UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

~~☒ Annual Report Pursuant to Section 13 or 15~~(d)Mark ~~of the Securities Exchange Act of 1934~~One)

☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended September 30, ~~2023.~~2025

~~☐ Transition Report Pursuant to Section 13~~ or ~~15(d) of the Securities Exchange Act of 1934~~

☐ 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~~name of ~~Registrant~~registrant as ~~Specified~~specified in its ~~Charter~~charter)

Minnesota	41-1347235
(State of incorporation)	(I.R.S. Employer Identification No.)
(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 office) (763) 476-6866 (Registrant’s telephone number, including area code)

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(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	CLFD	The Nasdaq Stock Market

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

NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

☐ ~~YES~~ Yes ☒ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.

☐ ~~YES~~ Yes ☒ No

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

☒ Yes ☐ NO 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 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 ☒ ☐ Accelerated filer ☐ ☒ Non-accelerated filer ☐ Smaller Reporting Company ☐ Emerging Growth Company ☐

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

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

☐ ~~YES~~ Yes ☒ NO No

The aggregate market value of the voting and non-voting equity held by non-affiliates of the registrant, as of March 31, 2025, the last business day of the registrant’s most recently completed second fiscal quarter, ~~computed~~was byapproximately ~~reference~~$347,399,785 tobased on the closing sale price atper ~~which~~share of the ~~common~~registrant’s ~~equity~~Common ~~was~~Stock ~~last~~on ~~sold~~the ~~was~~Nasdaq ~~approximately~~Global ~~$603,165,864~~Market on such date.

As of November 1314, ~~2023~~2025, there were 1513,~~254~~839,~~525~~ 096 shares of the issuer’s common stock outstanding.

Documents Incorporated by Reference:

Portions of our proxy statement for the ~~2024~~2026 Annual Meeting of Shareholders, to be filed within 120 days after the end of the fiscal year covered by this report, are incorporated by reference into Part III.

CLEARFIELD, INC.

ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

PART I		1
PART I.		1
ITEM 1.	BUSINESS	1
ITEM 1A.	RISK FACTORS	86
ITEM 1B.	UNRESOLVED STAFF COMMENTS	1815
ITEM 2.	PROPERTIES	18
ITEM 1C.	CYBERSECURITY	15
ITEM 3.	LEGAL PROCEEDINGS	19
ITEM 2.	PROPERTIES	16
ITEM 4.	MINE SAFETY DISCLOSURES	19
ITEM 3.	LEGAL PROCEEDINGS	16
PART II.		19
ITEM 4.	MINE SAFETY DISCLOSURES	16
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	19
PART II.		16
ITEM 6.	[RESERVED]	21
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	16
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	21
ITEM 6.	[RESERVED]	18
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	31
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	18
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	32
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	25
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	59
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	26
ITEM 9A.	CONTROLS AND PROCEDURES	60
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	56
ITEM 9B.	OTHER INFORMATION	60
ITEM 9A.	CONTROLS AND PROCEDURES	56
PART III		60
ITEM 9B.	OTHER INFORMATION	57
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	60
ITEM 9C.	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS	57
ITEM 11.	EXECUTIVE COMPENSATION	60
PART III.		57
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	61
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	57
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	61
ITEM 11.	EXECUTIVE COMPENSATION	57
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	61
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	57
PART IV		62
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	57
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	62
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	57
ITEM 16.	FORM 10-K SUMMARY	64
PART IV.		58
SIGNATURES		65
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	58
ITEM 16.	FORM 10-K SUMMARY	61
SIGNATURES		62

PART I

Cautionary Note Regarding Forward-Looking Statements

Clearfield, Inc., together with its subsidiaries, is referred to in this report as “we,” “us,” “our,” and the “Company.” We make statements from time to time regarding our business and prospects, such as projections of future performance, statements of management’s plans and objectives, forecasts of market trends, and other matters that are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "“Securities Act"”) and Section 21E of the Securities Exchange Act of 1934, as amended (the "“Exchange Act"”). Statements containing the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimates,” “projects,” “believes,” “expects,” “anticipates,” “intends,” “target,” “goal,” “outlook,” “may,” “will,” “plans,” “objective,” “aims,” “should,” “could” or similar expressions identify forward-looking statements. Forward-looking statements may appear in documents, reports, filings with the Securities and Exchange Commission (SEC), news releases, written or oral presentations made by our authorized officers or other representatives. For such statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Our future results, including results expressed in or implied by forward-looking statements, involve a number of risks and uncertainties. Forward-looking statements are not guarantees of future actions, outcomes, results, or performance. Any forward-looking statement made by us or on our behalf speaks only as of the date on which such statement is made. We do not undertake any obligation to update or keep current any forward-looking statement to reflect events or circumstances arising after the date of such statement, except as required by law.

In addition to the factors identified or described by us from time to time in filings with the SEC, there are many important factors that could cause our future results to differ materially from historical results or trends, results anticipated or planned by us, or the results expressed in or implied by any forward-looking statements. These important factors are described below under Part I, Item 1A. “Risk Factors.”

ITEM 1. BUSINESS

Company Overview

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).

Our mission is to enable the lifestyle that better broadband provides through innovative product design that accelerates fiber-based deployment, making communications simpler and more affordable for people everywhere. We believe our products offer broadband service providers a competitive advantage at a crucial time when demand for fiber-based services is increasing to historic levels as providers focus on passing and connecting more homes. We are driven to help broadband service providers reduce the cost - and increase the speed - of fiber deployment.

~~Strategy~~Segment ~~Overview~~Information

InWe ~~2022,~~are weengaged ~~launched~~in aglobal ~~transformative multi-year strategy plan called LEAP~~operations. ToOur ~~leap~~operations ~~means~~currently ~~jumping~~comprise higher, further and with greater force. The LEAP plan is our roadmap to how we intend to scale as a company to seize the opportunity Clearfield was built to achieve. There are four tenets in our LEAP plan, one ~~for~~reportable ~~each letter~~segment.

~~The~~On LNovember is11, to2025, ~~leverage~~the ~~our~~Company ~~decade-long~~completed ~~excellence~~the insale ~~community~~of ~~broadband.~~its WeNestor ~~are~~Cables abusiness, ~~leader~~which inwas ~~community~~previously ~~broadband~~reported ~~fiber~~as ~~connectivity~~the ~~and~~Nestor ~~have~~Cables ~~been~~Operating ~~focused~~Segment. onIn ~~serving~~connection with this ~~market~~sale, ~~since~~the wehistorical ~~were~~results ~~founded.~~of Wethe ~~make~~Nestor ~~decisions~~Cables bybusiness ~~listening~~and tocertain ~~our~~assets ~~customers~~ and ~~understanding~~liabilities ~~their~~of ~~evolving~~the ~~needs.~~Nestor ~~Building~~Cables onbusiness are reported in our ~~decade~~consolidated ~~plus~~financial ofstatements ~~success~~as indiscontinued ~~this~~operations. ~~market,~~Following ~~we’ve~~the ~~demonstrated~~sale ~~that~~of wethe ~~can~~Nestor ~~nimbly~~Cables ~~adapt~~business, tothe acontinuing ~~changing~~operations ~~marketplace~~of ~~and~~the ~~grow~~Company ~~with~~comprise ~~our~~one ~~customers~~operating assegment ~~they~~and ~~grow~~one reportable segment.

The E is to execute capacity enhancement. This tenet is centered around aligning us closer to market demand by building production capacity that facilitates optimal time to market. We are structured to maintain our market leadership position and to gain market share from competitors and grow the business overall, by matching our capacity to address the significant market demand for fiber broadband.

The A is to accelerate infrastructure investments. This tenet reflects our commitment to continue investing in our organizational infrastructure to support the growing business and effectively manage our expanded capacity. This includes attracting and retaining key personnel, optimizing internal processes, and adding information systems to take advantage of the opportunity to achieve scalable company growth.

Finally, the P in LEAP stands for position innovation at the forefront of our value proposition. Accelerating our customers’ time to revenue by designing craft-friendly products that require less skilled labor is the foundation of our value proposition. We intend to achieve this tenet by emphasizing innovation in our product designs and increasing the cadence of our product expansions with the goal of facilitating our customers’ fiber broadband deployments.

Segments

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 allow its customers to connect twice as many homes in their Fiber to the Home (“FTTH”) builds by using fewer resources in less time. 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

As of July 26, 2022, Clearfield, through its newly created Finnish subsidiary, Clearfield Finland Oy, acquired Nestor Cables. 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. Prior to the acquisition, Nestor Cables had been a supplier to Clearfield for over a decade and that relationship continued following the closing of the acquisition. Nestor has two types of production processes, the process of making cable in its Finland 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.

Products

Our product strategy involves analyzing the broadband communications industry environment and technology, with a particular focus on simplifying our customers’ business, and developing innovative, high-quality products utilizing modular designs wherever possible. We are committed to make fiber deployment success easier by providing craft-friendly, pre-connectorized plug-and-play fiber assemblies, fiber management and pathway products to speed deployments and provide the lowest total cost of ownership for our customer’s networks. With the innovation of forward-thinking products, a 100 percent plug-and-play platform and creative deployment methods, we are fulfilling our mission toof ~~enable~~enabling the lifestyle ~~that~~of better broadband and ~~provides~~beyond.

Throughout the fiber deployment journey from the Inside Plant (ISP) to the Outside Plant (OSP), into the Access Network and all the way to the fiber connection at the home, our labor lite solutions solve service provider fiber network design and installation challenges. Our methodologies provide easy to engineer and easy to install solutions that take the mystery out of deploying fiber networks.

Leveraging factory terminated single-fiber and multi-fiber plug-and-play connectors, homes passed, and homes connected metrics can be greatly increased. The speed to turn up the entire network is maximized, while helping ensure superior optical performance achieved by using low-loss connectors, terminated in the factory.

Whether inside a cabinet or at the home, innovative slack storage spools and deploy reels reduce the dependence on making exact cable measurements. This enables the deployment of double-ended, standard cable lengths rather than relying on highly engineered, built -to -order cable assemblies or multiple field splicing events.

Product development for the Company’s product line program has mainly been conducted internally. We believe that the communication industry environment is constantly evolving, and our success depends on our ability to anticipate and respond to these changes. Research and development are reflected in Selling, General, & Administrative expenses.

Some of our products currently offered are described below:.

FieldSmart® is a series of panels, cabinets, wall boxes and other enclosures that provide a consistent design from the inside plant of the telco’s “central office” or cable television’s head-end, all the way through the outside plant to the access network to within the home or business. The Clearview® Cassette is the core building block of every product within the FieldSmart fiber management system. Clearview configuration options support tool-less installation, in-cassette buffer tube/ribbon slack storage as well as front access-only designs. The small footprint reduces real estate costs and improves density without compromising critical design elements of access, bend-radius protection, physical fiber protection and route path diversity. All types of fiber cable construction can be integrated within the cassette to support all patch only, patch and splice (in-cassette splicing), passive optical component hardware and plug-and-play scenarios.

WaveSmart® optical components are integrated for signal coupling, splitting, termination, multiplexing, demultiplexing and attenuation for a seamless integration within our fiber management platform. The products are built and tested for harsh environments to meet the strictest industry standards ensuring customers trouble-free performance in extreme outside plant conditions.

Active Cabinets using our FiberFlex product lines feature either fully integrated, fully engineered cabinets equipped with specific active electronics configurations or universal cabinets ready for mounting other electronic equipment. This product line features Clearfield’s fiber management solutions housing the Clearview Cassette. The FieldSmart® FiberFlex product line of outdoor active cabinets feature multiple sizes for universal configurations of electronic equipment. 2

Active Cabinets using our FiberFlex™ product lines feature either fully integrated, fully engineered cabinets equipped with specific active electronics configurations or universal cabinets ready for mounting other electronic equipment. This product line features Clearfield’s fiber management solutions housing the Clearview Cassette. The FieldSmart FiberFlex product line of outdoor active cabinets feature multiple sizes for universal configurations of electronic equipment.

CraftSmart® FiberFirst™ pedestals are designed to support fiber-only networks. Purpose-built to support a wide variety of service network designs, the pedestal eliminates the need for multiple, specialty pedestals and can support a passive optical network (PON) option, a splice-only option, or an access terminal option. The FiberFirst Pedestal Access Terminal options provide a cable management and mounting bracket kit that supports the deployment of all Clearfield access terminals.

3Access Terminals from Clearfield are designed to ensure every service provider has the freedom of choice to match drop cable configuration and technology with the needs of their environment and first-cost priorities. The YOURx® access terminals also offer flexibility with cable mid-span and internal splicing options. The TetherSmart Multi-Fiber Terminal is Clearfield’s smallest carrier-grade, plug-and-play access terminal. Its small size makes it an attractive choice to deliver fiber to cell towers and inside cellular concealment poles. Clearfield access terminals can be deployed in a variety of locations including pedestals, vault, flowerpot, pole-mount, smart-pole, or strand mounted options.

Access Terminals from Clearfield are designed to ensure every service provider has the freedom of choice to match drop cable configuration and technology with the needs of their environment and first-cost priorities. The patented SeeChange® terminal and hardened connector system lets the operator push fiber deeper in the neighborhood using a completely plug-and-play approach. The YOURx® access terminals also offer flexibility with cable mid-span and internal splicing options. Clearfield access terminals can be deployed in a variety of locations including pedestal, vault, flowerpot, pole-mount, smart-pole, or strand mounted options.

FieldShield® platform is a patented fiber pathway and protection method aimed at reducing the cost of broadband deployment. Our FieldShield fiber drop cable assemblies are designed to connect the fiber access point (hand hole, pedestal or aerial) to the optical network terminal (ONT), on the home, in a fiber to the home (FTTH) network. FieldShield starts with a ruggedized microduct designed to support all aerial, direct bury, and inside plant “last mile” needs. FieldShield microduct is strong enough to be placed using traditional methods of boring and plowing, leveraging existing conduit placement equipment, as well as newer, less disruptive technologies such as micro trenching or saw cutting.

Fiber Assemblies - Clearfield manufactures high quality fiber assemblies with an industry-standard or customer-specified configuration.  In addition, Clearfield’s engineering services team works alongside the engineering design departments of our original equipment manufacturer (“OEM”) customers to design and manufacture custom solutions for both in-the-box as well as network connectivity assemblies specific to that customer’s product line.

~~Fiber~~ClearPass™ ~~Optic~~Connector ~~Cables~~Cleaning ~~manufactured~~Dust byCap ~~Nestor~~is ~~Cables include~~ a ~~comprehensive~~game-changing ~~range~~innovation ofthat ~~optical~~simplifies fiber ~~cables~~connector ~~that~~cleaning ~~offer~~while ~~dependable~~enhancing ~~solutions~~network ~~for~~performance. ~~various~~With ~~installation~~built-in ~~conditions~~cleaning functionality and ~~special~~94.5% ~~requirements~~effectiveness, ~~including~~the ~~direct~~ClearPass ~~buried~~Dust ~~cables,~~Cap ~~duct~~ensures ~~cables,~~faster ~~microduct cables~~installation, ~~indoor/outdoor~~fewer ~~cables,~~errors ~~aerial~~and ~~cables~~a ~~and~~more ~~submarine~~reliable ~~cable~~broadband experience.

Copper Cables manufactured by Nestor cables include copper conducted instrumentation and automation cables as well as central and signaling cables Nestor also manufactures copper cable for telecommunications networks.

Nestor Optimus product family is a complete solution which includes all needed products - cables, microducts, microduct accessories and tools - for construction of microduct networks which are easily expandable, suitable for changing and growing urban and suburban areas, and enables the use of lighter installation techniques, which reduces construction costs and interference during installation.

NesCon Connectivity Products is a product family by Nestor Cables that includes essential installation and connection accessories for fiber optic networks, all of which are compatible with Nestor Cable’s optical fiber cables.

Markets and Customers

The Company’s products are sold across broadband service providers, which we categorize as National Carrier (wireline/wireless national telco carriers (Tier 1)), Community Broadband (Tier 2 and 3 telco carriers, utilities, municipalities, and alternative carriers), Large Regional Service Providers (ILEC operating a multi-state network with more than 500,000 subscribers), Multiple System Operators (cable television), and International (primarily ~~Europe~~Canada, the Caribbean, Central/~~Latin~~South America and ~~Canada~~Mexico), and Legacy build-to-print copper and fiber assemblies (primarily contract manufacturing). ~~Nestor’s products are sold to telecommunication wholesalers and telecommunication operators, primarily in Europe.~~

The Company’s products are sold direct to customers through the Company’s sales force as well as through authorized distributors. In addition, the Company uses manufacturing sales representatives and sales agents for customer and geography specific needs.

The Company considers the primary markets for its products to be as follows: .

Commercial Fiber Broadband Connectivity

FTTP

Fiber to the Premise (also called Fiber to the Home) is a means of delivering the highest possible level of bandwidth directly to the user. The Company’s sales and marketing efforts have principally been focused on the U.S., with additional efforts in Canada and Central/Latin America. ~~We intend to leverage our Nestor platform to cross sell connectivity products into Europe.~~

FTTB

Fiber to the Business is principally for Multiple System Operators (cable television) and wireline/wireless national telco carriers (Tier 1) to penetrate the business marketplace.

Broadband Service Provider Data Center Infrastructure

DC Interconnect/Campus Network

Fiber entry pathways supporting carrier access, campus links, and data center interconnection.

Meet-Me Room

Cross-connect environment where carriers, ISPs and cloud providers interconnect securely.

Main Distribution Area

Core switching and routing layer distributing connectivity between MMR and data halls.

White Space

Primary data hall for customer racks, servers and storage infrastructure.

Wireless Deployments

Metro Core

Aggregates traffic to and from national/international networks.

Backhaul

Connects Core to RAN; high-capacity data transport.

Indoor/Outdoor DAS

Connects centralized baseband units (BBUs) to remote radio heads (RRHs).

Small Cells

Links centralized or virtualized RAN hubs to small cell radios on poles and rooftops.

FTT-Cell site

Fiber to the ~~Cell~~cell site is the trend in which wireless service providers enhance their coverage for bandwidth. Currently, the majority of these cell sites are served by fiber backhaul and fronthaul.

Build to Print

In addition to a proprietary product line designed for the broadband service provider marketplace, Clearfield provides contract manufacturing services for original equipment manufacturers requiring copper and fiber cable assemblies built to their specification.

Competition

The market for the fiber management, fiber protection, and fiber delivery products ~~provided by the Clearfield segment~~ is highly competitive. Competition is largely based on any one or a combination of the following factors: functionality and features, price, product quality, product availability and lead times, cost and ease of installation, service and support, long-term returns to customers, scalability, product innovation, and manufacturing capability.

Competitors to the FieldSmart product lines include, but are not limited to, products offered by Corning Cabling Systems, Inc., OFS (Furukawa Electric North America, Inc.), AFL Telecommunications (a subsidiary of Fujikura Ltd.), Fujikura Ltd., Nokia, ~~Hextronics~~Hexatronics Group, Amphenol and CommScope, Inc. Competitors to the CraftSmart and FiberFlex active cabinet product lines include products offered by Emerson Network Power, a subsidiary of Vertiv Co., and Charles Industries, Ltd., a subsidiary of Amphenol. Competitors to FieldShield product lines include products offered by PPC Broadband, a subsidiary of Belden, Inc. and Emtelle UK Limited. In various geographic or vertical markets, there are also several smaller companies with which we compete. Clearfield believes that it has a competitive advantage with customers who can leverage the cost savings the Clearview Cassette can provide and those who require quick-turn, high-performance customized products, and that it is at a competitive disadvantage with customers who principally seek large volume commodity products.

The Nestor Cables segment faces competition from numerous competitors within each of the markets it serves. The Nestor Cables segment competes primarily on the basis of its product performance and its ability to meet its customers’ highly specified design, engineering and delivery needs on a timely basis. The market demand and resulting build rates of fiber optic networks and capital expenditures by telecommunications wholesalers and telecommunications providers, has a large and direct influence on the demand for the Nestor Cables segment products.

Many of our competitors have greater resources than we do, including greater sales, product development, marketing, financial, technical, or engineering resources. As a result, our competitors may be able to procure necessary components and labor at much lower prices than we can or may offer competitive products at below market prices, which could prevent us from competing effectively.

Sources of Materials and Supply Chain

Numerous purchased materials and components and sources of labor are used in the manufacturing of the Company’s products. Most of these are available from multiple suppliers. However, some components and third-party contract manufacturing services are purchased from a single or a limited number of suppliers. The loss of access to some components and third-party contract manufacturing services could have an adverse effect on our ability to deliver products on a timely basis and on our financial performance.

Clearfield’s Mexico facility operates under a Maquiladora arrangement. Under this arrangement, we contract with a company to provide certain personnel and other services at the production facilities in Mexico that complete final build and assembly of a significant portion of Clearfield’s products. Maquiladora status also allows us to import certain items from the United States into Mexico duty-free, provided that such items, after processing, are exported from Mexico within a stipulated time frame.

5Our supply chain management team oversees our suppliers to source and procure materials, manufacture and deliver our products to customers from the site of manufacture, whether at Clearfield’s facilities in Brooklyn Park, Minnesota or the facility in Tijuana, Mexico that operates as a Maquiladora. Our supply chain management team consists of planning, sourcing, and logistics personnel. We tightly integrate our supply chain management, our product innovation activities, and our manufacturing operations. Our supply chain team also manages the critical logistics and transport services for our materials, components and finished products in and out of Mexico to ensure sufficient materials to timely produce products and to ensure timely export of products in order to qualify as duty-free.

~~Our supply~~Over ~~chain~~the ~~management~~last ~~team~~several ~~oversees our suppliers to source and procure materials~~years, ~~manufacture~~we ~~and~~have ~~deliver~~taken ~~our~~steps ~~products~~ to ~~customers~~improve from the site of manufacture, whether at Clearfield’s facility in Brooklyn Park, Minnesota or the facility in Tijuana, Mexico that operates as Maquiladoras. Our supply chain management team consists of planning, sourcing, and logistics personnel. We tightly integrate our supply chain ~~management~~operations, ~~our~~enhance ~~product innovation activities~~resiliency, and ~~our~~mitigate ~~manufacturing~~risk ~~operations. Our supply chain team also manages the critical logistics and transport services for our materials, components and finished products in and out~~ of ~~Mexico to ensure sufficient materials to timely produce products and to ensure timely export of products in order to qualify as duty-free~~disruption.

Over the last several years, we have taken steps to improve our supply chain operations, enhance resiliency and mitigate risk of disruption.

Major Customers and Financial Information about Geographic Areas

For the fiscal year ended September 30, ~~2023~~2025, the Company had ~~one~~two ~~customer~~customers, ~~that~~Customer ~~comprised~~A 16and Customer B, which accounted for approximately 18% and 13% of net sales, respectively. ~~This~~These ~~customer~~customers isare ~~a distributor~~distributors. For the fiscal year ended September 30, ~~2022~~2024, ~~the~~Customer ~~Company~~A ~~had~~and ~~one~~Customer ~~customer~~B ~~that~~accounted ~~comprised~~for 14approximately 20% and 15% of net sales., ~~This customer was a distributor~~respectively. For the fiscal year ended September 30, ~~2021~~2023, ~~the~~Customer ~~Company~~A ~~had~~and ~~two~~Customer ~~customers~~B ~~that~~accounted ~~comprised~~for aapproximately ~~combined~~19% 28and 10% of net sales., ~~Both of these customers were distributors~~respectively. These major customers, like our other customers, purchase our products from time to time through purchase orders and we do not have any agreements that obligate these major customers to purchase products in the future from us.

As of September 30, ~~2023~~2025, ~~three~~the Company had two customers, Customer B and Customer A, which accounted for aapproximately ~~combined~~17% 40and 11% of accounts receivable., ~~These customers are all distributors~~respectively. As of September 30, ~~2022~~2024, ~~one~~Customer ~~customer~~B accounted for 2016% of accounts receivable. ~~This customer is a distributor.~~

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 Canada as well as countries in the Caribbean, ~~Europe and~~ Central ~~and~~ /South America~~. Since our acquisition of Nestor Cables in July 2022~~, weand ~~experienced an increased concentration of customers based in Europe~~Mexico.

Patents and Trademarks

As of September 30, ~~2023~~2025, Clearfield has 4763 patents granted and multiple patent applications pending both inside and outside the United States. These patents begin to expire in 2028. We have also developed and are using multiple trademarks and logos to market and promote our products.

Seasonality

We are affected by the seasonal trends in the industries we serve. We typically experience sequentially lower sales in our first and second fiscal year quarters, primarily due to customer budget cycles, deployment schedules of outdoor products, some customer geographical concentrations, as well as standard vacation and holiday calendars. Sales have usually reached a seasonal peak in our third and fourth fiscal quarters.

Human Capital Resources

As of September 30, ~~2023~~2025, ~~the~~Clearfield ~~Company~~ had approximately ~~400~~ 243 full-time employees, all of which ~~65%~~ were based in the United States, ~~(“U.S.”)~~excluding ~~and~~employees ~~35%~~associated ~~were~~with ~~based~~the ~~outside~~discontinued operations of the ~~U.S., primarily in Finland and Estonia due to our~~ Nestor Cables ~~operations~~business. We also employ seasonal, part-time employees and independent contractors. ~~Subject~~None ~~to customarily local collective bargaining arrangements for employees in Finland and Estonia, none~~ of our employees are covered by any collective bargaining ~~agreement~~agreements.

Our ~~U.S.~~ employees include approximately ~~165~~160 office personnel and ~~100~~83 manufacturing personnel as of September 30, ~~2023~~2025. The substantial majority of these employees work out of our Brooklyn Park, Minnesota headquarters. The Company’s office personnel are comprised of sales, marketing, engineering, and administrative personnel. The manufacturing personnel include both individuals directly involved in the manufacturing of our products, as well as warehouse and operations supervisory personnel. Certain positions within our organization require industry specific technical knowledge. Our manufacturing personnel currently work in one shift as needed at our Brooklyn Park facility.

We invest significant management attention, time, and resources to attract, engage, develop, and retain our employees, particularly for positions that require technical knowledge or expertise. For this reason, we offer rigorous training programs for manufacturing and other technical employees to allow them to develop the necessary skillset for their roles and promote career development. To date, our training programs and overall collaborative working environment have allowed us to be successful in attracting and retaining qualified technical personnel for these positions.

~~Nestor~~As ~~Cables~~of ~~has~~September ~~approximately~~ 30, ~~office~~2025, we had contracted for approximately 375 personnel ~~and~~in ~~105~~the Mexico facility through a Maquiladora agreement. The manufacturing personnel ascontracted ofthrough ~~September~~the ~~30,~~Maquiladora ~~2023~~are covered by a customary local collective bargaining agreement with the company that provides the personnel and other services to the Mexico facility.

As of September 30, 2023, we had contracted for approximately 600 personnel in the Mexico facility through a Maquiladora agreement.

In our manufacturing operations, we monitor key metrics and goals based on quality, productivity, and ability to meet shipping promise dates. As a measure of quality, we focus on First Pass Yield (“FPY”), which is calculated as the percentage of product that meets all performance criteria upon first completion from our manufacturing floor and requires no rework. The Company’s target for FPY ranges from 92-99%, depending on key manufacturing steps and the product line being produced. We also measure our On-Time Delivery (“OTD”) which is determined by the Company’s ability to ship product on the date necessary, accounting for standard shipping times, in order to meet the agreed upon delivery date with our customers. The Company’s OTD target is a minimum of 95%. This metric is important as the Company has taken a strategic approach to be able to offer low industry lead times for our customers. The Company incentivizes certain of its personnel based on these metrics.

Climate Change

Certain government and regulatory bodies have introduced or are contemplating regulatory changes relating to climate change. While we do not believe climate-related risks are reasonably likely to have a material impact on our business, results of operations, or financial condition at this time, we are continuing to assess the nature and extent of risk from a changing climate and the potential for increased regulation.

The majority of our manufacturing operations calls for compiling raw material and other purchased components from suppliers. As part of our operations, we focus on minimizing scrap and other waste and look to recycle and salvage this scrap wherever possible. Any new regulation of emissions may result in additional costs to our suppliers which may be passed on to us.

In addition, the physical impacts of climate change and other natural events, including adverse weather conditions such as heavy or sustained rainfall, flooding, cold weather and snow, can impact deployment schedules of outdoor products and potentially affect demand for our products. Additionally, we may need to take into account an increase in the frequency of extreme weather events in the development of our products.

An increase in the frequency of extreme weather events, changes in weather patterns, drought, rising ocean and temperature levels, earthquakes and the like may impact our manufacturing operations or the manufacturing operations of suppliers of our critical raw materials or components. These types of impacts may also result in transportation-related supply chain challenges and negatively impact the delivery of raw materials, components, or products to or from our facilities. These potential physical effects may increase costs, cause delays or shortages in components required to produce our products or cause delays in the shipment of our products to customers.

Changes in environmental and climate change laws or regulations, including laws relating to greenhouse gas (“GHG”) emissions, could lead to new or additional investment in the Company’s products or facilities and could increase environmental compliance expenditures. Changes in climate change concerns, or in the regulation of such concerns, including GHG emissions, could subject the Company to additional costs and restrictions, including increased energy and raw material costs and other compliance requirements which could negatively impact the Company’s reputation, business, capital expenditures, results of operations, and financial position.

Corporate Information

Clearfield, Inc. was incorporated under the laws of Minnesota in 1979. Our corporate headquarters are located at 7050 Winnetka Avenue North, Suite 100, Brooklyn Park, Minnesota, 55428, and our corporate website is www.seeclearfield.com. We do not incorporate the information on or accessible through our website into this annual report on Form 10-K, and you should not consider any information on, or that can be accessed through, our website as part of this annual report on Form 10-K.

Our annual report on Form 10-K, our quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available free of charge at our website as soon as reasonably practicable after we file such material with, or furnish it to, the SEC. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers, like Clearfield, that file electronically with the SEC and that internet site is http://www.sec.gov.

We use various trademarks and trade names in our business, including without limitation our corporate name and logo. Solely for convenience, the trademarks and trade names in this annual report may be referred to without the ® and ™ symbols, but such references should not be construed as any indicator that we will not assert, to the fullest extent under applicable law, our rights thereto.

ITEM 1A. RISK FACTORS

Risks Relating to Our Operations

~~Inflationary~~We ~~price~~depend ~~pressures~~on ~~and~~the ~~uncertain~~ availability of ~~components,~~sufficient ~~raw~~supply of certain materials,. ~~labor~~Global ~~and~~disruptions ~~logistics~~in ~~used~~the bysupply ~~us,~~chain ~~and~~for ~~our~~these ~~suppliers~~materials could ~~negatively~~prevent ~~impact~~us from meeting customer demand for our ~~profitability~~products.

