UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March~~June 3130, 2025

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

For the transition period from __________________ to ___________________

Commission File Number 0-16106

CLEARFIELD, INC.

(Exact name of registrant as specified in its charter)

Minnesota	41-1347235
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

7050 Winnetka Avenue North

Suite 100

Brooklyn Park, Minnesota

55428

(Address of principal executive offices)

(Zip Code)

(763) 476-6866

(Registrant’s telephone number, including area code)

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

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 par value	CLFD	The Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☒ Yes 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒ Yes No ☐

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.

Large accelerated filer ☐

Non-accelerated filer ☐

Accelerated filer ☒

Smaller reporting company ☐

Emerging growth company ☐

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes No ☒ No ☐

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class:	Outstanding as of ~~May~~August 1, 2025
Common stock, par value $.01	13,~~830~~806,~~950~~049

CLEARFIELD, INC.

FORM 10-Q

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION		4
	ITEM 1. FINANCIAL STATEMENTS	4
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	25
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	33
	ITEM 4. CONTROLS AND PROCEDURES	33
PART II. OTHER INFORMATION		34
	ITEM 1. LEGAL PROCEEDINGS	34
	ITEM 1A. RISK FACTORS	34
	ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	34
	ITEM 3. DEFAULTS UPON SENIOR SECURITIES	34
	ITEM 4. MINE SAFETY DISCLOSURES	34
	ITEM 5. OTHER INFORMATION	35
	ITEM 6. EXHIBITS	35
SIGNATURES		36

PART I. FINANCIAL INFORMATION	4
ITEM 1. FINANCIAL STATEMENTS	4
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	26
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	33
ITEM 4. CONTROLS AND PROCEDURES	34
PART II. OTHER INFORMATION	34
ITEM 1. LEGAL PROCEEDINGS	34
ITEM 1A. RISK FACTORS	34
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	35
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	35
ITEM 4. MINE SAFETY DISCLOSURES	35
ITEM 5. OTHER INFORMATION	35
ITEM 6. EXHIBITS	35
SIGNATURES	36

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CLEARFIELD, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
	March 31, 2025 (Unaudited)		September 30, 2024
Assets
Current Assets
Cash and cash equivalents	$	28,848	$	16,167
Short-term investments		83,142		114,825
Accounts receivables, net		24,196		21,309
Inventories, net		56,084		66,766
Other current assets		13,998		10,528
Total current assets		206,268		229,595
Property, plant and equipment, net		25,166		23,953
Other Assets
Long-term investments		41,356		24,505
Goodwill		6,573		6,627
Intangible assets, net		5,868		6,343
Right-of-use lease assets		17,834		15,797
Deferred tax asset		6,830		6,135
Other		962		2,320
Total other assets		79,423		61,727
Total Assets	$	310,857	$	315,275
Liabilities and Shareholders’ Equity
Current Liabilities
Current portion of lease liability	$	3,778	$	3,357
Current maturities of long-term debt		2,165		-
Accounts payable		8,683		6,720
Accrued compensation		7,053		6,977
Accrued expenses		3,460		4,378
Bank overdraft		1,239		-
Factoring liability		4,118		2,920
Total current liabilities		30,496		24,352
Other Liabilities
Long-term debt, net of current maturities		-		2,228
Long-term portion of lease liability		14,462		12,771
Deferred tax liability		-		161
Total liabilities		44,958		39,512
Shareholders’ Equity
Preferred stock, $.01 par value; 500,000 shares; no shares issued or outstanding		-		-
Common stock, authorized 50,000,000, $.01 par value; 13,991,769 and 14,229,107 shares issued and outstanding as of March 31, 2025 and September 30, 2024, respectively		140		142
Additional paid-in capital		150,789		159,579
Accumulated other comprehensive income		586		1,079
Retained earnings		114,384		114,963
Total shareholders’ equity		265,899		275,763
Total Liabilities and Shareholders’ Equity	$	310,857	$	315,275

CLEARFIELD, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE DATA)

	June 30, 2025 (Unaudited)		September 30, 2024
Assets
Current Assets
Cash and cash equivalents	$	33,871	$	16,167
Short-term investments		83,358		114,825
Accounts receivables, net		26,614		21,309
Inventories, net		53,753		66,766
Other current assets		15,042		10,528
Total current assets		212,638		229,595

Property, plant and equipment, net		19,742		23,953

Other Assets
Long-term investments		40,168		24,505
Goodwill		6,740		6,627
Intangible assets, net		10,666		6,343
Right-of-use lease assets		18,038		15,797
Deferred tax asset		6,029		6,135
Other		689		2,320
Total other assets		82,330		61,727
Total Assets	$	314,710	$	315,275

Liabilities and Shareholders’ Equity
Current Liabilities
Current portion of lease liability	$	4,108	$	3,357
Current maturities of long-term debt		2,358		-
Accounts payable		8,687		6,720
Accrued compensation		8,235		6,977
Accrued expenses		4,695		4,378
Bank overdraft		862		-
Factoring liability		6,943		2,920
Total current liabilities		35,888		24,352

Other Liabilities
Long-term debt, net of current maturities		-		2,228
Long-term portion of lease liability		14,346		12,771
Deferred tax liability		-		161
Total liabilities		50,234		39,512

Shareholders’ Equity
Preferred stock, $.01 par value; 500,000 shares; no shares issued or outstanding		-		-
Common stock, authorized 50,000,000, $.01 par value; 13,805,717 and 14,229,107 shares issued and outstanding as of June 30, 2025 and September 30, 2024, respectively		138		142
Additional paid-in capital		146,627		159,579
Accumulated other comprehensive income		1,721		1,079
Retained earnings		115,990		114,963
Total shareholders’ equity		264,476		275,763
Total Liabilities and Shareholders’ Equity	$	314,710	$	315,275

SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CLEARFIELD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2025			2024			2025			2024
Net sales	$	47,168		$	36,910		$	82,644		$	71,140
Cost of sales		32,976			34,078			60,270			63,611
Gross profit		14,192			2,832			22,374			7,529
Operating expenses
Selling, general and administrative		13,930			12,573			26,087			25,432
Income (Loss) from operations		262			(9,741	)		(3,713	)		(17,903	)
Net investment income		1,589			1,849			3,332			3,918
Interest expense		(69	)		(102	)		(169	)		(228	)
Income (Loss) before income taxes		1,782			(7,994	)		(550	)		(14,213	)
Income tax expense (benefit)		455			(2,083	)		29			(3,034	)
Net income (loss)	$	1,327		$	(5,911	)	$	(579	)	$	(11,179	)
Net income (loss) per share Basic	$	0.09		$	(0.40	)	$	(0.04	)	$	(0.75	)
Net income (loss) per share Diluted	$	0.09		$	(0.40	)	$	(0.04	)	$	(0.75	)
Weighted average shares outstanding:
Basic		14,095,341			14,629,489			14,154,830			14,922,811
Diluted		14,095,341			14,629,489			14,154,830			14,922,811

CLEARFIELD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(UNAUDITED)

(IN THOUSANDS, EXCEPT SHARE DATA)

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2025			2024			2025			2024

Net sales	$	49,903		$	48,793		$	132,547		$	119,933

Cost of sales		34,669			38,101			94,940			101,712

Gross profit		15,234			10,692			37,607			18,221

Operating expenses
Selling, general and administrative		13,738			12,998			39,823			38,430
Income (Loss) from operations		1,496			(2,306	)		(2,216	)		(20,209	)

Net investment income		1,588			1,735			4,920			5,653
Interest expense		(106	)		(153	)		(275	)		(381	)

Income (Loss) before income taxes		2,978			(724	)		2,429			(14,937	)

Income tax expense (benefit)		1,372			(277	)		1,401			(3,311	)
Net income (loss)	$	1,606		$	(447	)	$	1,028		$	(11,626	)

Net income (loss) per share Basic	$	0.11		$	(0.04	)	$	0.07		$	(0.79	)
Net income (loss) per share Diluted	$	0.11		$	(0.04	)	$	0.07		$	(0.79	)

Weighted average shares outstanding:
Basic		13,833,748			14,249,755			14,047,802			14,699,278
Diluted		13,833,748			14,249,755			14,047,802			14,699,278

SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CLEARFIELD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(UNAUDITED)
(IN THOUSANDS)
	Three Months Ended					Six Months Ended
	March 31,					March 31,
	2025		2024			2025			2024
Comprehensive income (loss):
Net income (loss)	$	1,327	$	(5,911	)	$	(579	)	$	(11,179	)
Other comprehensive income (loss), net of tax
Unrealized gain (loss) on available-for-sale investments		51		(45	)		(74	)		245
Unrealized gain (loss) on foreign currency translation		552		(301	)		(419	)		429
Total other comprehensive income (loss)		603		(346	)		(493	)		674
Total comprehensive income (loss)	$	1,930	$	(6,257	)	$	(1,072	)	$	(10,505	)

CLEARFIELD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

(IN THOUSANDS)

	Three Months Ended					Nine Months Ended
	June 30,					June 30,
	2025		2024			2025			2024

Comprehensive income (loss):
Net income (loss)	$	1,606	$	(447	)	$	1,028		$	(11,626	)
Other comprehensive income (loss), net of tax
Unrealized gain (loss) on available-for-sale investments		9		31			(65	)		275
Unrealized gain (loss) on foreign currency translation		1,126		(146	)		707			283
Total other comprehensive income (loss)		1,135		(115	)		642			559

Total comprehensive income (loss)	$	2,741	$	(562	)	$	1,670		$	(11,067	)

SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CLEARFIELD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(UNAUDITED)
(IN THOUSANDS)
For the three months ended March 31, 2025										Accumulated other
	Common Stock						Additional			comprehensive			Retained		Total share-
	Shares			Amount			paid-in capital			income (loss)			earnings		holders’ equity
Balance at December 31, 2024		14,132		$	141		$	154,254		$	(17	)	$	113,057	$	267,435
Stock-based compensation expense		-			-			1,288			-			-		1,288
Issuance of common stock under equity compensation plans, net		14			-			-			-			-		-
Repurchase of shares for payment of withholding taxes for vested restricted stock grants		-			-			(4	)		-			-		(4	)
Repurchase of common stock		(155	)		(1	)		(4,738	)		-			-		(4,739	)
Exercise of stock options, net of shares exchanged for payment		1			-			(11	)		-			-		(11	)
Other comprehensive income		-			-			-			603			-		603
Net income		-			-			-			-			1,327		1,327
Balance at March 31, 2025		13,992		$	140		$	150,789		$	586		$	114,384	$	265,899

CLEARFIELD, INC.

For the three months ended March 31, 2024										Accumulated other
	Common Stock						Additional			comprehensive			Retained			Total share-
	Shares			Amount			paid-in capital			income (loss)			earnings			holders’ equity
Balance at December 31, 2023		14,939		$	149		$	177,322		$	476		$	122,148		$	300,095
Stock-based compensation expense		-			-			1,012			-			-			1,012
Issuance of common stock under equity compensation plans, net		14			-			-			-			-			-
Repurchase of shares for payment of withholding taxes for vested restricted stock grants		-			-			(4	)		-			-			(4	)
Repurchase of common stock		(544	)		(5	)		(15,624	)		-			-			(15,629	)
Exercise of stock options, net of shares exchanged for payment		1			-			(9	)		-			-			(9	)
Other comprehensive loss		-			-			-			(346	)		-			(346	)
Net loss		-			-			-			-			(5,911	)		(5,911	)
Balance at March 31, 2024		14,410		$	144		$	162,697		$	130		$	116,237		$	279,208

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

~~SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~(UNAUDITED)

(IN THOUSANDS)

For the three months ended June 30, 2025										Accumulated other
	Common Stock						Additional			comprehensive		Retained		Total share-
	Shares			Amount			paid-in capital			income		earnings		holders’ equity
Balance at March 31, 2025		13,992		$	140		$	150,789		$	586	$	114,384	$	265,899
Stock-based compensation expense		-			-			1,313			-		-		1,313
Issuance of common stock under equity compensation plans, net		(4	)		-			-			-		-		-
Issuance of common stock under employee stock purchase plan		11			-			294			-		-		294
Repurchase of common stock		(200	)		(2	)		(5,648	)		-		-		(5,650	)
Exercise of stock options, net of shares exchanged for payment		7			-			(121	)		-		-		(121	)
Other comprehensive income		-			-			-			1,135		-		1,135
Net income		-			-			-			-		1,606		1,606
Balance at June 30, 2025		13,806		$	138		$	146,627		$	1,721	$	115,990	$	264,476

For the three months ended June 30, 2024										Accumulated other
	Common Stock						Additional			comprehensive			Retained			Total share-
	Shares			Amount			paid-in capital			income (loss)			earnings			holders’ equity
Balance at March 31, 2024		14,410		$	144		$	162,697		$	130		$	116,237		$	279,208
Stock-based compensation expense		-			-			1,152			-			-			1,152
Issuance of common stock under employee stock purchase plan		14			-			336			-			-			336
Repurchase of common stock		(185	)		(2	)		(5,558	)		-			-			(5,560	)
Other comprehensive loss		-			-			-			(115	)		-			(115	)
Net loss		-			-			-			-			(447	)		(447	)
Balance at June 30, 2024		14,239		$	142		$	158,627		$	15		$	115,790		$	274,574

SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CLEARFIELD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(UNAUDITED)
(IN THOUSANDS)
For the six months ended March 31, 2025										Accumulated other
	Common Stock						Additional			comprehensive			Retained			Total share-
	Shares			Amount			paid-in capital			income (loss)			earnings			holders’ equity
Balance as of September 30, 2024		14,229		$	142		$	159,579		$	1,079		$	114,963		$	275,763
Stock-based compensation expense		-			-			2,427			-			-			2,427
Issuance of common stock under employee stock purchase plan		11			-			301			-			-			301
Issuance of common stock under equity compensation plans, net		119			2			(1	)		-			-			1
Repurchase of shares for payment of withholding taxes for vested restricted stock grants		(17	)		-			(494	)		-			-			(494	)
Exercise of stock options, net of shares exchanged for payment		1			-			(12	)		-			-			(12	)
Repurchase of common stock		(351	)		(4	)		(11,011	)		-			-			(11,015	)
Other comprehensive loss		-			-			-			(493	)		-			(493	)
Net loss		-			-			-			-			(579	)		(579	)
Balance at March 31, 2025		13,992		$	140		$	150,789		$	586		$	114,384		$	265,899

CLEARFIELD, INC.

