What changed in this filing

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Item 1. Financial Statements

2022-01-19 compared with 2021-10-20 · 228 added, 73 removed, 506 unchanged (37% of the section changed)

2 unchanged sentences

BALANCE SHEETS

September 30, 2021

December 31, 2021

Current assets

64 unchanged sentences

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

4,833,232 issued and outstanding as of September 30 and March 31, 2021

4,833,714 issued and outstanding as of December 31, 2021 and 4,833,232 as of March 31, 2021

48,337  

19 unchanged sentences

STATEMENTS OF INCOME

Quarter Ended September 30

Quarter Ended December 31

Product sales

$ 5,916,790  

$ 6,332,349  

Contract research and development

374,019  

201,013  

Total revenue

6,290,809  

6,533,362  

Cost of sales

1,385,006  

1,075,048  

4,905,803  

5,458,314  

Research and development

596,492  

702,216  

Selling, general, and administrative

272,159  

311,356  

Total expenses

868,651  

1,013,572  

Income from operations

4,037,152  

4,444,742  

Interest income

283,940  

365,498  

Income before taxes

4,321,092  

4,810,240  

Provision for income taxes

855,685  

884,531  

$ 3,465,407  

$ 3,925,709  

Net income per share –

$ 0.72  

$ 0.81  

Net income per share –

$ 0.72  

$ 0.81  

Cash dividends declared per common share

$ 1.00  

Weighted average shares outstanding

4,833,604  

4,833,232  

4,835,770  

4,833,261  

STATEMENTS OF COMPREHENSIVE INCOME

Quarter Ended September 30

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

Quarter Ended December 31

$ 3,465,407  

$ 3,925,709  

Unrealized loss from marketable securities, net of tax

( 380,161 )  

Comprehensive income

$ 3,085,246  

$ 3,780,257  

See accompanying notes.

1 unchanged sentence

STATEMENTS OF INCOME

Six Months Ended September 30

Nine Months Ended December 31

Product sales

$ 19,500,567  

$ 14,850,157  

Contract research and development

766,866  

653,252  

Total revenue

20,267,433  

15,503,409  

Cost of sales

4,698,720  

2,852,757  

15,568,713  

12,650,652  

Research and development

2,112,630  

2,399,164  

Selling, general, and administrative

1,221,893  

1,024,549  

Total expenses

3,334,523  

3,423,713  

Income from operations

12,234,190  

9,226,939  

Interest income

868,519  

1,166,102  

Income before taxes

13,102,709  

10,393,041  

Provision for income taxes

2,411,228  

1,833,127  

$ 10,691,481  

$ 8,559,914  

Net income per share –

$ 2.21  

$ 1.77  

Net income per share –

$ 2.21  

$ 1.77  

Cash dividends declared per common share

$ 3.00  

Weighted average shares outstanding

4,833,356  

4,834,324  

4,835,781  

4,834,411  

STATEMENTS OF COMPREHENSIVE INCOME

Six Months Ended September 30

Nine Months Ended December 31

$ 10,691,481  

$ 8,559,914  

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

( 667,361 )  

966,886  

Comprehensive income

$ 10,024,120  

$ 9,526,800  

See accompanying notes.

46 unchanged sentences

68,228,589  

Exercise of stock options  

Comprehensive income:

Unrealized loss on marketable securities, net of tax  

( 380,161 )  

Net income  

3,465,407  

Total comprehensive income  

3,085,246  

Stock-based compensation  

Cash dividends declared ($ 1.00 per share of common stock)  

( 4,833,232 )  

Balance as of December 31, 2021  

4,833,714  

$ 48,337  

$ 19,411,158  

$ 433,759  

$ 46,596,148  

$ 66,489,402  

See accompanying notes. 

48 unchanged sentences

74,017,419  

Comprehensive income:

Unrealized loss on marketable securities, net of tax  

( 145,452 )  

Net income  

3,925,709  

Total comprehensive income  

3,780,257  

Stock-based compensation  

Cash dividends declared ($ 1.00 per share of common stock)  

( 4,833,232 )  

Balance as of December 31, 2020  

4,833,232  

$ 48,332  

$ 19,333,852  

$ 1,483,409  

$ 52,103,126  

$ 72,968,719  

See accompanying notes. 

