UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS

PURSUANT TO SECTIONS 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended October 31, 20192020

or

For the transition period from ______________ to ________________.

Commission File Number 0-13301

RF INDUSTRIES, LTD.

(Name of registrant as specified in its charter)

7610 Miramar Road, Bldg. 6000, San Diego, California 92126-4202

(Address of principal executive offices) (Zip Code)

(858) 549-6340

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.¨ ☐ Yesx ☒ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.¨ ☐ Yesx ☒ No

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.    x☒ Yes  ¨☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   x☒ Yes  ¨☐ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulations S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter was approximately $47.1$49.4 million.

On December 13, 2019,28, 2020, the Registrant had 9,614,6179,848,246 outstanding shares of Common Stock, $.01 par value.

Forward-Looking Statements:

Certain statements in this Annual Report on Form 10-K (this “Annual Report”), and other oral and written statements made by the Company from time to time are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, including those that discuss strategies, goals, outlook or other non-historical matters, or projected revenues, income, returns or other financial measures. In some cases forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “except,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of such terms or other comparable terminology. These forward-looking statements are subject to numerous risks and uncertainties that may cause actual results to differ materially from those contained in such statements. Among the most important of these risks and uncertainties are the ability of the Company to continue to source its raw materials and products from its suppliers and manufacturers, particularly those in Asia, the market demand for its products, which market demand is dependent to a large part on the state of the telecommunications industry, the effect of future business acquisitions and dispositions, the incurrence of impairment charges, and competition.

Important factors which may cause actual results to differ materially from the forward-looking statements are described in the Section entitled “Risk Factors” in this Form 10-K, and other risks identified from time to time in the Company’s filings with the Securities and Exchange Commission. The Company assumes no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.

PART I

General

RF Industries, Ltd. (together with subsidiaries, the “Company”, “we”, “us”, or “our”) is a national manufacturer and marketer of interconnect products and systems, including coaxial and specialty cables and connectors, fiber optic cables and connectors, and electrical and electronic specialty cables and components. The Company also manufactures and markets a line of ambient thermal systems for wireless telecom companies, as well as shrouds for small cell installations for the wireless industry. Through its fiveour manufacturing and production facilities, the Company provideswe provide a wide selection of interconnect products and solutions primarily to telecommunications carriers and equipment manufacturers, wireless and network infrastructure carriers and manufacturers and to various original equipment manufacturers (OEMs)(“OEMs”) in several market segments. Since our acquisition of Schroff Technologies International, Inc. in November 2019, we also manufacture and sell energy-efficient cooling systems and integrated small cell solutions and related components.

The Company operatesWe operate through two reporting segments: (i) the “RFRF Connector and Cable Assembly” (RF Connector)Assembly (“RF Connector”) segment, and (ii) the “CustomCustom Cabling Manufacturing and Assembly” (Custom Cabling)Assembly (“Custom Cabling”) segment. The RF Connector and Cable Assembly segment primarily designs, manufactures, markets and distributes a broad range of connector and cable products, including coaxial connectors and cable assemblies that are integrated with coaxial connectors, used in telecommunications and information technology OEM markets and other end markets. The Custom Cabling Manufacturing and Assembly segment designs, manufactures, markets and distributes custom copper and fiber cable assemblies, complex hybrid fiber optic and power solution cables, electromechanical wiring harnesses, wiring harnesses ambient thermalfor a broad range of applications in a diverse set of end markets, energy-efficient cooling systems for wireless base stations and shrouds forremote equipment shelters and custom designed, pole-ready 5G small cell installations.integrated enclosures.

In March 2020, the World Health Organization (the “WHO”) declared coronavirus (“COVID-19”) a pandemic emergency. The COVID-19 pandemic has negatively impacted regional and global economies, disrupted global supply chains, and created significant volatility and disruption of financial markets. The global impact of the outbreak has been rapidly evolving and certain jurisdictions, including those where we have operations, have also reacted by instituting quarantines, restrictions on travel, “shelter in place” rules, social distancing protocols and restrictions on types of business that may continue to operate. While we have been deemed an “essential” business, and therefore have been permitted to continue our operations, the impact of the COVID-19 pandemic has affected both our operations and those of our customers. Our operations have been negatively affected by changes that we had to make on our operating methods and procedures, and by our reduced workforce capacity allowed inside our facilities. Many of our customers and vendors have likewise had temporary closures of their facilities and have otherwise been impacted by changes in their industries. As a result, overall demand for our products has been reduced and certain costs have increased. We have taken measures to protect the health and safety of our employees, and we continue to work with our customers and vendors to minimize potential disruptions in addressing the challenges posed by this global pandemic.

Recent Transactions

On October 31, 2018, the Company sold Comnet Telecom Supply, Inc. (“Comnet”), its New Jersey-based manufacturer and supplier of telecommunications and data products, including fiber optic cables, cabling technologies, custom patch cord assemblies, data center consoles and other data center equipment. Comnet was a wholly-owned subsidiary that operated with a different sales model and margin profile than the rest of the Company. This divestiture reflected the Company’s transformation of its operating culture and marketing strategies.

On March 15, 2019, the Companywe purchased the business and assets of C Enterprises L.P., a California based designer and manufacturer of quality connectivity solutions to telecommunications and data communications distributors.

On November 4, 2019, the Companywe purchased Schroff Technologies International, Inc. (“Schrofftech”), a Rhode Island basedIsland-based manufacturer and marketer of intelligent thermal control systems used by telecommunications companies across the U.S. and Canada, and shrouds for small cell integration and installation.

Strategy

The Company’sOur overall strategy is to provide itsour customers with a broad selection of products, rapid and high-quality service, and custom design capabilities, all at competitive prices. Specifically, the Company’s overallour strategy is the following:

Provide rapid and flexible design and manufacturing services. DuringOver the past twofew years the Company has been restructuring its operations to focuswe have focused our organization on providing rapid,a standardized portfolio, allowing for quick turn readily available products, while having the capabilities, flexible design and high quality custom manufacturing services.services to customize our offering to address customer specific requirements or applications.

Competitive Pricingpricing. The Company’sOur manufacturing and distribution arrangements have been designed to lower costs and thereby, to enable the Companyus to offer prices on both theour standard and custom manufactured products and on most standard connector and cable products that are competitive with the marketplace.

Leverage its ourmanufacturing and distribution capabilities and facilities. The Company’sOur strategy is to operate itsour five manufacturing and distribution locations to best provide our customers with a competitively priced, high quality customized product offering delivered with a fast turnaround time. As part of this strategy, the Company utilizeswe utilize a “one-company” approach to itsour five production and distribution locations and allocates itsallocate our resources based on theirthat location’s production specialization capabilities, its proximity to the shipment destination, and manyon other factors. Using this “one-company” approach, the Company’sour goal is to not onlyleverage available capacity and shorten delivery times, but to alsowhile potentially providing lower shipping costs. The Company currently operates from itsTwo of our five manufacturing and distribution locations in the U.S.; twoare located in California, andwhile the other three are in the Northeast.

Integrate marketing and selling efforts. The Company’sOur strategy is to integrate and cross-sell the product lines manufactured at, or distributed by itsour five facilities. The Company hasWe have been integrating the marketing and sales efforts of the five divisions, thereby expanding the number and type of products each division can offer to its existing client base.

Broad range of immediately available connector products. The Company’sOur strategy is to stock a very large selection of connector parts, including parts for older or discontinued products that are available for immediate delivery. As a result, the Company iswe are able to fill smaller orders for unique connector parts,orders, as well as provide a broad range of standard connector products.

Targeted focus of product lines. The Company’s revisedOur strategy is to focus on passive products that are integrated into telecommunications, infrastructure and similar products manufactured by others, rather than manufacturing and selling operating components or products. As a result, the Companywe no longer manufacturesmanufacture radio modems, no longer providesprovide mobile management solutions and services, and no longer manufacturesmanufacture medical monitoring products. Our product line focus still remains on supporting and leveraging our distribution channels with our core RF Cable & Connectors, Passive DAS, and Quick-Turn Fiber/Copper assemblies offering, while in parallel we continue to expand our portfolio of integrated solutions to address key end customer and market applications.

Increase long-term relationships with customers. The Company’sOur goal is to establish longer-termlong-term relationships with the customers who have to date used the Companyus for specialized projects by having the Company’s customizedour solutions built into the customer’s product specifications and billbills of materials. As we remain focused on maintaining and expanding our national distributor relationships through our dedicated sales and management teams, we have invested in a targeted business development efforts to assist in getting more closely aligned with the requirements of strategic end customers.

Grow through strategic and targeted acquisitions. The CompanyWe will continue to consider strategic acquisitions of companies or technologies that can increase or diversify the Company’sour customer base, supplement the Company’sour management team, expand the Company’sour product offerings, and/or expand the Company’sour footprint in a relevant market segment.

Operations

The CompanyWe currently conducts itsconduct operations through itsour five divisions.divisions with our product areas divided into two reporting segments.

RF Connector and Cable Assembly Segment.

The Company’sOur RF Connector and Cable Assembly segment (“RF Connector segment”) consists of the RF Connector and Cable Assembly division (“RF Connector division”) that is based at the Company’sour headquarters in San Diego, California. Although most of the Company’s RF connector and cable products are inventoried and distributed from its San Diego facilities, some of these products also are inventoried and distributed from the Company’s other facilities. The RF Connector division is engaged in the design, manufacture and distribution of coaxial connector solutions for companies that design, build, operate, maintain and use wireless voice, data, messaging, and location tracking systems.a variety of connectivity / communication applications. Coaxial connector products consist primarily of connectors which, when attached to a coaxial cable, facilitate the transmission of analog and digital signals in various frequencies. Although most of the connectors are designed to fit standard cable products, the RF Connector division also sells custom connectors specifically designed and manufactured to suit its customers’ requirements such as the Wi-Fi and broadband wireless markets.requirements.

