Table of Contents
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, 20202021
or
[   ]
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period fromto 

Commission File Number: 000-12196
NVE Logo
nve.jpg
NVE CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota
41-1424202
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
11409 Valley View Road, Eden Prairie, Minnesota
 
55344
(Address of principal executive offices)
 
(Zip Code)
 
(952) 829-9217 
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[X]
☒ Yes  [   ]☐ No

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer [   ]☐
Accelerated filer [   ]☐
Non-accelerated filer [X]☒
Smaller reporting company [X]☒
 
Emerging growth company [   ]  ☐ 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]

☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     [   ]☐ Yes  [X]☒ No

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common Stock, $0.01 Par Value – 4,833,2324,833,714 shares outstanding as of January 15, 202114, 2022


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, 2021 and 2020
Statements of Comprehensive Income for the Quarters Ended December 31, 2021 and 2020
Statements of Income for the Nine Months Ended December 31, 2021 and 2020
Statements of Comprehensive Income for the Nine Months Ended December 31, 2021 and 2020
Statements of Shareholders’ Equity for the Period Ended December 31, 2021
Statements of Shareholders’ Equity for the Period Ended December 31, 2020
Statements of Cash Flows
Notes to Financial Statements
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 4. Controls and Procedures
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 4. Mine Safety Disclosures
Item 6. Exhibits
SIGNATURES
2
PART I–FINANCIAL INFORMATION

Item 1. Financial Statements

Balance Sheets

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

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

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

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

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

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

Statements of Cash Flows

Notes to Financial Statements

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

Item 4. Controls and Procedures

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

Item 4. Mine Safety Disclosures

Item 6. Exhibits

SIGNATURES


2
Table of Contents

PART I–FINANCIAL INFORMATION


Item 1. Financial Statements.
NVE CORPORATION
BALANCE SHEETS

  
(Unaudited)
December 31, 2021
  
March 31,
2021*
 
ASSETS
        
Current assets
        
Cash and cash equivalents
 $8,967,657  $10,427,340 
Marketable securities, short-term
  22,482,494   7,678,957 
Accounts receivable, net of allowance for uncollectible accounts of $15,000
  3,038,203   1,964,281 
Inventories
  4,367,675   3,900,777 
Prepaid expenses and other assets
  921,846   391,278 
Total current assets
  39,777,875   24,362,633 
Fixed assets
        
Machinery and equipment
  9,312,982   9,254,664 
Leasehold improvements
  1,810,872   1,810,872 
   11,123,854   11,065,536 
Less accumulated depreciation and amortization
  10,886,378   10,728,853 
Net fixed assets
  237,476   336,683 
Deferred tax assets
  260,134   73,538 
Marketable securities, long-term
  27,179,552   47,038,669 
Right-of-use asset – operating lease
  593,715   689,216 
Total assets
 $68,048,752  $72,500,739 
         
LIABILITIES AND SHAREHOLDERS’ EQUITY
        
Current liabilities
        
Accounts payable
 $111,243  $336,591 
Accrued payroll and other
  812,502   540,474 
Operating lease
  152,807   150,273 
Total current liabilities
  1,076,552   1,027,338 
Operating lease
  482,798   581,459 
Total liabilities
  1,559,350   1,608,797 
         
Shareholders’ equity
        
Common stock, $0.01 par value, 6,000,000 shares authorized; 4,833,714 issued and outstanding as of December 31, 2021 and 4,833,232 as of March 31, 2021
  48,337   48,332 
Additional paid-in capital
  19,411,158   19,338,127 
Accumulated other comprehensive income
  433,759   1,101,119 
Retained earnings
  46,596,148   50,404,364 
Total shareholders’ equity
  66,489,402   70,891,942 
Total liabilities and shareholders’ equity
 $68,048,752  $72,500,739 
(Unaudited)
December 31, 2020		March 31, 2020*
ASSETS
Current assets
Cash and cash equivalents$13,988,308  $8,065,594
Marketable securities, short-term11,115,094   19,084,814
Accounts receivable, net of allowance for uncollectible accounts of $15,000 3,161,308   2,694,018
Inventories 3,842,477   3,884,450
Prepaid expenses and other assets570,018  655,835 
Total current assets 32,677,205  34,384,711 
Fixed assets
Machinery and equipment  9,280,062  9,280,062
Leasehold improvements1,810,872  1,797,245 
 11,090,934   11,077,307
Less accumulated depreciation and amortization 10,724,866  10,494,840 
Net fixed assets 366,068   582,467
Deferred tax assets- 108,119 
Marketable securities, long-term40,656,967 43,606,495
Right-of-use asset – operating lease720,618  816,358 
Total assets$74,420,858  $79,498,150 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable$136,673  $186,993
Accrued payroll and other505,428  482,074
Operating lease106,843  127,134
Total current liabilities 748,944   796,201
Deferred tax liabilities 89,420 -
Operating lease613,775  706,600 
Total liabilities1,452,1391,502,801
 