1 unchanged sentence

STATEMENTS OF CASH FLOWS

Six Months Ended September 30 

Nine Months Ended December 31

OPERATING ACTIVITIES

$ 10,691,481  

$ 8,559,914  

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

Depreciation and amortization

358,828  

386,968  

Stock-based compensation

73,036  

41,297  

Deferred income taxes

1 unchanged sentence

Accounts receivable

( 1,073,922 )  

( 466,898 )  

41,973  

Prepaid expenses and other assets

( 435,067 )  

181,557  

Accounts payable and other liabilities

( 49,447 )  

Net cash provided by operating activities

9,098,330  

8,531,068  

INVESTING ACTIVITIES

Purchases of fixed assets

( 58,317 )  

Proceeds from maturities of marketable securities

Cash used in investing activities

4,000,000  

12,000,000  

Cash provided by investing activities

3,941,683  

11,986,373  

FINANCING ACTIVITIES

Repurchase of common stock

Payment of dividends to shareholders

( 14,499,696 )  

( 14,503,308 )

Cash used in financing activities

Increase in cash and cash equivalents

( 14,499,696 )  

( 14,594,727 )

(Decrease) increase in cash and cash equivalents

( 1,459,683 )  

5,922,714  

Cash and cash equivalents at beginning of period

10,427,340  

8,065,594  

Cash and cash equivalents at end of period

$ 8,967,657  

$ 13,988,308  

Supplemental disclosures of cash flow information:

Cash paid during the period for income taxes

$ 2,490,000  

$ 1,636,788  

See accompanying notes. 

8 unchanged sentences

Although we believe that the disclosures are adequate to make the information presented not misleading, certain disclosures have been omitted as allowed, and it is suggested that these unaudited financial statements be read in conjunction with the audited financial statements and the notes included in our latest annual financial statements included in our Annual Report on Form 10 -K for the fiscal year ended March 31, 2021.

The results of operations for the quarter and six months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the full fiscal year ending March 31, 2022.

The results of operations for the quarter and nine months ended December 31, 2021 are not necessarily indicative of the results that may be expected for the full fiscal year ending March 31, 2022.

Significant accounting policies

A description of our significant accounting policies is provided in Note 2 to the Financial Statements in our Annual Report on Form 10 -K for the year ended March 31, 2021.

As of September 30, 2021, there were no changes to our significant accounting policies.

As of December 31, 2021, there were no changes to our significant accounting policies.

RECENTLY ISSUED ACCOUNTING STANDARDS

20 unchanged sentences

The following tables show the components of diluted shares:

Quarter Ended September 30

Quarter Ended December 31

Weighted average common shares outstanding –

5 unchanged sentences

4,833,261  

Six Months Ended September 30

Nine Months Ended December 31

Weighted average common shares outstanding –

11 unchanged sentences

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

Contractual maturities of available-for-sale securities as of September 30, 2021 are as follows: 

Contractual maturities of available-for-sale securities as of December 31, 2021 are as follows: 

1–3 Years

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Total available-for-sale securities represented approximately 84 % of our total assets.

Marketable securities as of September 30, 2021 had remaining maturities between 16 weeks and 41  months.

Marketable securities as of December 31, 2021 had remaining maturities between three weeks and 38 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.

15 unchanged sentences

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

As of September 30, 2021

As of December 31, 2021

As of March 31, 2021

15 unchanged sentences

$ 64,860,822  

Our available-for-sale securities as of September 30 and March 31, 2021, aggregated into classes of securities, were as follows:

As of September 30, 2021

Our available-for-sale securities as of December 31 and March 31, 2021, aggregated into classes of securities, were as follows:

As of December 31, 2021

As of March 31, 2021

13 unchanged sentences

$ 56,738,624  

$ ( 110,789 )

$ 772,080  

1 unchanged sentence

$ 57,293,870  

$ 63,451,301  

$ 1,570,195  

$ ( 160,674 )

$ 64,860,822  

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 September 

30, 2021 and March 

Less Than 12 Months

12 Months or Greater

As of September 30, 2021

As of December 31, 2021

Corporate bonds

$ 10,167,905  

$ ( 110,789 )

$ ( 216,834 )  

$ ( 110,789 )

$ 10,167,905  

1 unchanged sentence

$ 10,167,905  

$ ( 216,834 )  

$ 10,167,905  

$ ( 216,834 )

9 unchanged sentences

$ ( 160,674 )

We did not consider any of our available-for-sale securities to be impaired as of September 30, 2021.

We did not consider any of our available-for-sale securities to be impaired as of December 31, 2021.

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

2 unchanged sentences

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 September 30, 2021.

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 December 31, 2021.