The Company’s RF Connector division typically carries over 1,500 different types of connectors, adapters, tools, and test and measurements kits. This division’s RF connectors are used in thousands of different devices, products and types of equipment. Since the RF Connector division’s standard connectors can be used in a number of different products and devices, the discontinuation of one product typically does not make the Company’sour connectors obsolete. Accordingly, most connectors carried by the Companythat we carry can be marketed for a number of years and are only gradually phased out.years. Furthermore, because the Company’sour connector products are not dependent on any single line of products or any market segment, the Company’sour overall sales of connectors tend to fluctuate less when there are material changes or disruption to a single product line or market segment. Sales of the Company’s connector products are, however, dependent upon the infrastructure build-out by large telecommunications firms and on the Company’s ability to market its products to these customers.

Cable assembly products manufactured and sold by the RF Connector division consist of various types of coaxial cables that are attached to connectors (usually the Company’sour connectors) for use in a variety of communications applications. Cable assemblies manufactured for the RF Connector division are primarily manufactured at the Company’sour San Diego, California facilities using state-of-the-art automation equipment and are sold through distributors or directly to major OEM accounts. Cable assemblies consistOur cable assembly portfolio consists of both standard and custom cable assemblies and assemblies that are custom manufactureddesigned for the Company’s clients. The Company offersspecific customer requirements. We offer a line of cable assemblies with over 100,000 cable product combinations.

The Company designs itsWe design our connectors at itsour headquarters in San Diego, California. However, most of the RF connectors are manufactured for the Companyus by third-party foreign manufacturers located in Asia.

Custom Cabling Manufacturing and Assembly Segment.

The Custom Cabling segment currently consists of four wholly-owned subsidiaries – three located in the Northeastern U.S and one located in Southern California. Until its sale on October 31, 2018, Comnet Telecom was part of the Custom Cabling segment. C Enterprises, Inc., which the Company acquired in March 2019, and Schrofftech, which was acquired in November 2019, are now part of the Custom Cabling Manufacturing and Assembly segment. Certain of the products manufactured and sold by these East Coast are similar and can be manufactured at either of the East Coast facilities. The Company’sOur plan is to integrate certain aspects of the manufacturing, sales and marketing functions of these divisions so as to better address overlapping market opportunities and to more efficiently manufacture, market, and ship products to the Company’sour customers. The newly acquired Southern California custom cabling manufacturing and assembly facility provides similar products and services to their customers compared to the other East Coast facilities focusing largely on fiber optic and copper cable assemblies.

The four subsidiariesdivisions that comprise the current Custom Cabling segment consist of the following:

Cables Unlimited, Inc. Cables Unlimited, Inc. ("(“Cables Unlimited"Unlimited”) is a custom cable manufacturer located in Yaphank, New York, that RF Industries, Ltd.we acquired in 2011. Cables Unlimited is a Corning Cable Systems CAH Connections SM Gold Program member, authorized to manufacture fiber optic products that are backed by Corning Cable Systems' extended warranty. Cables Unlimited designs, develops and manufactures custom connectivity solutions for the industrial, defense, telecommunications and wireless markets.  The products sold by Cables Unlimited include custom and standard copper and fiber optic cable assemblies, adapters and electromechanical wiring harnesses for communications, computer, LAN, automotive fiber optic and medical equipment.

Rel-Tech Electronics, Inc. RF Industries, Ltd. acquired Rel-Tech Electronics, Inc. ("Rel-Tech"(“Rel-Tech”) was acquired in June 2015. Rel-Tech’s offices and manufacturing facilities are located in Milford, Connecticut. Founded in 1986, Rel-Tech is a designer and manufacturer of cable assemblies and wiring harnesses for blue chip industrial, oilfield, instrumentation, medical and military customers. Wire and cable assembly products include custom wire harnesses, ribbon cable, electromechanical and kitted assemblies, and networking and communications cabling.

C Enterprises, Inc. C Enterprises, Inc. ("(“C Enterprises"Enterprises”) is a fiber optic and copper cable manufacturer located in Vista, California. This subsidiary acquired the business and assets of C Enterprises, L.P. on March 15, 2019. C Enterprises is a Corning Cable Systems CAH Connections SM Gold Program member, authorized to manufacture fiber optic products that are backed by Corning Cable Systems’ extended warranty. C Enterprises designs, develops and manufactures connectivity solutions to telecommunications and data communications distributors.

Schroff Technologies International, Inc. RF Industries, LtdWe acquired Schroff Technologies (“Schrofftech”) in November 2019. Schrofftech is a Rhode Island-basedIsland based manufacturer and marketer of intelligent thermal cooling control systems, along with pole-ready wireless small cell shrouds and enclosures, custom designed for plug-and-play installation. These products are typically used by telecommunications companies across the U.S. and Canada, and shrouds for small cell integration and installation.Canada.

Product Description

The Company producesWe produce a broad rangeoffering of interconnect products and assemblies and other products used in the telecommunications and a broad range of other industries. The products that are offeredwe offer and sold by the Companysell consist of the following:

Connector and Cable Products

The Company designs, manufacturesWe design, manufacture and marketsmarket a broad range of coaxial connectors, coaxial adapters and coaxial cable assemblies for the numerous products with applications in commercial, industrial, automotive, transportation, scientific, aerospace and military markets. Various types of products/connectors include passive DAS related items such as connectors, adapters, splitters, couplers and loads. These connectors are offered in several configurations and cable attachment methods for customer applications.

There are numerous applications for these connectors, some of which include digital applications, 2.5G, 3G, 4G, 5G, LTE, Wi-Fi and other broadband wireless infrastructure, GPS (Global Positioning Systems), mobile radio products, aircraft, video surveillance systems, cable assemblies and test equipment. Users of the Company’sour connectors include telecommunications companies, circuit board manufacturers, OEMs, consumer electronics manufacturers, audio and video product manufacturers and installers, and satellite companies. The Company marketsWe market over 1,500 types of connectors, adapters, tools, assembly, test and measurement kits, which range in price from under $1 to over $1,000 per unit. The kits satisfy a variety of applications including, but not limited to, lab operations, site requirements and adapter needs.

The CompanyWe also designsdesign and sellssell a variety of connector tools and hand tools that are assembled into kits used by lab and field technicians, research and development technicians and engineers. These tools are manufactured for the Companyus by outside contractors. Tool products are carried as an accommodation to the Company’sour customers and have not materially contributed to the Company’sour revenues.

The Company marketsWe market and manufacturesmanufacture cable assemblies in a variety of sizes and combinations of RF coaxial connectors and coaxial cabling. Cabling is purchased from a variety of major unaffiliated suppliers and is assembled predominately with the Company’s connectors or other brands ofour connectors as complete cable assemblies. Coaxial cable assemblies have numerous applications including low PIM, Wi-Fi and wireless local area networks, wide area networks, internet systems, cellular systems including 2.5G, 3G, 4G, 5G, LTE, DAS and Small Cell installations, TV/dish network systems, test equipment, military/aerospace (mil-standard and COTS (Commercial Off–The-Shelf)) and entertainment systems. Cable assemblies are manufactured to customer requirements.

The Company carriesWe carry thousands of separate types of connectors, most of which are available in standard sizes and configurations and that are also offered by other companies. However, the Companywe also hashave some proprietary products, including the CompPro product line, its OptiFlex cables, and the Schrofftech telecom shelter cooling and control system products. CompPro is a patented compression technology that offers advantages for a water-tight, ruggedized connection, providing easier installation, and improved system reliability on braided cables. CompPro is used by wireless network operators, installers and distributors in North America and other parts of the world. OptiFlex is a hybrid fiber optic and DC power cabling solution that the Companywe designed and manufactures,manufactured, and the Schrofftech products are energy efficient cooling/temperature control and filtration systems for use in telecom shelters, outdoor enclosures and battery/power rooms.

Fiber Optic Products

The Company’s Cables Unlimited division is a Corning Cable Systems CAH Connections SM Gold Program member that is authorized to manufacture fiber optic products that are backed by Corning Cable Systems’ extended warranty. Through itsour Cables Unlimited division, the Company offerswe offer a broad range of interconnect products and systems that have the ability to combine radio frequency and fiber optic interconnect components, with various connectors and power cables through customized solutions for these customers. Cables Unlimited also manufactures OptiFlex, a custom designed hybrid fiber optic and DC power cabling solution manufactured for wireless service providers engaged in upgrading their cell towers. The custom hybrid cable is significantly lighter and possesses greater flexibility than cables previously used for wireless service.

C Enterprises is a Corning Cable Systems CAH Connections SM Gold Program member, authorized to manufacture fiber optic products that are backed by Corning Cable Systems’ extended warranty. C Enterprises designs, develops and manufactures connectivity solutions to telecommunications and data communications distributors.

Other CablingProducts

The CompanyWe also designs, manufacturesdesign, manufacture and sellssell cable assemblies and wiring harnesses for industrial, oilfield, instrumentation, medical and military customers. Wire and cable assembly products include custom wire harnesses, ribbon cable, electromechanical and kitted assemblies, networking and communications cabling. DIN and Mini DIN connector assemblies include power cord, coaxial, Mil-spec and testing.

