NVE CORP /NEW/ 10-K

ITEM 9A. CONTROLS AND PROCEDURES. Disclosure Controls and Procedures 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, 2026, our disclosure controls and procedures were effective. 16 Table of Contents 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 Principal Financial Officer, assessed the effectiveness of our internal control over financial reporting as of March 31, 2026. 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, 2026. 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. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within NVE have been detected. Our internal controls over financial reporting, however, are designed to provide reasonable assurance that the objectives of internal control over financial reporting are met. Changes in Internal Controls During the year ended March 31, 2026, 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. ITEM 9B. OTHER INFORMATION. Rule 10b5-1 Plan Disclosures for Section 16 Officers and Directors During the quarter ended March 31, 2026, 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. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. Not applicable. 17 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. We have insider trading policies and procedures, which are referenced in Item 15(b) of this Report. Additionally, a section titled “Delinquent Section 16(a) Reports” to be included in our Proxy Statement for our 2026 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, 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 2026 Annual Meeting of Shareholders is incorporated by reference into this section of this Report. ITEM 11. 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 the Proxy Statement for our 2026 Annual Meeting of Shareholders is incorporated by reference into this section. ITEM 12. 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 the Proxy Statement for our 2026 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 7 to the Financial Statements included elsewhere in this Report. ITEM 13. 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 2026 Annual Meeting of Shareholders is incorporated by reference into this section. ITEM 14. 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 2026 and 2025” and “Audit Committee Disclosure – Audit Committee Pre-Approval Policy” to be included in the Proxy Statement for our 2026 Annual Meeting of Shareholders is incorporated by reference into this section. PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES. (a) Financial Statements and Schedules 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. (b) Exhibits A list of exhibits is on the following page. 18 Table of Contents Exhibit # Description 3.1 Amended and Restated Articles of Incorporation of the company as amended by the Board of Directors effective August 3, 2003 (incorporated by reference to our Form 8-K filed August 7, 2023). 3.2 Bylaws of the company as amended by the Board of Directors effective May 6, 2020. 4 Description of the registrant’s securities registered pursuant to Section 12 of the Securities Exchange Act of 1934. 10.1 Lease dated October 1, 1998, with Glenborough Properties, LP (incorporated by reference to our Form 10-QSB for the period ended September 30, 2002). 10.2 First amendment to lease with Glenborough dated September 18, 2002 (incorporated by reference to our Form 10-QSB for the period ended September 30, 2002). 10.3 Second amendment to lease with Glenborough dated December 1, 2003 (incorporated by reference to our Form 10-QSB for the period ended December 31, 2003). 10.4 Third amendment to lease with Carlson Real Estate (incorporated by reference to our Form 8-K/A filed December 20, 2007). 10.5 Fourth amendment to lease with the Barbara C. Gage Revocable Trust (incorporated by reference to our Form 8-K/A filed August 3, 2011). 10.6 Fifth amendment to lease with GRE – Bryant Lake, LLC (incorporated by reference to our Form 8-K/A filed March 3, 2020). 10.7 Sixth amendment to lease with GRE – Bryant Lake, LLC (incorporated by reference to our Form 8-K/A filed November 7, 2024). 10.8† Employment Agreement with Daniel A. Baker dated January 29, 2001 (incorporated by reference to our Form 10-KSB for the year ended March 31, 2001). 10.9† 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). 10.10 Indemnification Agreement by and between Pacesetter, Inc., a St. Jude Medical Company, and the company (incorporated by reference to our Form 8-K filed September 27, 2005). 