Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (ss.229.405 of this chapter) is not contained herein and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.o

EXPLANATORY NOTE

We are filing this Amendment No. 1 to Form 10-K (Amendment No. 1) on Form 10-K/A to our Annual Report on Form 10-K for the year ended March 29, 2019 (“Original Form 10-K”), which amends and restates the Original Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on July 12, 2019. The reasons for filing this Amendment No. 1 to Form 10-K on Form 10-K/A are (1) amending the Management’s Report on Internal Control over Financial Reporting to reference the date of 2013 to the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Item 9A. Controls and Procedures; (iii) amending, restating and inserting a new revised Report of Independent Registered Public Accounting Firm that coverage for the fiscal ended March 29, 2019 and March 30, 2018, and (iii) amending, restating and inserting the revised Consent of Manuel Reina, CPA, Registered Independent Accounting Firm to the date of the revised Report.

Except as described above, no other changes have been made to the Original Form 10-K, including, without limitation, no changes to the Company’s audited financial statements and accompanying notes for the fiscal year ended March 29, 2019, as set forth in Item 15 of the Original Form 10-K.

With this Amendment No. 1 on Form 10-K/A, the principal executive officer and principal financial officer of the Company have reissued their certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, respectively, including in Part IV, Item 15 and attached as Exhibits 31.1, 31.2 and 32.1 to the Amendment No. 1 on Form 10-K/A.

IEH CORPORATION

INDEX TO FORM 10-K/A

FOR THE YEAR ENDED MARCH 29, 2019

TABLE OF CONTENTS 

References in this Annual Report to, the terms “Company”, “IEH”, “we”, “us” and “our” refer to IEH Corporation, unless otherwise stated or the context clearly indicates otherwise.

IEH CORPORATION

Cautionary Statements Concerning Forward-Looking Statements

This report contains forward-looking statements within the meaning of Section 21E of the Exchange Act and Section 27A of the Securities Act. Any statements contained in this report that are not statements of historical fact may be forward-looking statements. When we use the words “anticipates,” “plans,” “expects,” “believes,” “should,” “could,” “may,” “will” and similar expressions, we are identifying forward-looking statements. All statements that express expectations, estimates, forecasts or projections are forward-looking statements within the meaning of the Securities Act and the Exchange Act, respectively. We have based these forward-looking statements largely on our current expectations and projections about future financial events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Forward-looking statements involve risks and uncertainties, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by forward-looking statements.  These factorsrisks and uncertainties include our limited experience with ourthe outbreak of the novel coronavirus (“COVID-19”), including the measures to reduce its spread, and its effects on the economy and the business plan;sectors for which we provide products and services; pricing pressures on our product caused by competition; the risk that our products will not gain market acceptance; our ability to obtain additional financing; our ability to protect intellectual property; and our ability to attract and retain key employees. No forward-looking statement is a guarantee of future performance and you should not place undue reliance on any forward-looking statements. Our actual results may differ materially from those projected in any forward-looking statements, as they will depend on many factors about which we are unsure, including many factors beyond our control. The impact of COVID-19 may make our actual results uncertain, and cannot be predicted, and may precipitate or exacerbate other risks and uncertainties. For specific risks related to the COVID-19 pandemic refer to Item 1A – Risk Factors in this Annual Report on Form 10-K.

Except as may be required by applicable law, we do not undertake or intend to update or revise our forward-looking statements, and we assume no obligation to update any forward-looking statements contained in this report as a result of new information or future events or developments. Thus, you should not assume that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements. You should carefully review and consider the various disclosures we make in this report and our other reports filed with the Securities and Exchange Commission (“SEC”) that attempt to advise interested parties of the risks, uncertainties and other factors that may affect our business.

IEH CORPORATION

PART I

IEH Corporation (hereinafter referred to as “IEH” or the “Company”) was organized under the laws of the State ofbegan in New York, on March 22, 1943 under the name Industrial Heat Treating Company, Inc. On March 15, 1989, the Company changed its name to its current name. The Company’s executive offices and manufacturing facilities are located at 140 58^th Street, Suite 8E, Brooklyn, New York 11220. The Company’s telephone number is (718) 492-4440; Fax: 718-492-9898; its email address is ieh@iehcorp.com.in 1941, when Louis Offerman founded L. Offerman Tool & Die with his two sons, Bernard and Seymour.  

The majority of our customers require that we maintainIn the late 1960’s, IEH bought a quality system in strict accordance with ISO 9001. This is an International Standard Organization (ISO) specificationlicense to manufacture HYPERBOLOID sockets, and we have been recently audited and have received certification to ISO 9001:2015. Our quality policy is: “Listening to our Customers and Meeting their Needs, while Continuously Improving our Processes and Services.”

The Company has developed a web site that reflects the standard catalog items produced along with custom offerings. New product lines currently under development will be added later this year. You can view it by going to: http://www.iehcorp.com.

The Company designs, develops and manufacturesbegan making printed circuit board (“PCB”) connectors for the military and aerospace industries, in accordance with the MIL-DTL-55302 military specification.  We have been making these connectors and custom interconnectsvariations of them ever since, and today, we are one of the worldwide leaders in HYPERBOLOID connectors and contacts.

In use for high performance applications. Allnearly 50 years under the most demanding conditions, HYPERBOLOID technology has proven itself to be the leading design for integrity and reliability. On avionics platforms, military and commercial aerospace equipment, engine control systems, missiles and torpedoes, vehicular electronics, satellites and rocket launchers, medical devices, industrial and environmental controls, test equipment, pin grid array (“PGA”) sockets and countless other rugged applications, HYPERBOLOID has lived up to its promise of the highest reliability connector available.

At IEH, we design and manufacture HYPERBOLOID connectors that not only accommodate, but exceed military and aerospace specification standards. Years after inception, our HYPERBOLOID solutions time and again continue to prove their reliability and benefits. Our acclaimed engineers have long provided reliable and innovative HYPERBOLOID interconnect solutions for defense, commercial, aerospace and medical use.

We are a family managed business, as Louis’ great-grandson David is the President and Chief Executive Officer, and we believe that we still manufacture the highest quality products for the most demanding environments.  But most importantly, we are always looking ahead. We are committed to developing new technology that meets the demands of our connectors utilize the HYPERBOLOID contact design, a rugged, high-reliability contact system ideally suited for high-stress environments. We believefast-paced electronic landscape, and we are the only independent producer of HYPERBOLOID printed circuit board connectorssteadfast about always exceeding our customers’ expectations.

IEH serves customers in the United States.

States and abroad, with a sales presence in over 40 countries.  Our customers consist of OEMs (Original Equipment Manufacturers)include defense contractors, commercial aerospace equipment manufacturers, medical device manufacturers, oil and distributors who resell our products to OEMs.gas exploration firms, and commercial space launch companies. We sell our productsboth directly and through 25 independentdistribution.  We maintain a Military Specification QPL (Qualified Product Listing), and an ISO (International Standards Organization) 9001:2015 Certification.

For the fiscal year ending March 31, 2020, approximately 60% of our sales representatives and distributors located in all regions of the United States, Canada, the European Union (EU), Southeast Asia, Central Asiawere for defense applications, 23% for commercial aerospace, and the Middle East.

The customers we service areremainder in the Military, Aerospace, Space, Medical, Oilcommercial space launch, medical, oil and Gas, Industrial, Test Equipmentgas and Commercial Electronicsindustrial markets. We appear on the Military Qualified Product Listing “QPL” to MIL-DTL-55302 and supply customer requested modifications to this specification. Sales to the Commercial electronics (inclusive of commercial aerospace, space, oil & gas, medical and miscellaneous markets) and Military markets were 49.9% and 50.1%, respectively, of the Company’s net sales for the year ended March 29, 2019. Our offering of “QPL” items has recently been expanded to include additional products.

In order to remain competitive, the Company has an internal program to upgrade, add and maintain machinery, review material costs and increase labor force productivity. During the fiscal years ended March 29, 2019 and March 30, 2018, the Company purchased several machines to increase the productivity of certain processes. This will help us meet this goal.

New Product DevelopmentDevelopment:

The Company is sought after by manyIEH continues to expand the scope and range of its customersPCB connector offerings.  In recent years, we have also increased the breadth of our products by introducing high-speed connectors for data transmission, as well as hybrid power/signal connectors.  New product developments are primarily driven by customer demand.  IEH also continues to designspecialize in custom interconnects designed specifically for customer applications.  Our engineers work in conjunction with customer engineers to create, refine and manufacture custom connectors. This has created many new productsconnectors and interconnect solutions that meet their specific, demanding needs.  IEH engineers are renowned for their flexibility and creativity in solving customer interconnect challenges and providing innovative designs and employ new technologies. The Company continues to be successful because of its ability to assist its customers and create new designs, including engineering drawing packages, in a relatively short period of time. We will continue to support our customers to the best of our ability.solutions.

A recent product line featuring high-speed and hybrid power signal connectors has been added to the Company’s product offering. The Company expects to recognize meaningful revenue from these product lines and we expect it to contribute substantially to the bottom line in the coming years.

The standard printed circuit board connectors we produce are continually being expanded and utilized in many of the military programs being built today. We have recently received approval for additional products that we can offer under the Military Qualified Product Listing “QPL.”

IEH CORPORATION

PART I

Item 1.      Business(continued)

Commitments

The Company has a collective bargaining multi-employer pension plan (“Multi-Employer Plan”) with the United Auto Workers of America, Local 259 (the “Union”). Contributions are made in accordance with a negotiated labor contract and are based on the number of covered employees employed per month. With the passage of the Multi-Employer Pension Plan Amendments Act of 1990 (the “1990 Act”), the Company may become subject to liabilities in excess of contributions made under the collective bargaining agreement. Generally, these liabilities are contingent upon the termination, withdrawal, or partial withdrawal from the Multi-Employer Plan. The Company has not taken any action to terminate, withdraw or partially withdraw from the Multi-Employer Plan nor does it intend to do so in the future. Under the 1990 Act, liabilities would be based upon the Company’s proportional share of the Multi-Employer Plan’s unfunded vested benefits, Based upon such Plan’s information and data as of December 31, 2018 furnished to the Company (including, without limitation, unfunded vested benefits, accumulated benefits and net assets), such Plan is fully funded. Based thereupon, the Company’s proportional share of the liability through December 31, 2018 is fully funded. The total contributions charged to operations under such Plan were $65,075 for the year ended March 29, 2019 and $151,314 for the year ended March 30, 2018.

Marketing and SalesSales:

The market for connectors and interconnect devices, domestic and worldwide, is highly fragmented as a result of the manufacture by many companies of a multitude of different types and varieties of connectors and interconnects. For example, connectors include: printed wiring board, rectangular I/O, circular, planar (IOC)(“IOC”) RF coaxial, IC socket and fiber optic. The Company has been servicing a niche in the market by manufacturing connectors containing HYPERBOLOID contact designs in the printed wiring board style of connectors.

The Company is continuously experimenting with innovative connection designs, which may cause it to alter its marketing plans in the future if a market should develop for any of its current or future innovative designs. The Company is continually reviewing product lines being sold in the connector and interconnect marketplace. We are committed to expanding our product offering and we consider that many of our current or future custom designs will become product lines.

The Company’s products are marketed to OEM’s (OriginalOriginal Equipment Manufacturers)Manufacturers (“OEM”) directly and through authorized representatives and distributors serving primarily the Military, Aerospace, Medical, Space, Industrial, Test Equipment and Commercial Electronics markets. The Company is also involved in developing new connectors for specific uses, which result from changes in technology. The Company assists customers in the development and design of connectors for specific customer applications. This service is marketed to customers who require the development of connectors and interconnection devices specially designed to accommodate the customers’ own products.

The Company is primarily a manufacturer and its products are essentially basic components of larger assemblies of finished goods. Approximately 93.4% and 90% of the Company’s net sales for the years ended March 31, 2020 and

March 29, 2019, and March 30, 2018, respectively, were made directly to manufacturers of finished products with the balance of the Company’s products sold to distributors. Distributors often purchase connectors for customers who do not require large quantities of connectors over a short period of time but rather require small allotments of connectors over an extended period of time.

During the fiscal year ended March 29, 2019, two customers accounted for $7,451,032 constituting 26.2% of the Company’s net sales. One of those customers accounted for 13.7% of the Company’s net sales while the second customer accounted for 12.5% of the Company’s net sales.

During the fiscal year ended March 30, 2018, one customer accounted for $2,685,250 constituting 11.4% of the Company’s net sales.

The Company currently employs 2522 independent sales representatives to market its products in all regions in the United States as well as in Canada, the European Union (EU)(“EU”), Southeast Asia, Central Asia and the Middle East. These

IEH CORPORATION

PART I

Marketing and Sales(continued)

independent sales representatives also promote the product lines of other electronics manufacturers; however, they do not promote the product lines of manufacturers which compete directly with the Company’s products. These sales representatives accounted for approximately 95%75% of CompanyCompany’s net sales for the fiscal year ended March 29, 201931, 2020 (with the balance of Company net sales being generated via direct customer contact).

International sales accounted for approximately 19.0% of net sales for the fiscal year ended March 31, 2020 and 18.3% of net sales for the fiscal year ended March 29, 20192019.

We also market our products and 20% of net sales forcapabilities through our website, www.iehcorp.com. Our newest product series HBH Hybrid Power/Signal HYPERBOLOID Connectors, has a configuration tool that allows users to build their own hybrid connector and download 3D models to incorporate into their modules. IEH has also established a presence on social media, and regularly promotes the year ended March 30, 2018, respectively.company and products on Facebook, LinkedIn and Twitter.

Backlog of Orders/Capital RequirementsRequirements:

The backlog of orders for the Company’s products amounted to approximately $21,552,000 at March 31, 2020 as compared to $18,407,000 at March 29, 2019 as compared to $15,658,000 at March 30, 2018.2019. A portion of these orders are subject to cancellation or postponement of delivery dates and, therefore, no assurance can be given that actual sales will result from these orders. The Company does not foresee any problems which would prevent it from fulfilling itsthese orders.

Forward Looking Business Trends:

COVID-19 Impact:

We are exposed to and impacted by macroeconomic factors and U.S., state and local government policies. Current general economic conditions are highly volatile due to the COVID-19 pandemic, resulting in both market size contractions due to economic slowdowns and government restrictions on movement. We have adopted particular measures to protect our employees at our manufacturing operations in Brooklyn, New York, and we expect to execute on our contracts through carefully designed arrangements. We are unable to determine at the present time whether the Company will be materially impacted by the COVID-19 pandemic in the fiscal year ending March 31, 2021.

In the future, this pandemic may cause reduced demand for certain products we provide. Our ability to continue to operate without any significant negative impacts will in part depend on our ability to protect our employees. We have endeavored to follow recommended actions of government and health authorities to protect our employees and were, and are, able to broadly maintain our operations. We intend to continue to work with government authorities and implement our employee safety measures to ensure that we are able to continue our operations during the pandemic.

However, uncertainty resulting from the pandemic could result in an unforeseen disruption to our operations (for example reduced purchase orders from our customers or customer-requested delays in filling existing purchase orders) that may not be fully mitigated.

For additional information on risk factors that could impact our results, please refer to “Risk Factors” in Part II, Item 1A of this Form 10-K.

The design, development, manufacture and distribution of electrical connectors and interconnection devices is a highly competitive field. The Company principally competes with companies who produce high performance connectors in printed circuits and wiring boards for high technology application. The Company competes by adapting certain technologies to meet specific product applications, producing connectors cost-effectively, and through its production capabilities. In addition, there are many companies who offer connectors with designs similar to those utilized by the Company and are direct competitors of the Company.

The primary basis upon which the Company competes is product performance and production capabilities. The Company usually receives job orders after submitting bids pursuant to customer-issued specifications for connectors and interconnects. The Company’s bid can be for a new item that requires the item to perform under harsh environment requirements or it can be for a standard catalog item. The Company also offers engineering services to its customers in designing and developing connectors for specialized products and specific customer applications. This enables the Company to receive a competitive advantage over those companies who basically manufacture connectors based solely or primarily on cataloged specifications.

ManySome of the Company’s competitors may have greater financial resources than the Company and no assurances can be given that the Company will be able to compete effectively with these companies in the future.

Suppliers of Raw Materials and Component PartsParts:

The Company utilizes a variety of raw materials and manufactured component parts, which it purchases from various suppliers. These materials and components are available from numerous sources and the Company does not believe that it will have a problem obtaining such materials and parts in the future.

However, any delay in the Company’s ability to obtain necessary raw materials and component parts may affect its ability to meet customer production needs. In anticipation of such delays, the Company carries an inventory of raw materials and component parts to avoid shortages and to insure continued production.

Employees

Employees:

The Company presently employsAs of March 31, 2020, we employed approximately 199229 people, two (2) of whom are executive officers; six (6)seven (7) are engaged in management activities; eight (8) provide general and administrative services; and approximately 183212 are employed in manufacturing and testing activities. Most of the employees engaged in manufacturing and testing activities are covered by

IEH CORPORATION

PART I

a collective bargaining agreement with the Union,United Auto Workers of America, Local 259 (the “Union”), which will expire on March 31, 2021. The Company believes that it has a good relationship with its employees and the Union.

Governmental RegulationsRegulations:

The Company is subject to federal regulations under the Occupational Safety and Health Act (“OSHA”) and the Defense Supply Command Columbus (“DSCC”).

OSHA provides federal guidelines and specifications to companies in order to insure the health and safety of employees.

DSCC oversees the quality and specifications of products and components manufactured and sold to the government and the defense industry. DSCC’s primary customer is the U.S. military. Many of our products appear on the DSCC Qualified Products Listing (“QPL”). To remain qualified, the Company submits its products to an outside testing laboratory which performs all required testing. After review by the Company of the testing results the data is then submitted to the DSCC. The Company and its products are only approved and remain on the QPL if the Company has passed all testing requirements. Although DSCC continuously requires products to an outside testing laboratory which performs all required testing. After review by the Company of the testing results the data is then submitted to the DSCC. The Company and its products are only approved and remain on the QPL if the Company has passed all testing requirements. Although DSCC continuously requires suppliers to meet changing specifications, the Company has not encountered any significant problems meeting such specifications and its products have, in the past, been approved. The Company is unaware of any changes in the Government’s regulations which are expected to materially affect the Company’s business.

We are a “smaller reporting company” as defined by Regulation S-K and as such, are not required to provide the information contained in this item pursuant to Regulation S-K. Notwithstanding the foregoing sentence, the Company is providing the following information concerning risk factors:

You should carefully consider the risks described below,above, together with all of following risk factors and the other information included in this report, in considering our business herein as well as the information included in other reports and prospects.herein. The risks and uncertainties described below are not the only ones facing our Company. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations, financial condition and/or operating results. If any of the matters or events described in the following risks actually occurs,risk factors materialize, our business, financial condition or results of operations could be harmed. In such case, the trading price of our common stock could decline, and you may lose all or part of your investment due to any of these risks.

Our operating results and financial condition have varied in the past and may in the future vary significantly depending on a number of factors. These factors, among others, could materially and adversely affect our business, results of operations, financial condition or liquidity and cause our actual results to differ materially from those contained in statements made in this report and presented elsewhere by management from time to time. The risks we have identified in our reports are not the only risks facing us. For example, these risks now include the impacts from the novel coronavirus (“COVID-19”) outbreak on our business, financial condition and results of operations.

Risks Related to Our BusinessBusiness:

FailureOur business results may vary from year to increase our revenue and keep our expenses consistent with revenues could prevent us from achieving and maintaining profitability.year depending upon the impact of large customer contracts.

We have generated net income of $5,160,776, $2,565,559, and $1,473,976, respectively, for the fiscal years ended

March 29, 2019, March 30, 2018, and March 31, 2017. The results for the fiscal year ended March 29, 2019 reflectand the completionfirst quarter of the year ended March 31, 2020 reflected the effects of a large customer contract in the amount of $3,766,000 which was fulfilled by the end of the first fiscal quarter.$3,766,000. Our reasonable expectation at this time is that this customer’s business will not be repetitive and accordingly there can be no assurance that the operating revenues in future fiscal quarters will equal or exceed the results of the first fiscal quarter.repetitive. We have expended, and will continue to be required to expend substantial funds to pursue product development projects, enhance our marketing and sales efforts and to effectively maintain business operations. Therefore, we will need to generate higher revenues to achieve and maintain profitability and cannot assure you that we will be profitable in any future period.

IEH CORPORATION

PART II: OTHER INFORMATION

Item 1A. Risk Factors(continued)

Risks Related to Our Business(continued)

Our capital requirements are significant and we have historically partially funded our operations through the financing of our accounts receivable.

We have an existing accounts receivable financing agreement with a commercial finance company whereby we can borrow up to 80 percent of our eligible receivables at an interest rate of 2.5% above JP Morgan Chase’s publicly announced prime rate with a minimum rate of 6% per annum. No assurances can be given that this financing agreement will continue into the future. If we are unable to continue with this agreement, our cash flow might be adversely be affected.

Our success is dependent on the performance of our management and the cooperation, performance and retention of our executive officers and key employees.

Our business and operations are substantially dependent on the performance of our senior management team and executive officers. If our management team is unable to perform it may adversely impact our results of operations and financial condition. We do not maintain “key person” life insurance on any of our executive officers. The loss of one or several key employees could seriously harm our business. Any reorganization or reduction in the size of our employee base could harm our ability to attract and retain other valuable employees critical to the success of our business.

If we lose key personnel or fail to integrate replacement personnel successfully, our ability to manage our business could be impaired.

Our future success depends upon the continued service of our key management, technical, sales, finance, and other critical personnel. We cannot assure you that we will be able to retain them. Key personnel have left our Company in the past and there likely will be additional departures of key personnel from time to time in the future. The loss of any key employee could result in significant disruptions to our operations, including adversely affecting the timeliness of product releases, the successful implementation and completion of Company initiatives, the effectiveness of our disclosure controls and procedures and our internal control over financial reporting, and the results of our operations. In addition, hiring, training, and successfully integrating replacement sales and other personnel could be time consuming, may cause additional disruptions to our operations, and may be unsuccessful, which could negatively impact future revenues.

Our reported financial results could be adversely affected by changes in financial accounting standards or by the application of existing or future accounting standards to our business as it evolves.

As a result of the enactment of the Sarbanes-Oxley Act and the review of accounting policies by the SEC and national and international accounting standards bodies, the frequency of accounting policy changes may accelerate. Possible future changes to accounting standards could adversely affect our reported results of operations.

Management determined that a misstatement and lack of disclosure in the second quarter regarding the employment agreement and option grant to the Chief Executive Officer, represented a material weakness in the disclosure controls and procedures. Such weakness may lead to additional risks and uncertainties, including stockholder or other actions, loss of investor confidence and negative impacts on our stock price.

During the third quarter of 2019, the Company identified certain adjustments required to correct and disclose stock based compensation expense related to an option that was granted to its President and Chief Executive Officer on July 29, 2019. The Company had omitted the disclosure and expense related to this option. This omission resulted in an understatement of selling, general and administrative expense of $884,667 for the three and six months ended September 27, 2019, and overstatement of income tax expense by $396,911 for the three and six months ended September 27, 2019 and an overstatement of net income by $487,756 for the three and six months ended September 27, 2019. The Company determined that these errors were immaterial to the previously issued financial statements, and as such no restatement was necessary. Accordingly, the misstatements were corrected during the period ended December 31, 2019 in the balance sheet as of December 31, 2019 and statements of operations for the nine months ended December 31, 2019.

In connection with this matter, our management identified material weaknesses in our internal control over financial reporting, as described in Item 9A, “Control and Procedures” of this Form 10-K. A material weakness is a deficiency, or combination of deficiencies in internal controls over financial reporting that results in a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Efforts to comply with the applicable provisions of Section 404 of the Sarbanes-Oxley Act will involve significant expenditures, and non-compliance with Section 404 of the Sarbanes-Oxley Act may adversely affect us and the market price of our common stock.

Under current SEC rules, we are required to report on our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, and related rules and regulations of the SEC; although, as an emerging growth company, we are exempt from the requirement to provide an auditor attestation to management’s assessment of its internal controls as required by Section 404(b) of the Sarbanes-Oxley Act. We will be required to review on an annual basis our internal control over financial reporting, and on a quarterly and annual basis to evaluate and disclose changes in our internal control over financial reporting. As a result, we expect to incur additional expenses in the near term that may negatively impact our financial performance and our ability to make distributions. This process also will result in a diversion of management’s time and attention. We cannot be certain as to the timing of completion of our evaluation, testing and remediation actions or the impact of the same on our operations, and we may not be able to ensure that the process is effective or that our internal control over financial reporting is or will be effective in a timely manner. In the event that we are unable to maintain or achieve compliance with the applicable provisions of Section 404 of the Sarbanes-Oxley Act and related rules, we and the market price of our common stock may be adversely affected.

Risks Related to Our Common StockStock:

Our stock price is volatile and could decline; we have a very limited trading market.

The price of our common stock has been, and is likely to continue to be, volatile. For example, our stock price during the fiscal year ended March 29, 201931, 2020 traded as low as $7.30$12.85 per share and as high as $22.00$23.95 per share. We cannot assure you that your investment in our common stock will not decline.

We have reduced disclosure and governance requirements applicable to smaller reporting companies, which could result in our common stock being less attractive to investors.

We have a public float of less than $250 million and therefore qualify as a smaller reporting company under the rules of the SEC. As a smaller reporting company, we are able to take advantage of reduced disclosure requirements, such as simplified executive compensation disclosures and reduced financial statement disclosure requirements in our SEC filings. Decreased disclosures in our SEC filings due to our status as a smaller reporting company may make it harder for our investors to analyze our results of operations and financial prospects. We cannot predict if investors will find our common stock less attractive due to our reliance on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be volatile.

We do not anticipate paying any dividends in the foreseeable future.

The current expectation is that we will retain our future earnings to fund the development and growth of the Company’s business.

Risks Related to General Economic Conditions and Other Factors:

Changes in general economic conditions, geopolitical conditions, U.S. trade policies and other factors beyond the Company’s control may adversely impact our business and operating results.

​

The Company’s operations and performance depend significantly on global, regional and U.S. economic and geopolitical conditions. In recent years, there has been discussion and dialogue regarding potential significant changes to U.S. trade policies, legislation, treaties and tariffs. Changes to current policies by the U.S. or other governments could affect our business, including potentially through increased import tariffs and other influences on U.S. trade relations with other countries. The imposition of additional tariffs or other trade barriers could increase our costs in certain markets, and may cause our customers to find alternative sourcing. In addition, other countries may change their own policies on business and foreign investment in companies in their respective countries. Additionally, it is possible that U.S. policy changes and uncertainty about such changes could increase market volatility and currency exchange rate fluctuations. Market volatility and currency exchange rate fluctuations could have a material adverse effect on our business, financial condition, results of operations or cash flows. As a result of these dynamics, we cannot predict the impact to our business of any future changes to the U.S.’s trading relationships.

​

In addition to changes in U.S. trade policy, a number of other economic and geopolitical factors both in the United States and abroad could have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows, such as:

​

Changes in defense expenditures may reduce the Company’s sales.

​

Approximately 60% and 50% of the Company’s net revenues for the fiscal years ended March 31, 2020 and March 29, 2019, respectively, came from sales to the military market. The Company participates in a broad spectrum of defense programs. Accordingly, the Company’s sales are affected by changes in the defense budgets of the U.S. government. A significant decline in U.S. government defense expenditures could have an adverse effect on the Company’s business, financial condition and results of operations. U.S. government expenditures are also subject to political and budgetary fluctuations and constraints, which may result in significant unexpected changes in levels of demand for our products.

We may be adversely affected by natural disasters, pandemics and other catastrophic events and by man-made problems such as terrorism that could disrupt our business operations, and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.

Our business operations are located in Brooklyn, New York. If a disaster, power outage, computer hacking, or other event occurred that prevented us from using all or a significant portion of an office, that damaged critical infrastructure, such as enterprise financial systems, IT systems, manufacturing resource planning or enterprise quality systems, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time. As an example, the New York City area has been significantly impacted by the COVID-19 pandemic and, due to safety considerations for our employees and government restrictions, including stay-at-home orders, certain of our employees have been working from home and we do not know when all of our employees will be able to resume full use of our office facilities. Our suppliers’ facilities are located in multiple locations where there may be similar stay-at-home orders in place for the current crisis and where other natural disasters or similar events, such as tornadoes, fires, explosions or large-scale accidents or power outages, or IT threats, pandemic, acts of terrorism and other geo-political unrest, could severely disrupt our operations and have a material adverse effect on our business, financial condition, operating results and prospects. All of the aforementioned risks may be further increased if we do not implement a disaster recovery plan or our partners’ or manufacturers’ disaster recovery plans prove to be inadequate. To the extent that any of the above should result in delays in the manufacture, or distribution of our products, our business, financial condition, operating results and prospects would suffer.

Our business and operations would suffer in the event of system failures, cyber-attacks or a deficiency in our cyber-security.

Despite the implementation of security measures, our internal computer systems and those of our contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. The risk of a security breach or disruption, particularly through cyber-attacks or cyber-intrusion, including by computer hackers, foreign governments, and cyber-terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations.

Risks Related to COVID – 19:

Our results of operations could in the future be materially adversely impacted by global, macroeconomic events, such as coronavirus pandemic (COVID-19), and the response to contain it.

In December 2019, a novel coronavirus disease (“COVID-19”) was reported and in January 2020, the World Health Organization (the “WHO”) declared it a Public Health Emergency of International Concern. On February 28, 2020, the WHO raised its assessment of the COVID-19 threat from high to very high at a global level due to the continued increase in the number of cases and affected countries, and on March 11, 2020, the WHO characterized COVID-19 as a pandemic. As COVID-19 continues to spread in the United States and around the world, we may experience disruptions that could severely impact our business.

The extent to which the coronavirus pandemic impacts our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, including: the duration and scope of the pandemic; governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic; the impact of the pandemic on economic activity and actions taken in response; the effect on our clients and client demand for our products; our ability to sell and provide our products, including as a result of travel restrictions and people working from home which has resulted in minor delays in our manufacturing and delivery of our products) and any closures of our and our customers’ offices and facilities. Customers may also slow down decision making, delay planned work or seek to terminate existing orders. Any of these events could materially adversely affect our business, financial condition, results of operations and the market price of our common stock.

The full extent to which the COVID-19 pandemic and the various responses to it impacts our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, including: the duration and scope of the pandemic; governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic; the effect on our customers and customer demand for our products; and disruptions or restrictions on our employees’ ability to work and travel. We will continue to actively monitor the issues raised by the COVID-19 pandemic and may take further actions that alter our business operations, as may be required by federal, state, or local authorities, or that we determine are in the best interests of our employees, customers, and shareholders. The potential effects of COVID-19 could also heighten the other risks disclosed in many of our risk factors that are included in this Part I, Item 1A, Risk Factors, of the 2020 Form 10-K. Because the COVID-19 situation is unprecedented and continuously evolving, other potential impacts to our risk factors are uncertain.

None.

IEH CORPORATION

PART 1None

The Company’s lease term for its manufacturing facility located at 140 58^th Street, Suite 8E, Brooklyn, New York runs from December 1, 2010 through November 30, 2020. We believe that these facilities are adequate and well suited to satisfy our business requirements. The Company has been in negotiations with the landlord for the renewal of the lease at the Brooklyn facility and has no reason to believe that the lease would not be renewed on terms acceptable to the Company. The basic minimum annual rentalsrental remaining are as follows:on this lease is $128,480 for the fiscal year ending March 31, 2021.

The Company leases approximately 20,400 square feet of space, of which it estimates 6,000 square feet are used as executive, sales and administrative offices and 14,400 square feet are used for its manufacturing, testing and plating operations.

The rental expense for the years ended March 29, 2019 and March 30, 2018 and was $183,720 and $178,360, respectively. In addition to the base rent, the Company pays insurance premiums and utility charges relating to the use of the premises. The Company considers its present facilities to be adequate for its present and anticipated future needs.

The Company is not a party to orand is not aware of any pending or threatened legal proceedings which, in the opinion of the Company’s management, would result in any material adverse effect on its results of operations or its financial condition.

Not applicable

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PART II

Principal MarketMarket:

On March 22, 2019, the Company’s shares of common stock (the “common stock”) commenced trading exclusively on the OTCQX Marketplace. Prior to March 22, 2019, the common stock was traded exclusively on the OTCQB Marketplace commencing on March 17, 2017. On March 17, 2017, theThe Company’s shares of common stock (the “common stock”) commenced trading exclusively on the OTCQBOTCQX Marketplace. The shares are quoted on the National Association of

Securities Dealers Automated Quotation (“NASDAQ”) System under the ticker symbol “IEHC”. Investors are able to view real-time quotes at http://www.otcmarkets.com.

Prior to March 17, 2017, the common stock of the Company was traded in the Over-The-Counter Market Electronic Bulletin Board (OTCBB).

Market InformationInformation:

The range of high and low bid prices for the Company’s common stock, for the periods indicated as set forth below as quoted (i) over the OTCBB prior to March 17, 2017, (ii) commencing on March 17, 2017 quoted on the OTCQB,OTCQX for the fiscal year ended March 31, 2020 and (iii) commencing on March 22, 2019, quoted on the OTCQX.29, 2019. Set forth below is a table indicating the high and low bid prices of the common stock during the periods indicated.

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PART II

On July 11, 2018October 6, 2020 (the last day prior to the filing of this report on which trading in the common stock occurred), the high bid for the common stock was $19.50$15.60 and the low bid was $18.00.$15.60.

Dividends

On May 17, 2017, the Board of Directors of the Company authorized a $0.25 one-time special cash dividend payable on June 19, 2017 to shareholders of record on the close of business of June 6, 2017. This dividend was the first dividend ever paid by the Company since it became an SEC reporting company.

Approximate Number of Equity Security HoldersHolders:

The number of record holders of the Company’s common stock as of July 12, 2019October 5, 2020 was approximately 279.260. Such number of record owners was determined from the Company’s shareholder records, and does not include the beneficial owners of the Company’s common stock whose shares are held in the names of various security holders, dealers and clearing agencies.

Dividends:

We have never declared or paid a regular, quarterly cash dividend on our Common Stock, and we do not expect to pay any regular, quarterly cash dividend on our Common Stock in the foreseeable future. Payment of future dividends, if any, on our Common Stock will be at the discretion of our Board of Directors after taking into account various factors, including our financial condition, operating results, anticipated cash needs, and plans for expansion.

Transfer AgentAgent:

The transfer agent for our common stock is Computershare located in Canton, Massachusetts.

We are a “smaller reporting company” as defined by Regulation S-K and as such, are not required to provide the information contained in this item pursuant to Regulation S-K.

Statements contained in this report, which are not historical facts, may be considered forward-looking information with respect to plans, projections, or future performance of the Company as defined under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties, which could cause actual

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results to differ materially from those projected. The words “anticipate,” “believe”, “estimate”, “expect,” “objective,” and “think”think” or similar expressions used herein are intended to identify forward-looking statements. The forward-looking

statements are based on the Company’s current views and assumptions and involve risks and uncertainties that include, among other things, the effects of the Company’s business, actions of competitors, changes in laws and regulations, including accounting standards, employee relations, customer demand, prices of purchased raw material and parts, domestic economic conditions, including housing starts and changes in consumer disposable income, and foreign economic conditions, including currency rate fluctuations. Some or all of the facts are beyond the Company’s control.

The following discussion and analysis should be read in conjunction with our audited financial statements and related footnotes included elsewhere in this report, which provide additional information concerning the Company’s financial activities and condition.

The Company designs, develops and manufactures printed circuit board connectors and custom interconnects for high performance applications.

Overview of Business

Business:

All of our connectors utilize the HYPERBOLOID contact design, a rugged, high-reliability contact system ideally suited for high-stress environments. We believe we are the only independent producer of HYPERBOLOID printed circuit board connectors in the United States.

Our customers consist of OEMs (Original Equipment Manufacturers) and distributors who resell our products to OEMs. We sell our products directly and through 2522 independent sales representatives and distributors located in all region of the United States, Canada, the European Union, Southeast Asia, Central Asia and the Middle East.

The customers we service are in the Military, Aerospace, Space, Medical, Oil and Gas, Industrial, Test Equipment and Commercial Electronics markets. We appear on the Military Qualified Product Listing “QPL”(“QPL”) to MIL-DTL-55302 and supply customer requested modifications to this specification. Sales toFor the commercial electronics (inclusivefiscal year ending March 31, 2020, approximately 60% of our sales were for defense applications, 23% for commercial aerospace, and the remainder in commercial space launch, medical, oil &and gas medical and miscellaneous markets) and military markets were 49.9% and 50.1%, respectively, ofindustrial markets. For the Company’s net sales for thefiscal year endedending March 29, 2019.2019, approximately 50% of our sales were for defense applications, 33% for commercial aerospace, and the remainder in commercial space launch, medical, oil and gas and industrial markets. Our offering of “QPL” items has recently been expanded to include additional products.

We are exposed to and impacted by macroeconomic factors and U.S., state and local government policies. Current general economic conditions are highly volatile due to the COVID-19 pandemic, resulting in both market size contractions due to economic slowdowns and government restrictions on movement. We believe, however, that our contract base is insulated from negative impacts due to the outbreak of COVID-19 as the products we provide to our customers are largely deemed essential by the customers we support resulting in a stable level of work. We have adopted particular measures to protect our employees at our manufacturing operations in Brooklyn, New York, and we expect to execute on our contracts through carefully designed arrangements.

Financial Overview:

Recent Developments:

PPP Loan and Note

On April 13, 2020, the Company entered into an unsecured note (the “PPP Note”) evidencing an unsecured loan (“PPP Loan”) in a principal amount of $2,103,885 pursuant to the Payment Protection Program (“PPP”) under the Coronavirus Aid Relief and Economic Security Act (“CARES Act”). The PPP Loan is administered by the U.S. Small Business Administration and the Company’s loan was made through JP Morgan Chase Bank. The PPP Loan bears interest at a fixed interest rate of one (1%) percent per year and matures in two (2) years after the issuance date. Payment of interest is deferred for the first six (6) months. Beginning on the seventh month following the date of the PPP Note (November 2020), the Company is required to make 18 payments of equal monthly installments of principal and interest with the final payment due in April 2022. The PPP Note provides for customary events of default including, among other things, cross-defaults on any other loan with JP Morgan Chase Bank. The PPP Loan may be accelerated upon the occurrence of an event of default. The PPP Note may be prepaid by the Company at any time with no prepayment penalties applied.

The proceeds of the PPP Loan may be used for payroll costs, costs related to certain group health care benefits, rent payments, utility payments, mortgage interest payments, interest payments on other debt obligation that were incurred before February 15, 2020. The PPP Note contains events of defaults and other conditions customary for a note of this type.

The PPP Loan is guaranteed by the United States Small Business Administration (“SBA”). The Company may apply to JP Morgan Chase Bank for forgiveness of the PPP Loan, with the amounts which may be forgiven equal to the sum of payroll costs, covered rent and mortgage obligations and covered utilities, which payments were incurred by the Company during the 24-week period beginning on April 13, 2020 and calculated in accordance with the CARES Act.

Under the terms of the CARES Act, the PPP Loan recipients can apply for and be granted forgiveness for all or a portion of a loan granted under the PPP with such forgiveness to be determined subject to limitations based on the use of loan proceeds for payment of payroll costs and any payments of mortgage, interest, rent and utilities. The terms of any forgiveness may be subject to further requirements in any regulations and guidelines the SBA may adopt. While the Company currently believes that its use of the PPP Note proceeds will meet the conditions for forgiveness under the PPP, no assurance is provided that the Company will obtain forgiveness of the PPP Note in whole or in part.

Appointment of New Chief Financial Officer and Treasurer

On August 27, 2020, the Company filed a Form 8-K announcing that William H. Craig will become the new Chief Financial Officer and Treasurer of the Company. Mr. Craig will replace Robert Knoth who is officially retiring later this month. Mr. Craig’s appointment was approved by the Board of Directors of the Company and will become effective on the next business day following the Company’s filing of its Annual Report on Form 10-K for the fiscal year ended March 31, 2020 with the Securities and Exchange Commission and upon Mr. Knoth’s official retirement.

Critical Accounting PoliciesPolicies:

The preparation of financial statements have been prepared in accordanceconformity with accounting principles generally accepted in the United States of America which require the Company(US GAAP) requires management to make estimates and assumptions about future events that affect the amounts reported amounts of assets and liabilities at the date ofin the financial statements and revenuesaccompanying notes. Future events and expenses duringtheir effects cannot be determined with absolute certainty. Therefore, the periods reported.determination of estimates requires the exercise of judgment. Actual results couldinevitably will differ from those estimates.estimates, and such differences may be material to the financial statements. The Company believesmost significant accounting estimates inherent in the followingpreparation of our financial statements include estimates associated with revenue recognition, depreciation and stock-based compensation.

Our financial position, results of operations and cash flows are impacted by the accounting policies we have adopted. In order to get a full understanding of our financial statements, one must have a clear understanding of the accounting policies employed. A summary of our critical accounting policies which could haveis presented within the most significant effect onfootnotes in the Company’s reported results and require the most difficult, subjective or complex judgments by management.financial statements presented within this Annual Report.

Results of Operations:

Critical Accounting Policies(continued)Fiscal Year End Results: March 31, 2020 and March 29, 2019:

The Company did not expend any funds on, nor receiving any revenues related to, customer sponsored research and development activities, relating to the developmentfollowing table summarizes our results of new designs, techniques and the improvement of existing designs,operations for the fiscal years ended March 29, 201931, 2020 and March 30, 2018, respectively, relating to the development of new designs, techniques and the improvement of existing designs.29, 2019:

Results of Operations

Stock-Based Compensation Plan:

Compensation expense for stock options granted to directors, officers and key employees is based on the fair value of the award on the measurement date, which is the date of the grant. The expense is recognized ratably over the service period of the award. The fair value of stock options is estimated using a Black-Scholes valuation model. The fair value of any other non-vested stock awards is generally the market price of the Company’s common stock on the date of the grant.

Year End Results: March 29, 2019 vs. March 30, 2018

The following table sets forthRevenue for the periods indicated, percentages for certain items reflected infiscal year ended March 31, 2020 amounted to $32,154,549 reflecting a $3,747,883 increase versus the financial data as such items bear to the revenues of the Company:

Relationship to Total Revenues

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Results of Operations(continued)

Year End Results: March 29, 2019 vs. March 30, 2018(continued)

Net sales for thefiscal year ended March 29, 2019 amounted to $28,406,666 reflecting a $4,933,972 increase versus the year ended March 30, 2018 which amounted to $23,472,694.$28,406,666. The increase in net salesrevenue is a direct result of the Company’s efforts in increasing sales in both the military and commercial aerospace sectors.

The Company is primarily a manufacturer and its products are essentially basic components of larger assemblies of finished goods. Approximately 90% of the Company’s net sales for the fiscal years ended March 29, 2019 and

March 30, 2018, respectively, were made directly to manufacturers of finished products with the balance of the Company’s products sold to distributors.

Distributors often purchase connectors for customers who do not require large quantities of connectors over a short period of time but rather require small allotments of connectors over an extended period of time.

During the fiscal year ended March 29, 2019, two customers accounted for $7,451,032 constituting 26.2% of the Company’s net sales. One of those customers accounted for 13.7% of the Company’s net sales while the second customer accounted for 12.5% of the Company’s net sales.

During the fiscal year ended March 30, 2018, one customer accounted for $2,685,250 constituting 11.4% of the Company’s net sales.

The Company currently employs 25 independent sales representatives to market its products in all regions in the United States as well as in Canada, the European Union (EU), Southeast Asia, Central Asia and the Middle East. These sales representatives accounted for approximately 95% of the Company’s net sales for the year ended March 29, 2019, with the balance of net sales being generated by direct customer contact.

For the fiscal year ended March 29, 2019, the Company’s principal customers included manufacturers of commercial electronic products, military defense contractors and distributors who service these markets. Sales to the commercial electronic products (inclusive of aerospace, space, oil & gas, medical & miscellaneous) were 49.9% and government markets comprised 50.1% of the Company’s net sales for the year ended March 29, 2019 and 35% and 45% of the Company’s net sales for the year ended March 30, 2018, respectively. Approximately 18% of net sales were made to international customers for the year ended March 29, 2019 and 20% for the year ended March 30, 2018, respectively.

Cost of products sold amounted to $16,377,063$21,906,236 for the fiscal year ended March 29, 2019,31, 2020, or 57.7%68.1% of operating revenues. This reflected a $1,642,502$5,529,173 or 11.2%33.8% increase in the cost of products sold of $14,734,561as compared to $16,377,063 or 62.8%57.7% of operating revenues for the fiscal year ended March 30, 2018. This29, 2019. The increase in cost of products sold is due primarily to the increased costincreases in costs of production associated with and necessarygoods sold to support the increaseadditional revenues, increases in sales.indirect production costs incurred as part of management’s plan to scale up production capacity and charges to adjust inventory costs in connection with the implementation of a new inventory system during the period.

Selling, general and administrative expenses were $6,007,241 and $4,007,145 or 18.7% and $4,006,950 or 14.1% and 17.1% of net salesrevenues for the fiscal years ended March 29, 201931, 2020 and March 30, 2018,29, 2019, respectively. This category of expenses increased by $195$2,000,096 or 0%49.9% from the prior year. This comparative increase can be attributed primarily to an increase in general and administrative cash compensation of $264,346 and stock-based compensation expense of $1,385,947.

Depreciation and amortization of $955,124 or 3.0% of net revenues was reported for the fiscal year ended March 31, 2020 as compared to $345,840 or 1.2% of net revenues for the fiscal year ended March 29, 2019. The increase was due to the purchase of additional machinery and equipment during the period and charges to adjust depreciation expense to conform to the expected lives of each of the respective asset groups.

For the fiscal year ended March 31, 2020, interest expense was $71,595 or .2% of net revenues. For the fiscal year ended March 29, 2019, interest expense was $63,271 or .2% of net sales. For the fiscal year ended March 30, 2018, interest expense was $48,178 or .2% of net sales.revenues. The increase of $15,093$8,324 or 31.3%13.2% reflects the additional borrowings from the Financing Company (as defined below) during the year.

Liquidity and Capital Resources:

Depreciation

As of March 31, 2020, the Company’s cash on hand was $7,760,057. The Company has recorded net income of $2,557,380 and amortization of $345,840 or 1.2% of net sales was reported$5,160,776 for the fiscal yearyears ended March 31, 2020 and March 29, 2019, as compared to $330,037 or 1.4%respectively. As of net sales forMarch 31, 2020, the prior period. The increase was due to the purchase of machinery and equipment.

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Results of Operations(continued)

Year End Results: March 29, 2019 vs March 30, 2018(continued)

The Company reported net income of $5,160,766 for the year ended March 29, 2019 representing basic earnings of $2.23 per share as compared to net income of $2,565,559 or $1.11 per share for the year ended March 30, 2018. The increase in net income for the current year can be attributed primarily to the reported increase in production and sales. 

Liquidity and Capital Resources

The Company reportedhad working capital of $19,653,160 as of March 29, 2019 compared to working capital of $14,951,572 as of March 30, 2018. The increase in working capital of $4,701,588 was attributable to the following items:

As a result of the above, the current ratio (current assets to current liabilities) was 6.15 to 1 at March 29, 2019 as compared to 7.56 to 1 at March 30, 2018. Current liabilities at March 29, 2019 were $3,816,396 as compared to $2,280,760 at

March 30, 2018.

The Company reported $840,292 in capital expenditures for the year ended March 29, 2019$23,506,134 and recorded depreciation expense of $345,840 for the year ended March 29, 2019.

Total stockholders’ equity increased by $5,196,040 which represented the reported net income for the year ended

March 29, 2019 of $5,160,776 and the increase of Capital in excess of par value for the additional stock option compensation expense of $35,264. Accordingly, the Company reported a total stockholders’ equity as of March 29, 2019 of $22,268,256 as compared to total stockholders’ equity of $17,072,216 as$26,510,847.

Our principal source of March 30, 2018.liquidity is cash flows generated by operating activities.

The Company has an accounts receivable financing agreement with a non-bank lending institution (“Financing Company”) whereby it can borrow up to 80 percent of its eligible receivables (as defined in such financing agreement) at an interest rate of 2 ½% above JP Morgan Chase’s publicly announced rate with a minimum interest rate of 6% per annum.

Net cash provided by operating activities was $1,683,413 for the fiscal year ended March 31, 2020 compared to $6,024,139 for the fiscal year ended March 29, 2019. The decrease in cash provided by operating activities was primarily due to a decrease of $2,603,396 in net income and an increase in accounts receivable of $2,469,481, off-set by an increase is stock-based compensation expense of $1,385,947 and an increase in depreciation and amortization of $609,284.

Net cash used in investing activities was $969,400 for the fiscal year ended March 31, 2020 compared to $840,292 for the fiscal year ended March 29, 2019. The increase in cash used in investing activities was due to an increase in the purchase of property, plant and equipment of $129,108.

Net cash used in financing agreement hasactivities was $34,082 for the fiscal year ended March 31, 2020 compared to net cash provided by financing activities of $489,266 for the fiscal year ended March 29, 2019. The change in cash used in financing activities was due to proceeds from the exercise of stock options of $264,000 in the year ended March 31, 2020, advances of $29,765,459 and repayments of $30,063,541 for the accounts receivable financing.

PPP Loan and Note

On April 13, 2020, the Company entered into the PPP Note evidencing an initial termunsecured loan in a principal amount of $2,103,885 pursuant to the PPP under the CARES Act. The PPP Loan is administered by the U.S. Small Business Administration and the Company’s loan was made through JP Morgan Chase Bank. The PPP Loan bears interest at a fixed interest rate of one (1%) percent per year and will automatically renewmatures in two (2) years after the issuance date. Payment of interest is deferred for successive one-year terms, unless terminatedthe first six (6) months. Beginning on the seventh month following the date of the PPP Note (November 2020), the Company is required to make 18 payments of equal monthly installments of principal and interest with the final payment due in April 2022. The PPP Note provides for customary events of default including, among other things, cross-defaults on any other loan with JP Morgan Chase Bank. The PPP Loan may be accelerated upon the occurrence of an event of default. The PPP Note may be prepaid by the Company or its lender upon receiving 60 days’ prior notice. Funds advancedat any time with no prepayment penalties applied.

The proceeds of the PPP Loan may be used for payroll costs, costs related to certain group health care benefits, rent payments, utility payments, mortgage interest payments, interest payments on other debt obligation that were incurred before February 15, 2020. The PPP Note contains events of defaults and other conditions customary for a note of this type.

The PPP Loan is guaranteed by the FinancingSBA. The Company are securedmay apply to JP Morgan Chase Bank for forgiveness of the PPP Loan, with the amounts which may be forgiven equal to the sum of payroll costs, covered rent and mortgage obligations and covered utilities, which payments were incurred by the Company’s accounts receivableCompany during the 24-week period beginning on April 13, 2020 and inventories. As of March 29, 2019, the Company had reported a liability to the Financing Company of $334,306 as compared to March 30, 2018 when the Company had reported excess payments to the Factor of $154,960. These excess payments are reported in the accompanying financial statements as “Excess payments to accounts receivable financing company.”

In the past two fiscal years, management has been reviewing its collection practices and policies for outstanding receivables and has revised its collection procedures to a more aggressive collection policy. As a consequence of this new policy the Company’s experience is that its customers have been remitting payments on a more consistent and timely basis. The Company reviews the collectability of all accounts receivable on a monthly basis.

The Company has the Multi-Employer Plan with the Union. Contributions are madecalculated in accordance with the CARES Act.

Under the terms of the CARES Act, the PPP Loan recipients can apply for and be granted forgiveness for all or a negotiated labor contract and areportion of a loan granted under the PPP with such forgiveness to be determined subject to limitations based on the numberuse of covered employees employed per month.loan proceeds for payment of payroll costs and any payments of mortgage, interest, rent and utilities. The terms of any forgiveness may be subject to further requirements in any regulations and guidelines the SBA may adopt. While the Company currently believes that its use of the PPP Note proceeds will meet the conditions for forgiveness under the PPP, no assurance is provided that the Company will obtain forgiveness of the PPP Note in whole or in part.

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PART II

Results of Operations(continued)

Year End Results: March 29, 2019 vs. March 30, 2018(continued)

Liquidity and Capital Resources(continued)

With the passage of the 1990 Act the Company may become subject to liabilities in excess of contributions made under the collective bargaining agreement. The Company has the Multi-Employer Plan with the Union. Contributions are made by the Company in accordance with a negotiated labor contract and are based on the number of covered employees employed per month. Generally, these liabilities are contingent upon the termination, withdrawal, or partial withdrawal from the Multi-Employer Plan. The Company has not taken any action to terminate, withdraw or partially withdraw from the Multi-Employer Plan nor does it intend to do so in the future. Under the 1990 Act, liabilities would be based upon the Company’s proportional share of such Plan’s unfunded vested benefits.

Based upon such Plan’s information and data as of December 31, 2018 furnished to the Company (including, without limitation, unfunded vested benefits, accumulated benefits and net assets), such Plan is fully funded. Based thereupon, the Company’s proportional share of the liability through December 31, 2018 is fully funded. The total contributions charged to operations under the provisions of the Multi-Employer Plan were $65,075 and $151,314 for the fiscal years ended March 29, 2019 and March 30, 2018, respectively.

Stock Option Plan

On August 31, 2011, the Company’s shareholders approved the adoption of the Company’s 2011 Equity Incentive Plan (“2011 Plan”) to provide for the grant of stock options and restricted stock awards to purchase up to 750,000 shares of the Company’s common stock to all employees, consultants and other eligible participants including senior management and members of the Board of Directors of the Company.

Options granted to employees under the 2011 Plan may be designated as options which qualify for incentive stock option treatment under Section 422A of the Internal Revenue Code, or options which do not qualify (non-qualified stock options).

Under the 2011 Plan, the exercise price of an option designated as an incentive stock option shall not be less than the fair market value of the Company’s common stock on the day the option is granted. In the event an option designated as an incentive stock option is granted to a ten percent (10%) or greater shareholder, such exercise price shall be at least 110 percent (110%) of the fair market value of the Company’s common stock and the option must not be exercisable after the expiration of ten years from the day of the grant. The 2011 Plan also provides that holders of options that wish to pay for the exercise price of their options with shares of the Company’s common stock must have beneficially owned such stock for at least six months prior to the exercise date.

Exercise prices of non-incentive stock options may be less than the fair market value of the Company’s common stock. The aggregate fair market value of shares subject to options granted to a participant(s), which are designated as incentive stock options, and which become exercisable in any calendar year, shall not exceed $100,000.

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Results of Operations(continued)Quantitative and Qualitative Disclosure About Market Risk

Year End Results: March 29, 2019 vs. March 30, 2018(continued)Not required.

Liquidity and Capital Resources(continued)Off-Balance Sheet Arrangements

Stock Option Plan(continued)We have no significant known off balance sheet arrangements.

Effective August 15, 2016, the Board of Directors also approved the granting of stock options to purchase shares of the Company’s common stock under the 2011 Plan to each of Dr. Marciano and Mr. Hugel as follows: Each of the new non-management directors received a grant of options totaling 5,000 shares each subject to the following vesting schedule: (i) 1,000 shares vested immediately (August 15, 2016); (ii) 2,000 shares vested on August 15, 2017; and (iii) 2,000 shares vested on August 15, 2018. The stock options (i) have a ten-year term; and (ii) have an exercise price equal to the fair market value of the Company’s common stock as determined under the 2011 Plan, as reported in the OTCBB, on the date of grant ($5.30). In the event of the termination of each recipient’s association with the Company, the options will remain exercisable in accordance with the terms of the 2011 Plan.

On September 7, 2018, the Board of Directors elected Michael E. Rosenfeld to the Board of Directors to fill the vacancy of a Class I Director of the Company created by the death of the Company’s then President and Chief Executive Officer, Michael Offerman. Such appointment became effective on October 26, 2018.

At the same time, the Board of Directors also approved the granting of stock options to purchase shares of the Company’s common stock under the 2011 Plan to Mr. Rosenfeld as follows: He received a grant of options totalling 5,000 shares each subject to the following vesting schedule: (i) 1,000 shares vested on October 26, 2018; (ii) 2,000 shares will vest on October 26, 2019; and (iii) 2,000 shares will vest on October 26, 2020. The stock options: (i) have a ten-year term; and (ii) have an exercise price equal to the value of the Company’s common stock on the date of grant. In the event of the termination of each recipient’s association with the Company, the options will remain exercisable in accordance with the terms of the 2011 Plan. 

The table below summarizes the option awards for the named executive officers and non-management directors:

¹Options to purchase 1,000 shares of common stock were vested on October 26, 2018 and options to purchase 4,000 shares of common stock have not yet vested. Options for 2,000 shares shall vest on October 26, 2019 and options for 2,000 shares shall vest on October 26, 2020.

IEH CORPORATION

 PART II

Results of Operations(continued)

Year End Results: March 29, 2019 vs. March 30, 2018(continued)

Liquidity and Capital Resources (continued)

Stock Option Plan(continued)

The following table shows the option activity for the fiscal years ended March 29, 2019 and March 30, 2018.

Stock-based compensation expense

Stock-based compensation expense, shown in the table below, is recorded in general and administrative expenses included in our statement of operations: 

Unrecognized stock-based compensation expense

Note: Stock option grants to IEH officers, directors and key employees in the fiscal years ended March 29, 2019 and March 30, 2018 were valued using a Black-Scholes model, under the following criteria:

IEH CORPORATION

PART II

Results of Operations(continued)

Year End Results: March 29, 2019 vs. March 30, 2018(continued)

Liquidity and Capital Resources (continued)

Stock Option Plan(continued)

The following table shows the activity for the fiscal years ended March 29, 2019 and March 30, 2018.

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (i.e., the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, times the number of shares) that would have been received by the option holders had all option holders exercised their in-the-money options on those dates. This amount will change based on the fair market value of the Company’s common stock.

IEH CORPORATION

PART II

Results of Operations(continued)

Year End Results: March 29, 2019 vs. March 30, 2018(continued)

Liquidity and Capital Resources (continued)

Cash Bonus Plan

In 1987, the Company adopted the Cash Bonus Plan for non-union, management and administration staff. Contributions to the Cash Bonus Plan are made by the Company only when the company is profitable for the fiscal year. Accordingly, the Company has accrued a contribution provision of $324,000 for the years ended March 29, 2019 and March 30, 2018, respectively.

Effects of Inflation

The Company does not view the effects of inflation to have a material effect upon its business. Increases in costs of raw materials and labor costs have been offset by increases in the price of the Company’s products, as well as reductions in costs of production, reflecting management’s efforts in this area. While the Company has in the past increased its prices to customers, it has maintained its relatively competitive price position.

However, significant decreases in government and military subcontractor spending have provided excess production capacity in the industry, which in turn has tightened pricing margins.

The Company does not have any off-balance sheet arrangements within the meaning of Item 303 of Regulation S-B.

We are a “smaller reporting company” as defined by Regulation S-K and as such, are not required to provide the information contained in this item pursuant to Regulation S-K.Not required.

We do not believe that any of our financial instruments have significant risk associated with market sensitivity. For more information on these investments see Note 2 to our financial statements included in this Form 10-K/A.

We are not exposed to significant financial market risks from changes in foreign currency exchange rates and are only minimally impacted by changes in interest rates. We have not used, and currently do not contemplate using, any derivative financial instruments.

Interest Rate Risk

At any time, fluctuations in interest rates could affect interest earnings on our cash. We believe that the effect, if any, of reasonably possible near-term changes in interest rates on our financial position, results of operations, and cash flows would not be material. Currently, we do not hedge these interest rate exposures. Our primary purpose is to preserve capital. We have not used derivative financial instruments in our investment portfolio.

As of March 29, 2019, our unrestricted cash was $7,204,126 of which $4,757,283 was in an interest-bearing money market account with and the balance of $2,446,843 was maintained in non-interest-bearing checking accounts used to pay operating expenses.

IEH CORPORATION

PART II

See our audited Financial Statements for the fiscal year ended March 29, 201931, 2020 which follows Item 15 of this Annual Report on Form 10-K/A.10-K.

None.

Item 9A.   Controls and Procedures

Evaluations(a) Evaluation of Disclosure Controls and Procedures

UnderWe maintain disclosure controls and procedures (as defined in paragraph (e) of Rules 13a-15 and 15d-15 under the supervisionExchange Act) designed to ensure that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and withreported within the participationtime periods specified under the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to our management, including theour Chief Executive Officer and our Chief Financial Officer, we evaluatedas appropriate to allow timely decisions regarding required disclosures. As required by paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer (our principal executive officer) and our Chief Financial Officer (our principal financial officer) carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15e) under the Exchange Act as of the end of the period covered byMarch 31, 2020. Based on this Annual Report on Form 10-K/A. Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures throughoutwere not effective at the period covered by this report were effective. As described below, they determined that deficiencies that were previously identified with respect to prior periods were corrected. These deficiencies included how the information required to be disclosed by us in reports filed under the Exchange Act is(i)recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and(ii) accumulated and communicated to our management to allow for timely decisions regarding disclosure. The deficiencies in our internal controls over financial reporting and disclosure controls related to the expertise of recording complex accounting issues with respect to stock-based compensation expense.

A controls system cannot provide absolutereasonable assurance however, that the objectives of the controls systems are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Management previously determined following the filing of the Company’s Annual Report on Form 10-K for the fiscal year ended March 30, 2018 thatlevel as of March 30, 2018, there were material weaknesses in both the design and effectiveness of our internal controls over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in

internal controls over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Specifically, these weaknesses related to the analysis and reporting of stock-based compensation expense. Additionally, the Company did not report fully diluted earnings per share for the year ended March 30, 2018.31, 2020.

Following the filing of the Company’s Annual Report on Form 10-K, the Company filed Amendment No. 1 to Form 10-K to report properly stock-based compensation and fully diluted earnings per share for the year ended March 30, 2018.

Management immediately thereafter undertook steps to correct these past deficiencies in its system of internal controls over financial reporting and implemented procedures to closely monitor its system of internal controls in the future. Specifically, management implemented protocols to report properly in all future quarterly and annual reports stock-based compensation and fully diluted earnings per share. The Company started properly reporting stock-based compensation in the Company’s Annual Report on Form 10-K for the fiscal year ended March 30, 2018 and in the Quarterly Report on Form 10-Q for the fiscal quarter ended June 29, 2018 properly reported stock-based compensation and fully diluted earnings per share. Thereafter, the Company properly reported stock-based compensation in the Quarterly Reports on Form 10-Q for the fiscal quarters ended September 28, 2018 and December 28, 2018, respectively.

IEH CORPORATION

PART II

Item 9A.    Controls and Procedures(continued)

Evaluations of Disclosure Controls and Procedures (continued)

In addition, management recommended to the Board of Directors to form an audit committee of the Board which will be responsible to review: (i) all financial reports of the Company including, without limitation, the audited and unaudited financial statements of the Company, as applicable; and (ii) periodically review our disclosure controls and internal controls over financial reporting. The audit committee will also be authorized to investigate and make recommendations to the Board to implement any necessary system of internal controls over financial reporting to prevent any future deficiency in the internal controls over financial reporting. The audit committee will be comprised of at least three (3) independent directors of the Company. In making this recommendation management believed that these changes were reasonably likely to affect materially and positively the Company’s internal controls over financial reporting. At its meeting on November 27, 2018, the Board of the Directors approved formation of the audit committee and appointed the following independent directors to the audit committee: Eric Hugel, Michael E. Rosenfeld and Allen Gottlieb. Mr. Hugel is designated as our Audit Committee Financial Expert.

(b) Management’s Report on Internal ControlControls over Financial Reporting

Our management under the supervision of our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting, (asas such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Our internal controlsInternal control over financial reporting is arefers to the process designed by, or under the supervision of, our principal executive officer and principal financial officer, or persons performing similar functions, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal controls

Internal control over financial reporting includes those policiescannot provide absolute assurance of achieving their objectives. Internal control over financial reporting is a process that involves human diligence and procedures that:

(i)       pertaincompliance and is subject to the maintenance of recordslapses in judgement and breakdowns resulting from human failures. Due to their inherent limitations, there is a risk that in reasonable detail, accuratelymaterial misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. It is possible to design safeguards to reduce, but not eliminate, this risk. Management is responsible for establishing and fairly reflect the transactions and dispositions of the assets of the Company;

(ii)       provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the Company; and

(iii)       provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. 

Management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of ourmaintaining adequate internal control over financial reporting as of March 29, 2019. In making this evaluation, managementfor our company.

Management has used the 2013 framework set forth in the report entitled Internal Control—Integrated Framework issuedpublished by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).(2013 framework), known as COSO, to evaluate the effectiveness of our internal control over financial reporting.

Our fiscal year end of March 31, 2020 occurred in the middle of the COVID 19 pandemic. We were unable to conduct a physical inventory observation for our year-end audit until May 2020. This was on account of COVID-19 restrictions which prevented us from being able to have the required personnel in the Company’s physical offices. As stated above, baseda result, we were required to institute additional manual procedures to roll-back our item by item inventory to March 31, 2020 from the May 2020 inventory observation dates. As discussed below, this inventory roll back had to be conducted utilizing our newly installed inventory accounting system. The Company migrated to its new inventory accounting system at the end of the second quarter of the fiscal year upon unexpectedly losing support for its legacy inventory system. The migration to the new system required additional time and effort, complicated by the COVID-19 protocols, such that certain inventory reconciliations were not able to be completed until September 2020. These issues resulted in the lateness in completion of our year-end financial reports, the completion of the audit by our independent auditors and ultimately, the filing of this Annual Report on Form 10-K.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Based on such evaluation, under the 2013 framework in Internal Control—Integrated Framework, our management hasPrincipal Executive Officer and our Principal Financial Officer have concluded that, as of March 31, 2020, our internal controls over financial reporting are effective asand controls over inventory and the related inventory reconciliation processes were not effective.

Mitigation Steps

In order to address the weaknesses stated above, Management and the Board of March 29, 2019.Directors undertook the following mitigation steps:

Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements or fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met.

This Annual Report on Form 10-K/A does not include an attestation report of our independent registered public accounting firm regarding our internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permitDodd-Frank Wall Street Reform and Consumer Protection Act, which permits us to provide only management’s report in this Annual Report.

Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

IEH CORPORATION

PART II

Item 9A.    ControlsOur management, including our Chief Executive Officer and Procedures(continued)

Changes in Internal Control overChief Financial Reporting

As stated above, management previously undertook steps to correct the deficiencies in our system of internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) which have now been in effect for the Company’s fiscal year ended as of March 29, 2019. As described above, the Board of Directors approved the formation of an audit committee and appointed three (3) independent directors to the audit committee.

Inherent Limitations on Effectiveness of Controls

We doOfficer does not expect that our disclosure controls and procedures or internal controls over financial reporting will prevent all errors or all instances of fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be 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 theits inherent limitations, in all control systems, nointernal controls over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of controls can provide absolute assuranceeffectiveness to future periods are subject to the risk that all control issues and instances of fraud, if any, within its company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls.

The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and any design may not succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or deterioration inthat the degree of compliance with the policies or procedures. Becauseprocedures may deteriorate. Also, projections of the inherent limitationany evaluation of a cost-effective control system, misstatements dueeffectiveness to error or fraud may occur and not be detected.

Other Information Related to Internal Controls

Additionally, in responsefuture periods are subject to the passagerisk that controls may become inadequate because of changes in conditions, or that the Sarbanes-Oxley Actdegree of 2002,compliance with the policies or procedures may deteriorate.

(c) Changes in Internal Controls Over Financial Reporting

There were no changes, other than described above, in our Board of Directorsinternal controls over financial reporting (as defined in Rule 13a-15(f) and management have adopted a Code of Ethics and have instituted a periodic review by members15d-15(f) under the Exchange Act) identified in connection with the evaluation of our management teaminternal controls that occurred during the fiscal quarter ended March 31, 2020 that materially affected, or are reasonably likely to assist and guide the disclosure process. The Board has also determined to periodically review and develop policies and procedures to enhancematerially affect our disclosureinternal controls and procedures as well as with reviewing our periodic reports and other public disclosures.over financial reporting.

Item 9B. Other Information

None.

IEH CORPORATIONNone

IEH CORPORATION

PART III

Item 10.     Directors, Executive Officers and Corporate Governance

Executive Officers and Directors

As of March 29, 2019,31, 2020, the executive officers and directors of the Company are as follows:

IEH’s Certificate of Incorporation provides that the directors of the Company are to be elected in two (2) classes; each class to be elected to a staggered two (2) year term and until their successors are duly elected and qualified. The Board of Directors currently consists of six (6) members divided into two classes with three Class I Members (Mr. Hugel, Ms. Marciano and Mr. Rosenfeld) and three Class II Members (Mr. David Offerman, Mr. Gottlieb and Mr. Chafetz). The Class III Members of the Board of Directors are scheduled to be elected at the Company’s 20192020 Annual Meeting. All officers are elected by and serve at the discretion of the Board of Directors.

David Offerman. On March 26, 2017, Mr. Offerman was elected to the Boardpositions of Directors of the Company held a special meeting by telephonic conference call to elect David Offerman as the Company’s new Chairman of the Board, President and Chief Executive Officer. David succeeded his late father, Michael Offerman, who passed away on March 24, 2017. David Offerman has been a member of IEH’s Board of Directors since July 15, 2016. Prior to March 24, 2017, he was the Vice President – Sales and Marketing of the Company. He joined the Company in September 2004 as the National Sales Manager and was appointed to Vice President – Sales and Marketing in April 2011. Prior to joining IEH, David worked as an account executive and sales manager in the telecommunication industry.

David graduated from the University of Michigan in 1993 with a Bachelor of Arts in film and communications. In 2016, he received an MBA from the NYU Stern School of Business with a concentration in leadership and management. David is the son of Michael Offerman, the late Chairman of the Board, President and Chief Executive Officer of the Company.

Robert Knoth. Robert Knoth joined the Company as Controller in January 1990 and was elected Chief Financial Officer and Treasurer of the Company in March 1990. He was elected as Secretary of the Company in September 1992 and Mr. Knoth has held these positions since said dates. From 1986 to January 1990, Mr. Knoth was employed as controller by G&R Preuss, Inc., a company engaged in the business of manufacturing truck bodies and accessories. On May 1, 2019, Atiqur Mufti replaced Mr. Knoth as Controller of the Company.

IEH CORPORATIONWilliam H. Craig On August 27, 2020, the Company appointed William H. Craig as its new Chief Financial Officer and Treasurer. His appointment becomes effective on the next business day following the Company filing its Annual Report on Form 10-K for the fiscal year ended March 31, 2020 with the U.S. Securities and Exchange Commission and upon the official retirement date of the current Chief Financial Officer and Treasurer, Robert Knoth. From March 2012 to March 2020, Mr. Craig served as Chief Executive Officer and Chief Financial Officer of Tarantin Industries, Inc., a family owned industrial distributor based in Freehold, NJ with operations in the eastern third of the U.S. From October 2007 to September 2011, Mr. Craig served as Chief Financial Officer of Fifth Street Capital, Inc., an externally managed closed end non-diversified Regulated Investment Company operating as a Business Development Company and based in White Plains, NY. From March 2005 to September 2007, he was the executive Vice President and Chief Financial Officer of Vital Signs, Inc., a medical device manufacturer based in the United States with global operations. Vital Signs, headquartered in Totowa, NJ, is a NASDAQ listed company (VITL). From 1999 to 2004, Mr. Craig served as the Executive Vice President of Finance and Administration and Chief Financial Officer of Matheson Tri- Gas, Inc., an industrial specialty gas company with global operations including 20 significant plants in the U.S., nearly 100 retail outlets and production/marketing joint ventures in Europe and Asia. From 1997 to 1999, he served as Executive Vice President and Chief Financial Officer of Empire of Carolina, an AMEX-listed consumer products company.

PART IIIOn August 27, 2020, the Company entered into an employment agreement with Mr. Craig. Pursuant to the agreement, Mr. Craig’s appointment as its new Chief Financial Officer and Treasurer becomes effective on the next business day following the Company filing its Annual Report on Form 10-K for the fiscal year ended March 31, 2020 with the U.S. Securities and Exchange Commission and upon the official retirement date of the current Chief Financial Officer and Treasurer, Robert Knoth (“Effective Date”). From August 27, 2020 and up to the Effective Date, Mr. Craig shall serve as a consultant to the company. Under the agreement, Mr. Craig shall receive a base salary of $225,000 per annum. Mr. Craig may receive cash bonuses in the sole discretion of the Compensation Committee of the Board of Directors for each fiscal year of employment and based on performance targets and other key objectives established by the Compensation Committee.

Item 10.   Directors, Executive OfficersThe agreement further provides for the payment of severance pay and Corporate Governance(continued)

Executive Officerscontinued participation in health and Directors(continued)welfare plans for up to twelve months in the case of termination without cause or a change of control of the company. Mr. Craig is subject to customary confidentiality and non-compete obligations that survive the termination of the agreement.

Allen Gottlieb. Allen Gottlieb has been a member of the Company’s Board of Directors since 1992. Mr. Gottlieb is retired. Mr. Gottlieb was previously engaged in the practice of law for 40 years, specializing in Labor-Management Relations.

Gerald Chafetz. Mr. Chafetz has been a member of the Company’s Board of Directors since 2009. He is President of GEC Enterprises, LLC since 2011. GEC Enterprises, LLC is a property management company headquartered in Rockville Centre, New York. He was previously President of Capitol City Companies. Prior to founding Capitol City Companies, he had an extended 22-year executive career in the textile industry with several knitwear and high fashion manufacturers, including Arista Knitwear, Berwick Fashion Knitwear and Beged-or Knitwear. Mr. Chafetz graduated from the University of Hartford in 1965 with a Bachelor of Science degree in business.

Eric C. Hugel, CPA, CFA.Eric C. Hugel has been a member of IEH’s Board of Directors since July 15, 2016. He is the Co-Chief Executive Officer and Chief Financial Officer of Deb’s Buried Treasure,Hugel Corporation, an online retailer, since July 2014. From March 2013 to February 2014, Mr. Hugel held the position of Senior Institutional Specialist in U.S. Fundamental Equity Research Analyst at McGraw Hill Financial – S&P Capital IQ providing investment advisory services. In particular he provided research and analysis in the U.S. aerospace and defense and industrial conglomerates sectors. From July 2002 through June 2012 he was a managing director at Stephens Inc. providing investment research and analytical services in the U.S. aerospace and defenses sectors. Mr. Hugel graduated from Lehigh University in 1993 with a Bachelor of Science in accounting.

Dr. Sonia Marciano. Dr. Sonia Marciano has been a member of IEH’s Board of Directors since July 15, 2016. She is a clinical professor at the NYU Stern School of Business since July 2007 where she teaches courses and manages academic programs. She graduated from the University of Chicago in 1984 with a Bachelor of Arts degree. In 2000, Dr. Marciano received from the University of Chicago her MBA in Economics and Finance and her PhD in Business Economics.

Michael E. Rosenfeld.Rosenfeld has been a member of the Company’s Board of Directors since 2018. He is a co-founder and principal of Olive Tree Holdings LLC, a real estate private equity company based in New York, NY and Atlanta, GA since 2017. Olive Tree is an owner-operator of value-added multifamily assets across the Southern U.S. From 2013-2016 he was Vice President and Chief of Staff at Bert E. Brodsky & Associates, Inc., a private investment firm with a diverse portfolio of companies across several industries. Prior to that from 2006-2013, he served as Vice President of Business Development of Mobile Health Management Services, Inc., a subsidiary of Bert Brodsky & Associates, Inc. Mr. Rosenfeld received his Bachelor of Arts in Political Science from Emory University in 2006, and his Master of Business Administration (MBA) in Corporate Finance from the New York University Stern School of Business in 2016.

Significant Employees

Mark Iskin is the Director of Purchasing, a position he has held since September 2000. On April 14, 2011, the Board of Directors appointed Mark to the position of Vice-President-Operations. Prior to joining the Company, Mark worked as a materials and purchasing specialist, in manufacturing and distribution companies. In his last position with an industrial distributor, he was responsible for purchasing as well as managing vendors for the cutting tool section of the catalog. In addition, he participated in setting up and developing such company’s forecasting/planning software related to that department procedures.

Robert Romeo serves as Vice President of Engineering for IEH, a post he has held since October 2005. Robert has corporate responsibility for engineering products and driving product enhancements to satisfy the demanding application requirements of IEH customers. In addition, Robert is tasked with engineering new product developments in the IEH connector offerings to broaden the market base of potential customers. These new connectors will introduce the traditional IEH quality and value to industries that specify exceptional reliability and performance in electrical equipment. Before joining IEH, Robert worked for more than 20 years in positions of increasing responsibility for major national manufacturers of electrical and electronic goods for residential, industrial, government and OEM markets.

IEH CORPORATION

PART III

Item 10.    Directors, Executive Officers and Corporate Governance(continued)

Executive Officers and Directors(continued)

Significant Employees(continued)

Sherif Mahdi joined IEH in October, 2014 as Director of Quality. Sherif has 22 years of progressive professional experience in total quality management/operations and engineering management, most notably, with a multinational manufacturing organization and distribution client. He has managed accounts in the aviation, space, government, commercial, medical, telecommunication, retail, construction, and automotive industries.  His expertise encompasses development, implementation and auditing of quality systems such as ISO9001, AS9100/AS9120, ISO13485, QS9000, TE Supplement, ISO20000, ISO14000, TS16949 and design for Six Sigma, Lean Six Sigma Black Belt directives impacting the lifecycle of plant and corporate operations including affiliated business and developmental concerns. His background is strengthened by significant experience as an industrial engineer. Sherif holds a Master of Science Degree in Engineering Management and a Master of Business Administration Degree.

Alexa Maldonado is the Director of Human Resources for IEH, a position she has held since July, 2018. Alexa has responsibility for policy implementation, handling employee relations, health and welfare benefit, administration, staffing and compliance training, payroll and supervisory training. She became employed by the Company on a full-time basis in March 2016. Prior to joining IEH, she worked for The New York Stock Exchange for 10 years in various human resources capacities and responsibilities including as a Human Resources Generalist, Benefits Administration and Staffing Coordinator.

Atiqur Mufti joined IEH as a consultant in February, 2016 and was promoted to be the Controller of IEH on May 1, 2019 replacing Mr. Knoth. He has eight (8) years of SAP ECC and SAP Business One implementation experience. Prior to joining IEH, he worked as an independent contractor as well as worked as a Financial Consultant at Accenture, Inc. located in Accenture’s New York City office. Mr. Mufti has successfully implemented three (3) life cycles of SAP in FICO (financial controlling) and FICA (finance contract accounting). He has two (2) Master Degrees in Finance and Accounting from Stony Brook University and SUNY College at Old Westbury respectively.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Exchange Act requires the Company’s directors and officers and persons who own, directly or indirectly, more than 10% of a registered class of the Company’s common stock, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock.

Officers, directors and greater than 10% shareholders are required to furnish the Company with copies of all Section 16(a) reports that they file. Based solely on review of the copies of such reports received by the Company, the Company believes that filing requirements applicable to officers, directors and 10% shareholders were complied with during the fiscal year ended March 29, 2019.31, 2020.

Director Independence; Meetings of Directors; Corporate Governance; Committees of the Board

Our Board of Directors currently consists of six individuals. Five of our directors are “independent” as defined in the Marketplace Rules of The NASDAQ Stock Market. During the fiscal year ended March 29, 2019,31, 2020, our Board of Directors held eight (8)one (1) meeting, the Audit Committee held seven (7) meetings and took action by written consent on one occasion.the Compensation Committee held three (3) meetings.

During the fiscal year ended March 29, 2019, the Chief Executive Officer and the Chief Financial Officer made an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. They concluded that our disclosure controls and procedures were not effective during the period covered by the fiscal year ended March 30, 2018. In response to such determination, management immediately undertook steps to correct the deficiencies.

IEH CORPORATION

PART III

Item 10.     Directors, Executive Officers and Corporate Governance(continued)

Director Independence; Meetings of Directors; Corporate Governance; Committees of the Board(continued)

in our internal controls over financial reporting, They recommended, in part, to the Board of Directors that the Board approve the formation of an audit committee and a compensation committee. Each such committee would initially have three (3) members consisting of independent directors. At its meeting of December 11, 2018, the Board of Directors approved the formation of an audit committee and a compensation committee, and each committee would initially have three (3) members consisting of independent directors. The Board nominated the following directors to each such committee: (i) Audit Committee – Eric Hugel (Chair), Allen Gottlieb and Michael E. Rosenfeld; and (ii) Compensation Committee – Gerald Chafetz (Chair), Michael E. Rosenfeld and Dr. Sonia Marciano. Each of these Board committees has a written charter approved by the Board of Directors. Each of the charters of these Board committees is available at the Company’s website,www.iehcorp.com (click on “Investors”, then on “Corporate Governance”.

For the fiscal year ended March 29, 2019,31, 2020, a general description of the duties of the committees were as follows:

Audit Committee. Our Audit Committee will actacts to: (i) review with management the finances, financial condition and interim financial statements of the Company; (ii) review with our independent registered public accounting firm the year-end financial statements; (iii) review implementation with the independent registered public accounting firm and management of any action recommended by the independent registered public accounting firm; and (iv) retain and terminate our independent registered public accounting firm. Mr. Hugel, the Chair of the Audit Committee was also designated as our Audit Committee Financial Expert.

During the 2018 fiscal year ended March 31, 2020, all of the members of our Audit Committee were “independent” within the definition of that term as provided by the OTCQX Marketplace Rules. During the fiscal year ended March 29, 2018,31, 2020, the Audit Committee held its initial meeting on February 6, 2019 and was scheduled to meet additionally in the first fiscal quarter of the fiscal year ending as of March 28, 2020.seven (7) meetings.

Compensation Committee. The Compensation Committee will actacts to: (i) review, approve and administer compensation arrangements for our executive officers; (ii) administer our equity-based compensation plans, (iii) establish and review general policies relating to the compensation and benefits of our executive officers and other personnel, (iv) evaluate the relationship between executive officer compensation policies and practices and corporate risk management to confirm those policies and practices do not incentivize excessive risk-taking, and (iv) evaluate and makes recommendations to our Board of Directors regarding the compensation of our non-employee directors. During the fiscal year ended March 29, 2019,31, 2020, the Compensation Committee did not yet hold its initial meeting but was scheduled to hold such initial meeting in April 2019.held three (3) meetings.

The Board did not adopt any modifications to the procedures by which security holders may recommend nominees to its Board of Directors.

IEH CORPORATION

PART III

Item 11.     Executive Compensation 

The following table sets forth below the summary compensation paid or accrued by the Company during the fiscal years ended March 31, 2020 and March 29, 2019, and March 30, 2018respectively, for the Company’s Chief Executive Officer and Chief Financial Officer:

David Offerman – Employment Agreement

On July 29, 2019, IEH entered into an employment agreement with David Offerman, its Chief Executive Officer and President. The employment agreement with Mr. Offerman is effective as of July 29, 2019 and will expire on December 31, 2024. Under the employment agreement, Mr. Offerman receives a base salary of $395,000 per annum and is eligible to receive an annual bonus of up to 100% of base salary for each fiscal year of employment based on performance targets and other key objectives established by the Compensation Committee of the Board of Directors.

TheDuring the term of the employment agreement, he is also eligible to receive equity or performance awards pursuant to any long-term incentive compensation plan adopted by the Compensation Committee.

In the event of the termination of Mr. Offerman’s employment by us without “cause” or by him for “good reason”, as such terms are defined in the employment agreement, he would be entitled to: (a) a severance payment of 36 months of base salary; (b) continued participation in our health and welfare plans for up to 24 months; and (c) all accrued but unpaid compensation. Further, under the employment agreement, if within the three (3) year period of a “change in control” (as defined in the employment agreement) either Mr. Offerman’s employment is terminated, or his title, position or responsibilities are materially reduced and he terminates his employment, the Company intendsshall pay and/or provide to provide additional information regardinghim substantially the same compensation awardedand benefits as if his termination was without “cause” or for “good reason”, subject to limitation to avoid the imposition of the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) if such payments would constitute an “excess parachute payment” as defined in Section 280G of the Code. Pursuant to the named executive officersemployment agreement, Mr. Offerman is subject to customary confidentiality, non-solicitation of employees and non-management directors in respectnon-competition obligations that survive the termination of and during the fiscal year ended March 29, 2019, in the proxy statement for the Company’s 2019 annual meeting of shareholders.such agreement.

Robert Knoth – Retirement/ Separation Agreement

On September 1, 2009, the Company entered into an agreement with Robert Knoth, its Chief Financial Officer, providing for certain retirement benefits to be payable to him after termination of such officer’s active service of employment with the Company. His agreement provides that his employment with the Company shall be divided into an “active period” and a “retirement period”.

The active period shall mean the period of time until the officer attains the age of 70 years, or further period of employment beyond such date if extended by mutual agreement of the officer and the Company. The retirement period shall mean the period beginning with the officer attaining the age of 70 years and continuing until 10 years thereafter unless the officer’s employment has been previously terminated or extended by the mutual agreement of the officer and the Company. The retirement period shall take effect only on termination of the active period. Pursuant to Mr. Knoth’s agreement, he will be entitled to receive $12,000 per annum and aggregate payments during the retirement period not to exceed $120,000. Since 2009, the Company and Mr. Knoth have annually mutually agreed to extend their respective periods of employment.

On September 1, 2017, the Company and Mr. Knoth executed an Amended and Restated Employment Agreement amending certain terms of the 2009 Employment Agreement including increasing the per annum payment to him to $25,000, payable in monthly installments of $2,083.33.$2,083. While the retirement payments would be payable for up to 10 years, the aggregate payments during the retirement period were increased to a maximum not exceed $250,000. In addition, during the active period, the Company shall provide Mr. Knoth (a) group healthcare and insurance benefits as generally made available to the Company’s senior management; and (b) such other insurance benefits obtained by the Company and generally made available to the Company’s senior management.

Also during the first five (5) years of the retirement period, the Company shall provide Mr. Knoth with group health insurance benefits as generally made available to the Company’s senior management. Upon expiration of such five (5) year period, Mr. Knoth shall be entitled to all applicable COBRA benefits.

Mr. Knoth intends to retire from active employment with the Company and commence his retirement upon the filing of this Annual Report.

Cash Bonus Plan

In 1987, the Company adopted the Cash Bonus Plan for non-union, management and administration staff. Contributions to the Cash Bonus Plan are made by the Company only when the Company is profitable for the fiscal year. Accordingly, the Company has accrued a contribution provision of $324,000 for the years ended March 31, 2020 and March 29, 2019, and March 30, 2018, respectively.

Stock Option Plan

On August 31, 2011, the Company’s shareholders approved the adoption of the Company’s 2011 Equity Incentive Plan (“2011 Plan”) to provide for the grant of options to purchase up to 750,000 shares of the Company’s common stock to all

IEH CORPORATION

PART III

Stock Option Plan(continued)

employees, consultants and other eligible participants, including senior management. The 2011 Plan terminates on

August 30, 2022 and as of March 30, 2018,31, 2020, the Company had issued options or awards as described below.

Options granted to employees under the 2011 Plan may be designated as options which qualify for incentive stock option treatment under Section 422A of the Internal Revenue Code, or options which do not qualify (non-qualified stock options).

Effective August 15, 2016, the Board of Directors also approved the granting of stock options to purchase shares of the Company’s common stock under the 2011 Plan to each of Dr. Marciano and Mr. Hugel as follows:

Each of the new non-management directors received a grant of options totaling 5,000 shares each subject to the following vesting schedule: (i) 1,000 shares vested immediately (August 15, 2016); (ii) 2,000 shares vested on August 15, 2017; and (iii) 2,000 shares will vest on August 15, 2018. The stock options (i) have a ten-year term; and (ii) have an exercise price equal to the fair market value of the Company’s common stock as determined under the 2011 Plan, as reported in the OTCBB, on the date of grant ($5.30). In the event of the termination of each recipient’s association with the Company, the options will remain exercisable in accordance with the terms of the 2011 Plan.

Options granted to employees under the 2011 Plan may be designated as options which qualify for incentive stock option treatment under Section 422A of the Internal Revenue Code, or option which do not so qualify.

Under the 2011 Plan, the exercise price of an option designated as an incentive stock option shall not be less than the fair market value of the Company’s common stock on the day the option is granted. In the event an option designated as an incentive stock option is granted to a ten percent (10%) shareholder, such exercise price shall be at least 110 percent (110%) of the fair market value or the Company’s common stock and the option must not be exercisable after the expiration of ten years from the day of the grant.

Exercise prices of non-incentive stock options may be less than the fair market value of the Company’s common stock. The aggregate fair market value of shares subject to options granted to a participant, which are designated as incentive stock options, and which become exercisable in any calendar year, shall not exceed $100,000.

The table below summarizes the option awards granted and outstanding for the named executive officers and non-management directors:

IEH CORPORATIONOutstanding Equity Awards as of March 31, 2020

The following table sets forth certain information regarding outstanding equity awards granted to our named executive officers that remain outstanding as of March 31, 2020.

Non-Employee Director Equity Awards

The following table sets forth certain information regarding outstanding equity awards granted to our non-employee directors that remain outstanding as of March 31, 2020.

Non-Employee Director Compensation

The following table sets forth the compensation (cash and equity) received by our non-employee directors during the fiscal year ended March 31, 2020.

PART III

IEH CORPORATION

CONSOLIDATED BALANCE SHEETS

As of March 29, 201931, 2020 and March 30, 201829, 2019