UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549









Form
10-Q









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


For the
quarterly period ended July 31, 2009




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 Web site, 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  ̈ 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 September 1, 2009 was 2,849,253.













Part
I. FINANCIAL INFORMATION





Item
1: Financial Statements




RF
INDUSTRIES, LTD.


CONDENSED
BALANCE SHEETS


(UNAUDITED)





July 31,
                  2009
                
                
                October 31,
                  2008(Note 1)ASSETSCURRENT
      ASSETSCash
      and cash equivalents
                
                $
                2,492,045
                
                
                $
                1,060,838Certificates
      of deposit
                
                
                4,502,074
                
                
                
                6,315,864Investments
      in available-for-sale securities
                
                
                -
                
                
                
                547,847Trade
      accounts receivable, net of allowance for doubtful accounts of $60,497 and
      $46,775
                
                
                1,867,253
                
                
                
                2,071,349Inventories
                
                
                5,299,080
                
                
                
                5,949,708Other
      current assets
                
                
                509,048
                
                
                
                217,443Income
      tax receivable
                
                
                96,806
                
                
                
                -Deferred
      tax assets
                
                
                542,100
                
                
                
                542,100TOTAL
      CURRENT ASSETS
                
                
                15,308,406
                
                
                
                16,705,149Equipment
      and furnishings:Equipment
      and tooling
                
                
                2,341,455
                
                
                
                2,205,525Furniture
      and office equipment
                
                
                390,106
                
                
                
                377,2862,731,561
                
                
                
                2,582,811Less
      accumulated depreciation
                
                
                2,185,930
                
                
                
                2,016,951TOTALS
                
                
                545,631
                
                
                
                565,860Goodwill
                
                
                137,328
                
                
                
                347,091Amortizable
      intangible assets, net
                
                
                33,945
                
                
                
                54,311Note
      receivable from stockholder
                
                
                66,980
                
                
                
                66,980Other
      assets
                
                
                28,776
                
                
                
                28,382TOTAL
      ASSETS
                
                $
                16,121,066
                
                
                $
                17,767,773




2


Item 1: Financial Statements
(continued)




RF
INDUSTRIES, LTD.


CONDENSED
BALANCE SHEETS


(UNAUDITED)





July 31,
                  2009
                
                
                October 31,
                  2008(Note
      1)LIABILITIES AND STOCKHOLDERS’
      EQUITYCURRENT
      LIABILITIESAccounts
      payable
                
                $
                234,180
                
                
                $
                329,509Accrued
      expenses
                
                
                542,701
                
                
                
                760,762Income
      taxes payable
                
                
                -
                
                
                
                232,927TOTAL
      CURRENT LIABILITIES
                
                
                776,881
                
                
                
                1,323,198Deferred
      tax liabilities
                
                
                105,700
                
                
                
                105,700Other
      long-term liabilities
                
                
                274,231
                
                
                
                217,185TOTAL
      LIABILITIES
                
                
                1,156,812
                
                
                
                1,646,083COMMITMENTS
      AND CONTINGENCIESSTOCKHOLDERS’
      EQUITYCommon
      stock - authorized 10,000,000 shares of $0.01 par value; 2,849,253 and
      3,226,264 shares issued and outstanding
                
                
                28,493
                
                
                
                32,263Additional
      paid-in capital
                
                
                6,474,262
                
                
                
                6,411,810Retained
      earnings
                
                
                8,461,499
                
                
                
                9,677,617TOTAL
      STOCKHOLDERS’ EQUITY
                
                
                14,964,254
                
                
                
                16,121,690TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                
                $
                16,121,066
                
                
                $
                17,767,773




See Notes
to Condensed Unaudited Financial Statements.


3










Item 1: Financial Statements
(continued)




RF
INDUSTRIES, LTD.


CONDENSED
STATEMENTS OF INCOME


(UNAUDITED)





Three Months Ended July 31,
                
                
                Nine Months Ended July 31,2009
                
                
                2008
                
                
                2009
                
                
                2008Net
      sales
                
                $
                3,294,290
                
                
                $
                4,667,638
                
                
                $
                10,401,589
                
                
                $
                13,002,083Cost
      of sales
                
                
                1,670,358
                
                
                
                2,351,721
                
                
                
                5,409,304
                
                
                
                6,454,478Gross
      profit
                
                
                1,623,932
                
                
                
                2,315,917
                
                
                
                4,992,285
                
                
                
                6,547,605Operating
      expenses:Engineering
                
                
                255,682
                
                
                
                278,600
                
                
                
                805,921
                
                
                
                775,463Selling
      and general
                
                
                1,339,847
                
                
                
                1,381,549
                
                
                
                3,736,126
                
                
                
                4,043,177Totals
                
                
                1,595,529
                
                
                
                1,660,149
                
                
                
                4,542,047
                
                
                
                4,818,640Operating
      income
                
                
                28,403
                
                
                
                655,768
                
                
                
                450,238
                
                
                
                1,728,965Other
      income - interest
                
                
                22,764
                
                
                
                40,768
                
                
                
                148,877
                
                
                
                178,811Income
      before provision for income taxes
                
                
                51,167
                
                
                
                696,536
                
                
                
                599,115
                
                
                
                1,907,776Provision
      for income taxes
                
                
                40,590
                
                
                
                296,824
                
                
                
                211,485
                
                
                
                794,071Net
      income
                
                $
                10,577
                
                
                $
                399,712
                
                
                $
                387,630
                
                
                $
                1,113,705Basic
      earnings per share
                
                $
                0.00
                
                
                $
                0.12
                
                
                $
                0.13
                
                
                $
                0.34Diluted
      earnings per share
                
                $
                0.00
                
                
                $
                0.11
                
                
                $
                0.12
                
                
                $
                0.30Basic
      weighted average shares outstanding
                
                
                2,869,928
                
                
                
                3,298,345
                
                
                
                2,985,083
                
                
                
                3,294,219Diluted
      weighted average shares outstanding
                
                
                3,161,904
                
                
                
                3,741,111
                
                
                
                3,278,509
                
                
                
                3,720,346Dividends
      paid
                
                $
                0
                
                
                $
                98,723
                
                
                $
                94,780
                
                
                $
                295,183




See Notes
to Condensed Unaudited Financial Statements.


4


Item 1: Financial Statements
(continued)




RF
INDUSTRIES, LTD.


