UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 10-Q

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended   December 31, 2018September 30, 2019
or
[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                                   to                                   

Commission File Number: 000-12196
 

NVE Logo
NVE CORPORATION
(Exact name of registrant as specified in its charter)
 
Minnesota41-1424202
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
 
11409 Valley View Road, Eden Prairie, Minnesota 55344
(Address of principal executive offices) (Zip Code)
 
 (952) 829-9217 
(Registrant’s telephone number, including area code)
 
     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[X] Yes  [   ] No

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

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

     Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueNVECThe NASDAQ Stock Market, LLC

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common Stock, $0.01 Par Value – 4,846,010 shares outstanding as of JanuaryOctober 18, 2019


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

PART I. FINANCIAL INFORMATION

     Item 1. Financial Statements

          Balance Sheets

          Statements of Income for the Quarters Ended December 31,September 30, 2019 and 2018 and 2017

          Statements of Comprehensive Income for the Quarters Ended December 31,September 30, 2019 and 2018 and 2017

          Statements of Income for the NineSix Months Ended December 31,September 30, 2019 and 2018 and 2017

          Statements of Comprehensive Income for the NineSix Months Ended December 31,September 30, 2019 and 2018 and 2017

Statements of Shareholders’ Equity for Periods Ended September 30, 2019

Statements of Shareholders’ Equity for Periods Ended September 30, 2018

          Statements of Cash Flows

          Notes to Financial Statements

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

     Item 4. Controls and Procedures

PART II. OTHER INFORMATION

     Item 1. Legal Proceedings

     Item 1A. Risk Factors

     Item 4. Mine Safety Disclosures

     Item 6. Exhibits

SIGNATURES


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PART I–FINANCIAL INFORMATION


Item 1. Financial Statements.
NVE CORPORATION
BALANCE SHEETS

 
(Unaudited)
Dec. 31, 2018
March 31, 2018*(Unaudited)
Sept. 30, 2019
March 31, 2019*
ASSETSCurrent assets
Cash and cash equivalents$6,206,549  $4,755,082$14,076,290  $6,877,304
Marketable securities, short-term17,445,586 20,765,809 - 12,487,821
Accounts receivable, net of allowance for uncollectible accounts of $15,0002,717,728 2,888,779 3,215,785 2,995,638
Inventories4,141,481 3,650,439 4,355,332 4,264,876
Prepaid expenses and other assets755,806  635,160 847,259  816,045 
Total current assets31,267,150   32,695,269  22,494,666  27,441,684 
Fixed assets
Machinery and equipment 9,426,267 9,395,987 9,381,906 9,365,806
Leasehold improvements1,787,269  1,749,284 1,787,269  1,787,269 
11,213,536 11,145,27111,169,175 11,153,075
Less accumulated depreciation and amortization 10,192,504  9,819,888 10,438,174  10,258,240 
Net fixed assets1,021,032 1,325,383731,001 894,835
Deferred tax assets590,391 572,655 68,495 353,735 
Marketable securities, long-term51,907,552  52,838,158 58,798,500 54,925,633
Right-of-use asset – operating lease188,743  - 
Total assets$84,786,125  $87,431,465 $82,281,405  $83,615,887 
LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent liabilities
Accounts payable$313,116 $414,970$324,413 $375,188
Accrued payroll and other552,834  574,755425,547 460,488
Operating lease173,852  -
Total current liabilities865,950 989,725 923,812 835,676
 
Operating lease42,782  - 
Total liabilities966,594835,676
Shareholders’ equity
Common stock, $0.01 par value, 6,000,000 shares authorized;
4,846,010 shares issued and outstanding as of Dec. 31, 2018 and 4,842,010 as of March 31, 2018
48,460 48,420
Common stock, $0.01 par value, 6,000,000 shares authorized;
4,846,010 issued and outstanding as of September 30, 2019 and March 31, 2019
 48,46048,460
Additional paid-in capital19,910,558 19,599,298 19,958,91819,910,558
Accumulated other comprehensive loss(929,899) (915,635)
Accumulated other comprehensive income (loss) 666,054(82,725)
Retained earnings64,891,056  67,709,657 60,641,379 62,903,918 
Total shareholders’ equity83,920,175  86,441,740 81,314,811 82,780,211 
Total liabilities and shareholders’ equity$84,786,125  $87,431,465 $82,281,405 $83,615,887 

*The March 31, 20182019 Balance Sheet is derived from the audited financial statements contained in our Annual Report on Form 10-K for the fiscal year ended March 31, 2018.2019.

See accompanying notes.


