NVE CORPORATION
(Exact name of registrant as specified in its charter)

Table of Contents
 
Intellectual Property
Patents
     As of March 31, 20202021 we had more than 50 issued U.S. patents assigned to us. We also have a number of foreign patents, a number of U.S. and foreign patents pending, and we have licensed patents from others. There are no patents we regard as critical to our current business owned by us or licensed to us that expire in the next 12 months.

We have patents on advanced MRAM designs that we believe are important, including patents that relate to magnetothermal MRAM, spin-momentum MRAM, and synthetic antiferromagnetic storage. Although it is not critical to our current business, we have identified U.S. patent 6,744,086 titled “Current switched magnetoresistive memory cell” as particularly important for successful high-density, high-performance MRAMs. The patent has been reissued as RE 44,878 and expires May 15, 2022.

     Much of our intellectual property has been developed with U.S. Government support. Under federal legislation, companies normally may retain the principal worldwide patent rights to any invention developed with U.S. Government support.

     Certain of our patents cover inventions we believe may be necessary for successful high-density, high-performance MRAMs. We believe U.S. Patents 6,538,921 titled “Circuit selection of magnetic memory cells and related cell structures,” and 6,744,086 titled “Current switched magnetoresistive memory cell” are particularly important. The 6,744,086 patent has been reissued as RE 44,878 and expires May 15, 2022. The 6,538,921 patent has been reissued as RE 47,583 and expires August 14, 2021.

     We also have patents on advanced MRAM designs that we believe are important, including patents that relate to magnetothermal MRAM, spin-momentum MRAM, and synthetic antiferromagnetic storage.

Trademarks
     “NVE” and “IsoLoop” are our registered trademarks. Other trademarks we claim include “GMR Switch” and “GT Sensor.”

Working Capital Items
     Like other companies in the electronics industry, we have historically invested in capital equipment for manufacturing and testing our products, as well as research and development equipment. We have also deployed significant capital in inventories to have finished products available from stock, to receive more favorable pricing for raw materials, and to guard against raw material shortages.

Dependence on Major Customers
     We rely on several large customers for a significant percentage of our revenue, including Abbott Laboratories, Sonova AG, certain other medical device manufacturers, and certain distributors. The loss of one or more of these customers could have a material adverse effect on us.

Firm BacklogGovernment Regulations
     As of March 31, 2020 we had $223,300 of contract researchWe are subject to government regulations including, but not limited to, regulations related to environment, tax matters, securities, conflict minerals, ethics and development backlog we believed to be firm,foreign corrupt practices, import and which weexport controls, product safety and liability, workplace health and safety, labor and employment, and data privacy. We incur and expect to be filled in fiscal 2021. Certaincontinue to incur costs and expenses to comply with these regulations and may incur penalties for any failure to do so.

     Additionally, certain contracts have performance requirementsrequired us maintain facilities and milestones,personnel security clearances to protect classified information. Such clearances are subject Government audits and there can be no assurance that backlog willinvestigations, and any deficiencies or illegal activities identified during the audits or investigations could result in future revenue. Our product sales are made primarily under standard purchase orders, which are generally cancellable. Therefore product order backlog is not included in “firm backlog,”the forfeiture or suspension of payments and product sales backlog as of any particular date may not be indicative of future results. We also have certain agreements that require customers to forecast purchases; however, these agreements do not generally obligate the customer to purchase any particular quantity of products. Based on semiconductor industry practice and our experience, we do not believe that such agreements are meaningful for determining backlog amounts.civil or criminal penalties.

Environmental Matters
     We are subject to environmental laws and regulations particularly with respectstate and local laws and regulations relating to industrial waste and emissions. Compliance with these laws and regulations has not had a material impact on our capital expenditures, earnings, or competitive position to date. Existing and future environmental laws and regulations could result in expenses related to emission abatement or remediation, but we are currently unable to estimate such expenses.

Number of EmployeesHuman Capital Resources
     We had 4644 employees as of March 31, 2020. Our2021, all of whom were full-time.

     We have policies to prevent discrimination based on gender, race, disability, ethnicity, nationality, religion, sexual orientation, gender identity, or gender expression. We take affirmative action to ensure that applicants are employed, and that employees are treated during employment, can fluctuate duewithout regard to a variety of factors.their race, color, religion, sex, or national origin. We also take affirmative action to employ and advance veterans in employment.

     We offer employees free health risk assessments, wellness programs, and financial incentives for healthy biometrics.

     None of our employees are represented by a labor union or are subject to a collective bargaining agreement, and we believe we maintain good relations with our employees.

Available Information
     All reports we file with the SEC, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and proxy statements and additional proxy materials on Schedule 14A, as well as any amendments to those reports and schedules, are accessible at no cost through the “Investors” section of our Website (www.nve.com). These filings are also accessible through the SEC’s Website (www.sec.gov).
 

Table of Contents
 
ITEM 1A. RISK FACTORS.
     We caution readers that the following important factors, among others, could affect our financial condition, operating results, business prospects or any other aspect of NVE, and could cause our actual results to differ materially from that projected or estimated by us in the forward-looking statements made by us or on our behalf. Although we have attempted to list below the important factors that do or may affect our financial condition, operating results, business prospects, or any other aspect of NVE, other factors may in the future prove to be more important. New factors emerge from time to time and it is not possible for us to predict all of such factors. Similarly, we cannot necessarily assess or quantify the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in forward-looking statements.

Risks Related to our Business
We may lose revenue if any of our large customers cancel, postpone, or reduce their purchases.
     We rely on several large customers for a significant percentage of our revenue. These large customers include Abbott Laboratories, Sonova AG, certain other medical device manufacturers, and certain distributors. Although we have agreements with certain large customers, these agreements do not obligate customers to purchase from us and may not prevent price reductions. Furthermore, orders from our large customers can generally be reduced, postponed, or canceled, and a number ofsome orders have already beenwere delayed or canceled due to the effects of the COVID-19 pandemic. Any decreases in purchases, or the loss of any of our large customers, could have a significant impact on our revenue and our profitability.

We risk losing business to our competitors.
     We have a number of competitors and potential competitors, many of whom have significantly greater financial, technical, and marketing resources than us. We believe that our competition is increasing as the technology and markets mature. This has meant more competitors and more severe pricing pressure. In addition, our competitors may be narrowing or eliminating our performance advantages. We expect these trends to continue, and we may lose business to competitors or it may be necessary to significantly reduce our prices in order to acquire or retain business. These factors could cause a material adverse impact on our financial condition, revenue, gross profit margins, or income.

Failure to meet stringent customer requirements could result in the loss of key customers and reduce our sales.
     Some of our customers, including certain medical device manufacturers, have stringent technical and quality requirements that require our products to meet certain test and qualification criteria or to adopt and comply with specific quality standards. Certain customers also periodically audit our performance. Failure to meet technical or quality requirements or a negative customer audit could result in the loss of current sales revenue, customers, and future sales.

We may lose revenue if we are unable to renew customer agreements.
     We have agreements with certain customers, including a Supplier Partnering Agreement, as amended, with Abbott Laboratories, which expires January 1,November 30, 2021, and Supply Agreement, as amended, with Sonova AG, which expires March 31, 2025. We cannot predict if these agreements will be renewed, or if renewed, under what terms. Although it is possible we could continue to sell products to these customers without formal agreements, an inability to agree on mutually acceptable terms or the loss of these customers could have a significant adverse impact on our revenue and our profitability.

Changes in tax law, in our tax rates or in exposure to additional income tax liabilities may materially and adversely affect our financial condition, results of operations, and cash flows.
     Changes in law and policy relating to taxes may materially and adversely affect our financial condition, results of operations and cash flows. For example, the 2017 Federal Tax Reform Act significantly decreased our Federal income tax rate. The current administration and Congress could make changes to existing tax law such as an increase in the corporate tax rate. Changes to existing Federal or state tax laws could adversely affect our financial condition and results of operations.

We will lose revenue if government contract funding is reduced, delayed, or eliminated.
     A decrease in U.S. Government funded research or disqualification as a vendor to the U.S. Government for any reason could hamper future research and development activity and decrease related revenue. In addition to direct Government funding, certain of our non-Government customers and prospective customers depend on Government support to fund their contracts with us. Our direct and indirect Government funding depends on adequate continued funding of the agencies and their programs. Such funding is subject to the availability of Congressional appropriations and that, as a result, long-term government contracts are partially funded initially with additional funds committed only as Congress makes further appropriations. We may be requiredCertain contracts require us to maintain security clearances for facilities and personnel in ordersecurity clearances to protect classified information. Such clearances are subject Government audits and investigations, and any deficiencies or illegal activities identified during the audits or investigations could result in the forfeiture or suspension of payments and civil or criminal penalties. Furthermore, some of our Government funding has been through Small Business Innovation Research (SBIR) or Small Business Technology Transfer Research (STTR) contracts. SBIR and STTR budgets, eligibility, or funding limits may be changed by legislation or by agencies such as the Department of Defense.

Table of Contents

If we were barred for any reason from U.S. government contracts there could be a significant adverse impact on our revenue and our ability to make research and development progress.
     If we were to be charged with violation of certain laws or if the U.S. Government were to determine that we are not a “presently responsible contractor,” we could be temporarily suspended or, in the event of a violation, barred for up to three years from receiving new U.S. Government contracts or government-approved subcontracts. Additionally, we are subject to routine government audits and may be subject to investigations, and any deficiencies or illegal activities identified during the audits or investigations may result in the forfeiture or suspension of payments and civil or criminal penalties. Being barred for any reason from U.S. Government contracts could have a material adverse effect on our revenue, profits, and research and development efforts.

