clfd20231231

clfd20231231_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended December 31, 2023

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

For the transition period from __________________ to ___________________

Commission File Number 0-16106

Clearfield, Inc.

(Exact name of Registrant as specified in its charter)

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

7050 Winnetka Avenue North

Suite 100

Brooklyn Park, Minnesota

55428

(Address of principal executive office)

(Zip Code)

(763) 476-6866

(Registrant’s telephone number, including area code)

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

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

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

☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company in Rule 12b-2 of the Exchange Act. 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 ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

☐ Yes ☒ No

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

Class:	Outstanding as of January 29, 2024
Common stock, par value $.01	14,706,671

CLEARFIELD, INC.

FORM 10-Q

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION	4
ITEM 1. FINANCIAL STATEMENTS	4
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	20
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	26
ITEM 4. CONTROLS AND PROCEDURES	26
PART II. OTHER INFORMATION	26
ITEM 1. LEGAL PROCEEDINGS	26
ITEM 1A. RISK FACTORS	26
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	26
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	27
ITEM 4. MINE SAFETY DISCLOSURES	27
ITEM 5. OTHER INFORMATION	27
ITEM 6. EXHIBITS	27
SIGNATURES	28

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CLEARFIELD, INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE DATA)

	December 31, 2023 (Unaudited)		September 30, 2023
Assets
Current Assets
Cash and cash equivalents	$	34,484	$	37,827
Short-term investments		128,352		130,286
Accounts receivables, net		17,363		28,392
Inventories, net		94,613		98,055
Other current assets		1,806		1,695
Total current assets		276,618		296,255

Property, plant and equipment, net		22,870		21,527

Other Assets
Long-term investments		6,505		6,343
Goodwill		6,615		6,528
Intangible assets, net		5,982		6,092
Right-of-use lease assets		13,297		13,861
Deferred tax asset		2,754		3,039
Other		988		1,872
Total other assets		36,141		37,735
Total Assets	$	335,629	$	355,517

Liabilities and Shareholders’ Equity
Current Liabilities
Current portion of lease liability	$	3,811	$	3,737
Current maturities of long-term debt		2,214		2,112
Accounts payable		7,368		8,891
Accrued compensation		5,279		5,571
Accrued expenses		2,750		2,404
Factoring liability		3,532		6,289
Total current liabilities		24,954		29,004

Other Liabilities
Long-term portion of lease liability		9,973		10,629
Deferred tax liability		607		721
Total liabilities		35,534		40,354

Shareholders’ Equity
Preferred stock, $.01 par value; 500,000 shares; no shares issued or outstanding		-		-
Common stock, authorized 50,000,000, $.01 par value; 14,939,671 and 15,254,725 shares issued and outstanding as of December 31, 2023 and Septembe 30, 2023, respectively		149		153
Additional paid-in capital		177,322		188,218
Accumulated other comprehensive loss		476		(544	)
Retained earnings		122,148		127,336
Total shareholders’ equity		300,095		315,163
Total Liabilities and Shareholders’ Equity	$	335,629	$	355,517

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CLEARFIELD, INC.

CONSOLIDATED STATEMENTS OF EARNINGS

(IN THOUSANDS, EXCEPT SHARE DATA)

	Three Months Ended			Three Months Ended
	December 31,			December 31,
	2023 (Unaudited)			2022

Net sales	$	34,230		$	85,942

Cost of sales		29,533			55,293

Gross profit		4,697			30,649

Operating expenses
Selling, general and administrative		12,859			12,759
Income from operations		(8,162	)		17,890

Net investment income		2,069			303
Interest expense		(126	)		(243	)

Income before income taxes		(6,219	)		17,950

Income tax expense		(951	)		3,695
Net income	$	(5,268	)	$	14,255

Net income per share Basic	$	(0.35	)	$	1.01
Net income per share Diluted	$	(0.35	)	$	1.00

Weighted average shares outstanding:
Basic		15,212,945			14,165,550
Diluted		15,212,945			14,284,847

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CLEARFIELD, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(IN THOUSANDS)

	Three Months Ended			Three Months Ended
	December 31,			December 31,
	2023 (Unaudited)			2022

Comprehensive (loss) Income:
Net (loss) income	$	(5,268	)	$	14,255
Other comprehensive income, net of tax
Unrealized gain on available-for-sale investments		291			141
Unrealized gain on foreign currency translation		729			1,024
Total other comprehensive income		1,020			1,165