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Table of Contents

NVE CORPORATION
STATEMENTS OF INCOME
(Unaudited
)

Quarter Ended Dec. 31Quarter Ended Sept. 30
2018201720192018
Revenue
Product sales$5,991,241 $6,448,831 $6,187,708$7,054,977 
Contract research and development278,164  911,958 314,237 451,098 
Total revenue6,269,405 7,360,789  6,501,945 7,506,075
Cost of sales1,169,406  1,657,700 1,346,098 1,352,845 
Gross profit5,099,999 5,703,089  5,155,847 6,153,230
Expenses
Research and development1,126,975 852,739 926,596971,963
Selling, general, and administrative268,905  313,033 368,450 377,448 
Total expenses1,395,880  1,165,772 1,295,046 1,349,411 
Income from operations3,704,119 4,537,317 3,860,801 4,803,819
Interest income457,204  404,665 456,309 443,325 
Income before taxes4,161,323 4,941,982 4,317,110 5,247,144
Provision for income taxes739,918  1,370,380 495,048 964,534 
Net income$3,421,405  $3,571,602 $3,822,062  $4,282,610 
Net income per share – basic$0.71  $0.74 $0.79  $0.88 
Net income per share – diluted$0.71  $0.74 $0.79  $0.88 
Cash dividends declared per common share$1.00  $1.00 $1.00  $1.00 
Weighted average shares outstanding
Basic 4,845,010 4,841,3694,846,0104,843,032
Diluted 4,850,5074,847,2904,847,8814,852,644


STATEMENTS OF COMPREHENSIVE INCOME
     (Unaudited)

Quarter Ended Dec. 31Quarter Ended Sept. 30
2018201720192018
Net income$3,421,405$3,571,602$3,822,062$4,282,610
Unrealized gain (loss) from marketable securities, net of tax 101,891 (295,458)
Unrealized gain from marketable securities, net of tax 178,716 51,237 
Comprehensive income$3,523,296 $3,276,144 $4,000,778 $4,333,847 
 
 
See accompanying notes.


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NVE CORPORATION
STATEMENTS OF INCOME
(Unaudited)

Nine Months Ended Dec. 31Six Months Ended Sept. 30
2018201720192018
Revenue
Product sales$19,916,864 $19,718,584 $12,273,072$13,925,623 
Contract research and development966,522  2,246,105 523,569 688,358 
Total revenue20,883,386 21,964,689  12,796,641 14,613,981 
Cost of sales3,918,256  4,809,235 2,438,135 2,748,850 
Gross profit16,965,130 17,155,454  10,358,506  11,865,131 
Expenses
Research and development3,087,964 2,788,968 1,899,663 1,960,989
Selling, general, and administrative975,114  1,060,757 698,459 706,209 
Total expenses4,063,078  3,849,725 2,598,122 2,667,198 
Income from operations12,902,052 13,305,729 7,760,3849,197,933
Interest income1,325,299  1,154,303 915,348 868,095 
Income before taxes14,227,351 14,460,032 8,675,732 10,066,028
Provision for income taxes2,578,287  4,429,780 1,246,251 1,838,369 
Net income$11,649,064  $10,030,252 $7,429,481 $8,227,659 
Net income per share – basic$2.41  $2.07 $1.53 $1.70 
Net income per share – diluted$2.40  $2.07 $1.53 $1.70 
Cash dividends declared per common share$3.00  $3.00 $2.00 $2.00 
Weighted average shares outstanding
Basic4,843,355 4,841,130 4,846,0104,842,524
Diluted4,850,1204,846,036 4,849,3574,851,072


STATEMENTS OF COMPREHENSIVE INCOME
     (Unaudited)
 
Nine Months Ended Dec. 31Six Months Ended Sept. 30
2018201720192018
Net income$11,649,064$10,030,252$7,429,481$8,227,659
Unrealized gain (loss) from marketable securities, net of tax 46,101 (227,693)748,779 (55,790)
Comprehensive income$11,695,165$9,802,559$8,178,260$8,171,869
 

See accompanying notes.

 
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NVE CORPORATION
STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)

 
 
 
Additional
Paid-In
Capital
  Accumulated
Other
Comprehen-
sive Income
(Loss)
 Retained
Earnings
  
Common Stock
Shares AmountTotal
Balance as of March 31, 20194,846,010$48,460$19,910,558 $(82,725)$62,903,918$82,780,211
Comprehensive income:
Unrealized gain on
marketable securities,
net of tax
570,063570,063
Net income3,607,419 3,607,419 
Total comprehensive income4,177,482
Cash dividends declared
($1.00 per share of
common stock)
      (4,846,010)(4,846,010)
Balance as of June 30, 20194,846,010 48,460 19,910,558 487,338  61,665,327  82,111,683 
Comprehensive income:
Unrealized gain on
marketable securities,
net of tax
          178,716 178,716
Net income              3,822,062   3,822,062 
Total comprehensive income                  4,000,778
Stock-based compensation      48,360           48,360 
Cash dividends declared
($1.00 per share of
common stock)
           (4,846,010) (4,846,010)
Balance as of September 30, 20194,846,010 $48,460 $19,958,918  $666,054  $60,641,379  $81,314,811 


See accompanying notes.


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NVE CORPORATION
STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)

 
 
 
Additional
Paid-In
Capital
  Accumulated
Other
Comprehen-
sive Income
(Loss)
 Retained
Earnings
  
Common Stock
Shares AmountTotal
Balance as of March 31, 20184,842,010 $48,420$19,599,298$(915,635)$67,709,657  $86,441,740 
Comprehensive income:
Unrealized loss on
marketable securities,
net of tax
(107,027)(107,027)
Net income              3,945,049   3,945,049 
Total comprehensive income3,838,022
Cash dividends declared
($1.00 per share of
common stock)
           (4,842,010) (4,842,010)
Cumulative effect of accounting change       (60,365)60,365   
Balance as of June 30, 20184,842,010  48,420  19,599,298  (1,083,027)  66,873,061  85,437,752 
Exercise of stock
options
2,00020124,430  124,450
Comprehensive income:
Unrealized gain on
marketable securities,
net of tax
          51,237 51,237 
Net income              4,282,610   4,282,610 
Total comprehensive income                  4,333,847 
Stock-based compensation      93,360           93,360 
Cash dividends declared
($1.00 per share of
common stock)
            (4,842,010) (4,842,010)
Balance as of September 30, 20184,844,010 $48,440 $19,817,088  $(1,031,790) $66,313,661  $85,147,399 


See accompanying notes.