Inventories are shown in the following table:

September 30,

Raw materials

11 unchanged sentences

STOCK-BASED COMPENSATION

Stock-based compensation expense was $ 56,999 for the second quarter of fiscal 2022, $ 34,315 for the second quarter of fiscal 2021, $ 64,237 for the first six months of fiscal 2022, and $ 37,022 for the first six months of fiscal 2021.

Stock-based compensation expense was $ 8,799 for the third quarter of fiscal 2022, $ 4,275 for the third quarter of fiscal 2021, $ 73,036 for the first nine months of fiscal 2022, and $ 41,297 for the first nine months of fiscal 2021.

We calculate the share-based compensation expense using the Black-Scholes standard option-pricing model. 

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.

We had no unrecognized tax benefits as of September 30, 2021, and we do not expect any significant unrecognized tax benefits within 12 months of the reporting date.

We had no unrecognized tax benefits as of December 31, 2021, and we do not expect any significant unrecognized tax benefits within 12 months of the reporting date.

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

As of September 30, 2021 we had no accrued interest related to uncertain tax positions.

As of December 31, 2021 we had no accrued interest related to uncertain tax positions.

The tax years 2016 through 2020 remain open to examination by the major taxing jurisdictions to which we are subject. 

6 unchanged sentences

31, 2021  

Six Months Ended

Nine Months Ended

31, 2021  

14 unchanged sentences

Discount rate  

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

 The following table presents the maturities of lease liabilities as of December 31, 2021:

Year Ending March 31  

17 unchanged sentences

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

The remaining authorization was $ 3,762,040 as of September 30, 2021.

We did not repurchase any of our Common Stock during the first or second quarter of fiscal 2022.

The remaining authorization was $ 3,762,040 as of December 31, 2021.

We have not repurchased any of our Common Stock during fiscal 2022.

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

3 unchanged sentences

salary deferral contributions.

Our matching contributions were $ 26,831 for the second quarter of fiscal 2022, $ 21,275 for the second quarter of fiscal 2021, $ 55,415 for the first six months of fiscal 2022, and $ 46,656 for the first six months of fiscal 2021.

Our matching contributions were $ 21,579 f or the third quarter of fiscal 2022, $ 22,571 for the third quarter of fiscal 20 21, $ 76,995 for the first nine months of fiscal 2022, and $ 69,227 for the first nine months of fiscal 2021.

SUBSEQUENT EVENTS

On October 20, 2021 we announced that our Board had declared a quarterly cash dividend of $ 1.00 per share of Common Stock to be paid November 30, 2021 to shareholders of record as of the close of business November 1, 2021 . 

Management ’

s Discussion and Analysis of Financial Condition and Results of Operations.

On January 19, 2022 we announced that our Board had declared a quarterly cash dividend of $ 1.00 per share of Common Stock to be paid February 28, 2022 to shareholders of record as of the close of business January 31, 2022 .

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-looking statements

4 unchanged sentences

We have attempted to identify, in context, some of the factors that we currently believe may cause actual future experience and results to differ from their current expectations.

These differences may be caused by a variety of factors, including but not limited to risks related to our reliance on several large customers for a significant percentage of revenue, uncertainties related to the economic environments in the industries we serve, uncertainties related to future sales and revenues, risks and uncertainties related to future stock repurchases and dividend payments, and other specific risks that may be alluded to in this Report or in the documents incorporated by reference in this Report.

These differences may be caused by a variety of factors, including but not limited to risks related to our reliance on several large customers for a significant percentage of revenue, our dependence on critical suppliers and packaging vendors, uncertainties related to the economic environments in the industries we serve, uncertainties related to future sales and revenues, risks and uncertainties related to future stock repurchases and dividend payments, and other specific risks that may be alluded to in this Report or in the documents incorporated by reference in this Report.

Further information regarding our risks and uncertainties are contained in Part I, Item 1A “Risk Factors”

4 unchanged sentences

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 year ended March 31, 2021.

As of September 30, 2021 our critical accounting policies and estimates continued to include investment valuation, inventory valuation, and deferred tax assets estimation.

Quarter ended September  

30, 2021 compared to quarter ended September  

As of December 31, 2021 our critical accounting policies and estimates continued to include investment valuation, inventory valuation, and deferred tax assets estimation.

Quarter ended December 31, 2021 compared to quarter ended December 31, 2020

The table shown below summarizes the percentage of revenue and quarter-to-quarter changes for various items:

Percentage of Revenue

Quarter Ended September 30

Quarter Ended December 31

Product sales

9 unchanged sentences

Provision for income taxes

Total revenue for the quarter ended September 30, 2021 (the second quarter of fiscal 2022) increased 56% compared to the quarter ended September 30, 2020 (the second quarter of fiscal 2021).