CONDENSED
STATEMENTS OF CASH FLOWS


NINE
MONTHS ENDED JULY 31


(UNAUDITED)





2009
                            
                            
                            2008OPERATING
      ACTIVITIES:Net
      income
                            
                            $
                            387,630
                            
                            
                            $
                            1,113,705Adjustments
      to reconcile net income to net cash provided by operating
      activities:Bad
      debt expense adjustment
                            
                            
                            13,722
                            
                            
                            
                            (3,615
                            )Depreciation
      and amortization
                            
                            
                            194,171
                            
                            
                            
                            152,751Goodwill
      impairment
                            
                            
                            209,763Loss
      on disposal of equipment
                            
                            
                            4,827Deferred
      income taxes
                            
                            
                            
                            
                            
                            
                            (9,900
                            )Stock-based
      compensation expense
                            
                            
                            124,786
                            
                            
                            
                            405,073Changes
      in operating assets and liabilities:Trade
      accounts receivable
                            
                            
                            190,374
                            
                            
                            
                            (104,356
                            )Inventories
                            
                            
                            650,628
                            
                            
                            
                            (1,134,924
                            )Income
      taxes payable/receivable
                            
                            
                            (329,733
                            )
                            
                            
                            (225,127
                            )Other
      current assets
                            
                            
                            (291,605
                            )
                            
                            
                            (52,402
                            )Other
      long-term assets
                            
                            
                            (394
                            )Accounts
      payable
                            
                            
                            (95,329
                            )
                            
                            
                            50,234Accrued
      expenses
                            
                            
                            (183,983
                            )
                            
                            
                            516,956Other
      long-term liabilities
                            
                            
                            57,046
                            
                            
                            
                            16,207Net
      cash provided by operating activities
                            
                            
                            931,903
                            
                            
                            
                            724,602INVESTING
      ACTIVITIES:Purchases
      of short-term investments and certificates of deposit
                            
                            
                            (2,117,184
                            )
                            
                            
                            (8,691,635
                            )Proceeds
      from sales of short-term investments and certificates of
      deposit
                            
                            
                            4,478,821
                            
                            
                            
                            6,821,000Capital
      expenditures
                            
                            
                            (158,403
                            )
                            
                            
                            (251,528
                            )Net
      cash provided by (used in) investing activities
                            
                            
                            2,203,234
                            
                            
                            
                            (2,122,163
                            )FINANCING
      ACTIVITIES:Proceeds
      from exercise of stock options
                            
                            
                            
                            
                            
                            
                            114,305Purchases
      of treasury stock
                            
                            
                            (1,609,150
                            )Dividends
      paid
                            
                            
                            (94,780
                            )
                            
                            
                            (295,183
                            )Net
      cash used in financing activities
                            
                            
                            (1,703,930
                            )
                            
                            
                            (180,878
                            )Net
      increase (decrease) in cash and cash equivalents
                            
                            
                            1,431,207
                            
                            
                            
                            (1,578,439
                            )Cash
      and cash equivalents, beginning of period
                            
                            
                            1,060,838
                            
                            
                            
                            3,400,566Cash
      and cash equivalents, end of period
                            
                            $
                            2,492,045
                            
                            
                            $
                            1,822,127Supplemental
      cash flow information:Income
      taxes paid
                            
                            $
                            550,000
                            
                            
                            $
                            1,033,000Retirement
      of treasury stock
                            
                            $
                            1,609,151Stock
      issuance related to contingent liability
                            
                            $
                            30,000




See Notes
to Condensed Unaudited Financial Statements.


5




RF
INDUSTRIES, LTD.


NOTES
TO CONDENSED UNAUDITED FINANCIAL STATEMENTS




Note
1 - Unaudited interim financial statements




The
accompanying unaudited condensed 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 balance sheet as of
October 31, 2008 has been derived from, and certain terms used herein are
defined in, the audited financial statements of the Company as of October 31,
2008 included in the Company’s Annual Report on Form 10-K (“Form 10-K”) for the
year ended October 31, 2008 that was previously filed with the Securities and
Exchange Commission (“SEC”). Operating results for the three and nine months
period ended July 31, 2009, are not necessarily indicative of the results that
may be expected for the year ending October 31, 2009. The unaudited condensed
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, 2008. The Company has evaluated subsequent events
through September 14, 2009, the date of filing for this Form 10-Q.




Revenue
Recognition




The
Company recognizes revenue in accordance with SEC Staff Accounting Bulletin No.
104, “Revenue Recognition in Financial Statements” (“SAB 104”). SAB 104 requires
that 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, which contain fixed prices, are received and the products are
shipped. Most of the Company’s products are sold to continuing customers with
established credit histories.




Note
2 - Fair value measurements





Effective
November 1, 2008, the Company adopted the methods of fair value as
described  in SFAS No. 157 ”Fair Value Measurements” (“SFAS 157”), to
value its financial assets and liabilities. As defined in SFAS 157, fair value
is based on the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date. In order to increase consistency and comparability in fair
value measurements, SFAS 157 establishes a fair value hierarchy that prioritizes
observable and unobservable inputs used to measure fair value.  The
adoption of SFAS 157 did not impact our financial position, results of
operations or cash flows.





In
addition, on November 1, 2008 the Company adopted SFAS No. 159, “The Fair Value
Option for Financial Assets and Financial Liabilities” (“SFAS 159”). Under SFAS
159, companies may elect to measure certain financial instruments and certain
other items at fair value. SFAS 159 requires that unrealized gains and losses on
items for which the fair value option has been elected be reported in earnings.
We did not elect to use the fair value option.  Therefore, the
adoption of SFAS 159 did not impact our condensed financial position, results of
operations or cash flows.


6




Note
3 - Components of inventories




Inventories,
consisting of materials, labor and manufacturing overhead, are stated at the
lower of cost or market. Cost has been determined using the weighted average
cost method.




July 31,
                  2009
                
                
                October 31,
                  2008Raw
      materials and supplies
                
                $
                1,409,105
                
                
                $
                1,496,364Work
      in process
                
                
                18,450
                
                
                
                31,131Finished
      goods
                
                
                3,914,577
                
                
                
                4,502,890Inventory
      reserve
                
                
                (43,052
                )
                
                
                (80,677
                )Totals
                
                $
                5,299,080
                
                
                $
                5,949,708





Purchases
of connector products from one major vendor in the nine month period ended July
31, 2009 represented 23% compared to two major vendors who represented 21% and
11% of the total inventory purchases for the same period in 2008, respectively.
The Company has arrangements with these vendors to purchase product based on
purchase orders periodically issued by the Company.





Note
4 - Earnings per share




Basic
earnings per share is computed by dividing net income by the weighted average
number of common shares outstanding during the period. Diluted earnings per
share is computed by dividing net income by the weighted average number of
common shares outstanding increased by the effects of assuming that other
potentially dilutive securities (such as stock options) outstanding during the
period had been exercised and the treasury stock method had been applied. At
July 31, 2009, the effects of the assumed exercise of options to purchase
391,439 shares of the Company’s common stock, at a price range of $3.95 to $7.56
per share, were not included in the computation of diluted per share amounts
because they were anti-dilutive for that purpose. At July 31, 2008, the effects
of the assumed exercise of options to purchase 229,196 shares of the Company’s
common stock, at a price of $7.50 to $7.56 per share, were not included in the
computation of diluted per share amounts because they were anti-dilutive for
that purpose.