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NVE CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
 
Nine Months Ended Dec. 31Six Months Ended September 30
2018201720192018
OPERATING ACTIVITIES
Net income$11,649,064$10,030,252$7,429,481$8,227,659
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 531,685 726,842 266,916 357,166 
Stock-based compensation 93,360 40,920  48,360  93,360
Deferred income taxes(30,648) 153,954  75,521  (36,743)
Changes in operating assets and liabilities:
Accounts receivable171,051 1,270,936  (220,147) (156,451)
Inventories (491,042) (238,028)(90,456) 74,476 
Prepaid expenses and other assets (120,646) (360,675)41,687  (15,588)
Accounts payable and accrued expenses (123,775) (159,525)
Deferred revenue -  (142,733)
Accounts payable and other liabilities (130,726) (273,761)
Net cash provided by operating activities 11,679,049  11,321,943  7,420,636 8,270,118 
INVESTING ACTIVITIES
Purchases of fixed assetsPurchases of fixed assets(68,265) (604,755)Purchases of fixed assets(16,100) (37,985)
Purchases of marketable securities (11,649,227) (16,256,210) (3,013,530) (6,679,727)
Proceeds from maturities and sales of marketable securities 15,800,000  16,540,000 
Net cash provided by (used in) investing activities 4,082,508  (320,965)
Proceeds from maturities of marketable securities 12,500,000  9,300,000
Cash provided by investing activities9,470,370  2,582,288 
FINANCING ACTIVITIES
Proceeds from sale of common stock 217,940 51,040-124,450 
Payment of dividends to shareholders (14,528,030) (14,523,030) (9,692,020) (9,684,020)
Net cash used in financing activities (14,310,090) (14,471,990)
Cash used in financing activities(9,692,020) (9,559,570)
Increase (decrease) in cash and cash equivalents1,451,467 (3,471,012)
Increase in cash and cash equivalents7,198,986 1,292,836 
Cash and cash equivalents at beginning of period4,755,082 8,199,364 6,877,304 4,755,082 
Cash and cash equivalents at end of period$6,206,549 $4,728,352 $14,076,290 $6,047,918 
Supplemental disclosures of cash flow information:
Cash paid during the period for income taxes$2,696,045 $4,615,019 $1,230,000 $1,866,045 
 
 
See accompanying notes.


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NVE CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

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

NOTE 2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
     The accompanying unaudited financial statements of NVE Corporation are prepared consistent with accounting principles generally accepted in the United States and in accordance with Securities and Exchange Commission rules and regulations. In the opinion of management, these financial statements reflect all adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation of the financial statements. Although we believe that the disclosures are adequate to make the information presented not misleading, certain disclosures have been omitted as allowed, and it is suggested that these unaudited financial statements be read in conjunction with the audited financial statements and the notes included in our latest annual financial statements included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2018.2019. The results of operations for the quarter or nineand six months ended December 31, 2018September 30, 2019 are not necessarily indicative of the results that may be expected for the full fiscal year ending March 31, 2019.2020.

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

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

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

     Accounts receivable is recognized when we have transferred a good or service to a customer and our right to receive consideration is unconditional through the completion of our performance obligation. A contract asset is recognized when we have a right to consideration from the transfer of goods or services to a customer but have not completed our performance obligation. A contract liability is recognized when we have been paid by a customer but have not yet satisfied the performance obligation by transferring goods or services. We had no material contract assets or contract liabilities as of December 31, 2018September 30, 2019 or March 31, 2018.2019.

     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.
 
 

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NOTE 3. RECENTLY ISSUED ACCOUNTING STANDARDS
Recently Adopted Accounting Standards

     In August 2018,July 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-13,2019-07, Fair Value MeasurementCodification 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 2018-13 modifies2019-07 aligns the disclosureguidance in various SEC sections of the codification with the requirements for fair value measurements by removing, modifying, or addingof certain disclosures. The amendmentsSEC final rules and is effective immediately. These rules include requiring filers to include in ASU 2018-13 will be effective for fiscal years beginning after December 15, 2019, andtheir interim periods within those fiscal years, which will be fiscal 2021 for us. Early adoption is permitted for the removed disclosures and delayed adoption is permitted until fiscal 2021 for the new disclosures.financial statements a reconciliation of changes in shareholders’ equity. We adopted ASU 2018-13 early, effective the quarter ended September 30, 2018. The removed and modified disclosures were adopted on a retrospective basis and the new disclosures on a prospective basis. The adoption did not have a significant effect on our financial statements.

