Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations

This report contains forward-looking statements. These statements relate to future events or the Company's future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "except," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither the Company, nor any other person, assumes responsibility for the accuracy and completeness of the forward-looking statements. The Company is under no obligation to update any of the forward-looking statements after the filing of this Quarterly Report on Form 10-Q to conform such statements to actual results or to changes in its expectations.

The following discussion should be read in conjunction with the Company's financial statements and the related notes and other financial information appearing elsewhere in this Form 10-Q. Readers are also urged to carefully review and consider the various disclosures made by the Company which attempt to advise interested parties of the factors which affect the Company's business, including without limitation the disclosures made under the caption "Management's Discussion and Analysis and Plan of Operation," under the caption "Risk Factors," and the audited financial statements and related notes included in the Company's Annual Report filed on Form 10-K for the year ended October 31, 2011 and other reports and filings made with the Securities and Exchange Commission.

Critical Accounting Policies

The unaudited condensed consolidated financial statements of the Company are prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). One of the accounting policies that involves significant judgments and estimates concerns our inventory valuation. Inventories are valued at the weighted average cost value. Certain items in the inventory may be considered obsolete or excess and, as such, we establish an allowance to reduce the carrying value of these items to their net realizable value. Based on estimates, assumptions and judgments made from the information available at the time, we determine the amounts of these allowances. Because inventories have, during the past few years, represented up to one-third of our total assets, any reduction in the value of our inventories would require us to take write-offs that would affect our net worth and future earnings.

Another accounting policy that involves significant judgments and estimates is our accounts receivable allowance valuation. The Company routinely assesses the financial strength of its customers and maintains an allowance for doubtful accounts that management believes will adequately provide for credit losses.

Another critical accounting policy that involves significant judgments and estimates is management's assessment of non-amortizable intangible assets for impairments. We review our non-amortizable intangible asset for impairment annually in the fourth quarter at the reporting unit level. Each quarter, we also analyze whether any indicators of impairment exist.

Another critical accounting policy that involves significant judgments and estimates is management's assessment of goodwill for impairments. We review our goodwill for impairment annually in the fourth quarter at the reporting unit level. Each quarter, we also analyze whether any indicators of impairment exist.

The Company uses the Black-Scholes model to value the stock option grants which involves significant judgments and estimates.

Overview

The Company markets connectors and cables to numerous industries for use in thousands of products, primarily for the wireless marketplace. In addition, to a limited extent, the Company also markets wireless products that incorporate connectors and cables. Since sales of RF connectors and cable assemblies represented 53% of the Company's net sales during the six month period ended April 30, 2012, the Company's results of operations and liquidity are principally dependent upon the results of its RF connector and cable operations. On June 15, 2011, the Company purchased Cables Unlimited, Inc., a fiber optic custom cable manufacturer based on Long Island, New York. In November 2011, RadioMobile Division was awarded a $2.6 million contract from the Los Angeles County Fire Department for the implementation of a wireless system upgrade to the County Fire Department's existing remote communications equipment.

Liquidity and Capital Resources

Management believes that existing current assets and the amount of cash it anticipates it will generate from current operations will be sufficient to fund the anticipated liquidity and capital resource needs of the Company for at least twelve months. The Company does not, however, currently have any commercial banking arrangements providing for loans, credit facilities or similar matters should the Company need to obtain additional capital. Management's beliefs that its existing assets and the cash expected to be generated from operations will be sufficient during the current fiscal year are based on the following:

- As of April 30, 2012, the amount of cash and cash equivalents was equal to $3,813,000 in the aggregate and the Company had $748,000 of investments in certificates of deposit.

- As of April 30, 2012, the Company had $15,491,000 in current assets, and $2,292,000 in current liabilities.

- As of April 30, 2012, the Company had no outstanding indebtedness (other than accounts payable and accrued expenses).

The Company does not anticipate needing material additional capital equipment in the next twelve months. In the past, the Company financed some of its equipment and furnishings requirements through capital leases. No additional capital equipment purchases have been currently identified that would require significant additional leasing or capital expenditures during the next twelve months. Management also believes that based on the Company's current financial condition, the absence of outstanding bank debt and recent operating results, the Company would be able to obtain bank loans to finance its expansion, if necessary, although there can be no assurance any bank loan would be obtainable or, if obtained, would be on favorable terms or conditions.