For the six months ended March 31, 2024										Accumulated other
	Common Stock						Additional			comprehensive			Retained			Total share-
	Shares			Amount			paid-in capital			income (loss)			earnings			holders’ equity
Balance as of September 30, 2023		15,255		$	153		$	188,218		$	(544	)	$	127,336		$	315,163
Stock-based compensation expense		-			-			2,284			-			-			2,284
Issuance of common stock under employee stock purchase plan		10			-			250			-			-			250
Issuance of common stock under equity compensation plans, net		132			1			(1	)		-			-			-
Repurchase of shares for payment of withholding taxes for vested restricted stock grants		(9	)		-			(240	)		-			-			(240	)
Exercise of stock options, net of shares exchanged for payment		1			-			(9	)		-			-			(9	)
Repurchase of common stock		(979	)		(10	)		(27,804	)		-			-			(27,814	)
Adoption of new accounting pronouncement		-			-			-			-			80			80
Other comprehensive income		-			-			-			674			-			674
Net loss		-			-			-			-			(11,179	)		(11,179	)
Balance at March 31, 2024		14,410		$	144		$	162,697		$	130		$	116,237		$	279,208

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

~~SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~(UNAUDITED)

(IN THOUSANDS)

For the nine months ended June 30, 2025										Accumulated other
	Common Stock						Additional			comprehensive		Retained		Total share-
	Shares			Amount			paid-in capital			income		earnings		holders’ equity
Balance as of September 30, 2024		14,229		$	142		$	159,579		$	1,079	$	114,963	$	275,763
Stock-based compensation expense		-			-			3,740			-		-		3,740
Issuance of common stock under employee stock purchase plan		23			-			595			-		-		595
Issuance of common stock under equity compensation plans, net		115			1			(1	)		-		-		-
Repurchase of shares for payment of withholding taxes for vested restricted stock grants		(17	)		-			(494	)		-		-		(494	)
Exercise of stock options, net of shares exchanged for payment		7			-			(133	)		-		-		(133	)
Repurchase of common stock		(551	)		(6	)		(16,659	)		-		-		(16,665	)
Other comprehensive income		-			-			-			642		-		642
Net income		-			-			-			-		1,028		1,028
Balance at June 30, 2025		13,806		$	138		$	146,627		$	1,721	$	115,990	$	264,476

For the nine months ended June 30, 2024										Accumulated other
	Common Stock						Additional			comprehensive			Retained			Total share-
	Shares			Amount			paid-in capital			income (loss)			earnings			holders’ equity
Balance as of September 30, 2023		15,255		$	153		$	188,218		$	(544	)	$	127,336		$	315,163
Stock-based compensation expense		-			-			3,436			-			-			3,436
Issuance of common stock under employee stock purchase plan		24			-			586			-			-			586
Issuance of common stock under equity compensation plans, net		133			1			(1	)		-			-			-
Repurchase of shares for payment of withholding taxes for vested restricted stock grants		(9	)		-			(240	)		-			-			(240	)
Exercise of stock options, net of shares exchanged for payment		1			-			(9	)		-			-			(9	)
Repurchase of common stock		(1,164	)		(12	)		(33,362	)		-			-			(33,374	)
Adoption of new accounting pronouncement		-			-			-			-			79			79
Other comprehensive income		-			-			-			559			-			559
Net loss		-			-			-			-			(11,626	)		(11,626	)
Balance at June 30, 2024		14,239		$	142		$	158,627		$	15		$	115,790		$	274,574

SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CLEARFIELD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
	Six Months Ended			Six Months Ended
	March 31,			March 31,
	2025			2024
Cash flows from operating activities
Net loss	$	(579	)	$	(11,179	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		3,711			3,572
Amortization of premium and discount on investments, net		(1,202	)		(2,195	)
Deferred taxes		(891	)		(195	)
Stock-based compensation		2,427			2,284
Changes in operating assets and liabilities, net of acquired amounts:
Accounts receivable		(3,447	)		6,600
Inventories, net		10,478			14,414
Other assets		(2,154	)		(5,951	)
Accounts payable and accrued expenses		1,855			(2,256	)
Net cash provided by operating activities		10,198			5,094
Cash flows from investing activities
Purchases of property, plant and equipment and intangible assets		(4,722	)		(4,389	)
Purchases of investments		(59,234	)		(47,748	)
Proceeds from maturities of investments		75,176			53,293
Net cash provided by investing activities		11,220			1,156
Cash flows from financing activities
Proceeds from issuance of common stock under employee stock purchase plan		301			250
Repurchase of shares for payment of withholding taxes for vested restricted stock grants		(494	)		(240	)
Withholding related to exercise of stock options		(12	)		(9	)
Borrowings and repayments of bank overdrafts, net		1,212			-
Borrowings and repayments of factoring liability, net		1,253			(497	)
Repurchase of common stock		(11,015	)		(27,814	)
Net cash used in financing activities		(8,755	)		(28,310	)
Effect of exchange rates on cash		18			51
Increase (decrease) in cash and cash equivalents		12,681			(22,009	)
Cash and cash equivalents, beginning of period		16,167			37,827
Cash and cash equivalents, end of period	$	28,848		$	15,818
Supplemental disclosures for cash flow information
Cash paid for income taxes	$	403		$	157
Cash paid for interest	$	109		$	172
Right of use assets obtained through lease liabilities	$	3,795		$	-
Non-cash financing activities
Cashless exercise of stock options	$	97		$	19

CLEARFIELD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(IN THOUSANDS)

	Nine Months Ended			Nine Months Ended
	June 30,			June 30,
	2025			2024
Cash flows from operating activities
Net income (loss )	$	1,028		$	(11,626	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		5,766			5,481
Amortization of premium and discount on investments, net		(1,556	)		(3,304	)
Deferred taxes		(157	)		(3,523	)
Stock-based compensation		3,745			3,437
Changes in operating assets and liabilities, net of acquired amounts:
Accounts receivable		(4,944	)		946
Inventories, net		13,752			23,440
Other assets		(2,555	)		(8,030	)
Accounts payable and accrued expenses		3,037			2,310
Net cash provided by operating activities		18,116			9,131

Cash flows from investing activities
Purchases of property, plant and equipment and intangible assets		(5,221	)		(5,608	)
Purchases of investments		(78,697	)		(124,137	)
Proceeds from maturities of investments		95,976			142,067
Net cash provided by investing activities		12,058			12,322

Cash flows from financing activities
Issuance of long-term debt		-			2,142
Repayment of long-term debt		-			(2,142	)
Proceeds from issuance of common stock under employee stock purchase plan		595			586
Repurchase of shares for payment of withholding taxes for vested restricted stock grants		(494	)		(240	)
Withholding related to exercise of stock options		(133	)		(9	)
Borrowings and repayments of bank overdrafts, net		793			-
Borrowings and repayments of factoring liability, net		3,544			(667	)
Repurchase of common stock		(16,665	)		(33,374	)
Net cash used in financing activities		(12,360	)		(33,704	)

Effect of exchange rates on cash		(109	)		48
Increase (decrease) in cash and cash equivalents		17,704			(12,203	)
Cash and cash equivalents, beginning of period		16,167			37,827
Cash and cash equivalents, end of period	$	33,871		$	25,624

Supplemental disclosures for cash flow information
Cash paid for income taxes	$	1,237		$	165
Cash paid for interest	$	193		$	302
Right of use assets obtained through lease liabilities	$	3,895		$	4,614
Non-cash financing activities
Cashless exercise of stock options	$	462		$	19

SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Summary of Significant Accounting Policies

Unless the context otherwise requires, for purposes of this Quarterly Report on Form 10-Q, the words “we,” “us,” “our,” the “Company,” and “Clearfield,” refer to Clearfield, Inc. and subsidiaries.

Basis of Presentation

The accompanying (a) condensed consolidated balance sheet as of September 30, 2024, which has been derived from audited financial statements, and (b) unaudited interim condensed consolidated financial statements as of and for the three and ~~six~~nine months ended ~~March~~June 3130, 2025 have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America for interim financial information, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the condensed consolidated financial statements include all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the financial position, results of operations, and cash flows of the interim periods presented. Operating results for the interim periods presented are not necessarily indicative of results to be expected for the full year or for any other interim period, due to variability in customer purchasing patterns, seasonality, and other factors. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2024.

In preparation of the Company’s condensed consolidated financial statements, management is required to make estimates and assumptions that affect reported amounts of assets and liabilities and related revenues and expenses during the reporting periods. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Clearfield, Inc. and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

New Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 is intended to enhance financial reporting by requiring incremental disclosures for significant segment expenses on an annual and interim basis by public entities required to report segment information in accordance with Accounting Standards Codification Topic 280. The amendments in ASU 2023-07 are to be applied retrospectively to all periods presented in the financial statements and early adoption is permitted. This standard will be applicable to the Company for the 2025 annual period and quarterly periods thereafter. The Company is evaluating its disclosure approach for ASU 2023-07 and ~~anticipates~~plans ~~adopting~~to adopt the standard for the year ended September 30, 2025, and filings thereafter.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The new guidance is expected to improve income tax disclosures primarily related to the rate reconciliation and income taxes paid information by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation, and (2) income taxes paid disaggregated by jurisdiction. The guidance is effective on a prospective basis, although retrospective application and early adoption is permitted. The Company is evaluating its disclosure approach for ASU 2023-09 and anticipates adopting the standard for the annual period starting October 1, 2025.

The FASB issued ASU No. 2024-03, (Subtopic 220-4012): Disaggregation of Income Statement Expenses. ~~The~~ ASU No. 2024-03 addresses the disaggregation of income statement expenses ~~that~~and aims to provide more detailed information about the types of expenses included in commonly presented expense captions, such as cost of sales, selling, general, and administrative expenses (SG&A), and research and development. ~~The~~ ASU 2024-04 can be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements. The Company is evaluating its disclosure approach for ASU 2024-03 and anticipates adopting the standard for the annual period starting October 1, 2027.

Correction of Prior Period Error

As disclosed in Note 1 to Company’s 2024 Form 10-K, the Company identified a prior period error in the presentation of its Consolidated Statement of Cash Flows. Management determined its presentation of the net borrowings and repayments of factoring receivables was incorrectly presented within the ‘Accounts payable and accrued expenses’ line within operating activities as opposed to being presented within financing activities. As corrected in the Condensed Consolidated Statements of Cash Flows, accounts payable and accrued expenses and net cash provided by operating activities are each increased by $~~497~~667,000 for the ~~six~~nine months ended ~~March~~June 3130, 2024, and net borrowings and repayments of factoring liability and net cash used in financing activities are each increased by $~~497~~667,000 for the ~~six~~nine months ended ~~March~~June 3130, 2024. This correction had no impact on the previously reported condensed consolidated balance sheets, condensed consolidated statements of earnings, condensed consolidated statement of comprehensive income, or condensed consolidated statements of shareholders’ equity. ~~The Company also will correct previously reported financial information for such immaterial errors in future filings, as applicable.~~

Note 2. Net Income (Loss) Per Share

Basic net income (loss) per common share (“EPS”) is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the reporting period. Diluted EPS equals net income (loss) divided by the sum of the weighted average number of shares of common stock outstanding plus all additional common stock equivalents, such as stock options, when dilutive.

The following is a reconciliation of the numerator and denominator of the net income (loss) per common share computations for the three and ~~six~~nine months ended ~~March~~June 3130, 2025, and 2024:

	Three Months Ended March 31,					Six Months Ended March 31,
	Three Months Ended June 30,					Nine months Ended June 30,
(In thousands, except for share data)	2025		2024			2025			2024
Net income (loss)	$	1,~~327~~606	$	(~~5,911~~447	)	$	~~(579~~1,028	)	$	(11,~~179~~626	)
Weighted average common shares		1413,~~095~~833,~~341~~748		14,~~629~~249,~~489~~755			14,~~154~~047,~~830~~802			14,~~922~~699,~~811~~278
Dilutive potential common shares		-		-			-			-
Weighted average dilutive common shares outstanding		1413,~~095~~833,~~341~~748		14,~~629~~249,~~489~~755			14,~~154~~047,~~830~~802			14,~~922~~699,~~811~~278
Net income (loss) per common share:
Basic	$	0.0911	$	(0.4004	)	$	(0.0407	)	$	(0.7579	)
Diluted	$	0.0911	$	(0.4004	)	$	(0.0407	)	$	(0.7579	)

For the three months and ~~six~~nine months ended ~~March~~June 3130, 2025, ~~400~~379,~~266~~471 and ~~402~~395,~~551~~619 stock options, as well as 76,121 and 76,121 performance stock units, were not included in the computation of diluted net income (loss) per share because the effect would have been anti-dilutive. For the three months and ~~six~~nine months ended ~~March~~June 3130, 2024, ~~359~~366,~~577~~984 and ~~361~~364,~~635~~104 stock options, as well as 47,745 and 47,745 performance stock units, were not included in the computation of diluted net loss per share because the effect would have been anti-dilutive.

Note 3. Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The following table presents the Company’s cash and cash equivalents balances:

(In thousands)	~~March~~June 3130, 2025		September 30, 2024
Cash and cash equivalents:
Cash, including money market accounts	$	39,~~706~~192	$	5,789
Money market funds		2524,~~142~~679		10,378
Total cash and cash equivalents	$	2833,~~848~~871	$	16,167

The Company maintains cash balances at multiple financial institutions, and at times, such balances exceeded insured limits. The Company has not experienced any losses in such accounts.

Note 4. Investments

The Company invests in United States Treasury securities (“Treasuries”) ~~securities~~ with terms of not more than five years and certificates of deposit (“CDs”) that are fully insured by the Federal Deposit Insurance Corporation (“FDIC”), as well as money market funds. The Company’s investment portfolio is classified as available-for-sale, which is reported on the consolidated balance sheet at fair value. The unrealized gain or loss on investment securities is recorded in other comprehensive income, net of tax. Realized gains and losses on available-for-sale securities are recognized upon sale and are included in net investment income in the condensed consolidated statement of earnings.

As of ~~March~~June 3130, 2025, available-for-sale investments consisted of the following:

	March 31, 2025
	June 30, 2025
(In thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Short-Term
U.S. Treasury securities	$	83,~~110~~411	$	~~133~~87	$	(~~101~~140	)	$	83,~~142~~358
Investment securities – short-term	$	83,~~110~~411	$	~~133~~87	$	(~~101~~140	)	$	83,~~142~~358
Long-Term
U.S. Treasury securities	$	4139,~~151~~867	$	6460	$	~~(98~~-	)	$	4139,~~117~~927
Certificates of deposit		248		-		(97	)		~~239~~241
Investment securities – long-term	$	4140,~~399~~115	$	6460	$	(~~107~~7	)	$	4140,~~356~~168

As of September 30, 2024, available-for-sale investments consisted of the following:

	September 30, 2024
(In thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Short-Term
U.S. Treasury securities	$	113,987	$	382	$	(45	)	$	114,324
Certificates of deposit		500		1		-			501
Investment securities – short-term	$	114,487	$	383	$	(45	)	$	114,825
Long-Term
U.S Treasury securities	$	24,514	$	-	$	(245	)	$	24,269
Certificates of deposit		248		-		(12	)		236
Investment securities – long-term	$	24,762	$	-	$	(257	)	$	24,505

As of ~~March~~June 3130, 2025, investments in debt securities in an unrealized loss position were as follows:

	In Unrealized Loss Position For Less Than 12 Months					In Unrealized Loss Position For Greater Than 12 Months
(In thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S Treasury securities	$	19,~~669~~659	$	(4329	)	$	65,~~613~~166	$	(~~156~~111	)
Certificates of deposit		-		-			~~239~~241		(97	)
Investment securities	$	19,~~669~~659	$	(4329	)	$	65,~~852~~407	$	(~~165~~118	)

As of September 30, 2024, investments in debt securities in an unrealized loss position were as follows:

	In Unrealized Loss Position For Less Than 12 Months					In Unrealized Loss Position For Greater Than 12 Months
(In thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S Treasury securities	$	19,719	$	(39	)	$	6,500	$	(250	)
Certificates of deposit		-		-			236		(12	)
Investment securities	$	19,719	$	(39	)	$	6,736	$	(262	)

As of ~~March~~June 3130, 2025, there were ~~six~~five securities in an unrealized loss position which is due to the market paying a higher interest rate than the coupon rate on these securities. As of September 30, 2024, there were six securities in an unrealized loss position which is due to the securities paying lower interest rates than the market. As of ~~March~~June 3130, 2025, and September 30, 2024, there are no securities which are other than temporarily impaired as the Company intends to hold these securities until their value recovers and there is limited credit risk due to the nature of the securities which are backed by the FDIC and U.S. federal government. The Company had no allowance for credit losses on investments for the three and ~~six~~nine months ended ~~March~~June 3130, 2025.

Note 5. Fair Value Measurements

The Company determines the fair value of its assets and liabilities based on the market price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company determines the fair value of Treasuries and CDs based on valuations provided by an external pricing service, which obtains them from a variety of industry standard data providers.

The Company’s investments are categorized according to the three-level fair value hierarchy which distinguishes between observable and unobservable inputs, in one of the following levels:

Level 1- Quoted prices in active markets for identical assets or liabilities.

Level 2- Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3- Unobservable inputs to the valuation methodology that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities. Level 3 assets and liabilities include those with fair value measurements that are determined using pricing models, discounted cash flow valuation or similar techniques, as well as significant management judgment or estimation.

The following provides information regarding fair value measurements for the Company’s investment securities as of ~~March~~June 3130, 2025, according to the three-level fair value hierarchy:

	Fair Value Measurements as of March 31, 2025
	Fair Value Measurements as of June 30, 2025
(In thousands)	Total		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	2524,~~142~~679	$	2524,~~142~~679	$	-	$	-
Total cash equivalents	$	2524,~~142~~679	$	2524,~~142~~679	$	-	$	-
Investment securities:
Certificates of deposit	$	239	$	-	$	239	$	-
U.S. Treasury securities	$	123,285	$	-	$	123,285	$	-
U.S. Treasury securities		124,259		-		124,259		-
Certificates of deposit		241		-		241		-
Total investment securities	$	~~124~~123,~~498~~526	$	-	$	~~124~~123,~~498~~526	$	-

The following provides information regarding fair value measurements for the Company’s investment securities as of September 30, 2024, according to the three-level fair value hierarchy:

	Fair Value Measurements as of September 30, 2024
(In thousands)	Total		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	10,378	$	10,378	$	-	$	-
Total cash equivalents	$	10,378	$	10,378	$	-	$	-
Investment securities:
Certificates of deposit		738		-		738		-
U.S. Treasury securities	$	138,592	$	-	$	138,592		-
U.S. Treasury securities	$	138,592	$	-	$	138,592	$	-
Certificates of deposit		738		-		738	$	-
Total investment securities	$	139,330	$	-	$	139,330	$	-

During the three and ~~six~~nine months ended ~~March~~June 3130, 2025 and the year ended September 30, 2024, the Company owned no Level 3 securities and there were no transfers within the fair value level hierarchy.

Non-financial assets such as equipment and leasehold improvements, goodwill and intangible assets, and right-of-use assets for operating leases are subject to non-recurring fair value measurements if they are deemed impaired. The Company had no re-measurements of non-financial assets to fair value during the three and ~~six~~nine months ended ~~March~~June 3130, 2025 and the year ended September 30, 2024.