     In February 2018, the FASB issued ASU No. 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220). ASU 2018-02 addresses the effectall of the change in the U.S. federal corporate tax rateapplicable rules for our Quarterly Report on items within accumulated other comprehensive income or loss due to the enactment of the Act “To provideForm 10-Q for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018” (the “Tax Reform Act”) on December 22, 2017. The guidance will be effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, which will be fiscal 2020 for us. Early adoption is permitted, and we adopted ASU 2018-02 in the quarter ended June 30, 2018.2019 and subsequent interim reports. The adoption resulted in a $60,365 reclassification from accumulated other comprehensive loss to retained earnings due to the change in the federal corporate tax rate.

     In August 2016, the FASB issuedof ASU No. 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts2019-07 only affected presentation and Cash Payments, which made eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. We adopted ASU 2016-15 retrospectively in the quarter ended June 30, 2018. The adoption did not have a significant impact on our financial statements.disclosure.

     In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments—Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. The amendment changed the accounting for and financial statement presentation of equity investments, other than those accounted for under the equity method of accounting or those that result in consolidation of the investee. The amendment provides clarity on the measurement methodology to be used for the required disclosure of fair value of financial instruments measured at amortized cost on the balance sheet and clarifies that an entity should evaluate the need for a valuation allowance on deferred tax assets related to available-for-sale securities in combination with the entity’s other deferred tax assets, among other changes. We adopted ASU 2016-01 retrospectively in the quarter ended June 30, 2018. The adoption did not have a significant impact on our financial statements.

     In May 2014, the FASB issued ASU No. 2014-09, which superseded the revenue recognition requirements in Accounting Standards Codification 605, Revenue Recognition. ASU 2014-09 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. It also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. We adopted the guidance using the modified retrospective method to contracts that were not complete as of April 1, 2018. The adoption did not have significant impact on our financial statements.

     Information regarding all other applicable recently issued accounting standards, on which our position have not changed since our latest annual financial statements, are contained in the financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2018.

New Accounting Standards Not Yet Adopted
     In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Statements. 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. 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. ASU 2016-13 and ASU 2018-19 are effective for financial statements issued for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years, which will be fiscal 2021 for us. We do not expect adoption of the new guidance to have a significant impact on our financial statements.


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     In February 2016, the FASB issued 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 will beis effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, which will beis fiscal 2020 for us. In July 2018, the FASB issued ASU No. 2018-11, Leases Topic (842): Targeted Improvements. This ASU provides2018-11 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. We expect to adoptstatements, and we adopted the new lease guidance using the newly-approved transition method. We expect to recognize a liability and corresponding asset associated with in-scope operating and finance leases but are stillthat method in the processquarter ended June 30, 2019. Currently our only lease is the lease for our facility. We recognized $298,983 of determiningleased 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 Standard Not Yet Adopted
     In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Statements. 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. 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. ASU 2016-13 and ASU 2018-19 are effective for financial statements issued for fiscal years beginning after December 15, 2019 and interim periods within those amounts andfiscal years, which will be fiscal 2021 for us. We do not expect adoption of the processes requirednew guidance to account for leasing activityhave a significant impact on an ongoing basis.our financial statements.


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NOTE 4. NET INCOME PER SHARE
     Net income per basic share is computed based on the weighted-average number of common shares issued and outstanding during each period. Net income per diluted share amounts assume exercise of all stock options. The following tables show the components of diluted shares:
 
Quarter Ended Dec. 31Quarter Ended Sept. 30
2018201720192018
Weighted average common shares outstanding – basic4,845,0104,841,3694,846,0104,843,032
Dilutive effect of stock options5,4975,9211,8719,612
Shares used in computing net income per share – diluted 4,850,5074,847,2904,847,8814,852,644
 
Nine Months Ended Dec. 31Six Months Ended Sept. 30
2018201720192018
Weighted average common shares outstanding – basic4,843,3554,841,1304,846,0104,842,524
Dilutive effect of stock options6,7654,9063,3478,548
Shares used in computing net income per share – diluted 4,850,1204,846,0364,849,3574,851,072
 
NOTE 5. FAIR VALUE OF FINANCIAL INSTRUMENTS
     Our corporate bonds and money market funds are classified as available-for-sale securities and carried at estimated fair value. Unrealized holding gains and losses are included in accumulated other comprehensive income (loss) in the statement of shareholders’ equity. Corporate bonds with remaining maturities less than one year are classified as short-term, and those with remaining maturities greater than one year are classified as long-term. We consider all highly-liquid investments with maturities of three months or less when purchased, including money market funds, to be cash equivalents. Gains and losses on marketable security transactions are reported on the specific-identification method.
 
    The fair value of our available-for-sale securities as of December 31, 2018September 30, 2019 by maturity were as follows::

TotalTotal<1 Year1–3 Years3–5 YearsTotal<1 Year1–3 Years3–5 Years
$75,268,216$23,360,664$22,867,445$29,040,10758,798,500 $- $45,948,207 $12,850,293

     Total available-for-sale securities represented approximately 89%71% of our total assets. Marketable securities as of December 31, 2018September 30, 2019 had remaining maturities between two weeks13 and 5553 months.
 
