What changed in this filing

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Item 9A. Controls and Procedures

2023-05-03 compared with 2022-05-04 · 159 added, 284 removed, 380 unchanged (54% of the section changed)

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Disclosure Controls and Procedures

Management, with the participation of the Chief Executive Officer and Chief Financial Officer, has performed an evaluation of our disclosure controls and procedures that are defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this Report.

This evaluation included consideration of the controls, processes, and procedures that are designed to ensure that information required to be disclosed by us in the reports we file under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2022, our disclosure controls and procedures were effective.

Management ’

s Report on Internal Control Over Financial Reporting

Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2023, our disclosure controls and procedures were effective.

Management ’ s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act.

Our management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of March 31, 2022.

In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in the 2013 Internal Control —

Integrated Framework .

Based on our assessment using the criteria set forth by COSO in the 2013 Internal Control —

Integrated Framework , management concluded that our internal control over financial reporting was effective as of March 31, 2022.

Our management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of March 31, 2023.

In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in the 2013 Internal Control — Integrated Framework .

Based on our assessment using the criteria set forth by COSO in the 2013 Internal Control — Integrated Framework , management concluded that our internal control over financial reporting was effective as of March 31, 2023.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our internal control over financial reporting will prevent all errors and all fraud.

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Changes in Internal Controls

During the quarter ended March 31, 2022, there was no change in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

During the year ended March 31, 2023, there was no change in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The section titled “Delinquent Section 16(a) Reports”

sets forth information regarding delinquent Section 16(a) reports required by Item 10, to be included in our Proxy Statement for our 2022 Annual Meeting of Shareholders , the section titled “Proposal 1.

Election of Board of Directors”

sets forth certain information regarding our directors and executive officers required by Item 10, the section titled “Information About Our Executive Officers”

sets forth information regarding our executive officers required by Item 10, and the section titled “Corporate Governance”

sets forth information regarding our corporate governance and code of ethics required by Item 10.

The information in these sections to be included in our Proxy Statement for our 2022 Annual Meeting of Shareholders are incorporated by reference into this section.

The section titled “Delinquent Section 16(a) Reports” sets forth information regarding delinquent Section 16(a) reports required by Item 10, to be included in our Proxy Statement for our 2023 Annual Meeting of Shareholders, the section titled “Proposal 1.

Election of Board of Directors” sets forth certain information regarding our directors and executive officers required by Item 10, the section titled “Information About Our Executive Officers” sets forth information regarding our executive officers required by Item 10, and the section titled “Corporate Governance” sets forth information regarding our corporate governance and code of ethics required by Item 10.

The information in these sections to be included in our Proxy Statement for our 2023 Annual Meeting of Shareholders is incorporated by reference into this section.

EXECUTIVE COMPENSATION.

The information in the sections “Executive Compensation,”

“Compensation Discussion and Analysis,”

“Corporate Governance –

Board Committees –

Compensation Committee Interlocks and Insider Participation,”

and “Director Compensation”

to be included in our Proxy Statement for our 2022 Annual Meeting of Shareholders is incorporated by reference into this section.

The information in the sections “Executive Compensation,” “Compensation Discussion and Analysis,” “Corporate Governance – Board Committees – Compensation Committee Interlocks and Insider Participation,” and “Director Compensation” to be included in our Proxy Statement for our 2023 Annual Meeting of Shareholders is incorporated by reference into this section.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The information in the sections “Equity Compensation Plan Information”

and “Security Ownership”

to be included in our Proxy Statement for our 2022 Annual Meeting of Shareholders is incorporated by reference into this section.

Information regarding the material features of our 2000 Stock Option Plan, as amended, is contained in Note 5 to the Financial Statements included elsewhere in this Report.

The information in the sections “Equity Compensation Plan Information” and “Security Ownership” to be included in our Proxy Statement for our 2023 Annual Meeting of Shareholders is incorporated by reference into this section.

Information regarding the material features of our 2000 Stock Option Plan, as amended, is contained in Note 5 to the Financial Statements included elsewhere in this Report.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

The information in the sections “Security Ownership –

Transactions With Related Persons, Promoters, and Certain Control Persons”

and “Corporate Governance –

Board Composition and Independence”

to be included in our Proxy Statement for our 2022 Annual Meeting of Shareholders is incorporated by reference into this section.