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




Three Months Ended July 31
                                        
                                        Nine Months Ended July 312009
                                        
                                        2008
                                        
                                        2009
                                        
                                        2008Weighted
      average shares outstanding for basic net earnings per
share
                                        
                                        
                                        2,869,928
                                        
                                        3,298,345
                                        
                                        
                                        2,985,083
                                        
                                        3,294,219Add
      effects of potentially dilutive securities-assumed exercise of stock
      options
                                        
                                        
                                        291,976
                                        
                                        442,766
                                        
                                        
                                        293,426
                                        
                                        426,127Weighted
      average shares for diluted net earnings per share
                                        
                                        
                                        3,161,904
                                        
                                        3,741,111
                                        
                                        
                                        3,278,509
                                        
                                        3,720,346





Note
5 - Stock-based compensation and equity transactions





The
stock incentive plans provide for the granting of qualified and nonqualified
options to the Company’s officers, directors and employees. Non-qualified stock
options granted during the quarter ended July 31, 2009 vest and are exercisable
immediately and expire in five years from date of grant.  Options
granted prior to fiscal 2008 were generally exercisable one year after the date
of the grant and expire no more than ten years after date of grant. Ten
thousand options were granted during the quarter ended July 31, 2009. The
Company satisfies the exercise of options by issuing previously unissued common
shares.


7





The
weighted average fair value of employee stock options granted by the Company in
the nine months ended July 31, 2009 was estimated to be $1.51 using the
Black-Scholes option pricing model with the following assumptions:




2009Risk-free
      interest rate
                    
                    
                    1.01%-
      2.85%Dividend
      yield
                    
                    
                    0%-
      2.96%Expected
      life of the option
                    
                    2.5
      - 5 yearsVolatility
      factor
                    
                    
                    53.65%-60.37%




Expected
volatilities are based on historical volatility of the Company’s stock, and
other factors. The Company uses historical experience with exercise and
post-vesting employment termination behavior to determine the options’ expected
life. 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 nine months ended July 31, 2009, the Company issued 7,407 shares of common
stock to the former owner of Radiomobile.  This transaction related to
the Radiomobile Purchase Agreement earn-out contingency as more fully described
in Note 11 of the Company’s Annual Report on Form 10-K for the year ended
October 31, 2008.





Company
Stock Option Plans




Descriptions
of the Company’s stock option plans are included in Note 7 of the Company’s
Annual Report on Form 10-K for the year ended October 31, 2008. A summary of the
status of the options granted under the Company’s stock option plans as of July
31, 2009 and the changes in options outstanding during the nine months then
ended is presented in the table that follows:




Shares
                          
                          Weighted
                            Average Exercise
                            Price
                          
                          Weighted Average
                            Remaining
                            Contractual Term
                          
                          Aggregate
                            Intrinsic
                            ValueOutstanding
      at November 1, 2008
                          
                          1,067,041
                          
                          $
                          3.77Options
      granted
                          
                          26,000
                          
                          
                          4.01Options
      exercised
                          
                          -
                          
                          
                          -Options
      canceled or expired
                          
                          (28,690)
                          
                          
                          6.17Options
      outstanding at July 31, 2009
                          
                          1,064,351
                          
                          $
                          3.71
                          
                          4.93 years
                          
                          $
                          1,649,046Options
      exercisable at July 31, 2009
                          
                          858,168
                          
                          $
                          3.73
                          
                          5.19 years
                          
                          $
                          1,466,546





As of
July 31, 2009, $262,162 of expense with respect to non-vested stock-based
arrangements has yet to be recognized which is expected to be recognized over a
weighted average period of 2.67 years.





Stock
Option Expense





During
the nine-month ended July 31, 2009 and 2008, stock-based compensation expense
totaled $124,786 and $405,073 respectively. The three-month ended July 31, 2009
and July 31, 2008, stock-based compensation expense totaled $47,576 and $136,763
respectively.





Note
6 - Concentration of Credit Risk





One
customer accounted for approximately 21% of the Company’s net sales for the
three month period ended July 31, 2009, while one customer accounted for
14% of net sales for the nine-month period ended July 31, 2009. One customer
accounted for approximately16% of the Company’s net sales for the three and
nine-month period ended July 31, 2008. Although these customers have been
on-going major customers of the Company continuously during the past eight and
eleven years respectively, the written agreements with these customers do not
have any minimum purchase obligations and the customers 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 revenues and profits.


8





Note
7 - Segment Information




The
Company follows the provisions of SFAS No. 131, “Disclosures about Segments of
an Enterprise and Related Information (“SFAS 131”).” Pursuant to the provisions
of SFAS No. 131, the Company reports segment sales in the same form reviewed by
the Company’s management chief decision maker (the “management
approach”).




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





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





Management
identifies the Company’s segments based on strategic business units that are, in
turn, based along market lines. These strategic business units offer products
and services to different markets in accordance with their customer base and
product usage. For segment reporting purposes, the Company aggregates Connector
and Cable Assembly, Aviel Electronics and Worswick divisions into the RF
Connector Cables Assembly segment while RF Neulink and RadioMobile are part of
the RF Wireless segment. The Bioconnect division makes up the Company’s
Medical Cabling and Interconnector segment.  The Company had
previously aggregated BioConnect within the RF Connector and Cables Assembly
segment as it represented only a small portion and had similar economic
characteristics of the overall segment. During Fiscal Year 2008, the BioConnect
division met one of the quantitative threshold required for separate segment
reporting. Prior year’s information has been revised to conform with the current
year’s presentation.





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. All stock-based compensation is attributed to the RF Connector
Cable Assembly segment. Accounting policies for segment reporting are the
same as for the Company as a whole.





Substantially
all of the Company’s operations are conducted in the United States; however, the
Company derives a portion of its revenue from export sales. The Company
attributes sales to geographic areas based on the location of the customers. The
following table presents the sales of the Company by geographic area for the
three and nine month periods ended July 31, 2009 and 2008:




Three Months Ended July 31,
                
                
                Nine Months Ended July 31,2009
                
                
                2008
                
                
                2009
                
                
                2008United
      States
                
                $
                2,890,715
                
                
                $
                3,895,678
                
                
                $
                8,622,873
                
                
                $
                11,204,414Foreign
      countries:Israel
                
                
                179,455
                
                
                
                299,291
                
                
                
                865,173
                
                
                
                672,497All
      other
                
                
                224,120
                
                
                
                472,669
                
                
                
                913,543
                
                
                
                1,125,172$
                3,294,290
                
                
                $
                4,667,638
                
                
                $
                10,401,589
                
                
                $
                13,002,083




9


Net
Sales, income (loss) before provision for income taxes and other related segment
information for the three months ended July 31, 2009 and 2008 are as
follows:
 
 2009
                                        
                                        RF Connectors
                                          and
                                          Cable Assembly
                                        
                                        
                                        Medical
                                          Cabling and
                                          Interconnector
                                        
                                        
                                        RF
                                          Wireless
                                        
                                        
                                        Corporate
                                        
                                        
                                        TotalNet
      sales
                                        
                                        $
                                        2,765,914
                                        
                                        
                                        $
                                        347,473
                                        
                                        
                                        $
                                        180,903
                                        
                                        
                                        
                                        
                                        
                                        $
                                        3,294,290Income
      (loss) before provision for income taxes
                                        
                                        
                                        313,462
                                        
                                        
                                        
                                        46,528
                                        
                                        
                                        
                                        (331,586)
                                        
                                        
                                        $
                                        22,763
                                        
                                        
                                        
                                        51,167Depreciation,
      amortization and impairment
                                        
                                        
                                        114,571
                                        
                                        
                                        
                                        3,388
                                        
                                        
                                        