Table of Contents

 
Some of our products are incorporated into medical devices, which could expose us to a risk of product liability claims and such claims could seriously harm our business and financial condition.
     Certain of our products are used in medical devices, including devices that help sustain human life. We are also marketing our technology to other manufacturers of cardiac pacemakers and ICDs. Although we have indemnification agreements with certain customers including provisions designed to limit our exposure to product liability claims, there can be no assurance that we will not be subject to losses, claims, damages, liabilities, or expenses resulting from bodily injury or property damage arising from the incorporation of our products in devices sold by our customers. Our indemnifying customers may not have the financial resources to cover all liability. Existing or future laws or unfavorable judicial decisions could limit or invalidate the provisions of our indemnification agreements, or the agreements may not be enforceable in all instances. A successful product liability claim could require us to pay, or contribute to payment of, substantial damage awards, which would have a significant negative effect on our business and financial condition.
 
We may lose revenue if we are unable to maintain important certifications.
     Our quality management system is certified to the ISO 9001 standard, and we have received a letter of conformance for the International Automotive Task Force (IATF) 16949 automotive sector-specific standard. Our products are also subject to independent certification and listings including by the VDE Institute and UL LLC. These certifications are subject to a number of rigorous conditions. Failure to achieve or maintain any of these certifications or listings could cause us to be disqualified by one or more of our customers, and could have a material adverse impact on our business and revenue.
 
Federal legislation may not protect us against liability for the use of our products in medical devices and a successful liability claim could seriously harm our business and financial condition.
     Although the Biomaterials Access Assurance Act of 1998 may provide us some protection against potential liability claims, that Act includes significant exceptions to supplier immunity provisions, including limitations relating to negligence or willful misconduct. A successful product liability claim could require us to pay, or contribute to payment of, substantial damage awards, which would have a significant negative effect on our business and financial condition. Any product liability claim against us, with or without merit, could result in costly litigation, divert the time, attention, and resources of our management and have a material adverse impact on our business.

The malfunction of our products in medical devices could lead to the need to recall devices incorporating our products from the market, which may be harmful to our reputation and cause a significant loss of revenue.
     The malfunction of our products that are incorporated in medical devices could lead to the recall of existing medical devices incorporating our products. Such a recall could be harmful to our reputation for product safety and efficacy. Even if assertions that our products caused or contributed to device failure do not lead to product liability or contract claims, such assertions could harm our reputation and customer relationships. Any damage to our reputation and/or the reputation of our products, or the reputation of our customers or their products could limit the market for our and our customers’ products and harm our results of operations.

We may lose business and revenue if our critical production equipment fails.
     Our production process relies on certain critical pieces of equipment for defining, depositing, and modifying the magnetic properties of thin films. Some of this equipment was designed or customized by us, and some may no longer be in production. While we have an in-house maintenance staff, maintenance agreements for certain equipment, some critical spare parts, and back-ups for some of the equipment, we cannot be sure we could repair or replace critical manufacturing equipment were it to fail.

The loss of supply from any of our key single-source wafer suppliers could substantially impact our ability to produce and deliver products and cause loss of revenue.seriously harm our business and financial condition.
     Our critical suppliers include suppliers of certain raw silicon and semiconductor foundry wafers that are incorporated in our products. We maintain inventory of some critical wafers, but we have not identified or qualified alternate suppliers for many of the wafers now being obtained from single sources. The COVID-19 pandemic has causedIn the past fiscal year there have been industry-wide semiconductor wafer shortages of the ingots and wafer substrates that are used to make the wafers we buy, and leadtimes have increased for certain of our foundry wafers. Wafer supply interruptions for any reason, including acts of God such as floods, typhoons, cyclones, earthquakes, or pandemics could seriously jeopardize our ability to provide products that are critical to our business and operations, and may cause us to lose revenue.

Table of Contents

The loss of supply of any critical chemicals or supplies could impact our ability to produce and deliver products and cause loss of revenue.
     There are a number of critical chemicals and supplies that we require to make products. These include certain gases, photoresists, polymers, metals, and specialized alloys. We maintain inventory of critical chemicals and materials, but in many cases we are dependent on single sources, and some of the materials could be subject to shortages or be discontinued by their suppliers at any time. Supply interruptions or shortages for any reason including interruptions due to effects of the COVID-19 pandemic, could seriously jeopardize our ability to provide products that are critical to our business and operations and may cause us to lose revenue.

Table of Contents

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 and equipment our packaging vendors need for their process. One of our packaging vendors in India was forced to suspend its factory operations infrom late March 2020 until mid-May 2020 and was permitted only limited operation from mid-May through August 2020 pursuant to a COVID-19 lockdown ordergovernment orders, and it is uncertain when they will resume operations. The COVID-19 pandemic has also caused shortages of materials and subassembliesstill not fully operational. Restrictions on our packaging vendors need forcould be reimposed in the packaging process.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.

We are subject to risks inherent in doing business in foreign countries that could impair our results of operations.
     Foreign sales are a significant portion of our revenue and we rely on suppliers in China, India, Taiwan, Thailand, and other foreign countries. Risks relating to operating in foreign markets that could impair our results of operations include economic and political instability; acts of God, including floods, typhoons, cyclones and earthquakes; public health crises including, but not limited to, the COVID-19 pandemic; difficulties in enforcement of contractual obligations and intellectual property rights; changes in regulatory requirements, tariffs, customs, duties, and other trade barriers; transportation delays; and other uncertainties relating to the administration of, or changes in, or new interpretation of, the laws, regulations, and policies of jurisdictions where we do business.

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 severely impacted global economic activity, and caused many of our important customers to delay or cancel orders. We are operating under Minnesota “Emergency Executive Order 20-20 Directing Minnesotans to Stay at Home,” which has been in effect since March 27, 2020. We are allowed to operate under the Order because the Company is in several “Critical Sectors” as defined in the Order, however future orders, could be imposed by State or Federal authorities that could limit or prohibitand disrupted 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, anysupply chains. 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.
 
We may not be able to enforce our intellectual property rights.
     We protect our proprietary technology and intellectual property by seeking patents, trademarks, and copyrights, and by maintaining trade secrets through entering into confidentiality agreements with employees, suppliers, customers, and prospective customers depending on the circumstances. We hold patents or are the licensee of others owning patented technology covering certain aspects of our products and technology. These patent rights may be challenged, rendered unenforceable, invalidated, or circumvented. Additionally, rights granted under the patents or under licensing agreements may not provide a competitive advantage to us. Efforts to enforce patent rights can involve substantial expense and may not be successful. Furthermore, others may independently develop similar, superior, or parallel technologies to any technology developed by us, or our technology may prove to infringe on patents or rights owned by others. Thus the patents held by or licensed to us may not afford us any meaningful competitive advantage. Also, our confidentiality agreements may not provide meaningful protection of our proprietary information. Our inability to maintain our proprietary rights could have a material adverse effect on our business, financial condition, and results of operations.
 
Our business success may be adversely affected if we are unable to attract and retain highly qualified employees.
     We have employment agreements with certain employees, including our Chief Executive Officer and Chief Financial Officer, but those agreements do not prevent employees from leaving the company. Competition for highly qualified management and technical personnel can be intense and we may not be able to attract and retain the personnel necessary for the development and operation of our business. The loss of the services of key personnel could have a material adverse effect on our business, financial condition, and results of operations.
 

Table of Contents
  
Our business could be negatively impacted by cyber security events or information technology disruptions.
     We face various cyber security threats, including threats to our information technology infrastructure and attempts to gain access to our proprietary or classified information, and denial-of-service attacks. Additionally, there is a risk of disruptions due to failures of our information technology infrastructure or service provider outages. We maintain policies and procedures for the mitigation of information technology risks, and we maintain data backups, backup hardware, and some redundant systems. We have experienced cyber security events and disruptions such as viruses, ransomware, hacker attacks, and limited server, Website, and e-mail outages. Although these events did not materially impact our business, future events could disrupt our operations, harm our reputation, expose us to liability, compromise our eligibility for research and development contracts involving sensitive or classified information, or have other effects including unpredictable effects.

We could incur losses on our marketable securities.
     As of March 31, 2020,2021, we held $62,691,309$54,717,626 in short-term and long-term marketable securities, representing approximately 79%75% of our total assets. Conditions and circumstances beyond our control or ability to anticipate, including the effects of the COVID-19 pandemic, can cause downgrades and increased default risk, and such downgrades or increases in default risk are possible at any time. Additionally, the assignment of a high credit rating does not preclude the risk of default on any marketable security. Defaults, default risks, or changes in market conditions could cause us to incur losses on our marketable securities, which could have a material adverse impact on our financial condition, income, or cash flows, and our ability to pay dividends.
 
Risks Related to our Industry
We face an uncertain economic environment in the industries we serve, which could adversely affect our business.
     We sell our products into the semiconductor market, which is highly cyclical and is currently being significantly affected by the COVID-19 pandemic.cyclical. We cannot predict the timing, strength, or duration of any economic slowdown or subsequent recovery, worldwide or in the industries we serve. The economic environment could have a material adverse impact on our business and revenue.

Our business and our reliance on intellectual property exposes us to litigation risks.
     If patent infringement claims or actions are asserted against us, we may be required to obtain a license or cross-license, modify our existing technology or design a new noninfringing technology. Such licenses or design modifications can be costly or could increase the cost of our products. In addition, we may decide to settle a claim or action against us, which settlement could be costly. We may also be liable for any past infringement, and we may be required to indemnify our customers against expenses relating to possible infringement. If there is an adverse ruling against us in an infringement lawsuit, an injunction could be issued barring production or sale of any infringing product. It could also result in a damage award equal to a reasonable royalty or lost profits or, if there is a finding of willful infringement, treble damages. Any of these results would increase our costs or harm our operating results.

Risks Related to our Stock
Any decisions to reduce or discontinue paying cash dividends to our shareholders could cause the market price of our common stock to decline.
     Future dividends will be subject to Board approval and will take into account factors including our results of operations, cash and marketable security balances, the timing of securities maturations, estimates of future cash requirements, fixed asset requirements, the impacts of the COVID-19 pandemic, and other factors our Board may deem relevant. Because they are generally more than our current cash flow from operations, recent and declared dividend amounts may be unsustainable. Any reduction or discontinuance by us of cash dividends could cause the market price of our common stock to decline.