The information in the sections “Security Ownership – Transactions With Related Persons, Promoters, and Certain Control Persons” and “Corporate Governance – Board Composition and Independence” to be included in our Proxy Statement for our 2023 Annual Meeting of Shareholders is incorporated by reference into this section.

PRINCIPAL ACCOUNTING FEES AND SERVICES.

The information in the sections “Audit Committee Disclosure –

Fees Billed to Us by Our Independent Registered Public Accounting Firm During Fiscal 2022 and 2021”

and “Audit Committee Disclosure –

Audit Committee Pre-Approval Policy”

to be included in our Proxy Statement for our 2022 Annual Meeting of Shareholders is incorporated by reference into this section.

The information in the sections “Audit Committee Disclosure – Fees Billed to Us by Our Independent Registered Public Accounting Firm During Fiscal 2023 and 2022” and “Audit Committee Disclosure – Audit Committee Pre-Approval Policy” to be included in our Proxy Statement for our 2023 Annual Meeting of Shareholders is incorporated by reference into this section.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a) Financial Statements and Schedules

Financial statements are provided pursuant to Item 8 of this Report.

Financial statements are provided pursuant to Item 8 of this Report.

Certain financial statement schedules have been omitted because they are not required, not applicable, or the required information is provided in other financial statements or the notes to the financial statements.

A list of exhibits of is on the following page.

Exhibit  

Amended and Restated Articles of Incorporation of the company as amended by the Board of Directors effective November 21, 2002 (incorporated by reference to the Form 10-QSB for the period ended December 31, 2002).

Bylaws of the company as amended by the Board of Directors effective May 6, 2020.

Description of the registrant’s securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to the Form 10-K for the year ended March 31, 2021).

A list of exhibits is on the following page.

Amended and Restated Articles of Incorporation of the company as amended by the Board of Directors effective November 21, 2002 (incorporated by reference to the Form 10-QSB for the period ended December 31, 2002).

Bylaws of the company as amended by the Board of Directors effective May 6, 2020.

Description of the registrant’s securities registered pursuant to Section 12 of the Securities Exchange Act of 1934.

Lease dated October 1, 1998 with Glenborough Properties, LP (incorporated by reference to the Form 10-QSB for the period ended September 30, 2002).

First amendment to lease with Glenborough dated September 18, 2002 (incorporated by reference to the Form 10-QSB for the period ended September 30, 2002).

First amendment to lease with Glenborough dated September 18, 2002 (incorporated by reference to the Form 10-QSB for the period ended September 30, 2002).

Second amendment to lease with Glenborough dated December 1, 2003 (incorporated by reference to the Form 10-QSB for the period ended December 31, 2003).

1 unchanged sentence

Fourth amendment to lease with the Barbara C.

Gage Revocable Trust (incorporated by reference to our Current Report on Form 8-K/A filed August 3, 2011).

Fifth amendment to lease with GRE – Bryant Lake, LLC (incorporated by reference to our Current Report on Form 8-K/A filed March 3, 2020).

Gage Revocable Trust (incorporated by reference to our Current Report on Form 8-K/A filed August 3, 2011).

Fifth amendment to lease with GRE – Bryant Lake, LLC (incorporated by reference to our Current Report on Form 8-K/A filed March 3, 2020).

Employment Agreement with Daniel A.

Baker dated January 29, 2001 (incorporated by reference to the Form 10-KSB for the year ended March 31, 2001).

NVE Corporation 2000 Stock Option Plan as Amended July 19, 2001 by the shareholders (incorporated by reference to our Registration Statement on Form S-8 filed July 20, 2001).

Baker dated January 29, 2001 (incorporated by reference to the Form 10-KSB for the year ended March 31, 2001).

NVE Corporation 2000 Stock Option Plan as Amended July 19, 2001 by the shareholders (incorporated by reference to our Registration Statement on Form S-8 filed July 20, 2001).

Indemnification Agreement by and between Pacesetter, Inc., a St.

Jude Medical Company, and the company (incorporated by reference to the Form 8-K filed September 27, 2005).

Supplier Partnering Agreement by and between St. Jude and the company (incorporated by reference to the Form 8-K filed January 4, 2006).