Total comprehensive (loss) income	$	(4,248	)	$	15,420

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CLEARFIELD, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(IN THOUSANDS)

For three months ended December 31, 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, 2023		15,254		$	153		$	188,218		$	(544	)	$	127,336		$	315,163
Stock-based compensation expense		-			-			1,271			-			-			1,271
Issuance of common stock under employee stock purchase plan		10			-			250			-			-			250
Issuance of common stock under equity compensation plans, net		120			-			-			-			-			-
Repurchase of shares for payment of withholding taxes for vested restricted stock grants		(9	)		-			(236	)		-			-			(236	)
Repurchase of common stock		(436	)		(4	)		(12,181	)		-			-			(12,185	)
Adoption of new accounting pronouncement		-			-			-			-			80			80
Other comprehensive income		-			-			-			1,020			-			1,020
Net loss		-			-			-			-			(5,268	)		(5,268	)
Balance at December 31, 2023		14,939		$	149		$	177,322		$	476		$	122,148		$	300,095

For three months ended December 31, 2022									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		13,819		$	138	$	54,539		$	(1,898	)	$	94,803	$	147,582
Stock-based compensation expense		-			-		660			-			-		660
Issuance of common stock under employee stock purchase plan		5			-		299			-			-		299
Issuance of common stock under equity compensation plans, net		18			-		954			-			-		954
Repurchase of shares for payment of withholding taxes for vested restricted stock grants		(10	)		-		(954	)		-			-		(954	)
Exercise of stock options, net of shares exchanged for payment		6			-		(342	)		-			-		(342	)
Issuance of common stock, net		1,380			14		130,248			-			-		130,262
Other comprehensive income		-			-		-			1,165			-		1,165
Net income		-		$	-	$	-		$	-		$	14,255	$	14,255
Balance at December 31, 2022		15,218		$	152	$	185,404		$	(733	)	$	109,058	$	293,881

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CLEARFIELD, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(IN THOUSANDS)

	Three Months			Three Months
	Ended			Ended
	December 31,			December 31,
	2023			2022
Cash flows from operating activities
Net (loss) income	$	(5,268	)	$	14,255
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		1,695			1,353
Gain on sale of property, plant, and equipment		(44	)		-
Amortization of discount on investments		(1,160	)		(218	)
Deferred taxes		(320	)		(80	)
Stock-based compensation		1,271			660
Changes in operating assets and liabilities, net of acquired amounts:
Accounts receivable		11,750			(549	)
Inventories, net		4,169			(6,505	)
Other assets		815			(176	)
Accounts payable and accrued expenses		(5,081	)		(7,637	)
Net cash provided by operating activities		7,827			1,103

Cash flows from investing activities
Purchases of property, plant and equipment and intangible assets		(2,412	)		(2,213	)
Purchases of investments		(47,748	)		(98,881	)
Proceeds from maturities of investments		51,068			-
Net cash provided by (used in) investing activities		908			(101,094	)

Cash flows from financing activities
Repayment of long-term debt		-			(16,700	)
Proceeds from issuance of common stock under employee stock purchase plan		250			299
Repurchase of shares for payment of withholding taxes		(236	)		(954	)
for stock grants
Tax withholding and proceeds related to exercise of stock options		-			(342	)
Issuance of stock under equity compensation plans		-			954
Net proceeds from issuance of common stock		-			130,262
Repurchase of common stock		(12,185	)		-
Net cash (used in) provided by financing activities		(12,171	)		113,519

Effect of exchange rates on cash		93			135
(Decrease) increase in cash and cash equivalents		(3,343	)		13,663
Cash and cash equivalents, beginning of year		37,827			16,650
Cash and cash equivalents, end of year	$	34,484		$	30,313

Supplemental disclosures for cash flow information
Cash paid during the year for income taxes	$	61		$	-
Cash paid for interest	$	86		$	205
Non-cash financing activities
Cashless exercise of stock options	$	-		$	431

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Summary of Significant Accounting Policies

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

Basis of Presentation

The accompanying (a) consolidated balance sheet as of September 30, 2023, which has been derived from audited financial statements, and (b) unaudited interim consolidated financial statements as of and for the three months ended December 31, 2023 have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America for interim financial information, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the consolidated financial statements include all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the financial position, results of operations, and cash flows of the interim periods presented. Operating results for the interim periods presented are not necessarily indicative of results to be expected for the full year or for any other interim period, due to variability in customer purchasing patterns, seasonality, and other factors. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2023.