Telecommunications Thermal Control Systems and Shrouds

Since itsour acquisition of Schrofftech in November 2019, the Companywe now also manufacturesmanufacture and sellssell intelligent thermal control systems for outdoor telecommunications equipment. The thermal control systems, which can be controlled offsite using networked software at the telecommunication company’s own data center, maintain the interior temperature of telecommunications equipment. Schrofftech has also introduced shrouds for small cell deployments that reduce installation time and improve aesthetics by eliminating the exterior cabling used with current configurations.

Foreign Sales

Net sales to foreign customers accounted for $1,411,000 (or approximately 3%) of our net sales, and $960,000 (or approximately 2%) of the Company’s net sales, and $662,000 (or approximately 1%) of the Company’sour net sales for the fiscal years ended October 31, 20192020 and 2018,2019, respectively. The majority of the export sales during these periods were to Canada and Mexico.Canada.

The Company doesWe do not own, or directly operate any manufacturing operations or sales offices in foreign countries.

Distribution and Marketing

The CompanyWe currently sells itssell our products through independent warehousing distributors and through itsour in-house marketing and sales team. Sales through independent distributors accounted for approximately 45%55% of theour net sales of the Company for the fiscal year ended October 31, 2019. The Company’s2020. Our agreements with most of the distributors are nonexclusive and generally may be terminated by either party upon 30-60 days’ written notice. The Company directly sells certain of its products to large, national telecommunication equipment and solution providers who include the Company’s products in their own product offerings.

Manufacturing

The Company contractsWe contract with outside third parties for the manufacture of a significant portion of itsour coaxial connectors. However, virtually all of the RF cable assemblies sold by the Company during the fiscal year ended October 31, 20192020 were assembled at the International Organization for Standardization (ISO) approved factory in San Diego, California. The Company procures itsWe procure our raw cable from manufacturers with ISO approved factories in the United States, China and Taiwan. The Company primarily relies on fourteen manufacturersseveral third-party partners for the manufacture of its coaxial connectors, tools and other passive components and several plants for raw cable.receives bulk cable from multiple manufacturing plants. Although the Company doeswe do not have manufacturing agreementscontracts with these manufacturers for itsour connectors and cable products, the Company doeswe do have long-term purchasing relationships with these manufacturers.relationships. There are certain risks associated with the Company’sour dependence on third-party manufacturers for some of itsour products. See “Risk Factors” below. The Company hasWe have in-house design engineers who create the engineering drawings for fabrication and assembly of connectors and cable assemblies. Accordingly, the manufacturers are not primarily responsible for design work related to the manufacture of the connectors and cable assemblies.

The Company manufactures

We manufacture custom cable assemblies, adapters and electromechanical wiring harnesses and other products through Cables Unlimited Inc. at its Yaphank, New York manufacturing facility. The Yaphank facility is an ISO approved factory. Cables Unlimited is a Corning Cable Systems CAH Connections SM Gold Program member, authorized to manufacture fiber optic products and assemblies that are backed by Corning Cable Systems' extended warranty.

The Milford, Connecticut facility of Rel-Tech Electronics, Inc. is an ISO approved manufacturing facility that is primarily used to manufacture cable assemblies, electromechanical assemblies, wiring harnesses and other similar products. 

The Vista, California facility operated by C Enterprises Inc. is an ISO approved manufacturing facility that is primarily used to manufacture fiber optic and copper cable assemblies that are backed by Corning Cable Systems’ extended warranty.

The products sold by Schrofftech are designed and manufactured at that company’sits ISO approved manufacturing facility in North Kingstown, Rhode Island. Schrofftech’s products are manufactured and tested in accordance with the ETL Listing standards.

Raw Materials

Connector materials are typically made of commodity metals such as copper, brass and zinc and include small applications of precious materials, including silver and gold. The RF Connector division purchases most of its connector products from contract manufacturers located in Asia and the United States. The Company believesWe believe that the raw materials used in itsour products are readily available and that the Company iswe are not currently dependent on any supplier for itsour raw materials. The Company doesWe do not currently have any long-term purchase or supply agreements with itsour connector suppliers. The Custom Cabling divisions obtain coaxial connectors from the RF Connector division. The Company believesWe believe there are numerous domestic and international suppliers of other coaxial connectors that the Companywe may need for any of itsour cabling products.

The Cables Unlimited, Rel-Tech, Electronics, C Enterprises, and Schrofftech divisions purchase largely all of the raw materials used in their products from sources located in the United States. Fiber optic cables are available from various manufacturers located throughout the United States; however, Cables Unlimited purchases most of its fiber optic cables from Corning Cables Systems LLC. The Company believes that the raw materials used by Cables Unlimited in its products are readily available and that Cables Unlimited is not currently dependent on any supplier for its raw materials except where Corning Extended Warranty certification is required. Neither Cables Unlimited nor Rel-Tech Electronics currently have any long-term purchase or supply agreements with their connector and cable suppliers.

Employees

As of October 31, 2019, the Company2020, we employed 281271 full-time employees, of whom 5154 were in accounting, administration, sales and management, 224210 were in manufacturing, distribution and assembly, and 6seven were engineers engaged in design, engineering and research and development. The employees were based at the Company’sour facilities in San Diego, California (78(81 employees), Yaphank, New York (76(51 employees), Milford, Connecticut (51(48 employees), Vista, California (79 employees), and Vista, California (76North Kingstown, Rhode Island (12 employees). RF Industries purchased Schrofftech in November 2019. As of the date of this Annual Report, Schrofftech had 12 full-time employees, of whom six were in administration and the rest were in engineering and manufacturing. The CompanyWe also occasionally hireshire part-time employees.

The Company believes We believe that it haswe have a good relationship with itsour employees. The Cables Unlimited division employs five cable installers who are currently represented by a union. Other than the foregoing installers that belong to a union, none of the Company’s other employees are unionized.

Patents, Trademarks and Licenses

The Company ownsWe own ten U.S. patents related to CompPro Product Line that itwe acquired in May 2015. The CompPro Product Line utilizes a patented compression technology that offers revolutionary advantages for a water-tight connection, easier installation, and improved system reliability on braided cables. The CompPro Product Line is used by wireless network operators, installers and distributors in North America and other parts of the world.

The Company’sOur Schrofftech subsidiary owns threefive issued patents (two are owned jointly) on its proprietary telecom shelter cooling and control system technology and its equipment room ventilation controls. Schrofftech has also filed fivefour pending patent applications related to ventilation and control equipment and controls.

The trademarks the Company owns includeswe own include the “CompPro” registered trademark associated with the compression cable product line and the “OptiFlex™” as a trademark for its hybrid cable wireless tower cable solution. The Company and eachEach of itsour subsidiaries also use various trademarks (and associated logos and trade names) in their operations, although none of these trademarks have been registered.

Because the RF Connectors division carries thousands of separate types of connectors and other products, most of which are available in standard sizes and configurations and are also offered by the Company’sour competitors, the Company doeswe do not believe that itsour cables and connector business or competitive position is dependent on patent protection.

Under its agreements with Corning Cables Systems LLC, Cables Unlimited and C Enterprises are permitted to advertise that they are Corning Cables System CAH Connections SM Gold Program members.

Warranties and Terms

The Company warrants itsWe warrant our products to be free from defects in material and workmanship for varying warranty periods, depending upon the product. Products are generally warranted to the dealer for one year, with the dealer responsible for any additional warranty it may make. The RF Connector products are warranted for the useful life of the connectors. Although the Company haswe have not experienced any significant warranty claims to date, there can be no assurance that it will not be subjected to such claims in the future.

The CompanyWe usually sellssell to customers on 30-day terms pursuant to invoices and doesdo not generally grant extended payment terms. Sales to most foreign customers are made on cash terms at time of shipment. Customers may delay, cancel, reduce, or return products after shipment subject to a restocking charge.

Under its agreements with Corning Cables Systems LLC, Cables Unlimited and C Enterprises are authorized to manufacture optic cable assemblies that are backed by Corning Cables Systems’ extended warranty (referred to as the “Gold Certified Warranty”).

Competition

The industries in which we operate are highly competitive, and we compete with thousands of companies that range from large multinational corporations,some of which have greater assets and financial resources, than the Company,to local manufacturers. Competition is generally based on breadth of product offering, product innovation, price, quality, delivery, performance and customer service. InIn addition, rapid technological changes occurring in the communications industry could also lead to the entry of new competitors of all sizes against whom we may not be able to successfully compete.  There can be no assurance that the Companywe will be able to compete successfully against existing or new competition, and the inability to do so may result in price reductions, reduced margins, or loss of market share, any of which could have an adverse effect on the Company’sour business, financial condition and results of operationsoperations.

Government Regulations

The Company’sOur products are designed to meet all known existing or proposed governmental regulations. Management believesWe believe that the Companywe currently meetsmeet existing standards for approvals by government regulatory agencies for itsour principal products.

The Company’sOur products are Restriction on Hazardous Substances (“RoHS”) compliant.

Investor Information.

The Company’sOur principal executive office is currently located at 7610 Miramar Road, Building #6000, San Diego, California. The CompanyRF Industries, Ltd. was incorporated in the State of Nevada on November 1, 1979, completed its initial public offering in March 1984 under the name Celltronics, Inc., and changed its name to RF Industries, Ltd. in November 1990. Unless the context requires otherwise, references to the “Company” in this report include RF Industries, Ltd. and its four wholly-owned subsidiaries, Cables Unlimited, Inc., Rel-Tech Electronics, Inc., C Enterprises, Inc., and Schroff Technologies International, Inc.

