UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended   June 30, 2022

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 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.

☒ 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).

☒ 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 ☒	Smaller reporting company ☒
	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  ☒ 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 – 4,830,826 shares outstanding as of July 15, 2022

NVE CORPORATION

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

2

PART I–FINANCIAL INFORMATION

Item 1. Financial Statements.

NVE CORPORATION

BALANCE SHEETS

	(Unaudited) June 30, 2022			March 31, 2022*
ASSETS
Current assets
Cash and cash equivalents	$	13,299,264		$	10,449,510
Marketable securities, short-term		14,888,372			20,839,683
Accounts receivable, net of allowance for uncollectible accounts of $15,000		3,513,216			4,704,829
Inventories		5,544,037			5,088,635
Prepaid expenses and other assets		721,989			420,520
Total current assets		37,966,878			41,503,177
Fixed assets
Machinery and equipment		9,603,049			9,739,244
Leasehold improvements		1,826,334			1,810,872
		11,429,383			11,550,116
Less accumulated depreciation and amortization		10,945,847			10,943,731
Net fixed assets		483,536			606,385
Deferred tax assets		578,291			483,469
Marketable securities, long-term		25,517,937			24,314,211
Right-of-use asset – operating lease		527,553			560,250
Total assets	$	65,074,195		$	67,467,492
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	295,443		$	943,535
Accrued payroll and other		667,372			1,356,689
Operating lease		156,975			156,121
Total current liabilities		1,119,790			2,456,345
Operating lease		411,405			446,018
Total liabilities		1,531,195			2,902,363
Shareholders’ equity
Common stock, $0.01 par value, 6,000,000 shares authorized; 4,830,826 issued and outstanding as of June 30 and March 31, 2022		48,308			48,308
Additional paid-in capital		19,263,619			19,256,485
Accumulated other comprehensive income		(656,673	)		(318,120	)
Retained earnings		44,887,746			45,578,456
Total shareholders’ equity		63,543,000			64,565,129
Total liabilities and shareholders’ equity	$	65,074,195		$	67,467,492

*The March 31, 2022 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, 2022.

See accompanying notes. 

3

NVE CORPORATION

STATEMENTS OF INCOME

(Unaudited)

	Quarter Ended June 30
	2022		2021
Revenue
Product sales	$	7,072,961	$	6,953,766
Contract research and development		263,446		199,397
Total revenue		7,336,407		7,153,163
Cost of sales		1,651,847		1,769,581
Gross profit		5,684,560		5,383,582
Expenses
Research and development		601,918		808,142
Selling, general, and administrative		371,320		466,618
Total expenses		973,238		1,274,760
Income from operations		4,711,322		4,108,822
Interest income		283,059		289,720
Income before taxes		4,994,381		4,398,542
Provision for income taxes		854,265		818,976
Net income	$	4,140,116	$	3,579,566
Net income per share – basic	$	0.86	$	0.74
Net income per share – diluted	$	0.86	$	0.74
Cash dividends declared per common share	$	1.00	$	1.00
Weighted average shares outstanding
Basic		4,830,826		4,833,232
Diluted		4,830,871		4,836,821

STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Quarter Ended June 30
	2022			2021
Net income	$	4,140,116		$	3,579,566
Unrealized loss from marketable securities, net of tax		(338,553	)		(90,165	)
Comprehensive income	$	3,801,563		$	3,489,401

See accompanying notes.

4

NVE CORPORATION

STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

							Accumulated
					Additional		Other
	Common Stock				Paid-In		Comprehensive			Retained
	Shares		Amount		Capital		Income (Loss)			Earnings			Total
Balance as of March 31, 2022		4,830,826	$	48,308	$	19,256,485	$	(318,120	)	$	45,578,456		$	64,565,129
Comprehensive income:
Unrealized loss on marketable securities, net of tax								(338,553	)					(338,553	)
Net income											4,140,116			4,140,116
Total comprehensive income														3,801,563
Stock-based compensation						7,134								7,134
Cash dividends declared ($1.00 per share of common stock)											(4,830,826	)		(4,830,826	)
Balance as of June 30, 2022		4,830,826		48,308		19,263,619		(656,673	)		44,887,746			63,543,000

See accompanying notes. 