10.11+ Supplier Partnering Agreement by and between St. Jude and the company (incorporated by reference to our Form 8-K filed January 4, 2006). 10.12 Amendment No. 4 to St. Jude Supplier Partnering Agreement (incorporated by reference to our Form 8-K/A filed February 7, 2011). 10.13 Supplier Quality Agreement between St. Jude and the company (incorporated by reference to our Form 8-K filed February 10, 2016). 10.14 Amendment No. 5 to St. Jude Supplier Partnering Agreement (incorporated by reference to our Form 8-K/A filed April 21, 2016). 10.15* Amendment No. 8 to Abbott Supplier Partnering Agreement (incorporated by reference to our Form 8-K/A filed February 2, 2022). 10.16* Amendment No. 1 0 to Supplier Partnering Agreement between Abbott and the company (incorporated by reference to o ur Form 8-K/A filed J anuary 3 , 202 4 ). 10.17* Amendment No. 11 to Supplier Partnering Agreement between Abbott and the company (incorporated by reference to our Form 8-K/A filed February 13, 2025). 10.18* Amendment No. 12 to Supplier Partnering Agreement between Abbott and the company (incorporated by reference to our Form 8-K/A filed December 17, 2025). 19 Insider Trading Policies and Procedures (incorporated by reference to our Form 10-K filed May 7, 2025) . 23 Consent of Boulay PLLP. 31.1 Certification by Daniel A. Baker pursuant to Rule 13a-14(a)/15d-14(a). 31.2 Certification by Daniel Nelson pursuant to Rule 13a-14(a)/15d-14(a). 32 Certification by Daniel A. Baker and Daniel Nelson pursuant to 18 U.S.C. Section 1350. 97 Clawback Policy (incorporated by reference to our Form 10-K filed May 1, 2024). 101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document 101.LAB XBRL Taxonomy Extension Label Linkbase Document 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document 104 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. We agree to furnish supplementally an unredacted copy of the exhibit to the Securities and Exchange Commission on its request. 19 Table of Contents ITEM 16. FORM 10-K SUMMARY. We have elected not to include an optional Form 10-K Summary. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NVE CORPORATION (Registrant) /s/Daniel A. Baker by Daniel A. Baker President and Chief Executive Officer Date May 6, 2026 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. Name Title Date /s/Terrence W. Glarner Terrence W. Glarner Director and Chairman of the Board May 6, 2026 /s/Daniel A. Baker Daniel A. Baker Director, President and Chief Executive Officer (Principal Executive Officer) May 6, 2026 /s/ Daniel Nelson Daniel Nelson Principal Financial Officer May 6, 2026 /s/Patricia M. Hollister Patricia M. Hollister Director May 6, 2026 /s/James W. Bracke James W. Bracke Director May 6, 2026 /s/Kelly Wei Kelly Wei Director May 6, 2026 20 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of NVE Corporation Opinion on the Financial Statements We have audited the accompanying balance sheets of NVE Corporation (the Company) as of March 31, 2026 and 2025, 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, 2026, 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, 2026 and 2025, and the results of its operations and its cash flows for each of the years in the two-year period ended March 31, 2026, 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. 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. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. 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. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters 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 PCOAB ID: 542 We have served as the Company’s auditor since 2019. Minneapolis, Minnesota May 6, 2026 F-1 Table of Contents NVE CORPORATION BALANCE SHEETS March 31, 2026 March 31, 2025 ASSETS Current assets Cash and cash equivalents $ 1,714,040 $ 8,036,564 Marketable securities, short-term (amortized cost of $ 18,118,460 as of March 31, 2026, and $ 13,730,266 as of March 31, 2025) 18,125,060 13,691,593 Accounts receivable, net of allowance for credit losses of $15,000 3,408,941 3,589,268 Inventories, net 7,082,821 7,449,083 Prepaid expenses and other assets 1,860,415 433,414 Total current assets 32,191,277 33,199,922 Fixed assets Machinery and equipment 13,843,799 11,758,205 Leasehold improvements 2,059,853 1,956,309 15,903,652 13,714,514 Less accumulated depreciation and amortization 12,187,643 11,727,615 Fixed assets, net 3,716,009 1,986,899 Deferred tax assets - 1,867,069 Marketable securities, long-term (amortized cost of $ 23,726,027 as of March 31, 2026, and $ 26,353,692 as of March 31, 2025) 23,678,452 