Note 6. Other Comprehensive Income (Loss)

Changes in components of other comprehensive income (loss), net of tax, are as follows:

(In thousands)	Available-for-Sale Securities			Foreign Currency Translation			Accumulated Other Comprehensive Income (Loss)
Balances at September 30, 2024	$	66		$	1,013		$	1,079
Other comprehensive (loss) for the three months ended December 31, 2024		(125	)		(971	)		(1,096	)
Balances at December 31, 2024	$	(59	)	$	42		$	(17	)
Other comprehensive income for the three months ended March 31, 2025		51			552			603
Balances at March 31, 2025	$	(8	)	$	594		$	586
Other comprehensive income for the three months ended June 30, 2025		9			1,126			1,135
Balances at June 30, 2025	$	1		$	1,720		$	1,721

Components of other comprehensive income ~~(loss)~~ for the three months ended ~~March~~June 3130, 2025 are as follows:

	Three Months Ended March 31, 2025
	Three Months Ended June 30, 2025
(In thousands)	Before Tax		Tax Effect			Net of Tax Amount
Unrealized gain on available-for-sale securities	$	6411	$	(132	)	$	519
Unrealized gain on foreign currency translation		~~656~~1,334		(~~104~~208	)		~~552~~1,126
Other comprehensive income (loss)	$	720	$	(117	)	$	603
Other comprehensive income	$	1,345	$	(210	)	$	1,135

Components of other comprehensive income (loss) for the six months ended March 31, 2025 are as follows:

	Six Months Ended March 31, 2025
(In thousands)	Before Tax			Tax Effect		Net of Tax Amount
Unrealized (loss) on available-for-sale securities	$	(94	)	$	20	$	(74	)
Unrealized (loss) on foreign currency translation		(504	)		85		(419	)
Other comprehensive (loss)	$	(598	)	$	105	$	(493	)

Components of other comprehensive ~~loss~~income for the ~~three~~nine months ended ~~March~~June 3130, ~~2024~~2025 are as follows:

	Three Months Ended March 31, 2024
	Nine months Ended June 30, 2025
(In thousands)	Before Tax			Tax Effect			Net of Tax Amount
Unrealized (loss) on available-for-sale securities	$	(5782	)	$	1217		$	(4565	)
Unrealized (loss) on foreign currency translation		(377	)		76			(301	)
Unrealized gain on foreign currency translation		830			(123	)		707
Other comprehensive (loss)	$	(434	)	$	88		$	(346	)
Other comprehensive income	$	748		$	(106	)	$	642

Components of other comprehensive ~~income~~loss for the ~~six~~three months ended ~~March~~June 3130, 2024 are as follows:

	Six Months Ended March 31, 2024
	Three Months Ended June 30, 2024
(In thousands)	Before Tax			Tax Effect			Net of Tax Amount
Unrealized gain on available-for-sale securities	$	~~333~~40		$	(889	)	$	~~245~~31
Unrealized gain on foreign currency translation		538			(109	)		429
Unrealized (loss) on foreign currency translation		(170	)		24			(146	)
Other comprehensive income	$	871		$	(197	)	$	674
Other comprehensive (loss)	$	(130	)	$	15		$	(115	)

Components of other comprehensive income for the nine months ended June 30, 2024 are as follows:

	Nine months Ended June 30, 2024
(In thousands)	Before Tax		Tax Effect			Net of Tax Amount
Unrealized gain on available-for-sale securities	$	373	$	(97	)	$	275
Unrealized gain on foreign currency translation		368		(85	)		283
Other comprehensive income	$	741	$	(182	)	$	559

Note 7. Stock-Based Compensation

The Company recorded $1,~~288~~313,000 and $23,~~427~~740,000 of compensation expense related to current and past restricted stock grants, non-qualified stock options, performance stock units, and the Company’s Employee Stock Purchase Plan (“ESPP”) for the three and ~~six~~nine months ended ~~March~~June 3130, 2025, respectively. For the three months ended ~~March~~June 3130, 2025, $1,~~225~~250,000 of this expense is included in selling, general and administrative expense, and $63,000 is included in cost of sales. For the ~~six~~nine months ended ~~March~~June 3130, 2025, $23,~~318~~568,000 of this expense is included in selling, general and administrative expense, and $~~109~~172,000 is included in cost of sales. As of ~~March~~June 3130, 2025, $86,~~002~~885,000 of total unrecognized compensation expense related to non-vested restricted stock awards, performance share units and stock options is expected to be recognized over a period of approximately 2.64 years.

The Company recorded $1,~~012~~152,000 and $23,~~284~~437,000 of compensation expense related to current and past restricted stock grants, non-qualified stock options, performance stock units, and the ESPP for the three and ~~six~~nine months ended ~~March~~June 3130, 2024. For the three months ended ~~March~~June 3130, 2024, $~~952~~1,099,000 of this expense is included in selling, general and administrative expense, and $6053,000 is included in cost of sales. For the ~~six~~nine months ended ~~March~~June 3130, 2024, $23,~~180~~280,000 of this expense is included in selling, general and administrative expense, and $~~104~~157,000 is included in cost of sales.

Stock Options

The Company uses the Black-Scholes option pricing model to determine the fair value of stock options granted. During the ~~six~~nine months ended ~~March~~June 3130, 2025, the Company granted employees non-qualified stock options to purchase an aggregate of 38,198 shares of common stock with a weighted average contractual term of five years, a weighted average vesting term of approximately three years, and a weighted average exercise price of $30.90 per share. During the ~~six~~nine months ended ~~March~~June 3130, 2024, the Company granted employees non-qualified stock options to purchase an aggregate of ~~111~~118,~~299~~706 shares of common stock with a weighted average contractual term of five years, a weighted average ~~three-year~~ vesting term of approximately 3 years, and a weighted average exercise price of $26.1884 per share.

The fair value of stock option awards during the ~~six~~nine months ended ~~March~~June 3130, 2025, was estimated as of the respective grant dates using the assumptions listed below:

	Six months ended March 31, 2025
	Nine months ended June 30, 2025
Dividend yield		0.00	%
Expected volatility		58.07	%
Risk-free interest rate		4.20	%
Expected life	3.5 years
Vesting period	3 years

The expected stock price volatility is based on the historical volatility of the Company’s stock for a period approximating the expected life. The expected life represents the period of time that options are expected to be outstanding after their grant date. The risk-free interest rate reflects the interest rate as of the grant date on zero-coupon U.S. governmental bonds with a remaining life similar to the expected option term.

Options are granted with exercise prices at fair market values determined on the date of grant and vesting normally occurs over a three to five-year period. Shares issued upon exercise of a stock option are issued from the Company’s authorized but unissued shares.

The following is a summary of stock option activity during the ~~six~~nine months ended ~~March~~June 3130, 2025:

	Number of options			Weighted average exercise price
Outstanding as of September 30, 2024		366,984		$	33.83
Granted		38,198			30.90
Exercised		(422,~~021~~749	)		2420.1929
Forfeited or expired		(~~895~~2,962	)		3447.6564
Outstanding as of March 31, 2025		400,266		$	33.64
Outstanding as of June 30, 2025		379,471		$	34.24

The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price. As of ~~March~~June 3130, 2025, the weighted average remaining contractual term for all outstanding and exercisable stock options was 21.2728 years and their aggregate intrinsic value was $63,~~298~~938,~~486~~824.

Restricted Stock

During the ~~six~~nine months ended ~~March~~June 3130, 2025, the Company granted employees restricted stock awards totaling 104,691 shares of common stock, with a vesting term of approximately three years and a fair value of $30.90 per share based on the stock price on the grant date. During the ~~six~~nine months ended ~~March~~June 3130, 2024, the Company granted employees restricted stock awards totaling ~~136~~137,~~157~~928 shares of common stock, with a vesting term of approximately three years and a fair value of $2926.6365 per share based on the stock price on the grant date.

During the ~~six~~nine months ended ~~March~~June 3130, 2025, the Company granted the non-employee directors restricted stock awards totaling 17,886 shares of common stock, with a vesting term of approximately one year and a fair value of $32.42 per share.

Restricted stock transactions during the ~~six~~nine months ended ~~March~~June 3130, 2025, are summarized as follows:

	Number of shares			Weighted average grant date fair value
Unvested shares as of September 30, 2024		162,207		$	34.91
Granted		122,577			31.12
Vested		(71,691	)		57.35
Forfeited		(37,~~530~~432	)		26.4676
Unvested as of March 31, 2025		209,563		$	27.83
Unvested as of June 30, 2025		205,661		$	27.79

Performance Stock Units

During the ~~six~~nine months ended ~~March~~June 3130, 2025, the Company granted 50,747 performance stock units which entitle the participant to receive one share of the Company’s common stock for each performance stock unit awarded, subject to the achievement of fiscal year 2025 performance goals. Achievement of the goals can result in 50%, 100%, or 150% of the shares being awarded, ~~which~~with ~~have~~two-thirds aof ~~vesting~~the ~~term~~earned shares being issued as stock subject to restrictions on transfer that will lapse on the first two anniversaries of 3the ~~years~~settlement date. The Company has determined the fair value per underlying share of the performance stock unit awards to be $30.90 as of the grant date.

Compensation expense for the performance stock units is measured using the fair value of our common stock at the grant date. As of ~~March~~June 3130, 2025, the Company believes it is probable that 100% of these performance stock unit awards will vest based on achievement of established performance goals and has recognized compensation cost accordingly.

During the ~~six~~nine months ended ~~March~~June 3130, 2024, the Company granted 47,745 performance stock units which entitled the participant to receive one share of the Company’s common stock for each performance stock unit awarded, ~~upon~~subject to achievement of a fiscal year 2024 performance goal. The Company determined the fair value per underlying share of the performance stock unit awards towas be $26.18 as of the grant date. The ~~2024~~ fiscal year 2024 performance goal was not ~~met~~achieved, and the ~~shares~~performance share units were ~~forfeited~~not ~~during~~earned. Accordingly, no stock-based compensation expense was recognized related to these awards for the ~~six~~three or nine months ended ~~March~~June 3130, ~~2025~~2024.

The following is a summary of performance stock unit activity during the ~~six~~nine months ended ~~March~~June 3130, 2025:

	Number of shares			Weighted average grant date fair value
Unvested shares as of September 30, 2024		47,745		$	26.18
Granted		50,747			30.90
Vested		-			-
Forfeited		(47,745	)		26.18
Unvested as of March 31, 2025		50,747		$	30.90
Unvested as of June 30, 2025		50,747		$	30.90

Employee Stock Purchase Plan

The Company’s ESPP allows participating employees to purchase shares of the Company’s common stock at a discount through payroll deductions. The ESPP is available to all employees subject to certain eligibility requirements. Terms of the ESPP provide those participating employees the ability to purchase the Company’s common stock on a voluntary after-tax basis. Employees may purchase the Company’s common stock at a price that is no less than the lower of 85% of the fair market value of one share of common stock at the beginning or end of each stock purchase period or phase. The ESPP is carried out in six-month phases, with phases beginning on January 1 and July 1 of each calendar year. For the phase that ended on December 31, 2024, employees purchased 11,415 shares at a price of $26.35 per share. ~~After the employee purchase on December 31, 2024, 133,134 shares of common stock were available for future purchase under the ESPP.~~

For the phase that ended on June 30, 2025, employees purchased 11,180 shares at a price of $26.35 per share. After the employee purchase on June 30, 2025, 121,953 shares of common stock were available for future purchase under the ESPP.

Note 8. Revenue

Revenue Recognition

Our revenue is comprised of the sale of our products to customers and is recognized when the Company satisfies its performance obligations under the applicable sales contract. A performance obligation is a promise in a sales contract to transfer a distinct product or service to a customer. Substantially all our sales contracts have a single performance obligation and are short term in nature. We recognize revenue by transferring the promised products to the customer, with substantially all revenue recognized at the point in time when the customer obtains control of the products. Shipping and handling costs charged to our customers are included in net sales, while the corresponding shipping expenses are included in cost of sales. Sales, value add, and other taxes collected from customers and remitted to governmental authorities are accounted for on a net (excluded from revenue) basis.

Disaggregation of Revenue

The Company allocates sales from external customers to geographic areas based on the location to which the product is transported. Sales outside the United States are principally to customers in Europe, the Caribbean, Canada, Central and South America.

Revenues related to the following geographic areas were as follows for the three and ~~six~~nine months ended:

Three Months Ended March 31,

Six Months Ended March 31,

Three Months Ended June 30,

Nine months Ended June 30,

(In thousands)

2025

2024

2025

2024

United States

3937,~~844~~413

2632,~~963~~300

69106,~~176~~590

5486,~~524~~823

All other countries

712,~~324~~490

916,~~947~~493

1325,~~468~~957

1633,~~616~~110

Total Net Sales

4749,~~168~~903

3648,~~910~~793

82132,~~644~~547

71119,~~140~~933

The Company sells its products to the Broadband Service Provider marketplace. In addition, the Company provides products to original equipment manufacturers, primarily copper cable assemblies built to their specification (Legacy).

The percentages of our sales by markets were as follows for the three and ~~six~~nine months ended:

	Three Months Ended March 31,						Six Months Ended March 31,
	Three Months Ended June 30,						Nine months Ended June 30,
(In thousands)	2025			2024			2025			2024
Broadband service providers		9495	%		9394	%		94	%		9394	%
Other customers		65	%		76	%		6	%		76	%
Total Net Sales		100	%		100	%		100	%		100	%

Broadband Service Providers are made up of Community Broadband, which includes local and regional telecom companies, utilities, municipalities and alternative carriers, also referred to as Tier 2 and Tier 3 customers; National Carriers, which includes large national and global wireline and wireless providers, also referred to as Tier 1 customers; Large Regional Service Providers with a national footprint; Multiple System Operators (“~~MSO’s~~MSOs”), which include cable television companies; and International customers.

Accounts Receivable

Credit is extended based on the evaluation of a customer’s financial condition, and collateral is generally not required. Accounts that are outstanding longer than the contractual payment terms are considered past due. On October 1, 2023, the Company adopted the cumulative expected credit loss model (CECL). Upon adoption of CECL, the Company measures the allowance for credit losses using an expected credit loss model, which uses a lifetime expected credit loss allowance for all accounts receivable. To measure the expected credit losses, accounts receivable are grouped based on shared credit risk characteristics and the days past due. In calculating an allowance for credit losses, the Company uses its historical experience, external indicators, and forward-looking information to calculate expected credit losses using an aging method. The Company assesses impairment of accounts receivable on a collective basis as they possess shared credit risk characteristics which have been grouped based on the days past due. The expected loss rates are based on the Company’s historical credit losses experience. The historical loss rates are adjusted to reflect current and forward-looking information. As of ~~March~~June 3130, 2025 and September 30, 2024, the Company’s allowance for credit losses was $0.

See Note 9 “Major Customer Concentration” for further information regarding accounts receivable and net sales.

Note 9. Major Customer Concentration

For the three months ended ~~March~~June 3130, 2025, the Company had ~~three~~one customers that comprised 1415%, ~~12% and 12%~~ of the Company’s net sales~~, respectively~~. ~~Two~~The ~~of these~~ customers ~~are distributors and one~~ is a ~~telecommunications~~distributor ~~service provider. All three customers are~~ within the ~~Broadband~~broadband service provider category. For the ~~six~~nine months ended ~~March~~June 3130, 2025, the Company had ~~three~~two customers that comprised 14%, ~~11%~~ and 10% of the Company’s net sales, respectively. ~~Two~~Both ~~of these~~ customers are distributors ~~and~~within ~~one is a telecommunications service provider, all of which are in~~ the ~~Broadband~~broadband service provider category.

18For the three months ended June 30, 2024, the Company had one customer that comprised 15% of the Company’s net sales. The customer is a distributor within the broadband service provider category. For the nine months ended June 30, 2024, the Company had one customer that comprised 11% of the Company’s net sales. The customer is a distributor within the broadband service provider category.

~~For~~As ~~the~~of ~~three~~June ~~months ended March 31~~30, ~~2024~~2025, ~~the~~one ~~Company~~customer ~~had~~accounted ~~two~~for ~~customers that comprised 15~~22% ~~and 11%~~ of ~~the~~accounts ~~Company’s~~receivable. ~~net~~This ~~sales,~~customer ~~respectively.~~is ~~Both~~a ~~customers~~distributor ~~are~~within ~~distributors.~~the ~~For~~broadband ~~the~~service ~~six~~provider ~~months~~category. ~~ended~~As ~~March~~of 31September 30, 2024, ~~the~~three ~~Company had two~~ customers ~~that~~accounted ~~comprised~~for 1716%, 11%, and 1410% of ~~the~~accounts ~~Company’s net sales~~receivable, respectively. ~~Both~~These customers are all distributors ~~and are~~ within the broadband service provider category.

As of March 31, 2025, two customers accounted for 16% and 13% of accounts receivable, respectively. Both of these customers are distributors. As of September 30, 2024, three customers accounted for 16%, 11%, and 10% of accounts receivable, respectively. These customers are all distributors and are within the broadband service provider category.