5

NVE CORPORATION

STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

							Accumulated
					Additional		Other
	Common Stock				Paid-In		Comprehensive			Retained
	Shares		Amount		Capital		Income			Earnings			Total
Balance as of March 31, 2021		4,833,232	$	48,332	$	19,338,127	$	1,101,119		$	50,404,364		$	70,891,942
Comprehensive income:
Unrealized loss on marketable securities, net of tax								(90,165	)					(90,165	)
Net income											3,579,566			3,579,566
Total comprehensive income														3,489,401
Stock-based compensation						7,238								7,238
Cash dividends declared ($1.00 per share of common stock)											(4,833,232	)		(4,833,232	)
Balance as of June 30, 2021		4,833,232		48,332		19,345,365		1,010,954			49,150,698			69,555,349

See accompanying notes. 

6

NVE CORPORATION

STATEMENTS OF CASH FLOWS

(Unaudited)

	Quarter Ended June 30
	2022			2021
OPERATING ACTIVITIES
Net income	$	4,140,116		$	3,579,566
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		87,621			140,427
Stock-based compensation		7,134			7,238
Deferred income taxes		1			(2,868	)
Changes in operating assets and liabilities:
Accounts receivable		1,191,613			(1,355,557	)
Inventories		(455,402	)		230,751
Prepaid expenses and other assets		(268,772	)		(235,406	)
Accounts payable and other liabilities		(1,371,168	)		936,243
Net cash provided by operating activities		3,331,143			3,300,394
INVESTING ACTIVITIES
Purchases of fixed assets		(24,500	)		(25,679	)
Purchases of marketable securities		(4,976,063	)		-
Proceeds from maturities of marketable securities		9,250,000			-
Receipt of tenant improvement allowance		100,000			-
Net cash provided (used) by investing activities		4,349,437			(25,679	)
FINANCING ACTIVITIES
Payment of dividends to shareholders		(4,830,826	)		(4,833,232	)
Cash used in financing activities		(4,830,826	)		(4,833,232	)
Increase (decrease) in cash and cash equivalents		2,849,754			(1,558,517	)
Cash and cash equivalents at beginning of period		10,449,510			10,427,340
Cash and cash equivalents at end of period	$	13,299,264		$	8,868,823
Supplemental disclosures of cash flow information:
Cash paid during the period for income taxes	$	1,275,629		$	-

See accompanying notes. 

7

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

Significant accounting policies

A description of our significant accounting policies is provided in Note 2 to the Financial Statements in our Annual Report on Form 10-K for the year ended March 31, 2022. As of June 30, 2022, there were no changes to our significant accounting policies.

NOTE 3. RECENTLY ISSUED ACCOUNTING STANDARDS

Recently Adopted Accounting Standard

In May 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. ASU 2021-04 addresses issuers’ accounting for certain modifications or exchanges of freestanding equity-classified written call options. We adopted ASU 2021-04 beginning with the quarter ended June 30, 2022. The adoption had no material impact on our financial statements.
 

New Accounting Standard Not Yet Adopted

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. In March 2020, the FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments; which modifies the measurement of expected credit losses of certain financial instruments. In accordance with ASU 2019-10 and ASU 2020-02, ASU 2016-13 is effective for certain Smaller Reporting Companies for financial statements issued for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years, which will be fiscal 2024 for us if we continue to be classified as a Smaller Reporting Company, with early adoption permitted. We are evaluating the potential impact of ASU 2016-13 on our financial statements.

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 June 30
	2022	2021
Weighted average common shares outstanding – basic	4,830,826	4,833,232
Dilutive effect of stock options	45	3,589
Shares used in computing net income per share – diluted	4,830,871	4,836,821

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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 June 30, 2022 are as follows: 

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

Total available-for-sale securities represented approximately 79% of our total assets. Marketable securities as of June 30, 2022 had remaining maturities between three weeks three years.