~~Increases~~We inpurchase ~~the~~critical ~~price~~components offor ~~raw~~our ~~materials~~products, ~~labor~~including ~~and~~injected ~~other~~molded ~~components~~parts, ~~utilized~~various incabling, ~~the~~optical ~~production~~components, ofcomponents ~~our~~for ~~products~~active cabinets, ~~along~~and ~~with~~connectors ~~logistics~~from ~~and~~third ~~other~~parties, ~~related~~some ~~costs,~~of ~~may~~which ~~lead~~are tosingle- ~~higher~~or ~~production~~limited-source ~~and~~suppliers. ~~shipping~~We ~~costs~~depend ~~for~~on ~~our~~the ~~products.~~ability ~~Additionally,~~of ~~increasing~~these ~~global~~third-party ~~demand~~suppliers ~~for,~~to ~~and~~secure ~~uncertain~~a sufficient supply of, ~~such~~raw materials ~~could~~and ~~disrupt~~maintain ~~our~~sufficient ~~ability~~manufacturing toand ~~obtain~~shipping ~~such~~capacity. ~~materials~~The inglobal asupply ~~timely~~chain ~~manner~~for toraw ~~meet~~materials ~~our~~critical ~~supply~~to ~~needs~~our ~~and~~products ~~could~~has ~~lead~~in tothe ~~increased~~past, ~~costs.~~and Anmay ~~increase~~again in the ~~cost~~future, ofsuffer ~~inputs~~shortages, ~~needed~~shipping todelays ~~produce~~and ~~our~~shipping ~~products~~shortages. ~~could~~This may lead tosome ~~higher~~manufacturers ~~costs~~who ~~and~~depend ~~could~~on ~~negatively~~these ~~impact~~raw ~~our~~materials ~~results~~to ofexperience ~~operation~~shortages, ~~future~~delivery ~~profitability,~~delays and ~~ability~~price toincreases ~~meet~~for ~~customer~~both ~~demand.~~the ~~Passing~~raw ~~along~~materials ~~these~~and ~~increased~~shipping, ~~prices~~with tothe ~~our~~corresponding ~~customers~~consequence tothat ~~offset~~these ~~the~~manufacturers ~~impact~~may ofbe ~~higher~~delayed ~~costs~~in ~~may~~delivering ~~cause~~products ~~certain customers~~ to ~~cancel,~~us ~~push~~or ~~out,~~may orcharge ~~refrain~~higher ~~from~~prices ~~purchasing~~for ~~our~~these products, ~~which~~or ~~could~~there ~~negatively~~may ~~impact~~be ~~demand~~increased ~~for~~shipping ~~our~~costs associated with the products,. ~~and~~Some ~~therefore~~manufacturers may also ~~negatively~~allocate ~~impact~~short ~~our~~supply ~~results~~ of ~~operations~~products among Clearfield and ~~future~~their ~~profitability~~other customers.

Increased demand for the Company’s products from its customers may put pressure on the Company’s supply chain, particularly during periods of disruption in the global supply chain and may lead to increases in costs or delays in obtaining the materials and components for our products from our suppliers. The Company’s ability to recognize revenue in the future for customer orders will depend on our ability to manufacture and deliver products to the customers and fulfill other contractual obligations. Our ability to meet future customer demand for our products will in turn depend upon our suppliers receiving timely and adequate supplies of raw materials to be able to produce the critical materials and components they supply to us. Although we place a high value on long-term relationships with our suppliers, generally we do not have long-term supply contracts but instead conduct business on an order-by-order basis. Therefore, we also compete with other companies for the production capacity of manufacturers of the materials and components we need for our products. We also are exposed to potentially increasing costs associated with the materials and components we purchase from suppliers or increased costs associated with shipping generally. We may attempt to mitigate the effect of increases in our cost of goods sold through sourcing or stocking initiatives and by selectively increasing the prices of our products. However, we may be unable to fully pass on these costs to our customers. Long lead times for certain components and changes in demand for our products may impact our ability to accurately forecast our production requirements. As a result, certain component inventory purchases may become excess or obsolete, which could have an adverse effect on our financial condition and results of operations.

The reduction of available production capacity among our suppliers, their failures to meet production deadlines or increases to us in their manufacturing or shipping costs may impact our ability to deliver quality products to our customers on a timely basis, make our products less competitive due to extended delivery times or increased price, negatively impact our customer or distributor relationships, and result in lower net sales and profit. Any delays or inabilities in meeting customer required shipping dates may also expose us to order cancellations in our sales order backlog by customers, which could have an adverse effect on our results of operations.

We rely on single-source suppliers, which could cause delays, increases in costs, or prevent us from completing customer orders, all of which could materially harm our business.

We assemble our products using materials and components supplied by various subcontractors and suppliers. We purchase critical components for our products, including injected molded parts, various cabling, optical components, and connectors from third parties, some of whom are single- or limited-source suppliers. If any of our suppliers are unable to ship critical components, we may be unable to manufacture and ship products to our distributors or customers. If the price of these components increases for any reason, or if these suppliers are unable or unwilling to deliver, we may have to find another source, which could result in interruptions, increased costs, delays, lost sales, and quality control problems.

Further, the costs to obtain certain raw materials and supplies, such as fiber ~~and copper cabling~~, are subject to price fluctuations, which may be substantial, because of global market demands. Many companies utilize the same raw materials and supplies in the production of their products as we use in our products. Companies with more resources than us may have a competitive advantage in obtaining raw materials and supplies due to greater purchasing power. Some raw materials or supplies may be subject to regulatory actions, which may affect available supplies. Further, new or increased tariffs may be imposed by ~~the~~governments ~~U.S.~~ on imports from other countries that are the single- or limited-source of our materials and components. Tariffs increase the cost of the materials and components that go into making our products, but we are generally unable to pass ~~most~~some or all of these increased costs on to our customers. Accordingly, these increased costs adversely impact the gross margin that we earn on our products. Furthermore, due to general economic conditions in the U.S. and globally, our suppliers may experience financial difficulties, which could result in increased delays, additional costs, or loss of a supplier.

The termination or interruption of any of these relationships, or the failure of these manufacturers or suppliers to supply components or raw materials to us on a timely basis or in sufficient quantities, likely would cause us to be unable to meet orders for our products and harm our reputation and our business. Identifying and qualifying alternative suppliers would take time, involve significant additional costs, and may delay the production of our products. If we fail to forecast our manufacturing requirements accurately or fail to properly manage our inventory with our contract manufacturers, we could incur additional costs, experience manufacturing delays, and lose sales. Further, if we obtain a new supplier or assemble our product using an alternative source of supply, we may need to conduct additional testing of our products to ensure they meet our quality and performance standards. Any delays in delivery of our product to distributors or customers could be extended, and our costs associated with the change in product manufacturing could increase.

The failure of our third-party manufacturers to manufacture the products for us or the failure of our suppliers of components and raw materials to supply us these items consistent with our requirements as to quality, quantity and timeliness could materially harm our business by causing delays, lost sales, increases in costs and lower gross profit margins.

AnA ~~increasing~~ number of products manufactured by the Company are produced outside the U.S., including in our Mexico ~~facilities~~facility. The Company’s manufacturing ~~facilities~~facility in Mexico ~~are~~is authorized to operate as ~~Maquiladoras~~a Maquiladora by the Ministry of Economy of Mexico. Maquiladora status allows the Company to import certain items from the U.S. into Mexico duty-free, provided that such items, after processing, are exported from Mexico within a stipulated time frame. Maquiladora status, which is renewed periodically, is subject to various restrictions and requirements, including compliance with the terms of the Maquiladora program and other local regulations. Failure to comply with these regulations or other disruptions within the program could adversely affect the Company’s financial position, results of operations, and cash flows.

WeChanges ~~depend~~in ontrade ~~the~~policy ~~availability of sufficient supply of certain materials. Global disruptions~~ in the ~~supply~~U.S. ~~chain~~and ~~for~~other ~~these~~countries ~~materials~~may ~~could~~adversely ~~prevent~~affect usour ~~from~~business ~~meeting~~and ~~customer~~results ~~demand~~of ~~for our products~~operations.

WeChanges ~~purchase~~in ~~critical~~trade ~~components~~policy, ~~for~~including ~~our~~the ~~products~~imposition of new, ~~including~~increased, ~~injected~~or ~~molded~~retaliatory ~~parts,~~tariffs ~~various~~by ~~cabling,~~the ~~optical~~U.S. ~~components~~or foreign governments, ~~components~~may ~~for~~increase ~~active~~the ~~cabinets,~~cost of raw materials and ~~connectors~~components imported from ~~third~~other ~~parties~~countries, ~~some~~leading ofto ~~whom~~higher ~~are~~production ~~single-~~costs orand ~~limited-source~~product ~~suppliers.~~pricing Weto ~~depend~~the onextent ~~the~~those ~~ability~~increased ofcosts ~~these~~are ~~third-party~~offset ~~suppliers~~through price increases to ~~secure~~our acustomers ~~sufficient~~(which may result in declines in sales); disrupt established supply ofchains, ~~raw~~forcing ~~materials~~the ~~and~~Company ~~maintain~~to ~~sufficient~~find ~~manufacturing~~new ~~and~~suppliers ~~shipping~~or ~~capacity.~~relocate ~~The~~production, ~~global~~which ~~supply~~could ~~chain~~be ~~for~~time-consuming ~~raw~~and ~~materials~~costly; ~~critical~~limit tothe attractiveness of certain geographic markets for our products ~~has~~and, in ~~the past~~turn, ~~and~~result ~~may~~in ~~again~~reduced sales; lower profitability; result in ~~the~~uncertainty ~~future,~~related ~~suffer~~to ~~shortages,~~planning ~~shipping~~long-term ~~delays~~investments and ~~shipping~~strategies; ~~shortages.~~and ~~This~~have ~~may~~other ~~lead~~competitive ~~some~~effects. ~~manufacturers~~While ~~who~~the ~~depend~~changes onin ~~these~~trade ~~raw~~policy ~~materials~~and totariffs ~~experience~~introduced ~~shortages,~~by ~~delivery~~the ~~delays~~U.S. and ~~price~~foreign ~~increases~~governments ~~for~~in ~~both~~2025 ~~the~~did ~~raw~~not ~~materials~~materially ~~and~~adversely ~~shipping,~~impact ~~with~~our fiscal year 2025 results, the ~~corresponding~~extent ~~consequence~~to ~~that~~which ~~these~~new, ~~manufacturers~~increased, or retaliatory tariffs may beadversely ~~delayed~~affect inour ~~delivering~~business ~~products~~and results of operations is uncertain, difficult to uspredict orand ~~may~~dependent ~~charge~~on ~~higher~~a ~~prices~~number ~~for~~of ~~these~~factors, ~~products~~including the extent and duration of the tariffs, orany ~~there~~reversal ~~may~~or besuspension ~~increased~~of ~~shipping~~the ~~costs~~tariffs, ~~associated~~changes ~~with~~in the ~~products.~~scope ~~Some~~and ~~manufacturers~~rates ~~may~~of ~~also~~the ~~allocate~~tariffs, ~~short~~the ~~supply~~availability of ~~products~~exemptions ~~among~~from ~~Clearfield~~the tariffs, and ~~their~~our ~~other~~ability ~~customers~~to successfully implement measures to mitigate the impact of the tariffs.

~~Increased~~Inflationary ~~demand~~price ~~for~~pressures ~~the~~and ~~Company’s~~uncertain ~~products~~availability ~~from its customers may put pressure on the Company’s supply chain, particularly during periods~~ of ~~disruption in the global supply chain and may lead to increases in costs or delays in obtaining the materials and~~ components, for our products from our suppliers. The Company’s ability to recognize revenue in the future for customer orders will depend on our ability to manufacture and deliver products to the customers and fulfill other contractual obligations. Our ability to meet future customer demand for our products will in turn depend upon our suppliers receiving timely and adequate supplies of raw materials, tolabor ~~be able to produce the critical materials~~ and ~~components~~logistics ~~they~~used ~~supply~~by to us~~. Although we place a high value on long-term relationships with our suppliers~~, generally we do not have long-term supply contracts but instead conduct business on an order-by-order basis. Therefore, we also compete with other companies for the production capacity of manufacturers of the materials and ~~components we need for~~ our ~~products. We also are exposed to potentially increasing costs associated with the materials and components we purchase from~~ suppliers orcould ~~increased~~negatively costs associated with shipping generally. We may attempt to mitigate the effect of increases in our cost of goods sold through sourcing or stocking initiatives and by selectively increasing the prices of our products. However, we may be unable to fully pass on these costs to our customers. Long lead times for certain components and changes in demand for our products may impact our ~~ability to accurately forecast our production requirements~~profitability. ~~As a result, certain component inventory purchases may become excess or obsolete, which could have an adverse effect on our financial condition and results of operations.~~

9Increases in the price of raw materials, labor and other components utilized in the production of our products, along with logistics and other related costs, may lead to higher production and shipping costs for our products. Additionally, increasing global demand for, and uncertain supply of, such materials could disrupt our ability to obtain such materials in a timely manner to meet our supply needs and could lead to increased costs. An increase in the cost of inputs needed to produce our products could lead to higher costs and could negatively impact our results of operation, future profitability, and ability to meet customer demand. Passing along these increased prices to our customers, where possible, to offset the impact of higher costs may cause certain customers to cancel, push out, or refrain from purchasing our products, which could negatively impact demand for our products, and therefore also negatively impact our results of operations and future profitability.

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.

Our customer base includes direct customers, OEMs, and distributors. For fiscal year ~~2023~~2025, the Company had ~~one~~two ~~customer~~customers, ~~that~~Customer ~~comprised~~A ~~16%~~and ofCustomer ~~net sales. For fiscal year 2022~~B, ~~the~~which ~~Company~~accounted ~~had~~for ~~one~~approximately ~~customer~~18% ~~that~~and ~~comprised 14~~13% of net sales, ~~and~~respectively. ~~for~~Both ~~fiscal year 2021 the Company had two customers that comprised a combined 28%,~~ of ~~net~~these ~~sales. These~~ customers are ~~all~~ distributors.

These customers, like our other customers, purchase our products from time to time through purchase orders. We do not have any agreements that obligate our customers to purchase products in the future from us. Our agreements with our distributor customers do not prohibit them from purchasing or offering products or services that compete with ours.

We believe that the loss of our major distributor customers would likely result in purchases being re-directed through other sales channels, for example our other distributors, independent sales representatives, or through direct sales by the Company to customers. However, there can be no assurance that the loss of a distributor customer would not have an adverse effect on our sales or gross margins in this event.

The loss of any one or more of our key customers, the substantial reduction, delay, or cancellation of orders received from any of our customers in our sales backlog or our inability to collect the accounts receivable from these customers, could have a material adverse effect on our business, financial position and results of operations.

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 believe consolidation among our customers in the future will continue in order for them to increase market share and achieve greater economies of scale. In connection with this merger and acquisition activity, our customers may postpone or cancel orders for our product based on revised plans for technology or network expansion pending consolidation activity. Customers integrating large-scale mergers or acquisitions may also reduce their purchases of equipment during the integration period or postpone or cancel orders.

The impact of significant mergers and acquisitions among our customers on our business is likely to be unclear until sometime after such transactions are completed, which may take a year or more. After a consolidation occurs, a customer may choose to reduce the number of vendors from which it purchases equipment and may choose one of our competitors as its preferred vendor. There can be no assurance that we will continue to supply equipment to the surviving company after a business combination is completed.

Our business is dependent on interdependent management information systems.

Our IT systems may also be vulnerable to disruptions from human error, outdated applications, computer viruses, natural disasters, unauthorized access, cyber-attack, and other similar disruptions. Any system failure, accident or security breach could result in disruptions to our operations. To the extent that any disruptions, cyber-attack or other security breach results in a loss or damage to our data, or inappropriate use or disclosure of confidential information, it could harm our business. In addition, we may be required to incur significant costs to protect against damage caused by these disruptions or security breaches in the future.

We may be subject to risks associated with acquisitions, and the risks could adversely affect future operating results.

We monitor our product portfolio and business and customer trends. In response, we have made and may continue to make acquisitions. The success of our acquisitions will depend on our ability to successfully identify and properly value suitable acquisition candidates, negotiate appropriate acquisition terms, obtain financing at a reasonable cost, prevail against competing acquirers, complete the acquisitions, and integrate the acquired businesses into our existing business. We cannot ensure that the expected benefits of any acquisition will be realized or will be realized within the time frames we expect. Costs could be incurred on pursuits or proposed acquisitions that have not yet or may not close which could impact our operating results, financial condition, or cash flows. Additionally, after the acquisition, unforeseen issues could arise which adversely affect the anticipated returns, or which are otherwise not recoverable as an adjustment to the purchase price. The price we pay for a business or product line may exceed the value we realize, and we cannot provide assurance that we will obtain the expected revenues, anticipated synergies, and strategic benefits of any acquisition within the time we expect or at all. Acquisitions may result in the recording of goodwill and other intangible assets which are subject to potential impairments in the future that could negatively impact our financial results. For the year ended September 30, 2025, we recorded an impairment charge of $2,022,000 related to the impairment of goodwill and $13,078,000 related to the impairment of the long-lived assets of the Nestor Cables business, which we acquired in July 2022 and disposed of on November 11, 2025. The total impairment charge, inclusive of estimated transaction costs, is reflected within Loss from impairment of discontinued operations before income taxes in the consolidated statements of earnings for the year ended September 30, 2025.

10If we are unable to complete acquisitions or successfully integrate and develop acquired businesses, or if acquired businesses do not perform as anticipated, our financial results could be materially and adversely affected. The risks inherent in pursuing or completing an acquisition include:

If we are unable to complete acquisitions or successfully integrate and develop acquired businesses, our financial results could be materially and adversely affected. The risks inherent in pursuing or completing an acquisition include:

●

diversion of management’s time and attention away from existing business activities;

●

difficulties or delays in integrating and assimilating information and financial systems, operations and products of an acquired business or other business venture or in realizing projected efficiencies, growth prospects, cost savings and synergies;

●

potential difficulties in managing our expanded operations and, in the case of international acquisitions, potential difficulties in managing non-U.S. subsidiaries, including the burden and cost of complying with a variety of international laws;

●

potential loss of key employees, customers and suppliers of the acquired businesses or adverse effects on relationships with existing customers and suppliers;

●

adverse impact on overall profitability if the acquired business does not achieve the return on investment projected at the time of acquisition;

●

currency translations and fluctuations may adversely affect the financial performance of our consolidated operations; and

●

with respect to the acquired assets and liabilities, inaccurate assessment of additional post-acquisition capital investments; undisclosed, contingent, or other liabilities; problems executing backlog of material supply or installation projects; unanticipated costs; and an inability to recover or manage such liabilities and costs.

These risks associated with acquisition, integration of acquired businesses and management of our expanded operations may have a material adverse effect on our sales, financial condition, and results of operations.

We have exposure to movements in foreign currency exchange rates.

Nestor Cables’ functional currency is the Euro, which is translated to the Company’s reporting currency of the U.S. dollar. Fluctuations in exchange rates between the Euro and U.S. dollar may impact our results of operations, financial position and cashflows. The Company expects to continue to experience fluctuations in the value of the U.S. dollar against the Euro and other currencies if it is not possible, cost-effective or should we not elect to hedge certain currency exposure. These factors, which are variable and generally outside of our control, could materially impact our results of operations, anticipated future results, financial position, and cash flows.

Adverse global economic conditions and geopolitical issues could have a negative effect on our business, and results of operations and financial condition.

Our business, including global supply chain, is affected by global economic conditions and geopolitical issues. Geopolitical issues, such as the Russian invasion of Ukraine, ~~and~~the ~~related~~Israel-Hamas ~~economic~~war, ~~sanctions~~the ~~and~~U.S.-China ~~tensions~~rivalry, ~~between~~rising ~~Russia~~trade protectionism, economic sanctions and ~~NATO~~other ~~countries~~global conflicts, ~~has~~have resulted in increasing global tensions, rising energy costs and creates uncertainty for our global supply chain. Sustained or worsening global economic conditions and geopolitical issues may disrupt or increase our cost of doing business and otherwise disrupt and delay our supply chain operations. These factors could negatively affect the cost and supply of components needed for our products, our ability to ship products to customers and ultimately impact our business, financial condition, and result of operations.

Growth may strain our business infrastructure, which could adversely affect our operations and financial condition.

As we grow, we will face the risk that our existing resources and systems, including management resources, enterprise technology and operating systems, may be inadequate to support our growth. There can be no assurance that we will be able to retain the personnel or make the changes in our systems that may be required to support our growth. Failure to secure these resources and implement these systems on a timely basis could have a material adverse effect on our operating results. In addition, hiring additional personnel and implementing changes and enhancements to our systems will require capital expenditures and other increased costs that could also have a material adverse impact on our operating results.

Product defects or the failure of our products to meet specifications or domestic content requirements could cause us to lose customers and sales or to incur unexpected expenses.

If our products do not meet our customers’ performance requirements, our customer relationships may suffer. Also, our products may contain defects or fail to meet product specifications. Any failure or poor performance of our products could result in:

●

lack of or delayed market acceptance of our products;

●

delayed product shipments;

●

unexpected expenses and diversion of resources to replace defective products or identify and correct the source of errors;

●

damage to our reputation and our customer relationships;

●

delayed recognition of sales or reduced sales;

●

increased product warranty claims; and

●

product liability claims or other claims for damages that may be caused by any product defects or performance failures.

In addition, certain of our products will be required to meet Build America, Buy America (BABA) Act domestic content requirements to enable certain customers to qualify for grant funding under the Broadband Equity, Access, and Deployment (BEAD) program. Any failure of such products to meet BABA domestic content requirements would result in those products being ineligible for purchase and use by certain customers under the BEAD program, and could result in lost sales, lost business opportunity, breach of warranty claims, and damage to our reputation and customer relationships.

Our products are often critical to the performance of telecommunications systems. We offer customers limited warranty provisions. If the limitations on the product warranties are unenforceable in a particular jurisdiction or if we are exposed to product liability claims that are not covered by insurance, a claim could harm our business.

We are dependent on key personnel.

Our failure to attract, develop and retain skilled personnel could hinder the management and growth of our business, our research and development, our sales and marketing efforts and our manufacturing capabilities. Our future success depends to a significant degree upon the continued services of key senior management personnel, including Cheryl Beranek, our Chief Executive Officer, and John P. Hill, our Chief Operating Officer. We have employment agreements with Ms. Beranek and Mr. Hill that provide that if we terminate the employment of either executive without cause or if the executive terminates her or his employment for good reason, we would be required to make specified payments to them as described in their employment agreements. We have key person life insurance on Ms. Beranek and Mr. Hill. We also have employment agreements with other key management. Further, our future success also depends on our continuing ability to attract, develop, retain, and motivate highly qualified managerial, technical and sales personnel. Our inability to attract, develop and retain qualified personnel could have a significant negative effect and thereby materially harm our business and financial condition.

1210

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.

Cybersecurity threats continue to expand and evolve, making it difficult to detect and prevent such threats from impacting the Company. While we monitor our networks and continue to enhance our network security measures, cyber-attacks have increased in frequency and sophistication, and our efforts may not be adequate to prevent all cybersecurity incidents. Cybersecurity threats to the Company could lead to unauthorized access to the Company’s information technology systems, customers, suppliers, and third-party service providers. Cybersecurity incidents could potentially result in the disruption of our business operations and/or the theft, destruction, publication, or corruption of critical data and confidential or proprietary information. Cybersecurity events could also result in the Company being unable to access critical data in a timely manner, or at all. Cybersecurity incidents could also result from unauthorized parties gaining access to our systems or information through fraudulent or other means of deceiving our employees, suppliers, customers, or third-party service providers. Despite the Company’s implementation of preventative security measures and controls to prevent, detect, and mitigate these threats, our infrastructure may still be susceptible to disruptions from cybersecurity incidents including ransomware attacks, security breaches, computer viruses, outages, and systems failures, any of which could include the inability to access critical data, reputational damage, loss of our intellectual property, release of highly sensitive confidential information, litigation with third parties and/or governmental investigations and fines, which could have a material adverse effect on our financial condition and results of operations. Additionally, as cybersecurity threats continue to evolve, we may be required to devote additional resources to continue to enhance our information security measures and controls to mitigate these new and emerging threats.

Our business is dependent on interdependent management information systems.

We rely on effective management information systems, including our enterprise resource planning (“ERP”) software, for critical business operations and to support strategic business decisions. We rely on our ERP system to support such important business operations as processing sales orders and invoicing, manufacturing, shipping, inventory control, purchasing and supply chain management, human resources, and financial reporting. Some of these systems are made up of multiple software and system providers. The interdependence of these solutions and systems is a risk, and the failure of any one system could have a material adverse effect on our overall information technology infrastructure. We are in the process of consolidating several of these solutions and systems into one integrated ERP system for our North American operations. Failure to successfully consolidate and integrate these solutions and systems could result in disruptions to our operations and adversely impact our business. Failure or abandonment of all or any part of the ERP system consolidation and integration project could result in a write-off of all or part of the costs that have been capitalized in connection with the project, which may negatively impact our financial results. We also rely on management information systems to produce information for business decision-making and planning. If we are unable to maintain our management information systems, including our IT infrastructure, to support critical business operations and to produce information for business decision-making activities, we could experience a material adverse impact on our business or an inability to timely and accurately report our financial results.

Our IT systems may also be vulnerable to disruptions from human error, outdated applications, computer viruses, natural disasters, unauthorized access, cyber-attack, and other similar disruptions. Any system failure, accident or security breach could result in disruptions to our operations. To the extent that any disruptions, cyber-attack or other security breach results in a loss or damage to our data, or inappropriate disclosure of confidential information, it could harm our business. In addition, we may be required to incur significant costs to protect against damage caused by these disruptions or security breaches in the future.

Natural disasters, extreme weather conditions or other catastrophic events could negatively affect our business, financial condition, and operating results.

Natural disasters, extreme weather events and other catastrophic events such as flooding, tornadoes, hurricanes, unusually heavy precipitation, earthquakes, tsunamis, fires, explosions, acts of war, terrorism, civil unrest, pandemics or ~~pandemics~~other health crises could increase the cost of doing business or otherwise harm our operations, our suppliers and our customers. Such events could reduce demand for our products or make it difficult or impossible for us to receive raw materials from suppliers and deliver products to our customers.

Pandemics and other health crises, including COVID-19, could have a material adverse effect on our business, financial condition, and operating results.

Pandemics and other health crises, including COVID-19, and governmental, business, and societal responses to pandemics or other health crises, have had, and in the future may have, an adverse effect on our operations, work force, supply chains, distribution channels, and customers. Constraints and limits imposed on our operations due to pandemics or other health crises may slow or diminish our sales and marketing programs, product development activities and qualification activities with our customers. Restrictions on our manufacturing, support operations or workforce, or similar limitations for our suppliers, could limit our ability to meet customer demand. Restrictions or disruptions of transportation, such as reduced availability of air transport, port closures and increased border controls or closures, resulting in higher costs and delays, could harm our profitability, make our products less competitive, or cause our customers to seek alternative suppliers. Employee health, availability, productivity, and efficiency may be adversely impacted. The degree to which pandemics and other health crises impact our results will depend on numerous factors and future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the pandemic and address its impact, and how quickly and to what extent normal economic and operating conditions can resume.

Risks Relating to Our Markets and Industry

To compete effectively, we must continually improve existing products and introduce new products that achieve market acceptance.

The telecommunications equipment industry is characterized by rapid technological changes, evolving industry standards, changing market conditions and frequent new product and service introductions and enhancements. The introduction of products using new technologies, or the adoption of new industry standards can make our existing products, or products under development, obsolete or unmarketable. In order to remain competitive and increase sales, we will need to anticipate and adapt to these rapidly changing technologies, enhance our existing products and introduce new products to address the changing demands of our customers.

Many of our competitors have greater engineering and product development resources than we have. Although we expect to continue to invest resources in product development activities, our efforts to achieve and maintain profitability will require us to be selective and focused with our research and development expenditures. In addition, sales to certain broadband service providers may require third-party independent laboratory testing in order to obtain industry certifications to be able to sell to those customers. Further, our existing and development-stage products may become obsolete if our competitors introduce newer or more appealing technologies. If these technologies are patented or proprietary to our competitors, we may not be able to access these technologies.

If we fail to anticipate or respond in a cost-effective and timely manner to technological developments, changes in industry standards or customer requirements, or if we experience any significant delays in product development or introduction, our business, operating results, and financial condition could be affected adversely.

Our business is dependent upon capital spending by broadband service providers, and any delay, reduction or cancellation in capital spending by broadband service providers could adversely affect our business.

Our business is dependent upon capital spending by broadband service providers for constructing, expanding, upgrading, rebuilding, and maintaining fiber-based networks for residential homes, businesses, and network infrastructure in the wireline and wireless access network. Capital spending in the broadband communications industry is cyclical, sporadic among individual broadband service providers, and can be delayed, reduced or cancelled on short notice, giving us limited visibility into changes in spending behavior in any particular period. We have experienced significant reductions in capital spending by broadband service providers in the past, which negatively impacted our results of operations, and we may experience significant fluctuations in capital spending by broadband service providers in the future. The timing and amount of capital spending in the broadband communications industry may be affected by a variety of factors, including but not limited to general economic and market conditions, customer-specific financial conditions or budget allocation decisions, seasonality of outdoor deployments, access to and timing of government funding programs, changes in consumer spending, the timing and adoption of new technologies, consumer and commercial demand for broadband services, competing technologies, competitive pressures, government regulations, industry consolidation, and changes in customer preferences or requirements. Unfavorable changes in economic conditions, including recession, inflation, lack of access to capital, lack of consumer confidence or other changes have resulted and may continue to result in lower spending among our customers and target customers in the broadband service provider industry. Within the broadband service provider industry, our customer segments may be more or less affected by these factors in any given period. Our ability to maintain or increase revenues in the future will depend on the financial health and continued growth of the broadband communications industry. If the broadband service providers do not maintain or increase spending or do not select our products for their fiber-based deployments, the market for our products may not grow or may grow more slowly than we expect, either of which would significantly adversely affect our business, results of operations, or financial condition.

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.

Our future success as a provider of fiber management, fiber protection and fiber delivery products depends on the continued growth of demand for fiber broadband and, in particular, the continued expansion in the United States and in our other markets of information networks, particularly those directly or indirectly dependent upon a fiber optic infrastructure. As part of that growth, we anticipate that demand for voice, video, and other data services delivered over high-speed connections (both wired and wireless) will continue to increase. If this demand does not increase, the need for enhanced high-speed bandwidth using fiber connections may not increase. Currently, demand for high-speed broadband capabilities and access is increasing, but future growth may be limited by several factors, including, among others: (1) relative strength or weakness of the global economy or certain countries or regions, (2) an uncertain regulatory environment, (3) uncertainty regarding long-term sustainable business models as multiple industries, such as the cable, traditional telecommunications, wireless and satellite industries, offer competing content delivery solutions, (4) excess product inventory in the marketplace, (5) lack of available skilled labor to install product; and (6) delays in the permitting process for fiber optic network installations. If the factors described above were to occur and cause the demand for fiber broadband capabilities or access to slow, stop or reverse, our business, financial condition and operating results would be negatively affected.