     Generally accepted accounting principles establish a framework for measuring fair value, provide a definition of fair value, and prescribe required disclosures about fair-value measurements. Generally accepted accounting principles define fair value as the price that would be received to sell an asset or paid to transfer a liability. Fair value is a market-based measurement that should be determined using assumptions that market participants would use in pricing an asset or liability. Generally accepted accounting principles utilize a valuation hierarchy for disclosure of fair value measurements. The categorization within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The categories within the valuation hierarchy are described as follows:

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

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

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

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

 


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     The following table shows the estimated fair value of assets that were accounted for at fair value on a recurring basis:
 
As of December 31, 2018As of March 31, 2018As of September 30, 2019As of March 31, 2019
Level 1Level 2TotalLevel 1Level 2TotalLevel 1Level 2TotalLevel 1Level 2Total
Money market funds $5,915,078  $-  $5,915,078  $3,951,032  $-  $3,951,032$13,807,888  $-  $13,807,888  $6,703,809  $-  $6,703,809
Corporate bonds - 69,353,138 69,353,138  54,517,969  19,085,998 73,603,967 -  58,798,500  58,798,500 - 67,413,454 67,413,454
Total$5,915,078$69,353,138$75,268,216 $58,469,001 $19,085,998$77,554,999$13,807,888 $58,798,500 $72,606,388 $6,703,809 $67,413,454 $74,117,263

     Our available-for-sale securities as of December 31September 30 and March 31, 2018,2019, aggregated into classes of securities, were as follows:

As of December 31, 2018As of March 31, 2018As of September 30, 2019As of March 31, 2019

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
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
Money market
funds
$5,915,078  $-  $-  $5,915,078  $3,951,032  $-  $-   $3,951,032$13,807,888  $-  $-   $13,807,888  $6,703,809  $-  $- �� $6,703,809
Corporate bonds  70,543,48519,403(1,209,750)69,353,138  74,853,327  -  (1,249,360)  73,603,967 57,945,899  878,961  (26,360)  58,798,500 67,519,350 315,902 (421,798) 67,413,454
Total$76,458,563$19,403$(1,209,750)$75,268,216 $78,804,359 $- $(1,249,360)$77,554,999$71,753,787 $878,961 $(26,360) $72,606,388 $74,223,159 $315,902 $(421,798) $74,117,263
 
     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 December 31September 30 and March 31, 2018.2019.

Less Than 12 Months12 Months or GreaterTotal
Estimated
Fair
Value
Gross
Unrealized
Holding Losses
Estimated
Fair
Value
Gross
Unrealized
Holding Losses
Estimated
Fair
Value
Gross
Unrealized
Holding Losses
 
As of December 31, 2018 
 Corporate bonds  $17,553,361$(122,792)$46,810,042$(1,086,958)$64,363,403$(1,209,750)
 Total$17,553,361$(122,792)$46,810,042$(1,086,958)$64,363,403$(1,209,750)
 
As of March 31, 2018
 Corporate bonds$61,731,248 $(1,003,849) $9,072,719 $(245,511) $70,803,967 $(1,249,360)
 Total$61,731,248 $(1,003,849) $9,072,719 $(245,511) $70,803,967 $(1,249,360)
Less Than 12 Months12 Months or GreaterTotal
Estimated
Fair
Value
Gross
Unrealized
Holding Losses
Estimated
Fair
Value
Gross
Unrealized
Holding Losses
Estimated
Fair
Value
Gross
Unrealized
Holding Losses
 
As of September 30, 2019 
Corporate bonds  $- $-  $5,054,583 $(26,360) $5,054,583 $(26,360)
 Total$- $-  $5,054,583 $(26,360) $5,054,583 $(26,360)
 
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 December 31, 2018.September 30, 2019. None of the securities were impaired at acquisition, and subsequent declines in fair value are not attributed to declines in credit quality. When evaluating for impairment we assess indicators that include, but are not limited to, earnings performance, changes in underlying credit ratings, market conditions, bona fide offers to purchase or sell, and ability to hold until maturity. Because we believe it is more likely than not we will recover the cost basis of our investments, we did not consider any of our marketable securities to be impaired as of December 31, 2018.September 30, 2019.
 
NOTE 6. INVENTORIES
     Inventories are shown in the following table:
December 31,
2018
March 31,
2018
September 30,
2019
March 31,
2019
Raw materials$1,155,148 $1,084,030$1,127,683$1,130,917
Work in process2,265,585 1,828,4922,282,2612,325,238
Finished goods720,748 737,917945,388808,721
Total inventories$4,141,481 $3,650,439$4,355,332$4,264,876
 


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NOTE 7. STOCK-BASED COMPENSATION
     Stock-based compensation expense was $48,360 for the second quarter and first six months of fiscal 2020, and $93,360 for the second quarter and first ninesix months of fiscal 2019 and $40,920 for the first nine months of fiscal 2018.2019. Stock-based compensation expenses for the quarters and six months ended September 30, 2019 and 2018 were due to the automatic issuance to our non-employee directors of options to purchase 1,000 shares of stock on their reelection to our Board. We calculate the share-based compensation expense using the Black-Scholes standard option-pricing model. The increase in stock-based compensation expense for fiscal 2019 compared to fiscal 2018 was due to an increase in the model valuation for the same number of options to purchase shares.
 