As of April 30, 2012, the Company had a total of $3,812,724 of cash and cash equivalents and $748,258 of short term investments in certificates of deposits. As of October 31, 2011, the Company had $1,760,816 of cash and cash equivalents and $4,094,724 of certificates of deposit. At the end of the six-month period ended April 30, 2012, the Company had working capital of $13,199,598 and a current ratio of approximately 7:1. The sum of cash, cash equivalents and certificates of deposit held on April 30, 2012 decreased from the amounts held on October 31, 2011 due primarily to (i) $446,134 of capital expenditures, (ii) $695,230 of dividends paid by the Company during the six-month period ended April 30, 2012, and (iii) the repurchase of $1,143,243 of the Company's common stock during the most recent six-month period.

The Company recognized net income of $719,560 for the six months ended April 30, 2012 and had $858,524 of cash provided by operating activities. Cash from operations was more than net income primarily because of an increase in outstanding accounts payables. During the six months ended April 30, 2012, the Company had an increase of $496,098 in accounts receivable, used $259,389 for the purchase of inventory, used $25,502 for prepaid expenses and inventory deposits, and reduced its accrued expenses by $289,608. These outlays were partially offset by a decrease of $384,271 in prepaid income taxes and increased accounts payables of $480,563, which resulted in cash provided by operating activities of $858,524 during the six months ended April 30, 2012. The Company increased its inventory purchases because of increased sales and because it received volume discounts from some of its inventory vendors. The benefits of inventories purchased at a discount are expected to be realized in future quarters as the inventories are sold.

The Company received proceeds of $3,346,466 from the maturity of certain of its certificates of deposit during the six months ended April 30, 2012. The Company spent $446,134 on capital expenditures during the six months ended April 30, 2012. Net cash used in financing activities decreased cash by $1,706,948 due primarily to the repurchase of $1,143,243 of the Company's common stock and dividends paid of $695,230 partially offset by the receipt of $76,351 from the exercise of stock options.

Trade accounts receivable (net of allowances for doubtful accounts) at April 30, 2012 increased approximately 19%, or $501,976 to $3,107,941 compared to the October 31, 2011 balance of $2,605,965 because of the 43% increase in net sales during the first six months of fiscal 2012.

Inventories at April 30, 2012 increased by 4%, or $259,389 to $6,448,990 compared to $6,189,601 at October 31, 2011. The increase in inventories reflects the increase in inventory purchases due to actual and anticipated sales increases.

Other current assets, including prepaid expenses and deposits, remained consistent at $513,533 as of April 30, 2012, compared to $511,832 at October 31, 2011 and relate primarily to prepaid insurance contracts and inventory purchases.

Accounts payable combined with accrued expenses at April 30, 2012 increased $190,955 to $2,291,574 from $2,100,619 on October 31, 2011. The primary reason for the increase is attributable to an increase in inventory related purchases in accounts payable at April 30, 2012 compared to October 31, 2011.

The above cash flow changes are net of the effects of the deconsolidation of K&K, which was completed in the first quarter of current year.

Results of Operations

Three Months Ended April 30, 2012 vs. Three Months Ended April 30, 2011

Net sales in the fiscal quarter ended April 30, 2012, increased 52% or $2,280,625 to $6,672,187 from $4,391,562 in the comparable fiscal quarter of prior year due to (i) the addition of the sales generated by the newly acquired Cables Unlimited division, and (ii) increased sales at the RF Wireless and Medical Cabling and Interconnect segments. Cables Unlimited was acquired after the April 30, 2011 fiscal periods and, therefore, no sales of Cables Unlimited are included in the three- and six-month periods ending April 30, 2011. Sales of the Cables Unlimited segment contributed $1,836,062 to total Company sales of the second fiscal quarter of 2012. Sales of the Company's RF Connector and Cable segment decreased by $47,070 or 1% from the prior year's comparable period ended April 30, 2011 primarily due to a decreases in sales at the Aviel and Oddcables divisions as well as slight decreases in sales with certain of the Connector divisions largest customers. As a result of the Company's continued success in marketing its larger selection of medical cabling products, sales of the Medical Cabling and Interconnect segment increased by $77,374 from the prior year's comparable period ended April 30, 2011. Sales of the RF Wireless segment increased by $414,263 from the prior comparable period ended April 30, 2011 due in part to revenues recognized relating to the $2.6 million LA County Fire Department contract that the RF Wireless segment received in November 2011, as well as increased sales of RF Neulink wireless products. As a result of increased sales at the Cables Unlimited, Medical Cabling and Interconnector, and RF Wireless segments, the percentage of the Company's total sales generated by the RF Connector and Cable assembly segment decreased to approximately 51% of the Company's total sales in the three month period ended April 30, 2012, from 79% of the Company's total sales in the comparable quarter of prior year.

