NVE CORP /NEW/ 10-Q

Item 1. Financial Statements. NVE CORPORATION BALANCE SHEETS (Unaudited) Dec. 31, 2023 March 31, 2023* ASSETS Current assets Cash and cash equivalents $ 4,684,910 $ 1,669,896 Marketable securities, short-term (amortized cost of $ 14,556,450 as of December 31, 2023, and $ 15,696,135 as of March 31, 2023) 14,335,619 15,513,095 Accounts receivable, net of allowance for credit losses of $ 15,000 2,245,728 6,523,344 Inventories 7,349,811 6,417,010 Prepaid expenses and other assets 597,305 663,459 Total current assets 29,213,373 30,786,804 Fixed assets Machinery and equipment 10,501,096 10,484,365 Leasehold improvements 1,956,309 1,956,309 12,457,405 12,440,674 Less accumulated depreciation and amortization 11,326,985 11,095,236 Net fixed assets 1,130,420 1,345,438 Deferred tax assets 1,290,284 572,038 Marketable securities, long-term (amortized cost of $ 36,414,391 as of December 31, 2023, and $ 37,495,846 as of March 31, 2023) 35,670,914 36,125,047 Right-of-use asset – operating lease 324,451 425,843 Total assets $ 67,629,442 $ 69,255,170 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities Accounts payable $ 170,701 $ 281,712 Accrued payroll and other 460,414 1,375,250 Operating lease 178,490 175,798 Total current liabilities 809,605 1,832,760 Operating lease 218,785 342,908 Total liabilities 1,028,390 2,175,668 Shareholders’ equity Common stock, $ 0.01 par value, 6,000,000 shares authorized; 4,833,401 issued and outstanding as of December 31, 2023, and 4,830,826 as of March 31, 2023 48,334 48,308 Additional paid-in capital 19,542,335 19,295,442 Accumulated other comprehensive loss ( 753,317 ) ( 1,213,858 ) Retained earnings 47,763,700 48,949,610 Total shareholders’ equity 66,601,052 67,079,502 Total liabilities and shareholders’ equity $ 67,629,442 $ 69,255,170 *The March 31, 2023 Balance Sheet is derived from the audited financial statements contained in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023. See accompanying notes. 3 Table of Contents NVE CORPORATION STATEMENTS OF INCOME (Unaudited ) Quarter Ended December 31, 2023 2022 Revenue Product sales $ 6,366,009 $ 7,200,385 Contract research and development 390,251 201,293 Total revenue 6,756,260 7,401,678 Cost of sales 1,355,067 1,478,372 Gross profit 5,401,193 5,923,306 Expenses Research and development 540,895 700,609 Selling, general, and administrative 389,311 403,449 Total expenses 930,206 1,104,058 Income from operations 4,470,987 4,819,248 Interest income 491,671 406,092 Income before taxes 4,962,658 5,225,340 Provision for income taxes 778,236 994,016 Net income $ 4,184,422 $ 4,231,324 Net income per share – basic $ 0.87 $ 0.88 Net income per share – diluted $ 0.87 $ 0.88 Cash dividends declared per common share $ 1.00 $ 1.00 Weighted average shares outstanding Basic 4,833,401 4,830,826 Diluted 4,837,230 4,832,368 STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Quarter Ended December 31, 2023 2022 Net income $ 4,184,422 $ 4,231,324 Unrealized gain on marketable securities, net of tax 748,830 332,673 Comprehensive income $ 4,933,252 $ 4,563,997 See accompanying notes. 4 Table of Contents NVE CORPORATION STATEMENTS OF INCOME (Unaudited ) Nine Months Ended December 31, 2023 2022 Revenue Product sales $ 22,183,223 $ 24,787,885 Contract research and development 537,727 668,024 Total revenue 22,720,950 25,455,909 Cost of sales 5,034,556 5,533,000 Gross profit 17,686,394 19,922,909 Expenses Research and development 1,920,095 1,972,505 Selling, general, and administrative 1,298,211 1,210,395 Provision for credit losses 9,514 - Total expenses 3,227,820 3,182,900 Income from operations 14,458,574 16,740,009 Interest income 1,440,289 1,040,528 Income before taxes 15,898,863 17,780,537 Provision for income taxes 2,587,145 3,318,723 Net income $ 13,311,718 $ 14,461,814 Net income per share – basic $ 2.75 $ 2.99 Net income per share – diluted $ 2.75 $ 2.99 Cash dividends declared per common share $ 3.00 $ 3.00 Weighted average shares outstanding Basic 4,832,992 4,830,826 Diluted 4,839,725 4,831,168 STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Nine Months Ended December 31, 2023 2022 Net income $ 13,311,718 $ 14,461,814 Unrealized gain (loss) on marketable securities, net of tax 460,541 ( 1,133,242 ) Comprehensive income $ 13,772,259 $ 13,328,572 See accompanying notes. 