The increase was due to a 59% increase in product sales partially offset by a 13% decrease in contract research and development revenue.

The increase in product sales in the second quarter of fiscal 2022 from the prior-year quarter was primarily due to increased purchases by existing customers, and sales increased in most of our markets and product lines.

The decrease in contract research and development revenue was due to the completion of certain contracts.

Gross profit as a percentage of revenue decreased to 77% the second quarter of fiscal 2022 from 79% the second quarter of fiscal 2021 primarily due to revenue mix.

Total expenses increased 1% in the second quarter of fiscal 2022 compared to the second quarter of fiscal 2021 due to a 35% increase in selling, general, and administrative expense, partially offset by an 13% decrease in research and development expense.

The increase in selling, general, and administrative expense was primarily due to increased employee compensation expense.

Total revenue for the quarter ended December 31, 2021 (the third quarter of fiscal 2022) decreased 4% compared to the quarter ended December 31, 2020 (the third quarter of fiscal 2021).

The decrease was due to a 7% decrease in product sales partially offset by an 86% increase in contract research and development revenue.

The decrease in product sales in the third quarter of fiscal 2022 from the prior-year quarter was primarily due to raw materials shortages and longer lead-times for critical materials and services.

The increase in contract research and development revenue was due to new contracts.

Gross profit as a percentage of revenue decreased to 78% the third quarter of fiscal 2022 from 84% the third quarter of fiscal 2021 primarily due to revenue mix and increased costs.

Total expenses decreased 14% in the third quarter of fiscal 2022 compared to the third quarter of fiscal 2021 due to a 15% decrease in research and development expense and a 13% decrease in selling, general, and administrative expense.

The decrease in research and development expense was primarily due to staffing changes and the completion of certain product development activities.

Interest income for the second quarter of fiscal 2022 decreased 27% due to a decrease in our available-for-sale securities and a decrease in the average interest rates on those securities.

The 64% increase in net income in the second quarter of fiscal 2022 compared to the prior-year quarter was primarily due to an increase in product sales. 

Six Months ended September 30, 2021 compared to six Months ended September 30, 2020

The decrease in selling, general, and administrative expense was primarily due to staffing changes.

Interest income for the third quarter of fiscal 2022 decreased 22% due to a decrease in our available-for-sale securities and a decrease in the average interest rates on those securities.

The 12% decrease in net income in the third quarter of fiscal 2022 compared to the prior-year quarter was primarily due to decreased revenue, decreased gross margin, and decreased interest income partially offset by decreased expenses. 

Nine months ended December 31, 2021 compared to nine months ended December 31, 2020

The table shown below summarizes the percentage of revenue and quarter-to-quarter changes for various items:

Percentage of Revenue

Six Months Ended Sep.

Nine Months Ended December 31

Product sales

4 unchanged sentences

Selling, general, and administrative

 6.6 

Total expenses

3 unchanged sentences

Provision for income taxes

Total revenue for the six months ended September 30, 2021 increased 56% compared to the six months ended September 30, 2020.

The increase was due to a 59% increase in product sales partially offset by a 13% decrease in contract research and development revenue.

Total revenue for the nine months ended December 31, 2021 increased 31% compared to the nine months ended December 31, 2020.

The increase was due to a 31% increase in product sales and a 17% increase in contract research and development revenue.

The increase in product sales from the prior-year period was primarily due to increased purchases by existing customers, and sales increased in most of our markets and product lines.

The decrease in contract research and development revenue was due to the completion of certain contracts.

Gross profit as a percentage of revenue decreased to 76% for the first six months of fiscal 2022 from 80% for the first six months of fiscal 2021 primarily due to revenue mix.

Total expenses increased 2% for the first six months of fiscal 2022 compared to the first six months of fiscal 2021 due to a 33% increase in selling, general, and administrative expense, partially offset by an 11% decrease in research and development expense.

The increase in selling, general, and administrative expense was primarily due to increased employee compensation expense.

The increase in contract research and development revenue was due to new contracts.

Gross profit as a percentage of revenue decreased to 77% for the first nine months of fiscal 2022 from 82% for the first nine months of fiscal 2021 primarily due to revenue mix and increased costs.

Total expenses decreased 3% for the first nine months of fiscal 2022 compared to the first nine months of fiscal 2021 due to a 12% decrease in research and development expense, partially offset by a 19% increase in selling, general, and administrative expense.

The decrease in research and development expense was primarily due to staffing changes and the completion of certain product development activities.