Domestic sales increased significantly by $2,154,979 to $6,331,240 from $4,176,261 in the prior comparable period, primarily due to the addition of Cables Unlimited. Foreign sales during the fiscal quarter ended April 30, 2012 increased to $340,947 compared to foreign sales of $215,301 during the fiscal quarter ended April 30, 2011, primarily due to an increase in cable assembly sales to new customers in Canada, increased sales to one ongoing customer located in Mexico, as well as the addition of $60,697 in sales of the Cables Unlimited segment relating to Canadian customers. Foreign sales represented approximately 5% of the Company's net sales during the fiscal quarters ended April 30, 2012 and 2011.

The Company's gross profit as a percentage of sales decreased 6% to 45% during the current fiscal quarter ended April 30, 2012 compared to 51% in the comparable fiscal quarter of prior year. The decrease in the Company's gross profit percentage reflects the impact of lower margins at Cables Unlimited. Cables Unlimited typically operates at a 30% gross margin, which reduces the Company's overall Company gross margins. Cables Unlimited was not included in the April 30, 2011 period. Gross profit margins of the RF Connector and Cable assembly segment decreased by 1% due to increased raw material costs and an increase in labor costs. The gross margins at the Medical Cabling and Interconnector segment increased by 7% to 46% compared to 39% in the comparable fiscal quarter of prior year due to increased sales coupled with increased efficiencies associated with a higher utilization rate for the new manufacturing equipment that this segment has acquired in recent years. Also, the gross margin of the RF Wireless segment increased 2% to 52% compared to 50% in the comparable fiscal quarter of prior year.

Engineering expenses decreased 15%, or $49,676, to $283,765 from $333,441 in the comparable quarter of 2011 due to the fact that R&D efforts have decreased as projects in prior years have been completed.

Selling and general expenses increased 44% or $558,096 in the current fiscal quarter ended April 30, 2012 to $1,839,681 from $1,281,585 in the comparable quarter of the prior fiscal year. The increase in selling and general expenses was due in part to the increase in sales, as well as the addition of expenses relating to the Cables Unlimited segment, which were absent in the comparable quarter of prior year. In addition, the Company's selling and general expenses increased due to an increase in salaries for most employees and the addition of new employees.

Other income for the second quarter of 2012 decreased $4,449 compared to the same period in the prior year due to lower investment interest income reflecting the decrease in investment balances as well as a decrease in interest rates on the Company's investments in certificates of deposit.

As a result of the significant increase in revenues, income before the provision for income taxes during the fiscal quarter ended April 30, 2012 increased by $272,544 to $905,034. Income before provision for income taxes for the fiscal quarter ended April 30, 2011 was $632,490.

The provision for income taxes during the second quarter of fiscal 2012 was $302,682 (or an effective tax rate of approximately 33.4%), compared to $225,978 in the comparable quarter of fiscal 2011 (or an effective tax rate of approximately 35.7%). The decrease in the effective income tax rate for the three months ended April 30, 2012, compared to the three months ended April 30, 2011, was primarily driven by the net effect of the following: a decrease in the rate due to an adjustment for deductible acquisition costs treated as a discrete item in the three months ended April 30, 2012; an increase in the rate due to a decrease in the amount of research credits resulting from the expiration of the credits on December 31, 2011; and an increase in the rate due to research credits treated as a discrete item in the three months ended April 30, 2011. Without these adjustments, the effective tax rate for the three-month period ended April 30, 2012 would have been higher.

With the significant increase of $2,280,625 in net sales in the second quarter of fiscal 2012, gross profit increased by $785,413 from the comparable fiscal 2011 quarter. The increase in gross profits was, however, partially offset by a $558,096 increase in selling and general expenses from the prior comparable period. As a result, the Company's operating income for the three months ended April 30, 2012 increased by only $276,993 to $898,723. Operating income was $621,730 in the second quarter of fiscal 2011. Accordingly, net income for the fiscal quarter ended April 30, 2012 was $602,352 compared to $406,512 in the prior comparable period.