5 Table of Contents NVE CORPORATION STATEMENTS OF SHAREHOLDERS ’ EQUITY (Unaudited) Accumulated Additional Other Common Stock Paid-In Comprehensive Retained Shares Amount Capital Income (Loss) Earnings Total Balance as of March 31, 2023 4,830,826 $ 48,308 $ 19,295,442 $ ( 1,213,858 ) $ 48,949,610 $ 67,079,502 Exercise of stock options 2,575 26 117,501 117,527 Comprehensive income: Unrealized loss on marketable securities, net of tax ( 234,701 ) ( 234,701 ) Net income 4,403,730 4,403,730 Total comprehensive income 4,169,029 Stock-based compensation 10,536 10,536 Cash dividends declared ($1.00 per share of common stock) ( 4,830,826 ) ( 4,830,826 ) Balance as of June 30, 2023 4,833,401 $ 48,334 $ 19,423,479 $ ( 1,448,559 ) $ 48,522,514 $ 66,545,768 Comprehensive income: Unrealized loss on marketable securities, net of tax ( 53,588 ) ( 53,588 ) Net income 4,723,566 4,723,566 Total comprehensive income 4,669,978 Stock-based compensation 106,312 106,312 Cash dividends declared ($1.00 per share of common stock) ( 4,833,401 ) ( 4,833,401 ) Balance as of September 30, 2023 4,833,401 $ 48,334 $ 19,529,791 $ ( 1,502,147 ) $ 48,412,679 $ 66,488,657 Comprehensive income: Unrealized gain on marketable securities, net of tax 748,830 748,830 Net income 4,184,422 4,184,422 Total comprehensive income 4,933,252 Stock-based compensation 12,544 12,544 Cash dividends declared ($1.00 per share of common stock) ( 4,833,401 ) ( 4,833,401 ) Balance as of December 31, 2023 4,833,401 $ 48,334 $ 19,542,335 $ ( 753,317 ) $ 47,763,700 $ 66,601,052 See accompanying notes. 6 Table of Contents NVE CORPORATION STATEMENTS OF SHAREHOLDERS ’ EQUITY (Unaudited) Accumulated Additional Other Common Stock Paid-In Comprehensive Retained Shares Amount Capital Income (Loss) Earnings Total Balance as of March 31, 2022 4,830,826 $ 48,308 $ 19,256,485 $ ( 318,120 ) $ 45,578,456 $ 64,565,129 Comprehensive income: Unrealized loss on marketable securities, net of tax ( 338,553 ) ( 338,553 ) Net income 4,140,116 4,140,116 Total comprehensive income 3,801,563 Stock-based compensation 7,134 7,134 Cash dividends declared ($1.00 per share of common stock) ( 4,830,826 ) ( 4,830,826 ) Balance as of June 30, 2022 4,830,826 48,308 19,263,619 ( 656,673 ) 44,887,746 63,543,000 Comprehensive income: Unrealized loss on marketable securities, net of tax ( 1,127,362 ) ( 1,127,362 ) Net income 6,090,373 6,090,373 Total comprehensive income 4,963,011 Stock-based compensation 39,951 39,951 Cash dividends declared ($1.00 per share of common stock) ( 4,830,826 ) ( 4,830,826 ) Balance as of September 30, 2022 4,830,826 48,308 19,303,570 ( 1,784,035 ) 46,147,293 63,715,136 Comprehensive income: Unrealized gain on marketable securities, net of tax 332,673 332,673 Net income 4,231,324 4,231,324 Total comprehensive income 4,563,997 Stock-based compensation 7,133 7,133 Cash dividends declared ($1.00 per share of common stock) ( 4,830,826 ) ( 4,830,826 ) Balance as of December 31, 2022 4,830,826 $ 48,308 $ 19,310,703 $ ( 1,451,362 ) $ 45,547,791 $ 63,455,440 See accompanying notes. 7 Table of Contents NVE CORPORATION STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended December 31, 2023 2022 OPERATING ACTIVITIES Net income $ 13,311,718 $ 14,461,814 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 156,073 187,781 Provision for current estimate of credit losses 9,514 - Stock-based compensation 129,392 54,218 Deferred income taxes ( 847,235 ) ( 61,972 ) Changes in operating assets and liabilities: Accounts receivable 4,268,102 2,607,555 Inventories ( 932,801 ) ( 1,370,592 ) Prepaid expenses and other assets 167,546 ( 502,423 ) Accounts payable and accrued expenses ( 1,147,278 ) ( 627,470 ) Net cash provided by operating activities 15,115,031 14,748,911 INVESTING ACTIVITIES Purchases of fixed assets ( 16,731 ) ( 907,612 ) Purchases of marketable securities ( 6,103,185 ) ( 26,618,617 ) Proceeds from maturities of marketable securities 8,400,000 18,750,000 Receipt of tenant improvement allowance - 100,000 Net cash provided (used) by investing activities 2,280,084 ( 8,676,229 ) ) FINANCING ACTIVITIES Proceeds from exercise of stock options 117,527 - Payment of dividends to shareholders ( 14,497,628 ) ( 14,492,478 ) Cash used in financing activities ( 14,380,101 ) ( 14,492,478 ) Increase (decrease) in cash and cash equivalents 3,015,014 ( 8,419,796 ) Cash and cash equivalents at beginning of period 1,669,896 10,449,510 Cash and cash equivalents at end of period $ 4,684,910 $ 2,029,714 Supplemental disclosures of cash flow information: Cash paid during the period for income taxes $ 3,685,861 $ 4,130,278 See accompanying notes. 