The Company’s principal Internet website is located athttp://www.rfindustries.com. The Company’s annual reports, quarterly reports, current reports on Form 8-K and amendments to such reports filed or furnished pursuant to sectionSection 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and other information related to the Company, are available, free of charge, on that website as soon as we electronically file those documents with, or otherwise furnish them to, the Securities and Exchange Commission (“SEC”). Reports filed with the SEC are also available on the SEC’s website atwww.sec.gov. The Company’s Internet website and the information contained therein, or connected thereto, are not and are not intended to be incorporated into this Annual Report on Form 10-K.Report.

Investors should carefully consider the risks described below and all other information in this Form 10-K. The risks and uncertainties described below are not the only ones facing the Company.us. Additional risks and uncertainties not presently known to the Companyus or that itwe currently deemsdeem immaterial may also impair the Company’sour business and operations.

If any of the following risks actually occur, the Company’sour business, financial condition or results of operations could be materially adversely affected. In such case, the trading price of the Company’sour common stock could decline and investors may lose all or part of their investment in the Company’sour common stock.

We The Company Is Heavily Dependent Upon Wireless And Broadband Communications Providers.are heavily dependent upon wireless and broadband communications providers.

Most of the Company’sour revenues and profitability werehave in recent years been generated from products that the Company sells,we sell, directly or through itsour distributors, to the wireless and broadband communications industries. In addition, the Companywe also sellssell connectors, cables and other products to companies that incorporate these products into their own wireless and broadband communications products. As a result, the Company’sour business is heavily dependent upon the wireless and broadband markets.  Demand for the Company’sour products in these markets depends primarily on capital spending by operators for constructing, rebuilding or upgrading their telecommunication systems. The amount of this capital spending and, therefore, the Company’sour sales and profitability, will be affected by a variety of factors affecting the telecommunications companies, including general economic conditions, consolidation within the telecommunications industry and the financial condition of operators. There can be no assurance that existing levelsAlthough we sell many products into many different markets other than the telecommunications marketplace, because a major portion of capital spending will continue or that spending will not decrease. A significant decline in capital expenditures byour revenues has historically been derived from direct and indirect sales to wireless and broadband communications companies, couldour financial condition and results of operations are heavily influenced by the health and growth of the wireless and broadband markets, all of which is beyond our control.

The COVID-19 public health pandemic is adversely affecting, and is expected to continue to adversely affect, certain aspects of our business.

The COVID-19 pandemic, and the reactions of governmental and other authorities to contain, mitigate or combat the pandemic, which have severely restricted the level of economic activity around the world, have impacted, and are expected to continue to impact, our operations, and the nature, extent and duration of the impact of the COVID-19 pandemic or any future disease or adverse health condition is highly uncertain and beyond our control. In response to the COVID-19 pandemic, Federal, state and local governmental agencies have taken and may again take preventative or protective actions, such as imposing restrictions on travel and business operations. The COVID-19 pandemic, and the government’s reaction to the pandemic have significantly slowed capital expenditures in the primary markets for our products, which has resulted in a material adverse effectsignificant reduction in demand for our products.

Although we have implemented measures to mitigate the impact of the COVID-19 pandemic on the Company’sour business, financial condition and results of operations.

The Company’s Recent Increases In Revenues and Profits Are Due In Large Part To Accelerated Spending Related to Upgradesoperations, including reducing our expenses in certain areas of our business, these measures will not fully mitigate the adverse impact of the U.S. Wireless InfrastructureCOVID-19 pandemic on our business, financial condition and Networks, And Any Decline In This Activityresults of operations. We cannot predict the degree to, or the Related Capital Expenditures Could Have A Material Negative Affect On The Company’s Operations And Financial Condition.

A major portionperiod over, which we will be affected by the COVID-19 pandemic and resulting governmental and other measures. However, we expect that the economic effects of the Company’s recent growth in both revenues and profitability is due to increased sales by the Company of products, particularly custom made products manufactured by the Company’s Custom Cabling segment, used to build out and/or upgrade the U.S. wireless infrastructure and related networks. The upgrades to the infrastructure are to both support existing 4G networks, as well as to lay the groundwork for mobile 5G networks. The Company’s products used to build out and upgrade cell tower networks include certain types of custom cabling, fiber optic cable, copper cabling, and hybrid fiber and power cables. Most of the Company’s recent sales of cell tower upgrade products were made, directly or through the Company’s distributors, to a small number of end users. The Company’s revenues and profits could abruptly and materially decrease if any of the Company’s primary end user customers slow down or decrease their purchases of the Company’s products. No assurance can be given that the Company willCOVID-19 pandemic may continue to benefit fromadversely affect demand for certain of our products for the recent increase in wireless network improvements by U.S. wireless carriers.foreseeable future.

We The Company Depends On Third-Party Contract Manufacturers For A Majority Of Its Connector Manufacturing Needs.depend on third-party contract manufacturers for amajority of our connector manufacturing needs. If They Are Unable To Manufacture A Sufficient Quantity Of High-Quality Products On A Timely And Cost-Efficient Basis, The Company’s Net Revenue And Profitability Would Be Harmed And Its Reputation May Suffer.they are unable to manufacture asufficient quantity of high-quality products on atimely and cost-efficient basis, our net revenue and profitability would be harmed and our reputation may suffer.

Substantially all of the Company’s RF Connector division’s connector products are manufactured by third-party contract manufacturers. The Company reliesWe rely on them to procure components for RF connectors and in certain cases to design, assemble and test itsthe products on a timely and cost-efficient basis. If the Company’sour contract manufacturers are unable to complete design work on a timely basis, the Companywe will experience delays in product development and itsour ability to compete may be harmed. In addition, because some of the Company’sour manufacturers have manufacturing facilities in Taiwan and China, their ability to provide the Companyus with adequate supplies of high-quality products on a timely and cost-efficient basis is subject to a number of additional risks and uncertainties, including political, social and economic instability and factors that could impact the shipment of supplies. If the Company’sour manufacturers are unable to provide itus with adequate supplies of high-quality products on a timely and cost-efficient basis, the Company’sour operations would be disrupted and itsour net revenue and profitability would suffer. Moreover, if the Company’sour third-party contract manufacturers cannot consistently produce high-quality products that are free of defects, the Companywe may experience a higher rate of product returns, which would also reduce itsour profitability and may harm the Company’sour reputation and brand.

The Company doesWe do not currently have any long-term supply agreements with any of itsour contract manufacturers, and such manufacturers could stop manufacturing products for the Companyus at any time. Although the Company believeswe believe that itwe could locate alternate contract manufacturers if any of its manufacturers terminated theirour business, the Company’sour operations could be impacted until alternate manufacturers are found.

Our The Company’s Prior Acquisitions And Potential Additional Future Acquisitions Could Increase Operating Costs And Expose The Company To Additional Risks.prior acquisitions and potential additional future acquisitions could increase operating costs and expose us to additional risks.

As part of itsour plan to operate businesses that are profitable and that reflect the changing market, the Companywe from time to time sellssell unprofitable divisions and purchasespurchase new businesses. Such recent transactions include the disposition of its Comnet Telecom subsidiary on October 31, 2018, and the purchase of itsour new C Enterprises and Schrofftech subsidiaries in 2019. In addition, the Company haswe have previously disclosed that, as part of itsour growth strategy, the Company intendswe intend to make additional acquisitions of businesses in the future. While the Company believeswe believe that restructuring itsour operations and acquiring other businesses will benefit the Companyus in the longer term, these dispositions and acquisitions have in the short term caused the Companyus to incur additional legal, accounting and administrative expenses, including the cost of integrating the various accounting systems of itsour new subsidiaries, upgrading itsour information systems, and the cost of managing various divisions in separate locations and states. The CompanyWe may in the future make additional acquisitions. Accordingly, the Companywe will be subject to numerous risks associated with the acquisition of additional businesses, including:

Any of these risks could materially harm the Company’sour business, financial condition and results of operations. There can be no assurance that any business that the Company acquireswe acquire will achieve anticipated revenues or operating results.

Our The Company’s Dependence On Third-Party Manufacturers Increases The Risk That It Will Not Have An Adequate Supply Of Products Or That Its Product Costs Will Be Higher Than Expected.dependence on third-party manufacturers increases the risk that we will not have an adequate supply of products or that our product costs will be higher than expected.

The risks associated with the Company’sour dependence upon third parties which develop and manufacture and assemble the Company’s products, include:

These risks may lead to increased costs or delay product delivery, which would harm the Company’sour profitability and customer relationships.

An Impairment In The Carrying Value Of Goodwill, Trade Names And Other Long-Lived Assets Could Negatively Affect The Company’s Consolidated Results Of Operations And Net Worth.impairment in the carrying value of goodwill, tradenames and other long-lived assets could negatively affect ourconsolidated results of operations and net worth.

Goodwill and indefinite-lived intangible assets, such as trade names, are recorded at fair value at the time of acquisition and are not amortized, but are reviewed for impairment annually or more frequently if impairment indicators arise. In evaluating the potential for impairment of goodwill and trade names, we make assumptions regarding future operating performance, business trends and market and economic conditions. There are inherent uncertainties related to these factors and in applying these factors to the assessment of goodwill and trade name recoverability. Goodwill reviews are prepared using estimates of fair value based on the estimated present value of future discounted cash flows. The CompanyWe could be required to evaluate the recoverability of goodwill or trade names prior to the annual assessment upon unexpected significant declines in operating results, the divestiture of a significant component of the Company’sour business or other factors.