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

Principles of Consolidation

The 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.

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.

Note 2. Net Income (Loss) Per Share

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

The following is a reconciliation of the numerator and denominator of the net income (loss) per common share computations for the three months ended December 31, 2023, and 2022:

	Three Months Ended December 31,
	2023			2022
Net (loss) income	$	(5,268,000	)	$	14,255,000
Weighted average common shares		15,212,945			14,165,550
Dilutive potential common shares		-			119,297
Weighted average dilutive common shares outstanding		15,212,945			14,284,847
Net (loss) income per common share:
Basic	$	(0.35	)	$	1.01
Diluted	$	(0.35	)	$	1.00

Note 3. Cash and Cash Equivalents

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

(In thousands)	December 31, 2023		September 30, 2023
Cash and cash equivalents:
Cash including money market accounts	$	9,156	$	11,360
Money market funds		25,328		26,467
Total cash and cash equivalents	$	34,484	$	37,827

Note 4. Investments

The Company invests in certificates of deposit that are fully insured by the Federal Deposit Insurance Corporation ("FDIC") and United States Treasury securities with terms of not more than five years, as well as money market funds. The Company’s investment portfolio is classified as available-for-sale, which is reported at fair value. 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.

As of December 31, 2023, available-for-sale investments consisted of the following:

	December 31, 2023
(In thousands)	Cost		Unrealized Gains		Unrealized Losses		Fair Value
Short-Term
U.S. Treasury securities	$	123,932	$	30	$	13	$	123,949
Certificates of deposit		4,446		-		43		4,403
Investment securities – short-term	$	128,378	$	30	$	56	$	128,352
Long-Term
U.S Treasury securities	$	6,728	$	-	$	448	$	6,280
Certificates of deposit		248		-		23		225
Investment securities – long-term	$	6,976	$	-	$	471	$	6,505

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

	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 December 31, 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	$	38,207	$	50	$	6,280	$	444
Certificates of deposit		245		-		4,384		65
Investment securities	$	38,452	$	50	$	10,664	$	509

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

As of December 31, 2023, there were 25 securities in an unrealized loss position which is due to the market paying a higher interest rate than the coupon rate on these securities. As of September 30, 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 December 31, 2023 and 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 U.S. federal government.

Note 5. Fair Value Measurements

The Company determines the fair value of its assets and liabilities based on the market price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company determines the fair value of U.S. treasury securities and certificates of deposit 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 December 31, 2023, according to the three-level fair value hierarchy:

	Fair Value Measurements as of December 31, 2023
(In thousands)	Total		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	25,328	$	25,328	$	-	$	-
Total cash equivalents	$	25,328	$	25,328	$	-	$	-
Investment securities:
Certificates of deposit	$	130,229	$	-	$	130,229	$	-
U.S. Treasury securities		4,628		-		4,628		-
Total investment securities	$	134,857	$	-	$	134,857	$	-

The following provides information regarding fair value measurements for the Company’s investment securities as of September 30, 2023, according to the three-level fair value hierarchy:

	Fair Value Measurements as of September 30, 2023
(In thousands)	Total		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	26,467	$	26,467	$	-	$	-
Total cash equivalents	$	26,467	$	26,467	$	-	$	-
Investment securities:
Certificates of deposit	$	8,115	$	-	$	8,115	$	-
U.S. Treasury securities		128,514		-		128,514		-
Total investment securities	$	136,629	$	-	$	136,629	$	-

During the three months ended December 31, 2023, and the year ended September 30, 2023, the Company owned no Level 3 securities and there were no transfers within the fair value level hierarchy.

Non-financial assets such as equipment and leasehold improvements, goodwill and intangible assets, and right-of-use assets for operating leases are subject to non-recurring fair value measurements if they are deemed impaired. The Company had no re-measurements of non-financial assets to fair value in the three months ended December 31, 2023, and the year ended September 30, 2023.