26,304,623 Right-of-use asset – operating lease 793,794 917,349 Total assets $ 60,379,532 $ 64,275,862 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities Accounts payable $ 278,599 $ 214,691 Accrued payroll and other 697,611 871,169 Operating lease 165,116 83,010 Total current liabilities 1,141,326 1,168,870 Deferred tax liabilities 248,284 - Long-term operating lease liability 740,423 838,221 Total liabilities 2,130,033 2,007,091 Shareholders’ equity Common stock, $ 0.01 par value, 6,000,000 shares authorized; 4,837,166 issued and outstanding as of March 31, 2026, and March 31, 2025 48,372 48,372 Additional paid-in capital 19,914,769 19,821,106 Accumulated other comprehensive loss ( 32,010 ) ( 68,544 ) Retained earnings 38,318,368 42,467,837 Total shareholders’ equity 58,249,499 62,268,771 Total liabilities and shareholders’ equity $ 60,379,532 $ 64,275,862 See accompanying notes. F-2 Table of Contents NVE CORPORATION STATEMENTS OF INCOME Year Ended March 31, 2026 2025 Revenue Product sales $ 25,221,918 $ 24,632,102 Contract research and development 1,109,300 1,242,592 Total revenue, net 26,331,218 25,874,694 Cost of sales 5,599,454 4,235,780 Gross profit 20,731,764 21,638,914 Expenses Research and development 3,160,483 3,635,519 Selling, general, and administrative 1,650,790 2,009,246 Total expenses 4,811,273 5,644,765 Income from operations 15,920,491 15,994,149 Interest income 1,891,925 1,909,218 Other income 3,905 135,370 Income before taxes 17,816,321 18,038,737 Provision for income taxes 2,617,126 2,974,221 Net income $ 15,199,195 $ 15,064,516 Net income per share – basic $ 3.14 $ 3.12 Net income per share – diluted $ 3.14 $ 3.11 Cash dividends declared per common share $ 4.00 $ 4.00 Weighted average shares outstanding Basic 4,837,166 4,835,069 Diluted 4,839,169 4,839,154 STATEMENTS OF COMPREHENSIVE INCOME Year Ended March 31, 2026 2025 Net income $ 15,199,195 $ 15,064,516 Unrealized gain on marketable securities, net of tax 36,534 709,093 Comprehensive income $ 15,235,729 $ 15,773,609 See accompanying notes. F-3 Table of Contents NVE CORPORATION STATEMENTS OF SHAREHOLDERS ’ EQUITY Common Stock Additional Paid-In Accumulated Other Comprehen- sive Income Retained Shares Amount Capital (Loss) Earnings Total Balance as of March 31, 2024 4,833,676 $ 48,337 $ 19,554,812 $ ( 777,637 ) $ 46,743,005 $ 65,568,517 Exercise of stock options, net of shares withheld for exercise price 3,490 35 114,127 114,162 Comprehensive income: Unrealized gain on marketable securities, net of tax 709,093 709,093 Net income 15,064,516 15,064,516 Total comprehensive income 15,773,609 Stock-based compensation 152,167 152,167 Cash dividends ($4.00 per share of common stock) ( 19,339,684 ) ( 19,339,684 ) Balance as of March 31, 2025 4,837,166 $ 48,372 $ 19,821,106 $ ( 68,544 ) $ 42,467,837 $ 62,268,771 Comprehensive income: Unrealized gain on marketable securities, net of tax 36,534 36,534 Net income 15,199,195 15,199,195 Total comprehensive income 15,235,729 Stock-based compensation 93,663 93,663 Cash dividends ($4.00 per share of common stock) ( 19,348,664 ) ( 19,348,664 ) Balance as of March 31, 2026 4,837,166 $ 48,372 $ 19,914,769 $ ( 32,010 ) $ 38,318,368 $ 58,249,499 See accompanying notes. F-4 Table of Contents NVE CORPORATION STATEMENTS OF CASH FLOWS Year Ended March 31, 2026 2025 OPERATING ACTIVITIES Net income $ 15,199,195 $ 15,064,516 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 460,028 324,232 Bond discount amortization ( 317,811 ) ( 307,666 ) Stock-based compensation 93,663 152,167 Deferred income taxes 2,105,121 ( 611,969 ) Non-cash operating lease expense (credit) 107,863 ( 61,355 ) Changes in operating assets and liabilities: Accounts receivable 180,327 ( 444,435 ) Inventories 366,262 ( 290,498 ) Prepaid expenses and other assets ( 1,427,001 ) 255,935 Accounts payable 63,908 87,537 Accrued payroll and other ( 173,558 ) 141,954 Net cash provided by operating activities 16,657,997 14,310,418 INVESTING ACTIVITIES Purchases of marketable securities ( 15,242,719 ) ( 11,279,773 ) Proceeds from maturities of marketable securities 13,800,000 15,205,000 Purchases of fixed assets ( 2,189,138 ) ( 1,257,109 ) Net cash (used in) provided by investing activities ( 3,631,857 ) 2,668,118 FINANCING ACTIVITIES Payment of dividends to shareholders ( 19,348,664 ) ( 19,339,684 ) Net proceeds from exercise of stock options - 114,162 Net cash used in financing activities ( 19,348,664 ) ( 19,225,522 ) Decrease in cash and cash equivalents ( 6,322,524 ) ( 2,246,986 ) Cash and cash equivalents at