No assurance can be given that events or circumstances will not change regarding the carrying value of goodwill of the Cables Unlimited, Rel-Tech, C-Enterprises and Schrofftech subsidiaries or the CompPro product line. Should the Companywe in the future determine that the carrying value of the goodwill associated with some or all of these assets no longer is recoverable, the Companywe will have to record additional impairment losses. In the event that the Company haswe have to record material impairment charges on the Cables Unlimited, Rel-Tech, C-Enterprises or Schrofftech subsidiaries or the CompPro product line, such future charges could materially reduce future earnings, which would negatively affect the Company’sour stock price.

Changes In Technology May Reduce The Demand For Some Of The Company’s Products.in technology may reduce the demand for some of ourproducts.

The wireless and telecommunications industry is rapidly changing. Changes in the product demands by telecommunications and other infrastructure companies may make certain of the Company’sour current products obsolete. Accordingly, the Companywe must timely react to technological developments and provide new products to meet the shifting demands of its customers. The Company’sOur failure to successfully introduce new or enhanced products on a timely and cost-competitive basis could have a material adverse effect on the Company’s results of our operations and financial condition.

If The Manufacturers Of The Company’s Coaxial Connectors Or Other Products Discontinue The Manufacturing Processes Needed To Meet The Company’s Demands Or Fail To Upgrade Their Technologies, The Company May Face Production Delays.the manufacturers of ourcoaxial connectors or other products discontinue the manufacturing processes needed to meet our demands or fail to upgrade their technologies, we may face production delays.

The Company’sOur coaxial connector and other product requirements typically represent a small portion of the total production of the third-party manufacturers. As a result, the Company iswe are subject to the risk that a third-party manufacturer will cease production of some of the Company’sour products or fail to continue to advance the process design technologies on which the manufacturing of the Company’sour products are based. Each of these events could increase the Company’sour costs, harm itsour ability to deliver products on time, or develop new products.

Our While The Company Has In The Past Paid Dividends, No Assurance Can Be Given That The Company Will Declare Or Pay Cash Dividends In The Future.dependence upon independent distributors to sell and market our products exposes us to the risk that such distributors may decrease their sales of our products or terminate their relationship with us.

During fiscal 2019, the Company made four dividends distributions to its stockholders (for a total of $0.08 per share). Dividends are declared and paid at the discretion of the Board of Directors subject to applicable laws, and depend on a number of factors, including our financial condition, results of operations, capital requirements, plans for future acquisitions, contractual restrictions, general business conditions and other factors that our Board of Directors may deem relevant. If the Company does not pay a cash dividend, the Company’s stockholders will not realize a return on their investment in the Common Stock except to the extent of any appreciation in the value of the Common Stock. 

The Company’s Dependence Upon Independent Distributors To Sell And Market The Company’s Products Exposes The Company To The Risk That Such Distributors May Decrease Their Sales Of The Company’s Products Or Terminate Their Relationship With The Company.

The Company’sOur sales efforts are primarily affected through independent distributors. Although the Company haswe have entered into written agreements with most of the distributors, the agreements are nonexclusive and generally may be terminated by either party upon 30-60 days’ written notice. The Company’sOur distributors are not within theour control, of the Company, are not obligated to purchase products from the Company,us, and may also sell other lines of products. There can be no assurance that these distributors will continue their current relationships with the Companyus or that they will not give higher priority to the sale of other products, which could include products of competitors. A reduction in sales efforts or discontinuance of sales of the Company’sour products by itsour distributors would lead to reduced sales and could materially adversely affect the Company’sour financial condition, results of operations and business. Selling through indirect channels such as distributors may limit the Company’sour contact with itsour ultimate customers and the Company’sour ability to assure customer satisfaction.

A Material Portion Of The Company’s Sales Is Dependent Upon A Few Principal Customers, The Loss Of Whom Could Materially Negatively Affect The Company’s Total Sales.material portion of oursales is dependent upon afew principal customers, the loss of whom could materially negatively affect our total sales.

Two customers, a distributorboth distributors, accounted for approximately 14% and 12% of our net sales for the fiscal year ended October 31, 2020. These two distributors each had accounts receivable balances that accounted for 12% of the total net accounts receivable balance at October 31, 2020. For the fiscal year ended October 31, 2019, one of these distributors and a wireless carrier accounted for approximately 19% and 23%, respectively, of the Company’sour net sales, respectively, for the fiscal year ended October 31, 2019. One distributor accounted for approximately 62% of the Company’s net sales for the year ended October 31, 2018.sales. The wireless carrier’s accounts receivable balance accounted for approximately 56% of the total net accounts receivable balance at October 31, 2019. The distributor’s accounts receivable balance accounted for approximately 48% of the total net accounts receivable balance at October 31, 2018.

None of these customers have entered into long-term written agreements with the Company,us, nor do they have any minimum purchase obligations. Accordingly, these customers could stop buying the Company’sour products at any time and for any reason. Also, a significant portion of the Company’s recently increased sales have been sold indirectlyfrom time to time we also sell products directly to a few end userslarger end-users for use in upgrading and building out thetheir wireless network infrastructure. A reduction, delay or cancellation of orders from these customers or the loss of the distributorour major distributors or theany of our primary end userend-user customers of the Company’s wireless product could significantly reduce the Company’s futureour revenues and profits. The CompanyWe cannot provide assurance that itsour existing distributors or primary end-user customers will continue to purchase at the current or historical levels or that the Company will be able to obtain orders from new customers.use us as a primary source of their product requirements.

Difficult Conditions In The Global Economy May Adversely Affected the Company’s Business And Results Of Operations.conditions in the global economy may adversely affected ourbusiness and results of operations.

A prolonged economic downturn, both in the U.S. and worldwide, could lead to lower sales or reduced sales growth, reduced prices, lower gross margins, and increased bad debt risks, all of which could adversely affect the Company’sour results of operations, financial condition and cash flows. Slowing economic activity, particularly in the telecommunication and data communication and wireless communications industries that represent the Company’sour largest target market, may adversely impact the demand for the Company’sour products. If the current economic condition in the U.S. deteriorates, the Company’sour results could be adversely affected as demand for wireless products lessens. There could also be a number of other adverse follow-on effects on the Company’sour business from a deterioration of economic conditions or from a credit crisis, including insolvency of certain key distributors, key suppliers, contract manufacturers and customers.

Changes In Income Tax And Other Regulatory Legislation.

The Company operates in compliance with applicable laws and regulations and attempts to structure its operations based upon existing laws and anticipated future changes in the law. However, when new legislation is enacted, or when new interpretations or applications of existing laws are made, the Company may need to implement changes in its policies or manner of operations, which changes could negatively affect the Company’s operations. The Company is, therefore, susceptible to unanticipated changes in legislation, especially relating to income and other taxes, import/export laws, hazardous materials, tariffs and other laws related to trade, accounting and business activities. Such changes in legislation may have an adverse effect on our business.

Because The Markets In Which The Company Competes Are Highly Competitive, A Failure To Effectively Compete Could Result In An Immediate And Substantial Loss Of Market Share.the markets in which wecompete are highly competitive, afailure to effectively compete could result in an immediate and substantial loss of market share.

The markets in which the Company operateswe operate are highly competitive and the Company expectswe expect that competition will increase in these markets. In particular, the wireless and telecommunications markets in which most of the Company’sour products are sold are intensely competitive. A failure to effectively compete in this market could result in an immediate and substantial loss of revenues and market share. Because most of the Company’sour sales are derived from products that are not proprietary or that can be used to distinguish the Companyus from itsour competitors, the Company’sour ability to compete successfully in these markets depends on a number of factors, including:

The Company’sOur revenues may suffer if the Company iswe are not able to effectively satisfy itsour customers in each of the foregoing ways. In addition, the Company’sour competitors or customers may offer enhancements to its existing products or offer new products based on new technologies, industry standards or customer requirements that have the potential to replace or provide lower-cost or higher performance alternatives to the Company’sour products. The introduction of enhancements or new products by the Company’sour competitors could render itsour existing and future products obsolete or unmarketable.

Many of the Company’sour competitors have significantly greater financial and other resources. In certain circumstances, the Company’sour customers or potential customers have internal manufacturing capabilities with which the Companywe may compete.

If The Industries Into Which The Company Sells Its Products Experience Recession Or Other Cyclical Effects Impacting The Budgets Of Its Customers, The Company’s Operating Results Could Be Negatively Impacted.the industries into which wesell our products experience recession or other cyclical effects impacting the budgets of our customers, our operating results could be negatively impacted.

The primary customers for the Company’sour connector and cable products are in the wireless communications industries. Any significant downturn in the Company’sour customers’ markets, in particular, or in general economic conditions which result in the cut back of budgets would likely result in a reduction in demand for the Company’sour products and services and could harm the Company’sour business. Historically, the communications industry has been cyclical, affected by both economic conditions and industry-specific cycles. Depressed general economic conditions and cyclical downturns in the communications industry have each had an adverse effect on sales of communications equipment, OEMs and their suppliers, including the Company.us. No assurance can be given that the wireless communications industry will not experience a material downturn in the near future. Any cyclical downturn in the communications industry could have a material adverse effect on the Company.us.

Because The Company Sells Its Products To Foreign Customers, The Company Is Exposed To All Of The Risks Associated With International Sales, Including Foreign Currency Exposure.we sell our products to foreign customers, we are exposed to all of the risks associated with international sales, including foreign currency exposure.