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.

The telecommunications and cable television industries are subject to significant and changing U.S. federal and state regulation, some of which subsidizes or encourages spending on initiatives that utilize our products.

For example, programs like the Connect America Fund (CAF), which provides a capital expenditure subsidy for the build-out of the country’s broadband network, the Rural Digital Opportunity Fund (RDOF), which ~~will~~provides ~~provide~~ a capital expenditure subsidy for the support of high-speed broadband networks in rural America, and the Broadband Equity, Access and Deployment (BEAD) program, among others, which will provide funding for broadband deployment, mapping and adoption projects in unserved and underserved areas in the United States, its territories, and the District of Columbia, may subsidize or encourage spending by our customers or prospective customers on capital spending projects that utilize our products. Customers may seek to time or otherwise adjust their technology or network expansion projects to the availability of subsidies under these or other programs, which will affect the timing and size of orders for our products. InAdditionally, ~~addition~~these government programs may be subject to significant timing, funding and other ~~universal~~uncertainties, ~~service~~which also may change with different state and ~~inter-carrier~~federal ~~compensation~~administrations, that make it challenging for us to accurately forecast the subsidies or other supports to our customers or the degree to which customers may undertake capital spending on projects that utilize our products. In addition, other universal service reforms scheduled to begin in the coming years will eliminate subsidies that carriers have traditionally relied upon to support service in high-cost, rural areas. Changes in government programs in our industry or uncertainty regarding future changes could adversely impact our customers’ or prospective customers’ decisions regarding timing and amounts of capital spending, which could decrease demand for our products, delay orders or result in pricing pressure from these customers. Moreover, disruptions at U.S. government agencies responsible for implementing broadband programs and subsidies, including as a result of government shutdowns or pandemics like COVID-19, may also delay the availability of subsidies or implementation of programs affecting our customers, which may adversely affect our business.

Intense competition in our industry may result in price reductions, lower gross profits, and loss of market share.

Competition in the telecommunications equipment and services industry is intense. Our competitors may have or could develop or acquire marketing, financial, development and personnel resources that exceed ours. Our ability to compete successfully will depend on whether we can continue to advance the technology of our products and develop new products, the acceptance of our products among our customers and prospective customers, and our ability to anticipate customer needs in product development, as well as the price, quality and reliability of our products, our delivery and service capabilities and our control of production capacity and operating expenses.

There can be no assurance that we will be able to compete successfully against our current or future competitors. Competition from manufacturers of telecommunications equipment such as ours may result in price reductions, lower gross profit margins, increased discounts to customers, and loss of market share, which could require increased spending by us on research and development, sales and marketing, and customer support.

Our success depends upon adequate protection of our patent and other intellectual property rights.

Our future success depends in part upon our proprietary technology. We attempt to protect our proprietary technology through patents, trademarks, copyrights, and trade secrets. However, these legal means afford us only limited protection and may not adequately protect our rights or remedies to gain or keep any advantages we may have over our competitors. Accordingly, we cannot predict whether these protections will be adequate, or whether our competitors will develop similar technology independently, without violating our proprietary rights.

Our competitors, many of which have significant resources, may make substantial investments in competing products and technologies, or may apply for and obtain patents that will prevent, limit, or interfere with our ability to manufacture or market our products. We may litigate to enforce patents issued to us and to defend against claimed infringement of the rights of others or to determine the ownership, scope, or validity of our proprietary rights and the rights of others.

Litigation has been necessary in the past and may be necessary in the future to defend or enforce our intellectual property rights, to protect our patents and trade secrets, and to determine the validity and scope of our proprietary rights. Any litigation also may involve substantial costs and diversion of the attention of Company management away from operational activities. Any claim of infringement against us could involve significant liabilities to third parties, could require us to seek licenses from third parties, and could prevent us from manufacturing, selling or using our products. The occurrence of litigation or the effect of any settlement or an adverse determination in litigation could have a material adverse effect on our business, financial condition, and results of operations.

We face risks associated with expanding our sales outside of the United States.

We believe that our future growth depends in part upon our ability to manage our international operations and increase sales in international markets. These sales are subject to a variety of risks, including fluctuations in currency exchange rates, tariffs, import restrictions and other trade barriers, unexpected changes in legal and regulatory requirements, longer accounts receivable payment cycles, potentially adverse tax consequences, and export license requirements. In addition, we are subject to the risks inherent in conducting business internationally, including political and economic instability, unexpected changes in diplomatic and trade relationships, and a complex system of commercial and trade laws, regulations, and policies, including those related to tariffs, data privacy, trade compliance, anti-corruption, and anti-bribery. Currency fluctuations may also increase the cost of our international operations and increase the relative price of our product in international markets and thereby cause our products to become less affordable or less price competitive than those of international manufacturers. These risks associated with international operations may have a material adverse effect on our revenue from or costs associated with international operations or sales.

Expectations relating to environmental, social and governance matters may increase our cost of doing business and expose us to reputational harm and potential liability.

Many regulators, investors, employees, vendors, customers, community members and other stakeholders are increasingly focused on environmental, social and governance matters relating to businesses, including climate change, greenhouse gas emissions, human capital, civil rights, and diversity, equity, and inclusion. We may make public statements about various environmental, social and governance matters and initiatives from time to time through our website, press releases and other communications. Addressing stakeholder expectations relating to environmental, social and governance matters requires an investment of time, money and other resources, and depends in part on third-party performance or data that is outside of our control, any, or all of which may increase our cost of doing business. In addition, as investor and other stakeholder expectations relating to environmental, social and governance matters change and evolve over time, any failure or perceived failure by us to adequately address those expectations may damage our reputation and adversely affect our business and results of operations. Similarly, public statements we make about environmental, social and governance matters and initiatives may result in increased scrutiny by our stakeholders and require additional attention relating to these issues. Federal, state or international government bodies or agencies have in the past adopted, and may in the future adopt, laws and regulations relating to environmental, social or governance matters. These laws or regulations could require us to modify our business practices to comply and could result in increased costs. Additionally, any failure to comply with federal, state, or international environmental, social and governance laws and regulations, could adversely affect our business and results of operations.

Risks Relating to Our Common Stock

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.

Because many purchases by customers of our products relate to a specific customer project and are procured by the customer from time to time through purchase orders, the short-term demand for our products can fluctuate significantly. This fluctuation can be further affected by the long sales cycles necessary to obtain contracts to supply equipment for these projects, the availability of capital to fund our customers’ projects, changes or delays in customer deployment schedules, and the impact of government programs to encourage service to unserved or underserved communities, rural areas or other high-cost areas on customer buying patterns. These long sales cycles may result in significant effort expended with no resulting sales or sales that are not made in the anticipated quarter or fiscal year. Certain customers and prospective customers, typically larger broadband service providers, are conducive to these long sales cycles which may be multi-year efforts. Demand for our products will also depend upon the extent to which our customers and prospective customers initiate these projects and the extent to which we are selected to provide our equipment in these projects, neither of which can be assured. In addition, a sharp increase in demand could result in actual lead times longer than quoted, and a sharp decrease in demand could result in excess stock. These factors generally result in fluctuations, sometimes significant, in our operating results. Other factors that may affect our quarterly operating results include:

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the volume and timing of orders from and shipments to our customers, particularly significant customers;

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mergers and acquisitions activity among our customers;

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work stoppages and other developments affecting the operations of our customers;

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the timing of and our ability to obtain required certifications or qualifications to sell products, the timing of and our ability to obtain new customer contracts, and the timing of revenue recognition;

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the timing of new product and service announcements;

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the availability of products and services;

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seasonal trends in the industries we serve;

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market acceptance of new and enhanced versions of our products and services, including the impact of government programs on customers purchasing decisions;

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variations in the mix of products and services we sell;

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the utilization of our production capacity and employees, including foreign operations;

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the availability and cost of key components of our products, including the impact of new or increased tariffs; and

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accounting treatment related to stock-based compensation.

Further, we budget our expenses based in part on expectations of future sales. If sales levels in a particular quarter are lower than expected, our operating results will be affected adversely.

Because of these factors, our quarterly operating results are difficult to predict and are likely to vary in the future. If our operating results are below financial analysts’ or investors’ expectations, the market price of our common stock may fall abruptly and significantly.

Our stock price has been volatile historically and may continue to be volatile. The price of our common stock may fluctuate significantly.

The trading price of our common stock has been and may continue to be subject to wide fluctuations. Our stock price may fluctuate in response to a number of events and factors, such as quarterly variations in operating results, announcements of technological innovations or new products by us or our competitors, changes in financial estimates and recommendations by securities analysts, the operating and stock price performance of other companies that investors may deem comparable to us, and new reports relating to trends in our markets or general economic conditions.

In addition, the stock market is subject to price and volume fluctuations that affect the market prices for companies in general, and small-capitalization, high-technology companies like us in particular. These broad market and industry fluctuations may adversely affect the price of our common stock, regardless of our operating performance. Further, any failure by us to meet or exceed the expectations of financial analysts or investors is likely to cause a decline in our common stock price. Further, recent industry and economic conditions have resulted in significant fluctuations in stock prices for many companies, including Clearfield. We cannot predict when the stock markets and the market for our common stock may stabilize. In addition, although our common stock is listed on the Nasdaq Stock Market, our common stock has at times experienced low trading volume in the past. Limited trading volume subjects our common stock to greater price volatility and may make it difficult for our shareholders to sell shares at an attractive price.

Anti-takeover provisions in our organizational documents, Minnesota law, and other agreements could prevent or delay a change in control of our Company.

Certain provisions of our articles of incorporation and bylaws, Minnesota law, and other agreements may make it more difficult for a third-party to acquire, or discourage a third-party from attempting to acquire, control of our Company, including:

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the provisions of our bylaws setting forth the advance notice and information requirements for shareholder proposals, including nominees for directors, to be considered properly brought before shareholders;

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the right of our board of directors to establish more than one class or series of shares and to fix the relative rights and preferences of any such different classes or series;

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the provisions of Minnesota law relating to business combinations and control share acquisitions; and

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the provisions of our equity compensation plans allowing for the acceleration of vesting or payments of awards granted under the plans in the event of specified events that result in a “change in control” and provisions of agreements with certain of our executive officers requiring payments if their employment is terminated and there is a “change in control.”

1714

These measures could discourage or prevent a takeover of us or changes in our management, even if an acquisition or such changes would be beneficial to our shareholders. This may have a negative effect on the price of our common stock.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 1C. CYBERSECURITY

Risk Management and Strategy

We believe cybersecurity plays a strategic role in ensuring smooth business operations. We are committed to developing, implementing and maintaining cybersecurity measures and processes that are designed to safeguard our information systems, data and operations, and to assess, identify and manage cybersecurity threats that may impact our business.

We operationalize our cybersecurity program through an information security management system based on the ISO/IEC 27001:2022 standard. This does not imply that we meet any particular technical standards, specifications, or requirements - only that we use the ISO/IEC 27001:2022 standard as a guide in designing and implementing our cybersecurity program. We believe designing and building our cybersecurity program around best practices and principles helps support robust business continuity.

Our cybersecurity program is integrated into our overall risk management processes. Key elements of our cybersecurity risk management program include, among others:

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Ongoing cybersecurity training and testing for all employees;

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Regular patching, vulnerability scanning, penetration testing, and network monitoring;

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Robust IT infrastructure to help reduce opportunities for adverse exploitation;

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Operational processes that reinforce cybersecurity policies and IT controls;

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Regular audits to assess our cybersecurity posture, maturity, and progress;

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A cybersecurity incident response plan operationalized in a governance, risk, and compliance (“GRC”) platform; and

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A third-party risk management process for enterprise software vendors that includes reviewing System and Organization Control 1 and 2 (SOC 1 and SOC 2) reports and onboarding and maintenance processes for suppliers that include cybersecurity assessments.

While we have experienced cybersecurity incidents and expect to continue to be subject to such incidents, to date we have not experienced any cybersecurity incidents that have materially affected our business strategy, financial condition, or results of operations. The cybersecurity threat landscape continues to evolve and escalate. We are subject to ongoing risks from cybersecurity threats that could materially affect our business strategy, financial condition, or results of operations, as further described in Part I, Item 1A, “Risk Factors” of this Annual Report on Form 10-K.

Governance

Our Board of Directors includes cybersecurity risk as part of its overall risk oversight function, and has delegated to our Audit Committee responsibility for overseeing, reviewing and discussing with management: (i) our cybersecurity, information technology and data security risks and threats; (ii) the potential impact of those risks and threats on our business, operations, and reputation; and (iii) management’s processes, procedures and actions to identify, assess, monitor, mitigate, and remediate such risks and threats. Our Chief Information Officer, who reports to our Chief Executive Officer, provides the Board and the Audit Committee regular reports and assessments on our cybersecurity program and material cybersecurity risks. In addition, our Chief Information Officer updates the Board and the Audit Committee, as appropriate, regarding significant cybersecurity incidents should they occur.

A cybersecurity incidence response team comprised of key function heads and personnel, including IT, Finance, Legal, and Human Resources, provides operational support for clarifying and acting on cybersecurity issues, including decision-making around materiality, escalation and disclosure. Our cybersecurity program is principally managed by our Information Security Manager, who reports to our Chief Information Officer. Together, our Information Security Manager and our Chief Information Officer have over 50 years of experience in IT, including developing, implementing, and operating IT controls. Our Chief Information Officer and our Information Security Manager manage cybersecurity risks by continually working to reduce risks, respond appropriately to incidents, and invest in hardening our attack surface to improve our cybersecurity posture. Our GRC platform is designed to provide reliability in identifying, tracking, and mitigating cybersecurity risks. We also engage third party assessors, consultants, and auditors to extend internal team capabilities and support our cybersecurity program, including engaging a cybersecurity service provider that provides 24/7 continuous managed detection and response services.

ITEM 2. PROPERTIES

Clearfield leases an 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 ten years and two months, ending on February 28, 2025, and is renewable. The renewal options have not been included within the lease term because it is not reasonably certain that the Company will exercise either option.

InThe ~~July~~Company ~~2021,~~indirectly ~~Clearfield~~leases ~~entered into~~ an ~~indirect lease arrangement for an~~ approximately 318,000 square foot office, manufacturing and warehouse facility in Tijuana, Mexico. The lease term is for 7 years of which 5 years are mandatory, commencing March 2022. The lease contains written options to renew for two additional consecutive periods of 5 years each. The lease calls for monthly rental payments of $162,000, increasing 2% annually. The renewal options have not been included within the lease term because it is not reasonably certain that ~~the~~operates ~~Company~~as ~~will~~a ~~exercise either option~~Maquiladora.

Clearfield’s ~~Mexico~~leases ~~facility operates under~~ a ~~Maquiladora~~105,000 ~~arrangement~~square ~~pursuant~~foot towarehouse ~~which we contract with a company to provide certain personnel~~ and ~~other~~manufacturing ~~services at the Tijuana, Mexico~~ facility. ~~Maquiladora~~in ~~status~~Brooklyn ~~allows us to import certain items from the United States into Mexico duty-free~~Park, ~~provided that such items, after processing, are exported from Mexico within a stipulated time frame~~Minnesota. Maquiladora status, which is renewed with the Ministry of the Economy of Mexico periodically, is subject to various restrictions and requirements, including compliance with the terms of the Maquiladora program and other local regulations, which have become stricter in recent years.

OnWe ~~November~~believe ~~19,~~our ~~2021,~~facilities ~~Clearfield~~are ~~signed~~in asatisfactory ~~lease for a 105~~condition,~~000~~ ~~square~~suitable ~~foot~~for ~~warehouse~~their inrespective ~~Brooklyn Park~~uses, ~~Minnesota. The lease term is five years commencing March 2022~~ and ~~ending~~generally onadequate ~~February 28, 2027, with rent payments increasing annually. The lease includes an option~~ to ~~extend~~meet ~~the~~current ~~lease for an additional five years~~needs. ~~The renewal option has not been included within the lease term because it is not reasonably certain that the Company will exercise the option. The lease commenced in the second quarter of fiscal 2022.~~

~~Nestor~~Please ~~leases~~see anNote ~~approximately~~9. ~~25,000~~Leases ~~square foot manufacturing facility~~ in ~~Oulu,~~the ~~Finland,~~consolidated ~~which~~financial isstatements ~~utilized~~ for ~~the~~further ~~operations~~details ofregarding ~~Nestor Cables. The original lease term ends on October 31, 2022, but auto renews indefinitely until terminated with two years written notice. It is not reasonably certain that~~ the ~~Company~~terms ~~will not exercise the termination option. The lease calls for monthly rental payments~~ of ~~approximately €40,000.~~our ~~Rent is increased each year on January 1st based upon the cost-of-living index published by the Finnish government~~leases.

On May 11, 2023, Nestor Cables signed a lease for an approximately 49,000 square foot manufacturing facility in Tabasalu, Estonia, to be utilized for the operations of Nestor Cables Baltics. The lease is without a fixed term and requires two years’ written notice to terminate the lease. Additionally, the lease grants to Nestor Cables the option to lease an expansion facility that is to be constructed no later than August 31, 2024. The expansion facility will be constructed on the same premises as the existing facility. Once the expansion option is exercised and the expansion facility is made available for use, the lease term of the existing facility will become a minimum of 60 months. The lease calls for monthly rental payments of approximately €20,400 until April 2024 and €25,000 afterwards. Rent is increased each year on May 1st based upon the cost-of-living index published by the Estonian government and capped at 5%.

ITEM 3. 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 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II.

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED ~~STOCKHOLDERMATTERS~~STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded on the Nasdaq Global Market under the symbol “CLFD.”

Number of Holders of Common Stock

There were ~~290~~284 holders of record of our common stock as of September 30, ~~2023~~2025.

Dividends

We have never paid cash dividends on our common stock. We currently intend to retain any earnings for use in our operations, continued organic growth, and potential future strategic transactions, as well as execution of the repurchase program described below, and do not intend in the foreseeable future to pay cash dividends on our common stock.

~~Stock Performance Graph~~16

~~The following graph shows a comparison of the 5-year cumulative total return on Clearfield, Inc.’s common stock relative to the Standard & Poor’s 500~~ Stock ~~Index~~Performance (S&P500 Index), which the Company has selected as a broad market index, and The Standard & Poor’s 1500 Communications Equipment Index (S&P 1500 Communications Equipment Index), which the Company has selected as a published industry index. The graph assumes an investment of $100 (with reinvestment of all dividends) is made in the Company’s common stock and in each index on September 30, 2018, and its relative performance is tracked through September 30, 2023. The returns shown are based on historical results and are not intended to suggest future performance.Graph

19The following graph shows a comparison of the 5-year cumulative total return on Clearfield, Inc.’s common stock relative to the Standard & Poor’s 500 Stock Index (S&P500 Index), which the Company has selected as a broad market index, and The Standard & Poor’s 1500 Communications Equipment Index (S&P 1500 Communications Equipment Index), which the Company has selected as a published industry index. The graph assumes an investment of $100 (with reinvestment of all dividends) is made in the Company’s common stock and in each index on September 30, 2020, and its relative performance is tracked through September 30, 2025. The returns shown are based on historical results and are not intended to suggest future performance.

Company/Index	September 30, 2018		September 30, 2019		September 30, 2020		September 30, 2021		September 30, 2022		September 30, 2023
Clearfield, Inc.	$	100.00	$	87.13	$	148.31	$	324.63	$	769.41	$	212.72
S&P 500 Index		100.00		117.95		133.49		170.98		142.32		170.20
S&P 1500 Communications Equipment Index		100.00		138.73		114.40		160.72		130.81		171.24

Company/Index	September 30, 2020		September 30, 2021		September 30, 2022		September 30, 2023		September 30, 2024		September 30, 2025
Clearfield, Inc.	$	100.00	$	218.89	$	518.79	$	143.43	$	193.16	$	170.45
S&P 500 Index		100.00		128.09		106.62		127.51		171.35		198.88
S&P 1500 Communications Equipment Index		100.00		140.49		114.35		149.69		168.77		243.06

Issuer Repurchases

~~The~~On ~~Company~~April ~~repurchased~~30, a2024, ~~total~~the Company’s board of directors increased the Company’s share repurchase program from $40,000,000 to $65,000,000 commencing May 7,~~084~~ ~~shares~~2024, ofand ~~our~~continuing ~~common~~for ~~stock~~an ~~during~~indefinite ~~the~~period ~~fourth~~or ~~quarter~~until terminated by the board of ~~fiscal~~directors. During the year ~~2023~~ended inSeptember ~~connection~~30, ~~with~~2025, ~~payment~~the Company repurchased 550,766 shares for approximately $16,530,000. As of ~~taxes~~September ~~upon~~30, ~~the~~2025, ~~vesting~~we have repurchased an aggregate of ~~restricted~~2,280,546 shares for approximately $56,607,000 leaving approximately $8,393,000 available within our $65,000,000 stock ~~previously~~repurchase ~~issued~~program. The repurchase program does not obligate Clearfield to ~~employees~~repurchase any particular amount of common stock during any period. ~~These~~The repurchases ~~are~~will ~~unrelated~~be tofunded ~~the~~by ~~stock~~cash ~~repurchase~~on ~~program~~hand.

~~Effective~~The ~~January~~following ~~27,~~table ~~2022,~~presents the ~~Company~~total ~~reinstated~~number ~~its stock repurchase program that had been suspended due to COVID uncertainty in April 2020. In addition, effective January 27, 2022, the Company’s board~~ of ~~directors~~shares ~~increased~~repurchased ~~the~~during ~~share repurchase program by an additional $10 million to an aggregate of $22 million, from~~ the ~~previous~~fourth ~~$12~~quarter ~~million. As~~ of ~~September~~fiscal ~~30,~~2025 2023, we have repurchased an aggregate of 565,590 shares for approximately $7,019,000, leaving approximately $14,981,000 available within our $22,000,000 stock repurchase program. The repurchase program does not obligate Clearfield to repurchase any particular amount of common stock during any period. The repurchase will be funded by ~~cash~~month onand ~~hand. During~~ the ~~year~~average ~~ended~~price ~~September~~paid ~~30,~~per ~~2023, the Company did not repurchase any shares under the stock repurchase program.~~share:

The following table presents the total number of shares repurchased during the fourth quarter of fiscal 2023 by month and the average price paid per share:

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⁾
July 1-31, 2025		-	$	-		-	$	8,393,000
August 1-31, 2025		-		-		-		8,393,000
September 1-30, 2025		-		-		-		8,393,000
Total		-	$	-		-	$	8,393,000

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)
July 1-31, 2023		-	$	-		-	$	14,980,671
August 1-31, 2023		7,084		37.50		-		14,980,671
September1-30, 2023		-		-		-		14,980,671
Total		7,084	$	37.50		-	$	14,980,671

(1)

On 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 commencing May 7, 2024.

~~(1)~~Equity ~~Amount~~compensation ~~remaining~~plans information is incorporated by reference from ~~the~~Part ~~aggregate~~III, ~~$22~~Item 12,~~000,000~~ ~~repurchase~~“Security ~~authorizations~~Ownership ~~approved~~of byCertain ~~the~~Beneficial ~~Company’s~~Owners ~~board~~and ofManagement ~~directors~~and onRelated ~~January~~Stockholder 27Matters,” ~~2022~~of this Annual Report, and should be considered an integral part of Item 5.

On November 7, 2023, the Company’s board of directors increased the share repurchase program to an aggregate of $40 million from the previous $22 million, leaving approximately $32,980,671 available for repurchase.

Equity compensation plans information is incorporated by reference from Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,” of this Annual Report, and should be considered an integral part of Item 5.

ITEM 6. [RESERVED]

Not applicable.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Regarding Forward-Looking Information

Statements made in this Annual Report on Form 10-K, in the Company’s other SEC filings, in press releases and in oral statements, that are not statements of historical fact are “forward-looking statements.” Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results or performance of the Company to be materially different from the results or performance expressed or implied by such forward-looking statements. The words “believes,” “expects,” “anticipates,” “seeks,” “may,” “will,” “plan,” “aim,” “project,” “target,” “intend,” “estimate,” “should,” “could,” “outlook,” “continue,” and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. The risks and uncertainties that could cause actual results to differ materially and adversely from those expressed or implied by the forward-looking statements include those risks described in Part I, Item 1A “Risk Factors.”

Overview of Business: The Clearfield operating segment designs, manufactures, and distributes fiber optic management, protection, and delivery products for communications networks. Its “fiber to the anywhere” platform serves the unique requirements of leading broadband service providers in the United States, which include Community Broadband, Large Regional Service Provider, National Carriers, and Multiple System Operators (“MSOs” or “cable TV”), while also serving the broadband needs of the International markets, primarily in the European, Caribbean Markets, Canada, and Mexico. These customers are collectively included in the category of Broadband Service Providers. The Clearfield operating segment also provides contract manufacturing services to its Legacy customers for build-to-print services which include OEM requiring copper and fiber cable assemblies built to their specifications. The Company’s sales channels include direct to customer, through distribution partners, and to original equipment suppliers who private label its products. The Company’s products are sold by its sales employees and independent sales representatives.18

21Overview of Business: Clearfield designs, manufactures, and distributes fiber optic management, protection, and delivery products for communications networks. Its “fiber to the anywhere” platform serves the unique requirements of leading broadband service providers in the United States, which include Community Broadband, Large Regional Service Providers, National Carriers, and Multiple System Operators (“MSOs” or “cable TV”), while also serving the broadband needs of the International markets, primarily in Canada, the Caribbean, Central/South America and Mexico. These customers are collectively included in the category of Broadband Service Providers. The Company’s sales channels include direct to customer and through distribution partners. The Company’s products are sold by its sales employees and independent sales representatives.

The Nestor Cables operating segment 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 Cables has been a supplier to Clearfield for over a decade. Nestor has two types of production processes, the process of manufacturing cable in its Finland facility and the finished assembly portion of its business performed in Estonia. Nestor Cables sells its products predominantly to customers in Europe.

Results of Operations

~~Year~~The ~~ended~~Company’s ~~September~~reportable 30segment is based on the Company’s method of internal reporting. The internal reporting of the operating segment is defined based, ~~2023~~in part, ~~compared~~on tothe ~~year~~reporting ~~ended~~and ~~September~~review 30process used by the Company’s Chief Executive Officer, ~~2022~~also known as the Chief Operating Decision Maker (“CODM”). The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources and evaluating financial performance. As such, the Company has determined that it operates as one reportable segment.

~~The~~On ~~Company’s~~November ~~net~~11, ~~sales~~2025, ~~for~~the ~~fiscal~~Company ~~year~~completed ~~2023~~the ~~decreased~~sale ~~1%,~~of orits ~~$2,163,000~~Nestor toCables ~~$268~~business,~~720,000~~ ~~from~~which ~~net~~was ~~sales~~previously ofreported ~~$270,883,000~~as inthe ~~fiscal~~Nestor ~~year~~Cables ~~2022~~Operating Segment. ~~The~~In ~~Company~~connection ~~allocates~~with ~~sales~~this ~~from~~sale, ~~external~~the ~~customers~~historical toresults ~~geographic~~of ~~areas~~the ~~based~~Nestor onCables ~~the~~business ~~location~~and tocertain ~~which~~assets and liabilities of the ~~product~~Nestor isCables ~~transported.~~business ~~Accordingly,~~are ~~international~~reported ~~sales~~in ~~represented~~our ~~19%~~consolidated ~~and~~financial 6%statements ofas ~~net~~discontinued ~~sales~~operations. ~~for~~Following the ~~years~~sale ~~ended~~of ~~September~~the ~~30,~~Nestor ~~2023~~Cables business, the continuing operations of the Company comprise one operating segment and ~~2022,~~one ~~respectively~~reportable segment.

~~The~~Reported ~~decrease~~below inare ~~net~~the ~~sales~~results ~~for fiscal year 2023~~ of ~~$2,163,000~~operations compared to fiscal year 2022 is attributable to decreased demand across Clearfield’s core markets. Sales to the Community Broadband market decreased 12% or $15,312,000 from $127,478,000 in fiscal year 2022 to $112,166,000 fiscal year 2023. Sales to Clearfield’s MSO/Cable TV market decreased 5% or $2,252,000 from $47,921,000 in fiscal year 2022 to $45,669,000 in fiscal year 2023. Sales to National Carriers decreased 17% or $1,817,000 from $10,772,000 in fiscal year 2022 to $8,954,000 in fiscal year 2023. The decrease in sales to these customers was due to a lull in demand for ~~fiber connectivity products as customers digest their larger than normal inventory levels built up during~~ the pandemic which were purchased over the previous several quarters. Net sales to International customers increased 226% or $34,570,000 from $15,316,000 in fiscal year 2022 to $49,885,000 in fiscal year 2023, primarily driven by the Company’s ~~acquisition~~continuing ofoperations ~~Nestor~~unless ~~Cables~~otherwise ~~on July 26, 2022~~stated.

~~Revenue~~Year ~~from~~ended ~~customers~~September is30, ~~obtained from purchase orders submitted from time to time~~2025, ~~with~~compared ~~a limited number of customers recently issuing purchase orders for longer time frames. The Company’s ability~~ to ~~predict~~year ~~orders~~ended inSeptember ~~future periods or trends affecting orders in future periods is limited. The Company’s ability to predict revenue is further limited by global supply chain issues~~30, customer deployment schedules and factors affecting customer ordering patterns, which may result in changes in customer ordering trends in a relatively short period of time. 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.2024

22The Company’s net sales for fiscal year 2025 increased 20%, or $24,566,000, to $150,134,000 from net sales of $125,568,000 in fiscal year 2024. The Company allocates sales from external customers to geographic areas based on the location to which the product is transported. Accordingly, international sales represented 3% and 2% of net sales for the years ended September 30, 2025, and 2024, respectively.

~~Cost of~~The increase in net sales for fiscal year ~~2023~~2025 ~~was~~of $~~183~~24,~~441~~566,000, ancompared ~~increase~~to offiscal year 2024 is attributable to increased demand across the Company’s core markets. Sales to the Community Broadband market increased 1%, or $25767,~~505,~~000, orfrom ~~16%~~$66,005,000 ~~from~~in ~~the~~fiscal year 2024 to $~~157~~66,~~936~~772,000 in fiscal year ~~2022~~2025. ~~Gross~~Sales ~~profit~~to ~~decreased~~Clearfield’s 25MSO/Cable TV market increased 38%, or $278,~~669~~864,000 from $~~112~~23,~~947~~487,000 ~~for~~in fiscal year ~~2022~~2024 to $8532,~~278~~351,000 ~~for~~in fiscal year ~~2023~~2025. ~~The~~Sales ~~decrease~~to the Large Regional market increased 58% to $33,706,000 from $21,293,000 in ~~gross~~fiscal ~~profit~~year ~~was~~2024. ~~due~~Sales to ~~lower~~National ~~net~~Carriers ~~sales~~increased ~~and~~11%, ~~lower~~or ~~gross~~$976,000, ~~profit~~from ~~margin~~$8,767,000 in fiscal year ~~2023~~2024 to $9,743,000 in fiscal year 2025.