Note 10. Inventories

Inventories consist of finished goods, raw materials, and work-in-process and are stated at average cost, subject to the lower of cost or net realizable value. Certain components of the Company’s inventory classified as raw materials or finished goods can be used as a component to manufacture products or can be sold directly to the customer. Inventory is valued using material costs, labor charges, and allocated factory overhead charges and consists of the following:

(In thousands)	~~March~~June 3130, 2025			September 30, 2024
Raw materials	$	4744,~~120~~161		$	56,842
Work-in-process		13,~~844~~753			1,790
Finished goods		2320,~~007~~629			23,389
Inventories, gross		7168,~~971~~543			82,021
Inventory reserve		(1514,~~887~~790	)		(15,255	)
Inventories, net	$	5653,~~084~~753		$	66,766

On a regular basis, the Company reviews its inventory and identifies that which is excess, slow moving, and obsolete by considering factors such as inventory levels, expected product life, and forecasted sales demand. A reserve is established for any identified excess, slow moving, and obsolete inventory through a charge to cost of sales. Inventory write-down charges may be required in the future if there is a significant decline in demand for the Company’s products and the Company does not adjust its manufacturing production accordingly, if new products are not accepted by the market, or if products are end of life through life cycle management.

Note 11. Goodwill and Intangible Assets

The Company tests goodwill for impairment annually at fiscal year-end, or more frequently when events or changes in circumstances indicate that the asset might be impaired. The Company assesses qualitative factors to determine whether the existence of events or circumstances would indicate that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. The result of the analysis performed as of September 30, 2024, did not indicate an impairment of goodwill. During the ~~six~~nine months ended ~~March~~June 3130, 2025, there were no triggering events that indicate potential impairment exists. The Company’s next annual test for goodwill impairment will be performed as of June 30, 2025 and will include an analysis of the value of goodwill of each reportable segment: (1) Clearfield; and (2) Nestor Cables.

The Company capitalizes legal costs incurred to obtain patents. Once accepted by either the ~~U.S.~~United States Patent and Trademark Office or the equivalent office of a foreign country, these legal costs are amortized using the straight-line method over the remaining estimated lives, not exceeding 20 years. As of ~~March~~June 3130, 2025, the Company has 5862 patents granted and multiple pending applications both inside and outside the United States.

In addition, the Company has various finite lived intangible assets, most of which were acquired as a result of the acquisition of the active cabinet product line from Calix, Inc. during fiscal year 2018 and the acquisition of Nestor Cables in fiscal year 2022. The Company analyzes its intangible assets for impairment annually or at interim periods when events occur or changes in circumstances indicate potential impairment. The result of the analysis performed as of September 30, 2024, did not indicate an impairment of our intangible assets. During the six months ended March 31, 2025, there were no triggering events that indicate potential impairment exists.

In addition, the Company has various finite lived intangible assets, most of which were acquired as a result of the acquisition of the active cabinet product line from Calix, Inc. during fiscal year 2018 and the acquisition of Nestor Cables in fiscal year 2022. The Company analyzes its intangible assets for impairment annually or at interim periods when events occur or changes in circumstances indicate potential impairment. The result of the ~~carrying~~analysis ~~amount~~performed as of ~~goodwill~~September by30, ~~reportable~~2024, ~~segment~~did ~~for~~not indicate an impairment of our intangible assets. During the ~~six~~nine months ended ~~March~~June 3130, 2025, ~~and~~there ~~2024~~ were asno ~~follows:~~triggering events that indicate potential impairment exists.

(In thousands)	Clearfield, Inc.		Nestor Cables			Total
Balance as of September 30, 2024	$	4,709	$	1,918		$	6,627
Currency translation effect on foreign goodwill balances		-		(54	)		(54	)
Balance as of March 31, 2025	$	4,709	$	1,864		$	6,573

The changes in the carrying amount of goodwill by reportable segment for the nine months ended June 30, 2025, and 2024 were as follows:

(In thousands)	Clearfield, Inc.		Nestor Cables		Total
Balance as of September 30, 2023	$	4,708	$	1,820	$	6,528
Balance as of September 30, 2024	$	4,709	$	1,918	$	6,627
Currency translation effect on foreign goodwill balances		-		40113		40113
Balance as of March 31, 2024	$	4,708	$	1,860	$	6,568
Balance as of June 30, 2025	$	4,709	$	2,031	$	6,740

Finite life intangible assets as of March 31, 2025, are as follows:

(In thousands)	Clearfield, Inc.		Nestor Cables		Total
Balance as of September 30, 2023	$	4,709	$	1,819	$	6,528
Currency translation effect on foreign goodwill balances		-		25		25
Balance as of June 30, 2024	$	4,709	$	1,844	$	6,553

	March 31, 2025
(In thousands)	Useful Life (Years)		Gross Carrying Amount		Accumulated Amortization		Net Book Value Amount
Customer relationships		15	$	4,825	$	1,972	$	2,853
Certifications		8		1,068		951		117
Trademarks		8-10		1,104		646		458
Patents		20		1,340		243		1,097
Developed Technology		10		336		89		247
Other		5		6		6		-
Software		1-3		4,092		2,996		1,096
Totals			$	12,771	$	6,903	$	5,868

Finite life intangible assets as of June 30, 2025, are as follows:

	June 30, 2025
(In thousands)	Useful Life (Years)		Gross Carrying Amount		Accumulated Amortization		Net Book Value Amount
Customer relationships		15	$	4,921	$	2,071	$	2,850
Certifications		8		1,068		985		83
Trademarks		8-10		1,153		692		461
Patents		20		1,416		263		1,153
Developed Technology		10		366		106		260
Other		5		6		6		-
Software		1-10		9,333		3,474		5,859
Totals			$	18,263	$	7,597	$	10,666

Finite life intangible assets as of September 30, 2024, are as follows:

	September 30, 2024
(In thousands)	Useful Life (Years)		Gross Carrying Amount		Accumulated Amortization		Net Book Value Amount
Customer relationships		15	$	4,856	$	1,815	$	3,041
Certifications		8		1,068		884		184
Trademarks		8-10		1,120		588		532
Patents		20		1,302		219		1,083
Developed Technology		10		346		75		271
Other		5		6		6		-
Software		1-3		3,475		2,243		1,232
Totals			$	12,173	$	5,830	$	6,343

Amortization expense related to these assets was $1,~~094~~742,000 and $~~663~~1,089,000 for the ~~six~~nine months ended ~~March~~June 3130, 2025, and 2024, respectively. Estimated future amortization expense for identifiable intangibles during the next five years is as follows:

(In thousands)	Estimated amortization expense
FY 2025 (remaining)	$	~~865~~1,475
FY 2026		~~875~~1,501
FY 2027		~~583~~1,143
FY 2028		~~473~~1,050
FY 2029		~~447~~930
Thereafter		24,~~625~~567
Total	$	510,~~868~~666

Note 12. Segment Reporting

The Company’s reportable segments are based on the Company’s method of internal reporting. These results are not necessarily indicative of the results of operations that would have occurred had each segment been an independent, stand-alone entity during the periods presented. The internal reporting of these operating segments is defined based in part on the reporting and review process used by the Company’s Chief Executive Officer.

The Company has two reportable segments: (1) Clearfield; and (2) Nestor Cables. Clearfield’s Finnish holding company, Clearfield Finland Oy, purchased Nestor Cables Oy, including its Estonian subsidiary, Nestor Cables Baltics OÜ, on July 26, 2022. These entities comprise the Nestor Cables Segment.

The following table summarizes the amounts between the two reportable segments for the three and ~~six~~nine months ended ~~March~~June 3130, 2025, and 2024:

	Three months ended March 31, 2025
	Three months ended June 30, 2025
(in thousands)	Clearfield		Nestor Cables			Eliminations			Consolidated
	Clearfield		Nestor Cables			Eliminations			Consolidated
Revenue from external customers	$	40,621	$	6,547		$	-		$	47,168
(in thousands)
Revenue from internal customers (Clearfield, Inc.)		-		298			(298	)		-
Revenue from external customers	$	38,755	$	11,148		$	-		$	49,903
Net investment income		1,648		-			(59	)		1,589
Revenue from internal customers (Clearfield, Inc.)		-		262			(262	)		-
Interest expense		-		128			(59	)		69
Net investment income		1,646		-			(58	)		1,588
Depreciation and amortization		1,547		328			-			1,876
Interest expense		-		164			(58	)		106
Stock based compensation		1,171		117			-			1,288
Depreciation and amortization		1,581		336			-			1,917
Income tax expense (benefit)		722		(267	)		-			455
Stock based compensation		1,196		117			-			1,313
Net income (loss)		2,339		(1,188	)		176			1,327
Income tax expense		787		585			-			1,372
Capital expenditures		1,067		1,327			-			2,394
Net income (loss)		2,219		(709	)		96			1,606
Capital expenditures		406		1			-			407

	Six months ended March 31, 2025
	Nine months ended June 30, 2025
(in thousands)	Clearfield		Nestor Cables			Eliminations			Consolidated
	Clearfield		Nestor Cables			Eliminations			Consolidated
Revenue from external customers	$	70,319	$	12,325		$	-		$	82,644
(in thousands)
Revenue from internal customers (Clearfield, Inc.)		-		964			(964	)		-
Revenue from external customers	$	109,074	$	23,473		$	-		$	132,547
Net investment income		3,451		-			(119	)		3,332
Revenue from internal customers (Clearfield, Inc.)		-		1,226			(1,226	)		-
Interest expense		-		288			(119	)		169
Net investment income		5,099		-			(179	)		4,920
Depreciation and amortization		3,061		650			-			3,711
Interest expense		-		454			(179	)		275
Stock based compensation		2,221		206			-			2,427
Depreciation and amortization		4,763		1,003			-			5,766
Income tax expense (benefit)		775		(746	)		-			29
Stock based compensation		3,417		323			-			3,740
Net income (loss)		1,845		(2,624	)		202			(579	)
Income tax expense (benefit)		1,562		(161	)		-			1,401
Capital expenditures		2,390		1,643			-			4,033
Net income (loss)		4,064		(3,335	)		299			1,028
Capital expenditures		2,796		1,684			-			4,480

	Three months ended March 31, 2024
	Three months ended June 30, 2024
(in thousands)	Clearfield			Nestor Cables			Eliminations			Consolidated
	Clearfield			Nestor Cables			Eliminations			Consolidated
Revenue from external customers	$	27,600		$	9,310		$	-		$	36,910
(in thousands)
Revenue from internal customers (Clearfield, Inc.)		-			218			(218	)		-
Revenue from external customers	$	33,670		$	15,123		$	-		$	48,793
Net investment income		1,906			2			(59	)		1,849
Revenue from internal customers (Clearfield, Inc.)		-			389			(389	)		-
Interest expense		-			161			(59	)		102
Net investment income		1,799			-			(64	)		1,735
Depreciation and amortization		1,551			369			-			1,920
Interest expense		-			213			(60	)		153
Stock based compensation		940			72			-			1,012
Depreciation and amortization		1,535			375			-			1,910
Income tax expense (benefit)		(1,825	)		(258	)		-			(2,083	)
Stock based compensation		1,080			72			-			1,152
Net loss		(5,001	)		(913	)		3			(5,911	)
Income tax benefit		(249	)		(28	)		-			(277	)
Capital expenditures		1,806			165			-			1,971
Net income (loss)		(478	)		(164	)		195			(447	)
Capital expenditures		1,115			106			-			1,221

	Six months ended March 31, 2024
	Nine months ended June 30, 2024
(in thousands)	Clearfield			Nestor Cables			Eliminations			Consolidated
	Clearfield			Nestor Cables			Eliminations			Consolidated
Revenue from external customers	$	55,700		$	15,440		$	-		$	71,140
(in thousands)
Revenue from internal customers (Clearfield, Inc.)		-			1,101			(1,101	)		-
Revenue from external customers	$	89,371		$	30,562		$	-		$	119,933
Net investment income		4,032			4			(118	)		3,918
Revenue from internal customers (Clearfield, Inc.)		-			1,490			(1,490	)		-
Interest expense		-			346			(118	)		228
Net investment income		5,832			-			(179	)		5,653
Depreciation and amortization		2,848			724			-			3,572
Interest expense		-			558			(177	)		381
Stock based compensation		2,161			123			-			2,284
Depreciation and amortization		4,383			1,098			-			5,481
Income tax expense (benefit)		(2,408	)		(626	)		-			(3,034	)
Stock based compensation		3,242			195			-			3,437
Net loss		(8,384	)		(2,673	)		(122	)		(11,179	)
Income tax benefit		(2,657	)		(654	)		-			(3,311	)
Capital expenditures		3,093			1,296			-			4,389
Net loss		(8,862	)		(2,836	)		72			(11,626	)
Capital expenditures		4,207			1,401			-			5,608

The following table summarizes the amounts between the two reportable segments as of ~~March~~June 3130, 2025, and as of September 30, 2024:

	March 31, 2025
	June 30, 2025
(in thousands)	Clearfield		Nestor Cables		Eliminations			Consolidated
	Clearfield		Nestor Cables		Eliminations			Consolidated
Goodwill	$	4,709	$	1,865	$	-		$	6,573
(in thousands)
Total assets	$	293,840	$	40,193	$	(23,176	)	$	310,857
Goodwill	$	4,709	$	2,031	$	-		$	6,740
Total assets	$	292,178	$	46,204	$	(23,672	)	$	314,710

	September 30, 2024
(in thousands)	Clearfield		Nestor Cables		Eliminations			Consolidated
Goodwill	$	4,709	$	1,918	$	-		$	6,627
Total assets	$	300,472	$	38,773	$	(23,970	)	$	315,275

Note 13. Financing Receivables

Nestor Cables factors certain of its accounts receivable, with recourse provisions that are accounted for as a secured borrowing. Nestor Cables has a total factoring liability of $46,~~118~~943,000 as of ~~March~~June 3130, 2025. Nestor receives cash for 80% of the receivable balance from the bank initially and the remaining 20% when the invoice is paid up to a limit of €12.5 million ($1314.57 million as of ~~March~~June 3130, 2025). Due to the conditions mentioned above, these transactions do not qualify as a sale and are thus accounted for as secured borrowing. The contractual interest rate on Nestor’s factoring arrangements is the 3-month Euribor rate plus a range of 0.75% to 1.3%. The average interest rate for the three months ended ~~March~~June 3130, 2025, was 3.7619%. The average interest rate for the ~~six~~nine months ended ~~March~~June 3130, 2025, was 5.1259%. These agreements are indefinite with a termination notice period ranging from zero to one month.

Note 14. Income Taxes

For the three and ~~six~~nine months ended ~~March~~June 3130, 2025, the Company recorded an income tax expense of $~~455~~1,372,000 and $291,401,000, respectively, reflecting an effective tax rate of 2546.51% and -557.37%, respectively. The difference between the effective tax rate and the statutory tax rate for the three months and ~~six~~nine months ended ~~March 31, 2025,~~ was primarily due to ~~discrete~~a ~~events~~valuation ~~during~~allowance ~~the~~of ~~period~~$780,000 ~~including~~recorded ~~excess~~against ~~tax~~the ~~shortfall~~deferred ~~from~~tax ~~vesting~~assets of ~~restricted~~the ~~stock~~Nestor asCables ~~well as a decrease in consolidated pre-tax book loss~~segment.

For the three and ~~six~~nine months ended ~~March~~June 3130, 2024, the Company recorded an income tax benefit of $2277,~~083,~~000 and $3,~~034~~311,000, respectively, reflecting an effective tax rate of 2638.12% and 2122.31%, respectively. The difference between the effective tax rate and the statutory tax rate for the three ~~and six~~ months ended ~~March~~June 3130, 2024, was primarily due to ~~decreased~~the ~~pretax~~higher percentage impact of discrete events during the quarter due to the lower level of pre-tax book ~~income~~loss during the period. The difference between the effective tax rate and the statutory tax rate for the nine months ended June 30, 2024, was primarily due to discrete events during the ~~quarter~~period, including excess tax shortfall from vesting of restricted stock.

Deferred taxes recognize the impact of temporary differences between the amounts of the assets and liabilities recorded for financial statement purposes and these amounts measured in accordance with tax laws. The Company’s realization of deferred tax temporary differences is contingent upon future taxable earnings. The Company reviewed its deferred tax asset for expected utilization using a “more likely than not” criteria by assessing the available positive and negative factors surrounding its recoverability. ASC 740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of evidence, it is more than likely than not that some portion or all of the deferred tax assets will not be recognized. After consideration of all the evidence, both positive and negative, the Company has determined that asa of$780,000 valuation ~~March~~allowance 31at June 30, 2025, ~~and~~on ~~September~~the deferred tax assets of the Nestor Cables segment is necessary to reduce the deferred tax assets to the amount that will more likely than not be realized. The Company determined that no valuation allowance is required for the deferred tax assets of the Clearfield segment as of June 30, ~~2024~~2025, aand no valuation allowance against ~~the~~ deferred tax assets is ~~not~~ required. as of September 30, 2024.The Company will continue to assess the need for a valuation allowance based on changes in assumptions of estimated future income and other factors in future periods.

