(

)

General

The accompanying unaudited condensed consolidated financial statements of Optical Cable Corporation and its subsidiaries (collectively, the “Company” or “OCC

”) have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and the instructions to Form

-Q and Regulation S-

Accordingly, they do

not

include all of the information and notes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all material adjustments considered necessary for a fair presentation have been included. Operating results for the

nine

months ended

July 31, 2018

are

not

necessarily indicative of the results for the fiscal year ending

October

31,

2018

because the following items, among other things,

may

impact those results: changes in market conditions, seasonality, changes in technology, competitive conditions, timing of certain projects and purchases by key customers, significant variations in sales resulting from high volatility and timing of large sales orders among a limited number of customers in certain markets, ability of management to execute its business plans; as well as other variables, uncertainties, contingencies and risks set forth as risks in the Company’s Annual Report on Form

-K for the fiscal year ended

October

31,

2017

(including those set forth in the “Forward-Looking Information” section), or as otherwise set forth in other filings by the Company as variables, contingencies and/or risks possibly affecting future results. The unaudited condensed consolidated financial statements and condensed notes are presented as permitted by Form

-Q and do

not

contain certain information included in the Company’s annual consolidated financial statements and notes. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form

-K for the fiscal year ended

October

31,

2017.

July 2015,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update

2015

11,

Simplifying the Measurement of Inventory

(“ASU

2015

11”

). ASU

2015

changes the inventory valuation method from lower of cost or market to lower of cost and net realizable value for inventory valued using

first

-in,

first

-out or average cost. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. ASU

2015

is effective for fiscal years beginning after

December 15, 2016,

including interim periods within those fiscal years, and should be applied prospectively. The Company adopted ASU

2015

effective

November 1, 2017.

The adoption did

not

have any impact on our results of operations, financial position or liquidity or our related financial statement disclosures.

March 2016,

the FASB issued Accounting Standards Update

2016

09,

Compensation - Stock Compensation (Topic

718

): Improvements to Employee Share-Based Payment Accounting

(“ASU

2016

09”

). ASU

2016

simplifies several aspects related to the accounting for share-based payment transactions, including the accounting for income taxes, forfeitures, statutory tax withholding requirements and classification on the statement of cash flows. ASU

2016

is effective for fiscal years beginning after

December 15, 2016,

including interim periods within that reporting period, with early adoption permitted. The Company adopted ASU

2016

effective

November 1, 2017.

The adoption did

not

have any impact on our results of operations, financial position or liquidity or our related financial statement disclosures.

March 2018,

the FASB issued Accounting Standards Update

2018

05,

Income Taxes (Topic

740

), Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin

No.

118

(“ASU

2018

05”

). ASU

2018

adds various Securities and Exchange Commission (“SEC”) paragraphs pursuant to the issuance of the

December 2017

SEC Staff Accounting Bulletin

No.

118,

Income Tax Accounting Implications of the Tax Cuts and Jobs Act

(“SAB

118”

), which was effective immediately. The SEC issued SAB

118

to address concerns about reporting entities’ ability to timely comply with the accounting requirements to recognize all of the effects of the Tax Cuts and Jobs Act (“Tax Act”) in the period of enactment. The Company has accounted for the tax effects of the Tax Act under the guidance of SAB

118

on a provisional basis. As the Company continues to analyze applicable information and data, and interpret any additional guidance issued by the U.S. Treasury Department, the Internal Revenue Service and others, it

may

make adjustments to the provisional amounts throughout the

one

-year measurement period as provided by SAB

118.

Adoption of ASU

2018

did

not

have any material impact on our results of operations, financial position or liquidity or our related financial statement disclosures.