~~Gross profit~~Cost ~~percent~~of ~~was~~sales ~~31.7%~~for in fiscal year ~~2023~~2025 was $99,597,000 compared to ~~41.7%~~$99,721,000 ~~for~~in fiscal year ~~2022~~2024. Gross profit ~~margin~~increased ~~was~~96%, ~~negatively~~or ~~affected~~$24,690,000, byfrom ~~excess~~$25,847,000 ~~overhead~~for ~~and~~fiscal ~~production~~year ~~capacity~~2024 ~~in the Company’s Clearfield segment that was underutilized. The Company continues~~ to ~~realign~~$50,537,000 ~~capacity~~for tofiscal ~~current~~year ~~market conditions~~2025. Gross profit percent was ~~also~~33.7% ~~affected~~in byfiscal ~~lower~~year ~~gross~~2025 ~~profit~~compared ~~realized~~to in20.6% ~~our~~for ~~Nestor~~fiscal ~~Cables~~year ~~cable~~2024. ~~manufacturing~~The ~~business~~improvement ~~which~~in ~~was~~gross ~~acquired~~margin inwas ~~July~~due ~~2022~~to ~~and~~increased ~~was~~volumes ~~not~~resulting ~~included~~ in ~~the~~improved ~~comparable~~absorption ~~period~~ of ~~fiscal~~manufacturing ~~2022.~~overhead, ~~The~~as ~~Company~~well ~~expects~~as tolower ~~operate~~excess atinventory ~~gross~~charges ~~profit~~of ~~percentage~~$10,074,000 ~~levels~~in atfiscal oryear ~~below~~2025, ~~these~~reflecting ~~levels~~improved ~~for~~inventory ~~several~~utilization ~~quarters~~and ~~until~~beneficial ~~revenue~~recoveries ~~levels~~from ~~increase,~~inventory ~~which~~previously iswritten ~~expected to bring improved margins~~down.

Selling, general and administrative ~~expense~~expenses for fiscal year ~~2023~~2025 was $4748,~~992~~419,000, aan ~~decrease~~increase of $13,~~155~~338,000, or 27%, compared to $4945,~~130~~081,000 for fiscal year ~~2022~~2024. ~~While~~The ~~relatively~~increase ~~consistent~~was ~~year over year, expense for the year ended September 30, 2023, decreased~~ due to ~~lower~~higher ~~performance-based~~wages ~~compensation~~ and ~~transaction costs, offset by additional professional and legal expenses related to the Nestor Cables business acquired in July 2022, as well as increased Clearfield employee compensation costs, stock~~performance-based compensation ~~and~~of ~~travel and entertainment expenses~~$3,164,000.

Income from continuing operations for fiscal year ~~2023~~2025 was $372,~~286~~118,000 compared to a loss from continuing operations of $6319,~~817~~234,000 for fiscal year ~~2022~~2024. The ~~decrease~~increase in income is attributable to ~~lower~~increased sales and gross profit asfrom ~~a result of~~ higher ~~unabsorbed~~customer ~~overhead~~demand ~~related~~and toimproved ~~expanded~~gross ~~manufacturing~~profit ~~capacities in the Clearfield segment~~margin, aspartially ~~well~~offset asby ahigher ~~full year of Nestor Cables~~selling, ~~which~~general ~~has a lower gross profit profile related to its bulk cable~~ and ~~duct~~administrative ~~product~~expenses ~~offerings.~~as ~~Nestor~~described ~~Cables was acquired in July 2022~~above.

Net investment income in fiscal year 2023 was $5,206,000 compared to $328,000 for fiscal year 2022. The increase in interest income is due to a higher average investments balance and higher interest rates earned for the year ended September 30, 2023. The higher investments balance is a result of the Company’s capital raise of approximately $130,000,000 completed in the first fiscal quarter of 2023. The Company invests its excess cash primarily in Federal Deposit Insurance Company (“FDIC”) backed bank certificates of deposit, United States (“U.S.”) treasury securities, and money market funds and accounts. We expect interest income to remain at these levels through fiscal year 2024, subject to changes in market interest rates and changes in the average investments balance.19

~~Interest~~Net ~~expense~~investment income in fiscal year ~~2023~~2025 was $~~881~~6,549,000 compared to $~~311~~7,472,000 for fiscal year ~~2022~~2024. The ~~increase~~decrease isin ~~primarily~~interest income is due to ~~incurring~~lower interest rates earned, partially offset by a ~~full~~higher average investments balance for the year ended September 30, 2025. The Company invests its excess cash primarily in Federal Deposit Insurance Company (“FDIC”) backed bank certificates of ~~interest~~deposit, ~~expense~~United onStates ~~the~~(“U.S.”) ~~factoring~~treasury ~~liability~~securities, ~~held~~and bymoney ~~Nestor~~market ~~Cables~~funds ~~which~~and ~~was~~accounts. ~~acquired~~We expect interest income to decrease slightly in ~~July~~fiscal ~~2022~~year 2026 due to lower expected market interest rates.

Income tax expense for fiscal year ~~2023~~2025 was $92,~~079~~357,000 compared to income tax benefit of $143,~~472~~248,000 for fiscal year ~~2022~~2024. The ~~decrease~~increase in tax expense of $5,~~393~~605,000 from the year ended September 30, ~~2022~~2024, is ~~primarily~~ due to the ~~decrease~~increase in ~~taxable~~pretax book income for fiscal year ~~2023~~2025. The ~~decrease in the~~ income tax expense rate decreased to 2127.82% for fiscal year ~~2023~~2025 from 2227.76% for fiscal year ~~2022~~2024 is due to ~~decreased~~changes ~~permanent~~in ~~addback~~state ~~items~~tax, ~~including~~foreign ~~nondeductible~~tax ~~compensation~~ and ~~transaction~~increased ~~costs~~section 162(m) deduction. Our provision for income taxes includes current U.S. federal ~~tax expense~~ and state ~~tax~~current ~~expense, Finland taxes~~ and deferred tax expense.

Net income from continuing operations for fiscal year ~~2023~~2025 was $326,~~533~~310,000 or $20.1745 per basic and diluted share compared to net loss of $498,~~362~~514,000 or $3(0.58) per basic and ~~$3.55 per~~ diluted share for fiscal year ~~2022~~2024.

~~Year~~Net ~~ended~~loss ~~September~~from ~~30,~~discontinued ~~2022~~operations for fiscal year 2025 was $3,947,000 or $(1.03) per basic and diluted share compared to net loss of $3,939,000 or $(0.27) per basic and diluted share for fiscal year ~~ended~~2024. ~~September~~Net 30loss from impairment of discontinued operations for fiscal year 2025 was $10,413,000. ~~2021~~See Note 11 for further details regarding the impairment charges related to the Nestor Cables business.

~~The~~Year ~~Company’s~~ended ~~net~~September ~~sales for fiscal year 2022 increased 92%~~30, ~~or $130~~2024,~~128,000,~~ compared to ~~$270,883,000 from net sales of $140,755,000 in fiscal~~ year 2021. The Company allocates sales from external customers to geographic areas based on the location to which the product is transported. Accordingly, international sales represented 6% and 7% of net sales for the years ended September 30, ~~2022, and 2021, respectively.~~2023

The ~~increase~~Company’s in net sales for fiscal year ~~2022~~2024 ofdecreased ~~$130,128,000 compared to fiscal year 2021 was attributable to increased demand across Clearfield’s core markets. Sales to the Community Broadband market increased 84~~44% ~~or $82~~,~~651,000~~ ~~from $97,978,000 in fiscal year 2021 to $180,629,000 fiscal year 2022. Sales to Clearfield’s MSO/Cable TV market increased 164%~~ or $30100,~~379~~154,000 ~~from $18~~,~~490,000~~ ~~in fiscal year 2021~~ to $48125,~~868~~568,000 ~~in fiscal year 2022. Sales to National Carriers increased 96% or $11,499,000~~ from ~~$11,956,000~~net insales ~~fiscal~~of ~~year 2021 to~~ $23225,~~456~~722,000 in fiscal year ~~2022~~2023. The ~~increase~~Company inallocates sales tofrom ~~these~~external customers ~~was due~~ to ~~continuing~~geographic ~~increased~~areas ~~demand~~based ~~for~~on ~~fiber~~the ~~connectivity~~location ~~products~~to inwhich ~~response~~the toproduct ~~COVID-19~~is ~~driven~~transported. byAccordingly, ~~customers~~international ~~accelerating~~sales ~~their~~represented ~~purchasing~~2% ~~decisions~~ and ~~deployment~~3% ~~schedules~~ of ~~our~~net ~~fiber~~sales ~~optic solutions and the need~~ for ~~high-speed broadband required in~~ the ~~work~~years ~~from~~ended ~~anywhere~~September ~~environment. Net sales to International customers increased 62% or $5~~30,~~846,000~~ ~~from $9~~2024,~~470,000~~ inand ~~fiscal year 2021 to $15~~2023,~~276,000~~ ~~in fiscal year 2022, partially driven by the Company’s acquisition of Nestor Cables on July 26, 2022~~respectively.

The decrease in net sales for fiscal year 2024 of $100,154,000 compared to fiscal year 2023 is attributable to decreased demand across the Company’s core markets. Sales to the Community Broadband market decreased 41%, or $45,703,000, from $111,708,000 in fiscal year 2023 to $66,005,000 in fiscal year 2024. Sales to Clearfield’s MSO/Cable TV market decreased 49%, or $22,182,000, from $45,669,000 in fiscal year 2023 to $23,487,000 in fiscal year 2024. Sales to the Large Regional market decreased 57% or $28,596,000, to $21,293,000 in fiscal 2024 from $49,889,000 in fiscal 2023. Sales to National Carriers decreased 2%, or $187,000, from $8,954,000 in fiscal year 2023 to $8,767,000 in fiscal year 2024. The decrease in sales to these customers was due to a lull in demand for fiber connectivity products as customers digest their larger than normal inventory levels built up during the pandemic which were purchased over the previous years.

Cost of sales for fiscal year ~~2022~~2024 was $~~157~~99,~~936~~721,000, ana ~~increase~~decrease of $7846,~~358~~144,000, or 9832%, from ~~the~~ $79145,~~578~~865,000 in fiscal year ~~2021~~2023. Gross profit ~~increased~~decreased 8568%, or $5154,~~770~~010,000, from $6179,~~177~~857,000 for fiscal year ~~2021~~2023 to $~~112~~25,~~947~~847,000 for fiscal year ~~2022~~2024. The decrease in gross profit was due to lower net sales and lower gross profit margin in fiscal year 2024. Gross profit percent was 20.6% in fiscal year 2024 compared to 35.4% for fiscal year 2023. Gross profit margin was negatively affected by unabsorbed overhead in our manufacturing facilities due to lower levels of demand. The Company’s gross profit was also negatively impacted by an increase in inventory write-downs of $4,748,000 during the fiscal year ended September 30, 2024. Inventory write-downs are primarily due to excess inventory due to the lull in demand while customers draw down their existing products previously purchased during the period of long lead time supply chain created by the pandemic. The Company expects to operate at gross profit percentage levels at or below these levels for several quarters until revenue levels increase, which is expected to bring improved margins.

~~Gross~~Selling, ~~profit~~general ~~percent~~and ~~was~~administrative ~~41.7%~~expense ~~in fiscal year 2022 compared to 43.5%~~ for fiscal year ~~2021.~~2024 ~~The~~was ~~decrease~~$45,081,000, inan ~~gross~~increase ~~profit~~of ~~margin~~$2,801,000, ~~for~~or ~~the~~7%, ~~period~~compared ~~was primarily due~~ to ~~component~~$42,280,000 ~~cost~~for ~~increases~~fiscal ~~absorbed~~year by2023. ~~the~~The ~~Company~~increase was due to ~~the inflationary economic environment,~~ increased ~~facility~~performance-based ~~costs~~compensation ~~from~~of ~~our expanded Mexico manufacturing and Minnesota distribution center operations~~$1,395,000, ~~and~~ increased ~~freight~~stock-based ~~and~~compensation ~~transportation~~of ~~costs. Despite the decrease in gross profit percentage~~$819,000, ~~gross~~and ~~profit dollars~~ increased ~~due~~professional tofees ~~the~~of ~~increase net sales~~$1,086,000.

~~Selling,~~Loss ~~general~~from ~~and~~continuing ~~administrative~~operations ~~expense~~ for fiscal year ~~2022~~2024 was $4919,~~130~~234,000, ~~an increase of $13,187,000, or 37%,~~ compared to ~~$35,943,000~~income ~~for~~from ~~fiscal~~continuing ~~year~~operations ~~2021. This increase was primarily comprised~~ of ~~an increase of~~ $637,~~976~~577,000 infor ~~Clearfield’s compensation costs due to additional personnel in~~ fiscal year ~~2022~~2023. ~~over~~The ~~fiscal~~decrease ~~year~~is ~~2021,~~attributable ~~higher performance-based compensation accruals as well as sales commissions due~~ to ~~significantly~~lower ~~higher~~ sales ~~volumes, expenses~~ and ~~fees~~gross ~~related~~profit ~~to the acquisition of Nestor Cables of $1,647,000, increased travel, entertainment, and tradeshows cost of $1,382,000~~ due to ~~reduced~~excess ~~COVID-19~~supply ~~travel~~of ~~restrictions~~fiber asproducts ~~compared to fiscal year 2021,~~ and ~~increased~~also ~~stock~~higher ~~compensation~~unabsorbed ~~expenses~~overhead ofrelated ~~$990,000 due~~ to ~~issuances~~expanded ofmanufacturing ~~equity awards in fiscal year 2022~~capacities.

~~Income~~Net ~~from~~investment ~~operations~~income ~~for~~in fiscal year ~~2022~~2024 was $637,~~817~~472,000 compared to $255,~~234~~199,000 for fiscal year ~~2021~~2023. ~~This~~ The increase ~~was~~in ~~attributable~~interest income is due to ~~increased~~a ~~sales~~higher average investments balance and ~~gross~~higher ~~profit~~interest rates earned for the year ended September 30, ~~partially~~2024. ~~offset~~The byhigher ~~increased~~overall ~~selling~~investments balance is a result of the Company’s capital raise of approximately $130,000,000 ~~general~~completed late in the first fiscal quarter of 2023 and ~~administrative~~cash ~~expenses~~generated asfrom ~~described~~operations ~~above~~in fiscal 2024. The Company invests its excess cash primarily in Federal Deposit Insurance Company (“FDIC”) backed bank certificates of deposit, United States (“U.S.”) treasury securities, and money market funds and accounts.

Net investment income in fiscal year 2022 was $328,000 compared to $500,000 for fiscal year 2021. The decrease was due to lower interest rates earned on decreased investment balances in fiscal year 2022.20

~~Interest~~Income ~~expense~~tax inbenefit for fiscal year ~~2022~~2024 was $~~311~~3,248,000. ~~The~~compared ~~increase~~to ~~was~~income ~~due~~tax toexpense of $~~141~~8,883,000 infor ~~interest~~fiscal asyear a2023. ~~result~~The decrease in tax expense of $1612,~~700~~131,000 ~~borrowed~~from onthe year ended September 30, 2023, is due to the ~~Company’s~~decrease ~~line~~in ofpretax ~~credit~~book ~~drawn~~income onfor fiscal year 2024. The increase in the ~~fourth~~income ~~quarter~~tax ofexpense rate to 27.6% for fiscal ~~2022~~year to2024 ~~fund~~from ~~the~~20.9% ~~acquisition~~for offiscal ~~Nestor~~year ~~Cables~~2023 is due to changes in state tax, foreign tax and ~~$170~~decreased excess tax benefits from stock option exercises and restricted stock vesting,~~000~~ resulting in ~~interest~~a onshortfall ~~debt~~in ~~held~~the ~~with~~current ~~Nestor Cables~~period. Our ~~The~~provision ~~Company~~for ~~did~~income ~~not~~taxes ~~have~~includes ~~any~~current ~~interest~~U.S. ~~expense~~federal, ~~for~~state ~~fiscal~~and ~~year~~foreign ~~2021~~current and deferred tax expense.

~~Income tax~~Net ~~expense~~loss from continuing operations for fiscal year ~~2022~~2024 was $148,~~472~~514,000 ~~compared~~or to $~~5,407,000~~(0.58) ~~for~~per ~~fiscal~~basic ~~year~~and ~~2021. The~~diluted ~~increase~~share incompared ~~tax~~to ~~expense~~net income of $933,~~065~~723,000 ~~from~~or ~~the~~$2.25 ~~year~~per ~~ended~~basic ~~September~~and ~~30,~~diluted ~~2021,~~share ~~was primarily due to the increase in taxable income~~ for fiscal year ~~2022~~2023. Net ~~The~~loss ~~increase~~from indiscontinued ~~the~~operations ~~income tax expense rate to 22.7%~~ for fiscal year ~~2022~~2024 ~~from 21.0% for fiscal year 2021~~ was ~~due~~$3,939,000 toor ~~increased~~$(0.27) ~~permanent~~per ~~addback~~basic ~~items including nondeductible compensation~~ and ~~transaction~~diluted ~~costs.~~share ~~Our~~compared ~~provision~~to ~~for~~net ~~income~~loss ~~taxes~~of ~~included~~$1,190,000 ~~current~~or U$(0.S.08) ~~federal~~per ~~tax~~basic ~~expense~~ and ~~state~~diluted ~~tax~~share ~~expense,~~for ~~Finland~~fiscal ~~taxes~~year ~~and deferred tax expense~~2023.

Net income for fiscal year 2022 was $49,362,000 or $3.58 per basic and $3.55 per diluted share compared to $20,327,000 or $1.48 per basic and $1.47 per diluted share for the fiscal year 2021.

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.

On July 26, 2022, Clearfield, through its newly created Finnish subsidiary, Clearfield Finland Oy, acquired all of the equity of Nestor Cables Oy, which has a wholly owned Estonian subsidiary Nestor Cables Baltics OÜ. Following the closing of the acquisition of Nestor Cables on July 26, 2022, the Company reassessed its operating segments as defined under ASC 280, Segment Reporting. Under ASC 280, operating segments are defined as components of an enterprise where discrete financial information is available that is evaluated regularly by the chief operating decision-maker (“CODM”), in deciding how to allocate resources and in assessing performance. Prior to July 26, 2022, we were considered to be a single operating segment structure. Based upon the Company’s assessment following the acquisition of Nestor Cables, the Company determined that the business of Nestor Cables was considered a second reportable segment as of July 26, 2022. Accordingly, beginning with the year ended September 30, 2022, the Company has two reportable segments: (1) Clearfield and (2) Nestor Cables. The entities that comprise the Nestor Cables segment are Clearfield Finland Oy, Nestor Cables Oy and Nestor Cables Baltics OÜ.

Reportable segments are as follows:

● Clearfield Segment - The Clearfield segment designs, manufactures, and sells fiber management, protection, and delivery solutions. For fiscal year 2023, net sales from the Clearfiled segment comprised 84% of the Company’s total net sales.

● Nestor Cables Segment - The Nestor Cables segment designs, manufactures, and sells fiber optic and copper telecommunication cables and equipment. For fiscal year 2023, net sales from the Nestor Cables segment comprised 16% of the Company’s total net sales.

Clearfield Segment

The following table provides net sales and net income for the Clearfield segment for the fiscal years ended:

(In thousands)	September 30, 2023		September 30, 2022		September 30, 2021
Segment net sales	$	225,722	$	263,822	$	140,755
Segment net income	$	32,834	$	49,771	$	20,327

Net sales in the Clearfield segment decreased 14% or $38,100,000 for the fiscal year ended September 30, 2023, resulting from decreased sales to its Community Broadband, MSO/Cable TV, and Large Regional customers as these customers work to digest inventory that was purchased previously.

Net income in the Clearfield segment for the fiscal year ended September 30, 2023, decreased 34% or $16,937,000 from the fiscal year ended September 30, 2022, driven by the changes in sales outlined above, as well as lower gross profit margin which was negatively affected by the buildup in capacity that was not utilized.

Nestor Cables Segment

The following table provides net sales and net income for the Nestor Cables segment for the fiscal year ended:

(In thousands)	September 30, 2023			September 30, 2022			September 30, 2021
Segment net sales	$	42,998		$	7,061		$	-
Segment net loss	$	(301	)	$	(409	)	$	-

Net sales in the Nestor Cables segment increased 509% or $35,937,000 for the fiscal year ended September 30, 2023, due to a full year of operations in fiscal 2023 after being acquired in the fourth quarter of fiscal 2022.

Net loss in the Nestor Cables segment for the fiscal year ended September 30, 2023 decreased 26% or $108,000 from the fiscal year ended September 30, 2022, driven by non-recurring acquisition related expenses in the prior year.

Sales Backlog

Sales backlog reflects purchase order commitments for our products received from customers that have yet to be fulfilled. The Company had a backlog of $57,285,000 and $164,914,000 as of September 30, 2023, and 2022, respectively. The decrease in backlog was primarily due to a lull in demand for fiber connectivity products as customers digest their larger than normal inventory levels built up during the pandemic which were purchased over the previous several quarters. As of September 30, 2023, most of the Company’s backlog orders are scheduled to ship within the next nine months. We believe that the Nestor Cables segment generally experiences the same seasonality as the Clearfield segment.

Liquidity and Capital Resources

As of September 30, ~~2023~~2025, the Company had combined consolidated balances of cash, cash equivalents, short-term and long-term investments of $~~174~~165,~~456~~799,000 compared to $45153,~~199~~478,000 as of September 30, ~~2022~~2024. Additionally, we have a line of credit for $40 million that has no outstanding borrowing as of September 30, ~~2023~~2025. The line of credit is secured by certain of the Company’s U.S. assets and matures April 25, 2026. We are in compliance with the debt covenants related to the line of credit. Our excess cash is invested mainly in certificates of deposit backed by the FDIC, U.S. Treasury securities, and money market funds. We believe the combined balances of short-term cash and investments, along with long-term investments and available bank lines of credit, provide a more accurate indication of our available liquidity.

~~On April~~We ~~27,~~believe ~~2022,~~our ~~Clearfield~~existing ~~entered~~cash ~~into~~equivalents ~~a loan agreement~~ and ashort-term ~~security~~investments, ~~agreement~~along ~~to provide the Company~~ with acash ~~$40~~flow ~~million~~from ~~revolving~~operations ~~line~~and ~~of credit that is secured by certain of the Company’s U.S. assets. The~~ line of credit ~~matures on April 27~~, ~~2025, and borrowed amounts~~ will ~~bear~~be ~~interest~~sufficient atto ameet ~~variable~~our ~~rate~~working ofcapital ~~the~~and ~~CME~~investment ~~Group~~requirements ~~one-month~~beyond ~~term Secured Overnight Financing Rate (“SOFR”) plus 1.85%, but not less than 1.80% per annum. As of September 30, 2023,~~ the ~~interest~~next ~~rate~~12 ~~was 7~~months.~~18%.~~ The ~~loan~~Company ~~agreement~~intends ~~and~~on ~~the~~utilizing ~~security~~its ~~agreement~~available ~~contains~~cash ~~customary affirmative~~ and ~~negative~~assets ~~covenants~~primarily ~~and~~for ~~requirements relating to the Company and~~ its ~~operations,~~continued ~~including~~organic agrowth ~~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~~potential afuture ~~debt~~strategic 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 Servicetransactions, ~~each~~ as ~~defined~~well ~~in the loan agreement. Debt and Cash Flow are also~~ as ~~defined~~execution ~~in the loan agreement for the purposes~~ of the ~~debt~~share torepurchase ~~cash~~program ~~flow~~adopted ~~ratio~~by ~~covenant.~~our Asboard of ~~September 30~~directors, ~~2023, the Company had no borrowings against this line of credit. As of September 30, 2023, the Company was in compliance with all covenants. We had no long-term debt obligations~~ as ofdetailed ~~September 30, 2023, and $18,666,000 as of September 30, 2022~~above. ~~We believe the combined balances of short-term cash and investments, along with long-term investments and available bank lines of credit provide a more accurate indication of our available liquidity.~~

We believe our existing cash equivalents and short-term investments, along with cash flow from operations and line of credit, 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 and potential future strategic transactions, as well as execution of the share repurchase program adopted by our board of directors. Effective January 27, 2022, the Company reinstated its stock repurchase program that had been suspended due to COVID uncertainty in April 2020. In addition, effective January 27, 2022, the Company’s board of directors increased the share repurchase program by an additional $10 million to an aggregate of $22 million, from the previous $12 million. As of September 30, 2023, we have repurchased an aggregate of 565,590 shares for approximately $7,019,000, leaving approximately $14,981,000 available within our $22,000,000 stock repurchase program. The repurchase program does not obligate Clearfield to repurchase any particular amount of common stock during any period. The repurchase will be funded by cash on hand. During the year ended September 30, 2023, the Company did not repurchase any shares under the stock repurchase program.

Operating Activities

Net cash provided by operations for the fiscal year ended September 30, ~~2023~~2025, totaled $2026,~~010~~553,000. Cash provided by operations included net income from continuing operations of $326,~~533~~310,000 for the fiscal year ended September 30, ~~2023~~2025, non-cash income and expenses for depreciation and amortization of $6,~~043~~121,000, stock-based compensation of $34,~~578~~597,000, increase of $4,244,000 in deferred tax assets, amortization of discount on investments of $31,~~512~~777,000, in addition to changes in operating assets and liabilities providing and using cash. Changes in operating assets and liabilities ~~using~~providing cash include ana ~~increase~~decrease in net inventories of $1513,~~083~~643,000, ~~and~~ a decrease in ~~accounts~~other ~~payable~~assets ~~and accrued expenses~~ of $26173,~~257,~~000., ~~The~~and an increase in ~~inventory~~accounts ispayable aand ~~result~~accrued expenses of ~~additional stocking levels to support the Company’s anticipated customer demand~~$5,562,000, ~~as well as stocking of long lead time components to limit manufacturing delays~~ due to ~~raw~~timing ~~material~~of ~~component shortages and supply chain delays experienced during the pandemic~~payments. The decrease in ~~accounts~~inventory ~~payable~~ is due to lower ~~purchasing~~inventory ~~activity~~purchases ofduring ~~inventory~~fiscal ~~near~~year ~~the~~2025 ~~end~~as of the ~~period~~Company inutilized ~~response~~inventory toon ~~lower~~hand ~~demand~~to ~~from~~fulfill ~~customers,~~customer asorders ~~well~~to assupport ~~lower~~sales ~~performance-based compensation accruals as of September 30, 2023~~demand. ~~Also,~~Changes ~~changes~~ in operating assets and liabilities ~~providing~~using cash include aan ~~decrease~~increase in accounts receivable of $263,~~277~~548,000,. ~~due~~The toincrease ~~lower~~in ~~net~~accounts ~~sales~~receivable inis ~~the~~due ~~Company’s~~to ~~fourth~~higher ~~quarter~~net ofsales in fiscal ~~2023~~2025 compared to the prior year. Days sales outstanding (“DSO”), which measures how quickly receivables are collected, ~~remained relatively consistent as it~~ increased 1five ~~day~~days from 5235 to 5340 from September 30, ~~2022~~2024, to September 30, ~~2023~~2025.

Net cash provided by operations for the fiscal year ended September 30, 2024, totaled $17,770,000. Cash provided by operations included net loss from continuing operations of $8,514,000 for the fiscal year ended September 30, 2024, non-cash income and expenses for depreciation and amortization of $5,924,000, stock-based compensation of $4,375,000, amortization of discount on investments of $4,406,000, in addition to changes in operating assets and liabilities using cash. Changes in operating assets and liabilities providing cash include a decrease in net inventories of $26,458,000, a decrease in accounts receivable of $6,473,000, and an increase in accounts payable and accrued expenses of $264,000. The decrease in inventory is due to lower inventory purchases during fiscal year 2024 as the Company utilized inventory on hand to fulfill customer orders to support sales demand, as well as higher excess inventory charges taken in fiscal year 2024. The decrease in accounts receivable is due to lower net sales in fiscal 2024 compared to the prior year. DSO decreased 12 days from 47 to 35 from September 30, 2023 to September 30, 2024. Changes in operating assets and liabilities using cash include an increase in other assets of $9,456,000. The increase in other assets is related to prepaid expenses including value added taxes related to cross border inventory transfers.

Net cash provided by operations for the fiscal year ended September 30, 2022, totaled $1,001,000. Cash provided by operations included net income of $49,362,000 for the fiscal year ended September 30, 2022, non-cash expenses for depreciation and amortization of $3,413,000, stock-based compensation of $2,339,000, in addition to changes in operating assets and liabilities using cash. Changes in operating assets and liabilities using cash include an increase in net inventories of $43,744,000 and accounts receivables of $24,234,000. The increase in inventory is a result of additional stocking levels to support the Company’s increased sales backlog and higher demand, and stocking of high turn and long lead time components to limit manufacturing delays due to raw material component shortages and supply chain delays. The increase in accounts receivable was due to higher net sales as well as increased DSO due to higher sales to certain customers with longer payment terms. DSO increased 13 days from 39 to 52 from September 30, 2021, to September 30, 2022. Also, changes in operating assets and liabilities providing cash include an increase in accounts payable and accrued expenses of $14,502,000, due to timing of accounts payable and $8,738,000 in fiscal year 2022 incentive compensation accruals to be paid after year end.21

Net cash provided by operations for the fiscal year ended September 30, ~~2021~~2023, totaled $1024,~~903~~596,000. Cash provided by operations included net income from continuing operations of $2033,~~327~~723,000 for the fiscal year ended September 30, ~~2021~~2023, non-cash expenses for depreciation and amortization of $24,~~302~~595,000, stock-based compensation of $13,~~280~~578,000, ~~and~~amortization ~~decrease~~of indiscount ~~allowance~~on ~~for~~investments ~~doubtful accounts~~ of $~~210~~3,512,000, in addition to changes in operating assets and liabilities using and providing cash. Changes in operating assets and liabilities using cash include an increase in net inventories of $1311,~~116~~145,000 and a decrease in accounts ~~receivables~~payable and accrued expenses of $927,~~151~~425,000. The increase in inventory is a result of additional stocking levels to support the Company’s ~~increased~~anticipated ~~sales~~customer ~~backlog and higher~~ demand, ~~and~~as well as stocking of ~~high turn and~~ long lead time components to limit manufacturing delays due to raw material component shortages and supply chain delays experienced during the pandemic. The ~~increase~~decrease in accounts ~~receivable~~payable ~~was~~is due to ~~higher~~lower ~~net~~purchasing ~~sales~~activity ~~experienced~~of ~~over~~inventory near the ~~prior~~end ~~year.~~of ~~The~~the ~~Company’s~~period ~~DSO~~in ~~increased~~response 1to ~~day~~lower demand from 38customers, toas 39well ~~from~~as ~~September~~lower ~~30,~~performance-based ~~2020,~~compensation toaccruals as of September 30, ~~2021~~2023. Also, changes in operating assets and liabilities providing cash include ana ~~increase~~decrease in accounts ~~payable~~receivable ~~and accrued expenses~~ of $927,~~776~~090,000, due to ~~timing~~lower ofnet ~~accounts~~sales ~~payable~~in ~~and~~the ~~$6,513,000~~Company’s infourth quarter of fiscal 2023 compared to the prior year. ~~2021~~DSO ~~incentive~~remained ~~compensation~~consistent ~~accruals~~as it decreased two days from 49 to be47 ~~paid~~from ~~after~~September ~~year~~30, ~~end~~2022, to September 30, 2023.