Shareholders’ equity
Common stock, $0.01 par value, 6,000,000 shares authorized; 4,833,232 issued
and outstanding as of December 31, 2020 and 4,835,038 as of March 31, 2020		 48,33248,350
Additional paid-in capital 19,333,85219,383,956
Accumulated other comprehensive income 1,483,409 516,523 
Retained earnings52,103,126 58,046,520 
Total shareholders’ equity72,968,719 77,995,349 
Total liabilities and shareholders’ equity$74,420,858 $79,498,150 

*The March 31, 20202021 Balance Sheet is derived from the audited financial statements contained in our Annual Report on Form 10-K for the fiscal year ended March 31, 2020.


2021.
See accompanying notes.


3
Table of Contents

NVE CORPORATION
STATEMENTS OF INCOME
(Unaudited)
  
Quarter Ended December 31
 
  
2021
  
2020
 
Revenue
        
Product sales
 $5,916,790  $6,332,349 
Contract research and development
  374,019   201,013 
Total revenue
  6,290,809   6,533,362 
Cost of sales
  1,385,006   1,075,048 
Gross profit
  4,905,803   5,458,314 
Expenses
        
Research and development
  596,492   702,216 
Selling, general, and administrative
  272,159   311,356 
Total expenses
  868,651   1,013,572 
Income from operations
  4,037,152   4,444,742 
Interest income
  283,940   365,498 
Income before taxes
  4,321,092   4,810,240 
Provision for income taxes
  855,685   884,531 
Net income
 $3,465,407  $3,925,709 
Net income per share – basic
 $0.72  $0.81 
Net income per share – diluted
 $0.72  $0.81 
Cash dividends declared per common share
 $1.00  $1.00 
Weighted average shares outstanding
        
Basic
  4,833,604   4,833,232 
Diluted
  4,835,770   4,833,261 

Quarter Ended December 31
20202019
Revenue
Product sales$6,332,349$6,160,967 
Contract research and development201,013 303,629 
Total revenue 6,533,362 6,464,596
Cost of sales1,075,048 1,263,806 
Gross profit 5,458,3145,200,790
Expenses
Research and development 702,216771,468
Selling, general, and administrative311,356 327,989 
Total expenses1,013,572 1,099,457 
Income from operations 4,444,7424,101,333
Interest income365,498 443,478 
Income before taxes 4,810,240 4,544,811
Provision for income taxes884,531 814,147 
Net income$3,925,709  $3,730,664 
Net income per share – basic$0.81  $0.77 
Net income per share – diluted$0.81  $0.77 
Cash dividends declared per common share$1.00  $1.00 
Weighted average shares outstanding
Basic4,833,2324,846,010
Diluted 4,833,2614,847,436


STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

Quarter Ended December 31
20202019
Net income$3,925,709 $3,730,664
Unrealized (loss) gain from marketable securities, net of tax  (145,452)31,237 
Comprehensive income$3,780,257
 $3,761,901 


  
Quarter Ended December 31
 
  
2021
  
2020
 
Net income
 $3,465,407  $3,925,709 
Unrealized loss from marketable securities, net of tax
  (380,161)  (145,452)
Comprehensive income
 $3,085,246  $3,780,257 
See accompanying notes.


