What changed in this filing

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Item 1. Financial Statements

2022-07-20 compared with 2022-01-19 · 108 added, 417 removed, 317 unchanged (62% of the section changed)

2 unchanged sentences

BALANCE SHEETS

December 31, 2021

June 30, 2022

March 31, 2022*

Current assets

64 unchanged sentences

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

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

4,830,826 issued and outstanding as of June 30 and March 31, 2022

48,308  

5 unchanged sentences

( 656,673 )  

1,101,119  

Retained earnings

11 unchanged sentences

STATEMENTS OF INCOME

Quarter Ended December 31

Quarter Ended June 30

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 December 31

$ 3,465,407  

$ 3,925,709  

Quarter Ended June 30

Unrealized loss from marketable securities, net of tax

( 380,161 )  

Comprehensive income

$ 3,085,246  

$ 3,780,257  

See accompanying notes.

NVE CORPORATION

STATEMENTS OF INCOME

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

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.

NVE CORPORATION

STATEMENTS OF SHAREHOLDERS ’

Comprehensive

Income (Loss)

Balance as of March 31, 2022

22 unchanged sentences

63,543,000  

Comprehensive income:

Unrealized loss on marketable securities, net of tax

( 197,034 )  

3,646,507  

Total comprehensive income

3,449,473  

Stock-based compensation

56,999  

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

( 4,833,232 )  

Balance as of September 30, 2021

4,833,232  

48,332  

19,402,364  

813,920  

47,963,973  

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. 

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Comprehensive income:

Unrealized gain on marketable securities, net of tax

1,242,662  

2,411,865  

Total comprehensive income

3,654,527  

Stock-based compensation

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

( 4,835,038 )

Balance as of June 30, 2020

4,835,038  

48,350  

19,386,663  

1,759,185  

55,623,347  

76,817,545  

Repurchase of common stock

Comprehensive income:

Unrealized loss on marketable securities, net of tax

4 unchanged sentences

Stock-based compensation

34,315  

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

1 unchanged sentence

( 4,833,232 )

Balance as of September 30, 2020

4,833,232  

48,332  

19,329,577  

1,628,861  

53,010,649  

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  

Balance as of June 30, 2021

4,833,232  

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STATEMENTS OF CASH FLOWS

Nine Months Ended December 31

Quarter Ended June 30

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 )  

Purchases of marketable securities

Proceeds from maturities of marketable securities

4,000,000  

12,000,000  

Cash provided by investing activities

3,941,683  

11,986,373  

Receipt of tenant improvement allowance

Net cash provided (used) by investing activities

FINANCING ACTIVITIES

Repurchase of common stock  

Payment of dividends to shareholders

( 14,499,696 )  

( 14,503,308 )

Cash used in financing activities

( 14,499,696 )  

( 14,594,727 )

(Decrease) increase in cash and cash equivalents

( 1,459,683 )  

5,922,714  

Increase (decrease) in cash and cash equivalents

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. 

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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, 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.

The results of operations for the quarter ended June 30, 2022 are not necessarily indicative of the results that may be expected for the full fiscal year ending March 31, 2023.

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, 2022.

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

As of June 30, 2022, there were no changes to our significant accounting policies.

RECENTLY ISSUED ACCOUNTING STANDARDS

Recently Adopted Accounting Standard

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2019 - 12, Income Taxes (Topic 740 )—Simplifying the Accounting for Income Taxes.

ASU 2019 - 12 simplifies accounting for income taxes, removes certain exceptions to the general principles in Topic 740, and amends existing guidance to improve consistent application.

We adopted ASU 2019 - 12 beginning with the quarter ended June 30, 2021.

In May 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2021 - 04, Earnings Per Share (Topic 260 ), Debt—Modifications and Extinguishments (Subtopic 470 - 50 ), Compensation—Stock Compensation (Topic 718 ), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815 - 40 ) Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options .

ASU 2021 - 04 addresses issuers’

accounting for certain modifications or exchanges of freestanding equity-classified written call options.

We adopted ASU 2021 - 04 beginning with the quarter ended June 

The adoption had no material impact on our financial statements.