Interest income for the first six months of fiscal 2022 decreased 27% due to a decrease in our available-for-sale securities and a decrease in the average interest rates on those securities.

The 56% increase in net income in the first six months of fiscal 2022 compared to the prior-year quarter was primarily due to an increase in product sales.

The increase in selling, general, and administrative expense was primarily due to increased employee compensation expense.

Interest income for the first nine months of fiscal 2022 decreased 26% due to a decrease in our available-for-sale securities and a decrease in the average interest rates on those securities.

The 25% increase in net income in the first nine months of fiscal 2022 compared to the prior-year period was primarily due to an increase in product sales.

The Impact of the COVID-19 Pandemic

We believe the impact of the COVID-19 pandemic on total revenue and net income was significantly less in the quarter and six months ended September 30, 2021 compared to the prior-year periods.

We believe the impact of the COVID-19 pandemic on customer demand was significantly less in the quarter and nine months ended December 31, 2021 compared to the prior-year periods.

We believe the impact of the pandemic on our supply chain, however, was significantly more in the quarter and nine months ended December 31, 2021 than in the prior-year periods.

The effects of the pandemic also increased labor and materials costs and expenses for the quarter and nine months ended December 31, 2021.

Liquidity and Capital Resources

Cash and cash equivalents were $11,145,156 as of September 30, 2021 compared to $10,427,340 as of March 31, 2021.

The $717,816 increase in cash and cash equivalents during first six months of fiscal 2022 was due to $6,458,196 in net cash provided by operating activities and $3,926,084 of cash provided by investing activities, partially offset by $9,666,464 of cash used in financing activities.

Cash and cash equivalents were $8,967,657 as of December 31, 2021 compared to $10,427,340 as of March 31, 2021.

The $1,459,683 decrease in cash and cash equivalents during first nine months of fiscal 2022 was due to $14,499,696 of cash used in financing activities partially offset by $9,098,330 in net cash provided by operating activities and $3,941,683 of cash provided by investing activities.

Operating Activities

Net cash provided by operating activities related to product sales and research and development contract revenue as our primary source of working capital for the current and prior year quarters.

Net cash provided by operating activities was $6,458,196 for first six months of fiscal 2022 and $5,540,971 for the first six months of fiscal 2021.

Accounts receivable increased by $911,821 during first six months of fiscal 2022 primarily due to the timing of sales to and payments from customers.

Net cash provided by operating activities was $9,098,330 for first nine months of fiscal 2022 and $8,531,068 for the first nine months of fiscal 2021.

Accounts receivable increased by $1,073,922 during first nine months of fiscal 2022 primarily due to the timing of sales to and payments from customers.

Prepaid expenses and other assets increased by $435,067 due to the timing of estimated tax payments.

Inventories increased $466,898 due primarily to our decisions to increase work in process in order to mitigate longer vendor lead-times.

Investing Activities

Cash used in investing activities during the six months ended September 30, 2021 consisted of $73,916 in capital expenditures offset by $4,000,000 in proceeds from maturities of marketable securities.

Cash provided by investing activities during the nine months ended December 31, 2021 consisted of $4,000,000 in proceeds from maturities of marketable securities, partially offset by $58,317 in capital expenditures.

Capital expenditures can vary from quarter to quarter depending on our needs and equipment purchasing opportunities.

We currently plan significantly more capital expenditures during fiscal 2022 than the $62,727 we invested in fiscal 2021.

We have ordered several pieces of production equipment to increase our capacity.

Therefore, we currently expect significantly more capital expenditures during fiscal 2022 than the $62,727 we invested in fiscal 2021.

Financing Activities

Cash used in financing activities during the six months ended September 30, 2021 consisted of $9,666,464 of cash dividends paid to shareholders.

In addition to cash dividends to shareholders paid in first six months of fiscal 2022, on October 20, 2021 we announced that our Board had declared a cash dividend of $1.00 per share of Common Stock, or $4,833,232 based on shares outstanding as of October 15, 2021, to be paid November 30, 2021.

Cash used in financing activities during the nine months ended December 31, 2021 consisted of $14,499,696 of cash dividends paid to shareholders.

In addition to cash dividends to shareholders paid in first nine months of fiscal 2022, on January 19, 2022 we announced that our Board had declared a cash dividend of $1.00 per share of Common Stock, or $4,833,714 based on shares outstanding as of January 14, 2022, to be paid February 28, 2022.

We plan to fund dividends through cash provided by operating activities and proceeds from maturities of marketable securities.

3 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-Q

Item 1. Financial Statements