Company: OCC
Filing Date: 2025-06-05
Form Type: 10-Q
Source: 0001437749-25-019494
Chunk: 89

Company: OPTICAL CABLE CORP
Filing Date: 2025-06-05
Form: 10-Q
Item: Item 8
Chunk 89
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Amortization of Intangible Assets

We recognized $14,000 of amortization expense, associated with intangible assets, during the second quarter of fiscal years 2025 and 2024.

19

Loss from operations

We reported a loss from operations of $429,000 for the second quarter of fiscal year 2025, compared to $1.3 million for the second quarter of fiscal year 2024. The improvement was primarily due to the increase in gross profit of $1.3 million, partially offset by the increase in SG&A expenses of $424,000.

Other Expense, Net

We recognized other expense, net in the second quarter of fiscal year 2025 of $254,000, compared to $293,000 in the second quarter of fiscal year 2024. Other expense, net is comprised primarily of interest expense and other miscellaneous items.

Loss Before Income Taxes 

We reported a loss before income taxes of $683,000 for the second quarter of fiscal year 2025, compared to $1.6 million for the second quarter of fiscal year 2024. The improvement was primarily a result of the decrease in loss from operations of $872,000.

Income Tax Expense

Income tax expense totaled $15,000 in the second quarter of fiscal year 2025, compared to $7,000 in the second quarter of fiscal year 2024. Our effective tax rate was negative 2.2% for the second quarter of fiscal year 2025 and less than negative one percent for the second quarter of fiscal year 2024.

Fluctuations in our effective tax rates are primarily due to permanent differences in U.S. GAAP and tax accounting for various tax deductions and benefits, but can also be significantly different from the statutory tax rate when income or loss before taxes is at a level such that permanent differences in U.S. GAAP and tax accounting treatment have a disproportional impact on the projected effective tax rate.

We previously established a valuation allowance against all of our net deferred tax assets. As a result of establishing a full valuation allowance against our net deferred tax assets, if we generate sufficient taxable income in subsequent periods to realize a portion or all of our net deferred tax assets, our effective income tax rate could be unusually low due to the tax benefit attributable to the necessary decrease in our valuation allowance. Further, if we generate losses before taxes in subsequent periods, our effective income tax rate could also be unusually low as any increase in our net deferred tax asset from such a net