As of ~~March~~June 3130, 2025, the Company does not have any unrecognized tax benefits. It is the Company’s practice to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. The Company does not expect any material changes in its unrecognized tax positions over the next 12 months.

The One Big Beautiful Bill Act ("OBBBA") was enacted on July 4, 2025 and the Company continues to evaluate the impact on its financial position. The OBBBA is not currently expected to materially impact the Company's effective tax rate or cash flows in the current fiscal year.

Note 15. Leases

The Company leases an approximately 85,000 square foot facility at 7050 Winnetka Avenue North, Brooklyn Park, Minnesota consisting of corporate offices, manufacturing, and warehouse space. The lease term is 13 years and two months, ending on February 29, 2028. At commencement, the lease called for monthly base rental payments of approximately $37,000, increasing annually.

The Company indirectly leases an approximately 318,000 square foot manufacturing facility in Tijuana, Mexico that operates as a Maquiladora. The lease term commenced in April 2024 and has a term of seven years, of which five years are mandatory. The lease contains two options to extend the term of the lease for additional periods of five years each. At commencement, the lease called for monthly base rental payments of approximately $169,000, increasing 2% annually. The renewal options have not been included within the lease term because it is not reasonably certain that the Company will exercise either option.

The Company leases an approximately 105,000 square foot warehouse and manufacturing facility in Brooklyn Park, Minnesota. The lease term is five years ending on February 28, 2027, with rent payments increasing annually. At commencement, the lease called for monthly base rental payments of approximately $56,000. The lease includes an option to extend the lease for an additional five years. The renewal option has not been included within the lease term because it is not reasonably certain that the Company will exercise the option.

Nestor Cables leases an approximately 25,000 square foot manufacturing facility in Oulu, Finland, which is utilized for the operations of Nestor Cables. The original lease term ended on October 31, 2022, but auto renewed and will continue to auto renew indefinitely until terminated with two years written notice. It is not reasonably certain that the Company will exercise the termination option. At lease commencement, the lease called for monthly rental payments of approximately €40,000. Rent is increased each year on January 1st based upon the cost-of-living index published by the Finnish government.

Nestor Cables previously leased a facility in Keila, Estonia which was terminated in the first quarter of fiscal 2025, with the operations of the Keila facility being consolidated into the Nestor Cables facility in Tabasalu, Estonia.

Nestor Cables leases a manufacturing facility in Tabasalu, Estonia, which was expanded in the first quarter of fiscal 2025 from approximately 49,000 square feet to approximately 115,000 square feet and which is utilized for the operations of Nestor Cables Baltics. The lease term is 10 years ending in November 2034. The lease for the facility calls for monthly rental payments of approximately €63,000. Rent for the portion of the lease pertaining to the original 49,000 square foot facility, which at lease commencement had monthly base rental of €24,000, is increased each year on May 1st based upon the cost-of-living index published by the Estonian government and is capped at 5%.

Right-of-use lease assets and lease liabilities are recognized as of the commencement date based on the present value of the remaining lease payments over the lease term which includes renewal periods we are reasonably certain to exercise. Our leases do not contain any material residual value guarantees or material restrictive covenants.

Operating lease expense included within cost of goods sold and selling, general and administrative expense was as follows for the three and ~~six~~nine months ended:

	Three Months Ended March 31,				Six Months Ended March 31,
Operating lease expense within:	Three Months Ended June 30,				Nine months Ended June 30,
Operating lease expense within: (in thousands)	2025		2024		2025		2024
(in thousands)	2025		2024		2025		2024
Cost of sales	$	1,~~201~~192	$	1,~~055~~081	$	23,~~269~~474	$	23,~~113~~193
Selling, general and administrative		~~138~~143		8280		~~230~~376		~~159~~229
Total lease expense	$	1,~~339~~335	$	1,~~137~~161	$	23,~~499~~850	$	23,~~272~~422

Future maturities of lease liabilities were as follows as of ~~March~~June 3130, 2025 (in thousands):

FY2025(Remaining)	$	2,701
FY2025 (Remaining)	$	1,690
FY2026		45,~~895~~081
FY2027		34,~~980~~099
FY2028		3,~~394~~508
FY2029		2,~~093~~188
Thereafter		5,~~000~~450
Total lease payments		22,~~063~~016
Less: Interest		(3,~~823~~562	)
Present value of lease liabilities	$	18,~~240~~454

The weighted average term and weighted average discount rate for the Company’s leases as of ~~March~~June 3130, 2025, were 5.7264 years and 6.4338%, respectively, compared to 45.7935 years and 36.8061%, respectively, as of ~~March~~June 3130, 2024.

For the three and six months ended March 31, 2025, the operating cash outflows from the Company’s leases was $1,194,000 and $2,364,000, respectively, compared to $1,049,000 and $2,093,000, respectively, for the three and six months ended March 31, 2024.

Note 16. Debt

On April 27, 2022, the Company entered into a loan agreement and a security agreement with a bank that provides the Company with a $40,000,000 revolving line of credit that is secured by certain of the Company’s U.S. assets. The line of credit was originally scheduled to mature on April 27, 2025. Borrowed amounts will bear interest at a variable rate of the CME Group one-month term Secured Overnight Financing Rate (“SOFR”) plus 1.85%, but not less than 1.80% per annum. As of March 31, 2025, the interest rate was 6.17%. The loan agreement and the security agreement contains customary affirmative and negative covenants and requirements relating to the Company and its operations, including a requirement that the Company maintain a debt service coverage ratio of not less than 1.20 to 1 as of the end of each fiscal year for the fiscal year then ended and maintain a debt to cash flow ratio of not greater than 2 to 1 measured as of the end of each of the Company’s fiscal quarters for the trailing twelve (12) month period. Debt service coverage ratio is the ratio of Cash Available for Debt Service to Debt Service, each as defined in the loan agreement. Debt and Cash Flow are also as defined in the loan agreement for the purposes of the debt to cash flow ratio covenant.

OnFor ~~August 5, 2024,~~ the ~~Company~~three ~~entered~~and ~~into~~nine anmonths ~~amendment~~ended toJune ~~the loan agreement that~~30, ~~among other things~~2025, ~~(i) eliminated~~ the ~~requirement~~operating ~~that the Company maintain a debt service coverage ratio of not less than 1.20 to 1 as of the end of each fiscal year for the fiscal year then ended and that the Company maintain a debt to~~ cash ~~flow~~outflows ~~ratio~~from ~~of not greater than 2 to 1 measured as of~~ the ~~end of each of the~~ Company’s ~~fiscal~~leases quarters for the trailing 12 month period; and (ii) added a requirement that the Company maintain accounts with the bank with a minimum aggregate liquidity of unrestricted and unencumbered cash and cash equivalents at all times of not less than the outstanding principal balance of the Company’s revolving credit promissory note payable to the bank. The Company was in$1,227,685 ~~compliance with the debt covenant for the three~~ and ~~six~~$3,609,176, ~~months ended March 31~~respectively, ~~2025.~~compared ~~The~~to ~~line of credit is collateralized by Clearfield~~$1,058,000 ~~Inc.’s~~and ~~assets of~~ $~~270~~3,~~783~~150,000, ~~as of March 31~~respectively, ~~2025.~~for ~~The outstanding principal balance on~~ the ~~line~~three ofand ~~credit~~nine ~~was~~months ~~zero~~ended atJune ~~March 31, 2025 and September~~ 30, 2024.

Note 16. Debt

On April 27, 2022, the Company entered into a loan agreement and a security agreement with a bank that provides the Company with a $40,000,000 revolving line of credit that is secured by certain of the Company’s U.S. assets. The line of credit was originally scheduled to mature on April 27, 2025. Borrowed amounts will bear interest at a variable rate of the CME Group one-month term Secured Overnight Financing Rate (“SOFR”) plus 1.85%, but not less than 1.80% per annum. As of June 30, 2025, the interest rate was 6.18%. The loan agreement and the security agreement contains customary affirmative and negative covenants and requirements relating to the Company and its operations, including a requirement that the Company maintain a debt service coverage ratio of not less than 1.20 to 1 as of the end of each fiscal year for the fiscal year then ended and maintain a debt to cash flow ratio of not greater than 2 to 1 measured as of the end of each of the Company’s fiscal quarters for the trailing twelve (12) month period. Debt service coverage ratio is the ratio of Cash Available for Debt Service to Debt Service, each as defined in the loan agreement. Debt and Cash Flow are also as defined in the loan agreement for the purposes of the debt to cash flow ratio covenant.

On August 5, 2024, the Company entered into an amendment to the loan agreement that, among other things, (i) eliminated the requirement that the Company maintain a debt service coverage ratio of not less than 1.20 to 1 as of the end of each fiscal year for the fiscal year then ended and that the Company maintain a debt to cash flow ratio of not greater than 2 to 1 measured as of the end of each of the Company’s fiscal quarters for the trailing 12 month period; and (ii) added a requirement that the Company maintain accounts with the bank with a minimum aggregate liquidity of unrestricted and unencumbered cash and cash equivalents at all times of not less than the outstanding principal balance of the Company’s revolving credit promissory note payable to the bank. The Company was in compliance with the debt covenant for the three and nine months ended June 30, 2025. The line of credit is collateralized by Clearfield, Inc.’s assets of $292,178,000 as of June 30, 2025. The outstanding principal balance on the line of credit was zero at June 30, 2025 and September 30, 2024.

On April 25, 2025, the Company entered into an amendment to the loan agreement that extended the maturity of the line of credit from April 27, 2025 to April 25, 2026.

During March 2021, Nestor Cables entered into a loan agreement, providing a €2,000,000 senior loan with a term of three years. The Finland Government pays the interest, capped at 5% with the interest to be paid by the Finnish Government when the loan is used as intended and is repayable with a 2% additional interest penalty if there is a violation of the terms. The loan expired on ~~March~~June 3130, 2024. A new loan was issued under the same program with consistent terms as detailed above and is due on March 31, 2026. The repayment and issuance of these loans occurred in April 2024. The loan is fully secured by a Finnish government guarantee. As of ~~March~~June 3130, 2025, and September 30, 2024, the Company owed €2,000,000 on this loan, which equates to $2,~~165~~358,000 and $2,228,000, respectively. As of September 30, 2024, Nestor Cables was not in compliance with the annual equity ratio covenant but received a waiver from the bank. The interest expense associated with this loan has been presented net of government payments on the Company’s income statement.

One of Nestor Cable’s bank accounts includes a feature that allows for applicable bank accounts to be in a negative position up to a certain maximum overdraft up to €2,000,000. Interest on drawn balances accrues at a rate equal to the 3-month Euribor rate plus 1.15%. As of ~~March~~June 3130, 2025, and September 30, 2024, the Company had utilized overdrafts in the amount of €1731,~~144,~~000 or $1862,~~239,~~000 and €0, respectively.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the Company’s financial condition and results of operations as of and for the three and ~~six~~nine months ended ~~March~~June 3130, 2025, and 2024 should be read in conjunction with the financial statements and related notes in Item 1 of this report and our Annual Report on Form 10-K for the year ended September 30, 2024.

OVERVIEW

General

Clearfield, Inc., together with its subsidiaries, is referred to in this report as “we,” “us,” “our,” and the “Company.” We design, manufacture, and distribute fiber protection, fiber management, and fiber delivery solutions to enable rapid and cost-effective fiber-fed deployment throughout the broadband service provider space primarily across North America. Our “fiber to anywhere” platform serves the unique requirements of Community Broadband customers (Tier 2 and 3 telco carriers, utilities, municipalities, and alternative carriers), Multiple System Operators (cable television), Large Regional Service Providers (ILEC operating a multi-state network with more than 500,000 subscribers), National Carriers (wireline/wireless national telco carriers (Tier 1)), and International customers (primarily Europe, Canada, Mexico, and Caribbean Markets).

We are engaged in global operations. Our operations currently comprise of two reportable segments: the Clearfield Operating Segment (referred to herein as “Clearfield”), and the Nestor Cables Operating Segment (referred to herein as “Nestor Cables” or “Nestor”), which we established following our acquisition of Nestor Cables on July 26, 2022. Prior to July 26, 2022, we had a single reportable segment structure.

Clearfield Operating Segment

Clearfield is focused on providing fiber management, fiber protection, and fiber delivery products that accelerate the turn-up of fiber-based networks in residential homes, businesses, and network infrastructure in the wireline and wireless access network. We offer a broad portfolio of fiber products that allow service providers to build fiber networks faster, meet service delivery demands, and align build costs with take rates.

Clearfield’s products are designed to allow its customers to pass and connect homes in their Fiber to the Home (“FTTH”) builds by using fewer resources in less time ~~vs.~~than competitive products. Our products speed up the time to revenue for our service provider customers in Multiple Dwelling Units (“MDUs”) and Multiple Tenant Units (“MTUs”) by reducing the amount of labor and materials needed to provide gigabit service. Our products help make business services more profitable through faster building access, easier reconfiguration, and quicker services turn-up. Finally, Clearfield is removing barriers to wireless 4G/5G deployments in backhaul from the tower to the cloud and fiber fronthaul from the tower to the antenna at the cell site through better fiber management, test access, and fiber protection.

Substantially all of the final build and assembly is completed at Clearfield’s plants in Brooklyn Park, Minnesota and Tijuana, Mexico, with manufacturing support from a network of domestic and global manufacturing partners. Clearfield specializes in producing these products on both a quick-turn and scheduled delivery basis.

Nestor Cables Operating Segment

Nestor Cables is based in Oulu, Finland, with operations in Estonia through its wholly owned subsidiary, Nestor Cables Baltics OÜ. Nestor Cables manufactures fiber optic and copper telecommunication cables and equipment which it distributes to telecommunication operators, network owners, electric companies, building contractors, and industrial companies. Nestor has two types of production processes, the process of making cable in its Finland and Estonia facility and the finished assembly portion of its business performed in Estonia. Nestor Cables’ customer base includes telecom operators, network owners, contractors, industries and wholesalers. Products are sold via distributors and directly to end users. Nestor Cables is subject to Finnish government regulation and Nestor Cables Baltics is subject to Estonian government regulation.

~~Recent~~Trade ~~Developments~~and – Tariffs Update

~~The~~Earlier this year the U.S. ~~recently~~ introduced trade policy changes that increased import tariffs across a wide range of ~~countries~~trading partners at various rates, with exemptions for certain goods, including currently United States-Mexico-Canada Agreement (USMCA) compliant goods. In response, many ~~countries~~trading partners implemented retaliatory tariffs on U.S. exports. InThe ~~early April 2025, the~~ U.S. and certain ~~other~~trading ~~countries~~partners have agreed to delay the effective date of certain of these tariffs while various trade deals are being negotiated, but a number of the ~~new~~increased tariffs remain in effect, including significant tariffs between the U.S. and China. While the tariffs did not materially impact our ~~second~~third quarter results, we do anticipate certain tariffs in effect as of ~~May~~August 97, 2025, will impact future financial results, the extent of which is uncertain, difficult to predict and dependent on a number of factors, including the extent and duration of the tariffs, any reversal or suspension of the tariffs, changes in the scope and rates of the tariffs, the availability of exemptions from the tariffs, the imposition of new tariffs, and our ability to successfully implement measures to mitigate the impact of the tariffs. Currently, products imported from our Mexican manufacturing facility are exempt from the new tariffs as they are USMCA compliant. Should the USMCA exemption no longer apply, our future financial results, particularly cost of sales and gross profit, would be negatively impacted by the tariffs. Components we import from China, some of which are from sole-source or limited source suppliers, are subject to the tariffs currently in effect. We are actively monitoring and evaluating the evolving tariff situation and working to mitigate the impact on our business.

Tariffs and other trade restrictions may increase the cost of raw materials and components imported from other countries, leading to higher production costs and product pricing to the extent those increased costs are offset through price increases to our customers (which may result in declines in sales); disrupt established supply chains, forcing the Company to find new suppliers or relocate production, which could be time-consuming and costly; limit the attractiveness of certain geographic markets for our product and, in turn, result in reduced sales; lower profitability; result in uncertainty related to planning long-term investments and strategies; and have other competitive effects.