                                        153,215
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        271,1742008Net
      sales
                                        
                                        $
                                        3,697,842
                                        
                                        
                                        $
                                        542,243
                                        
                                        
                                        $
                                        427,553
                                        
                                        
                                        
                                        
                                        
                                        
                                        $
                                        4,667,638Income
      (loss) before provision for income taxes
                                        
                                        
                                        604,935
                                        
                                        
                                        
                                        109,858
                                        
                                        
                                        
                                        (59,025)
                                        
                                        
                                        $
                                        40,768
                                        
                                        
                                        
                                        696,536Depreciation
      and amortization
                                        
                                        
                                        1,482
                                        
                                        
                                        
                                        4,988
                                        
                                        
                                        
                                        7,878
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        14,348
  Net
Sales, income (loss) before provision for income taxes and other related segment
information for the nine months ended July 31, 2009 and 2008 are as
follows:
 
 2009
                    
                    RF Connectors
                      and
                      Cable Assembly
                    
                    
                    Medical
                      Cabling and
                      Interconnector
                    
                    
                    RF
                      Wireless
                    
                    
                    Corporate
                    
                    
                    TotalNet
      sales
                    
                    $
                    8,831,013
                    
                    
                    $
                    924,044
                    
                    
                    $
                    646,532
                    
                    
                    
                    
                    
                    $
                    10,401,589Income
      (loss) before provision for income taxes
                    
                    
                    1,057,046
                    
                    
                    
                    12,772
                    
                    
                    
                    (619,579)
                    
                    
                    $
                    148,876
                    
                    
                    
                    599,115Depreciation,
      amortization and impairment
                    
                    
                    221,320
                    
                    
                    
                    10,683
                    
                    
                    
                    171,931
                    
                    
                    
                    
                    
                    
                    
                    403,9342008Net
      sales
                    
                    $
                    10,305,670
                    
                    
                    $
                    1,173,209
                    
                    
                    $
                    1,523,204
                    
                    
                    
                    
                    
                    
                    $
                    13,002,083Income
      (loss) before provision for income taxes
                    
                    
                    1,456,121
                    
                    
                    
                    188,852
                    
                    
                    
                    84,002
                    
                    
                    $
                    178,801
                    
                    
                    
                    1,907,776Depreciation
      and amortization
                    
                    
                    111,614
                    
                    
                    
                    17,905
                    
                    
                    
                    23,232
                    
                    
                    
                    
                    
                    
                    
                    152,751
 
 Note 8 - Income tax
provision
  The
income tax provision reflected in the accompanying unaudited condensed statement
of income for the three and nine months ended July 31, 2009 is different than
the expected tax provision computed based on the pre-tax income and the
applicable statutory Federal income tax rate of 34% and the state income
tax rate, net of Federal tax effects, of 6.4%. Interim tax provisions are
determined using an estimate of the annual effective tax rate. As of July 31,
2009, the Company estimated that its effective annual tax rate for the year
ending October 31, 2009 will be approximately 35% excluding the effects of the
one-time benefit recorded in the first quarter described below.
 
 The
provision for income taxes during the nine-month period ended July 31, 2009 was
$211,485 (or an effective tax rate of approximately 35%), compared to $794,071
in the nine-month period ended July 31, 2008 (or an effective tax rate of
approximately 42%). The decrease in the tax rate in the nine-month period ended
July 31, 2009 is the result of the Company recognizing a one-time tax benefit of
approximately $39,000 that related to a domestic product activity adjustment in
the first quarter of current fiscal year. Without this adjustment, the effective
tax rate for the nine-months ended July 31, 2009 would have approximated the
projected effective rate for fiscal 2009.
 
 Note
9 - Dividend Declaration
  On
December 15, 2008, the Board of Directors of the Company declared a quarterly
cash dividend of $0.03 per share.  The dividend date of record was
December 31, 2008 and the dividends were paid to stockholders on January 15,
2009.  However, in March 2009, the Company suspended its quarterly cash
dividends in order to maximize resources available for acquisitions, new product
development and the purchase of equipment to improve manufacturing
efficiency.   Accordingly, no dividends were paid during the
three month periods ended July 31, 2009 and April 30, 2009.
  10
 
 Note
10 - Amortizable Intangible assets:
 
 Amortizable
intangible assets are comprised of the following:
  July 31,
                                        2009
                                      
                                      
                                      October 31,
                                        2008Intangible
      assetsNon-compete
      agreement
                                      
                                      $
                                      120,000
                                      
                                      
                                      $
                                      120,000Accumulated amortization
                                      
                                      
                                      (120,000
                                      )
                                      
                                      
                                      (120,000
                                      )—
                                      
                                      
                                      
                                      —Software
                                      
                                      
                                      47,522
                                      
                                      
                                      
                                      47,522Accumulated
      amortization
                                      
                                      
                                      (27,721
                                      )
                                      
                                      
                                      (15,841
                                      )19,801
                                      
                                      
                                      
                                      31,681Customer
      List
                                      
                                      
                                      33,945
                                      
                                      
                                      
                                      33,945Accumulated amortization
                                      
                                      
                                      (19,801
                                      )
                                      
                                      
                                      (11,315
                                      )14,144
                                      
                                      
                                      
                                      22,630Totals
                                      
                                      $
                                      33,945
                                      
                                      
                                      $
                                      54,311
 
 Note
11 - Goodwill impairment
  We review
our goodwill for impairment annually in the fourth quarter at the reporting unit
level. We also analyze whether any indicators of impairment exist each quarter.
A significant amount of judgment is involved in determining if an indicator of
impairment has occurred. Such indicators may include a sustained, significant
decline in our share price and market capitalization, a decline in our expected
future cash flows, a significant adverse change in legal factors or in the
business climate, unanticipated competition, the testing for recoverability of
our long-lived assets, and/or slower growth rates, among others.
  We
estimate the fair value of our reporting units using discounted expected future
cash flows. If the fair value of the reporting unit exceeds its net book value,
goodwill is not impaired, and no further testing is necessary. If the net book
value of our reporting units exceeds their fair value, we perform a second test
to measure the amount of impairment loss, if any.
  We
performed extensive valuation analyses, utilizing an income approach in our
goodwill assessment process. The following describes the valuation methodologies
used to derive the fair value of our reporting units.
  •
              Income
      Approach:To
      determine its estimated fair value, we discount the expected cash flows of
      our reporting units. We estimate our future cash flows after considering
      current economic conditions and trends; estimated future operating
      results, our views of growth rates, anticipated future economic and
      regulatory conditions; and the availability of necessary technology. The
      discount rate used represents the estimated weighted average cost of
      capital, which reflects the overall level of inherent risk involved in our
      operations and the rate of return an outside investor would expect to
      earn. To estimate cash flows beyond the final year of our model, we use a
      terminal value approach. Under this approach, we use estimated operating
      income before depreciation and amortization in the final year of our
      model, adjust it to estimate a normalized cash flow, apply a perpetuity
      growth assumption and discount by a perpetuity discount factor to
      determine the terminal value. We incorporate the present value of the
      resulting terminal value into our estimate of fair
      value.
  Due to
current negative effects of the global recession and related triggers, during
the third quarter of 2009, the Company experienced a significant decrease in
sales in general, and at the Radiomobile and Worswick divisions in particular.
The sales generated by these divisions were significantly lower than expected
and the expected third quarter improvements did not occur. As such, triggers
were evident at these two divisions in the third quarter of 2009 and management
performed a goodwill impairment review. Prior to management’s review, the
Company had a total of $347,091 of goodwill of which $137,328 was allocated to
the acquisition of the Aviel division and the balance was allocated to the more
recent acquisitions of the Radiomobile and Worswick businesses. As a result of
its review, management recorded a goodwill impairment charge of $209,763 for the
third quarter of fiscal 2009, which is included in selling and general expense
in the statement of income. There were no such triggering events at the Aviel
division and its goodwill was not affected.
  11
 