Sales to customers located outside the United States, either directly or through U.S. and foreign distributors, accounted for approximately 3% and 2% and 1% of theour net sales of the Company during the years ended October 31, 20192020 and 2018,2019, respectively. International revenues are subject to a number of risks, including:

The Company’sOur foreign sales are also affected by general economic conditions in its international markets. A prolonged economic downturn in itsour foreign markets could have a material adverse effect on the Company’sour business. There can be no assurance that the factors described above will not have an adverse material effect on the Company’sour future international revenues and, consequently, on theour financial condition, results of operations and business of the Company.business.

Since sales made to foreign customers or foreign distributors have historically been in U.S. dollars, the Company haswe have not been exposed to the risks of foreign currency fluctuations. However, if the Companywe in the future isare required to accept sales denominated in the currencies of the countries where sales are made, the Companywe will thereafter also be exposed to currency fluctuation risks.

The Inability To Hire inability to hire or Retain Certain Key Professionals, Management And Staff Could Adversely Affect Our Business, Financial Condition And Results Of Operations.retain certain key professionals, management and staff could adversely affect our business, financial condition and results of operations.

The Company’sOur future success depends largely upon the continued service of itsour executive officers and other key management and technical personnel, and on itsour ability to continue to identify, attract, retain and motivate them. However, other than the employment agreement the entered into with Mr. Dawson, the Company’s Chief Executive Officer, the Companywe currently doesdo not have any other written employment agreements with itsour executive officers and managers. The market for employees in the Company’sour industry is extremely competitive and the cost for new employees may exceed the cost of existing employees.The loss of key management and technical personnel, could have an adverse effect on our business, financial position and results of operations.

We The Company Has Few Patent Rights In The Technology Employed In Its Products, Which May Limit the Company’s Ability To Compete.have few patent rights in the technology employed in our products, which may limit our ability to compete.

Other than the patents that the Company ownswe own related to itsthe CompPro proprietary product line and itsthe Schrofftech telecom shelter cooling products and control systems, the Company doeswe do not hold any other United States or foreign patents. The Company doesSince we do not seek to protect itsour rights in the technology that it developswe develop or that the Company’sour third-party contract manufacturers develop for us by means of the patent laws, although it does protect some aspects of its proprietary products and technologies by means of copyright and trade secret laws. Accordingly, competitors can and do sell manymost of the same products as the Company,us, and the Companywe cannot prevent or restrict such competition.

Volatility of Trading Prices Of The Company’s Stock Could Result In A Loss On An Investment In The Company’s Stock.trading prices of our stock could result in aloss on an investment in our stock.

The market price of the Company’sour common stock has varied greatly, and the trading volume of the Company’sour common stock has fluctuated greatly as well. These fluctuations often occur independently of the Company’sour performance or any announcements by the Company.of our announcements. Factors that may result in such fluctuations include:

In addition, the stock market may, from time to time, experience extreme price and volume fluctuations, which may be unrelated to the operating performance of any specific company. Accordingly, the market prices of the Company’sour common stock may be expected to experience significant fluctuations in the future.

Failure To Maintain An Effective System Of Internal Control Over Financial Reporting Or To Remediate Weaknesses Could Materially Harm The Company’s Revenues, Erode Stockholder Confidence In The Company's Ability To Pursue Business And Report Its Financial Results/Condition, And Negatively Affect The Trading Price Of The Company’s Common Stock.to maintain an effective system of internal control over financial reporting or to remediate weaknesses could materially harm our revenues, erode stockholder confidence in our ability to pursue business and report our financial results/condition, and negatively affect the trading price of our common stock.

As a public reporting company, the Company iswe are required to establish and maintain effective internal control over financial reporting. Failure to establish such internal control, or any failure of such internal control once established, could adversely impact the Company’sour public disclosures regarding itsour business, financial condition or results of operations. Any failure of our internal control over financial reporting could also prevent the Companyus from maintaining accurate accounting records and discovering accounting errors and financial frauds.

Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 require annual assessment of our internal control over financial reporting. The standards that must be met for management to assess the internal control over financial reporting as effective are complex, and require significant documentation, testing and possible remediation to meet the detailed standards. Any assessment by management that there are weaknesses in the Company’sour internal control over financial reporting may raise concerns for investors. Any actual or perceived weaknesses and conditions that need to be addressed in the internal controls over financial reporting (including those weaknesses identified in periodic reports), or disclosure of management’s assessment of the internal controls over financial reporting may have an adverse impact on the price of the Company’sour common stock.

As of October 31, 2020 and 2019, and 2018, the Companywe determined that itsour internal control over financial reporting was effective. However, no assurance can be given that there will not be failures in our internal controls in future periods.

A Cyber Incident Could Result In Information Theft, Data Corruption, Operational Disruption, And/ Or Financial Loss.cyber incident could result in information theft, data corruption, operational disruption, and/or financial loss.

Businesses have become increasingly dependent on digital technologies to conduct day-to-day operations. Additionally, we may be exposed to increased cyber security risks as a result of remote working requirements imposed on us as a result of the COVID-19 pandemic. At the same time, cyber incidents, including deliberate attacks or unintentional events, have increased. A cyber attack could include gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruption or result in denial of service on websites. The Company dependsWe depend on digital technology, including information systems and related infrastructure, to process and record financial and operating data, and communicate with its employees and business partners. The Company’sOur technologies, systems, networks, and those of its business partners may become the target of cyber attacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of proprietary and other information, or other disruption of the Company’sour business operations. Although to date the Company haswe have not experienced any losses relating to cyber attacks, there can be no assurance that the Companywe will not suffer such losses in the future. As cyber threats continue to evolve, the Companywe may be required to expend significant additional resources to continue to modify or enhance its protective measures or to investigate and remediate any information security vulnerabilities.

While wehave in the past paid dividends, no assurance can be given that we will declare or pay cash dividends in the future.

During fiscal 2020, we made two dividends distributions to our stockholders (for a total of $0.04 per share), but thereafter stopped paying dividends because of the decrease in revenues and profitability and the uncertainty associated with COVID-19. Dividends are declared and paid at the discretion of the Board of Directors subject to applicable laws, and depend on a number of factors, including our financial condition, results of operations, capital requirements, plans for future acquisitions, contractual restrictions, general business conditions and other factors that our Board of Directors may deem relevant. Therefore, even if our operations return to their prior level of profitability, any decision to pay dividends in the future will depend on various other factors that the Board may consider relevant. Accordingly, no assurance can be given that we will once again pay regular dividends in the future. If we do not pay a cash dividend, our stockholders will not realize a return on their investment in the common stock except to the extent of any appreciation in the value of the common stock. 

Not applicable.

The CompanyWe currently leases itslease our corporate headquarters and RF connector and cable assembly manufacturing facilities at 7610 Miramar Road,in San Diego, California. At that location, the Company leaseswe lease three buildings, with a total of approximately 21,908 square feet of office, warehouse and manufacturing space, that house the Company’sour corporate administration, sales and marketing, and engineering departments. The buildings also are used for production and warehousing by the Company’sour RF Connector division.segment. We also lease spaces in four other locations in the United States that house the administration offices and manufacturing facilities for our Custom Cabling segment. The termtable below shows a summary of the lease expires on Julysquare footage of these locations as of October 31, 2022, and the rental payments under the lease currently are $26,176 per month. The San Diego lease also requires the payment of the Company’s pro rata share of real estate taxes and insurance, maintenance and other operating expenses related to the facilities.2020:

The aggregate fiscal 2019 monthly rent for all of the Company’s facilities currently is approximately $76,000 per month, plus in certain circumstances, utilities, maintenance and insurance.

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. As of the date of this report, we are not subject to any proceeding that is not in the ordinary course of business or that is material to the financial condition of our business.

None.

PART II

Market Information.Information. RF Industries, Ltd.’s common stock is listed on the Nasdaq Global Market and is traded under the “RFIL” trading symbol.

Stockholder.Stockholders. As of October 31, 2019,2020, there were 271273 holders of the Company’s Common Stockour common stock according to the records of the Company’sour transfer agent, Continental Stock Transfer & Trust Company, New York, New York, not including holders who hold their stock in “street name.”

Repurchase of Securities.Securities. The CompanyWe did not repurchase any securities during the fiscal year October 31, 2019.2020.

Recent Sales of Unregistered Securities.Securities. There were no previously unreported sales of equity securities by the Companyus that were not registered under the Securities Act during fiscal 2019.2020.

Dividend Policy.Policy. During the past nine years, we have paid dividends on a quarterly basis. This fiscal year, due to the impact of the COVID-19 pandemic on our financial results, our Board terminated these dividend payments after the first two fiscal quarters. The declaration and amount of any actual cash dividend are in the sole discretion of the Company’sour Board of Directors and are subject to numerous factors that ordinarily affect dividend policy, including the results of our operations and financial position, as well as general economic and business conditions. The Company has been paying quarterlyAccordingly, if and when any dividends for over nine years. The amountwill be declared in the future will be determined by our Board based on the Company’s future operations and on the Board’s decision regarding the use of the quarterly dividends may differ from quarter to quarter. During the fiscal years ended October 31, 2019 and 2018, the Company paid an aggregate of $748,000 and $730,000, respectively, of dividends.any future earnings.

