### Optical Cable Faces Accounting Reevaluation Concerns

On December 20, 2024, Optical Cable Corporation (NASDAQ: OCC) revealed a critical reevaluation in its financial reporting. After meticulous scrutiny of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification, alongside insights from major U.S. accounting firms, management confirmed that U.S. Generally Accepted Accounting Principles (“GAAP”) necessitate the reflection of a borrower’s revolving line of credit balance as a current liability under specific conditions.

According to their Revolving Credit Master Promissory Note and Related Loan and Security Agreement, Optical Cable acknowledged mandatory lock box provisions with lenders and a “material adverse change” clause, compelling the reclassification of their Revolver balance as a current liability. Despite the clause’s potential non-utilization for twelve months or a loan maturity exceeding such, GAAP nuances dictated the immediate adjustment.

Consequently, Optical Cable’s Audit Committee, upon consultation with management, determined that financial statements dating back to October 31, 2023, including quarterly reports, need revisiting due to the reclassification implications. The impending Restatement will rectify prior misclassifications but will not influence total assets, liabilities, equity, or other consolidated financial statements.

Importantly, Optical Cable affirmed the non-triggering of the “material adverse change” clause by lenders over the past twelve months, highlighting stability in current credit arrangements. Also, there is no impact on compensation or lender covenants despite the recalibration exercise mandated by GAAP.

The impending Annual Report on Form 10-K for the fiscal year 2024 will incorporate the Restatement for the Non-Reliance Periods, presenting a more accurate portrayal of the company’s financial standing. It’s noteworthy that previous misclassifications did not distort the company’s financial health, nor did they breach any contractual obligations.

In response to these revelations and following discussions with independent registered public accounting firms, Optical Cable is poised to realign and address any discrepancies outlined in the recent 8-K filing. The implications of this accounting reevaluation reflect the company’s commitment to transparent and accurate financial reporting practices.

For further details and updates on Optical Cable Corporation’s evolving financial landscape, investors and stakeholders are encouraged to monitor the company’s filings with the Securities and Exchange Commission closely.

This article was generated by an automated content engine and was reviewed by a human editor prior to publication. For additional information, read Optical Cable’s 8K filing here.

Optical Cable Company Profile

Optical Cable Corporation, together with its subsidiaries, engages in the manufacture and sale of fiber optic and copper data communications cabling and connectivity solutions primarily for the enterprise market in the United States and internationally. The company provides fiber optic and hybrid cables for high bandwidth transmission of data, video, and voice communications; and copper datacom cables, including unshielded and shielded twisted pair constructions.