Jude Medical Company, and the company (incorporated by reference to the Form 8-K filed September 27, 2005).

Supplier Partnering Agreement by and between St.

Jude and the company (incorporated by reference to the Form 8-K filed January 4, 2006).

Amendment No.

1 to St. Jude Supplier Partnering Agreement (incorporated by reference to the Form 8-K/A filed September 10, 2007).

Jude Supplier Partnering Agreement (incorporated by reference to the Form 8-K/A filed September 10, 2007).

Amendment No.

2 to St. Jude Supplier Partnering Agreement (incorporated by reference to the Form 8-K/A filed December 18, 2009).

Jude Supplier Partnering Agreement (incorporated by reference to the Form 8-K/A filed December 18, 2009).

Amendment No.

3 to St. Jude Supplier Partnering Agreement (incorporated by reference to the Form 8-K/A filed September 16, 2010).

Jude Supplier Partnering Agreement (incorporated by reference to the Form 8-K/A filed September 16, 2010).

Amendment No.

4 to St. Jude Supplier Partnering Agreement (incorporated by reference to the Form 8-K/A filed February 7, 2011).

Supplier Quality Agreement between St. Jude and the company (incorporated by reference to the Form 8-K filed February 10, 2016).

Jude Supplier Partnering Agreement (incorporated by reference to the Form 8-K/A filed February 7, 2011).

Supplier Quality Agreement between St.

Jude and the company (incorporated by reference to the Form 8-K filed February 10, 2016).

Amendment No.

5 to St. Jude Supplier Partnering Agreement (incorporated by reference to the Form 8-K/A filed April 21, 2016).

Jude Supplier Partnering Agreement (incorporated by reference to the Form 8-K/A filed April 21, 2016).

Amendment No.

6 to Abbott Supplier Partnering Agreement (incorporated by reference to the Form 8-K/A filed December 21, 2020).

6 to Abbott Supplier Partnering Agreement (incorporated by reference to the Form 8-K/A filed December 21, 2020).

Amendment No.

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Amendment No.

8 to Abbott Supplier Partnering Agreement (incorporated by reference to the Form 8-K/A filed February 2, 2022).

Supply Agreement by and with Sonova AG (incorporated by reference to the Form 8-K/A filed November 16, 2015).

First Amendment to Sonova Supply Agreement (incorporated by reference to the Form 8-K/A filed February 18, 2020).

8 to Abbott Supplier Partnering Agreement (incorporated by reference to the Form 8-K/A filed February 2, 2022).

Amendment No.

9 to Supplier Partnering Agreement between Abbott and the company (incorporated by reference to the Form 8-K/A filed January 25, 2023).

Supply Agreement by and with Sonova AG (incorporated by reference to the Form 8-K/A filed November 16, 2015).

First Amendment to Sonova Supply Agreement (incorporated by reference to the Form 8-K/A filed February 18, 2020).

Consent of Boulay PLLP.

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Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

†Indicates a management contract or compensatory plan or arrangement.

+Confidential portions deleted and filed separately with the SEC.

*Certain confidential portions redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K.

The omitted information is (i) not material and (ii) would likely cause us competitive harm if publicly disclosed.

The omitted information is (i) not material and (ii) would likely cause us competitive harm if publicly disclosed.

We agree to furnish supplementally an unredacted copy of the exhibit to the Securities and Exchange Commission on its request.

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President and Chief Executive Officer

Date    May 4, 2022

Date May 3, 2023

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

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/s/ Joseph R.

Corporate Controller and

Chief Financial Officer

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Opinion on the Financial Statements

We have audited the accompanying balance sheets of NVE Corporation (the Company) as of March 31, 2022 and 2021, and the related statements of income, comprehensive income, shareholders' equity, and cash flows for each of the years in the two-year period ended March 31, 2022, and the related notes (collectively referred to as the financial statements).

We have audited the accompanying balance sheets of NVE Corporation (the Company) as of March 31, 2023 and 2022, and the related statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the years in the two-year period ended March 31, 2023, 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 March 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the two-year period ended March 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

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 audits.

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 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.

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The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

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Critical Audit Matters

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) related to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

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 our especially challenging, subjective, or complex judgments.

We determined that there were no critical audit matters.

/s/ Boulay PLLP

We have served as the Company’s auditor since May 8, 2019.