8 Table of Contents NVE CORPORATION NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1. DESCRIPTION OF BUSINESS We develop and sell devices that use spintronics, a nanotechnology that relies on electron spin rather than electron charge to acquire, store, and transmit information. NOTE 2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited financial statements of NVE Corporation are prepared consistent with accounting principles generally accepted in the United States and in accordance with Securities and Exchange Commission rules and regulations. In the opinion of management, these financial statements reflect all adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation of the financial statements. Although we believe that the disclosures are adequate to make the information presented not misleading, certain disclosures have been omitted as allowed, and it is suggested that these unaudited financial statements be read in conjunction with the audited financial statements and the notes included in our latest Annual Report on Form 10-K for the fiscal year ended March 31, 2023. The results of operations for the quarter ended December 31, 2023, are not necessarily indicative of the results that may be expected for the full fiscal year ending March 31, 2024. Significant accounting policies A description of our significant accounting policies is provided in Note 2 to the Financial Statements in our Annual Report on Form 10-K for the year ended March 31, 2023. As of December 31, 2023, there were no changes to our significant accounting policies except for changes resulting from the adoption of Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (ASC Topic 326) as described in the “Marketable securities and credit losses” section below and in Note 3. Marketable securities and credit losses Our marketable securities consist of corporate bonds and money market funds. Marketable securities are initially recognized at cost. Marketable securities considered to be “purchased financial assets with credit deterioration” are initially recognized at cost, less any allowance for expected credit losses. Unrealized holding gains and losses are reported in other comprehensive income, net of applicable taxes, until realized. All marketable securities are carried on the balance sheet at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We use a three-level fair value hierarchy in estimating and reporting fair values of our marketable securities: Level 1 – Securities whose fair values are determined using quoted prices in active markets for identical securities. Level 2 – Securities whose fair values are determined using quoted prices for similar securities in active markets or quoted prices for identical securities in markets that are not active. Level 3 – Securities whose fair values are determined using unobservable inputs. Corporate bonds with remaining maturities of less than one year are classified as short-term and those with remaining maturities of one year or more are classified as long-term. We consider all highly liquid investments with maturities of three months or less when purchased, including money market funds, to be cash equivalents. We measure credit losses on our marketable securities at the individual security level, using the present value of expected cash flows method. Credit losses are measured as the amount by which the amortized cost basis of the security exceeds the present value of expected cash flows (discounted at the effective interest rate implicit in the security at the date of