 Note
12 – Related party transactions:
 
 The note
receivable from stockholder of $66,980 at July 31, 2009 and October 31, 2008 is
due from the President of the Company, bears interest at 6%, payable annually,
and has no specific due date. The note is collateralized by a lien on certain
personal property.  During the three and nine months ended July 31,
2009 and 2008, $4,020 of interest was paid.
 
 Note
13 – Repurchase and retirement of treasury stock:
 
 In
September 2008, the Company announced that our Board of Directors had authorized
a stock repurchase program to repurchase up to 100,000 shares of the Company’s
common stock.  In October 2008, Company announced that our Board of
Directors had authorized a stock repurchase program to repurchase up to an
additional 100,000 shares of the Company’s common stock. In February 2009, the
Company announced that our Board of Directors had authorized a stock repurchase
program to repurchase up to an additional 300,000 shares of the Company’s common
stock. The repurchases were to be made from time to time in the open market
transactions in compliance with the Securities Exchange Act of 1934, or the
Exchange Act, Rule 10b-18.  During the nine month period ended July
31, 2009, the Company repurchased 234,418 shares of its common stock in
accordance with this plan for $997,651.  In addition to the Rule
10b-18 public repurchase program, the Company also repurchased 150,000 shares in
private transactions during the nine month period ended July 31, 2009 for
$611,500.
 
 Note
14 – Recent Accounting Pronouncements
 
 In June 2009, the Financial Accounting
Standards Board, (“FASB”), issued Statement of Financial Accounting Standards,
(“SFAS”), No. 168, “The FASB Accounting Standards Codification and the Hierarchy
of Generally Accepted Accounting Principles” (“SFAS 168”), a replacement to SFAS
No. 162, “the Hierarchy of Generally Accepted Accounting Principles.” The FASB
will become the source of authoritative accounting principles generally accepted
in the United States of America, (“U.S. GAAP”), recognized by the FASB to be
applied by nongovernmental entities, superseding all then-exiting non-SEC
accounting and reporting standards. All other non-grandfathered, non-SEC
accounting literature not included in SFAS 168 will become non-authoritative.
SFAS 168 is effective for financial statements issued for interim and annual
periods ending after September 15, 2009. We expect SFAS 168 will have an impact
on our financial statement disclosures in that all future references to
authoritative accounting literature will be referenced in accordance with SFAS
168.
 
 In May
2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS 165”), which
established general standards of accounting for and disclosure of events that
occur after the balance sheet date but before the financial statements are
issued or available to be issued. SFAS 165 requires new disclosure in financial
statements of the date through which reporting entities have evaluated events or
transactions that occur after the balance sheet date but before the financial
statements are issued or available to be issued. SFAS 165 requires public
entities, including the Company, to evaluate subsequent events through the date
that the financial statements are issued. Financial statements are considered
issued when they are widely distributed to stockholders and other financial
statement users for general use and reliance in a form and format that complies
with U.S. GAAP. SFAS 165 is effective for interim and annual financial periods
ending after June 15, 2009 and shall be applied on a prospective basis. The
adoption of SFAS 165 had no impact on our results of operation, financial
position or cash flows.
 
 In April
2009, the FASB issued three new FASB Staff Positions, (“FSP’s”), relating to
fair value accounting; FSP FAS 157-4, “Determining Fair Value When the Volume
and Level of Activity of the Asset or Liability Have Significantly Decreased and
Identifying Transactions That Are Not Orderly,” FSP FAS 115-2 and FSP FAS 124-2,
“Recognition and Presentation of Other-Than-Temporary Impairments” and FSP FAS
107-1/APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments.”
These FSP’s impact certain aspects of fair value measurements, impairments of
securities and related disclosures. The provisions of these FSP’s are effective
for interim and annual periods ending after June 15, 2009. The adoption of these
FSP’s had no impact on our condensed results of operations, financial position
or cash flows.
  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.
  12
  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 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 and Plan of Operation,” under the caption “Risk
Factors,” and the audited financial statements and related notes included in the
Company’s Annual Report filed on Form 10-K for the year ended October 31, 2008
and other reports and filings made with the Securities and Exchange
Commission.
  Critical
Accounting Policies
  The
financial statements of the Company are prepared in conformity with accounting
principles generally accepted in the United States of America (“GAAP”). The
preparation of these financial statements requires the Company’s management to
make estimates and assumptions about future events that affect the amounts
reported in the financial statements and related notes. Future events and their
effects cannot be determined with absolute certainty. Therefore, the
determination of estimates requires the exercise of judgment. The Company’s
significant accounting policies are summarized in Note 1 to the financial
statements contained in its Annual Report on Form 10-K filed for the fiscal year
ended October 31, 2008.
  Executive
Overview
  The
Company markets connectors and cables to numerous industries for use in
thousands of products, primarily for the wireless marketplace. In addition, to a
limited extent, the Company also markets wireless products that incorporate
connectors and cables. Since sales of RF connectors and cable assemblies
represented 84% and 85% of the Company’s net sales during the three and nine
month periods ended July 31, 2009 respectively, the Company’s results of
operations and liquidity are principally dependent upon the results of its RF
connector and cable operations.
  Liquidity
and Capital Resources
  Management
believes that existing current assets and the amount of cash it anticipates it
will generate from current operations will be sufficient to fund the anticipated
liquidity and capital resource needs of the Company for at least twelve months.
The Company does not, however, currently have any commercial banking
arrangements providing for loans, credit facilities or similar matters should
the Company need to obtain additional capital. Management’s beliefs that its
existing assets and the cash expected to be generated from operations will be
sufficient during the current fiscal year are based on the
following:
  ·
              As of July 31, 2009, the amount
      of cash and cash equivalents was equal to $2,492,045 in the aggregate and
      the Company had $4,502,074 of investments in certificates of
      deposit.
 
 ·
              As of July 31, 2009, the Company
      had $15,308,406 in current assets, and $776,881 in current
      liabilities.
 