beginning of year 8,036,564 10,283,550 Cash and cash equivalents at end of year $ 1,714,040 $ 8,036,564 Supplemental disclosures of cash flow information: Cash paid during the year for income taxes $ 1,933,149 $ 3,311,534 See accompanying notes. F-5 Table of Contents NVE CORPORATION NOTES TO FINANCIAL STATEMENTS NOTE 1. BASIS OF PRESENTATION 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. Segment Reporting In accordance with ASC 280, Segment Reporting , operating segments are determined based on the information provided to the Chief Operating Decision Maker (CODM) on a regular basis and used for the purpose of assessing performance and allocating resources within the company. Our CEO is deemed to be our CODM since he makes all major decisions on how to allocate the resources and assess the performance for strategic and operational initiatives. The CODM is regularly provided with and reviews revenue and gross margin information by revenue categories, product categories, and operating expenses by category to assess performance and allocate resources. ASC 280 indicates that a component is an operating segment if it meets the following criteria: · It engages in business activities from which it may earn revenues and incur expenses. · Its operating results are regularly reviewed by the CODM to make decisions about resources to be allocated to the segment and assess its performance. · Its discrete financial information is available. We analyze revenues and assess sales performance in various categories but we do not prepare or analyze discrete financial information such as sales expenses, operating results, or profit and loss itemized by category. Therefore, we have concluded that the Company as a whole is a single operating and reportable segment under ASC 280, Segment Reporting . NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash and Cash Equivalents We consider all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. 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 may not be federally insured. We have invested our excess cash in corporate-backed and municipal-backed bonds and money market instruments. Our investment policy prescribes purchases of only high-grade securities and limits the amount of credit exposure to any one issuer. Our customers are throughout the world. 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 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. Recent changes in tariffs and trade regulations, as well as geopolitical conflicts, may increase the risks of supply interruptions. F-6 Table of Contents Marketable securities Our marketable securities consist of corporate bonds, treasury securities, and money market funds and are classified as available for sale. 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 and treasury securities 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 extend credit terms to customers in the normal course of business. We perform ongoing credit valuations of customers’ financial condition, and generally require no collateral. We maintain an allowance for expected credit losses on accounts receivables, which is recorded as an offset to accounts receivable. Changes in the allowance for credit losses are included as a component of operating expenses in the Statements of Income and Statements of Comprehensive Income. We assess credit losses on a collective basis where similar risk characteristics exist. Risk characteristics we consider include customer type, geography, market, credit risk, and receivable age. Receivables that do not share risk characteristics with other receivables, or where known collectability issues exist, are evaluated on an individual basis. In determining the allowance for credit losses, we consider historical loss rates adjusted for current market conditions, and reasonable and supportable forecasts of future economic conditions, when applicable. Accounts considered to be uncollectible are written off against the allowance for credit losses. Inventories Inventories are stated at the lower of cost and net realizable value. Cost is determined by the first in, first out method. We record inventory reserves when we determine certain inventory is unlikely to be sold based on sales trends, turnover, competition, and other market factors. Product Warranty In general, we warranty our products to be free from defects in material and workmanship within 90 days of purchase. Fixed Assets Fixed assets are stated at cost. 