RESULTS OF OPERATIONS

THREE MONTHS ENDED ~~MARCH~~JUNE 3130, 2025 VS. THREE MONTHS ENDED ~~MARCH~~JUNE 3130, 2024

Net sales for the three months ended ~~March~~June 3130, 2025, were $4749,~~168~~903,000, an increase of approximately 282%, or $101,~~258~~110,000, from net sales of $3648,~~910~~793,000 for the three months ended ~~March~~June 3130, 2024. Net sales to Broadband Service Providers were $4446,~~384~~641,000 and $3446,~~363~~028,000 in the three months ended ~~March~~June 3130, 2025 and 2024, respectively. Net sales to Legacy customers were $~~710~~570,000 in the three months ended ~~March~~June 3130,2025 versus $~~645~~820,000 for the three months ended ~~March~~June 3130, 2024. In addition, the Company recorded $712,~~323~~490,000 in international sales for the three months ended ~~March~~June 3130, 2025 versus $916,~~947~~494,000 for the three months ended ~~March~~June 3130, 2024. The Company allocates sales from external customers to geographic areas based on the location to which the product is transported. International sales represented 1625% and 2734% of total net sales for the three months ended ~~March~~June 3130, 2025 and 2024, respectively.

The increase in net sales for the three months ended ~~March~~June 3130, 2025, of $101,~~258~~100,000 compared to the three months ended ~~March~~June 3130, 2024, was primarily driven by increased sales to Large Regional Service Provider customers of $83,~~140~~118,000, orup ~~255~~82%, ~~MSO customers of $2,620,000, or 53%,~~ and ~~Community~~MSO ~~Broadband~~ customers of $13,~~936~~418,000, orup 1259%, partially offset by decreased sales to International customers of $24,~~623~~004,000, ordown 2624%. The increase in sales in the Large Regional Service Provider, ~~MSO~~ and ~~Community~~MSO ~~Broadband~~ customer markets for the three months ended ~~March~~June 3130, 2025, as compared to the three months ended ~~March~~June 3130, 2024, is due to ~~increased~~higher ~~demand~~sales of additional product lines in the quarter ~~due~~ to ~~early build season orders as well as reduced excess inventory levels at~~ customers ~~compared~~in tothese ~~the prior year quarter~~segments. The decrease in sales to International customers was driven by decreased sales by the Nestor Cables segment during the quarter due to lower demand in Nestor’s European market.

Order backlog as of ~~March~~June 3130, 2025, was $3436,~~097~~092,000, an increase of 316% compared to $2634,~~028~~097,000 as of ~~December~~March 31, ~~2024~~2025, and aan ~~decrease~~increase of $133,~~082~~509,000, or ~~27.7~~11%, from ~~March~~June 3130, 2024. ~~This~~The ~~sequential~~ increase ~~aligns with the seasonal ordering patterns we typically experience~~ in ~~the~~backlog ~~start~~is ofconsistent ~~the~~with ~~build season, and~~ the ~~decrease~~normal ~~from~~seasonality ~~prior~~in ~~year~~our ~~reflects~~business ~~higher~~as ~~order~~well ~~fulfilment~~as ~~for~~increased ~~orders placed during the pandemic~~demand.

Revenue from customers is obtained from purchase orders submitted from time to time. The Company’s ability to predict orders in future periods or trends affecting orders in future periods is limited. The Company’s ability to predict revenue is further limited by customer deployment schedules and factors affecting customer ordering patterns, including the digestion of customers’ excess inventory, the impact of tariffs and other macroeconomic economic policies, and uncertainties relating to the economic outlook in the United States and other countries in which we sell products. The Company’s ability to recognize revenue in the future for customer orders will depend on the Company’s ability to manufacture and deliver products to the customers and fulfill its other contractual obligations. The Company tests goodwill for impairment annually, or more frequently when events or changes in circumstances indicate that the asset might be impaired. The Company assesses qualitative factors to determine whether the existence of events or circumstances would indicate that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. The Company’s forecast for future revenue, profitability and business climate are among the qualitative factors management considers in its annual analysis of goodwill. The result of the most recent analysis performed, did not indicate an impairment of goodwill. Goodwill represents the excess purchase price over the fair value of tangible net assets acquired in acquisitions after amounts have been allocated to intangible assets. To the extent that a reporting unit's recorded goodwill exceeds the implied fair value of goodwill, a goodwill impairment charge would be recognized in the Company’s consolidated statement of earnings. An analysis of goodwill involves significant management estimates and judgments and an impairment loss, while non-cash, could have a material impact on the Company’s financial statements. During the nine months ended June 30, 2025, the Nestor reporting unit, which has $2.0 million of Goodwill, had a net operating loss. The Company’s next annual test for goodwill impairment will be completed during the quarter ending September 30, 2025 and if operating losses persist into the future, or if there are adverse changes in key assumptions such as discount rates or long-term growth rates, it is reasonably possible that an impairment charge could be recognized for the Nestor reporting unit in future periods.

Cost of sales for the three months ended March 31, 2025, was $32,976,000, a decrease of $1,102,000, or 3%, from $34,078,000 for the three months ended March 31, 2024. Gross profit percent was 30.1% of net sales for the three months ended March 31, 2025, an increase from 7.7% of net sales for the three months ended March 31, 2024. Gross profit increased $11,359,000, or 401%, to $14,191,000 for the three months ended March 31, 2025, from $2,832,000 for the three months ended March 31, 2024. The improvement in gross margin from the prior year quarter was due to increased volumes within the Clearfield segment resulting in improved utilization of manufacturing overhead, as well as lower excess inventory charges of $4,426,000 in the current quarter, reflecting improved inventory utilization and beneficial recoveries from previously reserved inventory.

Selling, general and administrative expenses for the three months ended March 31, 2025, were $13,929,000 in comparison to $12,573,000 for the three months ended March 31, 2024, an increase of $1,356,000, or 11%, due to increased wages and performance-based compensation accruals.

Income from operations for the three months ended March 31, 2025, was $262,000 compared to loss from operations of $9,741,000 for the three months ended March 31, 2024, an increase of approximately 103%. The increased income from operations is the result of increased net sales and gross profit margin as explained above.

~~Net~~Cost ~~investment~~of ~~income~~sales for the three months ended ~~March~~June 3130, 2025, was $134,~~589~~669,000, ~~compared~~a decrease of $3,432,000, or 9%, from $38,101,000 for the three months ended June 30, 2024. Gross profit percent was 30.5% of net sales for the three months ended June 30, 2025, an increase from 21.9% of net sales for the three months ended June 30, 2024. Gross profit increased $4,542,000, or 42%, to $115,~~849~~234,000 for the three months ended ~~March~~June 3130, 2025, from $10,692,000 for the three months ended June 30, 2024. The ~~decrease~~improvement in ~~net~~gross ~~investment~~margin ~~income~~from isthe prior year quarter was due to ~~decreased~~increased ~~interest~~volumes ~~income~~within ~~driven~~the byClearfield tosegment resulting in improved utilization of manufacturing overhead, as well as lower ~~interest~~excess ~~rates~~inventory ~~earned~~charges onin ~~investments~~the ~~during~~Clearfield segment of $2,485,000 which resulted in a benefit to cost of goods sold of $1,131,000 in the current quarter, reflecting improved inventory utilization and beneficial recoveries from previously reserved inventory.

~~Interest~~Selling, ~~expense~~general and administrative expenses for the three months ended ~~March~~June 3130, 2025, ~~remained~~were ~~relatively consistent at~~ $6913,~~000~~738,000 ~~compared~~in comparison to $~~102~~12,999,000 for the three months ended ~~March~~June 3130, 2024., ~~Interest~~an ~~expense~~increase ~~incurred~~of ~~during~~$739,000, ~~these~~or ~~periods~~6%, isdue ~~related~~ to ~~factoring~~an ~~liabilities~~increase in ~~the~~depreciation ~~Nestor~~and ~~segment~~amortization and increased software maintenance costs.

~~The~~Income ~~Company~~from ~~recorded~~operations anfor ~~income~~the ~~tax~~three ~~expense~~months ofended June 30, 2025, was $~~455~~1,496,000 ~~and~~compared ~~income~~to ~~tax~~loss ~~benefit~~from operations of $2,~~083~~307,000 for the three months ended ~~March~~June 3130, ~~2025, and~~ 2024, ~~respectively.~~an Weincrease ~~record~~of ~~our~~approximately ~~quarterly provision for income taxes based on our estimated annual effective tax rate for the year~~165%. The ~~increase in tax expense of $2,538,000 is primarily due to~~ increased income from operations. ~~The~~is ~~income tax expense rate for~~ the ~~three~~result ~~months~~of ~~ended~~increased ~~March~~net ~~31,~~sales ~~2025,~~and ~~remained~~gross ~~relatively~~profit ~~consistent~~margin atas ~~25.5%~~explained ~~from 26~~above.~~1% recorded for the three months ended March 31, 2024.~~

~~The~~Net ~~Company’s~~investment ~~net~~ income for the three months ended ~~March~~June 3130, 2025, was $1,~~327~~588,000, orcompared to $~~0.09~~1,735,000 ~~per basic and diluted share. The Company’s net loss~~ for the three months ended ~~March~~June 3130, 2024~~, was $5,911,000, or $0~~.40 ~~per basic and diluted share.~~ The ~~increase~~decrease in ~~basic~~net ~~and~~investment ~~diluted~~income ~~earnings~~is ~~per share for the three months ended March 31, 2025, as compared to March 31, 2024, was~~ due to ~~higher~~decreased ~~net~~interest income asdriven ~~a result of increased net sales and gross profit margin, partially offset~~ by ~~increased~~lower ~~selling,~~interest ~~general~~rates ~~and~~earned ~~administrative~~on ~~expenses~~investments asduring ~~detailed~~the ~~above~~quarter.

~~SIX~~Interest ~~MONTHS~~expense ~~ENDED~~for ~~MARCH~~the 31three months ended June 30, 2025, ~~VS.~~remained ~~SIX~~relatively ~~MONTHS~~consistent ~~ENDED~~at ~~MARCH~~$106,000, 31compared to $153,000 for the three months ended June 30, 2024. Interest expense incurred during these periods is related to factoring liabilities in the Nestor segment.

~~Net~~The ~~sales~~Company ~~for~~recorded ~~the~~an ~~six~~income ~~months~~tax ~~ended~~expense ~~March 31, 2025, were $82,644,000, an increase~~ of ~~approximately 16%, or~~ $111,~~504~~372,000, ~~from~~and ~~net~~income ~~sales~~tax benefit of $71277,~~140,~~000 for the ~~six~~three months ended ~~March~~June 3130, ~~2024. Net sales to Broadband Service Providers were $77~~2025,~~833,000~~ and ~~$66,211,000 in the six months ended March 31, 2025 and~~ 2024, respectively. InWe ~~addition,~~record ~~the~~our ~~Company~~quarterly ~~recorded~~provision ~~$13,468,000 in international sales~~ for ~~the~~income ~~six~~taxes ~~months~~based ~~ended~~on ~~March~~our ~~31,~~estimated ~~2025~~annual ~~versus~~effective ~~$16,616,000~~tax rate for the ~~six months ended March 31, 2024~~year. The ~~Company~~income ~~allocates~~tax ~~sales~~expense ~~from~~rate ~~external~~for ~~customers to geographic areas based on~~ the ~~location~~three tomonths ~~which~~ended ~~the~~June ~~product~~30, ~~is transported. Accordingly~~2025, ~~international~~increased ~~sales~~to ~~represented 16~~46.1% ~~and~~from 2338.2% ofrecorded ~~total net sales~~ for the ~~six~~three months ended ~~March~~June 3130, ~~2025 and March 31,~~ 2024, ~~respectively.~~primarily ~~Net~~due ~~sales~~ to ~~Legacy~~a ~~customers~~valuation ~~were~~allowance of $1780,~~199,~~000 inrecorded against the ~~six~~deferred ~~months~~tax ~~ended~~assets ~~March~~of ~~31, 2025 versus $1,489,000 in~~ the ~~six~~Nestor ~~months~~Cables ~~ended March 31, 2024~~segment.

The ~~increase~~Company’s in net ~~sales~~income for the ~~six~~three months ended ~~March~~June 3130, 2025, ofwas $111,~~504~~606,000, ~~compared~~or to$0.11 ~~the~~per ~~six~~basic ~~months~~and ~~ended~~diluted ~~March~~share. ~~31,~~The ~~2024,~~Company’s ~~was~~net ~~primarily~~loss ~~driven~~for bythe ~~increased~~three ~~sales~~months toended ~~Large~~June ~~Regional Service Provider customers of $7~~30,~~502,000,~~ ~~or 67%~~2024, ~~Community~~was ~~Broadband Service Providers of~~ $2447,~~964,~~000, or ~~10%, MSO customers of~~ $~~2,947,000,~~0.04 orper ~~29%,~~basic and ~~National~~diluted ~~Carrier customers of $1,529,000, or 45%, partially offset by decreased sales to International customer of $3,148,000, or 19%~~share. The increase in ~~sales~~basic ~~across~~and ~~these~~diluted ~~markets~~earnings per share for the ~~six~~three months ended ~~March~~June 3130, 2025, as compared to ~~the~~June ~~six months ended March 31~~30, 2024, iswas due to ~~early~~higher ~~build~~net ~~season~~income ~~orders~~ as ~~well~~a asresult ~~reduced~~of ~~excess~~increased ~~inventory~~gross ~~levels~~profit atmargin, ~~customers~~partially ~~compared~~offset ~~to the prior year period. The decrease in sales to International customers was driven~~ by ~~decreased~~increased ~~sales~~selling, bygeneral ~~the~~and ~~Nestor~~administrative ~~Cables~~expenses, ~~segment~~and ~~during~~income ~~the~~tax ~~six~~expense ~~months~~as ~~ended~~detailed ~~March 31, 2025~~above.

~~Cost~~NINE ofMONTHS ~~sales~~ENDED ~~for~~JUNE ~~the six months ended March 31~~30, 2025, ~~was $60,270,000, a decrease of $3,341,000, or 5%, from $63,611,000 for the six months ended March 31, 2024~~VS. ~~Gross~~NINE ~~profit~~MONTHS ~~percent~~ENDED ~~was~~JUNE ~~27.1% of net sales for the six months ended March 31~~30, ~~2025, an increase from 10.6% of net sales for the six months ended March 31,~~ 2024. Gross profit increased $14,845,000, or 197%, to $22,374,000 for the six months ended March 31, 2025, from $7,529,000 for the six months ended March 31, 2024. The improvement in gross margin from the six months ended March 31, 2024, was due to increased volumes within the Clearfield segment resulting in improved utilization of manufacturing overhead, as well as lower excess inventory charges of $6,767,000 in the six months ended March 31, 2025, reflecting improved inventory utilization and beneficial recoveries from previously reserved inventory.

~~Selling,~~Net ~~general~~sales ~~and~~for ~~administrative~~the ~~expenses~~nine ~~increased~~months ended June 30, 2025, were $~~655~~132,547,000, oran 3increase of approximately 11%, or $12,614,000, from net sales of $119,933,000 for the nine months ended June 30, 2024. Net sales to Broadband Service Providers were $26124,~~087~~659,000 and $112,203,000 in the ~~six~~nine months ended ~~March~~June 3130, 2025 and 2024, ~~from~~respectively. In addition, the Company recorded $25,~~432~~958,000 in international sales for the ~~six~~nine months ended ~~March~~June 3130, 2025 versus $33,110,000 for the nine months ended June 30, 2024. The ~~increase~~Company isallocates ~~due~~sales tofrom ~~higher~~external ~~wages~~customers ~~and~~to ~~performance-~~geographic areas based ~~compensation~~on ~~accruals~~the location to which the product is transported. Accordingly, international sales represented 20% and 28% of total net sales for the nine months ended June 30, 2025 and June 30, 2024, respectively. Net sales to Legacy customers were $1,~~474~~769,000, ~~partially~~in ~~offset~~the bynine ~~lower~~months ~~legal~~ended ~~and~~June ~~professional~~30, ~~expenses~~2025 ofversus $~~839~~2,310,000 in the nine months ended June 30, 2024.

~~Loss~~The ~~from~~increase ~~operations~~in net sales for the ~~six~~nine months ended ~~March~~June 3130, 2025, ~~was~~of $312,~~713~~614 ,000 compared to ~~loss~~the ~~from~~nine ~~operations~~months ended June 30, 2024, was primarily driven by increased sales to Large Regional Service Provider customers of $1710,~~903~~620,000, ~~for~~up ~~the~~71%, ~~six~~Community ~~months~~Broadband ~~ended~~Service ~~March~~Providers 31of $1,992,000, ~~2024~~up 4%, aMSO ~~decrease~~customers of ~~approximately~~$6,364,000, 79up 40%, and National Carrier customers of $1,331,000, up 23%, partially offset by decreased sales to International customer of $7,152,,000, down 22%. The ~~decrease~~increase in sales across these markets for the nine months ended June 30, 2025, as compared to the nine months ended June 30, 2024, is due to early build season orders as well as reduced excess inventory levels at customers compared to the ~~result~~prior ofyear ~~increased~~period, ~~net~~and higher sales of additional product lines to customers in the Large Regional Service Provider and ~~gross~~MSO ~~profit~~markets. ~~margin~~The asdecrease ~~explained~~in ~~above,~~sales ~~partially~~to ~~offset~~International customers was driven by ~~increased~~decreased ~~selling,~~sales ~~general~~by ~~and~~the ~~administrative~~Nestor ~~expenses~~Cables segment during the nine months ended June 30, 2025.