 ·
              As of July 31, 2009, the Company
      had no current or long-term outstanding indebtedness (other than accounts
      payable and accrued
expenses).
  The
Company does not anticipate needing material additional capital equipment in the
next twelve months as it purchased most of the necessary additions during the
first quarter of fiscal 2009. In the past, the Company has financed some of
its equipment and furnishings requirements through capital leases. No additional
capital equipment purchases have been currently identified that would require
significant additional leasing or capital expenditures during the next twelve
months. Management also believes that based on the Company’s current
financial condition, the absence of outstanding bank debt and recent operating
results, the Company would be able to obtain bank loans to finance its
expansion, if necessary, although there can be no assurance any bank loan would
be obtainable or, if obtained, would be on favorable terms or
conditions.
  The
Company earned net income of $387,630 for the nine months ended July 31,
2009.  The Company used $450,000 of cash to pay income taxes, $95,329
to further reduce its accounts payable and $388,411 for prepaid expenses and
deposits, all of which further reduced the Company’s cash.  However,
because the Company generated $650,628 by reducing its inventories and $190,374
from increased collections of its accounts receivable, the Company had a
positive net cash flow of $931,903from operating activities during the nine
months ended July 31, 2009.  Also, during the nine months ended July
31, 2009, the Company liquidated $4,478,821 of certificates of deposit, invested
$2,117,184 of those funds in other certificates of deposit, and purchased
$158,403 of new assets.  As a result of these investing activities,
the Company realized $2,203,234 of net cash from investing
activities.  During the nine month period, the Company also used
$1,609,151 to repurchase shares of its outstanding common stock pursuant to the
publicly announced stock repurchase program and used $94,780 to pay dividends in
January 2009.  As a result of the $931,903 of net cash provided by its
operating activities and the $2,203,234 of net cash provided by investing
activities, the Company’s overall cash position increased by $1,431,207 during
the nine month period ended July 31, 2009 despite the use of $1,703,931 for
financing activities.
  13
  Trade
accounts receivable (net of allowances for doubtful accounts) at July 31, 2009
decreased approximately 10% or by $204,096 to $1,867,253 compared to the October
31, 2008 balance of $2,071,349. The decrease in accounts receivable is due to
improved receivables management, tighter credit policies, increased collection
efforts by the Company and lower sales.
  Inventories
at July 31, 2009 decreased 11% or $650,628 to $5,299,080 compared to $5,949,708
at October 31, 2008. The decrease in inventories is the result of lower
inventory purchases as the Company adjusted its inventory levels in anticipation
of anticipated lower levels of sales in the near future. In addition, because of
the uncertain future global economic and financial conditions, the Company took
efforts to lower its inventory balances including restocking inventories at
slightly lower levels compared to prior periods.
  Other
current assets, including prepaid expenses and deposits, increased $388,411 to
$605,854 as of July 31, 2009, from $217,443 on October 31, 2008 mainly as a
result of the renewal of certain insurance contracts as well as the addition of
prepaid inventory purchases.
  Accounts
payable at July 31, 2009 decreased $95,329 to $234,180 from $329,509 on October
31, 2008. The change in accounts payable is related to a decrease in sales and a
decrease in the purchase of inventories during the current period.
  Net cash
provided by investing activities was $2,203,234 for the nine months ended July
31, 2009 and was attributable to the sale of $4,478,821 of certificates of
deposit, which funds were partially reduces by the Company’ purchase of
$2,117,184 of certificates of deposit securities and the use of $158,403for
capital expenditures.
  Net cash
used in financing activities was $1,703,931 for the nine months ended July 31,
2009, and was attributable to the purchase of $1,609,151 of treasury stock and
$94,780 to pay cash dividends.
  As of July 31, 2009, the Company had a
total of $2,492,045 of cash and cash equivalents compared to a total of
$1,060,838 of cash and cash equivalents as of October 31, 2008. However, the
amount of investments in available-for-sale securities decreased by $2,361,637
to $4,502,074 from $6,863,711 on October 31, 2008 due to certain of the
Company’s certificates of deposit maturing. Collectively, the amount of cash,
available-for-sale securities and certificates of deposit that the Company held
on July 31, 2009 decreased by $930,430 from the amount held on October 31, 2008
due primarily to the use of $1,609,151 to repurchase and retire outstanding
shares of common stock. As of July 31, 2009, the Company had
working capital of $14,531,525 and a current ratio of approximately
20:1.
 
 Results
Of Operations
  Three
Months Ended July 31, 2009 vs. Three Months Ended July 31, 2008
  Net sales
in the current fiscal quarter ended July 31, 2009, decreased by 29%, or
$1,373,348, to $3,294,290 from $4,667,638 in the comparable fiscal quarter of
prior year, as a result of decreased sales in all three of the Company’s
business segments.  The RF Connectors and Cable Assembly segment, the
Company’s largest business unit, experienced a $931,928 decrease in sales during
the July 31, 2009 fiscal quarter compared to the sales in the comparable quarter
in 2008.  Sales at the Medical Cabling and Interconnector segment
decreased by $194,770 while sales at the RF Wireless segment decreased by
$246,649. Sales decreased in all segments compared to the same prior year period
due to current weak economic conditions, which has caused some of the Company’s
distributors to carry lower inventory levels and in turn resulted in lower sales
to these distributors in the second quarter of fiscal 2009.   The
Company believes that the decrease in sales is the result of a general slowdown
of economic activity as a result of the worldwide recession and financial
crisis, and not due to any shift in demand for the Company’s
products.
 
 Foreign
sales during the fiscal quarter ended July 31, 2009 decreased by $368,385 to
$403,575 compared to foreign sales of $771,960 during the fiscal quarter ended
July 31, 2008. Foreign sales represented approximately 12% and 17% of the
Company’s net sales during the fiscal quarters ended July 31, 2009 and 2008,
respectively. The decrease in foreign sales is primarily due to a decrease in
cable assembly sales to one major international customer.
  14
  The
Company’s gross profit as a percentage of sales decreased slightly to 49% during
the current fiscal quarter compared to the fiscal quarter of prior
year.  The Company operates in three segments.  While the
gross profit margin of the RF Connector and Cable Assembly segment remained
consistent at 53% with that of the prior year’s three month ended period,
decreases in gross profits occurred in the RF Wireless segment and in the
Medical Cabling and Interconnector segment.  The gross profit margin
of the RF Wireless segment decreased by 13% to 27% compared with 40% in the
prior comparable quarter due to a decrease in sales of wireless radio modems.
The Company was unable to reduce its fixed cost of goods in the RF Wireless
segment to match the decrease in sales in that segment. The gross profit
margin of the Medical Cabling and Interconnector segment decreased by 5% to 31%
compared with 36% in the prior comparable quarter.  This was due to a
decrease in sales of $194,770 from the prior comparable quarter and a decrease
of $106,928 in cost of goods sold from the prior comparable quarter. During the
third quarter of fiscal 2009, the Company’s fixed component cost of labor was
higher than in the prior comparable quarter of fiscal 2008, which caused a
decrease in gross margins in its segments.  Sales of the RF Connector
and Cable assembly segment accounted for approximately 84% of the Company’s
total sales and 78% of the total cost of goods sold in the current three month
period, compared to 79% of the Company’s total sales and 74% of the total cost
of goods sold in the comparable quarter of prior year.
  Engineering
expenses decreased 8%, or $22,918, to $255,682 from $278,600 in the comparable
quarter of the prior year due to decrease in projects at the RF Wireless segment
started in the second quarter of fiscal 2009.  Notwithstanding the
decrease in engineering expenses, the Company intends to continue to invest in
the development of new and improved products in its RF Wireless business
segment.
  Selling
and general expenses decreased by 3% in the 2009 fiscal quarter to $1,339,847
from $1,381,549 in the comparable quarter of the prior fiscal year. Excluding a
non-cash impairment charge of $209,763 recorded during the fiscal quarter ended
July 31, 2009, the selling and general expenses for the July 31, 2009 fiscal
quarter decreased by 18% compared to comparable 2008 fiscal quarter. The
decrease in selling and general expenses was due primarily to a decrease in
accounting and legal fees and stock option expense from the comparable period in
2008 and to other cost cutting initiatives that the Company commenced
implementing as a result of future market uncertainties.  These
decreases were partially offset by the recognition of $209,763 in total
impairment charges relating to the Radiomobile and Worswick division’s goodwill
balances determined by management to be fully impaired as of July 31,
2009.
  Other
income for the third quarter of 2009 decreased $18,004 compared to the same
period in the prior year as a result of lower investment balances and lower
rates of return.
  As a
result of the decrease in revenues and the decrease in gross profit as a
percentage of sales, income before the provision for income taxes during the
fiscal quarter ended July 31, 2009 decreased by $645,369 to $51,167. Income
before provision for income taxes for the fiscal quarter ended July 30, 2008 was
$696,536.
 