New Accounting Standard Not Yet Adopted

In May 2021, the FASB issued ASU No.

2021 - 04, Earnings Per Share (Topic 260 ), Debt —

Modifications and Extinguishments (Subtopic 470 - 50 ), Compensation —

Stock Compensation (Topic 718 ), and Derivatives and Hedging —

Contracts in Entity ’

s Own Equity (Subtopic 815 - 40 ) Issuer ’

s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options .

ASU 2021 - 04 addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options.

ASU 2021 - 04 is effective for fiscal years beginning after December 15, 2021 and interim periods within those fiscal years, which is fiscal 2023 for us, with early adoption permitted.

We do not expect adoption of the new guidance to have a significant impact on our financial statements.

In June 2016, the FASB issued ASU No.

2016 - 13, Financial Instruments-Credit Losses (Topic 326 ), Measurement of Credit Losses on Financial Statements .

2016 - 13 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected.

The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset.

In November 

2018 the FASB issued ASU No.

2018 - 19, Codification Improvements to Topic  

326, Financial Instruments-Credit Losses , which clarifies codification and corrects unintended application of the guidance, and in November 2019, the FASB issued ASU No.

2019 - 11, Codification Improvements to Topic 326, Financial Instruments-Credit Losses , which clarifies or addresses specific issues about certain aspects of ASU 

In November 

2019 the FASB issued ASU No.

2019 - 10, Financial Instruments —

Credit Losses (Topic 

326 ), Derivatives and Hedging (Topic 815 ), and Leases (Topic 

Effective Dates , and in February 2020 the FASB issued ASU No.

2020 - 02, Financial Instruments —

Credit Losses (Topic  

326 ) and Leases (Topic 842 ):

Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.

119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No.

2016 - 02, Leases (Topic 

842 ) , both of which delay the effective date of ASU 

2016 - 13 by three years for certain Smaller Reporting Companies such as us.

In March 

2020, the FASB issued ASU No.

2020 - 03, Codification Improvements to Financial Instruments ;

which modifies the measurement of expected credit losses of certain financial instruments.

In accordance with ASU 

2019 - 10 and ASU 

2020 - 02, ASU 

2016 - 13 is effective for certain Smaller Reporting Companies for financial statements issued for fiscal years beginning after December 

15, 2022 and interim periods within those fiscal years, which will be fiscal 2024 for us if we continue to be classified as a Smaller Reporting Company, with early adoption permitted.

We are evaluating the potential impact of ASU 

2016 - 13 on our financial statements.

NET INCOME PER SHARE

2 unchanged sentences

The following tables show the components of diluted shares:

Quarter Ended December 31

Weighted average common shares outstanding –

4,833,604  

4,833,232  

Dilutive effect of stock options

Shares used in computing net income per share –

4,835,770  

4,833,261  

Nine Months Ended December 31

Quarter Ended June 30

Weighted average common shares outstanding –

4,833,356  

4,834,324  

Dilutive effect of stock options

Shares used in computing net income per share –

4,835,781  

4,834,411  

FAIR VALUE OF FINANCIAL INSTRUMENTS

4 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 December 31, 2021 are as follows: 

Contractual maturities of available-for-sale securities as of June 30, 2022 are as follows: 

1–3 Years

3 unchanged sentences

$ 25,517,937  

$ 5,030,866  

Total available-for-sale securities represented approximately 79 % of our total assets.

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

Marketable securities as of June 30, 2022 had remaining maturities between three weeks three years.