EQUITY COMPENSATION PLAN INFORMATION

The following table provides information as of October 31, 20192020 with respect to the shares of Company common stock that may be issued under the Company’s existing equity compensation plans.plans:

Not applicable to a “smaller reporting company” as defined in Item 10(f)(1) of SEC Regulation S-K.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The consolidated financial statements and related disclosures have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of these consolidated financial statements requires the Companyus to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. The Company evaluates itsWe evaluate our estimates, including those related to bad debts, inventory reserves and contingencies on an ongoing basis. The Company bases itsWe base our estimates on historical experience and on various other assumptions that are believed to be appropriate under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Revenue Recognition

On November 1, 2018, the Companywe adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), (“ASC 606”) applying the modified retrospective method. The core principle of ASC 606 is that revenue should be recorded in an amount that reflects the consideration to which we expect to be entitled in exchange for goods or services promised to customers. Under ASC 606, the Company followswe follow a five-step model to: (1) identify the contract with our customer; (2) identify our performance obligations in our contract; (3) determine the transaction price for our contract; (4) allocate the transaction price to our performance obligations; and (5) recognize revenue when (or as) each performance obligation is satisfied. In accordance with this accounting principle, the Company recognizeswe recognize revenue using the output method at a point in time when finished goods have been transferred to the customer and there are no other obligations to customers after the title of the goods have transferred. Title of goods are transferred based on shipping terms for each customer – for shipments with terms of FOB Shipping Point, title is transferred upon shipment; for shipments with terms of FOB Destination, title is transferred upon delivery.

Inventories

Inventories are stated at the lower of cost or net realizable value, with cost determined using the weighted average cost method of accounting. Certain items in inventory may be considered obsolete or excess and, as such, the Companywe periodically reviews itsreview our inventories for excess and slow moving items and makes provisions as necessary to properly reflect inventory value. Because inventories have, during the past couple years, represented up to one-fourth of our total assets, any reduction in the value of our inventories would require the Companyus to take write-offs that would affect theour net worth and future earnings.

Allowance for Doubtful Accounts

The Company records itsWe record our allowance for doubtful accounts based upon itsour assessment of various factors. The Company considersWe consider historical experience, the age of the accounts receivable balance, credit quality of the Company’sour customers, current economic conditions and other factors that may affect a customer’s ability to pay.

Long-Lived Assets Including Goodwill

The Company assessesWe assess property, plant and equipment and intangible assets, which are considered definite-lived assets, for impairment. Definite-lived assets are reviewed when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company measuresWe measure recoverability of these assets by comparing the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If property and equipment and intangible assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair market value.

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

The Company tests itsWe test our goodwill and trademarks and indefinite-lived assets for impairment at least annually or more frequently if events or changes in circumstances indicate these assets may be impaired. These events or circumstances require significant judgment and could include a significant change in the business climate, legal factors, operating performance indicators, competition and sale or disposition of all or a portion of a division. This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital.

Income Taxes

The Company recordsWe record a tax provision for the anticipated tax consequences of the reported results of operations. Income taxes are accounted for under the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates as of the date of the financial statements that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled. The Company recordsWe record a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

The Company accountsWe account for uncertain tax positions by determining if it is “more likely than not” that a tax position will be sustained by the appropriate taxing authorities upon examination based on the technical merits of the position. An uncertain income tax position is not recognized if it has less than a 50% likelihood of being sustained.The Company recognizes We recognize interest and penalties related to certain uncertain tax positions as a component of income tax expense and the accrued interest and penalties are included in deferred and income taxes payable in the Company’sour consolidated balance sheets. See Note 98 to the Consolidated Financial Statements included in this Report for more information on the Company’sour accounting for uncertain tax positions.

The calculation of the tax provision involves significant judgment in estimating the impact of uncertainties in the application of GAAP and complex tax laws. Resolution of these uncertainties in a manner inconsistent with management’s expectations could have a material impact on the Company’sour financial condition and operating results. 

Stock-based Compensation

The Company usesWe use the Black-Scholes model to value the stock option grants. This valuation is affected by the Company’sour stock price as well as assumptions regarding a number of inputs which involve significant judgments and estimates. These inputs include the expected term of employee stock options, the expected volatility of the stock price, the risk-free interest rate and expected dividends.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

For recently issued accounting pronouncements that may affect us, see Note 1 of Notes to Consolidated Financial Statements.

OVERVIEW

During the periods covered by this Annual Report, the Companywe marketed a variety of connector products, including connectors and cables, standard and custom cable assemblies, wiring harnesses and fiber optic cable products to numerous industries for use in thousands of products. The Company aggregates itsWe aggregate our operating divisions into segments that have similar economic characteristics and are similar in the majority of the following areas: (1) the nature of the product and services; (2) the nature of the production process; (3) the type or class of customer for their products and services; (4) the methods used to distribute their products or services; and (5) if applicable, the nature of the regulatory environment. The Company hasWe have two reportable segments – the “RFRF Connector and Cable Assembly” (RF Connector)Assembly (“RF Connector”) segment and the “CustomCustom Cabling Manufacturing and Assembly” (Custom Cabling)Assembly (“Custom Cabling”) segment – based upon this evaluation.

In the fiscal years covered by this Annual Report, the RF Connector segment was comprised of one division, while the Custom Cabling segment was comprised of threefour divisions. The four divisions that met the quantitative thresholds for segment reporting in the fiscal year ended October 31, 20192020 were the RF Connector and Cable Assembly division, Cables Unlimited, Rel-Tech, and C Enterprises subsidiaries.and Schrofftech which the Company acquired in the current fiscal year ending October 31, 2020, is now part of the Custom Cabling segment.subsidiaries.

For the year ended October 31, 2019,2020, most of the Company’sour revenues were generated from the Custom Cabling segment from its sale of fiber optic cable, copper cabling, custom patch cord assemblies and wiring harnesses (which accounted for 75% of the Company’s total sales for the fiscal year ended October 31, 2019). This segment largely benefitted from an increase in demand of the segment’ssells customized cable assemblies and wiring harnesses that are integrated into customers’ products, as well as fiber optic cables used primarily in the build out of wireless carrier 4G and anticipated 5G network deployment. Thisnetworks. Because of the decrease in capital expenditures by carriers as a result of COVID-19, Custom Cabling sales decreased in fiscal 2020, and the percentage of our revenues generated by the Custom Cabling segment also sells customized cable assemblies and wiring harnesses which are integrated into customers’ products.decreased from 75% of our total sales in fiscal 2019 to 66% for the fiscal year ended October 31, 2020.

Revenues from the RF Connector segment were generated from the sales of RF connector products and connector cable assemblies and accounted for 25%34% of the Company’sour total sales for the fiscal year ended October 31, 2019.2020. This segment, which historically produces the largest margins of the fourfive production sites, is known for its quick turnaround of high quality customized solutions in the form of cable assemblies.

On October 31, 2018, the Company sold all of the shares of its Comnet subsidiary for a cash purchase price of $4.2 million.The sale of Comnet was consistent with the Company’s business transformation toward a one company culture and operating structure to more efficiently leverage its capabilities across the entire business. Comnet’s business did not match the Company’s go-to-market strategy since it operated with a different sales model and margin profile than the rest of the Company. As a result of the sale, the Company recognized a $0.2 million loss from discontinued operations for the year ended October 31, 2018.Comnet’s results of operations for fiscal 2018 have been excluded from operating results in the financial statements included in this Annual Report.

On March 15, 2019, through C Enterprises, Inc. (“C Enterprises”), itsour newly formed subsidiary, the Companywe purchased the business and assets of C Enterprises L.P., a California based designer and manufacturer of quality connectivity solutions to telecommunications and data communications distributors. In consideration for the C Enterprises business and assets, the Companywe paid $600,000 in cash and assumed certain liabilities. The acquisition was determined not to be material and was accounted for in accordance with the acquisition method of accounting, and the acquired assets and assumed liabilities were recorded by the Company at their estimated fair values in accordance with ASC 805, Business Combinations. There were no intangible assets identified as part of the acquisition. The results of C Enterprises, Inc.’sEnterprises’ operations subsequent to March 15, 2019 have been included in the results of the Custom Cabling segment as well as in the Company’s consolidated statements of operations.segment. Costs related to the acquisition of C Enterprises were approximately $100,000 and have been expensed as incurred and categorized in selling and general expenses. For the fiscal year ended October 31, 2019,2020, C Enterprises Inc. contributed $7.2$10.9 million of revenue.

On November 4, 2019, the Companywe purchased all of the issued and outstanding shares of Schroff Technologies International, Inc. (“Schrofftech”) from DRC Technologies, Inc., an unaffiliated party. Based in Rhode Island, Schrofftech is a Rhode Island based manufacturer and marketer of intelligent thermal control systems used by telecommunications companies across the U.S. and Canada, and shrouds for small cell integration and installation. The CompanyWe paid $4,000,000 in cash at the closing, of which $900,000 was deposited into two separate escrow accounts for a period of one year and two years, respectively, as security for any indemnification claims the Companywe may have against the seller. In addition to the cash paid at the closing, the Companywe agreed to pay up to an additional $2,400,000 as an earn-out payment if Schrofftech achieves certain adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) targets during the two-year period following the closing. SinceThe results of Schrofftech’s operations have been included in the results of the Custom Cabling segment. Costs related to the acquisition of Schrofftech occurred afterwere approximately $151,000 and have been expensed as incurred and categorize in selling and general expenses. For the endfiscal year ended October 31, 2020, Schrofftech contributed $4.3 million of revenue.

