##### Table of Contents





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 January 31, 2008

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission file number 0-27022





OPTICAL CABLE CORPORATION

(Exact name of registrant as specified in its
charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Virginia                                                       |  | 54-1237042                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

5290 Concourse Drive

Roanoke, Virginia 24019

(Address of principal executive offices, including
zip code)

(540) 265-0690

(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 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 Act).

Large Accelerated Filer   ̈    Accelerated Filer   ̈    Non-accelerated Filer  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

As of March 7, 2008, 6,074,689 shares of the registrants Common Stock, no par value, were outstanding.









---

##### Table of Contents

OPTICAL CABLE CORPORATION

Form 10-Q Index

Three Months Ended January 31, 2008



|           |  |                       |  |                                                                                       |  |   
|---------- |  | --------------------- |  | ------------------------------------------------------------------------------------- |  | --
|           |  |                       |  | Page                                                                                 
|PART I.    |  | FINANCIAL INFORMATION |  |                                                                                      
|           |  |                       | 
|           |  | Item 1.               |  | Financial Statements (unaudited)                                                      |  |   
|           |  |                       | 
|           |  |                       |  | Condensed Balance Sheets  January 31, 2008 and October 31, 2007                      |  | 2 
|           |  |                       | 
|           |  |                       |  | Condensed Statements of Operations  Three Months Ended January 31, 2008 and 2007     |  | 3 
|           |  |                       | 
|           |  |                       |  | Condensed Statement of Shareholders Equity  Three Months Ended January 31, 2008     |  | 4 
|           |  |                       | 
|           |  |                       |  | Condensed Statements of Cash Flows  Three Months Ended January 31, 2008 and 2007     |  | 5 
|           |  |                       | 
|           |  |                       |  | Condensed Notes to Condensed Financial Statements                                     |  | 6 
|           |  |                       | 
|           |  | Item 2.               |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 14
|           |  |                       | 
|           |  | Item 3.               |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 23
|           |  |                       | 
|           |  | Item 4.               |  | Controls and Procedures                                                               |  | 24
|           |  |                      
|PART II.   |  | OTHER INFORMATION     |  |                                                                                      
|           |  |                       | 
|           |  | Item 1A.              |  | Risk Factors                                                                          |  | 25
|           |  |                       | 
|           |  | Item 2.               |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 26
|           |  |                       | 
|           |  | Item 6.               |  | Exhibits                                                                              |  | 27
|           | 
|SIGNATURES |  | 28                   



1



---

##### Table of Contents

PART I. FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

OPTICAL CABLE CORPORATION

Condensed Balance Sheets

(Unaudited)



|                                                                                                                                                        |  |                 |            |                 |   |           
|------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------- | ---------- | --------------- | - | ----------
|                                                                                                                                                        |  | January 31,2008 |            | October 31,2007
|Assets                                                                                                                                                  |  |                 |            |                 |   |           
|Current assets:                                                                                                                                         |  |                 |            |                 |   |           
|Cash and cash equivalents                                                                                                                               |  | $               | 4,067,422  |                 | $ | 3,138,878 
|Trade accounts receivable, net of allowance for doubtful accounts of $240,042 at January 31, 2008 and $246,803 at October 31, 2007                      |  |                 | 8,591,151  |                 |   | 9,056,964 
|Other receivables                                                                                                                                       |  |                 | 170,882    |                 |   | 199,985   
|Inventories                                                                                                                                             |  |                 | 8,053,104  |                 |   | 7,340,370 
|Prepaid expenses and other assets                                                                                                                       |  |                 | 503,056    |                 |   | 371,194   
|Deferred income taxes                                                                                                                                   |  |                 | 729,530    |                 |   | 707,388   
|                                                                                                                                                        |  |                 |            |                 |   |           
|Total current assets                                                                                                                                    |  |                 | 22,115,145 |                 |   | 20,814,779
|                                                                                                                                                        |  |                
|Property and equipment, net                                                                                                                             |  |                 | 12,820,556 |                 |   | 12,896,564
|Note receivable                                                                                                                                         |  |                 | 3,760,677  |                 |   | 3,490,677 
|Other assets, net                                                                                                                                       |  |                 | 84,799     |                 |   | 79,220    
|                                                                                                                                                        |  |                 |            |                 |   |           
|Total assets                                                                                                                                            |  | $               | 38,781,177 |                 | $ | 37,281,240
|                                                                                                                                                        |  |                 |            |                 |   |           
|                                                                                                                                                        |  |                
|Liabilities and Shareholders Equity                                                                                                                    |  |                 |            |                 |   |           
|Current liabilities:                                                                                                                                    |  |                 |            |                 |   |           
|Accounts payable and accrued expenses                                                                                                                   |  | $               | 3,618,748  |                 | $ | 2,968,620 
|Accrued compensation and payroll taxes                                                                                                                  |  |                 | 1,211,110  |                 |   | 1,495,294 
|Income taxes payable                                                                                                                                    |  |                 | 493,068    |                 |   | 413,664   
|                                                                                                                                                        |  |                 |            |                 |   |           
|Total current liabilities                                                                                                                               |  |                 | 5,322,926  |                 |   | 4,877,578 
|                                                                                                                                                        |  |                
|Deferred income taxes                                                                                                                                   |  |                 | 406,025    |                 |   | 425,188   
|Other non-current liabilities                                                                                                                           |  |                 | 76,403     |                 |   |          
|                                                                                                                                                        |  |                 |            |                 |   |           
|Total liabilities                                                                                                                                       |  |                 | 5,805,354  |                 |   | 5,302,766 
|                                                                                                                                                        |  |                 |            |                 |   |           
|Shareholders equity:                                                                                                                                   |  |                 |            |                 |   |           
|Preferred stock, no par value, authorized 1,000,000 shares; none issued and outstanding                                                                 |  |                 |           |                 |   |          
|Common stock, no par value, authorized 50,000,000 shares; issued and outstanding 6,074,689 shares at January 31, 2008 and 6,090,331 at
October 31, 2007 |  |                 | 3,819,154  |                 |   | 3,683,754 
|Retained earnings                                                                                                                                       |  |                 | 29,156,669 |                 |   | 28,294,720
|                                                                                                                                                        |  |                 |            |                 |   |           
|Total shareholders equity                                                                                                                              |  |                 | 32,975,823 |                 |   | 31,978,474
|                                                                                                                                                        |  |                
|Commitments and contingencies                                                                                                                           |  |                 |            |                 |   |           
|                                                                                                                                                        |  |                 |            |                 |   |           
|Total liabilities and shareholders equity                                                                                                              |  | $               | 38,781,177 |                 | $ | 37,281,240
|                                                                                                                                                        |  |                 |            |                 |   |           

See accompanying condensed notes to condensed financial statements.



2



---

##### Table of Contents

OPTICAL CABLE CORPORATION

Condensed Statements of Operations

(Unaudited)



|                                             |      |                               |            |      |  |   |           |  
|-------------------------------------------- | ---- | ----------------------------- | ---------- | ---- |  | - | --------- | -
|                                             |      | Three Months EndedJanuary 31, |           
|                                             | 2008 |                               |            | 2007 | 
|Net sales                                    |      | $                             | 12,661,543 |      |  | $ | 9,276,329 |  
|Cost of goods sold                           |      |                               | 7,329,009  |      |  |   | 6,300,335 |  
|                                             |      |                               |            |      |  |   |           |  
|Gross profit                                 |      |                               | 5,332,534  |      |  |   | 2,975,994 |  
|Selling, general and administrative expenses |      |                               | 3,989,228  |      |  |   | 3,487,016 |  
|                                             |      |                               |            |      |  |   |           |  
|Income (loss) from operations                |      |                               | 1,343,306  |      |  |   | (511,022  | )
|Other income (expense), net:                 |      |                               |            |      |  |   |           |  
|Interest income                              |      |                               | 40,207     |      |  |   | 12,010    |  
|Interest expense                             |      |                               |           |      |  |   | (22,832   | )
|Other, net                                   |      |                               | (14,860    | )    |  |   | 3,200     |  
|                                             |      |                               |            |      |  |   |           |  
|Other income (expense), net                  |      |                               | 25,347     |      |  |   | (7,622    | )
|                                             |      |                               |            |      |  |   |           |  
|Income (loss) before income taxes            |      |                               | 1,368,653  |      |  |   | (518,644  | )
|Income tax expense (benefit)                 |      |                               | 506,704    |      |  |   | (186,659  | )
|                                             |      |                               |            |      |  |   |           |  
|Net income (loss)                            |      | $                             | 861,949    |      |  | $ | (331,985  | )
|                                             |      |                               |            |      |  |   |           |  
|Net income (loss) per share:                 |      |                               |            |      |  |   |           |  
|Basic and diluted                            |      | $                             | 0.14       |      |  | $ | (0.06     | )
|                                             |      |                               |            |      |  |   |           |  

See accompanying condensed notes to condensed financial statements.