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 December 31, 2021

As of June 30, 2022

As of March 31, 2022

Money market funds

$ 7,631,824  

$ 10,143,196  

Corporate bonds

49,662,046  

54,717,626  

$ 7,631,824  

$ 49,662,046  

$ 57,293,870  

$ 10,143,196  

$ 54,717,626  

$ 64,860,822  

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

Our available-for-sale securities as of June 30 and March 31, 2022, aggregated into classes of securities, were as follows:

As of June 30, 2022

As of March 31, 2022

Money market funds

$ 7,631,824  

$ 10,143,196  

Corporate bonds

49,106,800  

772,080  

( 216,834 )  

49,662,046  

53,308,105  

1,570,195  

54,717,626  

$ 56,738,624  

$ 772,080  

$ ( 216,834 )  

$ 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 December 31, 2021 and March 

Less Than 12 Months

12 Months or Greater

As of December 31, 2021

As of June 30, 2022

Corporate bonds

$ 10,167,905  

$ ( 216,834 )  

$ 10,167,905  

$ ( 216,834 )

$ 10,167,905  

$ ( 216,834 )  

$ 10,167,905  

$ ( 216,834 )

As of March 31, 2022

Corporate bonds

$ 10,322,539  

$ ( 160,674 )

$ 10,322,539  

$ ( 160,674 )

$ 10,322,539  

$ ( 160,674 )

$ 10,322,539  

$ ( 160,674 )

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.

The effects of the COVID- 19 pandemic, however, have degraded outlooks for some of our marketable securities’

issuers, which could lead to credit-quality downgrades in the future.

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 December 31, 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 June 30, 2022.

Inventories are shown in the following table:

June 30, 2022

March 31, 2022

Raw materials

$ 784,004  

$ 660,678  

Work in process

2,812,910  

2,220,723  

Finished goods

770,760  

1,019,376  

Total inventories

$ 4,367,675  

$ 3,900,777  

STOCK-BASED COMPENSATION

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.

Stock-based compensation expense was $ 7,134 for the first quarter of fiscal 2023 and $ 7,238 for the first quarter of fiscal 2022.

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 December 31, 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 June 30, 2022, 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 December 31, 2021 we had no accrued interest related to uncertain tax positions.

As of June 30, 2022 we had no accrued interest related to uncertain tax positions.

The tax years 2018 through 2022 remain open to examination by the major taxing jurisdictions to which we are subject. 

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Details of our operating lease are as follows: 

Quarter Ended

31, 2021  

Nine Months Ended

31, 2021  

Operating lease cost  

$ 42,516  

$ 127,546  

Variable lease cost  

31,029  

93,087  

$ 73,545  

$ 220,633  

Cash paid for amounts included in the measurement of lease liabilities  

Quarter Ended June 30, 2022

Operating lease cost

Variable lease cost

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows for leases

$ 37,962  

$ 113,886  

Remaining lease term  

51 months  

Discount rate  

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

Year Ending March 31  

Operating Leases  

38,817  

156,121  

159,592  

163,224  

165,947  

Total lease payments  

683,701  

Imputed lease interest  

Total lease liabilities  

$ 635,605  

Remaining lease term

Discount rate

 The following table presents the maturities of lease liabilities as of June 30, 2022:

Year Ending March 31

Operating Leases

Total lease payments

Imputed lease interest

Total lease liabilities

STOCK REPURCHASE PROGRAM

5 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 December 31, 2021.

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

The remaining authorization was $ 3,598,519 as of June 30, 2022.

We did not repurchase any of our Common Stock during the first quarter of fiscal 2023.

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

3 unchanged sentences

salary deferral contributions.

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.

Our matching contributions were $ 28,426 f or the first quarter of fiscal 2023 and $ 28,584 for the first quarter of fiscal 20 22 .

SUBSEQUENT EVENTS

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 .

On July 20, 2022 we announced that our Board had declared a quarterly cash dividend of $ 1.00 per share of Common Stock to be paid August 31, 2022 to shareholders of record as of the close of business August 1, 2022 .

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

7 unchanged sentences

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

of our Annual Report on Form 10-K for the year ended March 31, 2021 as updated in Item 1A of this report.

of our Annual Report on Form 10-K for the year ended March 31, 2022.

NVE Corporation, referred to as NVE, we, us, or our, develops and sells devices that use spintronics, a nanotechnology that relies on electron spin rather than electron charge to acquire, store and transmit information.

2 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, 2022.

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 December 31

Product sales

Contract research and development

Total revenue

Cost of sales

Research and development

Selling, general, and administrative

Total expenses

Income from operations

Interest income

Income before taxes

Provision for income taxes

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.

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

As of June 30, 2022 our critical accounting policies and estimates continued to include investment valuation, inventory valuation, and deferred tax assets estimation.

Quarter ended June 30, 2022 compared to quarter ended June 30, 2021

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

Percentage of Revenue

Nine Months Ended December 31

Quarter Ended June 30

Product sales

4 unchanged sentences

Selling, general, and administrative

 6.6 

Total expenses

3 unchanged sentences

Provision for income taxes

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

Total revenue for the quarter ended June 30, 2022 (the first quarter of fiscal 2023) increased 3% compared to the quarter ended June 30, 2021 (the first quarter of fiscal 2022).

The increase was due to a 2% increase in product sales and a 32% 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 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.

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.

Gross profit as a percentage of revenue increased to 77% for the first quarter of fiscal 2023 from 75% for the first quarter of fiscal 2022 primarily due to increased prices.

Total expenses decreased 24% for the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022 due to a 26% decrease in research and development expense and a 20% decrease in selling, general, and administrative expense.

The decrease in research and development expense was primarily due to the reallocation of resources from research and development to revenue-generating activities.

The decrease in selling, general, and administrative expense was primarily due to decreased employee compensation expense.

Interest income for the first quarter of fiscal 2023 decreased 2% primarily due to a decrease in our available-for-sale securities.

The 16% increase in net income in the first quarter of fiscal 2023 compared to the prior-year quarter was primarily due to increased revenue, increased gross profit margin, and decreased expenses.

The Impact of the COVID-19 Pandemic

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.

We believe revenues and costs in the quarter ended June 30, 2022 were unfavorably affected by continued supply chain disruptions related to the COVID-19 pandemic.

Liquidity and Capital Resources

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.

Cash and cash equivalents were $13,299,264 as of June 30, 2022 compared to $10,449,510 as of March 31, 2022.

The $2,849,754 increase in cash and cash equivalents during first quarter of fiscal 2023 was due to $3,331,143 in net cash provided by operating activities and $4,349,437 of cash provided by investing activities, partially offset by $4,830,826 of cash used in financing 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 $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.

Net cash provided by operating activities was $3,331,143 for first quarter of fiscal 2023 and $3,300,394 for the first quarter of fiscal 2022.

Accounts receivable decreased by $1,191,613 during the first quarter of fiscal 2023 primarily due to the timing of sales to and payments from customers.

Inventories increased $455,402 due primarily to our decisions to increase work in process in order to mitigate longer vendor lead-times.

Accounts payable and accrued expenses decreased $1,371,168 due to a $689,317 decrease in accrued expenses, a $648,092 decrease in accounts payable, and a $33,759 net decrease in operating lease liabilities.

The decrease in accounts payable was due to the timing of vendor payments.

The decrease in accrued expenses was due to decreases in accrued payroll and income taxes payable.

Investing Activities

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 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.

Cash provided by investing activities during the quarter ended June 30, 2022 consisted of $9,250,000 in proceeds from maturities of marketable securities and the receipt of a $100,000 buildout allowance, partially offset by $4,976,063 marketable securities purchases and $24,500 of fixed asset purchases.

Fixed asset purchases can vary from quarter to quarter depending on our needs and equipment purchasing opportunities.

We have ordered and are in the process of deploying additional new production equipment to increase our capacity.

Therefore, we currently expect significantly more fixed asset purchases during fiscal 2023 than the $484,579 we invested in fiscal 2022.

Financing Activities

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.

Cash used in financing activities during the quarter ended June 30, 2022 consisted of $4,830,826 of cash dividends paid to shareholders.

In addition to cash dividends to shareholders paid in first quarter of fiscal 2023, on July 20, 2022 we announced that our Board had declared a cash dividend of $1.00 per share of Common Stock, or $4,830,826 based on shares outstanding as of July 15, 2022, to be paid August 31, 2022.

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

1 unchanged sentence

Furthermore, dividends may be modified or discontinued at any time without notice.

We currently believe our working capital and cash generated from operations will be adequate for our needs at least for the next 12 months.

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