acquisition), limited by the amount by which the fair value of the security is less than its amortized cost basis. When estimating expected cash flows, we consider available information relating to past events, current conditions, and reasonable and supportable forecasts such as, past incidences of default, credit quality as reported by credit rating agencies, extent of impairment, length of time the security has been in a continuous unrealized loss position, and adverse conditions forecasted by industry, financial and economic experts that are relevant to the collectability of expected cash flows. We do not include accrued interest receivables in amortized cost and in fair value when measuring expected credit losses. We will write off uncollectible accrued interest receivable to net income in a timely manner, by reversing interest income, and therefore do not measure credit losses for accrued interest receivable. Timely manner means one year from the date the accrued interest receivable becomes past due. Accrued interest receivables are included in the balance sheet in “prepaid expenses and other assets.” 9 Table of Contents Accounts Receivable and Allowance for Credit Losses We grant credit to customers in the normal course of business and at times require customers to pay for orders before shipment. Accounts receivable are presented on the balance sheet net of any allowance for credit losses. We measure credit losses on our trade accounts receivable on a pool basis, and in some cases, on an individual basis, using the loss-rate method. Accounts receivable are pooled based on geographical locations because we believe accounts originating from the same geographical location share risk characteristics. When estimating expected credit losses on our trade accounts receivable, we consider available information relating to past events, current conditions, and reasonable and supportable forecasts such as historical loss rate, current age and remaining term of the receivable relative to our current days sales outstanding ratio, pending orders of the customer relative to accounts receivable balance as of the reporting date and amounts paid by the customers subsequent to the reporting period end but before the financial statements are issued. NOTE 3. RECENTLY ISSUED ACCOUNTING STANDARDS Recently Adopted Accounting Standard 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) 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. We adopted ASU No. 2016-13 beginning with the quarter ended June 30, 2023. The adoption resulted in disclosure changes and required us to consider the likelihood of default and to measure our allowance for credit losses over the contractual term of our receivables. The adoption did not have a material impact on the financial statements as of December 31 or April 1, 2023. New Accounting Standard Not Yet Adopted In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires additional quantitative and qualitative income tax disclosures to enable financial statements users better assess how an entity’s operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows. For public business entities, ASU 2023-09 is effective for annual periods beginning after December 15, 2024, which will be fiscal 2026 for us. We expect the adoption to result in disclosure changes only. We do not expect the adoption of other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date to have a material impact on our financial statements when they are adopted. NOTE 4. NET INCOME PER SHARE Net income per basic share is computed based on the weighted-average number of common shares issued and outstanding during each period. Net income per diluted share amounts assume exercise of all stock options. The following tables show the components of diluted shares: Quarter Ended December 31, 2023 2022 Weighted average common shares outstanding – basic 4,833,401 4,830,826 Dilutive effect of stock options 3,829 1,542 Shares used in computing net income per share – diluted 4,837,230 4,832,368 Nine Months Ended December 31, 2023 2022 Weighted average common shares outstanding – basic 4,832,992 4,830,826 Dilutive effect of stock options 6,733 342 Shares used in computing net income per share – diluted 4,839,725 4,831,168 10 Table of Contents NOTE 5. MARKETABLE SECURITIES The following table shows the major categories of our marketable securities and their contractual maturities as of December 31, 2023: Total <1 Year 1–3 Years 3–6 Years Money market funds $ 4,259,340 $ 4,259,340 $ - $ - Corporate bonds 50,006,533 14,335,619 27,222,387 8,448,527 Total $ 54,265,873 $ 18,594,959 $ 27,222,387 $ 8,448,527 Total marketable securities represent approximately 80% of our total assets as of December 31, 2023. Marketable securities as of December 31, 2023, had remaining maturities between one day and 64 months. 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.” Accrued interest receivables were $ 366,452 as of December 31, 2023, and $ 425,372 as of March 31, 2023, and are included in the balance sheets in “Prepaid expenses and other assets.” We monitor the credit ratings of our marketable securities at least quarterly as reported by Standard & Poor’s. The following table summarizes the fair values of our marketable securities as of December 31, 2023, aggregated by credit rating: Credit Rating Fair Value AAA $ 5,559,340 AA+ 2,179,443 AA 6,745,419 AA- 21,194,039 A+ 2,954,497 A 9,650,572 A- 5,982,563 Total $ 54,265,873 The following table shows the estimated fair value of our marketable securities, aggregated by fair value hierarchy inputs used in estimating their fair values: As of December 31, 2023 As of March 31, 2023 Level 1 Level 2 Total Level 1 Level 2 Total Money market funds $ 4,259,340 $ - $ 4,259,340 $ 906,141 $ - $ 906,141 Corporate bonds - 50,006,533 50,006,533 - 51,638,142 51,638,142 Total $ 4,259,340 $ 50,006,533 $ 54,265,873 $ 906,141 $ 51,638,142 $ 52,544,283 The following table shows the amortized cost, fair value, and gross unrealized holding gains and losses of our marketable securities as of December 31 and March 31, 2023: As of December 31, 2023 As of March 31, 2023 Amortized Cost Gross Unrealized Holding Gains Gross Unrealized Holding Losses Estimated Fair Value Amortized Cost Gross Unrealized Holding Gains Gross Unrealized Holding Losses Estimated Fair Value Money market funds $ 4,259,340 $ - $ - $ 4,259,340 $ 906,141 $ - $ - $ 906,141 Corporate bonds 50,970,841 7,965 ( 972,273 ) 50,006,533 53,191,981 1,007 ( 1,554,846 ) 51,638,142 Total $ 55,230,181 $ 7,965 $ ( 972,273 ) $ 54,265,873 $ 54,098,122 $ 1,007 $ ( 1,554,846 ) $ 52,544,283 11 Table of Contents The following table shows the gross unrealized holding losses and estimated fair value of our marketable securities for which an allowance for credit losses has not been recorded, aggregated by category of securities and length of time that individual securities had been in a continuous unrealized loss position as of December 31 and March 31, 2023. Less Than 12 Months 12 Months or Greater Total Estimated Fair Value Gross Unrealized Holding Losses Estimated Fair Value Gross Unrealized Holding Losses Estimated Fair Value Gross Unrealized Holding Losses As of December 31, 2023 Corporate bonds $ 1,848,307 $ ( 17,747 ) $ 40,715,403 $ ( 954,526 ) $ 42,563,710 $ ( 972,273 ) Total $ 1,848,307 $ ( 17,747 ) $ 40,715,403 $ ( 954,526 ) $ 42,563,710 $ ( 972,273 ) As of March 31, 2023 Corporate bonds $ 37,084,628 $ ( 590,967 ) $ 13,294,817 $ ( 963,879 ) $ 50,379,445 $ ( 1,554,846 ) Total $ 37,084,628 $ ( 590,967 ) $ 13,294,817 $ ( 963,879 ) $ 50,379,445 $ ( 1,554,846 ) None of the securities were impaired at acquisition, and subsequent declines in fair value are attributable to interest rate increases. We do not intend to sell, and it is not more likely than not that we will be required to sell, these securities before recovery of their amortized cost basis. The issuers continue to make timely interest payments on these securities. Because we believe it is more likely than not we will recover the cost basis of our investments, we did not record any impairment attributable to credit losses. None of the marketable securities purchased during the period had experienced more-than-insignificant deterioration in credit quality since its origination and were therefore not considered “Purchased Financial Assets with Credit Deterioration.” Unrealized losses on our marketable securities and their tax effects are as follows: Quarter Ended December 31, 2023 2022 Unrealized gain from marketable securities $ 958,564 $ 425,849 Tax effects ( 209,734 ) ( 93,176 ) Unrealized gain on marketable securities, net of tax $ 748,830 $ 332,673 Nine Months Ended December 31, 2023 2022 Unrealized loss from marketable securities $ 589,530 $ ( 1,450,643 ) Tax effects ( 128,989 ) 317,401 Unrealized gain (loss) on marketable securities, net of tax $ 460,541 $ ( 1,133,242 ) NOTE 6. ALLOWANCE FOR CREDIT LOSSES ON ACCOUNTS RECEIVABLES The following table shows a roll forward of the allowance for credit losses on our accounts receivable: Allowance for credit losses as of March 31, 2023 $ 15,000 Provision for credit losses 212,440 Change in provision for credit losses ( 202,926 ) Specific accounts deemed uncollectible ( 9,514 ) Allowance for credit losses as of December 31, 2023 $ 15,000 NOTE 7. INVENTORIES Inventories are shown in the following table: Dec. 31, 2023 March 31, 2023 Raw materials $ 2,068,092 $ 1,601,962 Work in process 2,995,391 3,781,894 Finished goods 2,286,328 1,033,154 Total inventories $ 7,349,811 $ 6,417,010 12 Table of Contents NOTE 8. STOCK-BASED COMPENSATION Stock-based compensation expense was $ 12,544 for the third quarter of fiscal 2024, $ 7,133 for the third quarter of fiscal 2023, $ 129,392 for the first nine months of fiscal 2024, and $ 54,218 for the first nine months of fiscal 2023. We calculate share-based compensation expense using the Black-Scholes-Merton standard option-pricing model . NOTE 9. INCOME TAXES 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. As of December 31, 2023, federal and state estimated tax overpayments of $ 90,387 were included in the balance sheet in “Prepaid expenses and other assets.” We had no unrecognized tax benefits as of December 31, 2023, and we do no t 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 December 31, 2023, we had no accrued interest related to uncertain tax positions. The tax years 2019 through 2023 remain open to examination by the major taxing jurisdictions to which we are subject. NOTE 10. LEASES We conduct our operations in a leased facility under a non-cancellable lease expiring March 31, 2026. Our lease does not provide an implicit interest rate, so we used our incremental borrowing rate to determine the present value of lease payments. Lease expense is recognized on a straight-line basis over the lease term. Details of our operating lease are as follows: Quarter Ended Dec. 31, 2023 Nine Months Ended Dec. 31, 2023 Operating lease cost $ 37,754 $ 113,261 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows for leases $ 44,433 $ 133,299 Remaining lease term 27 months Discount rate 3.5 % The following table shows the maturities of lease liabilities as of December 31, 2023: Year Ending March 31, Operating Lease Liabilities 2024 $ 45,341 2025 182,271 2026 184,995 Total lease payments 412,607 Imputed lease interest ( 15,332 ) Total lease liabilities $ 397,275 NOTE 11. STOCK REPURCHASE PROGRAM 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 depend 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. 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. We intend to finance any stock repurchases with cash provided by operating activities or maturing marketable securities. The remaining authorization was $ 3,520,369 as of December 31, 2023. We have no t repurchased any of our Common Stock during fiscal 2024. NOTE 12. 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 18. 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. Our matching contributions were $ 27,904 for the third quarter of fiscal 2024, $ 21,484 for the third quarter of fiscal 2023, $79,388 for the first nine months of fiscal 2024 , and $ 73,661 for the first nine months of fiscal 2023. 13 Table of Contents NOTE 13. SUBSEQUENT EVENTS On January 17, 2024 , we announced that our Board of Directors had declared a quarterly cash dividend of $ 1.00 per share of Common Stock to be paid February 28, 2024 , to shareholders of record as of the close of business January 29, 2024 .