4
Table of Contents

NVE CORPORATION
STATEMENTS OF INCOME
(Unaudited)
(Unaudited)
  
Nine Months Ended December 31
 
  
2021
  
2020
 
Revenue
        
Product sales
 $19,500,567  $14,850,157 
Contract research and development
  766,866   653,252 
Total revenue
  20,267,433   15,503,409 
Cost of sales
  4,698,720   2,852,757 
Gross profit
  15,568,713   12,650,652 
Expenses
        
Research and development
  2,112,630   2,399,164 
Selling, general, and administrative
  1,221,893   1,024,549 
Total expenses
  3,334,523   3,423,713 
Income from operations
  12,234,190   9,226,939 
Interest income
  868,519   1,166,102 
Income before taxes
  13,102,709   10,393,041 
Provision for income taxes
  2,411,228   1,833,127 
Net income
 $10,691,481  $8,559,914 
Net income per share – basic
 $2.21  $1.77 
Net income per share – diluted
 $2.21  $1.77 
Cash dividends declared per common share
 $3.00  $3.00 
Weighted average shares outstanding
        
Basic
  4,833,356   4,834,324 
Diluted
  4,835,781   4,834,411 

Nine Months Ended Dec. 31
20202019
Revenue
Product sales$14,850,157$18,434,039 
Contract research and development653,252 827,198 
Total revenue 15,503,409 19,261,237 
Cost of sales2,852,757 3,701,941 
Gross profit 12,650,652  15,559,296 
Expenses
Research and development 
2,399,164
 2,671,131
Selling, general, and administrative
1,024,549
 1,026,448 
Total expenses3,423,713 3,697,579 
Income from operations 
9,226,939
 11,861,717
Interest income1,166,102 1,358,826 
Income before taxes 
10,393,041
 13,220,543
Provision for income taxes1,833,127 2,060,398 
Net income$
8,559,914
 $11,160,145 
Net income per share – basic$1.77 $2.30 
Net income per share – diluted$1.77 $2.30 
Cash dividends declared per common share$3.00 $3.00 
Weighted average shares outstanding
Basic4,834,3244,846,010
Diluted4,834,4114,848,506


STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

Nine Months Ended Dec. 31
20202019
Net income$8,559,914$11,160,145
Unrealized gain from marketable securities, net of tax  966,886 780,016 
Comprehensive income$9,526,800$11,940,161


  
Nine Months Ended December 31
 
  
2021
  
2020
 
Net income
 $10,691,481  $8,559,914 
Unrealized (loss) gain from marketable securities, net of tax
  (667,361)  966,886 
Comprehensive income
 $10,024,120  $9,526,800 
See accompanying notes.


5
Table of Contents

NVE CORPORATION
STATEMENTS OF SHAREHOLDERS’SHAREHOLDERS’ EQUITY
(Unaudited)
              
Accumulated
         
          
Additional
  
Other
         
  
Common Stock
  
Paid-In
  
Comprehensive
  
Retained
     
  
Shares
  
Amount
  
Capital
  
Income
  
Earnings
  
Total
 
Balance as of March 31, 2021
  4,833,232  $48,332  $19,338,127  $1,101,119  $50,404,364  $70,891,942 
Comprehensive income:
                        
Unrealized loss on marketable securities, net of tax
              (90,165
)
      (90,165
)
Net income
                  3,579,566   3,579,566 
Total comprehensive income
                      3,489,401 
Stock-based compensation
          7,238           7,238 
Cash dividends declared ($1.00 per share of common stock)
                  (4,833,232
)
  (4,833,232
)
Balance as of June 30, 2021
  4,833,232   48,332   19,345,365   1,010,954   49,150,698   69,555,349 
Comprehensive income:
                        
Unrealized loss on marketable securities, net of tax
      0   0   (197,034)  0   (197,034)
Net income
      0   0   0   3,646,507   3,646,507 
Total comprehensive income
      0   0   0   0   3,449,473 
Stock-based compensation
      0   56,999   0   0   56,999 
Cash dividends declared ($1.00 per share of common stock)
      0   0   0   (4,833,232)  (4,833,232)
Balance as of September 30, 2021
  4,833,232   48,332   19,402,364   813,920   47,963,973   68,228,589 
Exercise of stock options  482   5   (5)  0   0   0
-
 
Comprehensive income:                        
Unrealized loss on marketable securities, net of tax      0   0   (380,161)  0   (380,161)
Net income      0   0   0   3,465,407   3,465,407 
Total comprehensive income      0   0   0   0   3,085,246 
Stock-based compensation      0   8,799   0   0   8,799 
Cash dividends declared ($1.00 per share of common stock)      0   0   0   (4,833,232)  (4,833,232)
Balance as of December 31, 2021  4,833,714  $48,337  $19,411,158  $433,759  $46,596,148  $66,489,402 