3



---

##### Table of Contents

OPTICAL CABLE CORPORATION

Condensed Statement of Shareholders Equity

(Unaudited)



|                              |              |                                     |                  |        |                          |           |  |   |            |  |   |           
|----------------------------- | ------------ | ----------------------------------- | ---------------- | ------ | ------------------------ | --------- |  | - | ---------- |  | - | ----------
|                              |              | Three Months Ended January 31, 2008
|                              | Common Stock |                                     | RetainedEarnings |        | TotalShareholdersEquity
|                              | Shares       |                                     |                  | Amount |                          |          
|Balances at October 31, 2007  |              | 6,090,331                           |                  |        | $                        | 3,683,754 |  | $ | 28,294,720 |  | $ | 31,978,474
|Share-based compensation, net |              | (15,642                             | )                |        |                          | 135,400   |  |   |           |  |   | 135,400   
|Net income                    |              |                                    |                  |        |                          |          |  |   | 861,949    |  |   | 861,949   
|                              |              |                                     |                  |        |                          |           |  |   |            |  |   |           
|Balances at January 31, 2008  |              | 6,074,689                           |                  |        | $                        | 3,819,154 |  | $ | 29,156,669 |  | $ | 32,975,823
|                              |              |                                     |                  |        |                          |           |  |   |            |  |   |           

See accompanying condensed notes to condensed financial statements.



4



---

##### Table of Contents

OPTICAL CABLE CORPORATION

Condensed Statements of Cash Flows

(Unaudited)



|                                                                                         |      |                               |           |      |  |   |           |  
|---------------------------------------------------------------------------------------- | ---- | ----------------------------- | --------- | ---- |  | - | --------- | -
|                                                                                         |      | Three Months EndedJanuary 31, |          
|                                                                                         | 2008 |                               |           | 2007 | 
|Cash flows from operating activities:                                                    |      |                               |           |      |  |   |           |  
|Net income (loss)                                                                        |      | $                             | 861,949   |      |  | $ | (331,985  | )
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |      |                               |           |      |  |   |           |  
|Depreciation and amortization                                                            |      |                               | 355,723   |      |  |   | 368,251   |  
|Bad debt recovery                                                                        |      |                               | (21,061   | )    |  |   | (52,306   | )
|Deferred income tax expense (benefit)                                                    |      |                               | (41,305   | )    |  |   | 38,073    |  
|Share-based compensation expense                                                         |      |                               | 135,400   |      |  |   | 168,981   |  
|(Increase) decrease in:                                                                  |      |                               |           |      |  |   |           |  
|Trade accounts receivable                                                                |      |                               | 486,874   |      |  |   | 2,368,384 |  
|Other receivables                                                                        |      |                               | 29,103    |      |  |   | (12,385   | )
|Inventories                                                                              |      |                               | (712,734  | )    |  |   | 444,769   |  
|Prepaid expenses and other assets                                                        |      |                               | (131,862  | )    |  |   | 101,304   |  
|Other assets, net                                                                        |      |                               | 1,663     |      |  |   | 136,376   |  
|Increase (decrease) in:                                                                  |      |                               |           |      |  |   |           |  
|Accounts payable and accrued expenses                                                    |      |                               | 619,691   |      |  |   | (93,082   | )
|Accrued compensation and payroll taxes                                                   |      |                               | (284,184  | )    |  |   | (1,443    | )
|Income taxes payable                                                                     |      |                               | 79,404    |      |  |   | (227,425  | )
|Other non-current liabilities                                                            |      |                               | 76,403    |      |  |   |          |  
|                                                                                         |      |                               |           |      |  |   |           |  
|Net cash provided by operating activities                                                |      |                               | 1,455,064 |      |  |   | 2,907,512 |  
|                                                                                         |      |                               |           |      |  |   |           |  
|                                                                                         |      |                              
|Cash flows from investing activities:                                                    |      |                               |           |      |  |   |           |  
|Purchase of and deposits for the purchase of property and equipment                      |      |                               | (229,798  | )    |  |   | (232,675  | )
|Investment in other assets                                                               |      |                               | (26,722   | )    |  |   |          |  
|Note receivable                                                                          |      |                               | (270,000  | )    |  |   | (350,000  | )
|                                                                                         |      |                               |           |      |  |   |           |  
|Net cash used in investing activities                                                    |      |                               | (526,520  | )    |  |   | (582,675  | )
|                                                                                         |      |                               |           |      |  |   |           |  
|Cash flows from financing activities:                                                    |      |                               |           |      |  |   |           |  
|Repayment of note payable to bank                                                        |      |                               |          |      |  |   | (990,724  | )
|                                                                                         |      |                               |           |      |  |   |           |  
|Net cash used in financing activities                                                    |      |                               |          |      |  |   | (990,724  | )
|                                                                                         |      |                               |           |      |  |   |           |  
|Net increase in cash and cash equivalents                                                |      |                               | 928,544   |      |  |   | 1,334,113 |  
|Cash and cash equivalents at beginning of period                                         |      |                               | 3,138,878 |      |  |   | 555,272   |  
|                                                                                         |      |                               |           |      |  |   |           |  
|Cash and cash equivalents at end of period                                               |      | $                             | 4,067,422 |      |  | $ | 1,889,385 |  
|                                                                                         |      |                               |           |      |  |   |           |  

See accompanying condensed notes to condensed financial statements.



5



---

##### Table of Contents

OPTICAL CABLE CORPORATION

Condensed Notes to Condensed Financial Statements

Three Months Ended January 31, 2008

(Unaudited)



|(1) | General
|--- | -------

The accompanying unaudited condensed
financial statements of Optical Cable Corporation (the Company) have been prepared in accordance with U.S. generally accepted accounting principles for interim financial reporting information and the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all material adjustments
considered necessary for a fair presentation have been included. Operating results for the three months ended January 31, 2008 are not necessarily indicative of the results for the fiscal year ending October 31, 2008 because the following
items, among other things, may impact those results: changes in market conditions, seasonality, changes in technology, competitive conditions, ability of management to execute its business plans, as well as other variables and contingencies set
forth as risks in the Companys Annual Report on Form 10-K for the fiscal year ended October 31, 2007 or as otherwise identified in other filings by the Company as risks possibly affecting future results. The unaudited condensed financial
statements and condensed notes are presented as permitted by Form 10-Q and do not contain certain information included in the Companys annual financial statements and notes. For further information, refer to the financial statements and notes
thereto included in the Companys annual report on Form 10-K for the fiscal year ended October 31, 2007.



|(2) | Stock Option Plan and Other Share-Based Compensation
|--- | ----------------------------------------------------

As of January 31, 2008, there were approximately 619,000 remaining shares available for grant under the Optical Cable Corporation 2005 Stock Incentive Plan (the 2005 Plan).

Share-based compensation expense recognized in the condensed statements of operations for the three months ended January 31, 2008 and 2007 was as
follows:



|                                      |      |                               |         |      |  |   |         |  
|------------------------------------- | ---- | ----------------------------- | ------- | ---- |  | - | ------- | -
|                                      |      | Three Months EndedJanuary 31, |        
|                                      | 2008 |                               |         | 2007 | 
|Share-based compensation expense      |      | $                             | 161,547 |      |  | $ | 201,814 |  
|Less shares surrendered for taxes     |      |                               | (26,147 | )    |  |   | (32,833 | )
|                                      |      |                               |         |      |  |   |         |  
|                                      |      |                               | 135,400 |      |  |   | 168,981 |  
|Less income tax benefit               |      |                               | 48,744  |      |  |   | 60,833  |  
|                                      |      |                               |         |      |  |   |         |  
|Share-based compensation expense, net |      | $                             | 86,656  |      |  | $ | 108,148 |  
|                                      |      |                               |         |      |  |   |         |  



6



---

##### Table of Contents

OPTICAL CABLE CORPORATION

Condensed Notes to Condensed Financial Statements

Three Months Ended January 31, 2008

(Unaudited)



Stock Option Awards

Employees and outside contractors were issued options to purchase common stock, all of which were issued prior to July 2002. Additionally, during 2002,
non-employee members of the Companys Board of Directors were granted options to purchase shares of the Companys common stock. The exercise price equaled the market price of the Companys common stock on the date of grant. Stock
option activity during the three months ended January 31, 2008 is as follows:



|                                                |  |                  |  |                                |      |                                                   |     
|----------------------------------------------- |  | ---------------- |  | ------------------------------ | ---- | ------------------------------------------------- | ----
|                                                |  | Numberof options |  | Weighted-averageexercise price |      | Weighted-averageremainingcontractualterm (in yrs)
|Outstanding and exercisable at October 31, 2007 |  | 204,456          |  | $                              | 7.76 |                                                   | 4.26
|Forfeited                                       |  |                 |  |                                |     |                                                   |     
|                                                |  |                  |  |                                |      |                                                   |     
|Outstanding and exercisable at January 31, 2008 |  | 204,456          |  | $                              | 7.76 |                                                   | 4.00
|                                                |  |                  |  |                                |      |                                                   |     

Compensation cost related to stock options granted to employees and non-employees prior to July
2002 was fully recognized in fiscal year 2007. Therefore, the Company did not record compensation expense related to its stock option awards during the three months ended January 31, 2008. Compensation cost related to stock option awards for
the three months ended January 31, 2007 totaled $27,358.

Restricted Stock Awards

The Company has granted, and anticipates granting from time to time, restricted stock awards pursuant to approval by the Compensation Committee of the
Board of Directors.

Restricted stock award activity during the three months ended January 31, 2008 consisted of 15,642 restricted
shares forfeited or withheld for taxes.