We have served as the Company’s auditor since 2019.

Minneapolis, Minnesota

NVE CORPORATION

BALANCE SHEETS

NVE CORPORATION BALANCE SHEETS

March 31, 2023

2 unchanged sentences

Cash and cash equivalents

$ 10,449,510  

$ 10,427,340  

Marketable securities, short-term

20,839,683  

7,678,957  

Accounts receivable, net of allowance for uncollectible accounts of $ 15,000

4,704,829  

1,964,281  

5,088,635  

3,900,777  

Prepaid expenses and other assets

420,520  

391,278  

Total current assets

41,503,177  

24,362,633  

Machinery and equipment

9,739,244  

9,254,664  

Leasehold improvements

1,810,872  

11,550,116  

11,065,536  

Less accumulated depreciation and amortization

10,943,731  

10,728,853  

Net fixed assets

606,385  

336,683  

Deferred tax assets

483,469  

73,538  

Marketable securities, long-term

24,314,211  

47,038,669  

Right-of-use asset –

operating lease

560,250  

689,216  

$ 67,467,492  

$ 72,500,739  

LIABILITIES AND SHAREHOLDERS’

Right-of-use asset – operating lease

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities

Accounts payable

$ 943,535  

$ 336,591  

Accrued payroll and other

1,356,689  

540,474  

Operating lease

156,121  

150,273  

Total current liabilities

2,456,345  

1,027,338  

Operating lease

446,018  

581,459  

Total liabilities

2,902,363  

1,608,797  

Shareholders’

Shareholders’ equity

Common stock, $ 0.01 par value, 6,000,000 shares authorized;

4,830,826 issued and outstanding as of March 31, 2022 and 4,833,232 as of March 31, 2021

48,308  

48,332  

4,830,826 issued and outstanding as of March 31, 2023 and 2022

Additional paid-in capital

19,256,485  

19,338,127  

Accumulated other comprehensive income (loss)

1,101,119  

Retained earnings

45,578,456  

50,404,364  

Total shareholders’

64,565,129  

70,891,942  

Total liabilities and shareholders’

$ 67,467,492  

$ 72,500,739  

Total shareholders’ equity

Total liabilities and shareholders’ equity

See accompanying notes.

NVE CORPORATION

STATEMENTS OF INCOME

NVE CORPORATION STATEMENTS OF INCOME

Year Ended March 31,

10 unchanged sentences

Provision for income taxes

Net income per share –

Net income per share – basic

Net income per share – diluted

Cash dividends declared per common share

5 unchanged sentences

See accompanying notes.

NVE CORPORATION

STATEMENTS OF SHAREHOLDERS ’

EQUITY  

NVE CORPORATION STATEMENTS OF SHAREHOLDERS ’ EQUITY

Balance as of March 31, 2021

4,835,038  

$ 48,350  

$ 19,383,956  

$ 516,523  

$ 58,046,520  

$ 77,995,349  

Repurchase of common stock

Exercise of stock options, net of shares withheld for exercise price

Comprehensive income:

Unrealized gain on marketable securities, net of tax

584,596  

11,694,384  

Total comprehensive income

12,278,980  

Stock-based compensation

45,572  

Cash dividends declared ($4.00 per share of common stock)

( 19,336,540 )

Balance as of March 31, 2022

4,833,232  

48,332  

19,338,127  

1,101,119  

50,404,364  

70,891,942  

Repurchase of common stock

Exercise of stock options

Exercise of stock options, net of shares withheld for exercise price

Comprehensive income:

Unrealized loss on marketable securities, net of tax

( 1,419,239 )

14,507,501  

Total comprehensive income

13,088,262  

Stock-based compensation

81,855  

Cash dividends declared ($4.00 per share of common stock)

( 19,333,409 )

Balance as of March 31, 2023

4,830,826  

48,308  

$ 19,256,485  

$ ( 318,120 )

$ 45,578,456  

$ 64,565,129  

See accompanying notes.