 
 
 		Additional
Paid-In
Capital		  Accumulated
Other
Comprehen-
sive
Income		 Retained
Earnings
  
Common Stock
Shares AmountTotal
Balance as of March 31, 20204,835,038 $48,350 $19,383,956  $516,523  $58,046,520  $77,995,349 
Comprehensive income:
Unrealized gain on
marketable securities,
net of tax
          1,242,662 1,242,662 
Net income              2,411,865   2,411,865 
Total comprehensive income                  3,654,527 
Stock-based compensation      2,707           2,707 
Cash dividends declared
($1.00 per share of
common stock)
           (4,835,038) (4,835,038)
Balance as of June 30, 20204,835,038 48,350 19,386,663 1,759,185  55,623,347  76,817,545 
Repurchase of common stock(1,806) (18) (91,401)          (91,419)
Comprehensive income:
Unrealized loss on
marketable securities,
net of tax
          (130,324)(130,324)
Net income              2,222,340   2,222,340 
Total comprehensive income                  2,092,016 
Stock-based compensation 34,31534,315 
Cash dividends declared
($1.00 per share of
common stock)
           (4,835,038) (4,835,038)
Balance as of September 30, 20204,833,232 48,332 19,329,577 1,628,861  53,010,649   74,017,419 
Comprehensive income:
Unrealized loss on
marketable securities,
net of tax
          (145,452)(145,452)
Net income              3,925,709   3,925,709 
Total comprehensive income                  3,780,257 
Stock-based compensation      4,275           4,275 
Cash dividends declared
($1.00 per share of
common stock)
           (4,833,232) (4,833,232)
Balance as of December 31, 20204,833,232$48,332 $19,333,852  $1,483,409  $52,103,126  $72,968,719 


See accompanying notes.


6
Table of Contents

NVE CORPORATION
STATEMENTS OF SHAREHOLDERS’SHAREHOLDERS’ EQUITY
(Unaudited)
              
Accumulated
         
          
Additional
  
Other
         
  
Common Stock
  
Paid-In
  
Comprehensive
  
Retained
     
  
Shares
  
Amount
  
Capital
  
Income
  
Earnings
  
Total
 
Balance as of March 31, 2020
  4,835,038  $48,350  $19,383,956  $516,523  $58,046,520  $77,995,349 
Comprehensive income:
                        
Unrealized gain on marketable securities, net of tax
      0   0   1,242,662   0   1,242,662 
Net income
      0   0   0   2,411,865   2,411,865 
Total comprehensive income
      0   0   0   0   3,654,527 
Stock-based compensation
      0   2,707   0   0   2,707 
Cash dividends declared ($1.00 per share of common stock)
      0   0   0   (4,835,038
)
  (4,835,038
)
Balance as of June 30, 2020
  4,835,038   48,350   19,386,663   1,759,185   55,623,347   76,817,545 
Repurchase of common stock
  (1,806
)
  (18
)
  (91,401
)
  0   0   (91,401
)
Comprehensive income:
                        
Unrealized loss on marketable securities, net of tax
      0   0   (130,324
)
      (130,324
)
Net income
      0   0   0   2,222,340   2,222,340 
Total comprehensive income
                      2,092,016 
Stock-based compensation
          34,315           34,315 
Cash dividends declared ($1.00 per share of common stock)
                  (4,835,038
)
  (4,835,038
)
Balance as of September 30, 2020
  4,833,232   48,332   19,329,577   1,628,861   53,010,649   74,017,419 
Comprehensive income:                        
Unrealized loss on marketable securities, net of tax      0   0   (145,452)  0   (145,452)
Net income      0   0   0   3,925,709   3,925,709 
Total comprehensive income      0   0   0   0   3,780,257 
Stock-based compensation      0   4,275   0   0   4,275 
Cash dividends declared ($1.00 per share of common stock)      0   0   0   (4,833,232)  (4,833,232)
Balance as of December 31, 2020  4,833,232  $48,332  $19,333,852  $1,483,409  $52,103,126  $72,968,719 

 
 
 		Additional
Paid-In
Capital		  Accumulated
Other
Comprehen-
sive (Loss)
Income		 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 
Comprehensive income:
Unrealized gain on
marketable securities,
net of tax
31,237 31,237
Net income              3,730,664   3,730,664 
Total comprehensive income                  3,761,901
Cash dividends declared
($1.00 per share of
common stock)
           (4,846,010) (4,846,010)
Balance as of December 31, 20194,846,010$48,460$19,958,918$697,291  $59,526,033$80,230,702 


See accompanying notes.