 The
provision for income taxes during the third fiscal quarter of 2009 was $40,590
(or a combined estimated Federal and state income tax rate of approximately
37%), compared to $296,824 in the fiscal quarter ended July 31, 2008 (or a
combined estimated Federal and state income tax rate of approximately 43%). The
79% tax rate for the third quarter resulted from recording our expected annual
tax rate of approximately 38% (before the effects of a $39,000 expense reduction
related to a domestic product activity). The rate was unusually high as pretax
income was low for the quarter.
  The
combination of an overall decrease in sales compared to prior period and a
decrease in gross margins resulted in a $691,985 decrease in gross profits.
Although the decrease in gross profits was partially offset by decreases in
selling and general expenses, the Company’s operating income for the third
fiscal quarter of 2009 decreased from $655,768 to $28,403 in the 2009 period.
The decrease in operating income was partially offset by lower income taxes.
Accordingly, net income for the fiscal quarter ended July 31, 2009 was $10,577
compared to net income of $399,712 for the comparable period of prior
year.
 
 Nine
Months Ended July 31, 2009 vs. Nine Months Ended July 31, 2008
  Net sales
in the nine months ended July 31, 2009, decreased 20%, or $2,600,494 to
$10,401,589 from $13,002,083 in the comparable fiscal quarter of prior year, due
to decreased sales of the Company’s connectors and radio modems. Sales decreased
during the nine month period ended July 31, 2009 from the prior year’s period
due to lower sales in all three of the Company’s business segments as a result
of the current weak economic conditions, which caused some of the Company’s
distributors to carry lower inventory levels and in turn resulted in lower sales
to these distributors.  The largest decreases in sales as a percentage
of sales occurred in the RF Wireless segment, whose sales decreased by $876,671
(or 58%) in the nine-months ended July 31, 2009.  Sales of RF Wireless
products in the 2008 nine-month period reflected revenues from a large sales
order of wireless transponders from the US Military, which order was
substantially filled during the 2008 period. The RF Connector and Cable
Assembly segment also had a significant decrease in net sales during the 2009
fiscal period (a decrease of $1,474,657 or 14%), which was attributable to a
general industry wide slowdown due to the worldwide recession.
 
 Foreign
sales during the nine-month period ended July 31, 2009 decreased by $18,593 to
$1,778,716 compared to foreign sales of $1,797,669 during the nine-month period
ended July 31, 2008.  Foreign sales represented approximately 17% and 14%
of the Company’s net sales during the nine-month period ended July 31, 2009 and
2008, respectively.
  15
  The
Company’s gross profit as a percentage of sales decreased 2% to 48% during the
nine-month period ended July 31, 2009 compared to 50% in the comparable
nine-month period of prior year.  The Company operates in three
segments. While the gross profit margin of the RF Connector and Cable
Assembly segment remained consistent at 52% with that of the prior comparable
nine-month period ended, decreases in gross profits occurred in the RF Wireless
segment and in the Medical Cabling and Interconnector segment.  The
gross profit margin of the RF Wireless segment decreased 13% to 36% compared
with 49% in the prior comparable nine-month period ended. This was due to a
decrease in sales of wireless radio modems, which caused net sales to decrease
by $876,671 to $646,533 from $1,523,204 in the prior comparable
period.  The Company was unable to reduce its fixed cost of goods in
the RF Wireless segment to match the decrease in sales in that
segment.  The gross profit margin of the Medical Cabling and
Interconnector segment decreased by 14% to 21% compared with 35% in the
prior comparable quarter.  This was due to a decrease in sales of
$249,165 from the prior comparable nine months ended coupled with a decrease of
$39,958 in cost of goods sold from the prior comparable quarter. During the
nine-month period ended July 31, 2009, the Company’s fixed component cost of
labor was higher than in the prior comparable period of fiscal 2008, which
caused a decrease in gross margins in its segments. Sales of the RF
Connector and Cable assembly segment accounted for approximately 85% of the
Company’s total sales and 79% of the total cost of goods sold in the current
nine-month period, compared to 79% of the Company’s total sales and 76% of
the total cost of goods sold in the comparable nine-month period of prior
year.
  Engineering expenses
increased 4% or $30,458 to $805,921 from $775,463 in the comparable nine-month
period of the prior year due to increased investment in the development of
products for the RF Wireless segment.
  Selling
and general expenses decreased 8% or $307,051 to $3,736,126 from $4,043,177 in
the comparable nine-month period of the prior year. The decrease in selling and
general expenses was due primarily to a decrease in accounting and legal fees
and stock option expense from the comparable period in 2008 and to other cost
cutting initiatives that the Company commenced implementing as a result of
future market uncertainties.  These decreases were partially offset by
a goodwill impairment relating to the Radiomobile and Worswick divisions in the
amount of $209,763 as management determined these balances to be fully impaired
during the third quarter of fiscal 2009.
  Other
income for the nine months ended July 31, 2009 decreased $29,934 compared with
the same nine-month period of the prior year due to lower rates of return on the
Company’s investment portfolio and also lower investment balances compared with
prior period.
  As a
result of the decrease in revenues, the decrease in gross profit as a percentage
of sales and the increase in engineering expenses, income before provision for
income taxes during the nine months ended July 31, 2009 decreased by 69% or
$1,308,661 to $599,115 from $1,907,776 in the comparable nine-month period of
the prior year.
 
 The
provision for income taxes during the nine months ended July, 31 2009 was
$211,485 (or a combined estimated Federal and state income tax rate of
approximately 35%), compared to $794,071 in the nine months ended July 31,
2008 (or a combined estimated Federal and state income tax rate of approximately
42%). The decrease in the tax rate in the nine-month period of fiscal year 2009
compared to the prior year comparable period is the result of a one-time tax
benefit of approximately $39,000 related to a domestic product activity. Without
this adjustment, the effective tax rate would have approximated the projected
rate for fiscal 2009.
 
 The
combination of an overall decrease in sales compared to prior period and a
decrease in gross margins resulted in a $1,555,320 decrease in gross profits.
Although the decrease in gross profits was offset slightly by decreases in
selling and general expenses, the Company’s operating income for the nine months
ended July 31, 2009 decreased by $1,278,727 to $450,238 from the prior
comparable nine-month period.  The decrease in operating income was
partially offset by lower income taxes. Accordingly, net income for the nine
month period ended July 31, 2009 was $387,630 compared to $1,113,705 for the
same period last year.
  Item
3.  Quantitative and Qualitative Disclosures about Market
Risk
 
 Not applicable
  Item 4T.   Controls and
Procedures
  The
Company maintains disclosure controls and procedures that are designed to ensure
that information required to be disclosed in the Company’s Exchange Act reports
is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission’s rules and forms and that
such information is accumulated and communicated to this Company’s management,
including the Company’s Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow for timely decisions regarding required disclosure. In
designing and evaluating the disclosure controls and procedures, management
recognizes that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives, and management is required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.
  16
 
 As
required by Securities and Exchange Commission Rule 13a-15(b), the Company
carried out an evaluation, under the supervision and with the participation of
the Company’s management, including the Company’s Chief Executive Officer and
the Company’s Chief Financial Officer, of the effectiveness of the design and
operation of the Company’s disclosure controls and procedures as of the end of
the fiscal quarter covered by this report. Based on the foregoing, the Company’s
Chief Executive Officer and Chief Financial Officer concluded that the Company’s
disclosure controls and procedures were effective as of July 30,
2009.
 
 There has
been no change in the Company’s internal control over financial reporting during
the quarter ended July 30, 2009 that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial
reporting.
  Part
II. OTHER INFORMATION
  Item
1.  Legal Proceedings
  Nothing
to report.
  Item
1A.  Risk Factors
  The
discussion of our business and operations should be read together with the risk
factors contained in Item 1A of our Annual Report on Form 10-K for the
fiscal year ended October 31, 2008 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. We are updating the risk factors set forth in our
Annual Report on Form 10-K by including the following risk factor:
 
 Difficult
conditions in the global economy in general have affected our business and
results of operations and these conditions are not expected to improve in the
near future and may worsen.
 
 A
prolonged economic downturn, both in the U.S. and worldwide, may lead to lower
sales or reduced sales growth, reduced prices, lower gross margins, and
increased bad debt risks, all of which could adversely affect the Company’s
results of operations, financial condition and cash flows.  Slowing
economic growth, particularly in the telecommunication and data communication
and wireless communications industries that represent the Company’s largest
target market, may adversely impact the demand for the Company’s
products.  Although the Company’s results of operations have to date
only been moderately affected by the factors noted above, if the current
economic downturn continues or intensifies, the Company’s results could be more
adversely affected in the future.  There could be a number of other
follow-on effects from the credit crisis on the Company’s business, including
insolvency of certain key distributors, key suppliers, contract manufacturers
and customers.
 
 Item
2. Unregistered Sales of Equity Securities and Use of Proceeds.
 
 Unregistered Sales of Equity
Securities.  In January 2009, the Company issued 7,407 shares
of its common stock to Radiomobile, Inc. as additional consideration under an
earn-out provision for the Radiomobile assets that the Company acquired in
August 2007.    The foregoing securities were issued without
the use of a placement agent or underwriter and were exempt from registration
under the Securities Act of 1933 pursuant to Section 4(2) thereof.
 
 Repurchase of
Securities.  In September 2008, the Company announced that our
Board of Directors had authorized a stock repurchase program to repurchase up to
100,000 shares of the Company’s common stock.  In October 2008,
Company announced that our Board of Directors had authorized a stock repurchase
program to repurchase up to an additional 100,000 shares of the Company’s common
stock. In February 2009, Company announced that our Board of Directors had
authorized a stock repurchase program to repurchase up to an additional 300,000
shares of the Company’s common stock. The repurchases may be made from time to
time in the open market transactions in compliance with the Securities Exchange
Act of 1934, or the Exchange Act, Rule 10b-18.  In addition to the
Rule 10b-18 public repurchase program, the Company also repurchased 100,000 and
50,000 shares in private transactions during the three-month periods ended April
30, 2009 and January 31, 2009 respectively.
  17
  
 Period:
                                    
                                    Total Number
                                      of Shares
                                      Purchased
                                    
                                    Average Price
                                      Paid per Share
                                    
                                    Total Number of
                                      Shares
                                      Purchased as
                                      Part of Publicly
                                      Announced Plans
                                      of Programs
                                    
                                    Approximate
                                      Dollar Value of
                                      Shares that May
                                      Yet Be
                                      Purchased
                                      Under the Plans
                                      or ProgramsMay
      1, 2009 through May 31, 2009
                                    
                                    24,480
                                    
                                    $
                                    3.75
                                    
                                    24,480
                                    
                                    $
                                    0June
      1, 2009 through June 30, 2009
                                    
                                    13,641
                                    
                                    $
                                    4.03
                                    
                                    13,641
                                    
                                    $
                                    0July
      1, 2009 through July 31, 2009
                                    
                                    11,565
                                    
                                    $
                                    4.07
                                    
                                    11,565
                                    
                                    $
                                    0Totals
                                    
                                    49,686
                                    
                                    
                                    
                                    
                                    49,686
 
 
 Item
3.  Defaults upon Senior Securities
  Nothing
to report.
  Item
4.  Submission of Matters to a Vote of Security Holders
  On June
5, 2009, the Company held the annual meeting of its shareholders.  At
the meeting, the holders of the Company’s outstanding common stock acted on the
following matters:
 
 A. Total
shares voted.........................................................2,073,636
   (1)
                The
      shareholders voted for six directors, each to serve for a term of one year
      and until his successor is elected.  Each nominee received the
      following votes:
   (1)Name
      of Nominee
                
                Votes
                  For
                
                
                Votes
                  WithheldJohn
      R. Ehret
                
                
                1,984,058
                
                
                
                89,578Marvin
      H. Fink
                
                
                1,932,558
                
                
                
                141,078Howard
      F. Hill
                
                
                1,809,217
                
                
                
                264,419Robert
      Jacobs
                
                
                1,755,117
                
                
                
                318,519Linde
      Kester
                
                
                1,984,058
                
                
                
                89,578William
      L. Reynolds
                
                
                1,984,058
                
                
                
                89,578
  (2)
                  To ratify the
      selection of J.H. Cohn LLP as the Company’s independent registered public
      accounting firm for the fiscal year ending October 31,
      2009.  Votes cast were as
follows:
 
 For
                Against
                Abstain1,952,451
                96,850
                24,335
 18
  Item
5.  Other Information
  Nothing
to report.
  Item
6. Exhibits
  ExhibitNumber31.1:
                    
                    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 September 14,
2009.
 
 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.Dated:
      September 14 , 2009
                  By:
                  /s/
      Howard F. HillHoward
      F. Hill, PresidentChief
      Executive Officer
 
 Dated:
      September 14 , 2009
                  By:
                  /s/
      James DossJames
      DossChief
      Financial Officer
  20