The price of our common stock may be adversely affected by significant price fluctuations due to a number of factors, many of which are beyond our control.
     From time to time our stock price has decreased sharply, and could decline in the future. The market price of our common stock may be significantly affected by many factors, some of which are beyond our control, including:

	•	the announcement of new products, product enhancements, or contracts by us or our competitors;
	•	delays in our introduction of new products or technologies or market acceptance of these products or technologies;
	•	loss of customers, decreases in customers’ purchases, or decreases in customers’ purchase prices;
	•	changes in demand for our customers’ products;
	•	quarterly variations in our financial results, revenue, or revenue growth rates;
	•	speculation in the press or analyst community about our business, potential revenue, or potential earnings;
	•	general economic conditions or market conditions specific to industries we or our customers serve or may serve;
	•	legal proceedings involving us, including intellectual property litigation or class action litigation;
	•	changes in Federal corporate income tax rates or changes in other tax provisions;
	•	changes in tariffs, customs, duties, or other trade barriers in foreign jurisdictions where we purchase raw materials or sell our products;
	•	the impact or perceived impact of the COVID-19 pandemic on general economic conditions, our industry, or our revenues or net income;
	•	our stock repurchase and dividend policies and decisions.

 

Table of Contents
 
ITEM 1B. UNRESOLVED STAFF COMMENTS.
     None.

ITEM 2. PROPERTIES.
     Our principal executive offices and manufacturing facility are located at 11409 Valley View Road, Eden Prairie, Minnesota, 55344, and leased under an agreement expiring March 31, 2026. The space consists of 21,362 square feet of offices, laboratories, and production areas. The facility is currently being utilized at less than maximum capacity to allow for growth, and we believe the facility is adequate to meet our current requirements. We hold no investments in real estate.

ITEM 3. 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 4. MINE SAFETY DISCLOSURES.
     Not applicable.
 
 

PART II

 
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information and Dividends
     Our Common Stock trades on the Capital Market tier of the NASDAQ Stock Market under the symbol NVEC.

     Dividends have been funded from net cash provided by operating activities and proceeds from maturities of marketable securities. Our dividend policy is subject to change at any time, and future dividends will be subject to Board approval and subject to the company’s results of operations, cash and marketable security balances, our forecasts of future cash requirements, and other factors our Board may deem relevant.

Shareholders
     We have approximately 6261 shareholders of record as of April 21, 2020. A substantially greater number of16, 2021. There are also several thousand beneficial holders of our common stock arein “street name” or beneficial holders,name,” whose shares of record are held by banks, brokers, and other financial institutions.

Securities Authorized for Issuance Under Equity Compensation Plans
     Information regarding our securities authorized for issuance under equity compensation plans will be included in the section “Equity Compensation Plan Information” of our Proxy Statement for our 20202021 Annual Meeting of Shareholders, and is incorporated by reference into Item 12 of this Report.

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. We repurchased 12,9721,806 shares of our Common Stock in fiscal 2020. We did not repurchase2021 and 12,972 shares in fiscal 2019.2020. The remaining authorization was $3,853,459$3,762,040 as of March 31, 2020.2021. Common Stock repurchases during each quarter of fiscal 2020,2021, all of which were made as part of our publicly announced program, were as follows:
 

							Total number of		Max. approximate								Total number of		Max. approximate
Period		Total		Average			shares purchased		dollar value of			Total		Average			shares purchased		dollar value of
		number		price			as part of publicly		shares that may			number		price			as part of publicly		shares that may
		of shares		paid			announced		yet be purchased			of shares		paid			announced		yet be purchased
		purchased		per share			program		under the program			purchased		per share			program		under the program
April 1, 2019 – June 30, 2019		-		$	-		-		$
July 1, 2019 – September 30, 2019		-		$	-		-		$
October 1, 2019 – December 31, 2019		-		$	-		-		$	4,540,806
January 1, 2020 – March 31, 2020		12,972		$	52.99		12,972		$	3,853,374
April 1, 2020 – June 30, 2020												-		$	-		-		$	3,853,459
July 1, 2020 – September 30, 2020												1,806		$	50.62		1,806		$	3,762,040
October 1, 2020 – December 31, 2020												-		$	-		-		$	3,762,040
January 1, 2021 – March 31, 2021												-		$	-		-		$	3,762,040
		12,972					12,972					1,806					1,806

 
 

Table of Contents
 
Common Stock repurchases during the fourth quarter of fiscal 2020 were as follows:

							Total number of		Max. approximate
Period		Total		Average			shares purchased		dollar value of
		number		price			as part of publicly		shares that may
		of shares		paid			announced		yet be purchased
		purchased		per share			program		under the program
January 1, 2020 – January 31, 2020		-		$	-		-		$	4,540,806
February 1, 2020 – February 29, 2020		-		$	-		-		$	4,540,806
March 1, 2020 – March 31, 2020		12,972		$	52.99		12,972		$	3,853,374
		12,972					12,972

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
     You should read this discussion together with our financial statements and notes included elsewhere in this Report. In addition to historical information, the following discussion contains forward-looking information that involves risks and uncertainties. Our actual future results could differ materially from those presently anticipated due to a variety of factors, including those discussed in Item 1A of this Report.

General
     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. We manufacture high-performance spintronic products including sensors and couplers to revolutionize data sensing and transmission. We also receive contracts for research and development and are a licensor of spintronic magnetoresistive random access memory technology, commonly known as MRAM.

Application of Critical Accounting Policies and Estimates
     In accordance with SEC guidance, those material accounting policies that we believe are the most critical to an investor’s understanding of our financial results and condition and require complex management judgment are discussed below.

Investment Valuation
     Our investments consist primarily of corporate obligations. We have generally invested excess cash in high-quality investment grade long-term marketable securities with less than five years to maturity. We classify all of our marketable securities as available-for-sale, thus securities are recorded at fair value and any associated unrealized gain or loss, net of tax, is included as a separate component of shareholders’ equity, “Accumulated other comprehensive income.” If we judged a decline in fair value for any security to be other than temporary, the cost basis of the individual security would be written down and a charge recognized to net income. The fair values for our securities are determined based on quoted market prices as of the valuation date and observable prices for similar assets. We consider a number of factors in determining whether other-than-temporary impairment exists, including: credit market conditions; the credit ratings of the securities; historical default rates for securities of comparable credit rating; the presence of insurance of the securities and, if insured, the credit rating and financial condition of the insurer; the effect of market interest rates on the value of the securities; and the duration and extent of any unrealized losses. We also consider the likelihood that we will be required to sell the securities prior to maturity based on our financial condition and anticipated cash flows. If any of these conditions and estimates change in the future, or, if different estimates are used, the fair value of the investments may change significantly and could result in other-than-temporary decline in value, which could have an adverse impact on our results of operations.

Inventory Valuation
     Inventories are stated at the lower of cost or net realizable value. Cost is determined by the first in, first out method. Where there is evidence that inventory could be disposed of at less than carrying value, the inventory is written down to the net realizable value in the current period. Additionally, we periodically examine our inventory in the context of inventory turnover, sales trends, competition and other market factors, and we record provisions to inventory reserve when we determine certain inventory is unlikely to be sold. If reserved inventory is subsequently sold, corresponding reductions in inventory and inventory reserves are made. Our inventory reserve was $230,000 as of March 31, 2021 and $210,000 as of March 31, 2020 and $190,000 as of March 31, 2019.2020.

Deferred Tax Assets Estimation
     In determining the carrying value of our net deferred tax assets, we must assess the likelihood of sufficient future taxable income in certain tax jurisdictions, based on estimates and assumptions to realize the benefit of these assets. We evaluate the realizability of the deferred assets quarterly and assess the need for valuation allowances or reduction of existing allowances quarterly. No valuation allowance was recorded as we believe it is more likely than not that all of the deferred tax assets will be realized.

     We had $108,119$73,538 of net deferred tax assets as of March 31, 20202021 and $353,735$108,119 as of March 31, 2019.2020. Net deferred tax assets included $65,218$75,189 in deferred tax assets for stock-based compensation deductions as of March 31, 20202021 and $62,671$65,218 as of March 31, 2019.2020.
 

Table of Contents
 
Results of Operations
     The following table summarizes the percentage of revenue and year-to-year changes for various items for the last two fiscal years:
 

	Percentage of Revenue Year Ended March 31						Year- to-Year Change		Percentage of Revenue Year Ended March 31						Year- to-Year Change
	2020			2019					2021			2020
Revenue
Product sales	96.0	%		95.5	%		(3.5	)%	96.1	%		96.0	%		(15.8	)%
Contract research and development	4.0	%		4.5	%		(14.3	)%	3.9	%		4.0	%		(18.4	)%
Total revenue	100.0	%		100.0	%		(4.0	)%	100.0	%		100.0	%		(15.9	)%
Cost of sales	19.2	%		19.7	%		(6.3	)%	19.3	%		19.2	%		(15.7	)%
Gross profit	80.8	%		80.3	%		(3.5	)%	80.7	%		80.8	%		(16.0	)%
Expenses
Research and development	14.5	%		15.5	%		(10.2	)%	14.9	%		14.5	%		(13.7	)%
Selling, general, and administrative	5.2	%		4.6	%		7.6	%	6.2	%		5.2	%		(0.1	)%
Total expenses	19.7	%		20.1	%		(6.1	)%	21.1	%		19.7	%		(10.1	)%
Income from operations	61.1	%		60.2	%		(2.6	)%	59.6	%		61.1	%		(17.9	)%
Interest income	7.0	%		6.7	%		0.1	%	7.1	%		7.0	%		(16.2	)%
Income before taxes	68.1	%		66.9	%		(2.3	)%	66.7	%		68.1	%		(17.7	)%
Income tax provision	10.9	%		12.1	%		(13.3	)%	12.0	%		10.9	%		(8.2	)%
Net income	57.2	%		54.8	%		0.1	%	54.7	%		57.2	%		(19.5	%

 
     Total revenue for fiscal 20202021 decreased 4%16% compared to fiscal 20192020 due to a 4%16% decrease in product sales and a 14%18% decrease in contract research and development revenue. The decrease in product sales was primarily due to decreased purchases by existing customers. The decrease in contract research and development revenue was due to the completion of certain contracts.