~~Net~~Cost ~~investment~~of ~~income~~sales for the ~~six~~nine months ended ~~March~~June 3130, 2025, was $394,~~332~~940,000, ~~compared~~a decrease of $6,773,000, or 7%, from $101,712,000 for the nine months ended June 30, 2024. Gross profit percent was 28.4% of net sales for the nine months ended June 30, 2025, an increase from 15.2% of net sales for the nine months ended June 30, 2024. Gross profit increased $19,387,000, or 106%, to $337,~~918~~608,000 for the ~~six~~nine months ended ~~March~~June 3130, 2025, from $18,221,000 for the nine months ended June 30, 2024. The ~~decrease~~improvement in ~~interest~~gross ~~income~~margin isfrom the nine months ended June 30, 2024, was due to increased volumes within the Clearfield segment resulting in improved utilization of manufacturing overhead, as well as lower ~~interest~~excess ~~rates~~inventory oncharges ~~investments~~of ~~during~~$9,319,000 in the ~~six~~nine months ended ~~March~~June 3130, 2025, reflecting improved inventory utilization and beneficial recoveries from previously reserved inventory.

~~Interest~~Selling, ~~expense~~general ~~for~~and administrative expenses increased $1,393,000, or 4%, to $39,823,000 in the ~~six~~nine months ended ~~March~~June 3130, 2025, ~~was~~from $~~168~~38,~~000 compared to $228~~430,000 for the ~~six~~nine months ended ~~March~~June 3130, 2024. ~~Interest~~The ~~expense~~increase ~~incurred~~is ~~during~~primarily ~~these periods~~ due to ~~factoring~~higher ~~liabilities~~wages inand ~~the~~performance-based ~~Nestor~~compensation ~~segment~~accruals of $1,562,000.

~~The~~Loss ~~Company~~from ~~recorded~~operations ~~an income tax expense of $29,000 and income tax benefit of $3,034,000~~ for the ~~six~~nine months ended ~~March~~June 3130, 2025, ~~and~~was ~~2024, respectively. We record our quarterly provision for income taxes based on our estimated annual effective tax rate for the year. The increase in tax expense of~~ $32,~~063~~217,000 incompared ~~the second quarter of fiscal 2025 from the second quarter of fiscal 2024 is primarily due~~ to ~~decreased~~ loss from operations. ~~The~~of ~~income~~$20,210,000 ~~tax expense rate~~ for the ~~six~~nine months ended ~~March~~June 3130, ~~2025~~2024, ~~was~~a ~~(5.3%)~~decrease ~~compared~~of toapproximately ~~21.3~~89% ~~for the six months ended March 31, 2024~~. The ~~change~~decrease inis the ~~effective~~result ~~tax rate was due to the higher percentage impact~~ of ~~discrete~~increased ~~items~~net sales and agross ~~lower~~profit ~~level~~margin ofas ~~pre-tax~~explained ~~book~~above, ~~loss~~partially ~~for~~offset ~~the~~by ~~six~~increased ~~months~~selling, ~~ended~~general ~~March~~and ~~31,~~administrative ~~2025~~expenses.

~~The~~Net ~~Company’s~~investment ~~net~~income ~~loss~~ for the ~~six~~nine months ended ~~March~~June 3130, 2025, was $~~579~~4,920,000 orcompared to $~~0.04~~5,653,000 ~~per basic share and diluted share. The Company’s net loss~~ for the ~~six~~nine months ended ~~March~~June 3130, 2024~~, was $11,179,000, or $0~~.75 ~~per basic share and diluted share.~~ The decrease in ~~basic~~interest ~~and~~income ~~diluted~~is ~~loss per share for the six months ended March 31, 2025, as compared to March 31, 2024, was~~ due to lower ~~net~~interest ~~loss~~rates ason ainvestments ~~result~~during ofthe ~~increased~~nine ~~sales~~months ~~and~~ended ~~increased~~June ~~gross profit margin~~30, ~~partially offset by higher selling, general and administrative expenses as detailed above~~2025.

Interest expense for the nine months ended June 30, 2025, was $275,000 compared to $381,000 for the nine months ended June 30, 2024. Interest expense incurred during these periods is due to factoring liabilities in the Nestor segment.

The Company recorded an income tax expense of $1,401,000 and income tax benefit of $3,311,000 for the nine months ended June 30, 2025, and 2024, respectively. We record our quarterly provision for income taxes based on our estimated annual effective tax rate for the year. The increase in tax expense of $4,712,000 for the nine months ended June 30, 2025 in from fiscal 2024 is primarily due to increased income from operations offset by a valuation allowance of $780,000 recorded against the deferred tax assets of the Nestor Cables segment recorded in the Company’s fiscal 2025 third quarter. The income tax expense rate for the nine months ended June 30, 2025, was 57.7% compared to 22.2% for the nine months ended June 30, 2024. The change in the effective tax rate was primarily due to the aforementioned valuation allowance recorded on the deferred tax assets of the Nestor Cables segment.

The Company’s net income for the nine months ended June 30, 2025, was $1,028,000 or $0.07 per basic share and diluted share. The Company’s net loss for the nine months ended June 30, 2024, was $11,626,000, or $0.79 per basic share and diluted share. The increase in basic and diluted income per share for the nine months ended June 30, 2025, as compared to June 30, 2024, was due to increased net income as a result of increased sales and increased gross profit margin, partially offset by higher selling, general and administrative expenses and income tax expense as detailed above.

Reportable Segments

The Company’s reportable segments are based on the Company’s method of internal reporting. These results are not necessarily indicative of the results of operations that would have occurred had each segment been an independent, stand-alone entity during the periods presented. The internal reporting of these operating segments is defined based, in part, on the reporting and review process used by the Company’s Chief Executive Officer.

Reportable segments are as follows:

● Clearfield Segment – The Clearfield segment designs, manufactures, and sells fiber management, protection, and delivery solutions. For the three months ended ~~March~~June 3130, 2025 and 2024, net sales from the Clearfield segment comprised 8678% and 7569% of the Company’s total net sales, respectively. For the ~~six~~nine months ended ~~March~~June 3130, 2025 and 2024, net sales from the Clearfield segment compromised 8582% and 7875% of the Company’s total net sales, respectively.

● Nestor Cables Segment – The Nestor Cables segment designs, manufactures, and sells fiber optic and copper telecommunication cables and equipment. For the three months ended ~~March~~June 3130, 2025, and 2024, net sales from the Nestor Cables segment comprised 1422% and 2531% of the Company’s total net sales, respectively. For the ~~six~~nine months ended ~~March~~June 3130, 2025 and 2024, net sales from the Nestor Cables segment compromised 1518% and 2225% of the Company’s total net sales, respectively.

Clearfield Segment

The following table provides net sales and net income for the Clearfield segment for the three and ~~six~~nine months ended:

	Three Months Ended March 31,					Six Months Ended March 31,
	Three Months Ended June 30,					Nine months Ended June 30,
(In thousands)	2025		2024			2025		2024
Segment net external sales	$	4038,~~621~~755	$	2733,~~600~~670		$	70109,~~319~~074	$	5589,~~700~~371
Segment net income (loss)	$	2,549	$	(4,975	)	$	2,194	$	(8,269	)
Segment net (loss) income	$	2,328	$	(196	)	$	4,522	$	(8,464	)

29Net sales in the Clearfield segment increased 15%, or $5,085,000, for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. Net sales in the Clearfield segment increased 22%, or $19,703,000, for the nine months ended June 30, 2025, as compared to the nine months ended June 30, 2024, resulting primarily from higher sales of additional product lines to customers in the Large Regional Service Provider and MSO markets.

Net ~~sales~~income in the Clearfield segment for the three months ended June 30, 2025, increased 471288%, or $132,~~021~~524,000, ~~for~~from ~~the~~a ~~three~~net ~~months ended March 31~~loss, ~~2025,~~ as compared to the three months ended ~~March~~June 3130, 2024. Net ~~sales~~income in the Clearfield segment for the nine months ended June 30, 2025, increased 26153%, or $1412,~~619~~986,000, ~~for~~from ~~the~~a ~~six~~net ~~months ended March 31~~loss, ~~2025~~ as compared to the ~~six~~nine months ended ~~March~~June 3130, 2024, ~~resulting~~driven ~~primarily~~by ~~from~~the ~~increased~~changes in sales tooutlined ~~its Large Regional Service Provider~~above, ~~MSO~~as ~~and~~well ~~Community Broadband customers~~ as ~~these~~increased ~~markets~~gross ~~had~~profit ~~increased~~margin ~~demand~~which inwas ~~the~~positively ~~quarter~~affected ~~related~~by toincreased ~~seasonality~~volume asand ~~well~~decreased asprovision ~~reduced~~for excess inventory ~~levels at customers compared to the prior year~~reserves.

Net income in the Clearfield segment for the three months ended March 31, 2025, increased 151%, or $7,524,000 from a net loss, as compared to the three months ended March 31, 2024. Net income in the Clearfield segment for the six months ended March 31, 2025 increased 127%, or $10,463,000 from a net loss, as compared to the six months ended March 31, 2024, driven by the changes in sales outlined above, as well as increased gross profit margin which was positively affected by increased volume and decreased provision for excess inventory reserves.

Nestor Cables Segment

The following table provides net sales and net income for the Nestor Cables segment for the three and ~~six~~nine months ended:

	Three Months Ended March 31,						Six Months Ended March 31,
	Three Months Ended June 30,						Nine months Ended June 30,
(In thousands)	2025			2024			2025			2024
Segment net external sales	$	611,~~547~~148		$	915,~~310~~123		$	1223,~~325~~473		$	1530,~~439~~562
Segment net (loss)	$	(~~1,222~~722	)	$	(~~936~~252	)	$	(23,~~773~~494	)	$	(23,~~910~~162	)

~~Net sales in the Nestor Cables segment decreased~~ 30%, or $2,763,000, for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, excluding sales to the Clearfield Segment. Net sales in the Nestor Cables segment decreased 20%, or $3,114,000, for the six months ended March 31, 2025, as compared to the six months ended March 31, 2024, excluding sales to the Clearfield Segment. The decrease in net sales for the Nestor Cables segment was driven by decreased demand for the three and six months ended March 31, 2025.

Net ~~loss~~sales in the Nestor Cables segment decreased 26%, or $3,975,000, for the three months ended ~~March~~June 3130, 2025, ~~increased 31%, or $286,000,~~ as compared to the three months ended ~~March~~June 3130, 2024., ~~The~~excluding ~~increased net loss was driven by decreased net~~ sales ~~for~~to the ~~three~~Clearfield ~~months ended March 31, 2025~~segment. Net ~~loss~~sales in the Nestor Cables segment decreased 23%, or $7,089,000, for the ~~six~~nine months ended ~~March~~June 3130, 2025, ~~decreased 5%, or $137,000,~~ as compared to the ~~six~~nine months ended ~~March~~June 3130, 2024, excluding sales to the Clearfield segment. The ~~decreased~~decrease in net ~~loss~~sales for the ~~six~~Nestor ~~months~~Cables ~~ended~~segment ~~March~~was ~~31,~~a ~~2025~~result isof ~~due~~lower todemand ~~lower~~in ~~selling,~~their ~~general~~European ~~and~~market ~~administrative~~for ~~expenses,~~the ~~partially~~three ~~offset~~and bynine ~~decreased~~months ~~net~~ended ~~sales~~June 30, 2025.

Net loss in the Nestor Cables segment for the three months ended June 30, 2025, increased 186%, or $470,000, as compared to the three months ended June 30, 2024. The increased net loss was driven by lower sales and increased income tax expense for the three months ended June 30, 2025. Net loss in the Nestor Cables segment for the nine months ended June 30, 2025, increased 10%, or $332,000, as compared to the nine months ended June 30, 2024. The increased net loss for the nine months ended June 30, 2025, is due to lower sales and the tax valuation allowance recorded in the third quarter of fiscal 2025.

Liquidity and Capital Resources

As of ~~March~~June 3130, 2025, our principal source of liquidity was our cash, cash equivalents, and short-term investments. These sources total $~~111~~117,~~990~~229,000 as of ~~March~~June 3130, 2025, compared to $130,992,000 as of September 30, 2024. Additionally, we have a line of credit for $40 million that has no outstanding borrowing as of ~~March~~June 3130, 2025. Our excess cash is invested mainly in ~~U.S. Treasury securities~~Treasuries, ~~certificates~~CDs ~~of deposit~~ backed by the FDIC, and money market funds. Investments considered long-term were $4140,~~356~~168,000 as of ~~March~~June 3130, 2025, compared to $24,505,000 as of September 30, 2024. We believe the combined balances of short-term cash and investments, long-term investments, along with our line of credit provide a more accurate indication of our available liquidity. As of ~~March~~June 3130, 2025, our cash, cash equivalents, and short-term and long-term investments totaled $~~153~~157,~~346~~397,000, compared to $155,497,000 as of September 30, 2024.

We believe our existing cash equivalents, short-term investments, and line of credit facility along with cash flow from operations will be sufficient to meet our working capital and investment requirements beyond the next 12 months. The Company intends on utilizing its available cash and assets primarily for its continued organic growth, potential future strategic transactions, and the Company’s share repurchase program.

Operating Activities

Net cash provided by operating activities totaled $1018,~~198~~116,000 for the ~~six~~nine months ended ~~March~~June 3130, 2025. This consisted of a net ~~loss~~income of $~~579~~1,028,000, non-cash expenses for depreciation and amortization of $35,~~711~~766,000, stock-based compensation of $23,~~427~~745,000, amortization of premium and discounts on investments of $1,~~202~~556,000, and ~~increased~~decreased deferred income taxes of $~~891~~157,000, in addition to changes in operating assets and liabilities providing and using cash. The primary change in operating assets and liabilities providing cash was a decrease in inventory of $1013,~~478~~752,000 and an increase in accounts payable and accrued expenses of $13,~~855~~037,000, due to timing of payments. The decrease in inventory is due to increased sales to customers during the ~~six~~nine months ended ~~March~~June 3130, 2025 as the Company ~~utilized~~has continued to utilize inventory on hand to fulfill customer orders and achieve lower stocking levels. The primary change in operating assets and liabilities using cash was an increase in accounts receivable of $34,~~447~~944,000, along with an increase in other assets of $2,~~154~~555,000, related to the increases in prepaid taxes and prepaid expenses. The increase in accounts receivable is due to increased net sales during the ~~six~~nine months ended ~~March~~June 3130, 2025. Days sales outstanding, which measures how quickly receivables are collected, decreased 83 days to 4749 days as of ~~March~~June 3130, 2025, compared to 5552 days ~~from~~as ~~March~~of 31June 30, 2024.

Net cash provided by operating activities totaled $59,~~094~~131,000 for the ~~six~~nine months ended ~~March~~June 3130, 2024. This consisted of a net loss of $11,~~179~~626,000, non-cash expenses for depreciation and amortization of $35,~~572~~481,000, stock-based compensation of $23,~~284~~437,000, ~~and~~ amortization of discounts on investments of $23,~~196~~304,000 and increased deferred income taxes of $3,523,000, in addition to changes in operating assets and liabilities providing and using cash. The primary change in operating assets and liabilities providing cash was a decrease in inventory of $1423,~~414~~440,000 and aan ~~decrease~~increase in accounts ~~receivable~~payable and accrued expenses of $62,~~600~~310,000. The decrease in inventory was due to decreased inventory purchases during the ~~six~~nine months ending ~~March~~June 3130, 2024, as the Company utilized inventory on hand to fulfill customer orders and achieve lower stocking levels to support the decreased sales order backlog, as well as higher excess inventory reserves. The decrease in accounts receivable was due to the decrease in sales volume during the second quarter of fiscal 2024. Days sales outstanding increased 2 days to 55 days as of March 31, 2024, compared to 53 days from September 30, 2023. The primary change in operating assets and liabilities using cash was ~~a decrease in accounts payable and accrued expenses of $2,256,000 and~~ an increase in other assets of $58,~~951~~030,000. ~~The~~related ~~accounts payable and accrued expenses decreased due~~ to ~~the timing of payments to vendors and lower inventory purchases during the six months ending March 31, 2024. Other assets increased due to~~ increases in prepaid taxes and prepaid expenses.

Investing Activities

We invest our excess cash in money market accounts, ~~U.S. Treasury securities~~Treasuries, money market funds, and bank ~~certificates~~CDs ~~of deposit~~ in denominations across numerous banks. We believe we obtain a competitive rate of return given the economic climate and relative risk profile of these investments. During the ~~six~~nine months ended ~~March~~June 3130, 2025, we received proceeds from the maturity of investment securities of $7595,~~176~~976,000 and used cash to purchase $5978,~~234~~697,000 of investment securities. Purchases of property, plant, and equipment, mainly related to manufacturing equipment and intangible assets, consumed $45,~~722~~221,000 of cash during the ~~six~~nine months ended ~~March~~June 3130, 2025.