The Company recorded compensation expense related to its restricted stock awards totaling $161,547
and $174,456, respectively, during the three months ended January 31, 2008 and 2007.

As of January 31, 2008, the maximum amount
of compensation cost related to unvested equity-based compensation awards in the form of service-based, market condition-based, and operational performance-based shares that the Company will have to recognize over a 2.8 year weighted-average period
is $1.7 million.



7



---

##### Table of Contents

OPTICAL CABLE CORPORATION

Condensed Notes to Condensed Financial Statements

Three Months Ended January 31, 2008

(Unaudited)



|(3) | Allowance for Doubtful Accounts for Trade Accounts Receivable
|--- | -------------------------------------------------------------

A summary of changes in the allowance for doubtful accounts for trade accounts receivable for the three months ended January 31, 2008 and 2007 follows:



|                               |      |                              |         |      |  |   |         |  
|------------------------------ | ---- | ---------------------------- | ------- | ---- |  | - | ------- | -
|                               |      | Three Months EndedJanuary 31 |        
|                               | 2008 |                              |         | 2007 | 
|Balance at beginning of period |      | $                            | 246,803 |      |  | $ | 238,455 |  
|Bad debt recovery              |      |                              | (21,061 | )    |  |   | (52,306 | )
|Losses charged to allowance    |      |                              | (1,000  | )    |  |   | (7,350  | )
|Recoveries added to allowance  |      |                              | 15,300  |      |  |   | 473     |  
|                               |      |                              |         |      |  |   |         |  
|Balance at end of period       |      | $                            | 240,042 |      |  | $ | 179,272 |  
|                               |      |                              |         |      |  |   |         |  



|(4) | Inventories
|--- | -----------

Inventories as of January 31,
2008 and October 31, 2007 consist of the following:



|                    |  |                 |           |                 |   |          
|------------------- |  | --------------- | --------- | --------------- | - | ---------
|                    |  | January 31,2008 |           | October 31,2007
|Finished goods      |  | $               | 2,497,224 |                 | $ | 2,484,892
|Work in process     |  |                 | 2,225,277 |                 |   | 1,609,425
|Raw materials       |  |                 | 3,127,908 |                 |   | 3,091,307
|Production supplies |  |                 | 202,695   |                 |   | 154,746  
|                    |  |                 |           |                 |   |          
|Total               |  | $               | 8,053,104 |                 | $ | 7,340,370
|                    |  |                 |           |                 |   |          



|(5) | Note Receivable
|--- | ---------------

On April 22, 2005, the
Company agreed to extend a loan to a start-up connector company, Applied Optical Systems, Inc., (the Borrower), specializing in the design, manufacture and sale of connectors and cable assemblies for certain niche markets. The Borrower
offers complementary products to the Companys product offering and was incorporated in December 2003. The Borrower currently has limited revenues and assets and is incurring net losses. As of January 31, 2008, total assets of the
Borrower, based on unaudited financial information, was equivalent to approximately 4.6% of the Companys total assets. As of October 31, 2007, total assets of the Borrower, based on audited financial information, was equivalent to
approximately 5.2% of the Companys total assets. Total revenue of the Borrower, based on unaudited financial information, was equivalent to approximately 7.9% and 9.6%, respectively, of the Companys net sales for the three month periods
ended January 31, 2008 and 2007.

This loan, and the related transactions described further herein, is part of a strategy designed to
provide the Company with the ability to expand its product line offering in certain market niches in which the Company currently sells its fiber optic cable products and to preserve channels to market for the Companys existing product line
offering in those market niches over the longer term.



8



---

##### Table of Contents

OPTICAL CABLE CORPORATION

Condensed Notes to Condensed Financial Statements

Three Months Ended January 31, 2008

(Unaudited)



Through January 31, 2008, the Company had advanced a total of $3,760,677, net (including accrued
interest and accounts receivable from product sales) to the Borrower. The note receivable, which matures July 31, 2008, is collateralized by all of the Borrowers tangible and intangible property and bears interest at six percent
(6%) per annum. Two of the founders of the Borrower have also personally guaranteed amounts up to two-thirds of the principal balance outstanding on the note receivable plus two-thirds of any accrued interest related to the note receivable. In
connection with the loan, the Company was issued a warrant by the Borrower which, as amended, gives the Company the right to purchase a fifty-six percent (56%) equity interest in the Borrower on a fully diluted, as converted basis, for a
purchase price of $1,500,000. In addition, the Company was granted the right to purchase all other outstanding equity of the Borrower at various times from 2009 through 2012, at a fixed multiple of trailing earnings before interest and taxes (EBIT),
conditioned upon the Companys exercise of the warrant or the Borrowers failure to repay the loan when due. The note receivable is callable by the Company at any time. The Companys rights under the warrant terminate if the warrant
is not exercised prior to the expiration date. Subsequent to January 31, 2008, the Company made additional advances to the Borrower totaling $347,603.

The Company sold fiber optic cables to the Borrower totaling $98,046 during the three months ended January 31, 2008. During the three months ended January 31, 2008, the Borrower sold product to the Company
totaling $164,074. The Company did not include any amount related to these sales of product to the Borrower in note receivable in the accompanying condensed balance sheet as of January 31, 2008.

The Company recorded interest income related to the loan totaling $32,874 and $13,381 during fiscal years 2006 and 2005, respectively, which is included
in note receivable in the accompanying condensed balance sheets as of January 31, 2008 and October 31, 2007. The Company has fully reserved interest income beginning in the third quarter of fiscal year 2006 related to the loan.



|(6) | Product Warranties
|--- | ------------------

As of January 31, 2008 and
October 31, 2007, the Companys accrual for estimated product warranty claims totaled $150,000 and $75,000, respectively, and is included in accounts payable and accrued expenses. Warranty claims expense for the three months ended
January 31, 2008 totaled $119,057. Warranty claims recovery for the three months ended January 31, 2007 totaled $15,786.

The
following table summarizes the changes in the Companys accrual for product warranties during the three months ended January 31, 2008 and 2007:



|                                                                   |      |                              |         |      |  |   |         |  
|------------------------------------------------------------------ | ---- | ---------------------------- | ------- | ---- |  | - | ------- | -
|                                                                   |      | Three Months EndedJanuary 31 |        
|                                                                   | 2008 |                              |         | 2007 | 
|Balance at beginning of period                                     |      | $                            | 75,000  |      |  | $ | 75,000  |  
|Liabilities accrued for warranties issued during the period        |      |                              | 68,239  |      |  |   | 15,440  |  
|Warranty claims and costs paid during the period                   |      |                              | (44,057 | )    |  |   | (9,214  | )
|Changes in liability for pre-existing warranties during the period |      |                              | 50,818  |      |  |   | (31,226 | )
|                                                                   |      |                              |         |      |  |   |         |  
|Balance at end of period                                           |      | $                            | 150,000 |      |  | $ | 50,000  |  
|                                                                   |      |                              |         |      |  |   |         |  



9



---

##### Table of Contents

OPTICAL CABLE CORPORATION

Condensed Notes to Condensed Financial Statements

Three Months Ended January 31, 2008

(Unaudited)



|(7) | Note Payable to Bank
|--- | --------------------

On September 25, 2006,
the Company established revolving credit facilities with Valley Bank. The credit facilities with Valley Bank provide a working capital line of credit (the Working Capital Facility), a machinery and equipment line of credit (the
Machinery and Equipment Facility) and a real estate term loan (the Real Estate Loan). The Working Capital Facility, the Machinery and Equipment Facility and the Real Estate Loan together provide the Company with an aggregate
maximum of $13.5 million in available credit, less any borrowings.

As of January 31, 2008, the Company had credit totaling
approximately $12.0 million unused and available, after considering borrowing base calculations. As of January 31, 2008, the Company had no outstanding borrowings under the Working Capital Facility, the Machinery and Equipment Facility or the
Real Estate Loan.

The Working Capital Facility and the Machinery and Equipment Facility expired on February 28, 2008. The Company and
Valley Bank agreed to extend the Working Capital Facility and the Machinery and Equipment Facility through April 28, 2008. The Company requested an extension for the Working Capital and Equipment and Machinery credit facilities in order to give
the Company time to seek more favorable credit terms from various lenders. The Company is engaged in active discussions with Valley Bank, as well as other financial institutions, to replace the Companys existing credit facilities with credit
facilities the Company believes will be more appropriate, and at least as favorable, for the Companys current and anticipated financing needs. Of the $13.5 million aggregate maximum availability, $6.5 million relates to the Real Estate Loan.
The period of time in which advances under the Real Estate Loan may be made was previously extended by Valley Bank until February 28, 2009.



|(8) | Income Taxes
|--- | ------------

Effective November 1, 2007, the
Company adopted the Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxesan interpretation of FASB Statement No. 109 (FIN 48). FIN 48 clarifies
the accounting for uncertainty in income taxes recognized in an enterprises financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Additionally, FIN 48 provides guidance on derecognition, classification, interest and penalties, accounting in interim
periods, disclosure, and transition. The adoption of FIN 48 did not have a material impact on the Companys financial position, results of operation or liquidity.