7
Table of Contents

NVE CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
  
Nine Months Ended December 31
 
  
2021
  
2020
 
OPERATING ACTIVITIES
        
Net income
 $10,691,481  $8,559,914 
Adjustments to reconcile net income to net cash provided by operating activities:
        
Depreciation and amortization
  358,828   386,968 
Stock-based compensation
  73,036   41,297 
Deferred income taxes
  319   (73,269)
Changes in operating assets and liabilities:
        
Accounts receivable
  (1,073,922)  (467,290)
Inventories
  (466,898)  41,973 
Prepaid expenses and other assets
  (435,067)  181,557 
Accounts payable and other liabilities
  (49,447)  (140,082)
Net cash provided by operating activities
  9,098,330   8,531,068 
         
INVESTING ACTIVITIES
       
Purchases of fixed assets
  (58,317) 0(13,627)
Proceeds from maturities of marketable securities
  4,000,000   12,000,000 
Cash provided by investing activities
  3,941,683   11,986,373 
         
FINANCING ACTIVITIES
        
Repurchase of common stock  0   (91,419)
Payment of dividends to shareholders
  (14,499,696)  (14,503,308)
Cash used in financing activities
  (14,499,696)  (14,594,727)
(Decrease) increase in cash and cash equivalents
  (1,459,683)  5,922,714 
         
Cash and cash equivalents at beginning of period
  10,427,340   8,065,594 
         
Cash and cash equivalents at end of period
 $8,967,657  $13,988,308 
         
Supplemental disclosures of cash flow information:
        
Cash paid during the period for income taxes
 $2,490,000  $1,636,788 

Nine Months Ended Dec. 31
20202019
OPERATING ACTIVITIES
Net income$8,559,914$11,160,145
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization386,968403,691
Stock-based compensation41,29748,360
Deferred income taxes(73,269)71,800 
Changes in operating assets and liabilities:
Accounts receivable(467,290)876,601 
Inventories41,973 105,134
Prepaid expenses and other assets181,557 80,746 
Accounts payable and other liabilities(140,082)(210,172)
Net cash provided by operating activities8,531,06812,536,305
 
INVESTING ACTIVITIES
Purchases of fixed assets(13,627)(26,076)
Purchases of marketable securities-(7,196,330)
Proceeds from maturities of marketable securities12,000,000   12,500,000 
Cash provided by investing activities 11,986,373   5,277,594 
 
FINANCING ACTIVITIES
Repurchase of common stock(91,419) -
Payment of dividends to shareholders (14,503,308)  (14,538,030)
Cash used in financing activities (14,594,727)  (14,538,030)
 
Increase in cash and cash equivalents5,922,714 3,275,869 
Cash and cash equivalents at beginning of period8,065,594  6,877,304 
 
Cash and cash equivalents at end of period$13,988,308  $10,153,173 
 
Supplemental disclosures of cash flow information:
Cash paid during the period for income taxes$1,636,788  $1,931,661 


See accompanying notes.


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Table of Contents

NVE CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

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

NOTE 2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited financial statements of NVE Corporation are prepared consistent with accounting principles generally accepted in the United States and in accordance with Securities and Exchange Commission rules and regulations. In the opinion of management, these financial statements reflect all adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation of the financial statements. Although we believe that the disclosures are adequate to make the information presented not misleading, certain disclosures have been omitted as allowed, and it is suggested that these unaudited financial statements be read in conjunction with the audited financial statements and the notes included in our latest annual financial statements included in our Annual Report on Form 10-K10-K for the fiscal year ended March 31, 2020. 2021. The results of operations for the quarter and nine months ended December 31, 2020 2021 are not necessarily indicative of the results that may be expected for the full fiscal year ending March 31, 2022.
Significant accounting policies
A description of our significant accounting policies is provided in Note 2 to the Financial Statements in our Annual Report on Form 10-K for the year ended March 31, 2021.