NVE CORPORATION

STATEMENTS OF CASH FLOWS  

NVE CORPORATION STATEMENTS OF CASH FLOWS

Year Ended March 31,

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Purchases of marketable securities

Proceeds from maturities and sales of marketable securities

Net cash provided by investing activities

Proceeds from maturities of marketable securities

Receipt of tenant improvement allowance

Net cash (used in) provided by investing activities

FINANCING ACTIVITIES

2 unchanged sentences

Net cash used in financing activities

Increase in cash and cash equivalents

(Decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of year

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We generally do not require collateral from our customers, but we perform ongoing credit evaluations of their financial condition.

More information on accounts receivable is contained in the paragraph titled “Accounts Receivable and Allowance for Doubtful Accounts”

of this note.

More information on accounts receivable is contained in the paragraph titled “Accounts Receivable and Allowance for Doubtful Accounts” of this note.

Additionally, we are dependent on critical suppliers including our packaging vendors and suppliers of certain raw silicon and semiconductor wafers that are incorporated in our products.

The effects of the COVID- 19 pandemic have increased the risk of supply interruptions.

Industry shortages and supply-chain disruptions in the past several years have increased the risks of supply interruptions.

Accounts Receivable and Allowance for Doubtful Accounts

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Amortization of leasehold improvements is recorded using the straight-line method over the lesser of the lease term or five-year useful life.

We record losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’

carrying amount.

We did not identify any indicators of impairment during fiscal 2023 or 2022.

Depreciation and amortization expense related to fixed assets was $ 214,877 for fiscal 2022 and $ 308,511 for fiscal 2021.

Depreciation expense related to fixed assets was $ 196,738 for fiscal 2023 and $ 214,877 for fiscal 2022.

Revenue Recognition

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A contract liability is recognized when we have been paid by a customer but have not yet satisfied the performance obligation by transferring goods or services.

We had no material contract assets or contract liabilities as of March 31, 2022 or March 

We had no material contract assets or contract liabilities as of March 31, 2023 or March 31, 2022.

Our performance obligations related to product sales and contract research and development contracts are satisfied in one year or less.

Unsatisfied performance obligations represent contracts with an original expected duration of one year or less.

As permitted under Accounting Standards Codification (“ASC”) Topic 

606, Revenue from Contracts with Customers , we are using the practical expedient not to disclose the value of these unsatisfied performance obligations.

As permitted under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers , we are using the practical expedient not to disclose the value of these unsatisfied performance obligations.

We also use the practical expedient in which we do not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less.

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Net income per diluted share amounts assume exercise of all stock options.

The following table shows the components of diluted shares: 

Year Ended March 31,

Weighted average common shares outstanding –

4,833,661  

4,834,054  

Weighted average common shares outstanding – basic

Dilutive effect of stock options

Shares used in computing net income per share –

4,835,639  

4,834,462  

Shares used in computing net income per share – diluted

Use of Estimates

2 unchanged sentences

Actual results could differ from those estimates.

Recently Issued Accounting Standards

Recently Adopted Accounting Standard

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2019 - 12, Income Taxes (Topic 740 )—Simplifying the Accounting for Income Taxes.

ASU 2019 - 12 simplifies accounting for income taxes, removes certain exceptions to the general principles in Topic 740, and amends existing guidance to improve consistent application.

In May 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options .

ASU 2021-04 addresses issuers’ accounting for certain modifications or exchanges of freestanding equity-classified written call options.

We adopted ASU 2021-04 beginning with the quarter ended June 30, 2022.

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New Accounting Standard Not Yet Adopted

In May 2021, the FASB issued ASU No.

2021 - 04, Earnings Per Share (Topic 260 ), Debt—Modifications and Extinguishments (Subtopic 470 - 50 ), Compensation—Stock Compensation (Topic 718 ), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815 - 40 ) Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options.

ASU 2021 - 04 addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options.

ASU 2021 - 04 is effective for fiscal years beginning after December 15, 2021 and interim periods within those fiscal years, which is fiscal 2023 for us, with early adoption permitted.

We do not expect adoption of the new guidance to have a significant impact on our financial statements.

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Statements .

ASU 2016-13 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected.

The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset.

In November 2018 the FASB issued ASU No.

2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses , which clarifies codification and corrects unintended application of the guidance, and in November 2019, the FASB issued ASU No.

2019-11, Codification Improvements to Topic 326, Financial Instruments-Credit Losses , which clarifies or addresses specific issues about certain aspects of ASU 2016-13.

In November 2019 the FASB issued ASU No.