Net cash provided by operating activities of discontinued operations for the fiscal year ended September 30, 2025, totaled $2,897,000. Cash provided by operations included net loss from discontinued operations of $3,947,000, non-cash income and expenses for depreciation and amortization of $1,351,000, deferred tax assets of $5,788,000, and stock-based compensation of $451,000, in addition to changes in operating assets and liabilities using cash of $746,000. Net cash provided by operating activities of discontinued operations for the fiscal year ended September 30, 2024, totaled $4,453,000. Cash provided by operations included net loss from discontinued operations of $3,939,000, non-cash income and expenses for depreciation and amortization of $1,478,000, deferred tax assets of $721,000, and stock-based compensation of $267,000, in addition to changes in operating assets and liabilities providing cash of $7,369,000. Net cash used in operating activities of discontinued operations for the fiscal year ended September 30, 2023, totaled $6,172,000. Cash used in operations included net loss from discontinued operations of $1,190,000 and non-cash expenses for depreciation and amortization of $1,456,000, in addition to changes in operating assets and liabilities using cash of $6,328,000.

Investing Activities

We invest our excess cash in money market accounts, U.S. Treasury securities, money market funds, and bank certificates 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. For the fiscal year ended September 30, ~~2023~~2025, the Company received proceeds from maturities of investments of $~~107~~115,~~060~~866,000 and used cash to purchase $~~210~~119,~~923~~074,000 of investments in certificates of deposit below FDIC insured levels and U.S. Treasuries. The Company used $84,~~384~~743,000 in cash to purchase fixed and intangible assets. The Company received proceeds from the sale of inventory and property, plant and equipment of $900,000 related to the Company’s former build-to-print copper cable assemblies business. The result is cash used in investing activities of $~~112~~7,~~247~~048,000 in fiscal year ~~2023~~2025. In fiscal year ~~2024~~2026, the Company intends to continue investing in ~~the~~ necessary information technology, manufacturing equipment, and facility needs.

For the fiscal year ended September 30, ~~2022~~2024, the Company ~~had~~received proceeds from maturities of investments of $17162,~~386~~064,000 and used cash to purchase $159,393,000 of ~~FDIC-backed~~investments in certificates of deposit below FDIC insured levels and U.S. Treasuries ~~mature or be sold~~. The Company used $97,~~148~~985,000 in cash to purchase fixed and intangible assets. ~~Additionally, the Company used $16,187,000 in cash to acquire Nestor Cables on July 26, 2022.~~ The result ~~was~~is cash used in investing activities of $85,~~197~~269,000 in fiscal year ~~2022~~2024.

For the fiscal year ended September 30, ~~2021~~2023, wethe ~~purchased~~Company ~~$24,809,000~~received ofproceeds ~~FDIC-backed~~from ~~certificates~~maturities of ~~deposit~~investments of $107,060,000 and ~~U.S.~~used ~~Treasuries~~cash ~~and~~to ~~had~~purchase $13210,~~255~~923,000 of ~~FDIC-backed~~investments in certificates of deposit below FDIC insured levels and U.S. Treasuries ~~mature or be called~~. The ~~result~~Company ~~was cash~~ used ~~in investing activities of~~ $137,~~600~~439,000 in ~~fiscal~~cash ~~year~~to ~~2021~~purchase fixed and intangible assets. The ~~increase~~result inis cash used in investing activities ~~was driven by increased investment~~ of ~~cash in excess of operating needs into long-term investments. During fiscal year 2021, we used~~ $2111,~~046~~302,000 in ~~cash~~fiscal ~~for~~year ~~the purchase of capital equipment and software and for obtaining patents~~2023. ~~These purchases were mainly related to manufacturing and information technology equipment.~~

Net cash used in investing activities of discontinued operations for the fiscal years ended September 30, 2025, 2024, and 2023 totaled $1,796,000, $1,627,000, and $945,000, respectively, driven by cash used to purchase fixed and intangible assets.

Financing Activities

For the fiscal year ended September 30, ~~2023~~2025, the Company ~~received~~used cash to repurchase $~~130~~16,~~262~~530,000 of ~~net~~our ~~proceeds through the issuance of~~ common stock inon the ~~first~~open ~~quarter~~market ofunder ~~fiscal~~our ~~2023.~~stock ~~The~~repurchase ~~Company~~program. ~~also~~In ~~received~~connection ~~$611,000~~with ~~from~~the ~~employees’ purchase of~~ stock ~~through~~repurchase, ~~our~~the ~~Employee~~Company ~~Stock~~paid ~~Purchase Plan (“ESPP”) and~~ $~~954~~123,000 ~~related~~of toU.S. ~~issuance~~Federal ofexcise ~~stock~~taxes asduring ~~payment~~fiscal ~~for~~year ~~incentive compensation~~2025. ~~The~~We ~~Company~~received ~~used~~ $16595,~~700,~~000 tofrom ~~pay~~employees’ ~~down~~purchase inof ~~full~~stock ~~the~~through ~~then-outstanding principal on~~ our ~~line~~Employee ofStock ~~credit,~~Purchase ~~which~~Plan ~~was originally drawn in the fourth quarter of fiscal 2022 to fund the acquisition of Nestor Cables~~(“ESPP”). The Company ~~also~~ used $~~491~~689,000 related to share withholding for exercise and taxes associated with the issuance of common stock upon cashless exercise of stock options. ~~and~~The Company also used cash of $1494,~~220,~~000 to pay for taxes as a result of employees’ vesting of restricted shares using share withholding. As a result, the net cash ~~provided~~used byfor financing activities during fiscal year ~~2023~~2025 was $~~113~~17,~~416~~241,000.

27For the fiscal year ended September 30, 2024, the Company used cash to repurchase $33,374,000 of our common stock on the open market under our stock repurchase program. In connection with the stock repurchase, the Company accrued $316,000 of U.S. Federal excise taxes to be paid during fiscal year 2025. We received $586,000 from employees’ purchase of stock through our Employee Stock Purchase Plan (“ESPP”). The Company also used cash of $493,000 to pay for taxes as a result of employees’ vesting of restricted shares using share withholding. As a result, the net cash used for financing activities during fiscal year 2024 was $33,289,000.

For the fiscal year ended September 30, 2022, the Company borrowed $16,700,000 on its line of credit to fund the July acquisition of Nestor Cables. The Company received $544,000 from employees’ purchase of stock through our ESPP. The Company used $5,183,000 related to share withholding for exercise and taxes associated with the issuance of common stock upon cashless exercise of stock options and used $1,406,000 to pay for taxes as a result of employees’ vesting of restricted shares using share withholding. As a result, the net cash provided by financing activities during fiscal year 2022 was $10,655,000.22

For the fiscal year ended September 30, ~~2021~~2023, the Company received $~~384~~130,262,000 of net proceeds through the issuance of common stock in the first quarter of fiscal 2023. The Company also received $611,000 from employees’ purchase of stock through our ESPP and $954,000 related to issuance of stock as payment for incentive compensation. The Company used $~~462~~16,700,000 to pay ~~for~~down ~~taxes~~in full the then-outstanding principal on our line of credit, which was originally drawn in the fourth quarter of fiscal 2022 to fund the acquisition of Nestor Cables. The Company also used $491,000 related to ~~employees’~~share ~~exercises~~withholding for exercise and taxes associated with the issuance of common stock upon cashless exercise of stock options and used $~~458~~1,220,000 to pay for taxes ~~related~~as toa result of employees’ vesting of restricted shares using share withholding. As a result, the net cash ~~used~~provided inby financing activities during fiscal year ~~2021~~2023 was $~~536~~113,416,000.

Net cash provided by financing activities of discontinued operations for the fiscal year ended September 30, 2025, totaled $3,000,000, driven by net borrowings and repayments from the factoring liability held by Nestor Cables. Net cash used in financing activities of discontinued operations for the fiscal year ended September 30, 2024, totaled $3,617,000, driven by net borrowings and repayments from the factoring liability held by Nestor Cables. Net cash provided by financing activities of discontinued operations for the fiscal year ended September 30, 2023, totaled $1,586,000, driven by net borrowings and repayments from the factoring liability held by Nestor Cables.

Operating Leases

We have entered into various non-cancelable operating lease agreements for office equipment ~~and~~at our office and manufacturing spaces in Minnesota, ~~Mexico, Finland,~~ and ~~Estonia~~Mexico expiring at various dates through ~~August~~April ~~2034~~2029. Certain of these leases have escalating rent payment provisions. We recognize rent expense under such leases on a straight-line basis over the term of the lease. Please see Note 9. Leases in the consolidated financial statements for further details regarding the terms of our leases.

Critical Accounting Estimates

In preparing our financial statements, we make estimates, assumptions and judgments that can have a significant impact on our sales, income from operations and net income, as well as on the value of certain assets and liabilities on our consolidated balance sheets. We believe ~~that~~ there are several accounting policies that are critical to an understanding of our historical and future performance, as these policies affect the reported amounts of sales, expenses and significant estimates and judgments applied by management. While there are a number of accounting policies, methods and estimates affecting our financial statements, areas that are particularly significant include:

● ~~Accounting for stock~~ Stock-based compensation

● Impairment ~~Income~~of ~~taxes~~long-lived assets, intangible assets and goodwill

● Valuation of inventory~~, long-lived assets, finite lived intangible assets and goodwill~~

● Valuation in business combinations

Stock-Based Compensation

We measure ~~and~~stock-based ~~recognize~~ compensation expense for all ~~stock~~share-based payment awards atgranted to employees and directors based on the fair value ~~over~~of those awards on the ~~requisite~~grant ~~service~~date. ~~period~~The determination of fair value includes estimates of the fair value of our common stock. WeThese ~~use~~estimates impact the ~~Black-Scholes~~amount ~~option~~of ~~pricing~~compensation ~~model~~expense torecognized ~~determine~~over the ~~fair~~requisite ~~value~~service period of ~~options~~the award. For restricted stock ~~grants~~awards and performance stock units (PSUs), fair value is determined asusing the closing market price of ~~the~~our ~~Company’s~~common stock on the ~~date of~~ grant date. ~~Equity-based~~For ~~compensation~~PSUs, ~~expense~~we isalso ~~broken~~make ~~out~~judgments ~~between~~regarding ~~cost~~the probability of ~~sales~~achieving ~~and~~performance ~~selling~~targets, ~~general~~which can significantly affect the timing and ~~administrative~~amount ~~expenses~~of ~~based~~expense onrecognized. For stock options, we use the ~~classification~~Black-Scholes option-pricing model to estimate fair value. The use of this model requires the ~~employee~~input of subjective assumptions such as, expected volatility, expected term, risk-free interest rate, and expected dividend yield. The ~~determination~~expected terms of ~~fair~~the ~~value~~options are based on evaluations of ~~stock~~historical and expected future employee exercise behavior. The risk-~~based~~free ~~awards~~interest rate is based on the U.S. Treasury rates at the date of grant ~~using~~with anmaturity ~~option-pricing~~dates ~~model~~approximately isequal ~~affected~~to bythe ~~our~~expected ~~stock~~life ~~price~~at asgrant ~~well~~date. asVolatility byis ~~assumptions~~based ~~regarding~~on ahistorical ~~number~~and expected future volatility of ~~subjective~~the ~~variables~~Company’s stock. ~~These~~The ~~variables~~Company ~~include,~~has ~~but~~not ~~are~~historically issued any dividends and does not ~~limited~~expect to, in the ~~expected~~future. Forfeitures for both option and restricted stock ~~price~~grants ~~volatility~~are ~~over~~estimated at the ~~term~~time of the ~~awards,~~grant and ~~actual~~revised ~~and~~in ~~projected~~subsequent ~~employee~~periods ~~stock~~if ~~option~~actual ~~exercise~~forfeitures ~~behaviors~~differ from estimates.

~~The~~Changes ~~expected~~in ~~terms~~any of the ~~options~~above ~~are~~assumptions ~~based~~could onmaterially ~~evaluations~~affect ofthe ~~historical~~amount ~~and~~of ~~expected future employee exercise behavior. The risk~~stock-~~free interest rate is~~ based oncompensation ~~the~~expense ~~U.S.~~recorded ~~Treasury~~in ~~rates~~future ~~at the date of grant with maturity dates approximately equal to the expected life at grant date~~periods. ~~Volatility~~We isperiodically ~~based~~review onour ~~historical~~valuation assumptions and ~~expected~~update ~~future~~them ~~volatility~~as ~~of the Company’s stock~~necessary. ~~The~~If ~~Company~~actual ~~has~~results ~~not~~differ ~~historically~~significantly ~~issued~~from ~~any~~our ~~dividends~~estimates ~~and~~or ~~does~~if ~~not~~we ~~expect~~modify ~~to in~~ the ~~future.~~underlying ~~Forfeitures~~assumptions, ~~for~~the ~~both~~amount ~~option~~of ~~and restricted~~ stock-based ~~grants~~compensation ~~are~~expense ~~estimated~~could atdiffer ~~the~~materially ~~time~~from of the ~~grant~~amounts ~~and~~currently ~~revised~~recognized inor ~~subsequent periods if actual forfeitures differ from estimates~~disclosed.

If factors change and we employ different assumptions in the determination of the fair value of grants in future periods, the related compensation expense that we record may differ significantly from what we have recorded in the current periods.23

Income Taxes

We account for income taxes in accordance with ASC 740, Income Taxes, under which deferred income taxes are recognized based on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, we consider tax regulations of the jurisdictions in which we operate, estimates of future taxable income, and available tax planning strategies. If tax regulations, operating results, or the ability to implement tax-planning strategies vary, adjustments to the carrying value of deferred tax assets and liabilities may be required. A valuation allowance is recorded when it is more likely than not that a deferred tax asset will not be realized. The recorded valuation allowance is based on significant estimates and judgments and if the facts and circumstances change, the valuation allowance could materially change.

In accounting for uncertainty in income taxes, we recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.

As of September 30, 2023, and 2022, the Company had no U.S. federal, state, or Estonia net operating loss (“NOL”) carry-forwards. As of September 30, 2023, and 2022 there is a Finnish NOL of $1,000 and $4,000, respectively.

As part of the process of preparing our financial statements, we are required to estimate our income tax liability in each of the jurisdictions in which we do business. This process involves estimating our actual current tax expense together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities. We must then assess the likelihood that these deferred tax assets will be recovered from future taxable income and, to the extent we believe that recovery is not more likely than not or unknown, we must establish a valuation allowance. If the valuation allowance is reduced, the Company would record an income tax benefit in the period in which that determination is made. If the valuation allowance is increased, the Company would record additional income tax expense.

The Company files income tax returns in the U.S. Federal jurisdiction and various state and foreign jurisdictions. Based on its evaluation, the Company has concluded that it has no significant unrecognized tax benefits. The Company is generally subject to U.S. federal examination for all tax years after 2018. The Company is subject to state examinations for all tax years after 2013 due to unexpired research and development credit carryforwards still open under statute. Nestor is generally subject to Finland examination for all tax years after 2019 and Estonia examination for all tax years after 2019.

Impairment of Long-Lived Assets, Intangible Assets and Goodwill

The Company’s long-lived assets as of September 30, ~~2023~~2025, consisted primarily of property, plant and equipment, right of use lease assets, patents, intangibles, and goodwill. The Company reviews the carrying amount of its property, plant and equipment, right of use lease assets, and intangible assets if events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. When this review indicates the carrying amount of an asset or asset group exceeds the sum of the future undiscounted cash flows expected to be generated by the assets, the Company recognizes an asset impairment charge against operations for the amount by which the carrying amount of the impaired asset exceeds its fair value.

Determining fair values of property, plant, and equipment, right of use lease assets, and intangible assets using a discounted cash flow method involves significant judgment and requires the Company to make significant estimates and assumptions, including long-term projections of cash flows, market conditions and appropriate discount rates. Judgments are based on historical experience, current market trends, consultations with external valuation specialists and other information. If facts and circumstances change, the use of different estimates and assumptions could result in a materially different outcome. The Company generally develops these forecasts based on recent sales data for existing products, planned timing of new product launches or acquisitions, and estimated future growth of the FTTP market.

29Goodwill represents the excess purchase price over the fair value of tangible net assets acquired in acquisitions after amounts have been allocated to intangible assets. Goodwill is tested for impairment annually at fiscal year-end, or more frequently when events or changes in circumstances indicate that the asset might be impaired. Examples of such events or circumstances include, but are not limited to, a significant adverse change in legal or business climate, an adverse regulatory action or unanticipated competition. 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.

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. Goodwill is tested for impairment annually at fiscal year-end, or more frequently when events or changes in circumstances indicate that the asset might be impaired. Examples of such events or circumstances include, but are not limited to, a significant adverse change in legal or business climate, an adverse regulatory action or unanticipated competition. 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. During the years ended September 30, 2023, 2022, and 2021, there were no triggering events that indicated goodwill or intangible assets may be impaired.

If after assessing the totality of events or circumstances, the Company were to determine that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, then the Company would perform a quantitative test that compares the fair value to its carrying value to determine the amount of any impairment.

If the carrying amount of a reporting unit exceeds its fair value, the Company would measure the possible goodwill impairment loss based on an allocation of the estimate of fair value of the reporting unit to all of the underlying assets and liabilities of the reporting unit, including any previously unrecognized intangible assets. The excess of the fair value of a reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. An impairment loss is recognized to the extent that a reporting unit's recorded goodwill exceeds the implied fair value of goodwill. An impairment loss would be based on significant estimates and judgments, and if the facts and circumstances change, a potential impairment could have a material impact on the Company’s financial statements.

No impairment of the goodwill or intangible assets related to continuing operations has occurred during the years ended September 30, ~~2023~~2025, ~~2022~~2024, and ~~2021~~2023, respectively. Refer to Note 11 for discussion of the discontinued operations and impairment of assets held for sale of the Nestor Cables business.

Valuation of Inventory

The Company maintains a material amount of inventory to support its manufacturing operations and customer demand. This inventory is stated at average cost, subject to the lower of cost or net realizable value. OnThe adetermination ~~regular~~of ~~basis,~~ the ~~Company~~valuation ~~reviews~~of ~~its~~ inventory ~~and~~requires ~~identifies~~management ~~inventory~~to ~~which~~make issignificant ~~excess,~~estimates ~~slow~~and ~~moving,~~judgments orabout ~~obsolete~~future byproduct ~~considering factors such as inventory levels~~demand, ~~expected~~ product life, ~~and forecasted sales demand. Any identified excess~~cycles, ~~slow moving,~~ and ~~obsolete~~the ~~inventory~~recoverability ~~is written down to its market value through a charge to cost~~ of ~~sales. It is possible that additional~~ 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 inventory procurement accordingly~~costs.

~~Valuation~~We evaluate inventory levels on a quarterly basis, considering factors such as historical usage, forecasted demand, production lead times, and product aging. When actual demand differs from our expectations, we may be required to record additional write-downs or, conversely, recognize a reduction in ~~Business~~previously ~~Combinations~~established write-downs once the product is sold. Because of the inherent uncertainty involved in forecasting future product demand and product life cycles, actual results could differ materially from these estimates.

WeManagement ~~record~~believes ~~tangible~~the ~~and~~methodologies ~~intangible assets acquired~~ and ~~liabilities~~assumptions ~~assumed~~used ~~in business combinations under the purchase method of accounting under ASC 805, Business combinations. Amounts paid for each acquisition are allocated~~ to ~~the~~estimate ~~assets acquired and liabilities assumed based on their fair values at~~ the ~~dates~~valuation of ~~acquisition.~~inventory ~~The value recorded is based on estimates of future financial projections. These cash flow projections~~ are ~~discounted~~appropriate ~~with a risk adjusted rate. The fair value of identifiable intangible assets is based on detailed valuations that use information~~ and ~~assumptions~~consistently ~~provided~~applied; ~~by management~~however, ~~which~~changes isin ~~considered~~product ~~management’s~~mix, ~~best~~customer ~~estimate~~demand, ofor ~~inputs~~technological ~~and~~obsolescence ~~assumptions~~could ~~that~~materially aimpact ~~market~~future ~~participant~~results ~~would use. We allocate any excess purchase price over the fair value~~ of ~~the~~operations ~~net tangible~~ and ~~intangible~~financial ~~assets acquired and liabilities assumed to goodwill~~condition.

3024

~~New~~Recently Adopted Accounting Pronouncements:

InRefer ~~June~~to ~~2016,~~Note ~~the~~1 ~~Financial~~to ~~Accounting Standards Board (“FASB”) issued~~ the Accounting Standards Update (“ASU”) 2016-13, Measurement of Credit Losses on Financial Instruments. In November 2018, the FASB issued update ASU 2018-19 that clarifies the scope of the standard in the amendments in ASU 2016-13. This guidance introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. Financial instruments impacted include accounts receivable, other financial assets measured at amortized cost and other off-balance sheet credit exposures. The new guidance is effective for the Company’s ~~beginning in the first quarter of fiscal 2024, with early adoption permitted. The Company has evaluated the impact of the adoption of ASU 2016-13 on its~~ consolidated financial statements ~~and~~for ~~determined~~a ~~that~~discussion ~~the adoption~~ of ~~the~~recently ~~new~~adopted ~~standard~~accounting ~~would not have a material impact on the Company's consolidated financial statements~~pronouncements.

New Accounting Pronouncements Not Yet Adopted

Refer to Note 1 to the Company’s consolidated financial statements for a discussion of new accounting pronouncements not yet adopted.

Quarterly Information

As a result of the retrospective changes associated with the sale of the Nestor Cables business, which are reflected as discontinued operations for all periods presented, the following table sets forth selected consolidated quarterly financial information that have been adjusted to reflect these presentation changes.

	Three Months Ended
(In thousands, except per share data)	September 30, 2025			June 30, 2025			March 31, 2025			December 31, 2024
Net sales	$	41,060		$	38,755		$	40,621		$	29,698
Gross profit	$	14,225		$	13,676		$	13,961		$	8,675
Income (loss) from continuing operations before income taxes	$	2,583		$	3,115		$	3,271		$	(302	)
(Loss) from discontinued operations before income taxes	$	(17,367	)	$	(137	)	$	(1,488	)	$	(2,030	)
Net (loss) income	$	(9,077	)	$	1,606		$	1,327		$	(1,906	)

Basic (loss) earnings per share:
Continuing operations	$	0.13		$	0.17		$	0.18		$	(0.02	)
Discontinued operations		(0.78	)		(0.06	)		(0.09	)		(0.11	)
Basic (loss) earnings per share	$	(0.65	)	$	0.11		$	0.09		$	(0.13	)

Diluted (loss) earnings per share:
Continuing operations	$	0.13		$	0.17		$	0.18		$	(0.02	)
Discontinued operations		(0.78	)		(0.06	)		(0.09	)		(0.11	)
Diluted (loss) earnings per share	$	(0.65	)	$	0.11		$	0.09		$	(0.13	)

	Three Months Ended
(In thousands, except per share data)	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023
Net sales	$	36,197		$	33,670		$	27,600		$	28,101
Gross profit	$	9,635		$	9,175		$	2,313		$	4,724
Income (loss) from continuing operations before income taxes	$	(641	)	$	(445	)	$	(6,800	)	$	(3,876	)
(Loss) from discontinued operations before income taxes	$	(678	)	$	(280	)	$	(1,193	)	$	(2,343	)
Net (loss) income	$	(827	)	$	(447	)	$	(5,911	)	$	(5,268	)

Basic (loss) earnings per share:
Continuing operations	$	(0.01	)	$	(0.01	)	$	(0.34	)	$	(0.22	)
Discontinued operations		(0.04	)		(0.03	)		(0.06	)		(0.13	)
Basic (loss) earnings per share	$	(0.05	)	$	(0.04	)	$	(0.40	)	$	(0.35	)

Diluted (loss) earnings per share:
Continuing operations	$	(0.01	)	$	(0.01	)	$	(0.34	)	$	(0.22	)
Discontinued operations		(0.04	)		(0.03	)		(0.06	)		(0.13	)
Diluted (loss) earnings per share	$	(0.05	)	$	(0.04	)	$	(0.40	)	$	(0.35	)

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company currently invests its excess cash in bank certificates of deposit that are fully insured by the Federal Deposit Insurance Corporation and United States Treasury securities 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. As of September 30, ~~2023~~2025, and ~~2022~~2024, the Company had combined consolidated balances of cash, cash equivalents, short term, and long-term investments of $~~174~~165,~~456~~799,000 and $45153,~~199~~478,000, respectively.

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 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 for fiscal year 2023 would have increased or decreased by approximately $570,000 or approximately 1%. 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 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 which has outpaced our ability to reduce the cost structure and manufacturability. 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 financial statements.

3125

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining an adequate system of internal control over financial reporting of the Company. This system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with United States generally accepted accounting principles.

Our internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management conducted an evaluation of the effectiveness of the system of internal control over financial reporting as of September 30, ~~2023~~2025. In making this evaluation, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—2013 Integrated Framework. Based on management’s evaluation and those criteria, management concluded that the Company’s system of internal control over financial reporting was effective as of September 30, ~~2023~~2025.

Management’s internal control over financial reporting as of September 30, ~~2023~~2025, has been audited by ~~Baker~~Deloitte ~~Tilly~~& Touche LLP, an independent registered public accounting firm, as stated in their report appearing on the following page, in which they expressed an unqualified opinion thereon.

Date: November 29, 2023

/s/ Cheryl Beranek Cheryl Beranek Chief Executive Officer /s/ Daniel Herzog Daniel Herzog Chief Financial Officer

Further discussion of our internal controls and procedures is included in Item 9A of this report, under the caption “Controls and Procedures.”

3226

Clearfield, Inc.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm (PCAOB ID 23)	34
Report of Independent Registered Public Accounting Firm (PCAOB ID 34)	28
Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID 23)	31
Consolidated Balance Sheets	36
Financial Statements
Consolidated Statements of Earnings	37
Consolidated Balance Sheets	33
Consolidated Statement of Comprehensive Income	38
Consolidated Statements of Earnings	34
Consolidated Statements of Shareholders’ Equity	39
Consolidated Statement of Comprehensive (Loss) Income	35
Consolidated Statements of Cash Flows	39
Consolidated Statements of Shareholders’ Equity	36
Notes to the Consolidated Financial Statements	40
Consolidated Statements of Cash Flows	37
Notes to the Consolidated Financial Statements	38

3327

~~REPORT~~Report OFof ~~INDEPENDENT~~Independent ~~REGISTERED~~Registered ~~PUBLIC~~Public ~~ACCOUNTING~~Accounting ~~FIRM~~Firm

To the shareholders and the Board of Directors of Clearfield, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Clearfield, Inc. and subsidiary (the "Company") as of September 30, 2025, the related consolidated statements of earnings, comprehensive (loss) income, ⁠shareholders' equity, and cash flows, for the period ended September 30, 2025, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2025, and the results of its operations and its cash flows for the period ended September 30, 2025, in conformity with accounting principles generally accepted in the United States of America.

The consolidated financial statements of the Company for the years ended September 30, 2024 and 2023, before the effects of the retrospective adjustments for the discontinued operations discussed in Note 11 and changes in reportable segment disclosures discussed in Note 12 to the financial statements, were audited by other auditors whose report, dated November 15, 2024, expressed an unqualified opinion on those statements. We also have audited the adjustments to the 2024 and 2023 consolidated financial statements to retrospectively adjust for the changes related to discontinued operations and reportable segments in 2024 and 2023, as discussed in Note 11and Note 12 to the financial statements. Our procedures included (1) obtaining the Company's underlying accounting analysis prepared by management of the retrospective adjustments for discontinued operations and reportable segments and comparing the retrospectively adjusted amounts per the 2024 and 2023 consolidated financial statements to such analysis and supporting documentation, (2) comparing previously reported amounts to the previously issued consolidated financial statements for such years, and (3) testing the mathematical accuracy of the accounting analysis. In our opinion, such retrospective adjustments are appropriate and have been properly applied. However, we were not engaged to audit, review, or apply any procedures to the 2024 or 2023 consolidated financial statements of the Company other than with respect to the retrospective adjustments, and accordingly, we do not express an opinion or any other form of assurance on the 2024 and 2023 consolidated financial statements taken as a whole.⁠

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of September 30, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated November 25, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Inventories, Net – Inventory Reserves - Refer to Note 1 to the financial statements

Critical Audit Matter Description
Inventory is stated at average cost, subject to the lower of cost or net realizable value. The Company’s recorded inventory reserve balance was approximately $12.4 million at September 30, 2025. On a regular basis, the Company reviews its inventory and identifies inventory which is excess, slow moving, or obsolete by considering factors such as inventory levels, expected product life, and forecasted sales demand. In estimating the excess, slow-moving and obsolete inventory reserve, management utilizes several inputs, including inventory turns of on-hand inventory, historical sales of inventory, order backlog, and historical write-off activity. Any identified excess, slow moving, and obsolete inventory is written down to its net realizable value through a charge to cost of sales. We identified the estimated inventory reserve for excess, slow-moving and obsolete inventory as a critical audit matter given the magnitude of inventories, coupled with the significant judgments necessary to estimate the expected product life and forecasted sales demand. Auditing such estimates required a high degree of auditor judgment and an increased extent of effort when performing audit procedures and evaluating the results of those procedures.

How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to Inventories, Net – Inventory Reserves included the following, among others:

●

We tested the design and operating effectiveness of controls over management’s excess, slow-moving and obsolete inventory reserve estimate.

●

We compared actual write-off activity in the current year to the excess and slow-moving inventory reserve estimated by the Company in the prior year, to evaluate management’s ability to accurately estimate the excess and slow-moving inventory reserve.

●

We evaluated the appropriateness of and performed audit procedures over specified inputs supporting management’s excess, slow-moving and obsolete inventory reserve estimate, including the inventory turns of on-hand inventory, historical sales of inventory, order backlog and historical write-off activity.

●

We evaluated the appropriateness and consistency of management’s methods and assumptions used in developing their estimate of the excess and slow-moving inventory reserve, which included consideration of expected product life and forecasted sales demand.

●

We reperformed the calculation of the excess and slow-moving inventory reserve utilizing the inputs, assumptions, and methodology consistent with management’s estimate.

