segment Reporting Information [Line Items]    
Net sales 4,828 3,617
Income (loss) from continuing operations before benefit for income taxes (118) (164)
Depreciation and amortization 220 144
Medical Cabling and Interconnector    
Segment Reporting Information [Line Items]    
Net sales 200 576
Income (loss) from continuing operations before benefit for income taxes (78) 125
Depreciation and amortization 6 5
Corporate    
Segment Reporting Information [Line Items]    
Net sales 0 0
Income (loss) from continuing operations before benefit for income taxes 0 5
Depreciation and amortization $ 0 $ 0


v3.3.1.900
Income tax benefit - Additional Information (Detail) - USD ($)
3 Months Ended
Jan. 31, 2016
Jan. 31, 2015
Income Taxes [Line Items]    
Provision for income tax as percentage of income (loss) before income taxes 42.00% 68.00%
Unrecognized tax benefits $ 0 $ 0
Accrued interest and penalties related to uncertain tax positions $ 0 $ 0


v3.3.1.900
Intangible assets (Detail) - USD ($)
$ in Thousands
Jan. 31, 2016
Oct. 31, 2015
Intangible Assets [Line Items]    
Amortizable intangible assets, net $ 4,096 $ 4,268
Non-amortizable intangible assets, trade marks 1,387 1,387
Non-compete agreements (estimated lives 3 - 5 years)    
Intangible Assets [Line Items]    
Amortizable intangible assets, gross 310 310
Amortizable intangible assets, accumulated amortization (231) (212)
Amortizable intangible assets, net 79 98
Customer relationships (estimated lives 7 - 15 years)    
Intangible Assets [Line Items]    
Amortizable intangible assets, gross 5,099 5,099
Amortizable intangible assets, accumulated amortization (1,237) (1,101)
Amortizable intangible assets, net 3,862 3,998
Backlog (estimated life 1 year)    
Intangible Assets [Line Items]    
Amortizable intangible assets, gross 134 134
Amortizable intangible assets, accumulated amortization (114) (100)
Amortizable intangible assets, net 20 34
Patents (estimated life 14 years)    
Intangible Assets [Line Items]    
Amortizable intangible assets, gross 142 142
Amortizable intangible assets, accumulated amortization (7) (4)
Amortizable intangible assets, net $ 135 $ 138


v3.3.1.900
Intangible assets (parenthetical) (Detail)
3 Months Ended
Jan. 31, 2016
Jan. 31, 2015
Non-compete agreements (estimated lives 3 - 5 years) | Maximum [Member]    
Intangible Assets [Line Items]    
Finite-Lived Intangible Asset, Useful Life 5 years 5 years
Non-compete agreements (estimated lives 3 - 5 years) | Minimum [Member]    
Intangible Assets [Line Items]    
Finite-Lived Intangible Asset, Useful Life 3 years 3 years
Customer relationships (estimated lives 7 - 15 years) | Maximum [Member]    
Intangible Assets [Line Items]    
Finite-Lived Intangible Asset, Useful Life 15 years 15 years
Customer relationships (estimated lives 7 - 15 years) | Minimum [Member]    
Intangible Assets [Line Items]    
Finite-Lived Intangible Asset, Useful Life 7 years 7 years
Backlog (estimated life 1 year)    
Intangible Assets [Line Items]    
Finite-Lived Intangible Asset, Useful Life 1 year 1 year
Patents (estimated life 14 years)    
Intangible Assets [Line Items]    
Finite-Lived Intangible Asset, Useful Life 14 years 14 years


v3.3.1.900
Accrued expenses (Detail) - USD ($)
$ in Thousands
Jan. 31, 2016
Oct. 31, 2015
Schedule of Accrued Liabilities [Line Items]    
Wages payable $ 762 $ 978
Accrued receipts 502 438
Earn-out liability 675 1,150
Other current liabilities 330 302
Totals $ 2,269 $ 2,868


v3.3.1.900
Accrued expenses - Additional Information (Detail)
Jan. 31, 2016
USD ($)
Other Noncurrent Liabilities [Member]  
Schedule Of Accrued Liabilities [Line Items]  
Accrued Earn Out Liability Non Current $ 377,000


v3.3.1.900
Line of credit - Additional Information (Detail)
$ in Millions
1 Months Ended
Mar. 31, 2014
USD ($)
Line of Credit Facility [Line Items]  
Line of Credit Facility, Interest Rate During Period 3.00%
Line of Credit Facility, Expiration Date Jun. 30, 2016
Letter of Credit  
Line of Credit Facility [Line Items]  
Line of Credit Facility, Amount Outstanding $ 5.0


v3.3.1.900
Commitments - Additional Information (Detail)
1 Months Ended 3 Months Ended
Mar. 31, 2015
USD ($)
a
Apr. 30, 2014
USD ($)
Jan. 31, 2016
USD ($)
a
Jan. 31, 2015
Commitments And Contingencies [Line Items]        
Operating Leases, Rent Expense, Net, Total     $ 280,000  
Minimum annual rental payments   $ 19,000    
Lease Expiration Date   Mar. 31, 2017    
Yaphank [Member] | Commitments [Member]        
Commitments And Contingencies [Line Items]        
Lease Expiration Date     Jun. 30, 2016  
Area of Land | a     12,000  
Operating Leases, Rent Expense     $ 13,000  
Las Vegas [Member] | Commitments [Member]        
Commitments And Contingencies [Line Items]        
Lease Expiration Date       Apr. 30, 2016
Area of Land | a 4,500      
Operating Leases, Rent Expense $ 4,270      
East Brunswick [Member] | Commitments [Member]        
Commitments And Contingencies [Line Items]        
Lease Expiration Date     Sep. 30, 2017  
Area of Land | a     15,000  
Operating Leases, Rent Expense     $ 11,655  
Milford [Member] | Commitments [Member]        
Commitments And Contingencies [Line Items]        
Lease Expiration Date     Aug. 30, 2017  
Area of Land | a     13,750  
Operating Leases, Rent Expense     $ 8,307  


v3.3.1.900
Cash dividend and declared dividends - Additional Information (Detail) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended
Jan. 31, 2016
Jan. 31, 2015
Dividends Payable [Line Items]    
Dividends paid, per share $ 0.07 $ 0.07
Dividends paid $ 610 $ 578


v3.3.1.900
Subsequent events - Additional Information (Detail)
Mar. 31, 2016
$ / shares
Subsequent Event  
Subsequent Event [Line Items]  
Dividends Payable, Amount Per Share $ 0.02
RF Industries (NASDAQ:RFIL)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more RF Industries Charts.
RF Industries (NASDAQ:RFIL)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more RF Industries Charts.