Note 6. Other Comprehensive Income (Loss)

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

(In thousands)	Available-for-Sale Securities			Foreign Currency Translation		Accumulated Other Comprehensive Loss
Balances at September 30, 2023	$	(682	)	$	138	$	(544	)
Other comprehensive income for the three months ended December 31, 2023		291			729		1,020
Balances at December 31, 2023	$	(391	)	$	867	$	476

Note 7. Stock-Based Compensation

The Company recorded $1,271,000 of compensation expense related to current and past restricted stock grants, non-qualified stock options, performance stock units, and the Company’s Employee Stock Purchase Plan (“ESPP”) for the three months ended December 31, 2023. For the three months ended December 31, 2023, $1,227,000 of this expense is included in selling, general and administrative expense, and $44,000 is included in cost of sales. The Company recorded $660,000 of compensation expense related to current and past restricted stock grants, non-qualified stock options, and the Company’s ESPP for the three months ended December 31, 2022. For the three months ended December 31, 2022, $625,000 of this expense is included in selling, general and administrative expense, and $35,000 is included in cost of sales. As of December 31, 2023, $8,668,000 of total unrecognized compensation expense related to non-vested restricted stock awards and stock options is expected to be recognized over a period of approximately 2.9 years.

Stock Options

The Company uses the Black-Scholes option pricing model to determine the fair value of stock options granted. During the three months ended December 31, 2023, the Company granted employees non-qualified stock options to purchase an aggregate of 111,299 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 $26.18 per share. During the three months ending December 31, 2022, the Company granted employees non-qualified stock options to purchase an aggregate of 15,020 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 $104.36 per share.

The fair value of stock option awards during the three months ended December 31, 2023, was estimated as of the respective grant dates using the assumptions listed below:

	Three months ended December 31, 2023
Dividend yield		0.00	%
Expected volatility		61.71	%
Risk-free interest rate		4.55	%
Expected life (years)	3.5
Vesting period (years)	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 as of the grant date on zero-coupon U.S. governmental bonds with a remaining life similar to the expected option term.

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

The following is a summary of stock option activity during the three months ended December 31, 2023:

	Number of options			Weighted average exercise price
Outstanding as of September 30, 2023		254,124		$	37.04
Granted		111,299			26.18
Exercised		-			-
Forfeited or expired		(1,731	)		41.64
Outstanding as of December 31, 2023		363,692		$	33.69

The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price. As of December 31, 2023, the weighted average remaining contractual term for all outstanding and exercisable stock options was 2.14 years and their aggregate intrinsic value was $1,258,000.

Restricted Stock

During the three months ended December 31, 2023, the Company granted employees restricted stock awards totaling 121,884 shares of common stock, with a vesting term of approximately three years and a fair value of $26.18 per share based on the stock price on the grant date. During the three months ended December 31, 2022, the Company granted employees restricted stock awards totaling 8,686 shares of common stock, with a vesting term of approximately three years and a fair value of $104.36 per share.

Restricted stock transactions during the three months ended December 31, 2023, are summarized as follows:

	Number of shares			Weighted average grant date fair value
Unvested shares as of September 30, 2023		90,575		$	49.92
Granted		121,884			26.18
Vested		(30,422	)		52.67
Forfeited		(2,017	)		35.26
Unvested as of December 31, 2023		180,020		$	32.32

Performance Stock

During the three months ended December 31, 2023, the Company granted 47,745 performance stock units which entitles the participant to receive the same number of shares of the Company’s common stock, upon achievement of a fiscal year 2024 performance goal. The Company has determined the fair value per underlying share of the performance stock unit awards to be $26.18 as of the grant date.

Compensation expense for the performance stock units is measured using the fair value of our common stock at the grant date. As of December 31, 2023, the Company believes it is probable that these performance stock unit awards will vest and compensation expense has been recognized ratably over the performance period based on our estimated achievement of the established performance criteria. The Company did not issue any performance stock units in the three months ended December 31, 2022.

Bonus Stock

The Company did not issue any bonus stock in the three months ended December 31, 2023. During the three months ended December 31, 2022, the Company granted employees an aggregate of 9,144 shares of stock as a discretionary bonus to pay the incentive compensation earned 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.

Employee Stock Purchase Plan

The Company’s ESPP allows participating employees to purchase shares of the Company’s common stock at a discount through payroll deductions. The ESPP is available to all employees subject to certain eligibility requirements. Terms of the ESPP provide those participating employees the ability to purchase the Company’s common stock on a voluntary after-tax basis. Employees may purchase the Company’s common stock at a price that is no less than the lower of 85% of the fair market value of one share of common stock at the beginning or end of each stock purchase period or phase. The ESPP is carried out in six-month phases, with phases beginning on January 1 and July 1 of each calendar year. For the phase that ended on December 31, 2023, employees purchased 10,104 shares at a price of $24.72 per share. After the employee purchase on December 31, 2023,

SEC Form 10-Q filed by Clearfield Inc.