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A description of our critical accounting policies is provided in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026.
−Removed: As of June 30, 2026, our critical accounting policies and estimates continued to include marketable securities valuation, inventory valuation, and deferred tax estimation.
−Removed: Quarter ended June 30, 2026, compared to quarter ended June 30, 2025
+Added: As of September 30, 2026, our critical accounting policies and estimates continued to include marketable securities valuation, inventory valuation, and deferred tax estimation.
+Added: Quarter ended September 30, 2026, compared to quarter ended September 30, 2025
The table shown below summarizes the percentage of revenue and quarter-to-quarter changes for various items:
Percentage of Revenue
−Removed: Quarter Ended June 30,
+Added: Quarter Ended September 30,
Product sales
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Provision for income taxes
−Removed: Total revenue for the quarter ended June 30, 2026 (the first quarter of fiscal 2027) increased 81% compared to the quarter ended June 30, 2025 (the first quarter of fiscal 2026).
−Removed: The increase was due to an 82% increase in product sales and a 53% increase in contract research and development revenue.
+Added: Total revenue for the quarter ended September 30, 2026 (the second quarter of fiscal 2027) decreased 8% compared to the quarter ended September 30, 2025 (the second quarter of fiscal 2026).
+Added: The decrease was due to a 9% decrease in product sales, partially offset by a 25% increase in contract research and development revenue.
+Added: The decrease in product sales was due to certain customer’s orders rescheduling and a decrease in defense industry product sales.
+Added: The orders rescheduling was due to a temporary change to a certain customer’s inventory requirements.
+Added: Defense sales depend on Government procurement cycles and can be highly variable.
+Added: The increase in contract research and development revenue was due to progress on existing contracts.
+Added: Total operating expenses increased 4% for the second quarter of fiscal 2027 compared to the second quarter of fiscal 2026, due to a 44% increase in selling, general, and administrative expense, partially offset by a 17% decrease in research and development expense.
+Added: The decrease in research and development expense was due to staffing redeployment.
+Added: The increase in selling, general and administrative expense was primarily due to larger stock-based compensation expense related to director stock option grants, because of a higher grant-date stock price.
+Added: Interest income decreased 2% due to a decrease in our marketable securities portfolio as proceeds from bond maturities partially funded dividends and fixed asset purchases in the prior fiscal year, and lower interest rates on securities purchased in the past year.
+Added: Our effective tax rate, which is the provision for income taxes as a percentage of income before taxes, decreased to 14% for the quarter ended September 30, 2026 (the second quarter of fiscal 2027), compared to 20% for the quarter ended September 30, 2025 (the second quarter of fiscal 2026).
+Added: The decrease was primarily due to more favorable tax treatment of Foreign-Derived Deduction Eligible Income.
+Added: We currently expect a tax rate of 13% to 15% for the remaining two remaining quarters of fiscal 2027.
+Added: The 4% decrease in net income for the second quarter of fiscal 2027 compared to the prior-year quarter was primarily due to decreased revenue and increased operating expenses, partially offset by a decreased income tax provision.
+Added: Six months ended September 30, 2026, compared to six months ended September 30, 2025
+Added: The table shown below summarizes the percentage of revenue and year-to-year changes for various items:
+Added: Percentage of Revenue
+Added: Six Months Ended Sept.
+Added: Product sales
+Added: Contract research and development
+Added: Total revenue
+Added: Cost of sales
+Added: Research and development
+Added: Selling, general, and administrative
+Added: Total expenses
+Added: Income from operations
+Added: Interest income
+Added: Income before taxes
+Added: Provision for income taxes
+Added: Total revenue for the six months ended September 30, 2026 increased 36% compared to the six months ended September 30, 2025.
+Added: The increase was due to a 35% increase in product sales and a 38% increase in contract research and development revenue.
The increase in product sales was due to increases in both defense and non-defense sales, as well as increases in sales through both direct and distributor channels.
The increase in contract research and development revenue was due to progress on existing contracts.
−Removed: Total operating expenses increased 50% for the first quarter of fiscal 2027 compared to the first quarter of fiscal 2026, due to a 31% increase in research and development expense and an 81% increase in selling, general, and administrative expense.
−Removed: The increase in research and development expense was due to increased staffing and new product development activities.
−Removed: The increase in selling, general, and administrative expenses was primarily due to increased performance-based compensation.
