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Note 5 - Fair Value of Financial Instruments

3 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Fair Value Disclosures [Text Block]

NOTE 5. FAIR VALUE OF FINANCIAL INSTRUMENTS

Our corporate bonds and money market funds are classified as available-for-sale securities and carried at estimated fair value. Unrealized holding gains and losses are included in accumulated other comprehensive income (loss) in the statement of shareholders’ equity. Corporate bonds with remaining maturities less than one year are classified as short-term, and those with remaining maturities greater than one year are classified as long-term. We consider all highly-liquid investments with maturities of three months or less when purchased, including money market funds, to be cash equivalents. Gains and losses on marketable security transactions are reported on the specific-identification method.

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

Total			<1 Year			1–3 Years			3–5 Years
$	51,663,939		$	26,146,002		$	25,517,937		$	-

Total available-for-sale securities represented approximately 79% of our total assets. 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. Generally accepted accounting principles define fair value as the price that would be received to sell an asset or paid to transfer a liability. Fair value is a market-based measurement that should be determined using assumptions that market participants would use in pricing an asset or liability. Generally accepted accounting principles utilize a valuation hierarchy for disclosure of fair value measurements. The categorization within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The categories within the valuation hierarchy are described as follows:

Level 1 – Financial instruments with quoted prices in active markets for identical assets or liabilities.

Level 2 – Financial instruments with quoted prices in active markets for similar assets or liabilities. Level 2 fair value measurements are determined using either prices for similar instruments or inputs that are either directly or indirectly observable, such as interest rates.

Level 3 – Inputs to the fair value measurement are unobservable inputs or valuation techniques.

Money market funds are included on the balance sheets in “Cash and cash equivalents.” Corporate bonds are included on the balance sheets in “Marketable securities, short term” and “Marketable securities, long term.”

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

		As of June 30, 2022												As of March 31, 2022
		Level 1				Level 2				Total				Level 1				Level 2				Total
Money market funds		$	11,257,630			$	-			$	11,257,630			$	6,756,993			$	-			$	6,756,993
Corporate bonds			-				40,406,309				40,406,309				-				45,153,894				45,153,894
Total		$	11,257,630			$	40,406,309			$	51,663,939			$	6,756,993			$	45,153,894			$	51,910,887

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
		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		$	11,257,630			$	-			$	-			$	11,257,630			$	6,756,993			$	-			$	-			$	6,756,993
Corporate bonds			41,246,905				25,066				(865,662	)			40,406,309				45,561,114				230,085				(637,305	)			45,153,894
Total		$	52,504,535			$	25,066			$	(865,662	)		$	51,663,939			$	52,318,107			$	230,085			$	(637,305	)		$	51,910,887

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 June 30 and March 31, 2022.

		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 June 30, 2022
Corporate bonds		$	8,981,072			$	(100,920	)		$	9,554,349			$	(764,742	)		$	18,535,421			$	(865,662	)
Total		$	8,981,072			$	(100,920	)		$	9,554,349			$	(764,742	)		$	18,535,421			$	(865,662	)

As of March 31, 2022
Corporate bonds		$	6,306,750			$	(23,727	)		$	9,738,338			$	(613,578	)		$	16,045,088			$	(637,305	)
Total		$	6,306,750			$	(23,727	)		$	9,738,338			$	(613,578	)		$	16,045,088			$	(637,305	)

None of the securities were impaired at acquisition, and subsequent declines in fair value are not attributed to declines in credit quality. When evaluating for impairment we assess indicators that include, but are not limited to, earnings performance, changes in underlying credit ratings, market conditions, bona fide offers to purchase or sell, and ability to hold until maturity. Because we believe it is more likely than not we will recover the cost basis of our investments, we did not consider any of our marketable securities to be impaired as of June 30, 2022.

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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