NOTE 8. INCOME TAXES
     Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

     The Act “To provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018” (the “Tax Reform Act”) was enacted December 22, 2017. The Tax Reform Act reduced certain Federal corporate income tax rates effective January 1, 2018 and changed certain other provisions. As a result of the Tax Reform Act, our tax rate decreased to an estimated 18% for fiscal 2019 from 30% for fiscal 2018.
 
     We had no unrecognized tax benefits as of December 31, 2018,September 30, 2019, and we do not expect any significant unrecognized tax benefits within 12 months of the reporting date. We recognize interest and penalties related to income tax matters in income tax expense. As of December 31, 2018September 30, 2019 we had no accrued interest related to uncertain tax positions. The tax years 1999 and 20142016 through 20172018 remain open to examination by the major taxing jurisdictions to which we are subject.

NOTE 9. LEASES
     We conduct our operations in a leased facility under a non-cancellable lease through December 31, 2020. Our lease does not provide an implicit rate, so we used our incremental borrowing rate to determine the present value of lease payments. Lease expense is recognized on a straight-line basis over the lease term. Variable lease costs consist primarily of common area maintenance and real estate taxes which are paid based on actual costs incurred by the lessor.

     Details of our operating lease are as follows:
Quarter Ended
September 30, 2019
Six Months Ended
September 30, 2019
Operating lease cost$38,641 $77,282
Variable lease cost 30,227  60,454 
Total 68,868 $137,736 
 
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for leases$43,365 $86,730
Remaining lease term 1.25 years
Discount rate 3.5%
 
     The following table presents the maturities of lease liabilities as of September 30, 2019:
 
Year Ending March 31Operating Leases
2020$87,798
2021 133,299 
Total lease payments 221,097 
Imputed lease interest (4,463)
Total lease liabilities$216,634 

NOTE 10. STOCK REPURCHASE PROGRAM
     On January 21, 2009 we announced that our Board of Directors authorized the repurchase of up to $2,500,000 of our Common Stock, and on August 27, 2015 we announced that our Board authorized $5,000,000 of additional repurchases. We did not repurchase any of our Common Stock under the program during the quarter ended December 31, 2018.September 30, 2019. The remaining authorization was $4,540,806 as of December 31, 2018.September 30, 2019. The Repurchase Program may be modified or discontinued at any time without notice.

NOTE 10.11. INFORMATION AS TO EMPLOYEE STOCK PURCHASE, SAVINGS, AND SIMILAR PLANS
     All of our employees are eligible to participate in our 401(k) savings plan the first quarter after reaching age 21. Employees may contribute up to the Internal Revenue Code maximum. We make matching contributions of 100% of the first 3% of participants’ salary deferral contributions. Our matching contributions were $21,990 for the second quarter of fiscal 2020, $46,056 for the first six months of fiscal 2020, $22,296 for the second quarter of fiscal 2019, and $45,594 for the first six months of fiscal 2019.


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NOTE 12. SUBSEQUENT EVENTS

     On JanuaryOctober 23, 2019 we announced that our Board had declared a quarterly cash dividend of $1.00 per share of Common Stock to be paid February 28,November 29, 2019 to shareholders of record as of the close of business FebruaryNovember 4, 2019.
 
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-looking statements

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

     Further information regarding our risks and uncertainties are contained in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended March 31, 2018.2019.

General
     NVE Corporation, referred to as NVE, we, us, or our, develops and sells devices that use spintronics, a nanotechnology that relies on electron spin rather than electron charge to acquire, store and transmit information. We manufacture high-performance spintronic products including sensors and couplers that are used to acquire and transmit data. We have also licensed our spintronic magnetoresistive random access memory technology, commonly known as MRAM.
 


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Critical accounting policies
     A description of our critical accounting policies is provided in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended March 31, 2018.2019. As of December 31, 2018September 30, 2019 our critical accounting policies and estimates continued to include investment valuation, inventory valuation, and deferred tax assets estimation.
 

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Quarter ended December 31, 2018September 30, 2019 compared to quarter ended December 31, 2017September 30, 2018
     The table shown below summarizes the percentage of revenue and quarter-to-quarter changes for various items:

Percentage of Revenue
Quarter Ended Dec. 31
Quarter-
to-Quarter
Change
Percentage of Revenue
Quarter Ended September 30
Quarter-
to-Quarter
Change
2018201720192018
Revenue
Product sales95.6%87.6%(7.1)%95.2%94.0%(12.3)%
Contract research and development4.4%12.4%(69.5)%4.8%6.0%(30.3)%
Total revenue100.0%100.0%(14.8)%100.0%100.0%(13.4)%
Cost of sales18.7%22.5%(29.5)%20.7%18.0%(0.5)%
Gross profit81.3%77.5%(10.6)%79.3%82.0%(16.2)%
Expenses
Research and development17.9%11.6%32.2%14.2%13.0%(4.7)%
Selling, general, and administrative4.3%4.3%(14.1)%5.7%5.0%(2.4)%
Total expenses22.2%15.9%19.7%19.9%18.0%(4.0)%
Income from operations59.1%61.6%(18.4)%59.4%64.0%(19.6)%
Interest income7.3%5.5%13.0%7.0%5.9%2.9%
Income before taxes66.4%67.1%(15.8)%66.4%69.9%(17.7)%
Provision for income taxes11.8%18.6%(46.0)%7.6%12.8%(48.7)%
Net income54.6%48.5%(4.2)%58.8%57.1%(10.8)%
 
     Total revenue for the quarter ended December 31, 2018September 30, 2019 (the thirdsecond quarter of fiscal 2019)2020) decreased 15%13% compared to the quarter ended December 31, 2017September 30, 2018 (the thirdsecond quarter of fiscal 2018)2019). The decrease was due to a 7%12% decrease in product sales and a 69%30% decrease in contract research and development revenue.