+Added: Total operating expenses increased 25% for the first six months of fiscal 2027 compared to the first six months of fiscal 2026, due to a 5% increase in research and development expense and a 62% increase in selling, general, and administrative expense.
+Added: The increase in research and development expense was due to increased new product development activities.
+Added: The increase in selling, general, and administrative expenses was primarily due to increased performance-based compensation and an increase in the estimated value of directors’ stock-based compensation.
Interest income decreased 6% due to a decrease in our marketable securities portfolio as proceeds from bond maturities partially funded dividends and fixed asset purchases in the prior fiscal year.
−Removed: The 79% increase in net income in the first quarter of fiscal 2027 compared to the prior-year quarter was primarily due to increased revenue, partially offset by increased operating expenses and decreased interest income.
+Added: Our effective tax rate, which is the provision for income taxes as a percentage of income before taxes, decreased to 16% for the first six months of fiscal 2027, from 18% for the first six months of fiscal 2026.
+Added: The decrease was primarily due to more favorable tax treatment of Foreign-Derived Deduction Eligible Income.
+Added: The 39% increase in net income for the first six months of fiscal 2027 compared to the prior-year period was primarily due to increased revenue and a decrease in our effective tax rate, partially offset by increased operating expenses and decreased interest income.
Liquidity and Capital Resources
−Removed: Cash and cash equivalents were $2,896,148 as of June 30, 2026, compared to $1,714,040 as of March 31, 2026.
−Removed: The $1,182,108 increase in cash and cash equivalents during the first quarter of fiscal 2027 was due to $5,306,318 of net cash provided by operating activities and $712,956 of net cash provided by investing activities, partially offset by $4,837,166 of cash used in financing activities.
+Added: Cash and cash equivalents were $3,969,958 as of September 30, 2026, compared to $1,714,040 as of March 31, 2026.
+Added: The $2,255,918 increase in cash and cash equivalents during the first six months of fiscal 2027 was due to $11,127,370 of net cash provided by operating activities and $809,961 of net cash provided by investing activities, partially offset by $9,681,413 of cash used in financing activities.
Operating Activities
Net cash provided by operating activities related to product sales and research and development contract revenue was our primary source of working capital for the current and prior-year quarters.
−Removed: Accounts receivable increased $3,136,772 during the first quarter of fiscal 2027 primarily due to increased sales and timing of customer payments.
+Added: Accounts receivable decreased $403,013 during the first six months of fiscal 2027 primarily due to the timing of customer payments.
Inventories decreased $222,511 primarily due to increased sales.
−Removed: Prepaid expenses and other assets decreased $1,174,494 as the accrual for fiscal 2027 federal and state taxes offset prior-year’s estimated taxes overpayment.
+Added: Prepaid expenses and other assets decreased $318,932 due to decreased estimated taxes because of favorable tax law changes.
Investing Activities
−Removed: Cash provided by investing activities during the quarter ended June 30, 2026, consisted $5,000,000 in proceeds from maturities of marketable securities, partially offset by $4,230,211 of marketable securities purchases and $56,833 of fixed asset purchases.
+Added: Cash provided by investing activities during the six months ended September 30, 2026, consisted $9,000,000 in proceeds from maturities of marketable securities, partially offset by $8,108,071 of marketable securities purchases and $81,968 of fixed asset purchases.
We currently expect fixed asset purchases in the fiscal year ending March 31, 2027 to be significantly less than for the year ended March 31, 2026 with the completion of our expansion in the past fiscal year.
Financing Activities
−Removed: Cash used in financing activities during the quarter ended June 30, 2026, consisted of $4,837,166 of cash dividends paid to shareholders.
−Removed: In addition to cash dividends to shareholders paid in the first quarter of fiscal 2027, on July 22, 2026, we announced that our Board of Directors had declared a cash dividend of $1.00 per share of Common Stock, or $4,837,166 based on shares outstanding as of June 30, 2026, to be paid on August 31, 2026.
+Added: Cash used in financing activities during the six months ended September 30, 2026, consisted of $9,681,245 of dividends and $168 paid for fractional shares on the exercise of stock options.
+Added: In addition to cash dividends paid to shareholders in the first six months of fiscal 2027, on October 21, 2026, we announced that our Board of Directors had declared a cash dividend of $1.00 per share of Common Stock, or $4,844,079 based on shares outstanding as of September 30, 2026, to be paid on November 30, 2026.
We plan to fund dividends through cash provided by operating activities and proceeds from maturities of marketable securities.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.