Business Context and Reporting Period
Company: Optical Cable Corporation (OCC)
Filing Type: Form 8-K (Current Report)
Date of Report: April 30, 2026
Event: Entry into a Material Definitive Agreement (Business Loan) and Termination of a Prior Material Definitive Agreement.
Key Financial Metrics and Debt Structure
New Debt Instrument:
- Lender: Freedom First Federal Credit Union
- Principal Amount: $2,650,000.00
- Maturity Date: May 1, 2036 (10-year term)
- Interest Rate Structure:
- Years 1–5: Fixed at 6.5% per annum.
- Years 6–10: Variable rate (5-Year U.S. Treasury Index + 2.5% margin), with a floor of 4.5% and a statutory cap.
- Monthly Payment (Years 1–5): $19,912.69 (Principal and Interest).
- Prepayment: Allowed without penalty; fees are non-refundable.
- Default Interest Rate: 18.0% per annum.
- First-lien Deed of Trust on real property located at 5290 N. Concourse Drive, Roanoke, VA.
- Assignment of Rents from the secured property.
- Cross-collateralization of all present and future obligations to the Lender.
- Terminated Loan: Virginia Real Estate Loan with Northeast Bank (paid in full).
- Previous Terms: Prime Rate with an 8.5% floor; maturity was May 5, 2026.
The filing text does not provide specific values for the company's overall cash flow, liquidity ratios, or operating margins. The transaction involves a refinancing of existing real estate debt.
Material Changes Versus Prior Period
Debt Refinancing: The Company replaced an existing loan with Northeast Bank (maturing May 5, 2026) with a new 10-year facility with Freedom First Federal Credit Union.
Interest Rate Impact: The new loan introduces a fixed rate of 6.5% for the first five years, replacing a variable rate tied to the Prime Rate with an 8.5% floor. This change may result in lower interest costs depending on the prevailing Prime Rate at the time of the prior loan's final months.
Term Extension: The debt maturity was extended from May 2026 to May 2036, significantly altering the company's long-term liability profile.
Guidance, Risks, and Contingencies
Management Commentary: The filing contains no forward-looking guidance, earnings outlook, or management commentary regarding future business performance.
Risks and Covenants:
- Confession of Judgment: The Promissory Note includes a confession of judgment provision, waiving certain debtor rights and allowing the Lender to obtain a judgment without further notice upon default.
- Variable Rate Risk: Starting in Year 6, interest rates will fluctuate based on the 5-Year U.S. Treasury Index, introducing uncertainty in future debt service costs.
- Collateral Restrictions: The Deed of Trust restricts the Company from removing soil, engaging in borrow pit operations, using the property as a landfill, or cutting timber for sale without Lender consent.
- Environmental Liability: The Company indemnifies the Lender against environmental claims related to the property, with obligations surviving the payoff of the loan.
Investor Verification Checklist
- Verify the current Prime Rate to confirm the interest savings achieved by refinancing from the Northeast Bank loan (8.5% floor) to the new 6.5% fixed rate.
- Review the Company's cash flow statements to ensure the $19,912.69 monthly payment is sustainable relative to operating cash flow.
- Confirm the status of the real property at 5290 N. Concourse Drive, Roanoke, VA, to assess the value of the collateral securing the $2.65 million debt.
- Monitor the 5-Year U.S. Treasury Index to project potential interest rate increases for the variable period (Years 6–10).
- Check for any subsequent filings regarding the release of the Northeast Bank lien and the recording of the new Deed of Trust.