     Gross profit margin for fiscal 2020 increased to 81% from 80% for fiscal 2019 due to a more profitable revenue mix.
 
     Total expenses decreased 6%10% for fiscal 20202021 compared to fiscal 20192020 due primarily to a 10%14% decrease in research and development expense, partially offset by an 8% increase in selling, general, and administrative expense. The decrease in research and development expense was primarily due to the completion of certain new productnew-product development projects. The increase in selling, general, and administrative expense was

     Interest income for fiscal 2021 decreased 16% due to increased sales activitiesa decrease in our available-for-sale securities and staffing changes.a decrease in the average interest rates on those securities.

     Our effective tax rate for fiscal 2021 was 18% of income before taxes compared to 16% for fiscal 2020. The provisionsmaller effective rate for income taxes decreased 13%fiscal 2020 was due to tax benefits from the Federal Tax Reform Act enacted in 2017. Our effective tax rate for fiscal 2020 was 16% of income before taxes compared to 18% for fiscal 2019. We currently expect our tax rate for fiscal 20212022 to be approximately 18%.

     The increasedecrease in net income in fiscal 20202021 compared to the prior year was primarily due to a decreasedecreases in researchrevenue and development expense and a decrease in the provision forinterest income, taxes, partially offset by an increase in selling, general, and administrative expense and a decrease in total revenue.expenses.
 
The Impact of the COVID-19 Pandemic
     We believe the COVID-19 pandemic had a slight negativesignificant impact on our results of operations in late fiscal 2020 due to deteriorating business conditions, especially in China. We currently expect significant decreases in total revenue and net income for the quarter ending June 30, 2020 comparedfiscal 2021 due to the prior-year quarter due toits effects on market conditions in certain industries, especially medical devices. We believe the effects of the COVID-19 pandemic on general economic conditions, market conditionsour business began to subside in industries we and our customers serve, and supply-chain disruptions affecting our ability to produce certain products. Total revenue and net income will likely continue to decrease for quarters beyond June 30, 2020 compared to prior-year quarters due to the effectssecond half of the COVID-19 pandemic.fiscal 2021.

Liquidity and Capital Resources
Overview
     Cash and cash equivalents were $10,427,340 as of March 31, 2021 compared to $8,065,594 as of March 31, 2020 compared to $6,877,304 as of March 31, 2019.2020. The $1,188,290$2,361,746 increase in cash and cash equivalents was due to $15,895,773$13,364,832 in net cash provided by operating activities and $5,251,629$8,424,873 net cash provided by investing activities, less $19,959,112partially offset by $19,427,959 net 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 fiscal 20202021 and 2019.2020. Net cash provided by operating activities was $13,364,832 for fiscal 2021 and $15,895,773 for fiscal 2020 and $14,218,994 for fiscal 2019.2020.
 

Table of Contents
 
     Inventory decreased $380,426 in fiscal 2020 primarily due to the timing of raw material purchases. Accounts receivable decreased $301,620$729,737 primarily due to the timing of sales to and payments from customers.

Investing Activities
     Net cash provided by investing activities in fiscal 20202021 was due to marketable security maturities of $12,500,000,$19,000,000, partially offset by marketable security purchases of $7,196,330$10,512,400 and fixed assets purchases of $52,041.$62,727.

     Purchases of fixed assets were $62,727 in fiscal 2021 and $52,041 in fiscal 2020 and $68,265 in fiscal 2019.2020. Purchases were primarily for capital equipment and leasehold improvements to speed new product development and were financed with cash provided by operating activities. Our capital expenditures have been significantly higher in prior years and can vary from year to year depending on our needs and equipment purchasing opportunities.
 
Financing Activities
     Net cash used in financing activities in fiscal 20202021 was due to $19,384,040$19,336,540 in cash dividends to shareholders and $687,432$91,419 in repurchases of our common stock, partially offset by net proceeds from the sale of common stock of $112,360 from stock option exercises.stock.

     In addition to cash dividends to shareholders paid in fiscal 2020,2021, on May 6, 20205, 2021 we announced that our Board had declared a cash dividend of $1.00 per share of Common Stock, or $4,835,038$4,833,232 based on shares outstanding as of May 1, 2020,April 30, 2021, to be paid May 29, 2020.31, 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 believe our working capital and cash generated from operations will be adequate for our needs at least through fiscal 2021.

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.2022.
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
     Financial statements and accompanying notes are included in this Report beginning on page F-1.
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
     None.

ITEM 9A. 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 of March 31, 2020,2021, our disclosure controls and procedures were effective.

Management’s Report on Internal Control Over Financial Reporting
     Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. Our management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of March 31, 2020.2021. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in the 2013 Internal Control—Integrated Framework. Based on our assessment using the criteria set forth by COSO in the 2013 Internal Control—Integrated Framework, management concluded that our internal control over financial reporting was effective as of March 31, 2021.

ITEM 9B. OTHER INFORMATION.
     Effective as of April 30, 2021 we executed Amendment No. 7 to our Supplier Partnering Agreement dated January 3, 2006 by and between Pacesetter, Inc., now a subsidiary of Abbott Laboratories, and us, as amended by Amendment No. 1 to the Agreement dated September 6, 2007, Amendment No. 2 dated December 15, 2009, Amendment No. 3 dated September 13, 2010, Amendment No. 4 dated February 1, 2011, Amendment No. 5 dated April 20, 2016, and Amendment No. 6 dated December 18, 2020. We supply products to Abbott Laboratories under the Supplier Partnering Agreement as amended. The Amendment extends the Supplier Partnering Agreement term through November 30, 2021. The Amendment is filed as Exhibit 10.18 to this Annual Report on Form 10-K.
 

Table of Contents

     Under an amendment recently adopted by the SEC to the definition of “accelerated filer” pursuant to Rule 12b-2 under the Securities Exchange Act of 1934, we now qualify as a “smaller reporting company” and are therefore no longer required to have an audit of our internal control over financial reporting by an independent registered public accounting firm.

     Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within NVE have been detected. Our internal controls over financial reporting, however, are designed to provide reasonable assurance that the objectives of internal control over financial reporting are met.

Changes in Internal Controls
     During the quarter ended March 31, 2020,2021, 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.
 
ITEM 9B. OTHER INFORMATION.
     We amended our Bylaws to allow our meetings of shareholders to be held by means of remote communication (often referred to as “virtual meetings”). This provides us with additional options for our annual meetings of shareholders, especially with limitations on public movement and the size of gatherings during the COVID-19 pandemic. We also modernized and clarified certain sections of the Bylaws. Our Bylaws as amended are filed as Exhibit 3.2 to this Report.

PART III

 
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
     The section titled “Proposal 1. Election of Board of Directors” to be included in our Proxy Statement for our 20202021 Annual Meeting of Shareholders sets forth certain information regarding our directors and executive officers required by Item 10, the section titled “Information About Our Executive Officers” sets forth information regarding our executive officers required by Item 10, and the section titled “Corporate Governance” sets forth information regarding our corporate governance and code of ethics required by Item 10. The information in these sections to be included in our Proxy Statement for our 20202021 Annual Meeting of Shareholders are incorporated by reference into this section.

ITEM 11. EXECUTIVE COMPENSATION.
     The information in the sections “Executive Compensation,” “Compensation Discussion and Analysis,” “Corporate Governance – Board Committees – Compensation Committee Interlocks and Insider Participation,” and “Director Compensation” to be included in our Proxy Statement for our 20202021 Annual Meeting of Shareholders is incorporated by reference into this section.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
     The information in the sections “Equity Compensation Plan Information” and “Security Ownership” to be included in our Proxy Statement for our 20202021 Annual Meeting of Shareholders is incorporated by reference into this section. Information regarding the material features of our 2000 Stock Option Plan, as amended, is contained in Note 5 to the Financial Statements included elsewhere in this Report.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
     The information in the sections “Security Ownership – Transactions With Related Persons, Promoters, and Certain Control Persons” and “Corporate Governance – Board Composition and Independence” to be included in our Proxy Statement for our 20202021 Annual Meeting of Shareholders is incorporated by reference into this section.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
     The information in the sections “Audit Committee Disclosure – Fees Billed to Us by Our Independent Registered Public Accounting Firm During Fiscal 2020 and 2019” and “Audit Committee Disclosure – Audit Committee Pre-Approval Policy” to be included in our Proxy Statement for our 20202021 Annual Meeting of Shareholders is incorporated by reference into this section.
 

PART IV
 

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a) Financial Statements and Schedules
     Financial statements are provided pursuant to Item 8 of this Report. Certain financial statement schedules have been omitted because they are not required, not applicable, or the required information is provided in other financial statements or the notes to the financial statements.
 