2019-10, Financial Instruments — Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842):

Effective Dates , and in February 2020 the FASB issued ASU No.

2020-02, Financial Instruments — Credit Losses (Topic 326) and Leases (Topic 842):

Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.

119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No.

2016-02, Leases (Topic 842) , both of which delay the effective date of ASU 2016-13 by three years for certain Smaller Reporting Companies such as us.

In March 2020, the FASB issued ASU No.

2020-03, Codification Improvements to Financial Instruments ;

which modifies the measurement of expected credit losses of certain financial instruments.

In accordance with ASU 2019-10 and ASU 2020-02, ASU 2016-13 is effective for certain Smaller Reporting Companies for financial statements issued for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years, which will be fiscal 2024 for us.

We do not expect the adoption of ASU 2016-13 to have a material impact on our financial statements.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Our corporate bonds and money market funds are classified as available-for-sale securities and carried at estimated fair value.

Unrealized holding gains and losses are included in accumulated other comprehensive income in the statement of shareholders’

Unrealized holding gains and losses are included in accumulated other comprehensive income in the statement of shareholders’ equity.

Corporate bonds with remaining maturities less than one year are classified as short-term, and those with remaining maturities greater than one year are classified as long-term.

1 unchanged sentence

Gains and losses on marketable security transactions are reported on the specific-identification method.

The fair value of our available-for-sale securities as of March 

31, 2022 by maturity were as follows:

$ 51,910,887  

$ 27,596,676  

$ 24,314,211  

The fair value of our available-for-sale securities as of March 31, 2023 by maturity were as follows:

Total available-for-sale securities represented approximately 76% of our total assets.

Marketable securities as of March 

31, 2022 had remaining maturities between 11  weeks and 36 months.

Marketable securities as of March 31, 2023 had remaining maturities between 12 days and 73 months.

Generally accepted accounting principles establish a framework for measuring fair value, provide a definition of fair value, and prescribe required disclosures about fair-value measurements.

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The categories within the valuation hierarchy are described as follows:

Level 1 –

Financial instruments with quoted prices in active markets for identical assets or liabilities.

Level 2 –

Financial instruments with quoted prices in active markets for similar assets or liabilities.

2 fair value measurements are determined using either prices for similar instruments or inputs that are either directly or indirectly observable, such as interest rates.

Level 3 –

Inputs to the fair value measurement are unobservable inputs or valuation techniques.

Money market funds are included on the balance sheets in “Cash and cash equivalents.”

Corporate bonds are included on the balance sheets in “Marketable securities, short term”

and “Marketable securities, long term.”

Level 1 – Financial instruments with quoted prices in active markets for identical assets or liabilities.

Level 2 – Financial instruments with quoted prices in active markets for similar assets or liabilities.

Level 2 fair value measurements are determined using either prices for similar instruments or inputs that are either directly or indirectly observable, such as interest rates.

Level 3 – Inputs to the fair value measurement are unobservable inputs or valuation techniques.

Money market funds are included on the balance sheets in “Cash and cash equivalents.” Corporate bonds are included on the balance sheets in “Marketable securities, short term” and “Marketable securities, long term.”

The following table shows the estimated fair value of assets that were accounted for at fair value on a recurring basis:

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Corporate bonds

Our available-for-sale securities as of March 

31, 2022 and 2021, aggregated into classes of securities, were as follows:

Our available-for-sale securities as of March 31, 2023 and 2022, aggregated into classes of securities, were as follows:

As of March 31, 2023

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Corporate bonds

The following table shows the gross unrealized holding losses and fair value of our available-for-sale securities with unrealized holding losses, aggregated by class of securities and length of time that individual securities had been in a continuous unrealized loss position as of March 

2022 and 2021.

Less Than 12 Months

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Corporate bonds

We did not consider any of our available-for-sale securities to be impaired as of March 

We did not consider any of our available-for-sale securities to be impaired as of March 31, 2023.

None of the securities were impaired at acquisition, and subsequent declines in fair value are not attributed to declines in credit quality.

When evaluating for impairment we assess indicators that include, but are not limited to, earnings performance, changes in underlying credit ratings, market conditions, bona fide offers to purchase or sell, and ability to hold until maturity.

