Company Quick10K Filing
NVE
Price71.41 EPS3
Shares5 P/E25
MCap346 P/FCF35
Net Debt-14 EBIT16
TEV332 TEV/EBIT20
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-12-31 Filed 2021-01-20
10-Q 2020-09-30 Filed 2020-10-21
10-Q 2020-06-30 Filed 2020-07-22
10-K 2020-03-31 Filed 2020-05-06
10-Q 2019-12-31 Filed 2020-01-22
10-Q 2019-09-30 Filed 2019-10-23
10-Q 2019-06-30 Filed 2019-07-17
10-K 2019-03-31 Filed 2019-05-01
10-Q 2018-12-31 Filed 2019-01-23
10-Q 2018-09-30 Filed 2018-10-15
10-Q 2018-09-30 Filed 2018-10-15
10-Q 2018-06-30 Filed 2018-07-18
10-K 2018-03-31 Filed 2018-05-02
10-Q 2017-12-31 Filed 2018-01-17
10-Q 2017-09-30 Filed 2017-10-18
10-Q 2017-06-30 Filed 2017-07-19
10-K 2017-03-31 Filed 2017-05-03
10-Q 2016-12-31 Filed 2017-01-18
10-Q 2016-09-30 Filed 2016-10-19
10-Q 2016-06-30 Filed 2016-07-20
10-K 2016-03-31 Filed 2016-05-04
10-Q 2015-12-31 Filed 2016-01-20
10-Q 2015-09-30 Filed 2015-10-21
10-Q 2015-06-30 Filed 2015-07-22
10-K 2015-03-31 Filed 2015-05-06
10-Q 2014-12-31 Filed 2015-01-21
10-Q 2014-09-30 Filed 2014-10-22
10-Q 2014-06-30 Filed 2014-07-23
10-K 2014-03-31 Filed 2014-06-06
10-Q 2013-12-31 Filed 2014-01-22
10-Q 2013-09-30 Filed 2013-10-23
10-Q 2013-06-30 Filed 2013-07-24
10-K 2013-03-31 Filed 2013-05-01
10-Q 2012-12-31 Filed 2013-01-23
10-Q 2012-09-30 Filed 2012-10-17
10-Q 2012-06-30 Filed 2012-07-18
10-K 2012-03-31 Filed 2012-05-02
10-Q 2011-12-31 Filed 2012-01-18
10-Q 2011-09-30 Filed 2011-10-19
10-Q 2011-06-30 Filed 2011-07-20
10-K 2011-03-31 Filed 2011-05-04
10-Q 2010-12-31 Filed 2011-01-19
10-Q 2010-09-30 Filed 2010-10-20
10-Q 2010-06-30 Filed 2010-07-21
10-K 2010-03-31 Filed 2010-05-05
10-Q 2009-12-31 Filed 2010-01-20
8-K 2020-10-21
8-K 2020-08-06
8-K 2020-07-22
8-K 2020-05-06
8-K 2020-01-22
8-K 2019-10-23
8-K 2019-08-01
8-K 2019-07-17
8-K 2019-05-08
8-K 2019-05-01
8-K 2019-01-23
8-K 2018-11-07
8-K 2018-10-15
8-K 2018-08-02
8-K 2018-07-18
8-K 2018-05-02
8-K 2018-01-17

NVEC 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements.
Part II - Other Information
EX-31 ex31-dab.htm
EX-31 ex31-car.htm
EX-32 ex32.htm

NVE Earnings 2020-12-31

Balance SheetIncome StatementCash Flow
1209672482402012201420172020
Assets, Equity
151296302012201420172020
Rev, G Profit, Net Income
10.06.02.0-2.0-6.0-10.02012201420172020
Ops, Inv, Fin

10-Q 1 NVE_Q3_FY2021_10Q.htm QUARTERLY REPORT FOR THE PERIOD ENDED DEC. 31, 2020
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended   December 31, 2020
or
[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                                   to                                    

Commission File Number: 000-12196
 
NVE Logo
NVE CORPORATION
(Exact name of registrant as specified in its charter)
 
Minnesota 41-1424202
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
 
11409 Valley View Road, Eden Prairie, Minnesota   55344
(Address of principal executive offices)   (Zip Code)
 
 (952) 829-9217 
(Registrant’s telephone number, including area code)
 
     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[X] Yes  [   ] No

     Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
[X] Yes  [   ] No

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
      Large accelerated filer [   ]
Accelerated filer [   ]
Non-accelerated filer [X]
Smaller reporting company [X]
  Emerging growth company [   ]  
 
     If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]
 
     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     [   ] Yes  [X] No

     Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbol(s) Name of each exchange on which registered
Common Stock, $0.01 par value NVEC The NASDAQ Stock Market, LLC
 
     Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common Stock, $0.01 Par Value – 4,833,232 shares outstanding as of January 15, 2021
 

 
NVE CORPORATION
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

     Item 1. Financial Statements

          Balance Sheets

          Statements of Income for the Quarters Ended December 31, 2020 and 2019

          Statements of Comprehensive Income for the Quarters Ended December 31, 2020 and 2019

          Statements of Income for the Nine Months Ended December 31, 2020 and 2019

          Statements of Comprehensive Income for the Nine Months Ended December 31, 2020 and 2019

          Statements of Shareholders’ Equity for the Period Ended December 31, 2020

          Statements of Shareholders’ Equity for the Period Ended December 31, 2019

          Statements of Cash Flows

          Notes to Financial Statements

     Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     Item 4. Controls and Procedures

PART II. OTHER INFORMATION

     Item 1. Legal Proceedings

     Item 1A. Risk Factors

     Item 4. Mine Safety Disclosures

     Item 6. Exhibits

SIGNATURES


2

Table of Contents

PART I–FINANCIAL INFORMATION


Item 1. Financial Statements.
NVE CORPORATION
BALANCE SHEETS

 
(Unaudited)
December 31, 2020
March 31, 2020*
ASSETS
Current assets
Cash and cash equivalents
$ 13,988,308     $ 8,065,594
Marketable securities, short-term
11,115,094       19,084,814
Accounts receivable, net of allowance for uncollectible accounts of $15,000
  3,161,308       2,694,018
Inventories
  3,842,477       3,884,450
Prepaid expenses and other assets
570,018     655,835  
Total current assets   32,677,205     34,384,711  
Fixed assets
Machinery and equipment 
  9,280,062     9,280,062
Leasehold improvements
1,810,872     1,797,245  
  11,090,934       11,077,307
Less accumulated depreciation and amortization 
10,724,866     10,494,840  
Net fixed assets   366,068       582,467
Deferred tax assets -   108,119  
Marketable securities, long-term 40,656,967   43,606,495
Right-of-use asset – operating lease 720,618     816,358  
Total assets $ 74,420,858     $ 79,498,150  
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable
$ 136,673     $ 186,993
Accrued payroll and other
505,428     482,074
Operating lease
106,843     127,134
Total current liabilities   748,944       796,201
Deferred tax liabilities   89,420   -
Operating lease 613,775     706,600  
Total liabilities 1,452,139 1,502,801
 
Shareholders’ equity
Common stock, $0.01 par value, 6,000,000 shares authorized; 4,833,232 issued
and outstanding as of December 31, 2020 and 4,835,038 as of March 31, 2020
  48,332 48,350
Additional paid-in capital
  19,333,852 19,383,956
Accumulated other comprehensive income
  1,483,409   516,523  
Retained earnings
52,103,126   58,046,520  
Total shareholders’ equity 72,968,719   77,995,349  
Total liabilities and shareholders’ equity $ 74,420,858   $ 79,498,150  

*The March 31, 2020 Balance Sheet is derived from the audited financial statements contained in our Annual Report on Form 10-K for the fiscal year ended March 31, 2020.

 
See accompanying notes.

 
3

Table of Contents

NVE CORPORATION
STATEMENTS OF INCOME
(Unaudited
)

Quarter Ended December 31
2020 2019
Revenue
Product sales
$ 6,332,349 $ 6,160,967  
Contract research and development
201,013   303,629  
Total revenue   6,533,362   6,464,596
Cost of sales 1,075,048   1,263,806  
Gross profit   5,458,314 5,200,790
Expenses
Research and development
  702,216 771,468
Selling, general, and administrative
311,356   327,989  
Total expenses 1,013,572   1,099,457  
Income from operations   4,444,742 4,101,333
Interest income 365,498   443,478  
Income before taxes   4,810,240   4,544,811
Provision for income taxes 884,531   814,147  
Net income $ 3,925,709     $ 3,730,664  
Net income per share – basic $ 0.81     $ 0.77  
Net income per share – diluted $ 0.81     $ 0.77  
Cash dividends declared per common share $ 1.00     $ 1.00  
Weighted average shares outstanding
Basic
4,833,232 4,846,010
Diluted
  4,833,261 4,847,436


STATEMENTS OF COMPREHENSIVE INCOME
     (Unaudited)

Quarter Ended December 31
2020 2019
Net income $ 3,925,709   $ 3,730,664
Unrealized (loss) gain from marketable securities, net of tax   (145,452 ) 31,237  
Comprehensive income $ 3,780,257
  $ 3,761,901  
 
 
See accompanying notes.


4

Table of Contents

NVE CORPORATION
STATEMENTS OF INCOME
(Unaudited)
 
Nine Months Ended Dec. 31
2020 2019
Revenue
Product sales
$ 14,850,157 $ 18,434,039  
Contract research and development
653,252   827,198  
Total revenue   15,503,409   19,261,237  
Cost of sales 2,852,757   3,701,941  
Gross profit   12,650,652     15,559,296  
Expenses
Research and development
 

2,399,164

  2,671,131
Selling, general, and administrative

1,024,549

  1,026,448  
Total expenses 3,423,713   3,697,579  
Income from operations  

9,226,939

  11,861,717
Interest income 1,166,102   1,358,826  
Income before taxes  

10,393,041

  13,220,543
Provision for income taxes 1,833,127   2,060,398  
Net income $

8,559,914

  $ 11,160,145  
Net income per share – basic $ 1.77   $ 2.30  
Net income per share – diluted $ 1.77   $ 2.30  
Cash dividends declared per common share $ 3.00   $ 3.00  
Weighted average shares outstanding
Basic
4,834,324 4,846,010
Diluted
4,834,411 4,848,506


STATEMENTS OF COMPREHENSIVE INCOME
     (Unaudited)
 
Nine Months Ended Dec. 31
2020 2019
Net income $ 8,559,914 $ 11,160,145
Unrealized gain from marketable securities, net of tax   966,886   780,016  
Comprehensive income $ 9,526,800 $ 11,940,161
 

See accompanying notes.

 
5

Table of Contents  

NVE CORPORATION
STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)
 
 
 
 
Additional
Paid-In
Capital
    Accumulated
Other
Comprehen-
sive
Income
  Retained
Earnings
   
Common Stock
Shares   Amount Total
Balance as of March 31, 2020 4,835,038   $ 48,350   $ 19,383,956     $ 516,523     $ 58,046,520     $ 77,995,349  
Comprehensive income:
Unrealized gain on
marketable securities,
net of tax
                    1,242,662   1,242,662  
Net income
                            2,411,865       2,411,865  
Total comprehensive income
                                    3,654,527  
Stock-based compensation
            2,707                       2,707  
Cash dividends declared
($1.00 per share of
common stock)
                      (4,835,038 )   (4,835,038 )
Balance as of June 30, 2020 4,835,038   48,350   19,386,663   1,759,185     55,623,347     76,817,545  
Repurchase of common stock
(1,806 )   (18 )   (91,401 )                     (91,419 )
Comprehensive income:
Unrealized loss on
marketable securities,
net of tax
                    (130,324 ) (130,324 )
Net income
                            2,222,340       2,222,340  
Total comprehensive income
                                    2,092,016  
Stock-based compensation
  34,315 34,315  
Cash dividends declared
($1.00 per share of
common stock)
                      (4,835,038 )   (4,835,038 )
Balance as of September 30, 2020 4,833,232   48,332   19,329,577   1,628,861     53,010,649       74,017,419  
Comprehensive income:
Unrealized loss on
marketable securities,
net of tax
                    (145,452 ) (145,452 )
Net income
                            3,925,709       3,925,709  
Total comprehensive income
                                    3,780,257  
Stock-based compensation
            4,275                       4,275  
Cash dividends declared
($1.00 per share of
common stock)
                      (4,833,232 )   (4,833,232 )
Balance as of December 31, 2020 4,833,232 $ 48,332   $ 19,333,852     $ 1,483,409     $ 52,103,126     $ 72,968,719  
 
 
See accompanying notes.


6

Table of Contents

NVE CORPORATION
STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)
 
 
 
 
Additional
Paid-In
Capital
    Accumulated
Other
Comprehen-
sive (Loss)
Income
  Retained
Earnings
   
Common Stock
Shares   Amount Total
Balance as of March 31, 2019 4,846,010 $ 48,460 $ 19,910,558   $ (82,725 ) $ 62,903,918 $ 82,780,211
Comprehensive income:
Unrealized gain on
marketable securities,
net of tax
570,063 570,063
Net income
3,607,419   3,607,419  
Total comprehensive income
4,177,482
Cash dividends declared
($1.00 per share of
common stock)
            (4,846,010 ) (4,846,010 )
Balance as of June 30, 2019 4,846,010   48,460   19,910,558   487,338     61,665,327     82,111,683  
Comprehensive income:
Unrealized gain on
marketable securities,
net of tax
                    178,716   178,716
Net income
                            3,822,062       3,822,062  
Total comprehensive income
                                    4,000,778
Stock-based compensation
            48,360                       48,360  
Cash dividends declared
($1.00 per share of
common stock)
                      (4,846,010 )   (4,846,010 )
Balance as of September 30, 2019 4,846,010     48,460     19,958,918       666,054       60,641,379       81,314,811  
Comprehensive income:
Unrealized gain on
marketable securities,
net of tax
31,237   31,237
Net income
                            3,730,664       3,730,664  
Total comprehensive income
                                    3,761,901
Cash dividends declared
($1.00 per share of
common stock)
                      (4,846,010 )   (4,846,010 )
Balance as of December 31, 2019 4,846,010 $ 48,460 $ 19,958,918 $ 697,291     $ 59,526,033 $ 80,230,702  
 
 
See accompanying notes.


7

Table of Contents

NVE CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
 
Nine Months Ended Dec. 31
2020 2019
OPERATING ACTIVITIES
Net income $ 8,559,914 $ 11,160,145
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization
386,968 403,691
Stock-based compensation
41,297 48,360
Deferred income taxes
(73,269 ) 71,800  
Changes in operating assets and liabilities:
Accounts receivable
(467,290 ) 876,601  
Inventories
41,973   105,134
Prepaid expenses and other assets
181,557   80,746  
Accounts payable and other liabilities
(140,082 ) (210,172 )
Net cash provided by operating activities 8,531,068 12,536,305
 
INVESTING ACTIVITIES
Purchases of fixed assets (13,627 ) (26,076 )
Purchases of marketable securities - (7,196,330 )
Proceeds from maturities of marketable securities 12,000,000       12,500,000  
Cash provided by investing activities   11,986,373       5,277,594  
 
FINANCING ACTIVITIES
Repurchase of common stock (91,419 )   -
Payment of dividends to shareholders   (14,503,308 )     (14,538,030 )
Cash used in financing activities   (14,594,727 )     (14,538,030 )
 
Increase in cash and cash equivalents 5,922,714   3,275,869  
Cash and cash equivalents at beginning of period 8,065,594     6,877,304  
 
Cash and cash equivalents at end of period $ 13,988,308     $ 10,153,173  
 
Supplemental disclosures of cash flow information:
Cash paid during the period for income taxes
$ 1,636,788     $ 1,931,661  
 
 
See accompanying notes.


8

Table of Contents

NVE CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

NOTE 1. DESCRIPTION OF BUSINESS
     We develop and sell devices that use spintronics, a nanotechnology that relies on electron spin rather than electron charge to acquire, store, and transmit information.

NOTE 2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
     The accompanying unaudited financial statements of NVE Corporation are prepared consistent with accounting principles generally accepted in the United States and in accordance with Securities and Exchange Commission rules and regulations. In the opinion of management, these financial statements reflect all adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation of the financial statements. Although we believe that the disclosures are adequate to make the information presented not misleading, certain disclosures have been omitted as allowed, and it is suggested that these unaudited financial statements be read in conjunction with the audited financial statements and the notes included in our latest annual financial statements included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2020. The results of operations for the quarter and nine months ended December 31, 2020 are not necessarily indicative of the results that may be expected for the full fiscal year ending March 31, 2021.

Significant Accounting Policies
Revenue Recognition
    We recognize revenue when we satisfy performance obligations by the transfer of control of products or services to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those products or services. Revenue is disaggregated into product sales and contract research and development to depict the nature, amount, timing of revenue recognition and economic characteristics of our business, and is represented within the financial statements.

     We recognize revenue from product sales to customers and distributors when we satisfy our performance obligation, at a point in time, upon product shipment or delivery to our customer or distributor as determined by agreed upon shipping terms. Shipping charges billed to customers are included in product sales and the related shipping costs are included in cost of sales. Under certain limited circumstances, our distributors may earn commissions for activities unrelated to their purchases of our products, such as for facilitating the sale of custom products or research and development contracts with third parties. We recognize any such commissions as selling, general, and administrative expenses. We recognize discounts provided to our distributors as reductions in revenue.

     We recognize contract research and development revenue over a period of time as the performance obligation is satisfied over a period of time rather than a point in time. Contracts have specifications unique to each customer and do not create an asset with an alternate use, and we have an enforceable right to payment for performance completed to date. We recognize revenue over a period of time using costs incurred as the measurement of progress towards completion.

     Accounts receivable is recognized when we have transferred a good or service to a customer and our right to receive consideration is unconditional through the completion of our performance obligation. A contract asset is recognized when we have a right to consideration from the transfer of goods or services to a customer but have not completed our performance obligation. A contract liability is recognized when we have been paid by a customer but have not yet satisfied the performance obligation by transferring goods or services. We had no material contract assets or contract liabilities as of December 31, 2020 or March 31, 2020.
 
     Our performance obligations related to product sales and contract research and development contracts are satisfied in one year or less. Unsatisfied performance obligations represent contracts with an original expected duration of one year or less. As permitted under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, we are using the practical expedient not to disclose the value of these unsatisfied performance obligations. We also use the practical expedient in which we do not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less.
 
9

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NOTE 3. RECENTLY ISSUED ACCOUNTING STANDARDS
New Accounting Standards Not Yet Adopted

     In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes. ASU 2019-12 is intended to simplify accounting for income taxes. It removes certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years, which is fiscal 2022 for us, with early adoption permitted. We do not expect adoption of the new guidance to have a significant impact on our financial statements.

     In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Statements. ASU 2016-13 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. In November 2018 the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, which clarifies codification and corrects unintended application of the guidance, and in November 2019, the FASB issued ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which clarifies or addresses specific issues about certain aspects of ASU 2016-13. In November 2019 the FASB issued ASU No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, and in February 2020 the FASB issued ASU No. 2020-02, Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842), both of which delay the effective date of ASU 2016-13 by three years for certain Smaller Reporting Companies such as us. We were unaffected by the change in the effective date of the ASU related to Leases (Topic 842) because we have already adopted that ASU. In March 2020, the FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments; which modifies the measurement of expected credit losses of certain financial instruments. In accordance with ASU 2019-10 and ASU 2020-02, ASU 2016-13 is effective for certain Smaller Reporting Companies for financial statements issued for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years, which will be fiscal 2024 for us if we continue to be classified as a Smaller Reporting Company, with early adoption permitted. We do not expect adoption of the new guidance to have a significant impact on our financial statements.
 
NOTE 4. NET INCOME PER SHARE  
     Net income per basic share is computed based on the weighted-average number of common shares issued and outstanding during each period. Net income per diluted share amounts assume exercise of all stock options. The following tables show the components of diluted shares:
 
Quarter Ended Dec. 31
2020 2019
Weighted average common shares outstanding – basic 4,833,232 4,846,010
Dilutive effect of stock options 29 1,426
Shares used in computing net income per share – diluted   4,833,261 4,847,436
 
Nine Months Ended Dec. 31
2020 2019
Weighted average common shares outstanding – basic 4,834,324 4,846,010
Dilutive effect of stock options 87 2,496
Shares used in computing net income per share – diluted   4,834,411 4,848,506
 
 
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NOTE 5. FAIR VALUE OF FINANCIAL INSTRUMENTS
     Our corporate bonds and money market funds are classified as available-for-sale securities and carried at estimated fair value. Unrealized holding gains and losses are included in accumulated other comprehensive income (loss) in the statement of shareholders’ equity. Corporate bonds with remaining maturities less than one year are classified as short-term, and those with remaining maturities greater than one year are classified as long-term. We consider all highly-liquid investments with maturities of three months or less when purchased, including money market funds, to be cash equivalents. Gains and losses on marketable security transactions are reported on the specific-identification method.

     Contractual maturities of available-for-sale securities as of December 31, 2020 are as follows:
 
Total <1 Year 1–3 Years 3–5 Years
$ 65,694,022 $ 25,037,055 $ 34,142,192 $ 6,514,775
 
     Total available-for-sale securities represented approximately 88% of our total assets. Marketable securities as of December 31, 2020 had remaining maturities between eight weeks and 38 months.
 
     Generally accepted accounting principles establish a framework for measuring fair value, provide a definition of fair value, and prescribe required disclosures about fair-value measurements. Generally accepted accounting principles define fair value as the price that would be received to sell an asset or paid to transfer a liability. Fair value is a market-based measurement that should be determined using assumptions that market participants would use in pricing an asset or liability. Generally accepted accounting principles utilize a valuation hierarchy for disclosure of fair value measurements. The categorization within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The categories within the valuation hierarchy are described as follows:
 
     Level 1 – Financial instruments with quoted prices in active markets for identical assets or liabilities.

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

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

     Money market funds are included on the balance sheets in “Cash and cash equivalents.” Corporate bonds are included on the balance sheets in “Marketable securities, short term” and “Marketable securities, long term.”
 
     The following table shows the estimated fair value of assets that were accounted for at fair value on a recurring basis:
 
As of December 31, 2020 As of March 31, 2020
Level 1   Level 2   Total Level 1 Level 2 Total
Money market funds   $ 13,921,961    $ -    $ 13,921,961    $ 7,903,433    $ -    $ 7,903,433
Corporate bonds   -     51,772,061     51,772,061     -     62,691,309     62,691,309
Total $ 13,921,961   $ 51,772,061   $ 65,694,022   $ 7,903,433   $ 62,691,309   $ 70,594,742

     Our available-for-sale securities as of December 31 and March 31, 2020, aggregated into classes of securities, were as follows:

As of December 31, 2020 As of March 31, 2020

Amortized
Cost
  Gross
Unrealized
Holding Gains
  Gross
Unrealized
Holding Losses
  Estimated
Fair
Value

Amortized
Cost
Gross
Unrealized
Holding Gains
Gross
Unrealized
Holding Losses
Estimated
Fair
Value
Money market
   funds
$ 13,921,961    $ -    $ -      $ 13,921,961    $ 7,903,433    $ -    $ -      $ 7,903,433
Corporate bonds     49,873,178     1,898,883     -       51,772,061     62,030,120     752,621     (91,432 )     62,691,309
Total $ 63,795,139   $ 1,898,883   $ -     $ 65,694,022   $ 69,933,553   $ 752,621   $ (91,432 )   $ 70,594,742
 
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NOTE 6. INVENTORIES
     Inventories are shown in the following table:
Dec. 31,
2020
March 31,
2020
Raw materials $ 839,102 $ 1,017,451
Work in process   1,959,692 1,863,000
Finished goods 1,043,683 1,003,999
Total inventories $ 3,842,477 $ 3,884,450
 
NOTE 7. STOCK-BASED COMPENSATION
     Stock-based compensation expense was $4,275 for the third quarter of fiscal 2021, $41,297 for the first nine months of fiscal 2021, and $48,360 for the first nine months of fiscal 2020. There was no Stock-based compensation expense in the third quarter of fiscal 2020. We calculate the share-based compensation expense using the Black-Scholes standard option-pricing model.
 
NOTE 8. INCOME TAXES
     Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
 
     We had no unrecognized tax benefits as of December 31, 2020, and we do not expect any significant unrecognized tax benefits within 12 months of the reporting date. We recognize interest and penalties related to income tax matters in income tax expense. As of December 31, 2020 we had no accrued interest related to uncertain tax positions. The tax years 2016 through 2019 remain open to examination by the major taxing jurisdictions to which we are subject.
 
NOTE 9. LEASES
     We conduct our operations in a leased facility under a non-cancellable lease expiring March 31, 2026. Our lease does not provide an implicit rate, so we used our incremental borrowing rate to determine the present value of lease payments. Lease expense is recognized on a straight-line basis over the lease term. Variable lease costs consist primarily of common area maintenance and real estate taxes which are paid based on actual costs incurred by the lessor. Details of our operating lease are as follows:
 
Quarter Ended
Dec. 31, 2020
Nine Months Ended
Dec. 31, 2020
Operating lease cost $ 38,641     $ 115,923
Variable lease cost   30,608       91,824  
Total $ 69,249     $ 207,747  
 
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for leases
$ 44,433     $ 133,299
Remaining lease term   63 months
Discount rate   3.5 %
 
     The following table presents the maturities of lease liabilities as of December 31, 2020:
 
Year Ending March 31 Operating Leases
2021 $ (4,762 )
2022 152,703
2023 156,121
2024 159,592
2025 163,224
2026 165,947
Total lease payments   792,825
 
Imputed lease interest   (72,207 )
Total lease liabilities $ 720,618  
 
 
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NOTE 10. STOCK REPURCHASE PROGRAM
     On January 21, 2009 we announced that our Board of Directors authorized the repurchase of up to $2,500,000 of our Common Stock from time to time in open market, block, or privately negotiated transactions. The timing and extent of any repurchases depends on market conditions, the trading price of the company’s stock, and other factors, and subject to the restrictions relating to volume, price, and timing under applicable law. On August 27, 2015, we announced that our Board of Directors authorized up to $5,000,000 of additional repurchases. Our repurchase program does not have an expiration date and does not obligate us to purchase any shares. The Program may be modified or discontinued at any time without notice. We intend to finance any stock repurchases with cash provided by operating activities or maturating marketable securities. The remaining authorization was $3,762,040 as of December 31, 2020.
 
NOTE 11. INFORMATION AS TO EMPLOYEE STOCK PURCHASE, SAVINGS, AND SIMILAR PLANS
     All of our employees are eligible to participate in our 401(k) savings plan the first quarter after reaching age 21. Employees may contribute up to the Internal Revenue Code maximum. We make matching contributions of 100% of the first 3% of participants’ salary deferral contributions. Our matching contributions were $22,571 for the third quarter of fiscal 2021, $22,456 for the third quarter of fiscal 2020, $69,227 for the first nine months of fiscal 2021, and $68,512 for the first nine months of fiscal 2020.

NOTE 12. SUBSEQUENT EVENTS
     On January 20, 2021 we announced that our Board had declared a quarterly cash dividend of $1.00 per share of Common Stock to be paid February 26, 2021 to shareholders of record as of the close of business February 1, 2021.
 
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
Forward-looking statements

     Some of the statements made in this Report or in the documents incorporated by reference in this Report and in other materials filed or to be filed by us with the Securities and Exchange Commission (“SEC”) as well as information included in verbal or written statements made by us constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to the safe harbor provisions of the reform act. Forward-looking statements may be identified by the use of the terminology such as may, will, expect, anticipate, intend, believe, estimate, should, or continue, or the negatives of these terms or other variations on these words or comparable terminology. To the extent that this Report contains forward-looking statements regarding the financial condition, operating results, business prospects or any other aspect of NVE, you should be aware that our actual financial condition, operating results and business performance may differ materially from that projected or estimated by us in the forward-looking statements. We have attempted to identify, in context, some of the factors that we currently believe may cause actual future experience and results to differ from their current expectations. These differences may be caused by a variety of factors, including but not limited to risks related to our reliance on several large customers for a significant percentage of revenue, uncertainties related to the economic environments in the industries we serve, uncertainties related to future sales and revenues, risks related to the COVID-19 pandemic, risks and uncertainties related to future stock repurchases and dividend payments, and other specific risks that may be alluded to in this Report or in the documents incorporated by reference in this Report.

     Further information regarding our risks and uncertainties are contained in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended March 31, 2020 as updated in our Quarterly Reports on Form 10-Q for the quarters ended June 30, 2020, September 30, 2020, and Item 1A herein.
 
General
     NVE Corporation, referred to as NVE, we, us, or our, develops and sells devices that use spintronics, a nanotechnology that relies on electron spin rather than electron charge to acquire, store and transmit information. We manufacture high-performance spintronic products including sensors and couplers that are used to acquire and transmit data.
 
Critical accounting policies
     A description of our critical accounting policies is provided in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended March 31, 2020. As of December 31, 2020 our critical accounting policies and estimates continued to include investment valuation, inventory valuation, and deferred tax assets estimation.
 
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Quarter ended December 31, 2020 compared to quarter ended December 30, 2019
     The table shown below summarizes the percentage of revenue and quarter-to-quarter changes for various items:

Percentage of Revenue
Quarter Ended December 31
Quarter-
to-Quarter
Change
2020 2019
Revenue
Product sales
96.9 % 95.3 % 2.8 %
Contract research and development
3.1 % 4.7 % (33.8 )%
Total revenue 100.0 % 100.0 % 1.1 %
Cost of sales 16.5 % 19.5 % (14.9 )%
Gross profit 83.5 % 80.5 % 5.0 %
Expenses
Research and development
10.7 % 12.0 % (9.0 )%
Selling, general, and administrative
4.8 % 5.1 % (5.1 )%
Total expenses 15.5 % 17.1 % (7.8 )%
Income from operations 68.0 % 63.4 % 8.4 %
Interest income 5.6 % 6.9 % (17.6 )%
Income before taxes 73.6 % 70.3 % 5.8 %
Provision for income taxes 13.5 % 12.6 % 8.6 %
Net income 60.1 % 57.7 % 5.2 %
 
     Total revenue for the quarter ended December 31, 2020 (the third quarter of fiscal 2021) increased 1% compared to the quarter ended December 31, 2019 (the third quarter of fiscal 2020). The increase was due to a 3% increase in product sales, partially offset by a 34% decrease in contract research and development revenue. The increase in product sales from the prior-year quarter was primarily due to increased purchases by existing customers. The decrease in contract research and development revenue in the third quarter of fiscal 2021 was due to the completion of certain contracts.

     Gross profit margin increased to 84% of revenue for the third quarter of fiscal 2021 compared to 80% of revenue for the third quarter of fiscal 2020 due to a more profitable revenue mix.

     Total expenses decreased 8% in the third quarter of fiscal 2021 compared to the third quarter of fiscal 2020 due to a 9% decrease in research and development expense and a 5% decrease in selling, general, and administrative expense. The decrease in research and development expense was primarily due to the completion of certain product development activities. The decrease in selling, general, and administrative expense was primarily due to staffing changes.
 
     Interest income for the third quarter of fiscal 2021 decreased 18% due to a decrease in our marketable securities and money market funds and a decrease in the average interest rates on those securities and funds.

     The 5% increase in net income in the third quarter of fiscal 2021 compared to the prior-year quarter was primarily due to increased product sales, increased gross profit margin, and decreased expenses, partially offset by decreased contract research and development revenue and decreased interest income.
 
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Nine months ended December 31, 2020 compared to nine months ended December 31, 2019
     The table shown below summarizes the percentage of revenue and period-to-period changes for various items:

Percentage of Revenue
Nine Months Ended Dec. 31
Period-
to-Period
Change
2020 2019
Revenue
Product sales
95.8 % 95.7 % (19.4 )%
Contract research and development
4.2 % 4.3 % (21.0 )%
Total revenue 100.0 % 100.0 % (19.5 )%
Cost of sales 18.4 % 19.2 % (22.9 )%
Gross profit 81.6 % 80.8 % (18.7 )%
Expenses
Research and development
15.5 % 13.9 % (10.2 )%
Selling, general, and administrative
6.6 % 5.3 % (0.2 )%
Total expenses 22.1 % 19.2 % (7.4 )%
Income from operations 59.5 % 61.6 % (22.2 )%
Interest income 7.5 % 7.0 % (14.2 )%
Income before taxes 67.0 % 68.6 % (21.4 )%
Provision for income taxes 11.8 % 10.7 % (11.0 )%
Net income 55.2 % 57.9 % (23.3 )%
 
     Total revenue for the nine months ended December 31, 2020 decreased 20% compared to the nine months ended December 31, 2019, due to a 19% decrease in product sales and a 21% decrease in contract research and development revenue.

     The decrease in product sales from the prior-year period was due to decreased purchase volumes by existing customers. The decrease in contract research and development revenue was due to the completion of certain contracts.

     Total expenses decreased 7% for the first nine months of fiscal 2021 compared to the first nine months of fiscal 2020 primarily due to a 10% decrease in research and development expense. The decrease in research and development expense was due to the completion of certain product development activities.

     Interest income for the first nine months of fiscal 2021 decreased 14% due to a decrease in our marketable securities and money market funds and a decrease in the average interest rates on those securities and funds.

      The 23% decrease in net income in the first nine months of fiscal 2021 compared to the prior-year period was primarily due to a decrease in revenue.
 
The Impact of the COVID-19 Pandemic
     The pandemic had a significant impact on total revenue and net income for the nine months ended December 31, 2020 compared to the prior-year period due to its effects on market conditions in certain industries, especially medical devices. We believe the effects of the pandemic on our business subsided in the quarter ended December 31, 2020, however.
 
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Liquidity and Capital Resources
Overview
     Cash and cash equivalents were $13,988,308 as of December 31, 2020 compared to $8,065,594 as of March 31, 2020. The $5,922,714 increase in cash and cash equivalents was due to $8,531,068 in net cash provided by operating activities and $11,986,373 of cash provided by investing activities, partially offset by $14,594,727 of cash used in financing activities.

Investing Activities
     Cash provided by investing activities in the nine months ended December 31, 2020 was due to $12,000,000 of marketable security maturities, partially offset by $13,627 of fixed asset purchases. Capital expenditures can vary from period to period depending on our needs and equipment purchasing opportunities.
 
Financing Activities
     We paid $14,503,308 in cash dividends and repurchased $91,419 of our Common Stock in the first nine months of fiscal 2021. In addition to cash dividends paid in the first nine months of fiscal 2021, on January 20, 2021 we announced that our Board had declared a cash dividend of $1.00 per share of Common Stock, or $4,833,232 based on shares outstanding as of January 15, 2021, to be paid February 26, 2021. We plan to fund dividends through cash provided by operating activities and proceeds from maturities of marketable securities. All future dividends will be subject to Board approval and subject to the company’s results of operations, cash and marketable security balances, estimates of future cash requirements, the impacts of the COVID-19 pandemic, and other factors the Board may deem relevant. Furthermore, dividends may be modified or discontinued at any time without notice.

     We currently believe our working capital and cash generated from operations will be adequate for our needs at least for the next 12 months.
 
Off-Balance-Sheet Arrangements
     Our off-balance sheet arrangements consist of purchase commitments. We believe such arrangements have no material current or anticipated future effect on our profitability, cash flows, or financial position.
 
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Item 4. Controls and Procedures.
Disclosure Controls and Procedures

     Management, with the participation of the Chief Executive Officer and Chief Financial Officer, has performed an evaluation of our disclosure controls and procedures that are defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this Report. This evaluation included consideration of the controls, processes, and procedures that are designed to ensure that information required to be disclosed by us in the reports we file under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as December 31, 2020, our disclosure controls and procedures were effective.

Changes in Internal Controls
     During the quarter ended December 31, 2020, there was no change in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
 
PART II–OTHER INFORMATION

Item 1. Legal Proceedings.
     In the ordinary course of business we may become involved in litigation. At this time we are not aware of any material pending or threatened legal proceedings or other proceedings contemplated by governmental authorities that we expect would have a material adverse impact on our future results of operation and financial condition.

Item 1A. Risk Factors.
     There have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2020 as updated in our Quarterly Report on Form 10-Q for the quarters ended June 30, 2020 and September 30, 2020, except the following risk factors are replaced in their entirety by the following to update the effects of the COVID-19 pandemic:

The loss of supply from any of our packaging vendors could impact our ability to produce and deliver products and cause loss of revenue.
     We are dependent on our packaging vendors. Because of the unique materials our products use, the complexity of some of our products, unique magnetic requirements, and high isolation voltage specifications, many of our products are more challenging to package than conventional integrated circuits. Some of our products use processes or tooling unique to a particular packaging vendor, and it might be expensive, time-consuming, or impractical to convert to another vendor in the event of a supply interruption due to vendors’ business decisions, business condition, or acts of God, including floods, typhoons, earthquakes, or pandemics. Leadtimes for packaging services have increased during the COVID-19 pandemic and there have been shortages of raw materials our packaging vendors need for their process. One of our packaging vendors was forced to suspend its factory operations from late March 2020 until mid-May 2020 and was permitted only limited operation from mid-May through August 2020 pursuant to COVID-19 government orders, and restrictions could be reimposed in the future. Additionally, certain of our packaging vendors are in flood-susceptible areas. Flooding risks to such vendors may increase in the future due to possible higher ocean levels, extreme weather, and other potential effects of climate change. We have alternate vendors or potential alternate vendors for the majority of our products, but it can be expensive, time-consuming, and technically challenging to convert to alternate vendors. Furthermore, we may not be able to recover work in process or finished goods at a packaging vendor in the event of a disruption. Any supply interruptions or loss of inventory could seriously jeopardize our ability to provide products that are critical to our business and operations and may cause us to lose revenue.

Public health crises could have an adverse effect on our operations and financial results.
     Public health crises could adversely affect our ongoing business operations. In particular, the COVID-19 pandemic has impacted global economic activity and caused many of our important customers to delay or cancel orders. We have been allowed to operate under Minnesota emergency executive orders in effect since March 27, 2020, however future orders could be imposed by State or Federal authorities that could limit or prohibit our normal operation. Furthermore, if one or more of our employees become infected with COVID-19, we could be forced to curtail or cease operations to protect the health of our employees or to prevent the spread of the disease. Additionally, any customer or supplier disruptions could affect our ability to operate. These and other impacts of COVID-19 pandemic or other public health crises could have a material adverse effect on our results of operations or our financial condition.

Item 4. Mine Safety Disclosures.
     Not applicable.
 
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Item 6. Exhibits.
Exhibit #
Description
  10 Amendment No. 6 to Supplier Partnering Agreement between Abbott and the company (incorporated by reference to the Form 8-K/A filed December 21, 2020).
 
  31.1 Certification by Daniel A. Baker pursuant to Rule 13a-14(a)/15d-14(a).
 
  31.2 Certification by Curt A. Reynders pursuant to Rule 13a-14(a)/15d-14(a).
 
  32 Certification by Daniel A. Baker and Curt A. Reynders pursuant to 18 U.S.C. Section 1350.
 
101.INS XBRL Instance Document
 
101.SCH      XBRL Taxonomy Extension Schema Document
 
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
 
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
 
101.LAB XBRL Taxonomy Extension Label Linkbase Document
 
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
 
 
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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

NVE CORPORATION
          (Registrant)

 
January 20, 2021
/s/ DANIEL A. BAKER 
Date
Daniel A. Baker
President and Chief Executive Officer

 
January 20, 2021
/s/ CURT A. REYNDERS 
Date
Curt A. Reynders
Chief Financial Officer
 
 
 
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