Table of Contents

(b) Exhibits
     The following is a list of exhibits:
 

Exhibit #	Description
3.1	Amended and Restated Articles of Incorporation of the company as amended by the Board of Directors effective November 21, 2002 (incorporated by reference to the Form 10-QSB for the period ended December 31, 2002).
3.2	Bylaws of the company as amended by the Board of Directors effective May 6, 2020.
4	Description of the registrant’s securities registered pursuant to Section 12 of the Securities Exchange Act of 1934.
10.1	Lease dated October 1, 1998 between the company and Glenborough Properties, LP (incorporated by reference to the Form 10-QSB for the period ended September 30, 2002).
10.2	First amendment to lease between the company and Glenborough dated September 18, 2002 (incorporated by reference to the Form 10-QSB for the period ended September 30, 2002).
10.3	Second amendment to lease between the company and Glenborough dated December 1, 2003 (incorporated by reference to the Form 10-QSB for the period ended December 31, 2003).
10.4	Third amendment to lease between the company and Carlson Real Estate (incorporated by reference to the Form 8-K/A filed December 20, 2007).
10.5	Fourth amendment to lease between the company and the Barbara C. Gage Revocable Trust (incorporated by reference to our Current Report on Form 8-K/A filed August 3, 2011).
10.6	Fifth amendment to lease between the company and GRE – Bryant Lake, LLC (incorporated by reference to our Current Report on Form 8-K/A filed March 3, 2020).
10.7†	Employment Agreement between the company and Daniel A. Baker dated January 29, 2001 (incorporated by reference to the Form 10-KSB for the year ended March 31, 2001).
10.8†	NVE Corporation 2000 Stock Option Plan as Amended July 19, 2001 by the shareholders (incorporated by reference to our Registration Statement on Form S-8 filed July 20, 2001).
10.9	Indemnification Agreement by and between Pacesetter, Inc., a St. Jude Medical Company, d.b.a. St. Jude Medical Cardiac Rhythm Management Division, and the company (incorporated by reference to the Form 8-K filed September 27, 2005).
10.10+	Supplier Partnering Agreement by and between St. Jude and the company (incorporated by reference to the Form 8-K filed January 4, 2006).
10.11+	Amendment No. 1 to Supplier Partnering Agreement between St. Jude and the company (incorporated by reference to the Form 8-K/A filed September 10, 2007).
10.12+	Amendment No. 2 to Supplier Partnering Agreement between St. Jude and the company (incorporated by reference to the Form 8-K/A filed December 18, 2009).
10.13+	Amendment No. 3 to Supplier Partnering Agreement between St. Jude and the company (incorporated by reference to the Form 8-K/A filed September 16, 2010).
10.14	Amendment No. 4 to Supplier Partnering Agreement between St. Jude and the company (incorporated by reference to the Form 8-K/A filed February 7, 2011).
10.15	Supplier Quality Agreement between St. Jude and the company (incorporated by reference to the Form 8-K filed February 10, 2016).
10.16	Amendment No. 5 to Supplier Partnering Agreement between St. Jude and the company (incorporated by reference to the Form 8-K/A filed April 21, 2016).
10.17+10.17	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).
10.18	Amendment No. 7 to Supplier Partnering Agreement between Abbott and the company (filed with this Annual Report on Form 10-K).
10.19+	Supply Agreement by and between the company and Sonova AG (incorporated by reference to the Form 8-K/A filed November 16, 2015).
10.18*10.20*	First Amendment to Supply Agreement by and between the company and Sonova AG (incorporated by reference to the Form 8-K/A filed February 18, 2020).
23.1	Consent of Boulay PLLPPLLP..
23.2	Consent of Grant Thornton LLP.
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

†Indicates a management contract or compensatory plan or arrangement.
 
+Confidential portions deleted and filed separately with the SEC.
 
*Certain confidential portions redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K. The omitted information is (i) not material and (ii) would likely cause us competitive harm if publicly disclosed. We agree to furnish supplementally an unredacted copy of the exhibit to the Securities and Exchange Commission on its request.

Table of Contents
 
ITEM 16. FORM 10-K SUMMARY.
     We have elected not to include an optional Form 10-K Summary.
 
 

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 its behalf by the undersigned, thereunto duly authorized.

NVE CORPORATION
          (Registrant)

/s/Daniel A. Baker
by Daniel A. Baker
President and Chief Executive Officer

Date    May 6, 20205, 2021

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name	Title	Date
/s/Terrence W. Glarner Terrence W. Glarner	Director and Chairman of the Board	May 6, 20205, 2021
/s/Daniel A. Baker Daniel A. Baker	Director, President & Chief Executive Officer (Principal Executive Officer)	May 6, 20205, 2021
/s/Curt A. Reynders Curt A. Reynders	Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer)	May 6, 20205, 2021
/s/Patricia M. Hollister Patricia M. Hollister	Director	May 6, 20205, 2021
/s/Richard W. Kramp Richard W. Kramp	Director	May 6, 20205, 2021
/s/Gary R. Maharaj Gary R. Maharaj	Director	May 6, 20205, 2021

Table of Contents
 

 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Board of Directors and Shareholders of
NVE Corporation

Opinion on the Financial Statements
We have audited the accompanying balance sheetsheets of NVE Corporation (the Company) as of March 31, 2021 and 2020, and the related statements of income, comprehensive income, shareholders' equity, and cash flows for each of the yearyears in the two-year period ended March 31, 2020,2021, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2021 and 2020, and the results of its operations and its cash flows for each of the yearyears in the two-year period ended March 31, 2020,2021, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit.audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our auditaudits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit,audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our auditaudits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our auditaudits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit providesaudits provide a reasonable basis for our opinion.

Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) related to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition – Refer to Note 1 to the Financial Statements

Description of the Matter
The Company recognizes revenue from product sales to customers and distributors upon satisfaction of the performance obligation, at a point in time, upon product shipment or delivery to its customer or distributor as determined by agreed upon shipping terms. Additionally, the Company recognizes contract research and development revenue over a period of time as the performance obligation is satisfied over a period of time. Each research and development contract has specifications unique to each customer and does not create an asset with an alternate use, and the Company has an enforceable right to payment for performance completed to date. The Company recognizes revenue over a period of time based on an input method using costs incurred as the measurement of progress towards completion.

Table of Contents

Significant judgment is exercised by the Company in determining revenue recognition for these customer agreements, and includes the following:

	•	Determination of whether products and services are considered distinct performance obligations that should be accounted for separately versus together as it relates to product sales and research and development contracts.
	•	Determination of stand-alone selling prices for each distinct performance obligation and for products and services that are not sold separately.
	•	The pattern of delivery (i.e., timing of when revenue is recognized) for each distinct performance obligation.
	•	Estimation of variable consideration when determining the amount of revenue to recognize (e.g., customer credits, incentives, and in certain instances, estimation of customer usage of products and services).

Given these factors, the related audit effort in evaluating management’s judgments in determining revenue recognition for these customer agreements was extensive and required a high degree of auditor judgment.

How the Critical Audit Matter Was Addressed in the Audit
Our principal audit procedures related to the Company’s revenue recognition for these customer agreements included the following:

	•	We evaluated the Company’s accounting policies and related disclosures for compliance with applicable revenue recognition accounting guidance.
	•	We obtained an understanding of the design and implementation of internal controls related to the Company’s revenue recognition process, including the identification of performance obligations and allocation of transaction price.
	•	We performed analytical procedures to test the reasonableness of recorded balances.
	•	We performed procedures to test the transactions were recorded in the appropriate accounting period.
	•	We selected a sample of product sales and contract research agreements and performed the following procedures:

	–	Tested the existence and accuracy of the transaction by obtaining and agreeing terms to the underlying contract.
	–	Evaluated management’s identification of significant terms for completeness, including the identification of distinct performance obligations and variable consideration.
	–	We evaluated the reasonableness of management’s estimate of stand-alone selling prices for products and services that are not sold separately.
	–	Tested the underlying costs driving recognition of revenue related to contract research and development contracts.
	–	Evaluated whether the transaction was accounted for in accordance with the Company’s policies.

 
 
/s/ Boulay PLLP
We have served as the Company’s auditor since May 8, 2019.

Minneapolis, Minnesota
May 6, 2020

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM5, 2021
 
Board of Directors and Shareholders
NVE Corporation

Opinion on the financial statements
We have audited the accompanying balance sheet of NVE Corporation (a Minnesota corporation) (the “Company”) as of March 31, 2019, the related statements of income, comprehensive income, shareholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2019, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.


/s/ Grant Thornton LLP
We served as the Company’s auditor from 2014 through 2019 and are now the predecessor auditor.

Minneapolis, Minnesota
May 1, 2019

Table of Contents
 

NVE CORPORATION
BALANCE SHEETS
 

	March 31, 2020				March 31, 2019			March 31, 2021				March 31, 2020
ASSETS															Current assets
Cash and cash equivalents	$	8,065,594			$	6,877,304		$	10,427,340			$	8,065,594
Marketable securities, short-term		19,084,814				12,487,821			7,678,957				19,084,814
Accounts receivable, net of allowance for uncollectible accounts of $15,000		2,694,018				2,995,638			1,964,281				2,694,018
Inventories		3,884,450				4,264,876			3,900,777				3,884,450
Prepaid expenses and other assets	655,835				816,045			391,278				655,835
Total current assets		34,384,711				27,441,684			24,362,633				34,384,711
Fixed assets
Machinery and equipment		9,280,062				9,365,806			9,254,664				9,280,062
Leasehold improvements	1,797,245				1,787,269			1,810,872				1,797,245
		11,077,307				11,153,075			11,065,536				11,077,307
Less accumulated depreciation and amortization	10,494,840				10,258,240			10,728,853				10,494,840
Net fixed assets		582,467				894,835			336,683				582,467
Deferred tax assets	108,119				353,735			73,538				108,119
Marketable securities, long-term	43,606,495				54,925,633			47,038,669				43,606,495
Right-of-use asset – operating lease	816,358				-			689,216				816,358
Total assets	$	79,498,150			$	83,615,887		$	72,500,739			$	79,498,150
															LIABILITIES AND SHAREHOLDERS’ EQUITY															Current liabilities
Accounts payable	$	186,993			$	375,188		$	336,591			$	186,993
Accrued payroll and other	482,074				460,488			540,474				482,074
Operating lease	127,134				-			150,273				127,134
Total current liabilities		796,201				835,676			1,027,338				796,201
Operating lease	706,600				-			581,459				706,600
Total liabilities	1,502,801				835,676			1,608,797				1,502,801
															Shareholders’ equity
Common stock, $0.01 par value, 6,000,000 shares authorized; 4,835,038 issued and outstanding as of March 31, 2020 and 4,846,010 as of March 31, 2019		48,350				48,460
Common stock, $0.01 par value, 6,000,000 shares authorized; 4,833,232 issued and outstanding as of March 31, 2021 and 4,835,038 as of March 31, 2020									48,332				48,350
Additional paid-in capital		19,383,956				19,910,558			19,338,127				19,383,956
Accumulated other comprehensive income (loss)		516,523				(82,725	)
Accumulated other comprehensive income									1,101,119				516,523
Retained earnings	58,046,520				62,903,918			50,404,364				58,046,520
Total shareholders’ equity	77,995,349				82,780,211			70,891,942				77,995,349
Total liabilities and shareholders’ equity	$	79,498,150			$	83,615,887		$	72,500,739			$	79,498,150

 

See accompanying notes.