Because we believe it is more likely than not we will recover the cost basis of our investments, we did not consider any of our marketable securities to be impaired as of March 

Because we believe it is more likely than not we will recover the cost basis of our investments, we did not consider any of our marketable securities to be impaired as of March 31, 2023.

Inventories are shown in the following table:

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Exercise prices are not less than fair market value of the underlying Common Stock at the date the options are granted.

Stock-based compensation expense was $ 81,855 in fiscal 2022 and $ 45,572 in fiscal 

Stock-based compensation expense was $ 59,657 in fiscal 2023 and $ 81,855 in fiscal 2022.

Valuation assumptions

We use the Black-Scholes standard option-pricing model to determine the fair value of stock options.

We use the Black-Scholes-Merton option-pricing model to determine the fair value of stock options.

The following assumptions were used to estimate the fair value of options granted:

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Risk-free interest rate

0.9 % – 3.0 %

0.7 % – 0.9 %

Expected volatility

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Dividend yield

The determination of the fair value of the awards on the date of grant using the Black-Scholes model is affected by our stock price as well as assumptions of other variables, including projected stock option exercise behaviors, risk-free interest rate, and expected volatility of our stock price in future periods.

5.0 % – 5.5 %

5.0 % – 5.4 %

The determination of the fair value of the awards on the date of grant using the Black-Scholes-Merton model is affected by our stock price as well as assumptions of other variables, including projected stock option exercise behaviors, risk-free interest rate, and expected volatility of our stock price in future periods.

Our estimates and assumptions affect the amounts reported in the financial statements and accompanying notes.

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Tax effects of stock-based compensation

Stock-based compensation increased deferred tax assets by $ 13,521 for fiscal 2022 and $ 9,971 for fiscal 2021.

Stock-based compensation reduced deferred tax assets by $16,976 for fiscal 2023 and increased deferred tax assets by $13,521 for fiscal 2022.

General stock option information

The following table summarizes information on options outstanding as of March 

Exercise Prices

The following table summarizes the activity for all stock options outstanding for the years ended March 31:

Weighted Average

Exercise Price

Weighted Remaining

Contractual Life (years)

$ 57.46  

17,500  

$ 55.94  

$ 107.86  

11,500  

29,000  

$ 69.52  

A summary of our stock options is shown in the following table:

Option Shares

Weighted Average

Option Exercise Price

At March 31, 2019

At March 31, 2020

At March 31, 2021

At March 31, 2022

The remaining weighted-average exercisable life was 5.0 years as of March 

31, 2022 and 5.7  years as of March 

24,000 outstanding options were exercisable as of March 

31, 2022 and 28,000 outstanding options were exercisable as of March 31, 2021.

Options outstanding as of March 

31, 2022 had no intrinsic value based on our closing stock price for that day.

Exercise Price

Options outstanding at beginning of year

Options exercisable at March 31,

Weighted average grant date fair value of options granted during the year

The following table summarizes additional information about stock options outstanding and exercisable at March 31, 2023:

Options Outstanding

Options Exercisable

Weighted Average

Remaining Contractual

Weighted Average

Exercise Price

Intrinsic Value

Weighted Average

Exercise Price

Intrinsic Value

The remaining weighted-average exercisable life was 5.9 years as of March 31, 2023 and 5.0 years as of March 31, 2022.

32,000 outstanding options were exercisable as of March 31, 2023 and 24,000 outstanding options were exercisable as of March 31, 2022.

The total intrinsic value of options outstanding March 31, 2023, based on our closing stock price for that day, was $562,415, all of which was exercisable.

The total fair value of option grants was $ 58,900 in fiscal 2023.

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State income taxes, net of Federal benefit

Research and development credits

Research & development and manufacturing tax credits

Foreign-derived intangible income deduction

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Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of our deferred tax assets and liabilities as of March 

31, 2022 and 2021 were as follows:

Significant components of our deferred tax assets and liabilities as of March 31, 2023 and 2022 were as follows:

Paid time off accrual

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Unrealized gain on marketable securities

UNICAP 263A inventory

Deferred tax assets

We had no unrecognized tax benefits as of March 

31, 2022, and we do not expect any significant unrecognized tax benefits within 12  months of the reporting date.

We had no unrecognized tax benefits as of March 31, 2023, and we do not expect any significant unrecognized tax benefits within 12 months of the reporting date.