During the ~~six~~nine months ended ~~March~~June 3130, 2024, we received proceeds from the maturity of investment securities of $53142,~~293~~067,000 and used cash to purchase $47124,~~748~~137,000 of investment securities. Purchases of property, plant, and equipment, mainly related to manufacturing equipment and intangible assets, ~~mainly patent related,~~ consumed $45,~~389~~608,000 of cash during the ~~six~~nine months ended ~~March~~June 3130, 2024.

Financing Activities

For the ~~six~~nine months ended ~~March~~June 3130, 2025, we used cash to repurchase $1116,~~015~~665,000 of our common stock on the open market under our stock repurchase program, which includes U.S. Federal excise taxes. We received $~~301~~595,000 from employees’ participation and purchase of stock through our ESPP and used $494,000 for payment of withholding taxes for vesting of restricted stock grants. The Company ~~also~~ received cash of $13,~~253~~544,000 on net borrowings and repayments of factoring liabilities. The Company also received cash from net borrowings on bank overdrafts of $1793,~~212,~~000.

For the ~~six~~nine months ended ~~March~~June 3130, 2024, we used cash to repurchase $2733,~~814~~374,000 of our common stock on the open market under our stock repurchase program, which includes U.S. Federal excise taxes. We received $~~250~~586,000 from employees’ participation and purchase of stock through our ESPP, used $240,000 for payment of withholding taxes for vesting of restricted stock grants, and used $9,000 related to share withholding for the exercise price and taxes associated with the issuance of common stock upon cashless exercises of stock options. The Company also used cash of $~~497~~667,000 on net borrowings and repayments of factoring liabilities.

CRITICAL ACCOUNTING ESTIMATES

Management utilizes its technical knowledge, cumulative business experience, judgment and other factors in the selection and application of the Company’s accounting estimates. The accounting estimates considered by management to be the most critical to the presentation of the financial statements because they require the most difficult, subjective, and complex judgments include the fair value of investments, stock-based compensation, and valuation of inventory, long-lived assets, finite lived intangible assets and goodwill.

These accounting estimates are described in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K for the year ended September 30, 2024. Management made no changes to the Company’s critical accounting estimates during the three and ~~six~~nine months ended ~~March~~June 3130, 2025.

In applying its critical accounting estimates, management reassesses its estimates each reporting period based on available information. Changes in these estimates did not have a significant impact on earnings for the three and ~~six~~nine months ended ~~March~~June 3130, 2025.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to future events and typically address the Company’s expected future business and financial performance. Words such as “may,” “plan,” “expect,” “aim,” “believe,” “project,” “target,” “anticipate,” “intend,” “estimate,” “will,” “should,” “could,” “outlook,” or “continue” or comparable terminology are intended to identify forward-looking statements. Such forward looking statements include, for example, statements about the Company’s future revenue and operating performance, the impact of recent trade policy changes, including new and increased tariffs, retaliatory tariffs, trade disputes, and market and economic reactions to such changes, expected customer ordering patterns and future supply agreements with customers, anticipated shipping on backlog and future lead times, future availability of components and materials from the Company’s supply chain, compliance with Build America Buy America (BABA) Act requirements, future availability of labor impacting our customers’ network builds, the impact of the Broadband Equity, Access, and Deployment (BEAD) Program, Rural Digital Opportunity Fund (RDOF) or other government programs on the demand for the Company’s products or timing of customer orders, the Company’s ability to match capacity to meet demand, expansion into new markets and trends in and growth of the FTTx markets, market segments or customer purchases and other statements that are not historical facts. These statements are based upon the Company's current expectations and judgments about future developments in the Company's business. Certain important factors could have a material impact on the Company's performance, including, without limitation: our business is dependent on interdependent management information systems; inflationary price pressures and uncertain availability of components, raw materials, labor and logistics used by us and our suppliers could negatively impact our profitability; we rely on single-source suppliers, which could cause delays, increase costs or prevent us from completing customer orders; we depend on the availability of sufficient supply of certain materials and global disruptions in the supply chain for these materials could prevent us from meeting customer demand for our products; a significant percentage of our sales in the last three fiscal years have been made to a small number of customers, and the loss of these major customers could adversely affect us; further consolidation among our customers may result in the loss of some customers and may reduce sales during the pendency of business combinations and related integration activities; we may be subject to risks associated with acquisitions, and the risks could adversely affect future operating results; we have exposure to movements in foreign currency exchange rates; adverse global economic conditions and geopolitical issues could have a negative effect on our business, and results of operations and financial condition; growth may strain our business infrastructure, which could adversely affect our operations and financial condition; product defects or the failure of our products to meet specifications could cause us to lose customers and sales or to incur unexpected expenses; we are dependent on key personnel; cyber-security incidents, including ransomware, data breaches or computer viruses, could disrupt our business operations, damage our reputation, result in increased expense, and potentially lead to legal proceedings; natural disasters, extreme weather conditions or other catastrophic events could negatively affect our business, financial condition, and operating results; pandemics and other health crises could have a material adverse effect on our business, financial condition, and operating results; to compete effectively, we must continually improve existing products and introduce new products that achieve market acceptance; if the telecommunications market does not continue to expand, our business may not grow as fast as we expect, which could adversely impact our business, financial condition and operating results; changes in U.S. government funding programs may cause our customers and prospective customers to delay, reduce, or accelerate purchases, leading to unpredictable and irregular purchase cycles; intense competition in our industry may result in price reductions, lower gross profits and loss of market share; our success depends upon adequate protection of our patent and intellectual property rights; we face risks associated with expanding our sales outside of the United States; expectations relating to environmental, social and governance matters may increase our cost of doing business and expose us to reputational harm and potential liability; our operating results may fluctuate significantly from quarter to quarter, which may make budgeting for expenses difficult and may negatively affect the market price of our common stock; our stock price has been volatile historically and may continue to be volatile - the price of our common stock may fluctuate significantly; anti-takeover provisions in our organizational documents, Minnesota law and other agreements could prevent or delay a change in control of our Company; and other factors set forth in Part I, Item IA. “Risk Factors” of Clearfield's Annual Report on Form 10-K for the year ended September 30, 2024, Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q, as well as other filings with the Securities and Exchange Commission. The Company undertakes no obligation to update these statements to reflect actual events unless required by law.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to future events and typically address the Company’s expected future business and financial performance. Words such as “may,” “plan,” “expect,” “aim,” “believe,” “project,” “target,” “anticipate,” “intend,” “estimate,” “will,” “should,” “could,” “outlook,” or “continue” or comparable terminology are intended to identify forward-looking statements. Such forward looking statements include, for example, statements about the Company’s future revenue and operating performance, the impact of recent trade policy changes, including new and increased tariffs, retaliatory tariffs, trade disputes, and market and economic reactions to such changes, expected customer ordering patterns and future supply agreements with customers, anticipated shipping on backlog and future lead times, future availability of components and materials from the Company’s supply chain, compliance with Build America Buy America (BABA) Act requirements, future availability of labor impacting our customers’ network builds, the impact of the Broadband Equity, Access, and Deployment (BEAD) Program, Rural Digital Opportunity Fund (RDOF) or other government programs on the demand for the Company’s products or timing of customer orders, the Company’s ability to match capacity to meet demand, expansion into new markets and trends in and growth of the FTTx markets, market segments or customer purchases, future goodwill analysis and other statements that are not historical facts. These statements are based upon the Company's current expectations and judgments about future developments in the Company's business. Certain important factors could have a material impact on the Company's performance, including, without limitation: our business is dependent on interdependent management information systems; inflationary price pressures and uncertain availability of components, raw materials, labor and logistics used by us and our suppliers could negatively impact our profitability; we rely on single-source suppliers, which could cause delays, increase costs or prevent us from completing customer orders; we depend on the availability of sufficient supply of certain materials and global disruptions in the supply chain for these materials could prevent us from meeting customer demand for our products; a significant percentage of our sales in the last three fiscal years have been made to a small number of customers, and the loss of these major customers could adversely affect us; further consolidation among our customers may result in the loss of some customers and may reduce sales during the pendency of business combinations and related integration activities; we may be subject to risks associated with acquisitions, and the risks could adversely affect future operating results; we have exposure to movements in foreign currency exchange rates; adverse global economic conditions and geopolitical issues could have a negative effect on our business, and results of operations and financial condition; growth may strain our business infrastructure, which could adversely affect our operations and financial condition; product defects or the failure of our products to meet specifications could cause us to lose customers and sales or to incur unexpected expenses; we are dependent on key personnel; cyber-security incidents, including ransomware, data breaches or computer viruses, could disrupt our business operations, damage our reputation, result in increased expense, and potentially lead to legal proceedings; natural disasters, extreme weather conditions or other catastrophic events could negatively affect our business, financial condition, and operating results; pandemics and other health crises could have a material adverse effect on our business, financial condition, and operating results; to compete effectively, we must continually improve existing products and introduce new products that achieve market acceptance; if the telecommunications market does not continue to expand, our business may not grow as fast as we expect, which could adversely impact our business, financial condition and operating results; changes in U.S. government funding programs may cause our customers and prospective customers to delay, reduce, or accelerate purchases, leading to unpredictable and irregular purchase cycles; intense competition in our industry may result in price reductions, lower gross profits and loss of market share; our success depends upon adequate protection of our patent and intellectual property rights; we face risks associated with expanding our sales outside of the United States; expectations relating to environmental, social and governance matters may increase our cost of doing business and expose us to reputational harm and potential liability; our operating results may fluctuate significantly from quarter to quarter, which may make budgeting for expenses difficult and may negatively affect the market price of our common stock; our stock price has been volatile historically and may continue to be volatile - the price of our common stock may fluctuate significantly; anti-takeover provisions in our organizational documents, Minnesota law and other agreements could prevent or delay a change in control of our Company; and other factors set forth in Part I, Item IA. “Risk Factors” of Clearfield's Annual Report on Form 10-K for the year ended September 30, 2024, Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q, as well as other filings with the Securities and Exchange Commission. The Company undertakes no obligation to update these statements to reflect actual events unless required by law.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Clearfield is exposed to market risk due to the risk of loss arising from adverse changes in interest rates, foreign currency exchange rates, and commodity prices. Changes in those factors could impact the Company’s results of operations and financial condition. For a discussion of sensitivity analysis related to these types of market risks, refer to Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in our Annual Report on Form 10-K for the year ended September 30, 2024. There have been no material changes in information that would have been provided in the context of Item 3 for the three and ~~six~~nine months ended ~~March~~June 3130, 2025.

The Company currently invests its excess cash in bank CDs that are fully insured by the Federal Deposit Insurance Corporation and Treasuries with terms of not more than five years, as well as money market funds. The fair value of these investments fluctuates subject to changes in market interest rates.33

The Company currently invests its excess cash in bank CDs that are fully insured by the FDIC and Treasuries with terms of not more than five years, as well as money market funds. The fair value of these investments fluctuates subject to changes in market interest rates.

Foreign Exchange Rates

The Company uses the U.S. Dollar as its reporting currency. The functional currency of Nestor Cables is the Euro. The changing relationships of the U.S. Dollar to the Euro could have a material impact on our financial results. Fluctuations in the Euro to U.S. Dollar exchange rate impacts our condensed consolidated balance sheets, as well as sales, cost of sales, and net income. If the Euro had appreciated or depreciated by 10% relative to the U.S. Dollar, our operating expenses would have increased or decreased by approximately $~~163~~159,000 and $~~308~~468,000, or approximately 1%, for the three and ~~six~~nine months ended ~~March~~June 3130, 2025. We do not hedge against foreign currency fluctuations. As such, fluctuations in foreign currency exchange rates could have a material impact on the Company’s condensed consolidated financial statements.

Inflation

Rising costs, including wages, logistics, components, and commodity prices, are negatively impacting our profitability. We are subject to market risk from fluctuating market prices of certain purchased commodities and raw materials such as fiber cable and other components, which has outpaced our ability to reduce the cost structure and manufacturability or increase prices. We do not hedge commodity prices. Accordingly, inflation impacts our profitability, including cost of sales and operating expenses, and may have a material impact on the Company’s condensed consolidated financial statements.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company’s management carried out an evaluation, under the supervision and with the participation of the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of ~~March~~June 3130, 2025. Based upon that evaluation, the Company’s Chief Executive Officer and the Company’s Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

~~There~~During ~~were~~the nothree ~~changes~~months toended June 30, 2025, the Company implemented a new ERP system in the Clearfield segment, which changed a number of the Company’s processes and internal ~~control~~controls over financial reporting, as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934,. ~~that~~These ~~occurred~~changes ~~during~~are ~~the~~primarily ~~three~~in ~~months~~our ~~ended March 31~~revenue, ~~2025~~inventory, ~~that~~accounts ~~materially~~payable ~~affected,~~and orfinancial ~~are~~reporting ~~reasonably~~processes. ~~likely~~In toconnection ~~materially~~with ~~affect,~~this ~~the~~implementation ~~Company’s~~we ~~internal~~have updated aspects of our control ~~over~~environment ~~financial~~related ~~reporting~~to these processes to ensure our controls remain effective.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are no pending legal proceedings against or involving the Company for which the outcome is likely to have a material adverse effect upon its financial position or results of operations.

ITEM 1A. RISK FACTORS

The most significant risk factors applicable to the Company are described in Part II, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended September 30, 2024. There have been no material changes from the risk factors previously disclosed.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The Company repurchased shares of stock associated with exercise and satisfaction of employee tax withholding requirements on vesting or exercise of equity awards under the Company’s Stock Compensation Plans for the three months ended ~~March~~June 3130, 2025, as well as the repurchase of shares on the open market under the Company’s stock repurchase program. Accordingly, the Company’s purchases of equity securities for the three months ended ~~March~~June 3130, 2025, were as follows:

ISSUER PURCHASES OF EQUITY SECURITIES

ISSUER PURCHASES OF EQUITY SECURITIES
Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program ⁽¹⁾
April 1-30, 2025		153,837		27.30		153,837		9,793,000
May 1- 31, 2025		45,937		27.97		45,937		8,393,000
June 1- 30, 2025		-		-		-		8,393,000
Total		199,774		27.72		199,774		8,393,000

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (1)
January 1-31, 2025		13,609	$	31.46		13,609	$	18,691,000
February 1-28, 2025		13,572	$	31.79		13,572	$	17,831,000
March 1-31, 2025		127,499	$	30.13		127,381	$	13,993,000
Total		154,680	$	30.39		154,562	$	13,993,000

(1)	Effective April 30, 2024, the Company’s board of directors increased the share repurchase program to an aggregate of $65 million from the prior $40 million.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

During the three and ~~six~~nine months ended ~~March~~June 3130, 2025, none of our directors or officers informed us of the adoption, modification or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408(a).

ITEM 6. EXHIBITS

3.1 – Restated Articles of Incorporation of APA Optics, Inc. (n/k/a Clearfield, Inc.) dated November 3, 1983, and Articles of Amendment dated December 9, 1983, July 30, 1987, March 22, 1989, September 14, 1994 and August 17, 2000. (Incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000.)

3.1(a) – Articles of Amendment to Articles of Incorporation dated August 25, 2004. (Incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004.)

3.2 – Amended and Restated Bylaws of Clearfield, Inc. (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated February 26, 2016.)

10.1 – Amendment No. 2 to Loan Agreement dated April 25, 2025, by and between Clearfield, Inc. and Bremer Bank, National Association. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April 25, 2025.)

31.1 – Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Exchange Act

31.2 – Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Exchange Act

32.1 – Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. §1350

101 – The following materials from Clearfield, Inc.’s Quarterly Report on Form 10-Q for the period ended ~~March~~June 3130, 2025 are formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at ~~March~~June 3130, 2025 and September 30, 2024; (ii) Condensed Consolidated Statements of Earnings for the three and ~~six~~nine months ended ~~March~~June 3130, 2025 and 2024; (iii) Condensed Consolidated Statements of Shareholders’ Equity for the three and ~~six~~nine months ended ~~March~~June 3130, 2025 and 2024; (iv) Condensed Consolidated Statements of Cash Flows for the ~~six~~nine months ended ~~March~~June 3130, 2025 and 2024; and (v) Notes to the Condensed Consolidated Financial Statements.

104 - Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CLEARFIELD, INC.	~~CLEARFIELD, INC.~~
May 9, 2025		/s/ Cheryl Beranek
August 7, 2025	/s/ Cheryl Beranek
	By: Cheryl Beranek Its: President and Chief Executive Officer	~~By: Cheryl Beranek Its: President and Chief Executive Officer~~
	(Principal Executive Officer)	~~(Principal Executive Officer)~~
May 9, 2025		/s/ Daniel Herzog
August 7, 2025	/s/ Daniel Herzog
	By: Daniel Herzog Its: Chief Financial Officer	~~By: Daniel Herzog Its: Chief Financial Officer~~
	(Principal Financial and Accounting Officer)	~~(Principal Financial and Accounting Officer)~~

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