At the adoption date of November 1, 2007, the Company had unrecognized tax benefits of $57,766 (inclusive of potential interest and penalties totaling $12,459). As of January 31, 2008, the Company had
$76,403 (inclusive of potential interest and penalties totaling $16,186) of unrecognized tax benefits, of which $55,544 would impact the effective tax rate if recognized. We recognize accrued interest and penalties related to uncertain tax positions
as a component of income tax expense. The Company does not anticipate that the total unrecognized tax benefits recorded as of November 1, 2007 will significantly change during the fiscal year ending October 31, 2008.



10



---

##### Table of Contents

OPTICAL CABLE CORPORATION

Condensed Notes to Condensed Financial Statements

Three Months Ended January 31, 2008

(Unaudited)



The Company files income tax returns in the U.S. federal jurisdiction and in various state
jurisdictions. The statue of limitations remains open for U.S. and certain state income tax examinations for tax years from 2003 and forward.



|(9) | Net Income (Loss) Per Share
|--- | ---------------------------

Basic net income
(loss) per share excludes dilution and is computed by dividing net income (loss) available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted net income (loss) per share reflects the potential
dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the net income (loss) of the Company.

The following is a reconciliation of the numerators and denominators of the net income (loss) per share computations for the periods presented:



|                                              |  |                       |          |   |                     |           |                 |   |       |  
|--------------------------------------------- |  | --------------------- | -------- | - | ------------------- | --------- | --------------- | - | ----- | -
|Three months ended January 31, 2008           |  | Net income(Numerator) |          |   | Shares(Denominator) |           | Per shareamount |  
|Basic net income per share                    |  | $                     | 861,949  |   |                     | 6,090,331 |                 | $ | 0.14  |  
|                                              |  |                       |          |   |                     |           |                 |   |       |  
|Effect of dilutive stock options              |  |                       |         |   |                     |          |                 |   |       |  
|                                              |  |                       |          |   |                     |           |                 |   |       |  
|Diluted net income per share                  |  | $                     | 861,949  |   |                     | 6,090,331 |                 | $ | 0.14  |  
|                                              |  |                       |          |   |                     |           |                 |   |       |  
|                                              |  |                       |         
|Three months ended January 31, 2007           |  | Net loss(Numerator)   |          |   | Shares(Denominator) |           | Per shareamount |  
|Basic net loss per share                      |  | $                     | (331,985 | ) |                     | 6,008,016 |                 | $ | (0.06 | )
|                                              |  |                       |          |   |                     |           |                 |   |       |  
|Effect of dilutive stock options and warrants |  |                       |         |   |                     |          |                 |   |       |  
|                                              |  |                       |          |   |                     |           |                 |   |       |  
|Diluted net loss per share                    |  | $                     | (331,985 | ) |                     | 6,008,016 |                 | $ | (0.06 | )
|                                              |  |                       |          |   |                     |           |                 |   |       |  

Stock options and warrants that could potentially dilute net income (loss) per share in the future
that were not included in the computation of diluted net income (loss) per share (because to do so would have been antidilutive for the periods presented) totaled 204,456 and 458,043 for the three months ended January 31, 2008 and 2007,
respectively.

Otherwise dilutive securities, including stock options and warrants, to acquire approximately 144 shares, net of assumed
proceeds based on exercise price, and with an exercise price less than the stock price as of January 31, 2007, were excluded from the computation of diluted net loss per share for the three months ended January 31, 2007 because their
effect would have been antidilutive.



|(10) | Shareholders Equity
|---- | --------------------

On March 26, 2007,
the Companys Board of Directors approved a plan to purchase and retire up to 300,100 shares of the Companys common stock, or approximately 5% of the shares then outstanding. At the time the plan was approved, the Company anticipated that
the purchases would be made over a 12-month period, but there is no definite time period for repurchase. As of January 31, 2008, the Company had repurchased and retired 141,273 shares of its outstanding common stock. The repurchase of these
shares and the costs associated with the repurchase, including brokerage and legal fees, totaled $722,515. As of January 31, 2008, 6,074,689 shares of the Companys common stock were outstanding.



11



---

##### Table of Contents

OPTICAL CABLE CORPORATION

Condensed Notes to Condensed Financial Statements

Three Months Ended January 31, 2008

(Unaudited)



|(11) | Segment Information and Business and Credit Concentrations
|---- | ----------------------------------------------------------

The Company has a single reportable segment for purposes of segment reporting.

The Company provides credit, in the normal course
of business, to various commercial enterprises, governmental entities and not-for-profit organizations. Concentration of credit risk with respect to trade receivables is limited due to the Companys large number of customers. The Company also
manages exposure to credit risk through credit approvals, credit limits and monitoring procedures. Management believes that credit risks as of January 31, 2008 and October 31, 2007 have been adequately provided for in the condensed
financial statements.

For the three months ended January 31, 2008 no single customer accounted for more than 10% of net sales. For the
three months ended January 31, 2007, 14.1% of net sales were attributable to one major domestic distributor, but no other single customer accounted for more than 10% of the Companys net sales during the first quarter of fiscal year 2007.
For the three months ended January 31, 2008 and 2007, approximately 61% and 73%, respectively, of net sales were from customers located in the United States, and approximately 39% and 27%, respectively, were from customers outside of the United
States. Net sales to Canada in the first quarter of fiscal year 2008 accounted for 17.7% of the Companys net sales.



|(12) | Contingencies
|---- | -------------

From time to time, the Company is
involved in various claims, legal actions and regulatory reviews arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Companys
financial position, results of operations or liquidity.



|(13) | New Accounting Standards
|---- | ------------------------

In September 2006, the
FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), which clarifies the definition of fair value, establishes a framework for measuring fair value under U.S. generally accepted
accounting principles, and expands disclosures regarding fair value measurements. SFAS 157 does not require any new fair value measurements and eliminates inconsistencies in guidance found in various prior accounting pronouncements. SFAS
157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company is currently evaluating the impact of SFAS No. 157.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities(SFAS 159). SFAS 159 allows entities to measure eligible financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate
volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The Statement also establishes presentation and disclosure requirements designed to
facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. The Statement will be effective as of the beginning of an entitys first fiscal year beginning after
November 15, 2007. The Company is currently evaluating the impact of SFAS 159.



12



---

##### Table of Contents

OPTICAL CABLE CORPORATION

Condensed Notes to Condensed Financial Statements

Three Months Ended January 31, 2008

(Unaudited)



In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141(R),
Business Combinations(SFAS 141(R)).SFAS 141(R) requires all business combinations completed after the effective date to be accounted for by applying the acquisition method (previously referred to as the purchase
method). Companies applying this method will have to identify the acquirer, determine the acquisition date and purchase price and recognize at their acquisition-date fair values the identifiable assets acquired, liabilities assumed, and any
noncontrolling interests in the acquiree. In the case of a bargain purchase the acquirer is required to reevaluate the measurements of the recognized assets and liabilities at the acquisition date and recognize a gain on that date if an excess
remains. SFAS 141(R) becomes effective for fiscal periods beginning after December 15, 2008. The Company is currently evaluating the impact of SFAS 141(R).

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB 51(SFAS 160). SFAS 160
amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. The statement requires consolidated net income to be reported at amounts that include the
amounts attributable to both the parent and the noncontrolling interest. It also requires disclosure on the face of the consolidated statement of income, of the amounts of consolidated net income attributable to the parent and to the noncontrolling
interest. In addition, this statement establishes a single method of accounting for changes in a parents ownership interest in a subsidiary that do not result in deconsolidation and requires that a parent recognize a gain or loss in net income
when a subsidiary is deconsolidated. SFAS 160 becomes effective for fiscal periods beginning after December 15, 2008. The Company is currently evaluating the impact of SFAS 160.

As of March 7, 2008, there are no other new accounting standards issued, but not yet adopted by the Company, which are expected to be applicable to
its financial position, operating results or financial statement disclosures.



13



---

##### Table of Contents

|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

Forward Looking Information

This Form 10-Q may contain certain forward-looking information within the meaning of the
federal securities laws. The forward-looking information may include, among other information, (i) statements concerning our outlook for the future, (ii) statements of belief, anticipation or expectation, (iii) future plans,
strategies or anticipated events, and (iv) similar information and statements concerning matters that are not historical facts. Such forward-looking information is subject to risks and uncertainties that may cause actual events to differ
materially from our expectations. Factors that could cause or contribute to such differences include, but are not limited to, the level of sales to key customers, including distributors; timing of certain projects and purchases by key customers; the
economic conditions affecting network service providers; corporate and/or government spending on information technology; actions by competitors; fluctuations in the price of raw materials (including optical fiber); our dependence on a single
manufacturing facility; our ability to protect our proprietary manufacturing technology; market conditions influencing prices or pricing; our dependence on a limited number of suppliers; the loss of or conflict with one or more key suppliers or
customers; an adverse outcome in litigation, claims and other actions, and potential litigation, claims and other actions against us; an adverse outcome in regulatory reviews and audits and potential regulatory reviews and audits; adverse changes in
state tax laws and/or positions taken by state taxing authorities affecting us; technological changes and introductions of new competing products; changes in end-user preferences for competing technologies, including copper cable and wireless,
relative to fiber optic cable; economic conditions that affect the telecommunications sector, certain technology sectors or the economy as a whole; terrorist attacks or acts of war, and any current or potential future military conflicts; changes in
the level of military spending by the United States government; ability to retain key personnel; inability to recruit needed personnel; poor labor relations; the impact of changes in accounting policies, including those by the Securities and
Exchange Commission and the Public Company Accounting Oversight Board; our ability to successfully comply with, and the cost of compliance with, the provisions of Section 404 of the Sarbanes-Oxley Act of 2002 or any revisions to that act which
apply to us; impact of future consolidation among competitors and/or among customers adversely affecting our position with our customers and/or our market position; actions by customers adversely affecting us in reaction to the expansion of our
product offering in any manner, including, but not limited to, by offering products that compete with our customers, and/or by entering into alliances with, and/or making investments in or with, parties that compete with and/or have conflicts with
customers of ours; adverse reactions by customers, vendors or other service providers to unsolicited proposals regarding the acquisition of us by another company; the additional costs of considering and possibly defending our position on such
unsolicited proposals regarding the acquisition of us by another company; impact of weather or natural disasters in the areas of the world in which we operate and market our products; economic downturns and/or changes in market demand, exchange
rates, productivity, or market and economic conditions in the areas of the world in which we operate and market our products, and our success in managing the risks involved in the foregoing.