/s/ Deloitte & Touche LLP

Minneapolis, Minnesota

November 25, 2025

We have served as the Company's auditor since 2025.

Report of Independent Registered Public Accounting Firm

To the shareholders and the Board of Directors of Clearfield, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Clearfield, Inc. (the "Company") as of September 30, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended September 30, 2025, of the Company and our report dated November 25, 2025, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting.⁠ Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

/s/ Deloitte & Touche LLP

Minneapolis, Minnesota

November 25, 2025

Report of Independent Registered Public Accounting Firm

To the shareholders and the board of directors of Clearfield, Inc.:

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited, before the effects of the adjustments to retrospectively apply the change in reportable segment disclosures described in Note 12 and assets held for sale and discontinued operations described in Note 11, the accompanying consolidated balance sheets of Clearfield, Inc. (the "Company") as of September 30, ~~2023~~2024 and ~~2022~~2023, the related consolidated statements of earnings, comprehensive (loss) income, shareholders'’ equity, and cash flows, for each of the ~~three~~two years in the period ended September 30, ~~2023~~2024, and the related notes (collectively referred to as the "consolidated financial statements"). We also have audited the Company’s internal control over financial reporting as of September 30, ~~2023~~2024, based on criteria established in Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements, before the effects of the adjustments to retrospectively apply the change in reportable segment disclosures described in Note 12 and assets held for sale and discontinued operations described in Note 11, present fairly, in all material respects, the financial position of the Company as of September 30, ~~2023~~2024 and ~~2022~~2023, and the results of ~~their~~its operations and ~~their~~its cash flows for each of the ~~three~~two years in the period ended September 30, ~~2023~~2024, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, ~~2023~~2024, based on criteria established in Internal Control – Integrated Framework: (2013) issued by COSO.

We were not engaged to audit, review, or apply any procedures to the adjustments and related required disclosures regarding the effects of the adjustments to retrospectively apply the change in reportable segment disclosures described in Note 12 and assets held for sale and discontinued operations described in Note 11.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management report. Our responsibility is to express an opinion on the Company's consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

3431

Definition and Limitations of Internal Control Over Financial Reporting

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved or are especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

/s/ Baker Tilly, US, LLP

We ~~have~~ served as the Company's auditor ~~since~~from 2013 to 2024.

Minneapolis, Minnesota

November 2915, ~~2023~~2024

3532

CLEARFIELD, INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT PER SHARE DATA)

	September 30, 2023			September 30, 2022
	September 30, 2025			September 30, 2024
Assets
Current Assets
Current assets
Cash and cash equivalents	$	3721,~~827~~493		$	1614,~~650~~148
Short-term investments		~~130~~84,~~286~~484			5114,~~802~~825
Accounts receivables, net		2817,~~392~~991			5313,~~704~~843
Inventories, net		9842,~~055~~031			8256,~~208~~096
Other current assets		1,695			1,758
Prepaid and other current assets		11,152			10,528
Total current assets		296,255			160,122
Current assets held for sale		21,337			20,155
Property, plant and equipment, net		21,527			18,229
Total current assets		198,488			229,595
Other Assets
Property, plant and equipment, net		9,682			15,871
Long-term investments		659,~~343~~822			2224,~~747~~505
Goodwill		64,~~528~~709			64,~~402~~709
Intangible assets, net		69,~~092~~353			64,~~376~~671
Right-of-use lease assets		138,~~861~~420			1310,~~256~~957
Deferred tax asset		310,~~039~~263			16,~~414~~135
Other		1,872			582
Other non-current assets		608			963
Total other assets		37,735			50,777
Non-current assets held for sale		4,828			17,869
Total Assets	$	355,517		$	229,128
Total assets	$	306,173		$	315,275
Liabilities and Shareholders’ Equity
Current Liabilities
Current liabilities
Current portion of lease liability	$	32,~~737~~823		$	32,~~385~~532
Current maturities of long-term debt		2,112			-
Accounts payable		7,028			2,783
Accounts payable		8,891			24,118
Accrued compensation		6,598			4,709
Accrued compensation		5,571			13,619
Accrued expenses		2,197			2,263
Accrued expenses		2,404			6,181
Current liabilities held for sale		17,957			12,065
Factoring liability		6,289			4,391
Total current liabilities		36,603			24,352
Total current liabilities		29,004			51,694
Other liabilities
Other Liabilities
Long-term portion of lease liability		5,934			8,757
Long-term debt, net of current maturities		-			18,666
Non-current liabilities held for sale		7,473			6,403
Long-term portion of lease liability		10,629			10,412
Total liabilities		50,010			39,512
Deferred tax liability		721			774
Shareholders’ equity
Total liabilities		40,354			81,546
Shareholders’ Equity
Preferred stock, $.01 par value; 500,000 shares; no shares issued or outstanding		-			-
Common stock, authorized 50,000,000, $.01 par value; 15,254,725 and 13,818,452 shares issued and outstanding as of September 30, 2023 and 2022, respectively		153			138
Common stock, authorized 50,000,000, $.01 par value; 13,839,675 and 14,229,107 shares issued and outstanding as of September 30, 2025 and September 30, 2024, respectively		138			142
Additional paid-in capital		~~188~~147,~~218~~382			54159,~~539~~580
Accumulated other comprehensive loss		(544	)		(1,898	)
Accumulated other comprehensive income		1,731			1,079
Retained earnings		~~127~~106,~~336~~912			94114,~~803~~962
Total shareholders’ equity		~~315~~256,163			~~147~~275,~~582~~763
Total Liabilities and Shareholders’ Equity	$	~~355~~306,~~517~~173		$	~~229~~315,~~128~~275

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3633

CLEARFIELD, INC.

CLEARFIELD, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

	Year Ended			Year Ended			Year Ended
	September 30,			September 30,			September 30,
	2025			2024			2023
Net sales	$	150,134		$	125,568		$	225,722

Cost of sales		99,597			99,721			145,865

Gross profit		50,537			25,847			79,857

Operating expenses
Selling, general and administrative		48,419			45,081			42,280
Income (loss) from continuing operations		2,118			(19,234	)		37,577

Net investment income		6,549			7,472			5,199
Interest expense		-			-			(170	)

Income (loss) from continuing operations before income taxes		8,667			(11,762	)		42,606

Income tax expense (benefit)		2,357			(3,248	)		8,883
Income (loss) from continuing operations, net of tax		6,310			(8,514	)		33,723

(Loss) from discontinued operations, net of tax		(3,947	)		(3,939	)		(1,190	)
(Loss) from impairment of discontinued operations, net of tax		(10,413	)		-			-

Net (loss) income	$	(8,050	)	$	(12,453	)	$	32,533

(Loss) earnings per share
Basic
Continuing operations	$	0.45		$	(0.58	)	$	2.25
Discontinued operations		(1.03	)		(0.27	)		(0.08	)
Basic (loss) earnings per share	$	(0.58	)	$	(0.85	)	$	2.17

Diluted
Continuing operations	$	0.45		$	(0.58	)	$	2.25
Discontinued operations		(1.03	)		(0.27	)		(0.08	)
Diluted (loss) earnings per share	$	(0.58	)	$	(0.85	)	$	2.17

Weighted average shares outstanding:
Basic		13,989,489			14,582,450			14,975,972
Diluted		13,989,489			14,582,450			15,012,527

CONSOLIDATED STATEMENTS OF EARNINGS

(IN THOUSANDS, EXCEPT SHARE DATA)

	Year Ended			Year Ended			Year Ended
	September 30,			September 30,			September 30,
	2023			2022			2021
Net sales	$	268,720		$	270,883		$	140,755
Cost of sales		183,441			157,936			79,578
Gross profit		85,279			112,947			61,177
Operating expenses
Selling, general and administrative		47,992			49,130			35,943
Income from operations		37,287			63,817			25,234
Net investment income		5,206			328			500
Interest expense		(881	)		(311	)		-
Income before income taxes		41,612			63,834			25,734
Income tax expense		9,079			14,472			5,407
Net income	$	32,533		$	49,362		$	20,327
Net income per share Basic	$	2.17		$	3.58		$	1.48
Net income per share Diluted	$	2.17		$	3.55		$	1.47
Weighted average shares outstanding:
Basic		14,975,972			13,771,665			13,720,699
Diluted		15,012,527			13,905,984			13,784,294

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3734

CLEARFIELD, INC.

CLEARFIELD, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(IN THOUSANDS)

	Year Ended			Year Ended			Year Ended
	September 30,			September 30,			September 30,
	2025			2024			2023
Comprehensive (loss) income:
Net (loss) income	$	(8,050	)	$	(12,453	)	$	32,533
Other comprehensive income, net of tax
Unrealized (loss) gain on available-for-sale investments		(8	)		748			542
Unrealized gain on foreign currency translation		660			875			812
Total other comprehensive income		652			1,623			1,354

Total comprehensive (loss) income	$	(7,398	)	$	(10,830	)	$	33,887

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(IN THOUSANDS)

	Year Ended		Year Ended			Year Ended
	September 30,		September 30,			September 30,
	2023		2022			2021
Comprehensive Income:
Net income	$	32,533	$	49,362		$	20,327
Other comprehensive income (loss), net of tax
Unrealized gain (loss) on available-for-sale investments		542		(1,590	)		-
Unrealized gain (loss) on foreign currency translation		812		(308	)		-
Total other comprehensive income (loss)		1,354		(1,898	)		-
Total comprehensive income	$	33,887	$	47,464		$	20,327

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3835

CLEARFIELD, INC.

CLEARFIELD, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(IN THOUSANDS)

For the year ended September 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		$	159,580		$	1,079	$	114,962		$	275,763
Stock based compensation expense		-			-			5,039			-		-		$	5,039
Issuance of common stock under employee stock purchase plan		23			-			595			-		-		$	595
Issuance of common stock under equity compensation plans, net		112			2			(2	)		-		-		$	-
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		44			-			(689	)		-		-		$	(689	)
Repurchase of common stock		(551	)		(6	)		(16,647	)		-		-		$	(16,653	)
Other comprehensive income		-			-			-			652		-		$	652
Net loss		-			-			-			-		(8,050	)	$	(8,050	)
Balance at September 30, 2025		13,840			138		$	147,382		$	1,731	$	106,912		$	256,163

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the year ended September 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		15,254		$	153		$	188,218		$	(544	)	$	127,336		$	315,163
Stock based compensation expense		-			-			4,641			-			-			4,641
Issuance of common stock under equity compensation plans, net		130			1			(1	)		-			-			-
Issuance of common stock under employee stock purchase plan		24			-			586			-			-			586
Exercise of stock options, net of shares exchanged for payment		1			-			(9	)		-			-			(9	)
Repurchase of shares for payment of withholding taxes for vested restricted stock grants		(16	)		-			(493	)		-			-			(493	)
Repurchase of common stock		(1,164	)		(12	)		(33,362	)		-			-			(33,374	)
Adoption of new accounting pronouncement		-			-			-			-			79			79
Other comprehensive income		-			-			-			1,623			-			1,623
Net loss		-			-			-			-			(12,453	)		(12,453	)
Balance at September 30, 2024		14,229		$	142		$	159,580		$	1,079		$	114,962		$	275,763

(IN THOUSANDS)

For the year ended September 30, 2023									Accumulated other
	Common Stock					Additional			comprehensive			Retained		Total share-
	Shares			Amount		paid-in capital			income (loss)			earnings		holders’ equity
Balance as of September 30, 2022		13,818		$	138	$	54,539		$	(1,898	)	$	94,803	$	147,582
Stock-based compensation expense		-			-		3,578			-			-		3,578
Issuance of common stock under equity compensation plans, net		49			-		954			-			-		954
Issuance of common stock under employee stock purchase plan		13			-		611			-			-		611
Exercise of stock options, net of shares exchanged for payment		11			-		(491	)		-			-		(491	)
Repurchase of shares for payment of withholding taxes for vested restricted stock grants		(17	)		-		(1,220	)		-			-		(1,220	)
Issuance of common stock, net		1,380			15		130,247			-			-		130,262
Other comprehensive income		-			-		-			1,354			-		1,354
Net income		-			-		-			-			32,533		32,533
Balance as of September 30, 2023		15,254		$	153	$	188,218		$	(544	)	$	127,336	$	315,163

For the year ended September 30, 2023									Accumulated other
	Common Stock					Additional			comprehensive			Retained		Total share-
	Shares			Amount		paid-in capital			loss			earnings		holders’ equity
Balance as of September 30, 2022		13,818		$	138	$	54,539		$	(1,898	)	$	94,803	$	147,582
Stock-based compensation expense		-			-		3,578			-			-		3,578
Issuance of common stock under equity compensation plans, net		49			-		954			-			-		954
Issuance of common stock under employee stock purchase plan		13			-		611			-			-		611
Exercise of stock options, net of shares exchanged for payment		11			-		(491	)		-			-		(491	)
Repurchase of shares for payment of withholding taxes for vested restricted stock grants		(17	)		-		(1,220	)		-			-		(1,220	)
Issuance of common stock, net		1,380			15		130,247			-			-		130,262
Other comprehensive income		-			-		-			1,354			-		1,354
Net income		-			-		-			-			32,533		32,533
Balance at September 30, 2023		15,254		$	153	$	188,218		$	(544	)	$	127,336	$	315,163

For the year ended September 30, 2022									Accumulated other
	Common Stock					Additional			comprehensive			Retained		Total share-
	Shares			Amount		paid-in capital			loss			earnings		holders’ equity
Balance as of September 30, 2021		13,732		$	137	$	58,246		$	-		$	45,441	$	103,824
Stock-based compensation expense		-			-		2,339			-			-		2,339
Issuance of common stock under equity compensation plans, net		26			-		-			-			-		-
Issuance of common stock under employee stock purchase plan		13			-		544			-			-		544
Exercise of stock options, net of shares exchanged for payment		60			1		(5,184	)		-			-		(5,183	)
Repurchase of shares for payment of withholding taxes for vested restricted stock grants		(13	)		-		(1,406	)		-			-		(1,406	)
Other comprehensive loss		-			-		-			(1,898	)		-		(1,898	)
Net income		-			-		-			-			49,362		49,362
Balance at September 30, 2022		13,818		$	138	$	54,539		$	(1,898	)	$	94,803	$	147,582

For the year ended September 30, 2021									Accumulated other
	Common Stock					Additional			comprehensive		Retained		Total share-
	Shares			Amount		paid-in capital			loss		earnings		holders’ equity
Balance as of September 30, 2020		13,650		$	137	$	57,503		$	-	$	25,114	$	82,754
Stock-based compensation expense		-			-		1,280			-		-		1,280
Issuance of common stock under equity compensation plans, net		36			-		-			-		-		-
Issuance of common stock under employee stock purchase plan		24			-		383			-		-		383
Exercise of stock options, net of shares exchanged for payment		34			-		(458	)		-		-		(458	)
Repurchase of shares for payment of withholding taxes for vested restricted stock grants		(12	)		-		(462	)		-		-		(462	)
Net income		-			-		-			-		20,327		20,327
Balance at September 30, 2021		13,732		$	137	$	58,246		$	-	$	45,441	$	103,824

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3936

CLEARFIELD, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)

CLEARFIELD, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

	Year Ended			Year Ended			Year Ended
	September 30,			September 30,			September 30,
	2025			2024			2023
Cash flows from operating activities (continuing)
Net (loss) income	$	(8,050	)	$	(12,453	)	$	32,533
Loss from discontinued operations, net of tax		3,947			3,939			1,190
Loss from impairment of discontinued operations, net of tax		10,413			-			-
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		6,121			5,924			4,595
(Gain) loss on sale of assets		(284	)		10			3
Amortization of premium and discount on investments, net		(1,777	)		(4,406	)		(3,512	)
Deferred taxes		(4,244	)		(3,358	)		(2,002	)
Stock-based compensation		4,597			4,375			3,578
Changes in operating assets and liabilities, net of acquired amounts:
Accounts receivable		(3,548	)		6,473			27,090
Inventories, net		13,643			26,458			(11,145	)
Other assets		173			(9,456	)		(309	)
Accounts payable and accrued expenses		5,562			264			(27,425	)
Net cash provided by operating activities (continuing)		26,553			17,770			24,596

Cash flows from investing activities (continuing)
Purchases of property, plant and equipment and intangible assets		(4,743	)		(7,985	)		(7,439	)
Proceeds from sale of property and equipment		903			45			-
Purchases of investments		(119,074	)		(159,393	)		(210,923	)
Proceeds from maturities of investments		115,866			162,064			107,060
Net cash used in investing activities (continuing)		(7,048	)		(5,269	)		(111,302	)

Cash flows from financing activities (continuing)
Repayment of long-term debt		-			-			(16,700	)
Proceeds from issuance of common stock under employee stock purchase plan		595			586			611
Repurchase of shares for payment of withholding taxes for vested restricted stock grants		(494	)		(493	)		(1,220	)
Withholding related to exercise of stock options		(689	)		(9	)		(491	)
Net proceeds from issuance of common stock		-			-			130,262
Issuance of stock under equity compensation plans		-			1			954
Repurchase of common stock		(16,653	)		(33,374	)		-
Net cash (used in) provided by financing activities (continuing)		(17,241	)		(33,289	)		113,416
Cash flows from discontinued operations
Net cash provided by (used in) operating activities		2,897			4,453			(6,172	)
Net cash used in investing activities		(1,796	)		(1,627	)		(945	)
Net cash provided by (used in) financing activities		3,000			(3,617	)		1,586
Net cash provided by (used in) discontinued operations		4,101			(791	)		(5,531	)

Effect of exchange rates on cash and cash equivalents		(97	)		(81	)		(2	)
Net increase (decrease) in cash and cash equivalents		6,268			(21,660	)		21,177
Change in cash held for sale		1,077			(19	)		(1,011	)
Cash and cash equivalents, beginning of period		14,148			35,827			15,661
Cash and cash equivalents, end of period	$	21,493		$	14,148		$	35,827
Supplemental disclosures for cash flow information
Cash paid for income taxes	$	1,670		$	160		$	12,760
Cash paid for interest	$	-		$	-		$	170
Right of use assets obtained through lease liabilities	$	-		$	4,364		$	-
Non-cash financing activities
Cashless exercise of stock options	$	2,533		$	19		$	566

	Year Ended			Year Ended			Year Ended
	September 30,			September 30,			September 30,
	2023			2022			2021
Cash flows from operating activities
Net income	$	32,533		$	49,362		$	20,327
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		6,054			3,426			2,302
Change in allowance for doubtful accounts		-			-			210
Amortization of discount on investments		(3,512	)		(42	)		(7	)
Deferred taxes		(2,114	)		(326	)		(187	)
Stock-based compensation		3,578			2,339			1,280
Changes in operating assets and liabilities, net of acquired amounts:
Accounts receivable		26,277			(24,234	)		(9,151	)
Inventories, net		(15,083	)		(43,744	)		(13,116	)
Other assets		(1,466	)		(282	)		(531	)
Accounts payable and accrued expenses		(26,257	)		14,502			9,776
Net cash provided by operating activities		20,010			1,001			10,903
Cash flows from investing activities
Purchases of property, plant and equipment and intangible assets		(8,384	)		(9,148	)		(2,046	)
Purchases of investments		(210,923	)		(248	)		(24,809	)
Proceeds from sales and maturities of investments		107,060			17,386			13,255
Business acquisition, net of cash acquired		-			(16,187	)		-
Net cash used in investing activities		(112,247	)		(8,197	)		(13,600	)
Cash flows from financing activities
Issuance (Repayment) of long-term debt		(16,700	)		16,700			-
Proceeds from issuance of common stock under employee stock purchase plan		611			544			384
Repurchase of shares for payment of withholding taxes for vested restricted stock grants		(1,220	)		(1,406	)		(462	)
Withholding related to exercise of stock options		(491	)		(5,183	)		(458	)
Issuance of stock under equity compensation plans		954			-			-
Net proceeds from issuance of common stock		130,262			-			-
Net cash provided by (used in) financing activities		113,416			10,655			(536	)
Effect of exchange rates on cash		(2	)		(24	)		-
Increase (decrease) in cash and cash equivalents		21,177			3,434			(3,233	)
Cash and cash equivalents, beginning of year		16,650			13,216			16,450
Cash and cash equivalents, end of year	$	37,827		$	16,650		$	13,216
Supplemental disclosures for cash flow information
Cash paid during the year for income taxes	$	12,967		$	13,744		$	5,505
Cash paid for interest	$	463		$	119		$	-
Non-cash financing activities
Cashless exercise of stock options	$	566		$	1,624		$	1,271

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4037

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Summary of Significant Accounting Policies

Description of Business: Clearfield, Inc. ~~and~~ ~~subsidiaries~~ (the “Company”) manufactures a broad range of fiber connectivity products to customers throughout the United States and internationally,. ~~and~~Our ~~since~~continuing ~~the~~operations ~~July~~are ~~26,~~comprised ~~2022, acquisition~~ of ~~Nestor~~one ~~Cables~~reportable ~~Oy, manufactures fiber optic and copper telecommunication cables and equipment through its Finnish subsidiaries~~segment. ~~Refer to Note 11 for further information regarding the acquisition of Nestor Cables.~~

WeOn ~~are~~November ~~engaged~~11, in2025, ~~global~~the ~~operations.~~Company ~~Our~~completed ~~operations~~the ~~currently~~sale ~~comprise~~ of ~~two~~its ~~reportable~~Nestor ~~segments:~~Cables ~~the~~business. ~~Clearfield~~In ~~segment,~~connection ~~(referred~~with tothis ~~herein as “Clearfield”) and~~sale, ~~since~~the ~~July~~historical ~~26,~~results ~~2022,~~of the Nestor Cables ~~segment~~business ~~(referred~~and tocertain ~~herein~~assets asand ~~“Nestor~~liabilities ~~Cables”~~of orthis ~~“Nestor”).~~business ~~Prior~~are toreported ~~July~~in ~~26,~~our ~~2022,~~consolidated wefinancial ~~were~~statements ~~considered~~as toheld befor insale/discontinued ~~a single operating segment structure~~operations.

The Company’s products include fiber distribution systems, optical components, Outside Plant (“OSP”) cabinets, and fiber and copper cable assemblies that serve the communication service provider markets, including Fiber-to-the-Premises (“FTTP”), large enterprise, and original equipment manufacturer (“OEM”) markets.

Principles of Consolidation: The 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.

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. For those transactions where all performance obligations will be satisfied within one year or less, we apply the practical expedient outlined in ASC 606-10-32-18, which allows us not to adjust promised consideration for the effects of a significant financing component if we expect at contract inception that the period between when we transfer the promised products to a customer and when the customer pays for those products will be one year or less. We recognize revenue by transferring the promised products to the customer, in an amount that reflects the consideration we expect to receive in exchange for those products and services, with substantially all revenue recognized at the point in time when the customer obtains control of the products upon shipment. 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.

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)	September 30, ~~2023~~2025		September 30, ~~2022~~2024
Cash and cash equivalents:
Cash including money market accounts	$	11,360	$	16,635
Cash, including money market accounts	$	5,732	$	3,770
Money market funds		2615,~~467~~761		1510,378
Total cash and cash equivalents	$	3721,~~827~~493	$	1614,~~650~~148

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.

Investments: The Company ~~currently~~ invests ~~its excess cash~~ in ~~bank~~ certificates of deposit (“CDs”) that are fully insured by the Federal Deposit Insurance Corporation (“FDIC”) and United States Treasury (“Treasuries”) securities with terms of not more than five years, as well as money market ~~accounts~~funds. ~~Historically,~~The ~~the~~ Company’s investment portfolio ~~had~~is ~~been~~ classified as ~~held-to-maturity and recorded at amortized cost. During the second quarter of fiscal 2022, the Company sold investments and has reclassified its investment portfolio to~~ available-for-sale~~, which is reported 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 consolidated statement of earnings.

Foreign Currency Translation: Balance sheet and statement of earnings of our international subsidiaries are measured using local currency as their functional currency. Assets and liabilities of these operations are translated at the exchange rates in effect at each fiscal year-end. Statements of operations accounts are translated at the average rates of exchange prevailing during the year. Translation adjustments arising from the use of differing exchange rates from period to period are included as a cumulative translation adjustment in shareholders’ equity.38

41Foreign Currency Translation: Balance sheets and statements of earnings of our international subsidiaries are measured using local currency as their functional currency. Assets and liabilities of these operations are translated at the exchange rates in effect at each fiscal year-end. Statements of earnings accounts are translated at the average rates of exchange prevailing during the year. Translation adjustments arising from the use of differing exchange rates from period to period are included as a cumulative translation adjustment in shareholders’ equity.

Comprehensive ~~Income~~ (Loss) Income: Total comprehensive (loss) income and the components of accumulated other comprehensive ~~loss~~income are presented in the Consolidated Statements of Comprehensive (Loss) Income and the Consolidated Statements of Shareholders'’ Equity. Accumulated other comprehensive ~~loss~~income is composed of foreign currency translation effects and unrealized gains and losses on available-for-sale marketable debt securities. We use the individual item approach for releasing income tax effects from accumulated other comprehensive ~~loss~~income.

Fair Value of Financial Instruments: The financial statements include the following financial instruments: cash and cash equivalents,; investments,; accounts receivable; and accounts payable. The Company estimates the fair value of investments as of the balance sheet date. All other financial instruments’ carrying values approximate fair values because of the short-term nature of the instruments.

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. ~~The~~On October 1, 2023, the Company ~~does~~adopted ~~not~~the ~~charge~~cumulative ~~interest~~expected oncredit ~~past~~loss ~~due~~model ~~receivables~~(“CECL”). ~~The~~Upon adoption of CECL, the Company ~~determines~~measures ~~its~~the allowance for ~~doubtful~~credit ~~accounts~~losses byusing ~~considering~~an aexpected ~~number~~credit ofloss ~~factors~~model, ~~including~~which uses a lifetime expected credit loss allowance for all accounts receivable. To measure the ~~length~~expected ofcredit ~~time~~losses, ~~trade~~accounts ~~receivables~~receivable are ~~past~~grouped ~~due,~~based ~~the~~on ~~Company’s~~shared ~~previous~~credit ~~loss~~risk ~~history,~~characteristics and the ~~customer’s~~days ~~current~~past ~~ability~~due. toIn ~~pay~~calculating ~~its~~an ~~obligation~~allowance tofor credit losses, the Company uses its historical experience, external indicators, and ~~the~~forward-looking ~~condition~~information ofto ~~the~~calculate ~~general~~expected ~~economy~~credit ~~and~~losses ~~the~~using ~~industry~~an asaging ~~whole~~method. The Company ~~writes~~assesses ~~off~~impairment of accounts receivable ~~when~~on a collective basis as they ~~become~~possess ~~uncollectible;~~shared ~~payments~~credit ~~subsequently~~risk ~~received~~characteristics which have been grouped based on ~~such~~the ~~receivables~~days past due. The expected loss rates are ~~credited~~based on the Company’s historical credit losses experience. The historical loss rates are adjusted to reflect current and forward-looking information. As of September 30, 2025, the Company’s allowance for ~~doubtful~~credit ~~accounts~~losses was $0.

~~The~~As of September 30, 2023, prior to the adoption of CECL, the Company’s allowance for doubtful accounts ~~activity~~was ~~for~~$79,000. Upon the ~~years~~adoption ~~ended~~of ~~September 30~~CECL, ~~2023,~~the ~~and~~prior ~~2022~~allowance isfor doubtful accounts was recorded as ~~follows:~~a benefit to beginning retained earnings.

Year Ended	Balance at Beginning of Year		Additions (Recoveries) Charged to Costs and Expenses		Less Write-offs		Balance at End of Year
September 30, 2023	$	79,000	$	-	$	-	$	79,000
September 30, 2022	$	79,000			$	-	$	79,000

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:

	September 30, 2023			September 30, 2022
(In thousands)	September 30, 2025			September 30, 2024
(In thousands)
Raw materials	$	37,993			50,193
Raw materials	$	73,657		$	69,142
Work-in-process		2,369			1,088
Work-in-process		1,462			4,592
Finished goods		14,107			19,524
Finished goods		29,696			10,803
Inventories, gross		54,469			70,805
Inventories, gross		104,815			84,537
Inventory reserve		(12,438	)		(14,709	)
Inventory reserve		(6,760	)		(2,329	)
Inventories, net	$	42,031			56,096
Inventories, net	$	98,055		$	82,208

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 to write-down the inventory to net realizable value 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, or if new products are not accepted by the market, or if products are end of life through life cycle management.

4239

Property, Plant and Equipment: Property, plant and equipment are recorded at cost. Significant additions or improvements extending asset lives are capitalized, while repairs and maintenance are charged to expense when incurred. Depreciation is provided in amounts sufficient to relate the cost of assets to operations over their estimated useful lives. Leasehold improvements are amortized over the shorter of the remaining term of the lease or estimated life of the asset.

Estimated useful lives of the assets are as follows:

	Years
Equipment		3 – 15
Leasehold improvements	Shorter of remaining life of lease or 7-10	~~7-10 or life of lease~~
Vehicles		3

Property, plant and equipment consist of the following:

(In thousands)	September 30, ~~2023~~2025			September 30, ~~2022~~2024
Manufacturing equipment	$	2317,~~580~~176		$	1817,~~418~~073
Office equipment		4,~~560~~457			4,~~174~~040
Leasehold improvements		6,~~107~~259			56,~~000~~078
Vehicles		~~446~~550			~~340~~439
Construction in progress		2,~~447~~464			16,~~715~~287
Property, plant and equipment, gross		3730,~~140~~906			2933,~~647~~917
Less accumulated depreciation		15,613			11,418
Less: Accumulated depreciation		(21,224	)		(18,046	)
Property, plant and equipment, net	$	219,~~527~~682		$	1815,~~229~~871

Depreciation expense for the years ended September 30, ~~2023~~2025, ~~2022~~2024, and ~~2021~~2023 was $43,~~915~~920,000, $24,~~647~~528,000, and $13,~~699~~623,000, respectively.

Goodwill and Intangible Assets: 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. Goodwill is tested for impairment annually at fiscal year-end, or more frequently when events or changes in circumstances indicate that the asset might be impaired. Examples of such events or circumstances include, but are not limited to, a significant adverse change in legal or business climate, an adverse regulatory action or unanticipated competition. 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. ~~During the years ended September 30, 2023, 2022, and 2021, there were no triggering events that indicated goodwill or intangible assets may be impaired.~~

If the carrying amount of a reporting unit exceeds its fair value, the Company would measure the possible goodwill impairment loss based on an allocation of the estimate of fair value of the reporting unit to all the underlying assets and liabilities of the reporting unit, including any previously unrecognized intangible assets. The excess of the fair value of a reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. An impairment loss is recognized to the extent that a reporting unit'’s recorded goodwill exceeds the implied fair value of goodwill. An impairment loss would be based on significant estimates and judgments, and if the facts and circumstances change, a potential impairment could have a material impact on the Company’s financial statements.