Six Months Ended April 30, 2012 vs. Six Months Ended April 30, 2011

Net sales in the six month period ended April 30, 2012 increased significantly by $3,699,084 to $12,230,941 from $8,531,857 in the comparable fiscal period of prior year due to the addition of Cables Unlimited and increased sales in the RF Wireless and Medical Cabling and Interconnect segments. Sales of the Cables Unlimited segment contributed $3,279,778 to total Company sales for the six month period ended April 30, 2012. Sales of the Company's RF Connector and Cable segment decreased by $349,621 compared to the same fiscal period in 2011. The decrease in the RF Connector and Cable assembly segment was due in part to a large, non-recurring order that the Company filled during the 2011 fiscal period. Sales of the Medical Cabling and Interconnect segment increased by $142,923 from the prior period and sales at the RF Wireless segment increased by $626,004 from the prior comparable period ended April 30, 2011. Sales in the RF Wireless segment increased as revenues were recognized under the LA County Fire Department contract that the Company received in November 2011, as well as the Company's continued success in marketing its larger selection of medical cabling products.

Domestic sales increased significantly by $3,834,512 to $11,521,111 from $7,686,599 in the prior comparable period, but were partially offset by decreased foreign sales. Foreign sales during the six month period ended April 30, 2012 decreased by $135,428 to $709,830 compared to foreign sales of $845,258 during the six month period ended April 30, 2011 primarily due to a decrease in cable assembly sales to several major international customers in Israel. Foreign sales represented approximately 6% and 10% of the Company's net sales during the six month period ended April 30, 2012 and 2011, respectively. The decrease in foreign sales in the current period as a percentage of overall sales is also due to the fact that substantially all of Cables Unlimited's customers are located in the United States, which has increased the overall percentage of domestic sales of the Company compared to the comparable period of prior year.

The Company's gross profit as a percentage of sales decreased 7% to 45% during the six month period ended April 30, 2012 compared to 52% in the comparable six month period of prior year. The decrease in the Company's gross profit percentage relates to the impact of the Cables Unlimited 33% gross margin on the overall Company gross margin for the six month period ended April 30, 2012. The gross profit margin of the RF Connector and Cable Assembly segment decreased 3% due to increased raw material costs and higher labor costs, while the gross profit margin of the Medical Cabling and Interconnector segment increase by 6% from the prior comparable period due to increased efficiencies related to the higher volume of sales. The gross margin of the RF Wireless segment increased 3% to 47% from 44% in the prior comparable six month period ended April 30, 2011. As a result of increased sales and profits at the Cables Unlimited, Medical Cabling and Interconnector, and RF Wireless segments, sales of the RF Connector and Cable assembly segment accounted for approximately 53% of the Company's total sales in the current six month period, compared to 81% of the Company's total sales in the comparable six month period of prior year.

Engineering expenses decreased 9% or $55,694 to $573,762 from $629,456 in the comparable six month period of the prior year due to the fact that R&D efforts have decreased as projects in prior years have been completed.

Selling and general expenses increased 47% or $1,223,837 to $3,850,937 from $2,627,100 in the comparable six month period of the prior year. The increase in selling and general expenses was due in part to the increase in sales, as well as the addition of expenses relating to the Cables Unlimited segment, which were absent in the comparable period of prior year.

The increase in revenues and the resulting increase in gross profits were partially offset by the increases in selling and general expenses. As a result of these factors, income before the provision for income taxes during the six months ended April 30, 2012 decreased by 4% or $46,918 to $1,124,496 from $1,171,414 in the comparable six month period of the prior year.

The provision for income taxes during the six months ended April 30, 2012 was $406,784 (or a combined estimated Federal and state income tax rate of approximately 36.2%), compared to $413,409 in the six months ended April 30, 2011 (or a combined estimated Federal and state income tax rate of approximately 35.3%). The estimated effective tax rate for fiscal 2012 is 41.9%. The increase in the effective income tax rate from period to period for the six months was primarily driven by the net effect of the following: a decrease in the rate due to an adjustment for deductible acquisition costs treated as a discrete item in the three months ended April 30, 2012; an increase in the rate due to a decrease in the amount of research credits resulting from the expiration of the credits on December 31, 2011; and an increase in the rate due to research credits treated as a discrete item in the three months ended April 30, 2011. Without these adjustments, the effective tax rate for the six-month period ended April 30, 2012 would have been higher.

The significant increase in sales in the six-month period ended April 30, 2012 compared to prior year's six month period was offset slightly by the decrease in gross margins resulted in a $1,117,448 increase in gross profit. As engineering expenses decreased by $55,694 and selling and general expenses increased by $1,223,837 from the prior comparable period, the Company's operating income for the six months ended April 30, 2012 decreased by $50,695 to $1,099,473 up from $1,150,168 in the prior comparable six month period. Net income for the six-month period ended April 30, 2012 was $719,560 compared to $758,005 for the same period of the prior year.