We caution readers that the foregoing list of important factors is not exclusive and we incorporate by reference those factors included in current reports on Form 8-K.

Dollar amounts presented in the following discussion have been rounded to the nearest hundred thousand, unless the amounts are less than one million, in
which case the amounts have been rounded to the nearest thousand.

Summary of Company Performance for First Quarter 2008

Net sales, gross profit margin and net income all increased in the first quarter of fiscal year 2008, compared to the same period last year. Net sales increased 36.5% to
$12.7 million during the first quarter of our 2008 fiscal year when compared to the same period last year. At the same time, gross profit margin, or gross profit as a percentage of net sales, increased to 42.1% during the first quarter of fiscal
2008, compared to 32.1% during the same period last year. We reported net income of $862,000, or $0.14 per share, during the first quarter of fiscal 2008, compared to a net loss of $332,000, or $0.06 per share, for the comparable period last year.



14



---

##### Table of Contents

We experienced an increase in net sales during the first quarter of fiscal 2008 in our specialty markets compared to the
same period last year. The increase in net sales in our specialty markets was partially offset by a slight decrease in net sales in our commercial market. The timing of projects, and other factors affecting product demand over the short-term,
contributed to the increases in net sales in our specialty markets and the increase in net sales overall.

During the first quarter of fiscal year 2008, we
continued to experience positive impacts (as we did in the second half of fiscal year 2007) on our gross profit margins that we believe are attributable to improvements in our manufacturing efficiencies resulting from the successful integration of
our ERP system. Additionally, during the first quarter of fiscal 2008, we experienced an increase in net sales related to higher margin products, resulting in a substantial increase in our gross profit margin when comparing the first quarters of
fiscal years 2008 and 2007.

Overview of Optical Cable Corporation

We are a leading manufacturer of fiber optic cables primarily sold into the enterprise market, and the premier manufacturer of military ground tactical fiber optic cables for the U.S. military.

Founded in 1983, Optical Cable Corporation pioneered the design and production of fiber optic cables for the most demanding military field applications, as well as of
fiber optic cables suitable for both indoor and outdoor use. Our current broad product offering is built on the evolution of these fundamental technologies, and is designed to provide end-users with fiber optic cables that are easy and economical to
install, provide a high degree of reliability and offer outstanding performance characteristics.

We sell our products worldwide for uses ranging from
commercial and campus installations to customized products for specialty applications and harsh environments, including military applications. We manufacture our high quality fiber optic cables at our ISO 9001:2000 registered and MIL-STD-790F
certified facility located in Roanoke, Virginia.

Our tight-buffered fiber optic cables are used for high bandwidth transmission of data, video and audio
communications. The enterprise market into which we sell includes local area network and premises markets. Our fiber optic cables are well-suited for use in various other short- to moderate-distance applications as well.

We sell our products internationally and domestically through our sales force to our customers, which include major distributors, regional distributors, various smaller
distributors, original equipment manufacturers and value added resellers. Net sales to customers located outside of the United States were 39% and 27% for the three months ended January 31, 2008 and 2007, respectively. Substantially all of our
sales to customers located outside of the United States are denominated in U.S. dollars. We can experience fluctuations in the percentage of net sales to customers outside of the United States from period to period based on the timing of large
orders, coupled with the impact of increases or decreases in sales to customers located in the United States. In the first quarter of fiscal year 2008, we experienced increased net sales to customers located in Canada as a result of two large orders
from two unrelated customers in Canada, totaling in the aggregate, approximately $1.8 million. As a result, net sales to Canada in the first quarter of fiscal year 2008 accounted for 17.7% of our net sales.

Net sales consist of gross sales of products less discounts, refunds and returns. Revenue is typically recognized at the time of product shipment or delivery to the
customer (including distributors) provided that the customer takes ownership and assumes risk of loss, based on shipping terms. During the first quarter of fiscal year 2008, no single customer accounted for more than 10% of our net sales. During the
first quarter of fiscal year 2007, 14.1% of our net sales were attributable to one major domestic distributor, but no other single customer accounted for more than 10% of our net sales during the first quarter of fiscal year 2007.

A significant percentage of the selling price of our fiber optic cable is based on the cost of raw materials used. Single-mode fiber is less expensive than multimode
fiber, and consequently single-mode fiber optic cables have a lower per unit selling price than comparable multimode fiber optic cables. We believe that while the long-haul,



15



---

##### Table of Contents

metropolitan, access and fiber-to-the-premises (FTTX) markets are predominantly the users of single-mode fiber optic cable, that increasingly, single-mode
fiber optic cable is also being used for short- to moderate-distance installations where higher bandwidth is required. However, any trend toward the use of single-mode fiber optic cables in such short- to moderate-distance installations may be
slowed to the extent that 50 micron 10 gigabit multimode fiber optic cables are used to satisfy current bandwidth demands. To the extent that our sales mix shifts toward single-mode cables, we will have to increase the volume of product sold to
maintain our current level of net sales.

Cable containing multimode fiber is generally used for communications over shorter distances where the higher
bandwidth capacity and the higher transmission equipment cost of single-mode fiber is not required. Cable containing single-mode fiber is generally used for communications over longer distances and where higher bandwidth capacity is required.

Cost of goods sold consists of the cost of materials, product warranty costs and compensation costs, and overhead and other costs related to our
manufacturing operations. The largest percentage of costs included in cost of goods sold is attributable to costs of materials.

Selling, general and
administrative expenses (SG&A expenses) consist of the compensation costs for sales and marketing personnel, shipping costs, trade show expenses, customer support expenses, travel expenses, advertising, bad debt expense, the
compensation cost for administration and management personnel, legal and accounting fees, costs incurred to settle litigation or claims and other actions against us, and other costs associated with our operations.

Other income (expense), net consists of interest income, interest expense and other miscellaneous income and expense items not directly attributable to our operations.

Results of Operations

The following table sets forth
and highlights fluctuations in selected line items from our condensed statements of operations for the periods indicated:



|                  |      |                              |            |  |               |           |   |  |       |  
|----------------- | ---- | ---------------------------- | ---------- |  | ------------- | --------- | - |  | ----- | -
|                  |      | Three Months EndedJanuary 31 |            |  | PercentChange |          
|                  | 2008 |                              | 2007       |  |              
|Net sales         |      | $                            | 12,700,000 |  | $             | 9,300,000 |   |  | 36.5  | %
|Gross profit      |      |                              | 5,300,000  |  |               | 3,000,000 |   |  | 79.2  |  
|SG&A expenses     |      |                              | 4,000,000  |  |               | 3,500,000 |   |  | 14.4  |  
|Net income (loss) |      |                              | 862,000    |  |               | (332,000  | ) |  | 359.6 |  

Net Sales

Net
sales increased 36.5% to $12.7 million for the first quarter of fiscal year 2008 from $9.3 million for the same period in 2007. Net sales to customers located outside of the United States continued to show substantial strength in the first
quarter of fiscal year 2008, increasing 94.8% compared to the same period last year, while net sales to customers located in the United States increased 14.9%.

Net sales in our specialty markets increased during the first quarter of fiscal year 2008 compared to the same period last year, slightly offset by decreases in our commercial markets.

Generally, we believe our net sales can be impacted by seasonality factors. We typically expect net sales to be relatively lower in the first half of each fiscal year
and relatively higher in the second half of each fiscal year. This pattern may be substantially altered by the timing of larger projects or other economic factors impacting our



16



---

##### Table of Contents

industry or impacting the industries of our customers and end-users. In the first quarter of fiscal year 2008, we recognized net sales totaling in the
aggregate, approximately $1.8 million as the result of two large international orders. The occurrence of these sales in the first quarter of fiscal 2008 may have altered the seasonality pattern that we would typically expect for fiscal year 2008. As
a result, while we believe seasonality may be a factor that impacts our quarterly net sales results, we are not able to reliably predict net sales based on seasonality because these other factors can also substantially impact our net sales patterns
during the year.

Gross Profit

Gross profit margin, or
gross profit as a percentage of net sales, increased to 42.1% in the first quarter of fiscal 2008 from 32.1% in the first quarter of fiscal 2007. Gross profit increased 79.2% to $5.3 million during the first quarter of fiscal 2008 compared to $3.0
million for the same period last year.