     The decrease in product sales from the prior-year quarter was primarily due to decreased purchases by existing customers. The decrease in contract research and development revenue for the thirdsecond quarter of fiscal 20192020 was due to the completion of certain contracts.

     Gross profit margin increaseddecreased to 81%79% of revenue for the thirdsecond quarter of fiscal 2020 compared to 82% for the second quarter of fiscal 2019 compared to 77% for the third quarter of fiscal 2018 due to a moreless profitable revenueproduct mix.

     Total expenses increased 20% fordecreased 4% in the thirdsecond quarter of fiscal 2020 compared to the second quarter of fiscal 2019 compared to the third quarter of fiscal 2018, due to a 32% increase5% decrease in research and development expense partially offset byand a 14%2% decrease in selling, general, and administrative expense. The increasedecrease in research and development expense was due to an increase in newthe completion of certain product development activities. The decrease in selling, general, and administrative expense was due to staffing changes.

     Interest income for the thirdsecond quarter of fiscal 20192020 increased 13%3% due to an increase in the average interest rates on our marketable securities, partially offset by a decrease in our securities.

     Our effectiveThe provision for income taxes decreased 49% due to tax benefits from the Federal Tax Reform Act enacted in 2017. We currently expect our tax rate wasfor each of the remaining two quarters of fiscal 2020 to be approximately 18% of net income before taxes for the quarter, compared to 28% in the prior-year quarter. The decreased tax rate was due to the full effects of a decrease in the Federal tax rate and certain other provisions with the enactment of the Tax Reform Act. See Note 8 to the financial statements for more information on income taxes.

     The 4%11% decrease in net income in the thirdsecond quarter of fiscal 20192020 compared to the prior-year quarter was primarily due to a decrease in total revenue and an increaserevenue.

     Comprehensive income decreased 8% to $4,000,778 compared to $4,333,847 for the prior-year quarter. The decrease in research and development expense,comprehensive income was due to a decrease in net income, partially offset by an increase in gross profit margin, an increase in interest income, and a decreaseunrealized gain from marketable securities of $178,716 compared to $51,237 in the provision for income taxes.prior-year quarter. The increased unrealized gain was due to strong bond market conditions.
 


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NineSix months ended December 31, 2018September 30, 2019 compared to ninesix months ended December 31, 2017September 30, 2018

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

Percentage of Revenue
Nine Months Ended Dec. 31
Period-
to-Period
Change
Percentage of Revenue
Six Months Ended Sept. 30
Period-
to-Period
Change
2018201720192018
Revenue
Product sales95.4%89.8%1.0%95.9%95.3%(11.9)%
Contract research and development4.6%10.2%(57.0)%4.1%4.7%(23.9)%
Total revenue100.0%100.0%(4.9)%100.0%100.0%(12.4)%
Cost of sales18.8%21.9%(18.5)%19.1%18.8%(11.3)%
Gross profit81.2%78.1%(1.1)%80.9%81.2%(12.7)%
Expenses
Research and development14.8%12.7%10.7%14.8%13.4%(3.1)%
Selling, general, and administrative4.6%4.8%(8.1)%5.5%4.9%(1.1)%
Total expenses19.4%17.5%5.5%20.3%18.3%(2.6)%
Income from operations61.8%60.6%(3.0)%60.6%62.9%(15.6)%
Interest income6.3%5.2%14.8%7.2%6.0%5.4%
Income before taxes68.1%65.8%(1.6)%67.8%68.9%(13.8)%
Provision for income taxes12.3%20.1%(41.8)%9.7%12.6%(32.2)%
Net income55.8%45.7%16.1%58.1%56.3%(9.7)%
 
     Total revenue for the ninesix months ended December 31, 2018September 30, 2019 decreased 5%12% compared to the ninesix months ended December 31, 2017,September 30, 2018, due to a 57%12% decrease in product sales and a 24% decrease in contract research and development revenue.

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

     Gross profit margin increased to 81% of revenueTotal expenses decreased 3% for the first ninesix months of fiscal 2020 compared to the first six months of fiscal 2019 compared to 78% for the first nine months of fiscal 2018, due to a more profitable revenue mix.

     Total expenses increased 6% for the first nine months of fiscal 2019 compared to the first nine months of fiscal 2018, due to an 11% increase3% decrease in research and development expense partially offset by an 8%and a 1% decrease in selling, general, and administrative expense. The increasedecrease in research and development expense was due to an increase in newthe completion of certain product development activities. The decrease in selling, general, and administrative expense was due to staffing changes.

     Interest income for the first ninesix months of fiscal 20192020 increased 15%5% due to an increase in the average interest rates on our marketable securities, partially offset by a decrease in our securities.