~~No impairment of goodwill or intangible assets has occurred during the years ended September 30, 2023, 2022, and 2021, respectively.~~40

~~The~~No ~~Company~~impairment ~~capitalizes~~of ~~legal costs incurred to obtain patents. Once accepted by either~~ the ~~U.S.~~goodwill ~~Patent Office~~ or ~~the~~intangible ~~equivalent~~assets ~~office~~related ofto acontinuing ~~foreign~~operations ~~country,~~has ~~these~~occurred ~~legal~~during ~~costs are amortized using~~ the ~~straight-line~~years ~~method~~ended ~~over~~September ~~the~~30, ~~remaining~~2025, ~~estimated lives~~2024, ~~not~~and ~~exceeding~~2023, ~~20 years~~respectively. AsRefer ofto ~~September~~Note ~~30,~~11 ~~2023,~~for ~~the~~discussion ~~Company~~of ~~has~~the 47discontinued ~~patents~~operations ~~granted~~ and ~~multiple~~impairment ~~pending~~of ~~applications~~assets ~~both~~held ~~inside~~for ~~and~~sale ~~outside~~of the ~~United~~Nestor ~~States~~Cables business.

43The changes in the carrying amount of goodwill for fiscal years 2025 and 2024 were as follows:

In addition, the Company has various finite life intangible assets, most of which were acquired as a result of the acquisition of a portfolio of Telcordia certified outdoor active cabinet products from Calix, Inc. (“Calix”) during fiscal year 2018 and the acquisition of Nestor Cables as of July 26, 2022. Refer to Note 11 for further information regarding the acquisition of Nestor Cables. Finite life intangible assets as of September 30, 2023, and 2022 are as follows:

(In thousands)	Total
Balance as of September 30, 2023	$	6,528
Currency translation effect on foreign goodwill balances		99
Balance as of September 30, 2024	$	6,627
Currency translation effect on foreign goodwill balances		104
Nestor Cables goodwill impairment		(2,022	)
Balance as of September 30, 2025	$	4,709

	September 30, 2023
(In thousands)	Useful Life (Years)		Gross Carrying Amount		Accumulated Amortization		Net Book Value Amount
Customer relationships		15	$	4,894	$	1,582	$	3,312
Certifications		8		584		267		317
Trademarks		8-10		1,333		700		633
Patents		20		1,119		165		954
Developed Technology		10		311		22		289
Other		5		6		6		-
Software		1-3		2,613		2,026		587
Totals			$	10,860	$	4,768	$	6,092

Capitalized Software: In accordance with ASC 350-40, “Internal-use Software,” the Company capitalizes certain costs incurred in connection with developing or obtaining internal-use software. Costs incurred in the preliminary project stage are expensed. All direct costs incurred to develop internal-use software during the development stage are capitalized and amortized using the straight-line method over the estimated useful life, generally 2 to 15 years. Costs such as maintenance and training are expensed as incurred. Research and development costs are also expensed as incurred.

	September 30, 2022
(In thousands)	Useful Life (Years)		Gross Carrying Amount		Accumulated Amortization		Net Book Value Amount
Customer relationships		15	$	4,833	$	1,273	$	3,559
Certifications		8		584		133		451
Trademarks		8-10		1,306		586		720
Patents		20		931		118		813
Developed Technology		10		295		5		290
Other		5		6		6		-
Software		1-3		2,452		1,909		543
Totals			$	10,407	$	4,030	$	6,376

The Company capitalizes legal costs incurred to obtain patents. Once accepted by either the U.S. Patent 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 September 30, 2025, the Company has 63 patents granted and multiple pending applications both inside and outside the United States.

~~Amortization~~In ~~expense~~addition, ~~related~~the toCompany ~~these~~has various finite life intangible assets, ~~for~~most of which were acquired as a result of the ~~years~~acquisition ~~ended~~of ~~September~~a ~~30,~~portfolio ~~2023,~~of ~~2022,~~the ~~and~~active ~~2021~~cabinet ~~was~~products ~~$1,128,000,~~from ~~$766~~Calix,~~000,~~ ~~and~~Inc. ~~$602,000,~~(“Calix”) ~~respectively~~during fiscal year 2018.

~~Our~~Finite ~~future~~life ~~estimated~~intangible ~~amortization~~assets ~~expense for intangibles is~~ as ~~follows as~~ of September 30, ~~2023~~2025, and 2024 are as follows:

(In thousands)	Estimated amortization expense
	September 30, 2025
FY 2024	$	1,148
(In thousands)	Useful Life (Years)		Gross Carrying Amount		Accumulated Amortization		Net Book Value Amount
FY 2025		698
Customer relationships		15	$	3,742	$	1,902	$	1,840
FY 2026		563
Certifications		8		1,068		1,017		51
FY 2027		469
Trademarks		8-10		563		537		26
FY 2028		460
Patents		20		1,443		278		1,165
Thereafter		2,754
Software		1-10		9,101		2,830		6,271
Total	$	6,092
Totals			$	15,917	$	6,564	$	9,353

	September 30, 2024
(In thousands)	Useful Life (Years)		Gross Carrying Amount		Accumulated Amortization		Net Book Value Amount
Customer relationships		15	$	3,742	$	1,653	$	2,089
Certifications		8		1,068		884		184
Trademarks		8-10		563		466		97
Patents		20		1,288		219		1,069
Software		1-3		3,475		2,243		1,232
Totals			$	10,136	$	5,465	$	4,671

Amortization expense related to these assets for the years ended September 30, 2025, 2024, and 2023 was $2,194,000, $1,380,000, and $970,000, respectively.

Our future estimated amortization expense for intangibles is as follows as of September 30, 2025:

(In thousands)	Estimated amortization expense
FY 2026	$	1,588
FY 2027		1,195
FY 2028		989
FY 2029		901
FY 2030		694
Thereafter		3,986
Total	$	9,353

Impairment of Long-Lived Assets: The Company assesses potential impairments to its long-lived assets or asset groups when there is evidence that events occur or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recovered. An impairment loss is recognized when the carrying amount of the long-lived asset or asset group is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset or asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset or asset group.

Any required impairment loss is measured as the amount by which the carrying amount of a long-lived asset or asset group exceeds its fair value and is recorded as a reduction in the carrying value of the related asset or asset group and a charge to operating results. No impairment of the long-lived assets related to continuing operations occurred during the years ended September 30, ~~2023~~2025, ~~2022~~2024, or ~~2021~~2023, respectively. Refer to Note 11 for discussion of the discontinued operations and impairment of assets held for sale of the Nestor Cables business.

Income Taxes: The Company records income taxes in accordance with the liability method of accounting. Deferred taxes are recognized for the estimated taxes ultimately payable or recoverable based on enacted tax law. The Company establishes a valuation allowance to reduce the deferred tax assets when it is more likely than not that a deferred tax asset will not be realizable. Changes in tax rates are reflected in the tax provision as they occur.

In accounting for uncertainty in income taxes, we recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. As of September 30, ~~2023~~2025, and ~~2022~~2024, the Company did not have any unrecognized tax benefits. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. We do not expect any material changes in our unrecognized tax benefits over the next 12 months.

Stock-Based Compensation: We measure and recognize compensation expense for all stock-based awards at fair value over the requisite service period. We use the Black-Scholes option pricing model to determine the fair value of options. For restricted stock and performance share unit grants, fair value is determined as the ~~average~~closing price of the Company’s stock on the date of grant. Equity-based compensation expense is broken out between cost of sales and selling, general and administrative expenses based on the classification of the employee. The determination of fair value of stock-based awards on the date of grant using an option-pricing model is affected by our stock price as well as by assumptions regarding a number of subjective variables. These variables include, but are not limited to, the expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors.

The expected terms of the options are based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected life at grant date. Volatility is based on historical and expected future volatility of the Company’s stock. The Company has not historically issued any dividends and does not expect to in the future. Forfeitures for both option and restricted stock grants are estimated at the time of the grant and revised in subsequent periods if actual forfeitures differ from estimates.

Share Repurchase Program: ~~Effective~~On ~~January~~April 2730, ~~2022~~2024, the Company’s ~~reinstated~~board ~~its~~of ~~stock~~directors increased the Company’s share repurchase program ~~that~~from ~~had~~$40,000,000 ~~been~~to ~~suspended~~$65,000,000 incommencing ~~April~~May ~~2020~~7, ~~due~~2024, toand ~~COVID~~continuing ~~uncertainty.~~for Inan ~~addition,~~indefinite ~~effective~~period ~~January~~or ~~27,~~until ~~2022,~~terminated by the ~~Company’s~~ board of directors. ~~increased~~During the ~~share~~year ~~repurchase~~ended ~~program~~September by30, an2025, ~~additional~~the ~~$10~~Company ~~million~~repurchased ~~to an aggregate of $22 million~~550,766 ~~from~~shares ~~the~~for ~~previous~~approximately $~~12 million~~16,530,000. As of September 30, ~~2023~~2025, we have repurchased an aggregate of ~~565~~2,~~590~~280,546 shares for approximately $756,~~019~~607,000, leaving approximately $148,~~981~~393,000 available within our $2265,000,000 stock repurchase program. The repurchase program does not obligate the Company to repurchase any particular amount of common stock during any period. The ~~repurchase~~repurchases will be funded by cash on hand. During the year ended September 30, 2023, the Company did not repurchase any shares under the stock repurchase program. As of September 30, 2022, we had repurchased an aggregate of 565,590 shares for approximately $7,019,000, leaving approximately $14,981,000 available within our $22,000,000 stock repurchase program.

On November 7, 2023, the Company's board of directors increased the share repurchase program to an aggregate of 40 million from the previous $22 million, leaving approximately $32,980,671 available for repurchase. 42

The Company is authorized to issue 50,000,000 shares of common stock at $.01 par value and 5,000,000 undesignated shares. From the undesignated shares, 500,000 shares have been designated as Series B Junior Participating Preferred Shares and none of such shares have been issued or are outstanding. The ~~Board~~board of ~~Directors~~directors may, by resolution, establish from the remaining undesignated shares different classes or series of shares and may fix the relative rights and preferences of shares in any class or series.

Research and Development Costs: Research and development costs amounted to $32,~~115~~422,000, $~~895~~3,000,000, and $13,~~243~~115,000 for the years ended September 30, ~~2023~~2025, ~~2022~~2024, and ~~2021~~2023, respectively, and are charged to expense when incurred.

45Advertising Costs: Advertising costs amounted to $355,000, $464,000, and $554,000 for the years ended September 30, 2025, 2024, and 2023, respectively, and are charged to expense when incurred.

~~Advertising~~(Loss) ~~Costs~~Earnings Per Share: ~~Advertising~~Basic ~~costs~~and ~~amounted~~diluted to(loss) ~~$609,000,~~earnings ~~$537,000,~~per ~~and~~share ~~$436,000~~is ~~for~~computed by dividing net (loss) income by the ~~years~~weighted ~~ended~~average ~~September~~number ~~30,~~of ~~2023,~~common ~~2022,~~shares outstanding and ~~2021,~~the ~~respectively,~~weighted ~~and~~average ~~are~~number ~~charged~~of todilutive ~~expense~~shares ~~when~~outstanding, ~~incurred~~respectively.

~~Net~~Weighted ~~Income Per Share: Basic and diluted net income per share is computed by dividing net income by the weighted~~ average ~~number of~~ common shares outstanding ~~and~~for the ~~weighted~~years ~~average~~ended ~~number~~September of30, ~~dilutive~~2025, ~~shares outstanding~~2024, ~~respectively.~~and 2023 were as follows:

Weighted average common shares outstanding for the years ended September 30, 2023, 2022, and 2021 were as follows:

Year ended September 30, (In thousands except share data)	2025			2024			2023
Net (loss) income	$	(8,050	)	$	(12,453	)	$	32,533
Net income (loss) from continuing operations		6,310			(8,514	)		33,723
Weighted average common shares		13,989,489			14,582,450			14,975,972
Dilutive potential common shares		-			-			36,555
Weighted average dilutive common shares outstanding		13,989,489			14,582,450			15,012,527
(Loss) earnings per share:
Basic
Continuing operations	$	0.45		$	(0.58	)	$	2.25
Discontinued operations		(1.03	)		(0.27	)		(0.08	)
Basic (loss) earnings per share	$	(0.58	)	$	(0.85	)	$	2.17
Diluted
Continuing operations	$	0.45		$	(0.58	)	$	2.25
Discontinued operations		(1.03	)		(0.27	)		(0.08	)
Diluted (loss) earnings per share	$	(0.58	)	$	(0.85	)	$	2.17

Year ended September 30, (In thousands except share data)	2023		2022		2021
Net income	$	32,533	$	49,362	$	20,327
Weighted average common shares		14,975,972		13,771,665		13,720,699
Dilutive potential common shares		36,555		134,319		63,593
Weighted average dilutive common shares outstanding		15,012,527		13,905,984		13,784,294
Earnings per share:
Basic	$	2.17	$	3.58	$	1.48
Diluted	$	2.17	$	3.55	$	1.47

For the fiscal year ended September 30, 2025, 366,118 stock options, as well as 50,747 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 fiscal year ended September 30, 2024, 364,104 stock options were not included in the computation of diluted net loss per share because the effect would have been anti-dilutive. For the fiscal year ended September 30, 2023, 243,749 stock options were not included in the computation of diluted net loss per share because the effect would have been anti-dilutive.

There were no antidilutive shares for the years ended September 30, 2023, 2022, or 2021.

Use of Estimates: The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related revenues and expenses and disclosure about contingent assets and liabilities at the date of the financial statements. Significant estimates include the rebates related to revenue recognition, stock-based compensation and the valuation of inventory, long-lived assets, finite lived intangible assets and goodwill. Actual results may differ materially from these estimates.

Reclassification: For the purposes of comparability, certain prior period amounts have been reclassified to conform to current period classification. There was no impact to prior period net income or shareholders’ equity.43

~~New~~Recently Adopted Accounting Pronouncements: On October 1, 2023, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standard Update (“ASU”) No. 2016-13, Measurement of Credit Losses on Financial Instruments, and subsequent amendments to the initial guidance: ASU No. 2018-19, ASU No. 2019-04, ASU No. 2019-05, and ASU No. 2020-02 (collectively, Topic 326). This guidance introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses (CECL). The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost. The Company adopted Topic 326 using the modified retrospective method for all financial assets measured at amortized cost, which are primarily trade accounts receivable for the Company. Results for reporting periods beginning after October 1, 2023, are presented under Topic 326 while prior period amounts continue to be reported in accordance with previously applicable U.S. GAAP. The impact of adopting Topic 326 as of October 1, 2023, was not material to the consolidated financial statements.

InDuring ~~June 2016,~~ the ~~FASB~~year ~~issued~~ended ~~ASU~~September ~~2016-13~~30, ~~Measurement of Credit Losses on Financial Instruments. In November 2018~~2025, the ~~FASB~~Company ~~issued~~adopted ~~update~~ ASU ~~2018~~No. 2023-1907, ~~that~~Segment ~~clarifies~~Reporting ~~the~~(Topic ~~scope~~280): ofImprovements ~~the~~to ~~standard~~Reportable inSegment ~~the amendments in ASU 2016-13~~Disclosures. This ~~guidance~~update ~~introduces~~enhances asegment ~~new~~reporting ~~model~~by ~~for~~requiring ~~recognizing~~additional ~~credit~~disclosures, ~~losses~~including ondisclosure ~~financial~~of ~~instruments~~significant ~~based~~segment onexpenses, anidentification ~~estimate~~ of ~~current~~the ~~expected~~Chief ~~credit~~Operating ~~losses.~~Decision ~~Financial~~Maker ~~instruments~~(CODM) ~~impacted~~and ~~include~~their ~~accounts~~use ~~receivable,~~of ~~other~~segment ~~financial~~profit ~~assets~~or ~~measured~~loss atmeasures, ~~amortized cost~~ and ~~other~~enhanced ~~off-balance~~interim ~~sheet~~reporting ~~credit exposures~~requirements. The ~~new guidance is effective for the~~ Company ~~beginning~~applied in the ~~first~~guidance ~~quarter~~retrospectively ofto ~~fiscal~~all ~~2024,~~periods ~~with early adoption permitted~~presented. ~~The~~These ~~Company~~changes ~~has~~did ~~evaluated~~not ~~the~~ impact of the ~~adoption~~Company’s ~~of ASU 2016-13 on its~~ consolidated financial ~~statements~~results ~~and~~but ~~determined~~improved ~~that~~transparency ~~the~~for ~~adoption~~users of the ~~new~~financial ~~standard~~statements. ~~would~~See ~~not~~Note ~~have~~12 ato ~~material impact on~~ the ~~Company's~~ consolidated financial statements for further details.

New Accounting Pronouncements Not Yet Adopted: 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.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU No. 2024-03 addresses the disaggregation of income statement expenses 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. 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.

In September 2025, the FASB issued ASU No. 2025-06, Targeted Improvements to the Accounting for Internal-Use Software. The ASU replaces the current stage-based capitalization model with a principles-based approach that permits capitalization of internal-use software costs once (1) management has authorized and committed to fund the project and (2) it is probable the project will be completed and the software will function as intended. Costs incurred while significant development uncertainty exists must be expensed as incurred. ASU 2025-06 can be applied prospectively, retrospectively, or using a modified retrospective approach. The Company is evaluating its disclosure approach for ASU 2025-06 and anticipates adopting the standard for the annual period starting October 1, 2028.

Note 2. Stock Based Compensation

Stock-Based Compensation: The Company’s stock-based compensation plans are administered by the Compensation Committee of the board of directors, which selects persons to receive awards and determines the number of shares subject to each award and the terms, conditions, performance measures and other provisions of the award.

On February 23, 2023, the Company’s shareholders approved the Clearfield, Inc. 2022 Stock Compensation Plan (the “2022 Plan”). The 2022 Plan became effective on the date of shareholder approval, and no further awards may be made under the Clearfield, Inc. Amended and Restated 2007 Stock Compensation Plan (the “Prior Plan”) following the effective date of the 2022 Plan. The total number of shares of stock reserved and available for distribution under the 2022 Plan upon approval was 1,461,461 shares, which includes the number of shares remaining for grant and delivery under the Prior Plan, plus any shares subject to outstanding awards under the Prior Plan as of the effective date of the 2022 Plan that were forfeited, cancelled, or settled for cash.

4644

~~As of September 30, 2023, $4,445,000 of total unrecognized compensation expense related to non-vested awards is expected to be recognized over a period of approximately 2.9 years.~~ The Company recorded related compensation expense for the years ended September 30, ~~2023~~2025, ~~2022~~2024, and ~~2021~~2023 of $34,~~578~~597,000, $24,~~339~~375,000, and $13,~~280~~578,000, respectively. For the year ended September 30, ~~2023~~2025, $34,~~407~~434,000 of this expense was included in selling, general and administrative expense and $~~171~~163,000 was included in cost of sales. For the year ended September 30, ~~2022~~2024, $24,~~213~~191,000 of this expense was included in selling, general and administrative expense and $~~126~~184,000 was included in cost of sales. For the year ended September 30, ~~2021~~2023, $13,~~223~~412,000 of this expense was included in selling, general and administrative expense and $57166,000 was included in cost of sales. As of September 30, 2025, $5,707,000 of total unrecognized compensation expense related to non-vested awards is expected to be recognized over a period of approximately 2.1 years.

Stock Options: The Company uses the Black-Scholes option pricing model to determine the fair value of options granted. During the fiscal year ended September 30, ~~2023~~2025, the Company granted employees non-qualified stock options to purchase an aggregate of 4038,~~266~~198 shares of common stock with a weighted average contractual term of five years, a weighted average three-year vesting term, and a weighted average exercise price of $6430.3890. During the fiscal year ended September 30, ~~2022~~2024, the Company granted employees non-qualified stock options to purchase an aggregate of 62118,~~730~~706 shares of common stock with a weighted average contractual term of five years, a weighted average three-year vesting term, and a weighted average exercise price of $6626.4884. During the fiscal year ended September 30, ~~2021~~2023, the Company granted employees non-qualified stock options to purchase an aggregate of ~~105~~40,~~089~~266 shares of common stock with a weighted average contractual term of 5five years, a ~~3-year~~ weighted average three-year vesting term, and ana weighted average exercise price of $2364.7438.

The fair value of stock option awards during the year ended September 30, ~~2023~~2025, ~~2022~~2024, and ~~2021~~2023 was estimated as of the respective grant dates using the assumptions listed below:

	Year ended September 30, 2023			Year ended September 30, 2022			Year ended September 30, 2021
	Year ended September 30, 2025			Year ended September 30, 2024			Year ended September 30, 2023
Dividend yield		0	%		0	%		0	%
Weighted average expected volatility		6358.1407	%		5261.0266	%		4663.9014	%
Weighted average risk-free interest rate		34.7520	%		04.9755	%		03.2475	%
Weighted average expected life	5 years			5 years			5 years
Weighted average expected life (years)	5			5			5
Vesting period	3 years			3 years			3 years
Vesting period (years)	3			3			3

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 at grant date on zero-coupon U.S. governmental bonds having a remaining life similar to the expected option term.

Options are generally granted at fair market values determined on the date of grant and vesting normally occurs over a three to five-year period. The maximum contractual term is normally six years. Shares issued upon exercise of a stock option are issued from the Company’s authorized but unissued shares. There were 7994,~~911~~426 options vested during the year ended September 30, ~~2023~~2025, ~~113~~90,~~727~~245 options vested during the year ended September 30, ~~2022~~2024, and 79,~~833~~911 options vested during the year ended September 30, ~~2021~~2023. For the year ended September 30, ~~2023~~2025, there were 21138,~~630~~562 stock options that were exercised using a cashless method of exercise. For the year ended September 30, ~~2022~~2024, there were ~~125~~1,~~651~~501 stock options that were exercised using a cashless method of exercise. For the year ended September 30, ~~2021~~2023, there were ~~101~~21,~~966~~630 stock options that were exercised using a cashless method of exercise. The intrinsic value of options exercised during the years ended September 30, ~~2023~~2025, ~~2022~~2024, and ~~2021~~2023 was $12,~~603~~220,000, $1125,~~279,~~000, and $1,~~315~~603,000, respectively.

4745

Option transactions under the 2022 Plan during the ~~year~~years ended September 30, ~~2023~~2025, and 2024 and under the Prior Plan for the ~~years~~year ended September 30, ~~2022~~2023, ~~and 2021~~ are summarized as follows:

	Number of shares			Weighted average exercise price		Weighted average fair value
Outstanding as of September 30, 2020		337,100		$	12.48
Outstanding as of September 30, 2022		236,509			31.30
Granted		105,089			23.74	$	8.14
Exercised		(101,966	)		12.47
Forfeited and expired		(38,709	)		13.68
Outstanding as of September 30, 2021		301,514		$	16.25
Granted		62,730			66.48	$	25.54
Exercised		(125,651	)		12.92
Forfeited and expired		(2,084	)		19.94
Outstanding as of September 30, 2022		236,509		$	31.30
Granted		40,266			64.38	$	30.83
Exercised		(21,630	)		26.16
Forfeited and expired		(1,021	)		18.18
Outstanding as of September 30, 2023		254,124		$	37.04
Granted		118,706			26.84	$	12.96
Exercised		(1,501	)		12.40
Forfeited and expired		(4,345	)		38.13
Outstanding as of September 30, 2024		366,984		$	33.83
Granted		38,198			30.90	$	14.10
Exercised		(138,562	)		18.28
Forfeited and expired		(5,155	)		51.11
Outstanding as of September 30, 2025		261,465		$	41.30

The following table summarizes information concerning options exercisable under the 2022 Plan and the Prior Plan as of the ~~years~~year ended September 30, ~~2023, 2022 and 2021~~2025:

As of Year Ended	Exercisable		~~Weighted average remaining contractual life~~	Weighted average remaining contractual life (years)	~~Weighted average exercise price~~	Weighted average exercise price		~~Aggregate intrinsic value (in thousands)~~	Aggregate intrinsic value (in thousands)
September 30, 2023		97,056	2.28 years		$	28.13		$	2,731
September 30, 2025		132,164		1.81		$	50.50		$	6,674
September 30, 2022		39,276	2.78 years		$	20.26		$	3,314
September 30, 2021		51,201	2.29 years		$	12.28		$	1,632

The following table summarizes information concerning options currently outstanding at:

As of Year Ended	Number outstanding		~~Weighted average remaining contractual life~~	Weighted average remaining contractual life (years)	~~Weighted average exercise price~~	Weighted average exercise price		~~Aggregate intrinsic value (in thousands)~~	Aggregate intrinsic value (in thousands)
September 30, 2023		254,124	2.72 years		$	37.04		$	9,413
September 30, 2025		261,465		2.59		$	41.30		$	10,797
September 30, 2022		236,509	3.30 years		$	31.30		$	17,343
September 30, 2021		301,514	3.22 years		$	16.25		$	8,412

Restricted Stock: The 2022 Plan permits, and the Prior Plan permitted, the Compensation Committee of the board of directors to grant stock-based awards, including stock options and restricted stock, to key employees and non-employee directors. The Company has made restricted stock grants that vest over one to ten years.

Restricted stock transactions during the years ended September 30, ~~2023~~2025, ~~2022~~2024, and ~~2021~~2023 are summarized as follows:

	Number of shares			Weighted average grant date fair value
Unvested shares as of September 30, 2020		109,070		$	12.98
Unvested shares as of September 30, 2022		98,508		$	31.51
Granted		39,807			24.20
Vested		(35,840	)		12.48
Forfeited		(4,198	)		15.45
Unvested shares as of September 30, 2021		108,839		$	17.14
Granted		29,512			65.90
Vested		(37,094	)		17.78
Forfeited		(2,749	)		16.84
Unvested share, s as of September 30, 2022		98,508		$	31.51
Granted		41,492			70.50
Vested		(47,869	)		30.98
Forfeited		(1,556	)		15.61
Unvested shares as of September 30, 2023		90,575		$	49.92
Granted		137,928			26.65
Vested		(58,559	)		39.60
Forfeited		(7,737	)		27.84
Unvested shares as of September 30, 2024		162,207		$	34.91
Granted		122,577			31.12
Vested		(71,691	)		57.35
Forfeited		(10,908	)		26.99
Unvested shares as of September 30, 2025		202,185		$	27.64

48The fair value of restricted shares vested during the year end September 30, 2025, 2024, and 2023 was $2,089,000, $1,796,000, and $3,141,000 respectively. The Company repurchased a total of 17,497 shares of our common stock at an average price of $28.27 in connection with payment of taxes upon the vesting of restricted stock previously issued to employees for the year ended September 30, 2025. The Company repurchased a total of 15,879 shares of our common stock at an average price of $31.05 in connection with payment of taxes upon the vesting of restricted stock previously issued to employees for the year ended September 30, 2024. The Company repurchased a total of 12,862 shares of our common stock at an average price of $62.20 in connection with payment of taxes upon the vesting of restricted stock previously issued to employees for the year ended September 30, 2023.

The fair value of restricted shares vested during the year end September 30, 2023, 2022, and 2021 was $3,141,000, $3,744,000, and $1,364,000 respectively. The Company repurchased a total of 12,862 shares of our common stock at an average price of $62.20 in connection with payment of taxes upon the vesting of restricted stock previously issued to employees for the year ended September 30, 2023. The Company repurchased a total of 13,292 shares of our common stock at an average price of $105.78 in connection with payment of taxes upon the vesting of restricted stock previously issued to employees for the year ended September 30, 2022. The Company repurchased a total of 11,754 shares of our common stock at an average price of $39.32 in connection with payment of taxes upon the vesting of restricted stock previously issued to employees for the year ended September 30, 2021.46

~~Bonus~~Performance Stock Units: During the fiscal year ended September 30, ~~2023~~2025, the Company granted ~~employees~~50,747 anperformance ~~aggregate~~stock ofunits ~~9,144~~which ~~shares~~entitle the participant to receive one share of the Company’s common stock asfor aeach ~~discretionary~~performance ~~bonus~~stock ~~for~~unit awarded, subject to the achievement of fiscal ~~2022~~year 2025 performance goals. ~~The~~Achievement ~~bonus~~of ~~stock~~the ~~consisted~~goals can result in 50%, 100%, or 150% of ~~common~~the ~~stock~~shares being awarded, with notwo-thirds ~~vesting~~of ~~period~~the orshares earned being issued as stock subject to restrictions. ~~The~~on ~~fair~~transfer ~~value~~that will lapse on the ~~date~~first two anniversaries of ~~issuance~~the ~~was~~settlement ~~$104~~date.36 The Company has determined the fair value per underlying share. Noof ~~bonus~~the performance stock ~~was~~unit ~~granted~~awards into be $30.90, which is the ~~fiscal~~closing ~~year~~market ~~ended~~price ~~September~~of ~~30,~~our ~~2022~~common stock on the grant date.

~~Employee~~Compensation ~~Stock~~expense ~~Purchase~~for ~~Plan: The Clearfield, Inc. 2010 Employee Stock Purchase Plan (“ESPP”) allows participating employees to purchase shares of~~ the ~~Company’s~~performance ~~common~~ stock atunits ~~a discount through payroll deductions. The ESPP~~ is ~~available~~measured tousing ~~all employees subject to certain eligibility requirements. Terms of~~ the ESPP provide that participating employees may 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~~our ~~share of~~ common stock at the ~~beginning~~grant ~~or end of each stock purchase period or phase~~date. The ESPP is carried out in six-month phases, with phases beginning on July 1 and January 1 of each calendar year. For the phase that ended on June 30, 2023, employees purchased 7,754 shares at a price of $40.25 per share. For the phase that ended on December 31, 2022, employees purchased 5,585 shares at a price of $53.52 per share. As of September 30, ~~2023~~2025, the Company has ~~withheld~~achieved ~~approximately~~performance ~~$154,000~~goals ~~from~~which ~~employees~~result ~~participating~~ in ~~the~~100% ~~phase that began on July 1, 2023. In February 2020, the shareholders~~ of ~~Clearfield,~~these ~~Inc.~~performance ~~approved~~stock anunit ~~increase~~awards ofvesting ~~200,000~~and inhas ~~the~~recognized ~~shares~~compensation ~~authorized~~cost ~~for issuance under the ESPP~~accordingly. ~~After the employee purchase on June 30, 2023, 168,251 shares of common stock were available for future purchase under the ESPP.~~

During the fiscal year ended September 30, 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, 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 was $26.18 as of the grant date. The fiscal year 2024 performance goal was not achieved, and the performance share units were not earned. Accordingly, no stock-based compensation expense was recognized related to these awards for the year ended September 30, 2024.

Bonus Stock: During the fiscal year ended September 30, 2023, the Company granted employees an aggregate of 9,144 shares of common stock as a discretionary bonus for fiscal 2022 performance. The bonus stock consisted of common stock with no vesting period or restrictions. The fair value on the date of issuance was $104.36 per share. No bonus stock was granted in the fiscal years ended September 30, 2025, and 2024.