During the first quarter of fiscal 2008, we continued to experience positive impacts (as we did in the second half
of fiscal year 2007) on our gross profit margins that we believe are attributable to the improvements in our manufacturing efficiencies resulting from the successful integration of our ERP system. Additionally, during the first quarter of fiscal
2008, we experienced an increase in net sales related to higher margin products. Our gross profit margin percentages are heavily dependent upon product mix on a quarterly basis and may deviate from expectations based on both anticipated and
unanticipated changes in product mix.

Selling, General, and Administrative Expenses

SG&A expenses increased 14.4% to $4.0 million in the first quarter of 2008 from $3.5 million for the same period last year. SG&A expenses as a percentage of net sales were 31.5% in the first quarter of 2008
compared to 37.6% in the first quarter of 2007.

The increase in SG&A expenses during the first quarter of fiscal year 2008 compared to the same period
last year was primarily due to increased employee compensation. Compensation costs have increased when comparing the first quarter of fiscal year 2008 to the comparable period in fiscal year 2007 largely as a result of increases in employee
incentives due to the financial results during the first quarter of 2008, including increases in commissions due to higher net sales when comparing the first quarters of fiscal year 2008 and 2007.

Other Income (Expense), Net

We recognized other income, net in the
first quarter of fiscal year 2008 of $25,000 compared to other expense, net of $8,000 in the first quarter of fiscal year 2007. Other income (expense), net is comprised of interest income, interest expense and other miscellaneous items.

Income (Loss) Before Income Taxes

We reported income before
income tax expense of $1.4 million for the first quarter of fiscal year 2008 compared to a loss before income tax benefit of $519,000 for the first quarter of fiscal year 2007. This increase was primarily due to the increase in gross profit of $2.4
million in the first quarter of fiscal year 2008 compared to the same period in 2007, partially offset by the $502,000 increase in SG&A expenses.

Income Tax Expense (Benefit)

Income tax expense totaled $507,000 in the first quarter of fiscal year 2008 compared to income tax benefit of
$187,000 for the same period in fiscal year 2007. Our effective tax rate for the first quarter of fiscal year 2008 was 37.0% compared to 36.0% for the first quarter of fiscal year 2007. Generally, fluctuations in our effective tax rates are
primarily due to the amount and timing of various tax deductions and benefits.



17



---

##### Table of Contents

Net Income (Loss)

Net income for the first quarter of 2008 was $862,000 compared to a net loss of $332,000 for the first quarter of fiscal year 2007. This change was due primarily to the income before taxes experienced in the first quarter of fiscal year
2008 compared to a loss before taxes for the comparable period last year, partially offset by the recognition of tax expense in the first quarter of fiscal year 2008 compared to a tax benefit in the same period last year.

Financial Condition

Total assets increased $1.5 million, or 4.0%, to
$38.8 million at January 31, 2008, from $37.3 million at October 31, 2007. This increase was primarily due to a $929,000 increase in cash and cash equivalents and a $713,000 increase in inventories, partially offset by a $466,000
decrease in accounts receivable, net. Further detail regarding the increase in cash is provided in our discussion of Liquidity and Capital Resources. Our increase in inventoriesparticularly work in process inventoryresulted
mainly from efforts to maintain optimal stocking levels for manufacturing efficiencies. The decrease in accounts receivable, net largely resulted from the decrease in net sales in the first quarter of 2008 when compared to the fourth quarter of
2007, coupled with the timing of receipt of payments during the quarter and continued efforts to improve collections.

Total liabilities increased
$503,000, or 9.5%, to $5.8 million at January 31, 2008, from $5.3 million at October 31, 2007. This increase was primarily due to a $366,000 increase in accounts payable and accrued expenses (including accrued compensation and
payroll taxes), largely due to the timing of related payments when comparing the two periods.

Total shareholders equity at January 31, 2008
increased $997,000 in the first quarter of fiscal year 2008. The increase resulted from the impact of share-based compensation totaling $135,000 and net income retained of $862,000.

Liquidity and Capital Resources

Our primary capital needs during the first quarter of 2008 have been to fund working
capital requirements, capital expenditures, and advances to a start-up connector company described further herein. Our primary source of capital for these purposes has been existing cash and cash equivalents and cash provided by operations. As of
January 31, 2008 and October 31, 2007, we had no outstanding balance under our bank lines of credit.

Our cash totaled $4.1 million as of
January 31, 2008, an increase of $929,000, compared to $3.1 million as of October 31, 2007. The increase in cash for the quarter ended January 31, 2008 primarily resulted from net cash provided by operating activities of $1.5 million,
partially offset by capital expenditures totaling $230,000 and advances under a note receivable (described further herein) totaling $270,000.

On
January 31, 2008, we had working capital of $16.8 million compared to $15.9 million on October 31, 2007. The ratio of current assets to current liabilities as of January 31, 2008, was 4.2 to 1, compared to 4.3 to 1 as of
October 31, 2007. The increase in working capital when comparing the periods was primarily caused by the $929,000 increase in cash and the $713,000 increase in inventories, partially offset by the $366,000 increase in accounts payable and
accrued expenses (including accrued compensation and payroll taxes).

Net cash provided by operating activities was $1.5 million in the first quarter of
2008, compared to net cash provided by operating activities of $2.9 million in the first quarter of 2007. Net cash provided by operating activities during the first quarter of fiscal year 2008 primarily resulted from net income of $862,000, plus net
adjustments to reconcile net income to net cash provided by operating activities, including depreciation and amortization of $356,000 and share-based compensation expense of $135,000. Additionally, a decrease in accounts receivable in the amount of
$487,000 and an increase in accounts payable and accrued expenses of $620,000, further contributed to net cash provided by operating activities. All of the aforementioned factors



18



---

##### Table of Contents

positively affecting cash provided by operating activities were partially offset by the increase in inventories of $713,000. Net cash provided by operating
activities during the first quarter of fiscal year 2007 primarily resulted from certain adjustments to reconcile net loss to net cash provided by operating activities, including depreciation and amortization of $368,000 and share-based compensation
expense of $169,000. Additionally, a decrease in accounts receivable in the amount of $2.4 million and a decrease in inventories totaling $445,000, further contributed to net cash provided by operating activities. All of the aforementioned factors
positively affecting cash provided by operating activities were partially offset by a net loss totaling $332,000.

Net cash used in investing activities
totaled $527,000 and $583,000 in the first quarters of fiscal years 2008 and 2007, respectively. Net cash used in investing activities during the first quarters of fiscal years 2008 and 2007 resulted primarily from purchases of property and
equipment and advances made to a start-up connector company described further herein.

On April 22, 2005, we agreed to extend a loan to a start-up
connector company, Applied Optical Systems, Inc., (the Borrower), specializing in the design, manufacture and sale of connectors and cable assemblies for certain niche markets. The Borrower offers complementary products to our product
offering and was incorporated in December 2003. The Borrower currently has limited revenues and assets and is incurring net losses. As of January 31, 2008, total assets of the Borrower, based on unaudited financial information, was equivalent
to approximately 4.6% of our total assets. As of October 31, 2007, total assets of the Borrower, based on audited financial information, was equivalent to approximately 5.2% of our total assets. Total revenue of the Borrower, based on unaudited
financial information, was equivalent to approximately 7.9% and 9.6%, respectively, of our net sales for the three month periods ended January 31, 2008 and 2007.

This loan, and the related transactions described further herein, is part of a strategy designed to provide us with the ability to expand our product line offering in certain market niches in which we currently sell
our fiber optic cable products and to preserve channels to market for our existing product line offering in those market niches over the longer term.

Through January 31, 2008, we advanced a total of $3.8 million, net (including accrued interest and accounts receivable from product sales) to the Borrower. The note receivable, which matures July 31, 2008, is collateralized by all
of the Borrowers tangible and intangible property and bears interest at six percent (6%) per annum. Two of the founders of the Borrower have also personally guaranteed amounts up to two-thirds of the principal balance outstanding on the
note receivable plus two-thirds of any accrued interest related to the note receivable. In connection with the loan, we were issued a warrant by the Borrower which, as amended, gives us the right to purchase a fifty-six percent (56%) equity
interest in the Borrower on a fully diluted, as converted basis, for a purchase price of $1.5 million. In addition, we were granted the right to purchase all other outstanding equity of the Borrower at various times from 2009 through 2012, at a
fixed multiple of trailing earnings before interest and taxes (EBIT), conditioned upon our exercise of the warrant or the Borrowers failure to repay the loan when due. The note receivable is callable by us at any time. Our rights under the
warrant terminate if the warrant is not exercised prior to the expiration date. Subsequent to January 31, 2008, we made additional advances to the Borrower totaling $348,000, net of repayments.

There were no cash flows from financing activities in the first quarter of fiscal year 2008. Net cash used in financing activities totaled $991,000 for the three months
ended January 31, 2007 and resulted from the repayment of a note payable to our bank under our line of credit.

On September 25, 2006, we
established revolving credit facilities with Valley Bank. The credit facilities with Valley Bank provide a working capital line of credit (the Working Capital Facility), a machinery and equipment line of credit (the Machinery and
Equipment Facility) and a real estate term loan (the Real Estate Loan). The Working Capital Facility, the Machinery and Equipment Facility and the Real Estate Loan together provide us with an aggregate maximum of $13.5 million in
available credit, less any borrowings.