     Our effective tax rate was 18% of netThe provision for income before taxes for the first ninesix months of fiscal 2019, compared to 31% in the prior-year period. The decrease was2020 decreased 32% due to the effect of a decrease intax benefits from the Federal Tax Reform Act enacted in 2017. We currently expect our tax rate and certain other provisions withfor the enactmentlast six months of the Tax Reform Act. See Note 8fiscal year to the financial statements for more information onbe approximately 18% of income before taxes.

     The 16% increase10% decrease in net income in the first ninesix months of fiscal 20192020 compared to the prior-year period was primarily due to increased gross profit margin and a decrease in the provision for income taxes.total revenue.
 
     Comprehensive income for the first six months of fiscal 2020 increased slightly to $8,178,260 compared to $8,171,869 for the prior-year period. The increase was due to an unrealized gain from marketable securities of $748,779 compared to an unrealized loss of $55,790 in the prior-year period, partially offset by a decrease in net income. The unrealized gain was due to strong bond market conditions.



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Liquidity and capital resources
Overview
     Cash and cash equivalents were $6,206,549$14,076,290 as of December 31, 2018September 30, 2019 compared to $4,755,082$6,877,304 as of March 31, 2018.2019. The $1,451,467$7,198,986 increase in cash and cash equivalents during the ninesix months ended December 31, 2018September 30, 2019 was due to $11,679,049$7,420,636 in net cash provided by operating activities and $4,082,508$9,470,370 of cash provided by investing activities, partially offset by $14,310,090$9,692,020 of cash used in financing activities. We currently believe our working capital and cash generated from operations will be adequate for our needs at least for the next 12 months.

Investing Activities
     Cash provided by investing activities in the ninesix months ended December 31, 2018September 30, 2019 was due to $15,800,000$12,500,000 of marketable security maturities, partially offset by $11,649,227 of purchases$3,013,530 of marketable securities purchases and $68,265 of purchases$16,100 of fixed assets.asset purchases.
 
Financing Activities
     Cash used in financing activities in the first ninesix months of fiscal 20192020 was due to $14,528,030$9,692,020 of cash dividends paid to shareholders, partially offset by $217,940 in proceeds from sale of common stock from stock option exercises.shareholders. In addition to the dividends already paid in fiscal 2019,2020, on JanuaryOctober 23, 2019 we announced that our Board had declared a cash quarterly dividend of $1.00 per share of common stock, or $4,846,010 based on shares outstanding as of JanuaryOctober 18, 2019, to be paid February 28,November 29, 2019. We plan to fund dividends through cash provided by operating activities and proceeds from maturities and sales of marketable securities. All future dividends will be subject to Board approval and subject to the company’s results of operations, cash and marketable security balances, estimates of future cash requirements, and other factors the Board may deem relevant. Furthermore, dividends may be modified or discontinued at any time without notice.

Item 4. Controls and Procedures.
Disclosure Controls and Procedures

     Management, with the participation of the Chief Executive Officer and Chief Financial Officer, has performed an evaluation of our disclosure controls and procedures that are defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this Report. This evaluation included consideration of the controls, processes, and procedures that are designed to ensure that information required to be disclosed by us in the reports we file under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as December 31, 2018,September 30, 2019, our disclosure controls and procedures were effective.

Changes in Internal Controls
     During the quarter ended December 31, 2018,September 30, 2019, 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.
 
 

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PART II–OTHER INFORMATION

Item 1. Legal Proceedings.
     On September 16, 2012 the United States Patent and Trademark Office granted a request by Everspin Technologies, Inc. for an inter partes reexamination of our patent 6,538,921 titled “Circuit Selection of Magnetic Memory Cells and Related Cell Structures.” On December 30, 2015 the U.S. Patent and Trademark Office Patent Trial and Appeal Board affirmed an examiner’s decision to reject the claims of patent 6,538,921. We filed an application for reissue of the patent, and on August 27, 2019, the patent was reissued as RE 47,583 with a number of the claims of the original patent. The reissued patent is for the unexpired part of the term of the original patent, which expires August 14, 2021.

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

Item 1A. Risk Factors.
     There have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2018.2019.

Item 4. Mine Safety Disclosures.
     Not applicable.
 


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Table of Contents

Item 6. Exhibits.
Exhibit #
Description
  31.1Certification by Daniel A. Baker pursuant to Rule 13a-14(a)/15d-14(a).
 
  31.2Certification by Curt A. Reynders pursuant to Rule 13a-14(a)/15d-14(a).
 
  32Certification by Daniel A. Baker and Curt A. Reynders pursuant to 18 U.S.C. Section 1350.
 
101.INSXBRL Instance Document
 
101.SCH     XBRL Taxonomy Extension Schema Document
 
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
 
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
 
101.LABXBRL Taxonomy Extension Label Linkbase Document
 
101.PREXBRL Taxonomy Extension Presentation Linkbase Document


 
SIGNATURES

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

NVE CORPORATION
          (Registrant)

 
JanuaryOctober 23, 2019
/s/ DANIEL A. BAKER 
DateDaniel A. Baker
President and Chief Executive Officer

 
JanuaryOctober 23, 2019
/s/ CURT A. REYNDERS 
DateCurt A. Reynders
Chief Financial Officer
 
 
 
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