Generally accepted accounting principles establish a framework for measuring fair value, provide a definition of fair value, and prescribe required disclosures about fair-value measurements. Generally accepted accounting principles define fair value as the price that would be received to sell an asset or paid to transfer a liability. Fair value is a market-based measurement that should be determined using assumptions that market participants would use in pricing an asset or liability. Generally accepted accounting principles utilize a valuation hierarchy for disclosure of fair value measurements. The categorization within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The categories within the valuation hierarchy are described as follows:

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

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

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

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

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

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

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

	As of June 30, 2022									As of March 31, 2022
	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Estimated Fair Value		Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Estimated Fair Value
Money market funds	$	11,257,630	$	-	$	-		$	11,257,630	$	6,756,993	$	-	$	-		$	6,756,993
Corporate bonds		41,246,905		25,066		(865,662	)		40,406,309		45,561,114		230,085		(637,305	)		45,153,894
Total	$	52,504,535	$	25,066	$	(865,662	)	$	51,663,939	$	52,318,107	$	230,085	$	(637,305	)	$	51,910,887

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The following table shows the gross unrealized holding losses and fair value of our available-for-sale securities with unrealized holding losses, aggregated by class of securities and length of time that individual securities had been in a continuous unrealized loss position as of June 30 and March 31, 2022.

	Less Than 12 Months					12 Months or Greater					Total
	Estimated Fair Value		Gross Unrealized Holding Losses			Estimated Fair Value		Gross Unrealized Holding Losses			Estimated Fair Value		Gross Unrealized Holding Losses
As of June 30, 2022
Corporate bonds	$	8,981,072	$	(100,920	)	$	9,554,349	$	(764,742	)	$	18,535,421	$	(865,662	)
Total	$	8,981,072	$	(100,920	)	$	9,554,349	$	(764,742	)	$	18,535,421	$	(865,662	)
As of March 31, 2022
Corporate bonds	$	6,306,750	$	(23,727	)	$	9,738,338	$	(613,578	)	$	16,045,088	$	(637,305	)
Total	$	6,306,750	$	(23,727	)	$	9,738,338	$	(613,578	)	$	16,045,088	$	(637,305	)

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

NOTE 6. INVENTORIES

Inventories are shown in the following table:

		June 30, 2022		March 31, 2022
Raw materials	$	988,317	$	987,062
Work in process		3,863,801		3,355,838
Finished goods		691,919		745,735
Total inventories	$	5,544,037	$	5,088,635

NOTE 7. STOCK-BASED COMPENSATION

Stock-based compensation expense was $7,134 for the first quarter of fiscal 2023 and $7,238 for the first quarter of fiscal 2022. We calculate the share-based compensation expense using the Black-Scholes standard option-pricing model. 

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 June 30, 2022, and we do not expect any significant unrecognized tax benefits within 12 months of the reporting date. We recognize interest and penalties related to income tax matters in income tax expense. As of June 30, 2022 we had no accrued interest related to uncertain tax positions. The tax years 2018 through 2022 remain open to examination by the major taxing jurisdictions to which we are subject. 

10

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 June 30, 2022
Operating lease cost	$	42,515
Variable lease cost		31,190
Total	$	73,705
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for leases	$	44,433
Remaining lease term	45 months
Discount rate		3.5

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

Year Ending March 31	Operating Leases
2023		117,304
2024		159,592
2025		163,224
2026		165,947
Total lease payments		606,067
Imputed lease interest		(37,687	)
Total lease liabilities	$	568,380

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 $3,598,519 as of June 30, 2022. We did not repurchase any of our Common Stock during the first quarter of fiscal 2023. 

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 $28,426 for the first quarter of fiscal 2023 and $28,584 for the first quarter of fiscal 2022.

NOTE 12. SUBSEQUENT EVENTS

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

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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, our dependence on critical suppliers and packaging vendors, uncertainties related to the economic environments in the industries we serve, uncertainties related to future sales and revenues, 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, 2022.