19



---

##### Table of Contents

As of January 31, 2008, we had credit totaling approximately $12.0 million unused and available, after considering
borrowing base calculations. As of January 31, 2008, we had no outstanding borrowings under our Working Capital Facility, the Machinery and Equipment Facility or the Real Estate Loan.

The Working Capital Facility and the Machinery and Equipment Facility expired on February 28, 2008. An agreement was reached with Valley Bank to extend the Working
Capital Facility and the Machinery and Equipment Facility through April 28, 2008. We requested an extension for the Working Capital and Machinery and Equipment credit facilities in order to give us time to seek more favorable credit terms from
various lenders. We are engaged in active discussions with Valley Bank, as well as other financial institutions, to replace our existing credit facilities with credit facilities we believe will be more appropriate, and at least as favorable, for our
current and anticipated financing needs. Of the $13.5 million aggregate maximum availability, $6.5 million relates to the Real Estate Loan. The period of time in which advances under the Real Estate Loan may be made was previously extended by Valley
Bank until February 28, 2009.

We believe that our cash flow from operations, our cash on hand and our existing credit facilities, as renewed or
restructured, or any alternative credit facility we may obtain, will be adequate to fund our operations for at least the next twelve months. We anticipate being able to renew or restructure our current credit facilities or obtain other credit
facilities prior to our current credit facilities expiration at terms no less favorable than those of our current facilities.

From time to time, we
are involved in various claims, legal actions and regulatory reviews arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on our financial
position, results of operations or liquidity.

Seasonality

Historically, net sales are relatively lower in the first half of each fiscal year and relatively higher in the second half of each fiscal year, which we believe may be partially due to construction cycles and budgetary considerations of
our customers. For example, an average of approximately 45% of our net sales occurred during the first half of the fiscal year and an average of approximately 55% of our net sales occurred during the second half of the fiscal year for fiscal years
1996 through 2007, excluding fiscal years 2001 and 2002. Fiscal years 2001 and 2002 are excluded because we believe net sales did not follow this pattern due to overall economic conditions in the industry.

We believe our net sales have generally been impacted by seasonality factors where we typically expect net sales to be relatively lower in the first half of each fiscal
year and relatively higher in the second half of each fiscal year. This pattern may be substantially altered by the timing of larger projects or other economic factors impacting our industry or impacting the industries of our customers and
end-users. In the first quarter of fiscal year 2008, we recognized net sales totaling in the aggregate, approximately $1.8 million as the result of two large international orders. The occurrence of these sales in the first quarter of fiscal 2008 may
have altered the seasonality pattern that we would typically expect for fiscal year 2008. As a result, while we believe seasonality may be a factor that impacts our quarterly net sales results, we are not able to reliably predict net sales based on
seasonality because these other factors can also substantially impact our net sales patterns during the year.

Contractual Obligations and Commitments

As of January 31, 2008, we have no disclosable contractual obligations and commitments that will significantly impact our future liquidity.

Critical Accounting Policies and Estimates

Our
discussion and analysis of financial condition and results of operations is based on the condensed financial statements and accompanying condensed notes that have been prepared in accordance with U.S. generally



20



---

##### Table of Contents

accepted accounting principles for interim financial reporting information and the instructions to Form 10-Q and Article 10 of Regulation S-X. The
preparation of these condensed financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed
financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Note
1 to the financial statements filed with our Annual Report on Form 10-K for fiscal year 2007 provides a summary of our significant accounting policies. Those significant accounting policies detailed in our fiscal year 2007 Form 10-K did not change
during the period from November 1, 2007 through January 31, 2008, except that we adopted Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxesan
interpretation of FASB Statement No. 109 (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements in accordance with FASB Statement No. 109,
Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Additionally, FIN 48
provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We adopted FIN 48 as of November 1, 2007, which resulted in no material impact on our results of operations,
financial position or liquidity.

Future Accounting Considerations

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), which clarifies the definition of fair value, establishes a framework
for measuring fair value under U.S. generally accepted accounting principles, and expands disclosures regarding fair value measurements. SFAS 157 does not require any new fair value measurements and eliminates inconsistencies in guidance found
in various prior accounting pronouncements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. We are currently evaluating the
impact of SFAS No. 157.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities(SFAS 159). SFAS 159 allows entities to measure eligible financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities
with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The Statement also establishes presentation and disclosure
requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. The Statement will be effective as of the beginning of an entitys first fiscal year
beginning after November 15, 2007. We are currently evaluating the impact of SFAS 159.

In December 2007, the FASB issued Statement of Financial
Accounting Standards No. 141(R), Business Combinations(SFAS 141(R)).SFAS 141(R) requires all business combinations completed after the effective date to be accounted for by applying the acquisition method
(previously referred to as the purchase method). Companies applying this method will have to identify the acquirer, determine the acquisition date and purchase price and recognize at their acquisition-date fair values the identifiable assets
acquired, liabilities assumed, and any noncontrolling interests in the acquiree. In the case of a bargain purchase, the acquirer is required to reevaluate the measurements of the recognized assets and liabilities at the acquisition date and
recognize a gain on that date if an excess remains. SFAS 141(R) becomes effective for fiscal periods beginning after December 15, 2008. We are currently evaluating the impact of SFAS 141(R).

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements, an
Amendment of ARB 51(SFAS 160). SFAS 160 amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. The statement requires consolidated
net income to be reported at amounts that



21



---

##### Table of Contents

include the amounts attributable to both the parent and the noncontrolling interest. It also requires disclosure on the face of the consolidated statement of
income, of the amounts of consolidated net income attributable to the parent and to the noncontrolling interest. In addition, this statement establishes a single method of accounting for changes in a parents ownership interest in a subsidiary
that do not result in deconsolidation and requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated. SFAS 160 becomes effective for fiscal periods beginning after December 15, 2008. We are currently
evaluating the impact of SFAS 160.

As of March 7, 2008, there are no other new accounting standards issued, but not yet adopted by us, which are
expected to be applicable to our financial position, operating results or financial statement disclosures.



22



---

##### Table of Contents

|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

We do
not engage in transactions in derivative financial instruments or derivative commodity instruments. As of January 31, 2008, our financial instruments were not exposed to significant market risk due to interest rate risk, foreign currency
exchange risk, commodity price risk or equity price risk.



23



---

##### Table of Contents

|Item 4. | Controls and Procedures
|------- | -----------------------

Our management evaluated, with the
participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of the Companys disclosure controls and procedures as of January 31, 2008. Based on this evaluation process, the Chief Executive Officer and Chief
Financial Officer have concluded that the Companys disclosure controls and procedures are effective and that there have been no changes in the Companys internal control over financial reporting that occurred during the last fiscal
quarter ended January 31, 2008 that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.



24



---

##### Table of Contents

PART II. OTHER INFORMATION



|Item 1A. | Risk Factors
|-------- | ------------

There have been no material changes in the risk
factors disclosed in the Companys Form 10-K for the year ended October 31, 2007.



25



---

##### Table of Contents

PART II. OTHER INFORMATION



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

The
following table summarizes the Companys purchases of its common stock for the three months ended January 31, 2008:



|                                     |  |                                    |  |                            |  |                                                                              |  |                                                                               
|------------------------------------ |  | ---------------------------------- |  | -------------------------- |  | ---------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------
|Period                               |  | Total numberof sharespurchased (1) |  | Averageprice paidper share |  | Total number ofshares purchased aspart of
publiclyannounced plans orprograms |  | Maximum numberof shares that mayyet be purchasedunder the plans orprograms (1)
|November 1, 2007  November 30, 2007 |  |                                   |  |                           |  |                                                                             |  | 158,827                                                                       
|December 1, 2007  December 31, 2007 |  |                                   |  |                           |  |                                                                             |  | 158,827                                                                       
|January 1, 2008  January 31, 2008   |  |                                   |  |                           |  |                                                                             |  | 158,827                                                                       



|(1) | On March 26, 2007, the Companys Board of Directors approved a plan to purchase and retire up to 300,100 shares of the Companys common stock, or approximately 5% of
the shares then outstanding. At the time the plan was approved, the Company anticipated that the purchases would be made over a 12-month period, but there is no definite time period for repurchase. For the three month period ended January 31,
2008, the Company did not repurchase and retire any shares of its outstanding common stock. As of January 31, 2008, 6,074,689 shares of the Companys common stock were outstanding.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



26



---

##### Table of Contents

PART II. OTHER INFORMATION



|Item 6. | Exhibits
|------- | --------

The exhibits listed on the Exhibit Index
are filed as part of, and incorporated by reference into, this report.