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 remaining term of the lease and 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 asset groups are less than the assets’ carrying amount. We did not identify any indicators of impairment during fiscal 2026 or 2025. Depreciation expense related to fixed assets was $460,028 for fiscal 2026 and $324,232 for fiscal 2025. Revenue Recognition 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, 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. Shipping charges billed to customers are included in product sales and the related shipping costs are included in cost of sales as incurred. Under certain limited circumstances, our distributors may earn commissions for activities unrelated to their purchases of our products, such as for facilitating the sale of custom products or research and development contracts with third parties. We recognize any such commissions as selling, general, and administrative expenses. We recognize discounts provided to our distributors as reductions in revenue. F-7 Table of Contents 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 the percentage-of-completion method. Percentage of completion is measured using the cost-to-cost method, which compares costs incurred to date as a percentage of total estimated costs. 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. Accounts receivable as of March 31, 2026 and 2025 are reported on the balance sheets. Accounts receivable, net of allowance for credit losses, as of April 1, 2024 were $3,144,833. A contract asset is recognized when we have a right to consideration from the transfer of goods or services to a customer but have not completed our performance obligation. 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, 2026, or 2025. 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. 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. Income Taxes We account for income taxes using the asset and liability method. Deferred income taxes are provided for temporary differences between the financial reporting and tax bases of assets and liabilities. We provide valuation allowances against deferred tax assets if we determine that it is less likely than not that we will be able to utilize the deferred tax assets. Research and Development Expense Recognition Research and development costs are expensed as they are incurred. Customer-sponsored research and development costs are included in cost of sales. Stock-Based Compensation We measure stock-based compensation cost at the grant date based on the fair value of the award and recognize the compensation expense over the requisite service period, which is generally the vesting period. We recognize any forfeitures as they occur. Net Income Per Share 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: Year Ended March 31, 2026 2025 Weighted average common shares outstanding – basic 4,837,166 4,835,069 Dilutive effect of stock options 2,003 4,085 Shares used in computing net income per share – diluted 4,839,169 4,839,154 Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the amounts reported in the Financial Statements and accompanying Notes. Actual results could differ from those estimates. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more information on estimates and assumptions. NOTE 3. RECENTLY ADOPTED ACCOUNTING STANDARDS 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 was effective for annual periods beginning after December 15, 2024, which is fiscal 2026 for us. The adoption resulted in disclosure changes only in this Report, including a tabular reconciliation of our income tax provision in dollars and percentages in Note 7 to the Financial Statements of this report. F-8 Table of Contents NOTE 4. NEW ACCOUNTING STANDARDS NOT YET ADOPTED In July 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2025-05, Financial Instruments—Credit Losses (Topic 326)—Measurement of Credit Losses for Accounts Receivable and Contract Assets . ASU 2025-05 aims to reduce the cost and complexity of estimating credit losses while maintaining decision-useful information for financial statement users. The guidance allows a practical expedient of assuming current conditions as of the balance sheet date remain unchanged for the remaining life of the assets. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, and interim periods within those annual reporting periods, which will be fiscal 2027 for us, with early adoption permitted. We are not currently planning early adoption. Adoption of ASU 2025-05 will result in disclosure changes. We do not currently expect the adoption to have a material impact on our Financial Statements. In November 2024, the FASB issued Accounting Standards Update (ASU) No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). ASU 2024-03 aims to enhance transparency for users of financial statements by requiring public business entities to disaggregate specific expense categories. In January 2025, the FASB issued ASU No. 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date , which clarified the effective date for non-calendar year-end entities such as us. ASU 2024-03 mandates disclosures in the notes to financial statements detailing the composition and trends of key expense categories within major income statement captions. These enhanced disclosures are intended to help investors more effectively assess the entity’s performance, understand its cost structure, and make more accurate forecasts of future cash flows. For public business entities, ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, which for us will be for fiscal 2028 and for interim reporting periods beginning with the first quarter of fiscal 2029. 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. NOTE 5. MARKETABLE SECURITIES The following table shows the major categories of our marketable securities and cash equivalents and their contractual maturities as of March 31, 2026: Total <1 Year 1–3 Years 3–4 Years Money market funds $ 1,121,096 $ 1,121,096 $ - $ - Treasury securities 4,714,688 4,714,688 - Corporate bonds 37,088,824 13,410,372 19,696,213 3,982,239 Total $ 42,924,608 $ 19,246,156 $ 19,696,213 $ 3,982,239 Total marketable securities and money market funds represent approximately 71% of our total assets as of March 31, 2026. Marketable securities as of March 31, 2026, had remaining maturities between one and thirty-seven months. Money market funds are included on the balance sheets in “Cash and cash equivalents.” Corporate bonds are included in “Marketable securities, short-term” and “Marketable securities, long-term.” Treasury securities are included in “Marketable securities, long-term.” Accrued interest receivables were $ 455,566 as of March 31, 2026, and $ 340,241 as of March 31, 2025, 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 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, 2026 As of March 31, 2025 Level 1 Level 2 Total Level 1 Level 2 Total Money market funds $ 1,121,096 $ - $ 1,121,096 $ 7,905,042 $ - $ 7,905,042 Treasury securities - 4,714,688 4,714,688 - 4,715,238 4,715,238 Corporate bonds - 37,088,824 37,088,824 - 35,280,978 35,280,978 Total $ 1,121,096 $ 41,803,512 $ 42,924,608 $ 7,905,042 $ 39,996,216 $ 47,901,258 F-9 Table of Contents Our available-for-sale securities as of March 31, 2026 and 2025, aggregated into classes of securities, were as follows: As of March 31, 2026 As of March 31, 2025 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 $ 1,121,096 $ - $ - $ 1,121,096 $ 7,905,042 $ - $ - $ 7,905,042 Treasury securities 4,699,853 14,835 - 4,714,688 4,699,686 15,552 - 4,715,238 Corporate bonds 37,144,634 16,583 ( 72,393 ) 37,088,824 35,384,272 55,858 ( 159,152 ) 35,280,978 Total $ 42,965,583 $ 31,418 $ ( 72,393 ) $ 42,924,608 $ 47,989,000 $ 71,410 $ ( 159,152 ) $ 47,901,258 The following table shows the gross unrealized holding losses and estimated fair value of our marketable securities, aggregated by category of securities and length of time that individual securities had been in a continuous unrealized loss position as of March 31, 2026 and 2025: 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 March 31, 2026 Corporate bonds $ 23,221,061 $ ( 51,668 ) $ 4,447,243 $ ( 20,725 ) $ 27,668,304 $ ( 72,393 ) Total $ 23,221,061 $ ( 51,668 ) $ 4,447,243 $ ( 20,725 ) $ 27,668,304 $ ( 72,393 ) As of March 31, 2025 Corporate bonds $ 7,323,059 $ ( 31,808 ) $ 21,020,717 $ ( 127,344 ) $ 28,343,776 $ ( 159,152 ) Total $ 7,323,059 $ ( 31,808 ) $ 21,020,717 $ ( 127,344 ) $ 28,343,776 $ ( 159,152 ) 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. Unrealized gains on our marketable securities and their tax effects are as follows: Year Ended March 31, 2026 2025 Unrealized gain on marketable securities $ 46,767 $ 907,698 Tax effects ( 10,233 ) ( 198,605 ) Unrealized gain on marketable securities, net of tax $ 36,534 $ 709,093 NOTE 6. INVENTORIES Inventories are shown in the following table: March 31, 2026 2025 Raw materials $ 1,357,842 $ 1,608,632 Work in process 3,282,430 3,609,273 Finished goods 2,442,549 2,231,178 Total inventories $ 7,082,821 $ 7,449,083 F-10 Table of Contents NOTE 7. STOCK-BASED COMPENSATION Stock Option Plan Our 2000 Stock Option Plan, as amended, provides for issuance of up to 5,000,000 common shares to employees, directors, and certain service providers of incentive stock options and nonstatutory stock options. As of March 31, 2026, the number of common shares remaining available for future issuance under our stock option plan was 113,240. 