Employee Stock Purchase Plan: The Clearfield, Inc. 2010 Employee Stock Purchase Plan (“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 that participating employees may 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.

For the phase that ended on June 30, 2025, employees purchased 11,180shares 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 3. Investments

The Company invests in CDs in amounts that are fully insured by the FDIC and Treasuries with terms of not more than five years, as well as money market funds. ~~During~~The ~~the second quarter of fiscal 2022, the~~ Company’s ~~sold investments and has reclassified its~~ investment portfolio ~~to available-for-sale, which~~ is ~~reported~~classified atas ~~fair~~available ~~value~~for sale. The unrealized gain or loss on investment securities is recorded in other comprehensive income (loss), 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 consolidated statement of earnings. The Company did not sell investment securities during the years ended September 30, 2025, 2024 or 2023.

~~As of September 30, 2023, available-for-sale investments consist of the following:~~47

	September 30, 2023
(In thousands)	Cost		Unrealized Gains		Unrealized Losses		Fair Value
Short-Term
U.S. treasury securities	$	122,534	$	-	$	143	$	122,391
Certificates of deposit		8,014		-		119		7,895
Investment securities – short-term	$	130,548	$	-	$	262	$	130,286
Long-Term
U.S treasury securities	$	6,719	$	-	$	596	$	6,123
Certificates of deposit		248		-		28		220
Investment securities – long-term	$	6,967	$	-	$	624	$	6,343

As of September 30, 2025, available-for-sale investments consist of the following:

	September 30, 2025
(In thousands)	Cost		Unrealized Gains		Unrealized Losses			Fair Value
Short-Term
U.S treasury securities	$	84,192	$	119	$	(70	)	$	84,241
Certificates of deposit		248		-		(5	)		243
Investment securities – short-term	$	84,440	$	119	$	(75	)	$	84,484
Long-Term
U.S treasury securities	$	59,794	$	62	$	(34	)	$	59,822
Investment securities – long-term	$	59,794	$	62	$	(34	)	$	59,822

As of September 30, ~~2022~~2024, available-for-sale investments consisted of the following:

	September 30, 2022
	September 30, 2024
(In thousands)	Cost		Unrealized Gains		Unrealized Losses			Fair Value
Short-Term
Certificates of deposit	$	5,945	$	-	$	143		$	5,802
U.S treasury securities	$	113,987	$	382	$	(45	)	$	114,324
Investment securities – short-term	$	5,945	$	-	$	143		$	5,802
Certificates of deposit		500		1		-			501
Investment securities – short-term	$	114,487	$	383	$	(45	)	$	114,825
Long-Term
U.S treasury securities	$	1624,~~178~~514	$	-	$	~~1,085~~(245	)	$	1524,~~093~~269
Certificates of deposit		~~8,016~~248		-		~~362~~(12	)		~~7,654~~236
Investment securities – long-term	$	24,~~194~~762	$	-	$	~~1,447~~(257	)	$	2224,~~747~~505

~~The~~As ~~Company~~of ~~did not sell any investments in the year ended~~ September 30, ~~2023. For the year ended September 30~~2025, ~~2022, proceeds from the sale of~~ investments ~~was~~in ~~$14,365,000,~~debt upon which the Company realized within earnings gross realized gains on the sale of $92,000 partially offset by gross realized losses of $53,000. The specific identification method is used to determine the cost of the securities ~~sold. The Company’s sale of investment securities was associated with its need to respond to significant unanticipated and unprecedented growth~~ in ~~its~~an ~~sales~~unrealized ~~order~~loss ~~backlog~~position ~~coupled~~were ~~with supply chain challenges to obtain the inventory necessary for fulfillment of these orders,~~ as ~~well as the reevaluation of the Company’s approach to use of available capital.~~follows:

As of September 30, 2023, 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	$	40,330	$	(36	)	$	24,380	$	(68	)
Certificates of deposit		-		-			243		(5	)
Investment securities	$	40,330	$	(36	)	$	24,623	$	(73	)

	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	$	112,908	$	131	$	15,606	$	608
Certificates of deposit		245		-		7,870		147
Investment securities	$	113,153	$	131	$	23,476	$	755

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

As of September 30, 2022, 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	)

	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	$	-	$	-	$	15,093	$	1,085
Certificates of deposit		6,345		176		7,111		329
Investment securities	$	6,345	$	176	$	22,204	$	1,414

As of September 30, 2025, and 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 September 30, 2025, 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 negligible 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 year ended September 30, 2025.

As of September 30, 2023, there were 42 securities in an unrealized loss position which is due to the securities paying lower interest rates than the market. As of September 30, 2023, 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 negligible credit risk due to the nature of the securities which are backed by the FDIC and US federal government.48

Note 4. 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 September 30, ~~2023~~2025, according to the three-level fair value hierarchy:

	Fair Value Measurements as of September 30, 2023
	Fair Value Measurements as of September 30, 2025
(In thousands)	Total		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	2615,~~467~~761	$	2615,~~467~~761	$	-	$	-
Total cash equivalents	$	2615,~~467~~761	$	2615,~~467~~761	$	-	$	-
Investment securities:
Certificates of deposit	$	8,115	$	-	$	8,115	$	-
U.S. Treasury securities	$	144,063	$	-	$	144,063	$	-
U.S. Treasury securities		128,514		-		128,514		-
Certificates of deposit		243		-		243		-
Total investment securities	$	~~136~~144,~~629~~306	$	-	$	~~136~~144,~~629~~306	$	-

During the year ended September 30, ~~2023~~2025, we 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. We had no re-measurements of non-financial assets to fair value in the years-end September 30, 2025, 2024 and 2023, except as disclosed in Note 11 related to the impairment of goodwill and ~~2022~~long-lived assets of the Nestor Cables business.

The following provides information regarding fair value measurements for the Company’s investment securities as of September 30, ~~2022~~2024, according to the three-level fair value hierarchy:

	Fair Value Measurements as of September 30, 2022
	Fair Value Measurements as of September 30, 2024
(In thousands)	Total		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	1510,378	$	1510,378	$	-	$	-
Total cash equivalents	$	1510,378	$	1510,378	$	-	$	-
Investment securities:
Certificates of deposit	$	13,456	$	-	$	13,456	$	-
U.S. Treasury securities	$	138,592	$	-	$	138,592	$	-
U.S. Treasury securities		15,093		-		15,093		-
Certificates of deposit		738		-		738		-
Total investment securities	$	28139,~~549~~330	$	-	$	28139,~~549~~330	$	-

5149

Note 5. 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, 2021	$	-		$	-		$	-
Other comprehensive loss for the twelve months ended September 30, 2022		(1,224	)		(674	)		(1,898	)
Balances at September 30, 2022	$	(1,224	)	$	(674	)	$	(1,898	)
Other comprehensive income for the twelve months ended September 30, 2023		542			812			1,354
Balances at September 30, 2023	$	(682	)	$	138		$	(544	)
Other comprehensive income for the twelve months ended September 30, 2024		748			875			1,623
Balances at September 30, 2024	$	66		$	1,013		$	1,079
Other comprehensive (loss) income for the twelve months ended September 30, 2025		(8	)		660			652
Balances at September 30, 2025	$	58		$	1,673		$	1,731

The Company did not have any other comprehensive income or loss for the year ended September 30, 2021.

Note 6. Income Taxes

Components of income tax expense (benefit) are as follows for the years ended:

	September 30,			September 30,			September 30,
(In thousands)	~~2023~~2025			~~2022~~2024			~~2021~~2023
Current:
Federal	$	~~9,449~~-		$	~~13,230~~385		$	59,~~154~~449
State		~~1,435~~80			~~1,532~~(114	)		~~440~~1,435
Foreign		144			48			-
Current income tax expense		80			271			10,884
Current income tax expense		11,028			14,810			5,594
Deferred:
Federal		(1,~~751~~710	)		(~~509~~3,092	)		(~~234~~1,750	)
State		~~(251~~567	)		6(427	)		47(251	)
Foreign		53			165			-
Deferred income tax expense (benefit)		2,277			(3,519	)		(2,001	)
Deferred income tax expense		(1,949	)		(334	)		(187	)
Income tax expense (benefit)	$	2,357		$	(3,248	)	$	8,883
Income tax expense	$	9,079		$	14,472		$	5,407

The following is a reconciliation of the federal statutory income tax rate to the effective tax rate as a percent of pre-tax income for the following years ended:

	September 30,			September 30,			September 30,
	2023			2022			2021
	2025			2024			2023
Federal statutory rate		21.0	%		21.0	%		21.0	%
State income taxes		2.86	%		26.16	%		2.23	%
Foreign income taxes		(0.1	%)		0.4	%		-
Permanent differences		1.3	%		0.0	%		0.5	%
Permanent differences		0.8	%		4.6	%		-
Research and development credits		0.6	%		1.1	%		(0.9%	)
Research and development credits		(1.0	%)		(0.5	%)		(0.7	%)
Section 162(m) limitation on officer’s compensation		2.7	%		0.0	%		0.0	%
Excess tax benefits from stock-based compensation		(1.71%	%)		(41.91%	%)		(1.57%	%)
Effective Tax rate		21.8	%		22.7	%		21.0	%
Other		0.0	%		0.0	%		(0.3%	)
Effective tax rate		27.2	%		27.6	%		20.9	%

52As of September 30, 2025, the current U.S. income tax receivable was approximately $1,544,000. This amount is included in prepaid and other current assets in the Company’s consolidated balance sheet.

As of September 30, 2023, and 2022, the current income tax payable was approximately $84,000, and $1,791,000 respectively. Current income tax payable amounts are included in accrued expenses in the Company’s consolidated balance sheets.50

As of September 30, ~~2023~~2025, ~~and 2022,~~ the Company ~~had~~has noa gross U.S. federal, ~~state or Estonian~~ net operating loss (“NOL”) ~~carryforwards~~carryforward of $681,000. AsThere was no U.S. federal NOL as of September 30, ~~2023,~~2024. ~~and~~As of September 30, ~~2022~~ 2025 and 2024, there is a ~~Finnish~~gross state NOL of $13,700,000 and $41,259,000, respectively. The Company has not recorded a valuation allowance on these deferred tax assets as the Company believes it is more likely than not they will be utilized. In addition, as of September 30, ~~2023~~2025, and 2024, the Company had Minnesota research and development tax credits of $~~255~~360,000 and $370,000, respectively. AsThe Company had federal research and development tax credits of $106,000 as of September 30, ~~2022,~~2025. ~~the~~There ~~Company~~were ~~had~~no ~~Minnesota~~federal research and development tax credits as of ~~$292~~September 30,~~000~~ 2024. The Company has not recorded a valuation allowance on these research and development related deferred tax assets as the Company believes it is more likely than not they will be utilized before they begin to expire in fiscal year ~~2038~~2037.

Significant components of deferred income tax assets and liabilities are as follows at:

	September 30,			September 30,
(In thousands)	~~2023~~2025			~~2022~~2024
Inventories	$	23,~~154~~521		$	~~813~~4,241
R&D expenses		~~832~~1,558			-1,328
Stock-based compensation		~~600~~1,223			~~416~~1,042
Accrued expenses and reserves		515			1,020
Investment in foreign subsidiary		4,802			-
Unrealized loss on investments		204			365
Accrued expenses and reserves		582			427
Net operating loss carry forwards and credits		201			256
Property and equipment depreciation		654			205
Foreign currency translation loss		-			180
Net operating loss carry forwards and credits		804			357
Total deferred tax asset	$	413,~~506~~144		$	37,~~050~~600
Goodwill		(~~1,123~~906	)		(~~1,077~~816	)
Property and equipment depreciation		(683	)		(1,068	)
Unrealized loss on investments		-			(16	)
Prepaid expenses		(~~193~~284	)		(~~163~~141	)
Intangibles		(~~153~~1,332	)		(~~102~~254	)
Foreign currency translation gain		(36359	)		-(238	)
Total deferred tax liability	$	(2,~~188~~881	)	$	(21,~~410~~465	)
Net deferred tax asset	$	210,~~318~~263		$	~~640~~6,135

Realization of NOL carryforwards and other deferred tax temporary differences are contingent upon future taxable earnings. The deferred tax assets and deferred tax liabilities are not netted due to being within different tax jurisdictions. The Company’s deferred tax assets were reviewed for expected utilization by assessing the available positive and negative factors surrounding their recoverability. As of September 30, ~~2023~~2025, and ~~2022~~2024, no valuation allowance was deemed necessary as the Company determined it was more likely than not that the Company’s deferred tax assets will be realized.

The Company is required to recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company applies the interpretation to all tax positions for which the statute of limitations remained open. The Company had no liability for unrecognized tax benefits and did not recognize any interest or penalties during the years ended September 30, ~~2023~~2025, or ~~2022~~2024.

The Company is subject to income taxes in the U.S. federal and various state ~~and foreign~~ jurisdictions~~, including Finland~~. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. Clearfield, Inc. is generally subject to U.S. federal examination for all tax years after ~~2018~~2020 and state examinations for all tax years after ~~2014~~2016 due to unexpired research and development credit carryforwards still open under statute. ~~Nestor is generally subject to Finland examination for all tax years after 2019.~~

Note 7. Concentrations

Suppliers: The Company purchases critical components for our products, including injection molded parts and connectors from third parties, some of whom are single- or limited-source suppliers. If any of our suppliers are unable to ship critical components, we may be unable to manufacture and ship products to our distributors or customers. If the price of these components increases for any reason, or if these suppliers are unable or unwilling to deliver, we may have to find another source, which could result in interruptions, increased costs, delays, loss of sales and quality control problems.

Customers: For the fiscal year ended September 30, 2023, the Company had one customer that comprised 16% of net sales. This customer is a distributor. For the fiscal year ended September 30, 2022, the Company had one customer that comprised 14% of net sales. This customer is a distributor. For the fiscal year ended September 30, 2021, the Company had two customers that comprised a combined 28% of net sales. Both of these customers were distributors. These major customers, like our other customers, purchase our products from time to time through purchase orders, and we do not have any agreements that obligate these major customers to purchase products in the future from us.51

AsCustomers: ofFor the fiscal year ended September 30, ~~2023~~2025, ~~three~~the Company had two customers, Customer A and Customer B, which accounted for ~~16%,~~approximately 1318% and 1113% of ~~accounts~~net ~~receivable~~sales, respectively. These customers are ~~all~~ distributors. AsFor ofthe fiscal year ended September 30, ~~2022~~2024, ~~one~~Customer ~~customer~~A and Customer B accounted for approximately 20% and 15% of ~~accounts~~net ~~receivable~~sales, respectively. For ~~This~~the ~~customer~~fiscal isyear aended ~~distributor~~September 30, 2023, Customer A and Customer B accounted for approximately 19% and 10% of net sales, respectively. These major customers, like our other customers, purchase our products from time to time through purchase orders, and we do not have any agreements that obligate these major customers to purchase products in the future from us.

~~Disaggregation~~As of ~~Revenue:~~September ~~The~~30, ~~Company~~2025, ~~allocates~~the ~~sales~~Company ~~from~~had ~~external~~two customers, toCustomer ~~geographic~~B ~~areas~~and ~~based~~Customer onA, ~~the location to~~ which ~~the~~accounted ~~product~~for isapproximately ~~transported.~~17% ~~Sales~~and ~~outside~~11% ~~the~~of ~~United~~accounts ~~States~~receivable, ~~are~~respectively. ~~principally~~As toof ~~customers~~September ~~in Europe~~30, ~~the Caribbean~~2024, ~~Canada,~~Customer ~~and~~B inaccounted ~~Central~~for ~~and~~16% ~~South~~of ~~America~~accounts receivable.

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 Canada, the Caribbean, Central/South America and Mexico.

The following table presents our domestic and international sales for each of the last three fiscal years:

Year Ended September 30,
	2023		2022		2021
	2025		2024		2023
United States	$	~~218~~144,~~835~~895	$	~~255~~122,~~607~~483	$	~~131~~218,~~285~~835
All Other Countries		49,885		15,276		9,470
All other countries		5,239		3,085		6,887
Total Net Sales	$	268,720	$	270,883	$	140,755
Total net sales	$	150,134		125,568		225,722

The Company sells its products to the Broadband Service Provider marketplace. In addition, the Company provides Legacy services for original equipment manufacturers requiring copper and fiber cable assemblies built to their specification.

The percentages of our sales by these markets were as follows for each of the last three fiscal years:

Year Ended September 30,
	2023			2022			2021
	2025			2024			2023
Broadband service providers		9798	%		9998	%		9899	%
Other customers		32	%		12	%		21	%
Total Net Sales		100	%		100	%		100	%
Total net sales		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 3 customers, National Carriers, which includes large national and global wireline and wireless providers also referred to as Tier ~~1’s~~1s, Large Regional Service providers with a national footprint, ~~MSO’s~~MSOs, which include cable television companies, and international customers.

Long-~~lived~~Lived ~~assets~~Assets: As of September 30, ~~2023~~2025, and ~~2022~~2024, the Company had property, plant, and equipment with a net book value of $74,~~003~~507,000, and $45,~~213~~395,000, respectively, located in Mexico. In addition, as of September 30, 2023, and 2022, the Company had property, plant, and equipment with a net book value of $6,703,000, and $6,916,000, respectively, located in Finland and $660,000, and $280,000, respectively, located in Estonia. All other property, plant, and equipment is located within the United States.

Note 8. Employee Benefit Plan

Clearfield, Inc. maintains a contributory 401(k) profit sharing benefit plan, whereby eligible employees may contribute a portion of their earnings, not to exceed annual amounts allowed under the Internal Revenue Code. The Company matched 100% of the first 3% and 50% of the next 3% of the participant’s eligible compensation that was contributed by the participant. The Company’s contributions under this plan were $1,~~017~~110,000, $1,~~129~~087,000, and $~~915~~1,017,000 for the years ended September 30, ~~2023~~2025, ~~2022~~2024 and ~~2021~~2023, respectively.

Nestor Cables is mandated by the Finnish government to participate in a pension and social expense plan to which Nestor and its employees make contributions. The plan is accounted for as defined contribution plan and Nestor Cables is responsible for an average of 18.3% and 17.4% of employees’ wages for plan years ended September 30, 2023, and 2022, respectively. Nestor’s contributions under this plan were $1,112,000 and $204,000 for the years ended September 30, 2023, and 2022, respectively.52

Note 9. Leases

~~Clearfield,~~The ~~Inc.~~Company leases an 85,000 square foot facility at 7050 Winnetka Avenue North, Brooklyn Park, Minnesota consisting of corporate offices, manufacturing, and warehouse space. The original lease term iswas ten years and two months, ending on February 28, 2025, ~~and~~with isa ~~renewable~~renewal option. ~~The~~In ~~renewal~~April ~~options~~2024, ~~have~~the ~~not~~Company ~~been~~exercised ~~included~~the ~~within~~renewal option, which extended the lease term ~~because~~three itadditional isyears ~~not~~to ~~reasonably~~end ~~certain~~on ~~that~~February ~~the~~29, ~~Company~~2028. ~~will~~The exercise ~~either~~of the renewal option added a right of use asset and corresponding lease liability of $1,337,000 upon lease commencement.

InThe ~~July~~Company ~~2021,~~indirectly ~~Clearfield,~~leases ~~Inc. entered into~~ an ~~indirect lease arrangement for an~~ approximately 318,000 square foot manufacturing facility in Tijuana, Mexico that operates as a Maquiladora. The lease ~~term~~commenced isin ~~for~~April 72024, and has a term of seven years, of which 5five years are mandatory~~, commencing March 2022~~. The lease contains ~~written~~two options to ~~renew~~extend ~~for~~the ~~two~~term ~~additional~~of ~~consecutive~~the lease for additional periods of 5five years each. The lease calls for monthly base rental payments of approximately $~~162~~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.

OnThe ~~November~~Company ~~19,~~leases ~~2021, Clearfield, Inc. signed~~ a ~~lease for a~~ 105,000 square foot warehouse and manufacturing facility in Brooklyn Park, Minnesota. The lease term is five years ~~commencing March 2022 and~~ ending on February 28, 2027, with rent payments increasing annually. 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. ~~The lease commenced in the second quarter of fiscal 2022.~~

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 renews indefinitely until terminated with two years written notice. It is not reasonably certain that the Company will not exercise the termination option. The lease calls 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.

The lease calls for monthly rental payments of approximately €20,400 until April 2024 and €25,000 afterwards. Rent is increased each year on May 1st based upon the cost-of-living index published by the Estonian government and 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 sales and selling, general and administrative expense was as follows:

55(In thousands)

(In thousands) Operating lease expense under ASC842, Leases, within:

Year ended September 30, 2023

Year ended September 30, 2022

Year ended September 30, 2021

Operating lease expense under ASC842, Leases, within:

Year ended September 30, 2025

Year ended September 30, 2024

Year ended September 30, 2023

Cost of sales

43,~~067~~412

23,~~534~~198

~~999~~3,253

Selling, general and administrative

~~244~~287

~~277~~265

~~217~~244

Total lease expense

43,~~311~~699

23,~~801~~463

13,~~216~~497

Our future lease obligations for leases that have commenced were as follows as of September 30, ~~2023~~2025:

(In thousands)	Operating Leases
FY 2024	$	4,064
FY 2026	$	3,383
FY 2025		3,921
FY 2027		3,003
FY 2026		3,242
FY 2028		2,405
FY 2027		1,572
FY 2029		1,096
FY 2028		384
Total lease payments		9,887
Thereafter		2,626
Less: Interest		(1,130	)
Total lease payments		15,809
Present value of lease liabilities	$	8,757
Less: Interest		(1,443	)
Present value of lease liabilities	$	14,366

As of September 30, ~~2023~~2025, the weighted average term and weighted average discount rate for our leases were 53.1610 years and 37.5942%, respectively. As of September 30, ~~2022~~2024, the weighted average term and weighted average discount rate for our leases were 4.04 years and 37.2228%, respectively. As of September 30, ~~2021~~2023, the weighted average term and weighted average discount rate for our leases were 3.0952 years and 3.4104%, respectively. For the years ended September 30, ~~2023~~2025, ~~2022~~2024, and ~~2021~~2023, the operating cash outflows from our leases were $3,~~954~~305,000, $23,~~064~~233,000, and $13,~~290~~158,000, respectively.

Note 10. 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 original maturity date of the line of credit ~~matures~~was on April 27, 2025,. ~~and~~Borrowed ~~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 September 30, ~~2023~~2025, the interest rate was 76.1817%. The loan agreement and the security agreement ~~contains~~contain customary affirmative and negative covenants and requirements relating to the Company and its operations. On August 5, ~~including~~2024, athe 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 ~~twelve (~~12) month period.; ~~Debt~~(ii) ~~service~~added ~~coverage~~a ~~ratio~~requirement isthat the ~~ratio~~Company ofmaintain ~~Cash~~accounts ~~Available~~with ~~for~~the ~~Debt~~bank ~~Service~~with toa ~~Debt~~minimum ~~Service,~~aggregate ~~each~~liquidity asof ~~defined~~unrestricted inand ~~the~~unencumbered ~~loan~~cash ~~agreement. Debt~~ and ~~Cash~~cash ~~Flow~~equivalents ~~are~~at ~~also~~all astimes ~~defined~~of innot ~~the~~less ~~loan~~than ~~agreement for~~ the ~~purposes~~outstanding ofprincipal ~~the~~balance ~~debt to cash flow ratio covenant. As~~ of ~~September 30, 2023,~~ the Company’s ~~had~~revolving ~~no borrowings against this line of~~ credit. Aspromissory ofnote ~~September~~payable ~~30,~~to ~~2022,~~ the ~~Company~~bank; ~~had~~and ~~borrowed~~(iii) ~~$16,700,000~~waived ~~against~~ the ~~line of credit. As of September 30, 2023, and 2022, the~~ Company’s ~~was in~~ compliance with ~~all~~the ~~covenants.~~debt ~~The~~to ~~line~~cash offlow ~~credit~~ratio isfor ~~collateralized~~the byfiscal ~~Clearfield,~~quarter ~~Inc’s~~ended ~~assets~~June ~~of $335,412,000 as of September~~ 30, ~~2023~~2024.

~~During~~On ~~March~~April ~~2021~~25, ~~Nestor Cables entered into a loan agreement~~2025, ~~providing €2 million senior loan with a term of three years. The National Emergency Supply Agency of Finland (“NESA”) pays~~ the ~~interest,~~Company ~~capped~~entered atinto 5%an ~~with~~amendment ~~the interest~~ to ~~be paid by NESA when~~ the loan isagreement ~~used~~that ~~for~~extended ~~stockpiling~~the ~~purposes~~maturity ~~and is repayable with a 2% additional interest penalty if there is a violation~~ of the ~~terms.~~line The loan is due on March 31, 2024. The loan is fully secured by a Finnish Government guarantee. If used for any purposes other than stockpiling, the lender has the right to terminate the agreement and the entire outstanding balance will become due. As of ~~September~~credit ~~30,~~from ~~2023,~~April ~~and 2022~~27, ~~the Company owed €2~~2025,~~000,000~~ ~~on this loan, which equates~~ to ~~$2,112,000~~April ~~and $1~~25,~~966,000,~~ ~~as of September 30, 2023, and 2022, respectively~~2026. As of September 30, 2023, and 2022, Nestor Cables was in compliance with all covenants. The interest expense associated with this loan has been presented net of government payments on the Company’s income statement.

56As of September 30, 2025, 2024 and 2023, the Company had no borrowings against this line of credit. As of September 30, 2025, 2024, and 2023, the Company was in compliance with all applicable covenants. The line of credit is collateralized by Clearfield, Inc’s assets of $274,219,000 as of September 30, 2025.

Note 11. ~~Acquisition~~Assets ofHeld ~~Nestor~~for ~~Cables~~Sale and Discontinued Operations

OnDuring ~~July 26, 2022,~~ the ~~Company,~~fourth ~~through~~quarter ~~its~~of ~~newly~~fiscal ~~formed~~year ~~wholly owned subsidiary~~2025, ~~Clearfield~~the ~~Finland~~Company ~~Oy,~~committed ~~acquired~~to ~~100%~~a ofplan ~~the~~to ~~share~~sell ~~capital~~its of Nestor Cables ~~Oy,~~business. aAs ~~leading developer and manufacturer~~ of ~~fiber~~September ~~optic cable solutions located in Finland~~30, ~~upon the terms and conditions contained in a Share Sale and Purchase Agreement entered into on May 17~~2025, ~~2022. The total purchase price and~~ the ~~acquisition~~criteria ~~date~~for ~~fair~~classification ~~value~~as ofheld ~~the consideration transferred~~ for ~~the~~sale ~~shares~~under ~~totaled~~ASC ~~€7.9~~205-20 ~~million~~were ~~($8~~met.0 ~~million)~~Accordingly, ~~in addition to €7.6 million ($7.8 million) related to~~ the ~~repayment~~assets ofand ~~certain~~liabilities of ~~Nestor Cables' debt. The purchase price was funded from a draw of $16.7 million under~~ the ~~Company’s revolving line of credit. The purchase of~~ Nestor Cables isbusiness ~~expected~~have tobeen ~~provide~~classified ~~the~~as ~~Company~~held ~~with~~for ~~the~~sale ~~ability~~in ~~to vertically integrate~~ the ~~supply of fiber optic cables and fulfill customer demand more rapidly. Nestor Cables' technical expertise is expected to extend the supply of the~~ Company’s ~~FieldShield~~consolidated ~~product~~balance ~~line~~sheets ~~into~~as ~~the North American market, to reduce cost and complexity~~ of ~~transportation.~~September ~~Finally~~30, ~~Nestor Cables enhances the possibility of introducing Clearfield's cassette-based fiber management solutions into the European market~~2025.

~~The~~On ~~following~~November ~~table~~11, ~~summarizes~~2025, the ~~estimated~~Company ~~fair~~completed ~~value~~the sale of its Nestor Cables business. In connection with this sale, the historical results of the Nestor Cables business and certain assets and liabilities ~~acquired~~of asthis ofbusiness ~~July~~are ~~26,~~reported ~~2022:~~in our consolidated financial statements as discontinued operations.

(in thousands)
Cash	$	72
Accounts receivables		10,562
Inventories		11,377
Other current assets		173
Total current assets		22,184
Property and equipment		7,689
Intangibles assets		1,840
Right of use lease asset		1,297
Goodwill		1,762
Other		55
Total assets	$	34,827
Accounts payable		5,839
Accrued compensation		1,430
Accrued expenses		1,916
Deferred tax liability		621
Lease liability		1,297
Factoring liability		5,849
Long term debt		2,045
Total liabilities	$	18,997
Net assets acquired	$	15,830

Upon classification as held for sale, the Nestor Cables disposal group was measured at the lower of its carrying amount or fair value less costs to sell. Fair value was primarily based on the estimated selling price derived from a negotiated purchase agreement with a third-party buyer, adjusted for estimated transaction costs. The fair value measurement utilized Level 2 inputs within the fair value hierarchy under ASC 820. As the carrying amount of the disposal group exceeded its estimated fair value less costs to sell, the Company recorded a total impairment charge of $16,589,000, which includes $1,489,000 of estimated transaction costs, for the three months ended September 30, 2025. The estimated transaction costs are recorded as a contra asset within the Company’s consolidated balance sheets. The total impairment charge was also comprised of $2,022,000 related to the impairment of goodwill and $13,078,000 related to the impairment of the long-lived assets of the disposal group. The total impairment charge, inclusive of estimated transaction costs, is reflected within Loss from impairment of discontinued operations before income taxes in the consolidated statements of earnings for the year ended September 30, 2025.

The ~~Nestor~~following ~~Cablesacquisition~~table ~~resulted~~summarizes inthe ~~approximately~~results ~~$1,700,000~~ of ~~goodwill~~discontinued ~~due~~operations ~~to intangible assets not qualifying~~ for ~~separate~~each ~~recognition~~of ~~as well as expected synergies. The goodwill created from~~ the ~~acquisition~~last ofthree ~~Nestor~~fiscal ~~Cables is expected to be deductible for tax purposes.~~years:

(in thousands)	Year Ended September 30, 2025			Year Ended September 30, 2024			Year Ended September 30, 2023
Net sales	$	32,831		$	41,137		$	42,998
Cost of sales		30,665			38,095			37,576
Gross profit		2,166			3,042			5,422

Selling, general and administrative expenses		6,212			7,030			5,712
Operating loss		(4,046	)		(3,988	)		(290	)

Net investment income		-			-			7
Interest expense		(387	)		(506	)		(711	)

Loss from discontinued operations before income taxes		(4,433	)		(4,494	)		(994	)
Income tax (benefit) expense		(486	)		(555	)		196
Loss from discontinued operations, net of tax	$	(3,947	)	$	(3,939	)	$	(1,190	)

Loss from impairment of discontinued operations before income taxes	$

Filing Compare · Clearfield, Inc.