We recognize interest and penalties related to income tax matters in income tax expense.

As of March 

31, 2022 we had no accrued interest related to uncertain tax positions.

As of March 31, 2023 we had no accrued interest related to uncertain tax positions.

Income taxes payable were $161,092 as of March 31, 2023 and $432,506 as of March 31, 2022.

The tax years 2019 through 2021 remain open to examination by the major taxing jurisdictions to which we are subject.

Unrealize losses on our available-for-sale securities and their tax effects are as follows:

Year Ended March 31,

Unrealized loss from available-for-sale securities

Unrealized loss from available-for-sale securities, net of tax

We conduct our operations in a leased facility under a non-cancellable lease expiring March 31, 2026.

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Lease expense is recognized on a straight-line basis over the lease term.

Variable lease costs consist primarily of common area maintenance and real estate taxes which are paid based on actual costs incurred by the lessor.

Details of our operating lease are as follows:

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Operating lease cost

Variable lease cost

Cash paid for amounts included in the measurement of lease liabilities

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Discount rate

The following table presents the maturities of lease liabilities as of March 

The following table presents the maturities of lease liabilities as of March 31, 2023:

Year Ending March 31,

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Year Ended March 31

These customers accounted for 34 % of our accounts receivable as of March 

31, 2022 and 37 % as of March 

These customers accounted for 19% of our accounts receivable as of March 31, 2023 and 40% as of March 31, 2022.

We believe the receivable balances from these customers do not represent a significant credit risk based on past collection experience.

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On January 21, 2009 we announced that our Board of Directors authorized the repurchase of up to $ 2,500,000 of our Common Stock from time to time in open market, block, or privately negotiated transactions.

The timing and extent of any repurchases depends on market conditions, the trading price of the company’s stock, and other factors, and subject to the restrictions relating to volume, price, and timing under applicable law.

On August 

27, 2015, we announced that our Board of Directors authorized up to $ 5,000,000 of additional repurchases.

The timing and extent of any repurchases depends on market conditions, the trading price of the company’s stock, tax considerations, and other factors, and subject to the restrictions relating to volume, price, and timing under applicable law.

On August 27, 2015, we announced that our Board of Directors authorized up to $5,000,000 of additional repurchases.

Our repurchase program does not have an expiration date and does not obligate us to purchase any shares.

The Program may be modified or discontinued at any time without notice.

Our Board of Directors has resolved to forgo stock buybacks for five years if, under Government policies, such a voluntary agreement would result in preferential treatment for grants under the CHIPS and Science Act of 2022.

We intend to finance any stock repurchases with cash provided by operating activities or maturating marketable securities.

We repurchased 1,000 shares of our Common Stock in fiscal 2023 and 2,888 shares in fiscal 2022.

The remaining authorization was $ 3,598,519 as of March 

The Stock Repurchase Program may be modified or discontinued at any time without notice.

The remaining authorization was $ 3,520,369 as of March 31, 2023.

INFORMATION AS TO EMPLOYEE STOCK PURCHASE, SAVINGS, AND SIMILAR PLANS

All of our employees are eligible to participate in our 401 (k) savings plan the first quarter after reaching age 

All of our employees are eligible to participate in our 401(k) savings plan the first quarter after reaching age 21.

Employees may contribute up to the Internal Revenue Code maximum.

We make matching contributions of 100 % of the first 3 % of participants’

salary deferral contributions.

We make matching contributions of 100 % of the first 3 % of participants’ before-tax salary deferral contributions.

Our matching contributions were $ 98,029 for fiscal 2023 and $ 101,735 for fiscal 2022.

SUBSEQUENT EVENTS

On May 4, 2022 we announced that our Board had declared a quarterly cash dividend of $ 1.00 per share of Common Stock to be paid May 

31, 2022 to shareholders of record as of the close of business May 

On May 3, 2023 we announced that our Board had declared a quarterly cash dividend of $ 1.00 per share of Common Stock to be paid May 31, 2023 to shareholders of record as of the close of business May 15, 2023 .

EXHIBIT INDEX

Exhibit  

Description of the registrant’s securities registered pursuant to Section 12 of the Securities Exchange Act of 1934.

Consent of Boulay PLLP.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures