-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M5Qzq6jhF07CmocuOvuNP+ycZOO3KxuxcTn0UAUq3xYk0o673rOnjV/1HsPiq/e2 xFspABf0xs2/e7Iw8s9IaQ== 0000724910-02-000001.txt : 20020414 0000724910-02-000001.hdr.sgml : 20020414 ACCESSION NUMBER: 0000724910-02-000001 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20011230 FILED AS OF DATE: 20020204 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NVE CORP /NEW/ CENTRAL INDEX KEY: 0000724910 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 411424202 STATE OF INCORPORATION: MN FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-12196 FILM NUMBER: 02526346 BUSINESS ADDRESS: STREET 1: 11409 VALLEY VIEW ROAD CITY: EDEN PRAIRIE STATE: MN ZIP: 55344 BUSINESS PHONE: 9528299217 MAIL ADDRESS: STREET 1: 11409 VALLEY VIEW ROAD CITY: EDEN PRAIRIE STATE: MN ZIP: 55344 FORMER COMPANY: FORMER CONFORMED NAME: PREMIS CORP DATE OF NAME CHANGE: 19920703 10QSB 1 tenq3-02.txt 10QSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10QSB [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended: December 30, 2001 [ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act. NVE Corporation --------------- (Exact name of registrant as specified in its charter) Minnesota --------- (State or other jurisdiction of incorporation) 000-12196 41-1424202 - -------------------------------- ------------------------ Commission File Number I.R.S. Employer Identification number 11409 Valley View Road, Eden Prairie, Minnesota 55344 - ----------------------------------------------- ---------- (Address of principal executive offices) (Zip code) Issuer's telephone number, including area code: (952) 829-9217 -------------- 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. YES [X] NO [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date: Common Stock, $.01 Par Value - 17,177,406 shares outstanding as of January 31, 2002. PART I - FINANCIAL INFORMATION ITEM 1. - FINANCIAL STATEMENTS NVE CORPORATION BALANCE SHEET DECEMBER 30, 2001 ASSETS Current assets: Cash $ 870,840 Accounts receivable 1,127,975 Inventories 980,621 Prepaid expenses and other assets 33,887 ----------- Total current assets 3,013,323 Fixed assets: Machinery and equipment 2,248,807 Furniture and fixtures 35,499 Leasehold improvements 354,426 Construction in progress 68,497 ----------- 2,707,229 Less accumulated depreciation 1,387,076 ----------- Total fixed assets 1,320,153 ----------- Total assets $4,333,476 =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Note payable $ 234,550 Accounts payable 187,437 Accrued expenses 225,854 Deferred revenue 1,796,562 Current portion of long-term debt 135,518 ----------- Total current liabilities 2,579,921 Long-term debt Leases payable 406,331 ----------- Total liabilities 2,986,252 Shareholders' equity: Common stock 171,642 Additional paid-in capital 5,735,797 Accumulated deficit (4,560,215) ----------- Total shareholders' equity 1,347,224 ----------- Total liabilities and shareholders' equity $4,333,476 ===========
SEE ACCOMPANYING NOTES. NVE CORPORATION STATEMENTS OF OPERATIONS
THREE MONTHS ENDED: DECEMBER 30 DECEMBER 31 2001 2000 -------------------------- Revenues Contract research and development $1,246,875 $1,061,777 Product sales 402,168 169,416 License revenues 125,699 181,250 Honeywell license revenues - 1,250,000 -------------------------- Total revenues 1,774,742 2,662,443 Cost of sales 1,332,045 1,248,126 -------------------------- Gross profit 442,697 1,414,317 Expenses Research and development 475,266 155,468 Selling, general & administrative 405,368 378,619 -------------------------- Total expenses 880,634 534,087 -------------------------- (Loss) income from operations (437,937) 880,230 Interest income 4,099 13,481 Interest expense (21,346) (7,123) Other income (expense) 20,188 (3,697) -------------------------- Net (loss) income (434,996) 882,891 ========================== Net (loss) income per basic and diluted share (.03) .05 ========================== Weighted average shares outstanding: Basic 17,104,978 16,891,893 Diluted 17,104,978 18,501,060
SEE ACCOMPANYING NOTES. NVE CORPORATION STATEMENTS OF OPERATIONS
NINE MONTHS ENDED: DECEMBER 30 DECEMBER 31 2001 2000 -------------------------- Revenues Research and development $3,319,218 $3,248,854 Product sales 1,098,133 478,555 License revenues 488,197 543,750 Honeywell license revenues - 1,250,000 -------------------------- Total revenues 4,905,548 5,521,159 Cost of sales 3,815,892 3,452,449 -------------------------- Gross profit 1,089,656 2,068,710 Expenses Research and development 1,132,549 575,023 Selling, general & administrative 1,248,887 870,185 -------------------------- Total expenses 2,381,436 1,445,208 -------------------------- (Loss) income from operations (1,291,780) 623,502 Interest income 18,683 24,749 Interest expense (33,937) (23,528) Other income (expense) 100,715 3,018 -------------------------- Net (loss) income (1,206,319) 627,741 ========================== Net (loss) income per basic and diluted share (.07) .03 ========================== Weighted average shares outstanding: Basic 17,104,978 16,830,403 Diluted 17,104,978 18,439,570
SEE ACCOMPANYING NOTES. NVE CORPORATION CONDENSED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED: DECEMBER 30 DECEMBER 31 2001 2000 -------------------------- OPERATING ACTIVITIES Net (loss) income $(1,206,319) $ 627,741 Adjustments to reconcile net loss to net cash provided (used) by operating activities: Depreciation 233,452 187,446 Changes in operating assets and liabilities: Accounts receivable 188,753 (412,727) Inventories 107,195 (454,656) Prepaid expenses and other 39,992 (30,249) Accounts payable and accrued expenses (208,253) 195,530 Deferred revenue 481,140 680,095 Other assets - 40,495 -------------------------- Net cash provided by operating activities (364,040) 833,675 INVESTING ACTIVITIES Purchases of fixed assets (855,310) (117,479) -------------------------- Net cash used in investing activities (855,310) (117,479) FINANCING ACTIVITIES Net proceeds from sale of common stock 89,599 996,854 Net proceeds from (repayment of) note payable 508,511 (15,607) -------------------------- Net cash provided by financing activities 598,110 981,247 -------------------------- Increase (decrease) in cash (621,240) 1,697,443 Cash at beginning of period 1,492,080 383,030 -------------------------- Cash at end of period $ 870,840 $2,080,473 ==========================
SEE ACCOMPANYING NOTES. NVE CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 30, 2001 1. Interim Financial Information The accompanying unaudited condensed financial statements of NVE Corporation (the "Company") are consistent with generally accepted principles for financial reporting with SEC 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 the Company believes that the disclosures are adequate to make the information presented not misleading, it is suggested that that these condensed financial statements be read in conjunction with the audited financial statements and the notes there to included in the Company's latest annual financial statements included in its report on Form 10-KSB. The results of operations for the three and nine month periods ended December 30, 2001 are not necessarily indicative of the results that may be expected for the full year ending March 31, 2002. 2. Nature of Business NVE is a leader in the practical commercialization of "spintronics," magnetic devices which many experts believe represent the next generation of microelectronics. 3. Merger On November 21, 2000, then privately-owned Nonvolatile Electronics, Incorporated ("NVE") and publicly-held Premis Corporation completed a merger with Premis surviving under the new name NVE Corporation. The Company issued new shares of Common Stock in exchange for outstanding shares of NVE capital stock. The shares of Common Stock issued to NVE shareholders represented 94% of the common shares outstanding immediately following the consummation of the merger. In applying generally-accepted accounting principles ("GAAP"), the Merger has been deemed to be equivalent, for accounting purposes, to NVE's issuance of capital stock in exchange for the fair-market value of the assets and liabilities of the Company. As a result, no goodwill has been recorded, and the assets of NVE are recorded at their historic values. 4. Revenue Recognition In December 1999, the Securities and Exchange Commission issued Staff Account- ing Bulletin ("SAB") No. 101, "Revenue Recognition," which provides guidance on the recognition, presentation and disclosure of revenue in financial statements. SAB 101 requires that license and other up-front fees received from research collaborators be recognized over the term of the agreement unless the fee is in exchange for products delivered or services performed that represent the culmination of a separate earnings process. Effective January 1, 2000, the Company adopted SAB 101. In the current fiscal year, the Company recognized $125,699 for the three months and $488,197 for the nine months which was included in the cumulative effect adjustment. In the prior fiscal year, the Company recognized $181,250 for the three months and $543,750 for the nine months. The effect of those revenues was to reduce net losses by the amount reported. 5. Earnings Per Share The Company calculates its income (loss) per share pursuant to Statement of Financial Accounting Standards No. 128 ("SFAS 128"), Earnings Per Share. Basic earnings per share is computed based upon the weighted average number of common shares issued and outstanding during each year. Diluted net income per share amounts assume conversion, exercise or issuance of all potential common stock instruments (stock options, warrants and convertible preferred stock). Potentially dilutive securities including warrants and stock options are excluded from diluted earnings per share during net loss periods because these securities would be anti-dilutive. All per share amounts have been restated, based on the same conversion resulting from the Merger. 6. Reclassification The Company has reclassified certain research and development costs related to contract research and development programs to cost of sales. Previously, these costs were included with research and development costs reported as operating expenses. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS Results reported herein are for prior periods and not necessarily indicative of results which may be expected in the future. Management has made no predictions or estimates as to future operations, and no inferences as to future operations should be drawn. General NVE is a leader in the practical commercialization of "spintronics," which many experts believe represents the next generation of microelectronics. The Company derives revenue from three sources: 1) contract R&D (principally government contracts); 2) commercial sales of its GMR sensor and coupler products; and 3) licenses for its magnetic random-access memory (MRAM) technology. Three months ended December 30, 2001 compared to three months ended December 31, 2000 Revenues for the three months ended December 30, 2001 were $1,774,742, a decrease of 33% from revenues of $2,662,443 for the three months ended December 31, 2000. The higher revenues in the 2000 period were primarily due to $1.25 million of non-recurring license revenues resulting from a December, 2000 agreement with Honeywell International for MRAM technology. Additionally, recurring license revenues decreased $55,551 as revenue recognition for one of the Company's license agreements was completed during the third quarter of the current year (see Note 4 to Financial Statements-- Revenue Recognition). The decrease in license revenues was partially offset by a 138% increase in commercial product sales and $150,000 in new revenues recognized under an agreement with Agilent Technologies, Inc. ("Agilent"). Research and development expenses increased by 206% to $475,266 for the quarter ended December 30, 2001 as compared to $155,468 in the prior year's quarter. The increase was due to a greater emphasis on commercial product development. Gross profit margins decreased from 53% to 25%, primarily due to lower license revenues and start up costs associated with new commercial products. This resulted in a cost of sales of $1,332,045 for the current quarter. Selling, general and administrative expenses for the quarter ended December 30, 2001 increased by 7% to $405,368 compared to $378,619 in the prior year. The increase is primarily due to higher expenses associated with commercial selling activities and additional legal and accounting expenses associated with being publicly-held. The Company had a net loss in the quarter ended December 30, 2001 of $434,996 compared to a net income of $882,891 for the quarter ended December 31, 2000. The loss was due primarily to higher R&D expenses and lower license revenues. Nine months ended December 30, 2001 compared to nine months ended December 31, 2000 Revenues for the nine months ended December 30, 2001 were $4,905,548, a decrease of 11% from revenues of $5,521,159 for the nine months ended December 31, 2000. The higher revenues in the 2000 period were primarily due to $1.25 million of non-recurring license revenues resulting from a December, 2000 agreement with Honeywell International for MRAM technology. The decrease in non-recurring license revenues was partially offset by a 130% increase in commercial product sales. Research and development expenses increased by 97% to $1,132,549 for the nine months ended December 30, 2001 as compared to $575,023 in the prior year period. The increase was due to a greater emphasis on commercial product development. Gross profit margins decreased from 37% to 22%, primarily due to Lower license revenues and start-up costs associated with new commercial products. This resulted in a cost of sales of $3,815,892 for the current period. Selling, general and administrative expenses for the nine months ended December 30, 2001 increased by 44% to $1,248,887 compared to $870,185 in the prior year. The increase is primarily due to higher expenses associated with commercial selling activities and additional general and administrative expenses. General and administrative expenses increased due to additional legal and accounting expenses associated with being publicly-held and the costs of implementing a new accounting software system in the current period. The Company had a net loss in the nine months ended December 30, 2001 of $1,206,319 compared to a net income of $627,741 for the nine months ended December 31, 2000. The loss was due primarily to higher R&D expenses and lower license revenues. Liquidity and capital resources Cash flow for the nine months ended December 30, 2001 shows a decrease of $621,240. The Company had cash on December 30, 2001 of $870,840. The decrease in cash was primarily due to investments in developing and selling the Company's commercial products, partially offset by the sale and lease-back of equipment and payments from Agilent. The Company is exploring various sources of additional capital to fund its long-term growth strategy. PART II--OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K a. Exhibits None. b. Reports on Form 8-K None. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf of the undersigneds thereunto duly authorized. NVE CORPORATION Dated: February 4, 2002 By /s/ Daniel A. Baker ------------------------------------- Daniel A. Baker President and Chief Executive Officer By /s/ Richard George ------------------------------------- Richard George Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----