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 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. Stock-based compensation expense was $ 93,663 in fiscal 2026 and $ 152,167 in fiscal 2025. Valuation assumptions 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: Year Ended March 31, 2026 2025 Risk-free interest rate 3.8 % – 4.0 % 4.0 % – 4.6 % Expected volatility 40 % – 41 % 40 % – 42 % Expected life (years) 5.0 5.0 Dividend yield 5.9 % – 6.5 % 4.6 % – 5.0 % 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. Expected life We analyze historical exercise and termination data to estimate the expected life assumption. We believe historical data currently represents the best estimate of the expected life of a new option. Risk-free interest rate The risk-free rate is based on the yield of U.S. Treasury securities on the grant date for maturities similar to the expected lives of the options. Volatility We use historical volatility to estimate the expected volatility of our common stock. Dividend yield We assumed a 5.9% to 6.5% dividend yield for fiscal 2026 and 4.6% to 5% dividend yield for fiscal 2025 based on the dividend yield on the date the options were granted. Tax effects of stock-based compensation Stock-based compensation decreased net deferred tax liability by $20,418 for fiscal 2026, and increased net deferred tax assets by $17,142 for fiscal 2025. F-11 Table of Contents General stock option information The following table summarizes the activity for all stock options outstanding for the years ended March 31, 2026 and 2025: Year Ended March 31, 2026 2025 Shares Weighted Average Exercise Price Shares Weighted Average Exercise Price Options outstanding at beginning of year 33,500 $ 74.19 36,000 $ 69.50 Granted 6,500 64 6,500 81.96 Exercised - - ( 9,000 ) 61.06 At March 31, 40,000 $ 72.53 33,500 $ 74.19 Options exercisable at March 31, 37,500 $ 72.86 31,000 $ 73.56 Weighted average grant date fair value of options granted during the year $ 14.94 $ 22.77 No stock options were exercised in fiscal 2026. Of the 9,000 stock options exercised during the year ended March 31, 2025, 7,000 were exchanged in a cashless net option exercise which resulted into the issuance of 1,490 common shares. The following table summarizes additional information about stock options outstanding and exercisable at March 31, 2026: Options Outstanding Options Exercisable Options Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Aggregate Intrinsic Value Options Exercisable Weighted Average Exercise Price Aggregate Intrinsic Value 40,000 5.8 $ 72.53 $ 123,390 37,500 $ 72.86 $ 123,390 The total fair value of options granted was $ 97,082 in fiscal 2026 and $ 147,986 in fiscal 2025. There was $ 3,419 of unrecognized stock-based compensation as of March 31, 2026 related to nonvested options, which was recognized in the first quarter of fiscal 2027. There was no unrecognized stock-based compensation as of March 31, 2025 related to nonvested options. NOTE 8. INCOME TAXES Income tax provisions for fiscal 2026 and 2025 consisted of the following: Year Ended March 31, 2026 2025 Current taxes Federal $ 385,336 $ 3,403,776 State (Minnesota) 126,669 182,414 Deferred taxes Federal 2,074,509 ( 587,356 ) State (Minnesota) 30,612 ( 24,613 ) Income tax provision $ 2,617,126 $ 2,974,221 F-12 Table of Contents A reconciliation of the statutory tax rate to the effective tax rate for fiscal 2026 and 2025 is as follows: Year Ended March 31, 2026 2025 Amount % of Pretax Income Amount % of Pretax Income Income before income taxes $ 17,816,321 100.0% $ 18,038,737 100.0% Tax expense at U.S. statutory rate 3,741,427 21.0% 3,788,135 21.0% State income taxes, net of Federal benefit 155,002 0.9% 158,741 0.9% Tax credits (R&D and manufacturing credits) ( 1,135,592 ) (6.4% ) ( 202,166 ) (1.1% ) Effect of foreign-derived intangible income deductions ( 359,326 ) (2.0% ) ( 816,143 ) (4.5% ) Non-deductible items 934 0.0% 916 0.0% Other 214,681 1.2% 44,738 0.2% Provision for income taxes $ 2,617,126 14.7% $ 2,974,221 16.5% Income taxes paid for fiscal 2026 and 2025, disaggregated by federal and state, are as follow: Year Ended March 31, Income taxes paid: 2026 2025 Federal $ 1,793,539 $ 3,223,664 State (Minnesota) 139,610 87,870 Total $ 1,933,149 $ 3,311,534 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 deferred tax liabilities as of March 31, 2026 and 2025 were as follows: As of March 31, 2026 As of March 31, 2025 Deferred Tax Assets Deferred Tax Liabilities Net Deferred Tax Assets/ (Liabilities) Deferred Tax Assets Deferred Tax Liabilities Net Deferred Tax Assets/ (Liabilities) Paid time off accrual $ 67,884 $ - $ 67,884 $ 67,594 $ - $ 67,594 Reserve for obsolete inventory 47,017 - 47,017 47,042 47,042 Depreciation and amortization - ( 734,113 ) ( 734,113 ) - ( 118,314 ) ( 118,314 ) Stock-based compensation deductions 139,228 - 139,228 118,810 - 118,810 Unrealized loss on marketable securities 8,961 - 8,961 19,198 - 19,198 Section 174 R&D expense 65,273 - 65,273 1,417,015 - 1,417,015 Section 263A UNICAP inventory 129,744 - 129,744 311,729 - 311,729 Other 27,722 - 27,722 3,995 - 3,995 Deferred Tax $ 485,829 $ ( 734,113 ) $ ( 248,284 ) $ 1,985,383 $ ( 118,314 ) $ 1,867,069 We had no unrecognized tax benefits as of March 31, 2026, 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 provision for income taxes. As of March 31, 2026 we had no accrued interest related to uncertain tax positions. Federal estimated tax overpayment was $1,261,822 and State taxes payable was $69,968 as of March 31, 2026. Federal and State taxes payable were $243,394 as of March 31, 2025. The tax years ended March 31, 2023 through March 31, 2026 remain open to examination by the major taxing jurisdictions to which we are subject. F-13 Table of Contents NOTE 9. LEASES We conduct our operations in a leased facility under a non-cancellable lease expiring May 31, 2031. Our lease does not provide an implicit 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 the lease are as follows: Year Ended March 31, 2026 2025 Operating lease cost $ 192,858 $ 168,449 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows for leases $ 84,995 $ 182,271 Right-of-use assets obtained in exchange for new lease liabilities Operating lease $ 710,665 $ 710,665 Remaining lease term (months) 62 74 Discount rate 7.8 % 7.8 % The following table presents the maturities of lease liabilities as of March 31, 2026: Year Ending March 31, Operating Lease Liabilities 2027 172,142 2028 213,284 2029 220,216 2030 227,373 2031 234,762 2032 40,399 Total lease payments 1,108,176 Imputed lease interest ( 202,637 ) Total lease liabilities $ 905,539 NOTE 10. CONCENTRATIONS One customer accounted for 10% or more of total revenue for fiscal 2026: % of Revenue % of Accounts Receivable Year Ended March 31, 2026 2025 2026 2025 Customer A 37 % 35 % 27 % 26 % We do not currently believe the receivable balances from this customer represent significant credit risks based on our analysis of the likelihood of default. 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 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. We intend to finance any stock repurchases with cash provided by operating activities or maturating marketable securities. There were no stock repurchases for the fiscal years ended March 31, 2026 or 2025. Our repurchase program does not have an expiration date and does not obligate us to purchase any shares, and in recent years we have focused on cash dividends as a more efficient way to return capital to our shareholders. The remaining authorization was $ 3,520,369 as of March 31, 2026.The repurchase program may be modified or discontinued at any time without notice. NOTE 12. INFORMATION AS TO EMPLOYEE STOCK PURCHASE, SAVINGS, AND SIMILAR PLANS All of our employees except interns 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’ before-tax salary deferral contributions. Our matching contributions were $ 100,686 for fiscal 2026 and $ 94,912 for fiscal 2025. Table of Contents NOTE 13. SUBSEQUENT EVENT On May 6, 2026 we announced that our Board had declared a quarterly cash dividend of $ 1.00 per share of Common Stock to be paid May 29, 2026 to shareholders of record as of the close of business on May 18, 2026 . EXHIBIT INDEX Exhibit # Description 23 Consent of Boulay PLLP. 31.1 Certification by Daniel A. Baker pursuant to Rule 13a-14(a)/15d-14(a). 31.2 Certification by Daniel Nelson pursuant to Rule 13a-14(a)/15d-14(a). 32 Certification by Daniel A. Baker and Daniel Nelson pursuant to 18 U.S.C. Section 1350. 101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document 101.LAB XBRL Taxonomy Extension Label Linkbase Document 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). F-14