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

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

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

	Percentage of Revenue Quarter Ended June 30				Quarter- to-Quarter
	2022		2021		Change
Revenue
Product sales	96.4	%	97.2	%	1.7	%
Contract research and development	3.6	%	2.8	%	32.1	%
Total revenue	100.0	%	100.0	%	2.6	%
Cost of sales	22.5	%	24.7	%	(6.7)	%
Gross profit	77.5	%	75.3	%	5.6	%
Expenses
Research and development	8.2	%	11.3	%	(25.5)	%
Selling, general, and administrative	5.1	%	6.6	%	(20.4)	%
Total expenses	13.3	%	17.9	%	(23.7)	%
Income from operations	64.2	%	57.4	%	14.7	%
Interest income	3.9	%	4.1	%	(2.3)	%
Income before taxes	68.1	%	61.5	%	13.5	%
Provision for income taxes	11.7	%	11.5	%	4.3	%
Net income	56.4	%	50.0	%	15.7	%

Total revenue for the quarter ended June 30, 2022 (the first quarter of fiscal 2023) increased 3% compared to the quarter ended June 30, 2021 (the first quarter of fiscal 2022). The increase was due to a 2% increase in product sales and a 32% increase in contract research and development revenue.

The increase in contract research and development revenue was due to new contracts.

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

Total expenses decreased 24% for the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022 due to a 26% decrease in research and development expense and a 20% decrease in selling, general, and administrative expense. The decrease in research and development expense was primarily due to the reallocation of resources from research and development to revenue-generating activities. The decrease in selling, general, and administrative expense was primarily due to decreased employee compensation expense.

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

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

The Impact of the COVID-19 Pandemic

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

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Liquidity and Capital Resources

Overview

Cash and cash equivalents were $13,299,264 as of June 30, 2022 compared to $10,449,510 as of March 31, 2022. The $2,849,754 increase in cash and cash equivalents during first quarter of fiscal 2023 was due to $3,331,143 in net cash provided by operating activities and $4,349,437 of cash provided by investing activities, partially offset by $4,830,826 of cash used in financing activities.

Operating Activities

Net cash provided by operating activities related to product sales and research and development contract revenue as our primary source of working capital for the current and prior-year quarters. Net cash provided by operating activities was $3,331,143 for first quarter of fiscal 2023 and $3,300,394 for the first quarter of fiscal 2022.

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

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

Accounts payable and accrued expenses decreased $1,371,168 due to a $689,317 decrease in accrued expenses, a $648,092 decrease in accounts payable, and a $33,759 net decrease in operating lease liabilities. The decrease in accounts payable was due to the timing of vendor payments. The decrease in accrued expenses was due to decreases in accrued payroll and income taxes payable.

Investing Activities

Cash provided by investing activities during the quarter ended June 30, 2022 consisted of $9,250,000 in proceeds from maturities of marketable securities and the receipt of a $100,000 buildout allowance, partially offset by $4,976,063 marketable securities purchases and $24,500 of fixed asset purchases. Fixed asset purchases can vary from quarter to quarter depending on our needs and equipment purchasing opportunities. We have ordered and are in the process of deploying additional new production equipment to increase our capacity. Therefore, we currently expect significantly more fixed asset purchases during fiscal 2023 than the $484,579 we invested in fiscal 2022.

Financing Activities

Cash used in financing activities during the quarter ended June 30, 2022 consisted of $4,830,826 of cash dividends paid to shareholders. In addition to cash dividends to shareholders paid in first quarter of fiscal 2023, on July 20, 2022 we announced that our Board had declared a cash dividend of $1.00 per share of Common Stock, or $4,830,826 based on shares outstanding as of July 15, 2022, to be paid August 31, 2022. We plan to fund dividends through cash provided by operating activities and proceeds from maturities of marketable securities. 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, and other factors the Board may deem relevant. Furthermore, dividends may be modified or discontinued at any time without notice.

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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 Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Although there have been changes in personnel involved in our controls, processes, and procedures, our management concluded that, as of June 30, 2022, our disclosure controls and procedures were effective.

Changes in Internal Controls

During the quarter ended June 30, 2022, 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, 2022.

Item 4. Mine Safety Disclosures.

None.
 

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Item 6. Exhibits. 

Exhibit #	Description
31.1	Certification by Daniel A. Baker pursuant to Rule 13a-14(a)/15d-14(a).
31.2	Certification by Joseph P. Schmitz pursuant to Rule 13a-14(a)/15d-14(a).
32	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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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)
June 20, 2022	/s/ DANIEL A. BAKER
Date	Daniel A. Baker
	President and Chief Executive Officer
June 20, 2022	/s/ JOSEPH P. SCHMITZ
Date	Joseph P. Schmitz
	Chief Financial Officer

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