In March 2020, the World Health Organization (the “WHO”) declared coronavirus (“COVID-19”) a pandemic emergency. The COVID-19 pandemic has negatively impacted regional and global economies, disrupted global supply chains, and created significant volatility and disruption of financial markets. The global impact of the two fiscal years coveredoutbreak has been rapidly evolving and certain jurisdictions, including those where we have operations, have also reacted by instituting quarantines, restrictions on travel, “shelter in place” rules, social distancing protocols and restrictions on types of business that may continue to operate. While we have been deemed an “essential” business, and therefore have been permitted to continue our operations, the impact of the COVID-19 pandemic has affected both our operations and those of our customers. Our operations have been negatively affected by partial shutdowns of our facilities, by changes that we had to make on our operating methods and procedures, and by our reduced workforce as many of our employees stayed at home. Many of our customers and vendors have likewise had temporary closures of their facilities and have otherwise been impacted by changes in their industries. As a result, overall demand for our products has been reduced, and certain costs have increased. We have taken measures to protect the health and safety of our employees, and we continue to work with our customers and vendors to minimize potential disruptions in addressing the challenges posed by this report,global pandemic.

The extent of the impact of the COVID-19 pandemic on our operational and financial resultsperformance will depend on future developments, including the duration and spread of Schrofftechthe pandemic and related actions taken by domestic and international jurisdictions to prevent disease spread, all of which are uncertain and cannot be predicted. The outbreak impacted our performance for the fiscal year ended October 31, 2020. We currently expect the decline caused by the economic slowdown to persist through at least the first quarter of 2021. The operations of our Cables Unlimited subsidiary in Long Island, New York, was particularly affected as many employees stayed at home and as local customers shut down or otherwise delayed, deferred or cancelled orders for our products. Because of the impact that COVID-19 has on our Northeastern operations, in May 2020 we applied for and received loans under the Paycheck Protection Program (“PPP”) of the CARES Act totaling approximately $2.8 million (“PPP Loans”). The funds from the PPP Loans were used to retain employees, maintain payroll and benefits, and make lease and utility payments. Without the PPP Loans, we would have made material reductions in our workforce (particularly at Cables Unlimited). We anticipate that most of the PPP Loans will be eligible for forgiveness in accordance with the provisions of the CARES Act. To the extent not includedforgiven, the PPP Loans have a two-year term, a fixed interest rate of 1%, and principal and interest payments are deferred for six months.

We considered the impact of the COVID-19 related economic slowdown on our evaluation of goodwill impairment indicators as of October 31, 2020. Although no goodwill impairment indicators were identified, it is possible that impairments could emerge as the impact of the crisis becomes clearer, and those impairment losses could be material. The impact of the COVID-19 pandemic was considered in the attached consolidated financial statements.annual assessment at fiscal year ended October 31, 2020.

Financial Condition

The following table presents certain key measures of financial condition as of October 31, 20192020 and 20182019 (in thousands, except percentages):

Liquidity and Capital Resources

Management believesWe believe that itsour existing current assets and the amount of cash it anticipates itwe anticipate we will generate from current operations will be sufficient to fund theour anticipated liquidity and capital resource needs of the Company for at least twelve months from the date of this filing. Management believes that its existing assets and the cash it expects to generate from operations, including its current backlog of unfulfilled orders, will be sufficient during the current fiscal year.Annual Report.

As of October 31, 2019, the Company2020, we had a total of $12.5$15.8 million of cash and cash equivalents compared to a total of $16.3$12.5 million of cash and cash equivalents as of October 31, 2018.2019. As of October 31, 2019, the Company2020, we had working capital of $27.6$24.0 million and a current ratio of approximately 5.5:4.5:1. The Company’sDespite a decrease in sales as a result of the COVID-19 pandemic, our cash and cash equivalents decreasedincreased compared to itsour cash and cash equivalents as of October 31, 20182019 due to the receipt of the PPP Loans, and the timing of its sales and the changes in accounts receivable. During the fourth quartercollections of the fiscal year ended October 31, 2019, the Company’s sales increased significantly compared to the prior year, which increased the Company’soutstanding accounts receivable, toresulting in a decrease in the accounts receivable balance by $6.5 million, from $12.2 million as of October 31, 2019 compared to $4.3$5.7 million as of October 31, 2018.2020. As of October 31, 2019, the Company2020, we had $33.7$30.9 million in current assets and $6.1$6.9 million in current liabilities.

The Company’s cash and cash equivalents decreased by $4.0 million on November 4, 2019 due to the cash payment the Company made on that day to purchase Schrofftech. The decrease in cash is not expected to have a negative impact on the Company’s liquidity and capital resources in the current fiscal year.

The Company’s backlog asAs of October 31, 20192020, our backlog was $6.1$6.3 million compared to a backlog of $10.9$6.1 million as of the fiscal year ended October 31, 2018.2019. Since purchase orders are submitted from customers based on the timing of their requirements, the Company’sour ability to predict orders in future periods or trends in future periods is limited. Furthermore, purchase orders may be subject to cancellation from customers, although the Company haswe have not historically experienced material cancellations of purchase orders.

The Company used

We generated cash of $2.7$3.3 million in operating activities during the fiscal year ended October 31, 20192020 due largely to anthe receipt of the PPP Loans ($2.8 million) and the collection of accounts receivable ($6.8 million) that were outstanding as of October 31, 2019. The cash received from the PPP Loans and collected from our accounts receivables, and the increase in accounts receivable ($6.6 million) as a result of extending terms for one of its major customer. Other activities that contributed to the increased use of cash was increased inventory purchases ($0.7 million) due to increased sales, increased capital expenditures ($0.5 million) from the expansion of its manufacturing facilities and the purchase of additional manufacturing equipment, the purchase of C Enterprises ($0.5 million), and dividends paid ($0.7 million) to our shareholders. Partially offsetting these decreases were increases resulting from net income of $3.5 million, in addition to noncashnon-cash credits of $0.6 million from depreciation and amortization ($1.0 million) and $0.3 million from stock-based compensation expense.expense ($0.6 million), was partially offset by the net cash used in the purchase of Schrofftech ($3.9 million), net loss of $0.1 million, and a decrease in accounts payable ($1.0 million) and accrued expenses ($1.4 million) primarily due to the payout of prior year’s bonuses. In addition, during the fiscal year ended October 31, 2020, we received $0.4 million from the exercise of stock options and paid out $0.4 million in dividends. The current year dividends were declared before the full impact of the COVID-19 pandemic was realized, and our Board of Directors stopped the dividend payment when the adverse effects of the COVID-19 pandemic on our operations became clear.

The Company doesWe do not anticipate needing material additional capital equipment in the next twelve months. In the past, the Company haswe have financed some of itsour equipment and furnishings requirements through capital leases. No additional capital equipment purchases have been currently identified that would require significant additional leasing or capital expenditures during the next twelve months. ManagementWe also believesbelieve that based on the Company’sour current financial condition, itsour current backlog of unfulfilled orders and itsour anticipated future operations, the Companywe would be able to finance its expansion, if necessary.

As of October 31, 2019,2020, aside from the CompanyPPP Loans, we had no other outstanding indebtedness for borrowed funds. See Note 11 of the Notes to Consolidated Financial Statements for further discussion on the PPP Loans.  In November 2019, the Company obtainedwe entered into an agreement for a $5 million revolving line of credit (“LOC”) in the amount of $5.0 million from Bank of America, N.A. The credit facility is secured by all ofAmounts outstanding under the assets of RF Industries, Ltd., including by a pledge of the shares of the Company’s four subsidiaries and by guaranties executed by those subsidiaries. The credit facility bearsLOC shall bear interest per year at a rate equal to theof 2.0% plus LIBOR Daily Floating Rate plus 2.00%.(“base interest rate”), with interest payable on the first day of each month. Borrowings under the LOC are secured by a security interest in certain assets of the Company. The LOC contains certain loan covenants. Failure to maintain the loan covenants may constitute an event of default, which could result in all outstanding amounts of principal and interest becoming immediately due and payable. All outstanding principal and interest is due and payable on December 1, 2021. As of October 31, 2020, we were in compliance with all loan covenants. Additionally, as of the date of this Annual Report, no advancesreport, we have been made tonot used the Company underLOC and accordingly, the credit facility.entire amount of the LOC is currently available.

From time to time, the Companywe may undertake acquisitions of other companies or product lines in order to diversify itsour product and solutions offerings and customer base. Conversely, the Companywe may undertake the disposition of a division or product line due to changes in the Company’sour business strategy or market conditions. Acquisitions may require the outlay of cash, which may reduce the Company’sour liquidity and capital resources while dispositions may increase the Company’sour cash position, liquidity and capital resources.

The Company is currently evaluating On November 4, 2019, we purchased the financial impactbusiness of the import tariffs that were recently enactedSchroff Technologies International, Inc., a Rhode Island-based manufacturer and marketer of intelligent thermal control systems used by telecommunications companies across the U.S. and Canada, and shrouds for small cell integration and installation. At the closing, in consideration for Schrofftech, we paid the sellers $4 million in cash, and, if certain foreign countries. While the Company does not believe that the direct financial impact on the Companytargets are met by Schrofftech over a two-year period, agreed to pay an additional cash earn-out payment of the enacted tariffs has been material, there is uncertainty relatedup to potential costs resulting from the tariffs and the disruption related to the trade dispute between the U.S. and certain other countries, and there may be an indirect impact in the form of increased material costs from suppliers that cannot be accurately measured.$2.4 million.

Results of Operations

The following summarizes the key components of theour consolidated results of operations for the fiscal years ended October 31, 20192020 and 20182019 (in thousands, except percentages) of the Company, excluding Comnet. On October 31, 2018, the Company sold its Comnet subsidiary. Except as stated, all information regarding the Company’s results of operations in the fiscal year ended October 31, 2018 exclude the operations of Comnet. As a result of the sale of the Comnet division, Comnet is included in the Company’s results from operations as loss from discontinued operations.: