What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-05-01 compared with 2023-05-03 · 125 added, 118 removed, 421 unchanged (37% of the section changed)

1 unchanged sentence

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, 2023, our disclosure controls and procedures were effective.

Management, with the participation of the Chief Executive Officer and Principal 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 times 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 Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Based on such evaluation, although there have been changes in personnel involved in our controls, processes, and procedures, our Chief Executive Officer and Principal Financial Officer concluded that, as of March 31, 2024, 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, 2023.

Our management, including our Chief Executive Officer and Principal Financial Officer, assessed the effectiveness of our internal control over financial reporting as of March 31, 2024.

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, 2024.

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.

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

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

4 unchanged sentences

During the year ended March 31, 2024, 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.

OTHER INFORMATION.

Clawback Policy

We have adopted a policy for recovery of erroneously awarded incentive compensation (a “Clawback Policy”), which is filed as Exhibit 97 to this Report.

Rule 10b5-1 Plan Disclosures for Section 16 Officers and Directors

During the quarter ended March 31, 2024, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements (in each case, as defined in Item 408(a) of Regulation S-K).

There are no such plans currently in effect.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

Not applicable.

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 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.

A section titled “Delinquent Section 16(a) Reports” to be included in our Proxy Statement for our 2024 Annual Meeting of Shareholders will set forth information regarding delinquent Section 16(a) reports required by Item 10.

The section titled “Proposal 1.

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

The information in these sections to be included in the Proxy Statement for our 2024 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 2023 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 the Proxy Statement for our 2024 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 2023 Annual Meeting of Shareholders is incorporated by reference into this section.

The information in the sections “Equity Compensation Plan Information” and “Security Ownership” to be included in the Proxy Statement for our 2024 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.

2 unchanged sentences

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 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.

The information in the sections “Audit Committee Disclosure – Fees Billed to Us by Our Independent Registered Public Accounting Firm During Fiscal 2024 and 2023” and “Audit Committee Disclosure – Audit Committee Pre-Approval Policy” to be included in the Proxy Statement for our 2024 Annual Meeting of Shareholders is incorporated by reference into this section.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

3 unchanged sentences

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).

Amended and Restated Articles of Incorporation of the company as amended by the Board of Directors effective August 3, 2003 (incorporated by reference to the Form 8-K filed August 7, 2023).

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

15 unchanged sentences

Amendment No.

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

Amendment No.

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

Amendment No.

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

Amendment No.

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

4 unchanged sentences

Amendment No.

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

Amendment No.

7 to Abbott Supplier Partnering Agreement (incorporated by reference to the Annual Report on Form 10-K for the year ended March 31, 2021).

Amendment No.

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).

1 0 to Supplier Partnering Agreement between Abbott and the company (incorporated by reference to the Form 8-K/A filed J anuary 3 , 202 4 ).

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).

Second Amendment to Sonova Supply Agreement (incorporated by reference to the Form 8-K/A filed July 19, 2023).

Consent of Boulay PLLP.

1 unchanged sentence

Baker pursuant to Rule 13a-14(a)/15d-14(a).

Certification by Joseph R.

Schmitz pursuant to Rule 13a-14(a)/15d-14(a).

Certification by Daniel Nelson pursuant to Rule 13a-14(a)/15d-14(a).

Certification by Daniel A.

Baker and Joseph R.

Schmitz pursuant to 18 U.S.C.

Baker and Daniel Nelson pursuant to 18 U.S.C.

Section 1350.

Clawback Policy.

XBRL Instance Document

21 unchanged sentences

(Principal Executive Officer)

/s/ Joseph R.

Chief Financial Officer

/s/ Daniel Nelson

Daniel Nelson

Principal Financial Officer

/s/Patricia M.

/s/Richard W.

(1) Richard W.

Kramp was unable to sign this Report due to illness.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

29 unchanged sentences

Cash and cash equivalents

Marketable securities, short-term

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

Marketable securities, short-term (amortized cost of $ 12,283,630 as of March 31, 2024, and $ 15,696,135 as of March 31, 2023)

Accounts receivable, net of allowance for credit losses of $ 15,000

Prepaid expenses and other assets

5 unchanged sentences

Deferred tax assets

Marketable securities, long-term

Marketable securities, long-term (amortized cost of $ 31,417,890 as of March 31, 2024, and $ 37,495,846 as of March 31, 2023)

Right-of-use asset – operating lease

9 unchanged sentences

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

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

4,833,676 issued and outstanding as of March 31, 2024 and 4,830,826 as of March 31, 2023

Additional paid-in capital

12 unchanged sentences

Selling, general, and administrative

Credit loss expense

Total expenses

17 unchanged sentences

Comprehensive income:

Unrealized gain on marketable securities, net of tax

Unrealized loss on marketable securities, net of tax

Total comprehensive income

2 unchanged sentences

Balance as of March 31, 2023

Repurchase of common stock

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

Comprehensive income:

Unrealized loss on marketable securities, net of tax

Unrealized gain on marketable securities, net of tax

Total comprehensive income

7 unchanged sentences

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

Bond premium (discount) amortization

Provision for current estimate of credit losses

Stock-based compensation

10 unchanged sentences

Receipt of tenant improvement allowance

Net cash (used in) provided by investing activities

Net cash provided by (used in) investing activities

FINANCING ACTIVITIES

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

Repurchase of common stock

1 unchanged sentence

Net cash used in financing activities

(Decrease) increase in cash and cash equivalents

Increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

11 unchanged sentences

We consider all highly liquid investments with maturities of three months or less when purchased to be cash equivalents.

Fair Value of Financial Instruments

The carrying amount of cash and cash equivalents, accounts receivable, and accounts payable approximates fair value because of the short maturity of these instruments.

Fair values of marketable securities are based on quoted market prices.

Concentration of Risk and Financial Instruments

Financial instruments potentially subject to significant concentrations of credit risk consist principally of cash equivalents, marketable securities, and accounts receivable.

Cash and cash equivalents have been maintained in financial institutions we believe have high credit quality, however, these accounts are generally in excess of federally insured amounts.

Cash and cash equivalents have been maintained in financial institutions we believe have high credit quality, however, these accounts may not be federally insured.

We have invested our excess cash in corporate-backed and municipal-backed bonds and money market instruments.

2 unchanged sentences

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 Credit Losses” 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.

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

We grant credit to customers in the normal course of business and at times may require customers to prepay for an order prior to shipment.

Accounts receivable are recorded net of an allowance for doubtful accounts.

We make estimates of the uncollectibility of accounts receivable.

We specifically analyze accounts receivable, historical bad debts, and customer creditworthiness when evaluating the adequacy of the allowance.

We had no charges or provisions to our allowance for doubtful accounts in fiscal 2023 or 2022.

Marketable securities

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.

Accounts Receivable and Allowance for Credit Losses

We grant credit to customers in the normal course of business and at times may require customers to prepay for orders prior to shipment.

Accounts receivable are recorded net of allowance for credit losses.

We specifically analyze accounts receivable, historical credit losses, and customer creditworthiness when estimated allowance for credit losses.

Inventories are stated at the lower of cost or net realizable value.

5 unchanged sentences

Depreciation of machinery and equipment is recorded over the estimated useful lives of the assets, generally five years, using the straight-line method.

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

Amortization of leasehold improvements is recorded using the straight-line method over the lesser of the remaining term of the lease 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.

3 unchanged sentences

We recognize revenue when we satisfy performance obligations by the transfer of control of products or services to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those products or services.

Revenue is disaggregated into product sales and contract research and development to depict the nature, amount, timing of revenue recognition and economic characteristics of our business, and is represented within the financial statements.

Revenue is disaggregated into product sales and contract research and development to depict the nature, amount, and timing of revenue recognition and economic characteristics of our business, and is represented within the financial statements.

We recognize revenue from product sales to customers and distributors when we satisfy our performance obligation, at a point in time, on product shipment or delivery to our customer or distributor as determined by agreed-on shipping terms.

3 unchanged sentences

We recognize discounts provided to our distributors as reductions in revenue.

We recognize contract research and development revenue over a period of time as the performance obligation is satisfied over a period of time rather than a point in time.

We recognize contract research and development revenue as the performance obligations are satisfied.

Contracts have specifications unique to each customer and do not create an asset with an alternate use, and we have an enforceable right to payment for performance completed to date.

We recognize revenue over a period of time using costs incurred as the measurement of progress towards completion.

We use the proportion of total contract consideration attributable to performance milestones achieved as the measurement of progress toward completion.

Accounts receivable is recognized when we have transferred a good or service to a customer and our right to receive consideration is unconditional through the completion of our performance obligation.

16 unchanged sentences

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 year.

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

Net income per basic share is computed based on the weighted average number of common shares issued and outstanding during the year.

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

The following table shows the components of diluted shares:

8 unchanged sentences

Recently Adopted Accounting Standard

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.

The adoption had no material impact on our financial statements.

New Accounting Standard Not Yet Adopted

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.

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.

12 unchanged sentences

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’ 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.

We consider all highly-liquid investments with maturities of three months or less when purchased, including money market funds, to be cash equivalents.

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, 2023 by maturity were as follows:

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

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.

Generally accepted accounting principles define fair value as the price that would be received to sell an asset or paid to transfer a liability.

Fair value is a market-based measurement that should be determined using assumptions that market participants would use in pricing an asset or liability.

Generally accepted accounting principles utilize a valuation hierarchy for disclosure of fair value measurements.

The categorization within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement.

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.

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.

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

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 March 31, 2024 or April 1, 2023.

New Accounting Standards 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 to 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.

The adoption will 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.

MARKETABLE SECURITIES

The following table shows the major categories of our marketable securities and their contractual maturities as of March 31, 2024:

Money market funds

Corporate bonds

Total marketable securities represent approximately 79% of our total assets as of March 31, 2024.

Marketable securities as of March 31, 2024, had remaining maturities between six weeks and 61 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 $ 460,627 as of March 31, 2024, 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 March 31, 2024, aggregated by credit rating:

Credit Rating

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 March 31, 2024

7 unchanged sentences

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 31, 2023 and 2022.

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 March 31, 2024 and 2023:

Less Than 12 Months

7 unchanged sentences

Corporate bonds

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 31, 2023.

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:

Year Ended March 31,

Unrealized gain (loss) from marketable securities

Unrealized gain (loss) from marketable securities, net of tax

ALLOWANCE FOR CREDIT LOSSES ON ACCOUNTS RECEIVABLES

The following table shows a roll forward of the allowance for accounts receivable credit losses:

Allowance for credit losses as of March 31, 2023

Additions during the year

Reversals during the year

Specific accounts deemed uncollectible

Allowance for credit losses as of March 31, 2024

Inventories are shown in the following table:

7 unchanged sentences

Generally, the options may be exercised at any time prior to expiration, subject to vesting based on terms of employment.

The period ranges from immediate vesting to vesting over a five-year period.

The options have exercisable lives ranging from one year to ten years from the date of grant, and are generally not eligible to vest early in the event of retirement, death, disability, or change in control.

The period ranges from immediate vesting to vesting in one year.

The options have exercisable lives of ten years from the date of grant and are generally not eligible to vest early in the event of retirement, death, disability, or change in control.

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

24 unchanged sentences

Tax effects of stock-based compensation

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

Stock-based compensation increased deferred tax assets by $29,934 for fiscal 2024 and reduced deferred tax assets by $16,976 for fiscal 2023.

General stock option information

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

The following table summarizes the activity for all stock options outstanding for the years ended March 31, 2024 and 2023:

Weighted Average

16 unchanged sentences

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.

The total fair value of options granted was $ 143,943 in fiscal 2024 and $ 58,900 in fiscal 2023.

There was $ 4,181 of unrecognized stock-based compensation as of March 31, 2024 related to nonvested options, which we expect to recognize in the first quarter of fiscal 2025.

11 unchanged sentences

Research & development and manufacturing tax credits

Foreign-derived intangible income deduction

Tax effect of Foreign-derived intangible income deduction

Income tax provision

5 unchanged sentences

Stock-based compensation deductions

Unrealized gain on marketable securities

Unrealized loss on marketable securities

Section 174 R&D expense

UNICAP 263A inventory

3 unchanged sentences

As of March 31, 2024 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.

Federal and State estimated taxes overpayment were $31,250 as of March 31, 2024 and estimated taxes payable were $161,092 as of March 31, 2023.

The tax years 2020 through 2023 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.

We have an option to extend the lease for an additional five years at the market rent subject to certain terms and conditions.

Our lease does not provide an implicit rate, so we used our incremental borrowing rate to determine the present value of lease payments.

9 unchanged sentences

Year Ending March 31,

Operating Leases

Lease Liabilities

Total lease payments

3 unchanged sentences

The following table summarizes customers comprising 10% or more of revenue for the two most recent fiscal years:

% of Revenue for

% of Accounts Receivable

Year Ended March 31,

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.

We do not currently believe the receivable balances from this customer represents a significant credit risk based on our analysis of the likelihood of default.

STOCK REPURCHASE PROGRAM

4 unchanged sentences

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.

We repurchased 264 shares of our Common Stock in fiscal 2023.

The remaining authorization was $ 3,520,369 as of March 31, 2024.

7 unchanged sentences

EXHIBIT INDEX

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

Consent of Boulay PLLP.

1 unchanged sentence

Baker pursuant to Rule 13a-14(a)/15d-14(a).

Certification by Joseph R.

Schmitz pursuant to Rule 13a-14(a)/15d-14(a).

Certification by Daniel Nelson pursuant to Rule 13a-14(a)/15d-14(a).

Certification by Daniel A.

Baker and Joseph R.

Schmitz pursuant to 18 U.S.C.

Baker and Daniel Nelson pursuant to 18 U.S.C.

Section 1350.

Clawback Policy.

XBRL Instance Document

6 unchanged sentences

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