27



---

##### Table of Contents

SIGNATURES

Pursuant to 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.



|                     |  |                                                                          
|-------------------- |  | -------------------------------------------------------------------------
|                     |  | OPTICAL CABLE CORPORATION                                                
|                     |  | (Registrant)                                                             
|                     | 
|Date: March 14, 2008 |  | /s/ Neil D. Wilkin, Jr.                                                  
|                     |  | Neil D. Wilkin, Jr.                                                      
|                     |  | Chairman of the Board of Directors, President and Chief Executive Officer
|                     | 
|Date: March 14, 2008 |  | /s/ Tracy G. Smith                                                       
|                     |  | Tracy G. Smith                                                           
|                     |  | Vice President and Chief Financial Officer                               



28



---

##### Table of Contents

Exhibit Index



|            |  |                                                                                                                                                                                                                                                                                               
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                   
|3.1         |  | Articles of Amendment filed November 5, 2001 to the Amended and Restated Articles of Incorporation, as amended through November 5, 2001 (incorporated herein by reference to Exhibit 1 to the
Companys Form 8-A filed with the Commission on November 5, 2001).                              
|            | 
|3.2         |  | Bylaws of Optical Cable Corporation, as amended (incorporated herein by reference to Exhibit 3.2 to the Companys Quarterly Report on Form 10-Q for the third quarter ended July 31, 2004
(file number 0-27022)).                                                                             
|            | 
|4.1         |  | Form of certificate representing Common Stock (incorporated herein by reference to Exhibit 4.1 to the Companys Quarterly Report on Form 10-Q for the third quarter ended July 31, 2004 (file
number 0-27022)).                                                                               
|            | 
|4.2         |  | Rights Agreement dated as of November 2, 2001 (incorporated herein by reference to Exhibit 4 to the Companys Form 8-A filed with the Commission on November 5,
2001).                                                                                                                        
|            | 
|4.3         |  | Form of certificate representing preferred share purchase right (incorporated herein by reference to Exhibit 5 to the Companys Form 8-A filed with the Commission on November 5, 2001).                                                                                                      
|            | 
|4.6         |  | Commercial Loan Agreement dated September 22, 2006 by and between Optical Cable Corporation and Valley Bank in the amount of $6,500,000 (Loan No. 156779) (incorporated herein by reference to
Exhibit 4.6 of the Companys Annual Report on Form 10-K for the period ended October 31, 2006).
|            | 
|4.7         |  | Commercial Loan Agreement dated September 22, 2006 by and between Optical Cable Corporation and Valley Bank in the amount of $2,000,000 (Loan No. 156833) (incorporated herein by reference to
Exhibit 4.7 of the Companys Annual Report on Form 10-K for the period ended October 31, 2006).
|            | 
|4.8         |  | Commercial Loan Agreement dated September 22, 2006 by and between Optical Cable Corporation and Valley Bank in the amount of $5,000,000 (Loan No. 156809) (incorporated herein by reference to
Exhibit 4.8 of the Companys Annual Report on Form 10-K for the period ended October 31, 2006).
|            | 
|4.9         |  | Promissory Note dated September 22, 2006 by Optical Cable Corporation in the amount of $2,000,000 (Loan No. 156833) (incorporated herein by reference to Exhibit 4.9 of the Companys Annual
Report on Form 10-K for the period ended October 31, 2006).                                      



---

##### Table of Contents

|      |  |                                                                                                                                                                                                                                                                                                                                
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      | 
|4.10  |  | Credit Line Deed of Trust dated September 22, 2006 between Optical Cable Corporation as Grantor, John T. McCaleb and Catherine J. Hartman as Trustees, and Valley Bank as Lender
(incorporated herein by reference to Exhibit 4.10 of the Companys Annual Report on Form 10-K for the period ended October 31, 2006).         
|      | 
|4.11  |  | Promissory Note dated September 22, 2006 by Optical Cable Corporation in the amount of $6,500,000 (Loan No. 156779) (incorporated herein by reference to Exhibit 4.11 of the Companys Annual
Report on Form 10-K for the period ended October 31, 2006).                                                                      
|      | 
|4.12  |  | Promissory Note dated September 22, 2006 by Optical Cable Corporation in the amount of $5,000,000 (Loan No. 156809) (incorporated herein by reference to Exhibit 4.12 of the Companys Annual
Report on Form 10-K for the period ended October 31, 2006).                                                                      
|      | 
|4.13  |  | Amendment to Commercial Loan Agreement dated October 26, 2007 by and between Optical Cable Corporation and Valley Bank (Loan No. 156779) (incorporated herein by reference to Exhibit 4.13 of the
Companys Annual Report on Form 10-K for the period ended October 31, 2007).                                                 
|      | 
|4.14  |  | Amendment No. 1 dated February 29, 2008 to the Commercial Loan Agreement dated September 22, 2006 by and between Optical Cable Corporation and Valley Bank in the amount of $5,000,000 (Loan No.
156809) (incorporated herein by reference to Exhibit 4.1 of the Companys Current Report on Form 8-K filed February 29, 2008).
|      | 
|4.15  |  | Amendment No. 1 dated February 29, 2008 to the Commercial Loan Agreement dated September 22, 2006 by and between Optical Cable Corporation and Valley Bank in the amount of $2,000,000 (Loan No.
156833) (incorporated herein by reference to Exhibit 4.2 of the Companys Current Report on Form 8-K filed February 29, 2008).
|      | 
|10.1* |  | Employment Agreement by and between Optical Cable Corporation and Neil D. Wilkin, Jr. effective November 1, 2002 (incorporated herein by reference to Exhibit 10.1 to the Companys Amended
Quarterly Report on Form 10-Q/A for the quarterly period ended January 31, 2003 (file number 0-27022)).                            
|      | 
|10.2* |  | Employment Agreement dated December 10, 2004 by and between Optical Cable Corporation and Tracy G. Smith (incorporated herein by reference to Exhibit 10.1 to the Companys Current Report on
Form 8-K dated January 24, 2005 (file number 0-27022)).                                                                          
|      | 
|10.3* |  | Employment Agreement by and between Optical Cable Corporation and Luke J. Huybrechts effective November 1, 2002 (incorporated herein by reference to Exhibit 10.2 to the Companys Amended
Quarterly Report on Form 10-Q/A for the quarterly period ended January 31, 2003 (file number 0-27022)).                             
|      | 
|10.5* |  | Optical Cable Corporation Employee Stock Purchase Plan (incorporated herein by reference to Exhibit 10.9 to the Companys Quarterly Report on Form 10-Q for the period ended July 31, 1998
(file number 0-27022)).                                                                                                             



---

##### Table of Contents

|       |  |                                                                                                                                                                                                                                                                                                      
|------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | 
|10.6*  |  | Optical Cable Corporation 1996 Stock Incentive Plan (incorporated herein by reference to Exhibit 28.1 to the Companys Registration Statement on Form S-8 No. 333-09733).                                                                                                                            
|       | 
|10.7*  |  | Optical Cable Corporation Amended 2004 Non-Employee Directors Stock Plan (incorporated herein by reference to Appendix B to the Companys definitive proxy statement on Form 14A filed
February 23, 2005).                                                                                           
|       | 
|10.8*  |  | Form of December 17, 2004 restricted stock award agreement under the Optical Cable Corporation 1996 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.2 of the Companys
Current Report on Form 8-K filed January 24, 2005).                                                      
|       | 
|10.9*  |  | Form of December 17, 2004 restricted stock award agreement under the Optical Cable Corporation 1996 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.3 of the Companys
Current Report on Form 8-K filed January 24, 2005).                                                      
|       | 
|10.10* |  | Form of award agreement under the Optical Cable Corporation Amended 2004 Non-Employee Directors Stock Plan (incorporated herein by reference to Exhibit 10.10 of the Company Annual Report on Form
10-K for the period ended October 31, 2004).                                                      
|       | 
|10.11* |  | Optical Cable Corporation 2005 Stock Incentive Plan (incorporated by reference to Appendix A to the Companys definitive proxy statement on Form 14A filed February 23,
2005).                                                                                                                       
|       | 
|10.12* |  | Form of time vesting award agreement under the Optical Cable Corporation 2005 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.12 to the Companys Quarterly Report on
Form 10-Q for the period ended April 30, 2006).                                                           
|       | 
|10.13* |  | Form of stock performance vesting award agreement under the Optical Cable Corporation 2005 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.13 to the Companys Quarterly
Report on Form 10-Q for the period ended April 30, 2006).                                              
|       | 
|10.14* |  | Form of operational performance vesting award agreement under the Optical Cable Corporation 2005 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.14 to the Companys
Quarterly Report on Form 10-Q for the period ended April 30, 2006).                                        
|       | 
|10.15  |  | Form of operational performance (Company financial performance measure) vesting award agreement under the Optical Cable Corporation 2005 Stock Incentive Plan (incorporated herein by reference to
Exhibit 10.15 to the Companys Quarterly Report on Form 10-Q for the period ended April 30, 2007).
|       | 
|10.16  |  | Redemption Agreement by and between Optical Cable Corporation and BB&T Investment Services, Inc. dated March 27, 2007 (incorporated herein by reference to Exhibit 10.16 to the Companys
Quarterly Report on Form 10-Q for the period ended April 30, 2007).                                        
|       | 
|11.1   |  | Statement regarding computation of per share earnings (incorporated by reference to note 8 of the Condensed Notes to Condensed Financial Statements contained herein).                                                                                                                               



---

##### Table of Contents

|     |  |                                                                                                                                                                                
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|31.1 |  | Certification of the Companys Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. FILED HEREWITH.                                              
|     | 
|31.2 |  | Certification of the Companys Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. FILED HEREWITH.                                              
|     | 
|32.1 |  | Certification of the Companys Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. FILED
HEREWITH.
|     | 
|32.2 |  | Certification of the Companys Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. FILED
HEREWITH.



|* | Management contract or compensatory plan or agreement.
|- | ------------------------------------------------------