Table of Contents
 

NVE CORPORATION
STATEMENTS OF INCOME
 

	Year Ended March 31							Year Ended March 31
	2020				2019			2021				2020
Revenue
Product sales	$	24,400,192			$	25,291,306		$	20,540,557			$	24,400,192
Contract research and development	1,011,971				1,181,031			825,689				1,011,971
Total revenue		25,412,163				26,472,337			21,366,246				25,412,163
Cost of sales	4,889,295				5,216,112			4,121,461				4,889,295
Gross profit	20,522,868				21,256,225			17,244,785				20,522,868
Expenses
Research and development		3,690,539				4,107,692			3,184,754				3,690,539
Selling, general, and administrative	1,317,543				1,223,971			1,316,427				1,317,543
Total expenses	5,008,082				5,331,663			4,501,181				5,008,082
Income from operations		15,514,786				15,924,562			12,743,604				15,514,786
Interest income		1,787,117				1,785,277			1,498,148				1,787,117
Income before taxes		17,301,903				17,709,839			14,241,752				17,301,903
Provision for income taxes	2,775,261				3,201,903			2,547,368				2,775,261
Net income	$	14,526,642			$	14,507,936		$	11,694,384			$	14,526,642
Net income per share – basic	$	3.00			$	3.00		$	2.42			$	3.00
Net income per share – diluted	$	3.00			$	2.99		$	2.42			$	3.00
Cash dividends declared per common share	$	4.00			$	4.00		$	4.00			$	4.00
Weighted average shares outstanding
Basic	4,845,627		4,844,010					4,834,054		4,845,627
Diluted	4,847,294		4,850,567					4,834,462		4,847,294

 
  
STATEMENTS OF COMPREHENSIVE INCOME

	Year Ended March 31							Year Ended March 31
	2020				2019			2021				2020
Net income	$	14,526,642			$	14,507,936		$	11,694,384			$	14,526,642
Unrealized gain from marketable securities, net of tax	599,248				893,275			584,596				599,248
Comprehensive income	$	15,125,890			$	15,401,211		$	12,278,980			$	15,125,890

 
 
See accompanying notes.

Table of Contents
 

NVE CORPORATION
STATEMENTS OF SHAREHOLDERS’ EQUITY
 

						Additional Paid-In Capital				Accumulated Other Comprehen- sive Income (Loss)				Retained Earnings												Additional Paid-In Capital				Accumulated Other Comprehen- sive Income (Loss)				Retained Earnings
	Common Stock
	Shares		Amount		Total			Shares											Amount		Total
Balance as of March 31, 2018	4,842,010		$	48,420		$	19,599,298			$	(915,635	)		$	67,709,657			$	86,441,740
Exercise of stock options	4,000			40			217,900												217,940
Comprehensive income:
Unrealized gain on marketable securities, net of tax											893,275		893,275
Net income															14,507,936				14,507,936
Total comprehensive income																			15,401,211
Stock-based compensation						93,360												93,360
Cash dividends declared ($4.00 per share of common stock)														(19,374,040		)		(19,374,040		)
Cumulative effect of accounting change											(60,365	)		60,365
Balance as of March 31, 2019	4,846,010			48,460			19,910,558				(82,725	)			62,903,918				82,780,211		4,846,010		$	48,460		$	19,910,558			$	(82,725	)		$	62,903,918			$	82,780,211
Exercise of stock options	2,000			20			112,340												112,360		2,000			20			112,340												112,360
Repurchase of common stock	(12,972	)		(130	)		(687,302	)											(687,432	)	(12,972	)		(130	)		(687,302	)											(687,432	)
Comprehensive income:
Unrealized gain on marketable securities, net of tax											599,248		599,248																		599,248		599,248
Net income															14,526,642				14,526,642																14,526,642				14,526,642
Total comprehensive income																			15,125,890																				15,125,890
Stock-based compensation						48,360												48,360								48,360												48,360
Cash dividends declared ($4.00 per share of common stock)														(19,384,040		)		(19,384,040		)														(19,384,040		)		(19,384,040		)
Balance as of March 31, 2020	4,835,038		$	48,350		$	19,383,956			$	516,523			$	58,046,520			$	77,995,349		4,835,038		$	48,350		$	19,383,956			$	516,523			$	58,046,520			$	77,995,349
Repurchase of common stock																					(1,806	)		(18	)		(91,401	)											(91,419	)
Comprehensive income:																					Comprehensive income:
Unrealized gain on marketable securities, net of tax																															584,596		584,596
Net income																																			11,694,384				11,694,384
Total comprehensive income																																							12,278,980
Stock-based compensation																										45,572												45,572
Cash dividends declared ($4.00 per share of common stock)																																		(19,336,540		)		(19,336,540		)
Balance as of March 31, 2021																					4,833,232		$	48,332		$	19,338,127			$	1,101,119			$	50,404,364			$	70,891,942

 

See accompanying notes.

Table of Contents
 

NVE CORPORATION
STATEMENTS OF CASH FLOWS
 

	Year Ended March 31							Year Ended March 31
	2020				2019			2021				2020
OPERATING ACTIVITIES
Net income	$	14,526,642			$	14,507,936		$	11,694,384			$	14,526,642
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:							Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		549,969				705,197			542,926				549,969
Stock-based compensation		48,360				93,360			45,572				48,360
Deferred income taxes		77,779				(31,269	)		(129,155	)			77,779
Changes in operating assets and liabilities:
Accounts receivable		301,620				(106,859	)		729,737				301,620
Inventories		380,426				(614,437	)		(16,327	)			380,426
Prepaid expenses and other assets		(394,504	)			(180,885	)		391,699				(394,504	)
Accounts payable and accrued expenses		405,481				(154,049	)		105,996				405,481
Net cash provided by operating activities		15,895,773				14,218,994			13,364,832				15,895,773
															INVESTING ACTIVITIES
Purchases of fixed assets	Purchases of fixed assets	(52,041	)			(68,265	)	Purchases of fixed assets	(62,727	)			(52,041	)
Purchases of marketable securities		(7,196,330	)			(13,672,407	)		(10,512,400	)			(7,196,330	)
Proceeds from maturities and sales of marketable securities		12,500,000				20,800,000			19,000,000				12,500,000
Net cash provided by investing activities		5,251,629				7,059,328			8,424,873				5,251,629
															FINANCING ACTIVITIES
Proceeds from exercise of stock options		112,360				217,940			-				112,360
Repurchase of common stock		(687,432	)			-			(91,419	)			(687,432	)
Payment of dividends to shareholders		(19,384,040	)			(19,374,040	)		(19,336,540	)			(19,384,040	)
Net cash used in financing activities		(19,959,112	)			(19,156,100	)		(19,427,959	)			(19,959,112	)
Increase in cash and cash equivalents		1,188,290				2,122,222			2,361,746				1,188,290
Cash and cash equivalents at beginning of year	6,877,304				4,755,082			8,065,594				6,877,304
Cash and cash equivalents at end of year	$	8,065,594			$	6,877,304		$	10,427,340			$	8,065,594
															Supplemental disclosures of cash flow information:
Cash paid during the year for income taxes	$	2,586,661			$	3,426,045		$	2,438,788			$	2,586,661

 

See accompanying notes.

Table of Contents
 

NVE CORPORATION
NOTES TO FINANCIAL STATEMENTS

 
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. We operate in one reportable segment.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
     We consider all highly liquid investments with maturities of three months or less when purchased to be cash equivalents.

Fair Value of Financial Instruments
     The carrying amount of cash and cash equivalents, accounts receivable, and accounts payable approximates fair value because of the short maturity of these instruments. Fair values of marketable securities are based on quoted market prices.

Concentration of Risk and Financial Instruments
     Financial instruments potentially subject to significant concentrations of credit risk consist principally of cash equivalents, marketable securities, and accounts receivable.

     Cash and cash equivalents have been maintained in financial institutions we believe have high credit quality, however these accounts are generally in excess of federally insured amounts.

     We have invested our excess cash in corporate-backed and municipal-backed bonds and money market instruments. Our investment policy prescribes purchases of only high-grade securities, and limits the amount of credit exposure to any one issuer. The effects of the COVID-19 pandemic have degraded outlooks for some of our securities’ issuers, which may increase the risk of default on one or more securities.

     Our customers are throughout the world. We generally do not require collateral from our customers, but we perform ongoing credit evaluations of their financial condition. More information on accounts receivable is contained in the paragraph titled “Accounts Receivable and Allowance for Doubtful Accounts” of this note. The effects of the COVID-19 pandemic could increase our bad-debt risk in the future.

     Additionally, we are dependent on critical suppliers including our packaging vendors and suppliers of certain raw silicon and semiconductor wafers that are incorporated in our products. The effects of the COVID-19 pandemic have increased the risk of supply interruptions.

Accounts Receivable and Allowance for Doubtful Accounts
     We grant credit to customers in the normal course of business and at times may require customers to prepay for an order prior to shipment. Accounts receivable are recorded net of an allowance for doubtful accounts. We make estimates of the uncollectibility of accounts receivable. We specifically analyze accounts receivable, historical bad debts, and customer creditworthiness when evaluating the adequacy of the allowance. We had no charges or provisions to our allowance for doubtful accounts in fiscal 20202021 or 2019.2020.
 
Inventories
     Inventories are stated at the lower of cost or net realizable value. Cost is determined by the first in, first out method. We record inventory reserves when we determine certain inventory is unlikely to be sold based on sales trends, turnover, competition, and other market factors.
 
Product Warranty
     In general we warranty our products to be free from defects in material and workmanship for one year.

Fixed Assets
     Fixed assets are stated at cost. Depreciation of machinery and equipment is recorded over the estimated useful lives of the assets, generally five years, using the straight-line method. Amortization of leasehold improvements is recorded using the straight-line method over the lesser of the lease term or five-year useful life. We record losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount. We havedid not identifiedidentify any indicators of impairment during fiscal 20202021 or 2019.2020. Depreciation and amortization expense related to fixed assets was $308,511 for fiscal 2021 and $364,409 for fiscal 2020 and 498,813 for fiscal 2019.2020.
 

Table of Contents
 
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, uponon product shipment or delivery to our customer or distributor as determined by agreed uponon 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 March 31, 20202021 or March 31, 2019.2020.

     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.
 
Income Taxes
     We account for income taxes using the asset and liability method. Deferred income taxes are provided for temporary differences between the financial reporting and tax bases of assets and liabilities. We provide valuation allowances against deferred tax assets if we determine that it is less likely than not that we will be able to utilize the deferred tax assets.
 
Research and Development Expense Recognition
     Research and development costs are expensed as they are incurred. Customer-sponsored research and development costs are included in cost of sales.
 
Stock-Based Compensation
     We measure stock-based compensation cost at the grant date based on the fair value of the award and recognize the compensation expense over the requisite service period, which is generally the vesting period. We recognize any forfeitures as they occur.
 
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 year. Net income per diluted share amounts assume exercise of all stock options. The following table shows the components of diluted shares:
 

	Year Ended March 31			Year Ended March 31
	2020		2019	2021		2020
Weighted average common shares outstanding – basic	4,845,627	4,844,010		4,834,054	4,845,627
Dilutive effect of stock options	1,667		6,557	408		1,667
Shares used in computing net income per share – diluted	4,847,294		4,850,567	4,834,462		4,847,294

 
Use of Estimates
     The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
 

Table of Contents
  
Recently Issued Accounting Standards
Recently Adopted Accounting Standards
     In July 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-07, Codification Updates to SEC Sections—Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization, and Miscellaneous Updates. ASU 2019-07 aligns the guidance in various SEC sections of the codification with the requirements of certain SEC final rules and is effective immediately. These rules include requiring filers to include in their interim financial statements a reconciliation of changes in shareholders’ equity. We adopted all of the applicable rules for our Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 and subsequent interim reports. The adoption of ASU 2019-07 only affected presentation and disclosure.

     In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Lease Accounting. ASU 2016-02 requires recognition of lease assets and lease liabilities on the balance sheet of lessees. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842 (Leases), which provides narrow amendments to clarify how to apply certain aspects of the new lease standard. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, which is fiscal 2020 for us. In July 2018, the FASB issued ASU No. 2018-11, Leases Topic (842): Targeted Improvements. ASU No. 2018-11 provided companies an option to apply the transition provisions of the new lease standard at its adoption date instead of at the earliest comparative period presented in its financial statements, and we adopted the new lease guidance using that method in the quarter ended June 30, 2019. Currently our only lease is the lease for our facility. We recognized $298,983 of leased liabilities a right-of-use asset of $261,644 as of April 1, 2019. The leased liabilities and right-of-use asset exclude non-lease components. There was no effect on our results of operations or cash flows.

New Accounting Standards Not Yet Adopted
     In December 2019, the FASBFinancial Accounting Standards Board (“FASB”) issued ASUAccounting 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.us. 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. 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.
 

Table of Contents
 
NOTE 3. 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 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.
 
    The fair value of our available-for-sale securities as of March 31, 20202021 by maturity were as follows:

Total	Total		<1 Year			1–3 Years			3–5 Years		Total		<1 Year			1–3 Years			3–5 Years
$	70,594,742		$	26,988,247		$	28,683,823		$	14,922,672	64,860,822		$	17,822,153		$	36,716,130		$	10,322,539

     Total available-for-sale securities represented approximately 89% of our total assets. Marketable securities as of March 31, 20202021 had remaining maturities between seven20 weeks and 47 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.

Table of Contents

     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 March 31, 2020									As of March 31, 2019								As of March 31, 2021									As of March 31, 2020
	Level 1			Level 2			Total			Level 1			Level 2			Total		Level 1			Level 2			Total			Level 1			Level 2			Total
Money market funds	$	7,903,433		$	-		$	7,903,433		$	6,703,809		$	-		$	6,703,809	$	10,143,196		$	-		$	10,143,196		$	7,903,433		$	-		$	7,903,433
Corporate bonds		-			62,691,309			62,691,309			-			67,413,454			67,413,454		-			54,717,626			54,717,626			-			62,691,309			62,691,309
Total	$	7,903,433		$	62,691,309		$	70,594,742		$	6,703,809		$	67,413,454		$	74,117,263	$	10,143,196		$	54,717,626		$	64,860,822		$	7,903,433		$	62,691,309		$	70,594,742

     Our available-for-sale securities as of March 31, 20202021 and 2019,2020, aggregated into classes of securities, were as follows:

	As of March 31, 2020													As of March 31, 2019												As of March 31, 2021													As of March 31, 2020
	Amortized Cost			Gross Unrealized Holding Gains			Gross Unrealized Holding Losses				Estimated Fair Value			Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses				Estimated Fair Value		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	$	7,903,433		$	-		$	-			$	7,903,433		$	6,703,809		$	-		$	-			$	6,703,809	$	10,143,196		$	-		$	-			$	10,143,196		$	7,903,433		$	-		$	-			$	7,903,433
Corporate bonds		62,030,120			752,621			(91,432	)			62,691,309			67,519,350			315,902			(421,798	)			67,413,454		53,308,105			1,570,195			(160,674	)			54,717,626			62,030,120			752,621			(91,432	)			62,691,309
Total	$	69,933,553		$	752,621		$	(91,432	)		$	70,594,742		$	74,223,159		$	315,902		$	(421,798	)		$	74,117,263	$	63,451,301		$	1,570,195		$	(160,674	)		$	64,860,822		$	69,933,553		$	752,621		$	(91,432	)		$	70,594,742

Table of Contents
 
     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 March 31, 20202021 and 2019.2020.

																							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 March 31, 2021																						As of March 31, 2021
		Less Than 12 Months							12 Months or Greater							Total						Corporate bonds	$	10,322,539		$	(160,674	)		$	-		$		-		$	10,322,539		$	(160,674	)
		Estimated Fair Value			Gross Unrealized Holding Losses				Estimated Fair Value			Gross Unrealized Holding Losses				Estimated Fair Value			Gross Unrealized Holding Losses			Total	$	10,322,539		$	(160,674	)		$	-		$		-		$	10,322,539		$	(160,674	)
																																											As of March 31, 2020
	Corporate bonds	$	19,525,169		$	(91,432	)		$	-		$	-			$	19,525,169		$	(91,432	)	Corporate bonds	$	19,525,169		$	(91,432	)		$	-		$		-		$	19,525,169		$	(91,432	)
	Total	$	19,525,169		$	(91,432	)		$	-		$	-			$	19,525,169		$	(91,432	)	Total	$	19,525,169		$	(91,432	)		$	-		$		-		$	19,525,169		$	(91,432	)
As of March 31, 2019
	Corporate bonds	$	-		$	-			$	51,413,428		$	(421,798	)		$	51,413,428		$	(421,798	)
	Total	$	-		$	-			$	51,413,428		$	(421,798	)		$	51,413,428		$	(421,798	)

 
     We did not consider any of our available-for-sale securities to be impaired as of March 31, 2020.2021. None of the securities were impaired at acquisition, and subsequent declines in fair value are not attributed to declines in credit quality. The effects of the COVID-19 pandemic, however, have degraded outlooks for some of our marketable securities’ issuers, which could lead to credit-quality downgrades in the future. 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 March 31, 2020.2021.

NOTE 4. INVENTORIES
     Inventories are shown in the following table:
 

	March 31					March 31
	2020			2019		2021			2020
Raw materials	$	1,017,451		$	1,130,917	$	660,678		$	1,017,451
Work in process		1,863,000			2,325,238		2,220,723			1,863,000
Finished goods	1,003,999			808,721		1,019,376			1,003,999
Total inventories	$	3,884,450		$	4,264,876	$	3,900,777		$	3,884,450

 

Table of Contents

NOTE 5. STOCK-BASED COMPENSATION
Stock Option Plan
     Our 2000 Stock Option Plan, as amended, provides for issuance to employees, directors, and certain service providers of incentive stock options and nonstatutory stock options. Generally, the options may be exercised at any time prior to expiration, subject to vesting based on terms of employment. The period ranges from immediate vesting to vesting over a five-year period. The options have exercisable lives ranging from one year to ten years from the date of grant, and are generally not eligible to vest early in the event of retirement, death, disability, or change in control. Exercise prices are not less than fair market value of the underlying Common Stock at the date the options are granted. Stock-based compensation expense was $45,572 in fiscal 2021 and $48,360 in fiscal 2020 and $93,360 in fiscal 2019.2020.

Valuation assumptions
     We use the Black-Scholes standard option-pricing model to determine the fair value of stock options. The following assumptions were used to estimate the fair value of options granted:

	Year Ended March 31					Year Ended March 31
	2020			2019		2021			2020
Risk-free interest rate	1.7	%		2.9	%	0.2 – 0.4	%		1.7	%
Expected volatility	37	%		33	%	34 – 35	%		37	%
Expected life (years)	4.6			4.5		4.6			4.6
Dividend yield	5.9	%		3.7	%	7.0 – 7.4	%		5.9	%

 
     The determination of the fair value of the awards on the date of grant using the Black-Scholes model is affected by our stock price as well as assumptions of other variables, including projected stock option exercise behaviors, risk-free interest rate, and expected volatility of our stock price in future periods. Our estimates and assumptions affect the amounts reported in the financial statements and accompanying notes.

Table of Contents


Expected life
     We analyze historical exercise and termination data to estimate the expected life assumption. We believe historical data currently represents the best estimate of the expected life of a new option.

Risk-free interest rate
     The risk-free rate is based on the yield of U.S. Treasury securities on the grant date for maturities similar to the expected lives of the options.

Volatility
     We use historical volatility to estimate the expected volatility of our common stock.

Dividend yield
     We assumed a 7.0% to 7.4% dividend yield offor fiscal 2021 and 5.9% for fiscal 2020 and 3.7% for fiscal 2019 based on the dividend yield on the date the options were granted.

Tax effects of stock-based compensation
     Stock-based compensation increased deferred tax assets by $9,971 for fiscal 2021 and $10,581 for fiscal 2020 and $19,771 for fiscal 2019.2020.

General stock option information
     The following table summarizes information abouton options outstanding as of March 31, 2020, all of which were exercisable:2021:
 

Ranges of Exercise Prices		Number Outstanding		Weighted Average Exercise Price			Weighted Remaining Contractual Life (years)
$49.86 - $67.69		16,000		$	61.37		6.0
$76.13 - $107.86		8,000		92.00			7.9
		24,000		$	71.58		6.6

Ranges of Exercise Prices		Number Outstanding		Weighted Average Exercise Price			Weighted Remaining Contractual Life (years)
$49.86 – $67.69		22,000		$	59.85		5.3
$76.13 – $107.86		8,000		92.00			6.9
		30,500		$	68.28		5.7

 
     A summary of our stock options is shown in the following table:
 

	Option Shares Reserved			Options Outstanding			Weighted Average Option Exercise Price		Option Shares Reserved			Options Outstanding			Weighted Average Option Exercise Price
At March 31, 2018	139,230			22,000			$	61.19
Granted	(4,000	)		4,000			$	107.86
Exercised	-			(4,000	)		$	54.49
At March 31, 2019	135,230			22,000			$	70.89	135,230			22,000			$	70.89
Granted	(4,000	)		4,000			$	67.65	(4,000	)		4,000			$	67.65
Exercised	-			(2,000	)		$	56.18	-			(2,000	)		$	56.18
At March 31, 2020	131,230			24,000			$	71.58	131,230			24,000			$	71.58
Granted									(6,500	)		6,500			$	56.12
At March 31, 2021									124,730			30,500			$	68.28

Table of Contents
 
     The remaining weighted-average exercisable life was 5.7 years as of March 31, 2021 and 6.6 years as of March 31, 2020 and 6.7 years as of March 31, 2019. All2020. 28,000 outstanding options were exercisable as of March 31, 20202021 and 2019. The total intrinsic value24,000 outstanding options were exercisable as of options exercised during fiscal 2020 was $32,108 based on the difference between the exercise price and stock price at the time of exercise for in-the-money options.March 31, 2020. The total intrinsic value of options outstanding March 31, 2020,2021, based on our closing stock price for that day, was $2,170, all$230,540, $191,140 of which was exercisable. The total fair value of option grants was $48,360$47,140 in fiscal 2020.2021. There was no$1,568 of unrecognized stock-based compensation as of March 31, 2020.2021 related to nonvested options, which we expect to recognize in the first quarter of fiscal 2022.

NOTE 6. INCOME TAXES
     Income tax provisions for fiscal 20202021 and 20192020 consisted of the following:

	Year Ended March 31
	2020				2019
Current taxes
Federal	$	2,710,658			$	3,107,376
State	(13,176		)		125,796
Deferred taxes
Federal	74,651				(30,012		)
State	3,128				(1,257		)
Income tax provision	$	2,775,261			$	3,201,903

	Year Ended March 31
	2021				2020
Current taxes
Federal	$	2,600,670			$	2,710,658
State	75,852				(13,176		)
Deferred taxes
Federal	(123,959		)		74,651
State	(5,195		)		3,128
Income tax provision	$	2,547,368			$	2,775,261

 
     A reconciliation of income tax provisions at the U.S. statutory rate for fiscal 20202021 and 20192020 is as follows:

Table of Contents

	Year Ended March 31							Year Ended March 31
	2020				2019			2021				2020
Tax expense at U.S. statutory rate	$	3,633,400			$	3,719,066
Tax expense at U.S. Statutory rate								$	2,990,768			$	3,633,400
State income taxes, net of Federal benefit		77,989				95,430			88,909				77,989
Research and development credits		(126,320	)			-			(86,223	)			(126,320	)
Foreign-derived intangible income deduction		(540,265	)			(555,256	)		(450,912	)			(540,265	)
Other		(269,543	)			(57,337	)		4,826				(269,543	)
Income tax provision	$	2,775,261			$	3,201,903		$	2,547,368			$	2,775,261

 
     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. Significant components of our deferred tax assets and liabilities as of March 31, 20202021 and 20192020 were as follows:

	March 31							March 31
	2020				2019			2021				2020
Paid time off accrual	$	55,240			$	55,900		$	60,869			$	55,240
Inventory reserve	45,948				41,572			50,324				45,948
Depreciation and amortization	22,651				112,125			88,690				22,651
Stock-based compensation deductions	65,218				62,671			75,189				65,218
Unrealized (gain) loss on marketable securities	(144,668		)		23,170
Unrealized gain on marketable securities								(308,403		)		(144,668		)
Other	63,730				58,297			106,869				63,730
Deferred tax assets	$	108,119			$	353,735		$	73,538			$	108,119

 
     We had no unrecognized tax benefits as of March 31, 2020,2021, 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 March 31, 20202021 we had no accrued interest related to uncertain tax positions. The tax years 2016 through 20182019 remain open to examination by the major taxing jurisdictions to which we are subject.
 
NOTE 7. LEASES
     We conduct our operations in a leased facility under a non-cancellable lease expiring March 31, 2026. On March 2, 2020 we executed a fifth amendment to the lease agreement between us and GRE – Bryant Lake, LLC covering our facility. Our lease would have expired December 31, 2020 without the fifth amendment, which extended the lease for an additional term of 63 months. The fifth amendment is incorporated in this Report by reference to our Current Report on Form 8-K/A filed March 3, 2020. The fifth amendment will decrease our monthly base rent to $14,241 in 2021 from $14,811 in 2020 under the current lease, with subsequent 2% annual increases for 2022, 2023, 2024, and 2025. The fifth amendment also provides the first three months of 2021 as net free. 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:
 

		Year Ended March 31, 2020
Operating lease cost		$	154,565
Variable lease cost		96,798
Total		$	251,363
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for leases		$	174,528
Remaining lease term			6 years
Discount rate			3.5	%

Table of Contents

		Year Ended March 31
		2021				2020
Operating lease cost		$	158,439			$	154,565
Variable lease cost		109,449				96,798
Total		$	267,888			$	251,363
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for leases		$	133,299			$	174,528
Remaining lease term			5 years				6 years
Discount rate			3.5	%			3.5	%

 
      The following table presents the maturities of lease liabilities as of March 31, 2020:2021:

Year Ending March 31	Operating Leases
2021	128,537
2022	152,703
2023	156,121
2024	159,592
2025	163,224
2026	165,947
Total lease payments	926,124
Imputed lease interest	(92,390		)
Total lease liabilities	$	833,734

Table of Contents

Year Ending March 31	Operating Leases
2022	152,703
2023	156,121
2024	159,592
2025	163,224
2026	165,947
Total lease payments	797,587
Imputed lease interest	(65,855		)
Total lease liabilities	$	731,732

 
NOTE 8. CONCENTRATIONS
     The following table summarizes customers comprising 10% or more of revenue for the two most recent fiscal years:
 

	% of Revenue for Year Ended March 31			% of Revenue for Year Ended March 31
	2020		2019	2021		2020
Customer A	24%		21%	22%		24%
Customer B	14%		18%	15%		14%
Customer C	10%		Less than 10%	Less than 10%		10%

 
     These customers accounted for 43% of our accounts receivable as of March 31, 20202021 and 41%43% as of March 31, 2019.2020. We believe the receivable balances from these customers do not represent a significant credit risk based on past collection experience.
 
NOTE 9. 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. We repurchased 12,9721,806 shares of our Common Stock in fiscal 2020. We did not repurchase2021 and 12,972 shares in fiscal 2019.2020. The remaining authorization was $3,853,459$3,762,040 as of March 31, 2020.2021. The Stock Repurchase Program may be modified or discontinued at any time without notice.
 
NOTE 10. 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 $94,498 for fiscal 2021 and $92,880 for fiscal 2020 and $91,341 for fiscal 2019.2020.
 
NOTE 11. SUBSEQUENT EVENTS
     On May 6, 20205, 2021 we announced that our Board had declared a quarterly cash dividend of $1.00 per share of Common Stock to be paid May 29, 202031, 2021 to shareholders of record as of the close of business May 18, 2020.17, 2021.
  

Table of Contents 
 

EXHIBIT INDEX

Exhibit #	Description
3.2	Bylaws of the company as amended by the Board of Directors effective May 6, 2020.
4	Description of the registrant’s securities registered pursuant to Section 12 of the Securities Exchange Act of 1934.
10.610.18	Fifth amendmentAmendment No. 7 to leaseSupplier Partnering Agreement between Abbott and the company and GRE – Bryant Lake, LLC (incorporated by reference to the Form 8-K/A filed March 3, 2020company.).
10.18	First Amendment to Supply Agreement by and between the company and Sonova AG (incorporated by reference to the Form 8-K/A filed February 18, 2020). Certain portions of this exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K. The omitted information is (i) not material and (ii) would likely cause competitive harm to us if publicly disclosed. We agree to furnish supplementally an unredacted copy of the exhibit to the Securities and Exchange Commission on its request.
23.123	Consent of Boulay PLLP.
23.2	Consent of Grant Thornton LLP.
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

 

F-14

---