Significant Accounting Policies
Revenue Recognition
    We recognize revenue when we satisfy performance obligations by the transferAs of control of products or servicesDecember 31, 2021, there were no changes to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those products or services. Revenue is disaggregated into product sales and contract research and development to depict the nature, amount, timing of revenue recognition and economic characteristics of our business, and is represented within the financial statements.

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

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

     Accounts receivable is recognized when we have transferred a good or service to a customer and our right to receive consideration is unconditional through the completion of our performance obligation. A contract asset is recognized when we have a right to consideration from the transfer of goods or services to a customer but have not completed our performance obligation. A contract liability is recognized when we have been paid by a customer but have not yet satisfied the performance obligation by transferring goods or services. We had no material contract assets or contract liabilities as of December 31, 2020 or March 31, 2020.

     Our performance obligations related to product sales and contract research and development contracts are satisfied in one year or less. Unsatisfied performance obligations represent contracts with an original expected duration of one year or less. As permitted under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, we are using the practical expedient not to disclose the value of these unsatisfied performance obligations. We also use the practical expedient in which we do not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less.

accounting policies.
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NOTE 3. RECENTLY ISSUED ACCOUNTING STANDARDS

NewRecently Adopted Accounting Standards Not Yet AdoptedStandard
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, 2019-12,Income Taxes (Topic 740)740)—Simplifying the Accounting for Income Taxes.Taxes. ASU 2019-12 is intended to simplify2019-12 simplifies accounting for income taxes. Ittaxes, removes certain exceptions to the general principles in Topic 740, and amends existing guidance to improve consistent application. We adopted ASU 2019-122019-12 beginning with the quarter ended June 30, 2021. The adoption had no material impact on our financial statements.
 
New Accounting Standard Not Yet Adopted
In May 2021, the FASB issued ASU No.2021-04,Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. ASU 2021-04 addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options. ASU 2021-04 is effective for fiscal years beginning after December 15, 2020 2021 and interim periods within those fiscal years, which is fiscal 20222023 for us, with early adoption permitted. We do not expect adoption of the new guidance to have a significant impact on our financial statements.

     In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Statements. ASU 2016-13 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. In November 2018 the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, which clarifies codification and corrects unintended application of the guidance, and in November 2019, the FASB issued ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which clarifies or addresses specific issues about certain aspects of ASU 2016-13. In November 2019 the FASB issued ASU No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, and in February 2020 the FASB issued ASU No. 2020-02, Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842), both of which delay the effective date of ASU 2016-13 by three years for certain Smaller Reporting Companies such as us. We were unaffected by the change in the effective date of the ASU related to Leases (Topic 842) because we have already adopted that ASU. In March 2020, the FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments; which modifies the measurement of expected credit losses of certain financial instruments. In accordance with ASU 2019-10 and ASU 2020-02, ASU 2016-13 is effective for certain Smaller Reporting Companies for financial statements issued for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years, which will be fiscal 2024 for us if we continue to be classified as a Smaller Reporting Company, with early adoption permitted. We do not expect adoption of the new guidance to have a significant impact on our financial statements.

NOTE 4. NET INCOME PER SHARE
Net income per basic share is computed based on the weighted-average number of common shares issued and outstanding during each period. Net income per diluted share amounts assume exercise of all stock options. The following tables show the components of diluted shares:

Quarter Ended Dec. 31
20202019
Weighted average common shares outstanding – basic4,833,2324,846,010
Dilutive effect of stock options291,426
Shares used in computing net income per share – diluted  4,833,2614,847,436

Nine Months Ended Dec. 31
20202019
Weighted average common shares outstanding – basic4,834,3244,846,010
Dilutive effect of stock options872,496
Shares used in computing net income per share – diluted  4,834,4114,848,506

  
Quarter Ended December 31
 
  
2021
  
2020
 
Weighted average common shares outstanding – basic
  4,833,604   4,833,232 
Dilutive effect of stock options
  2,167   29 
Shares used in computing net income per share – diluted
  4,835,770   4,833,261 
  
Nine Months Ended December 31
 
  
2021
  
2020
 
Weighted average common shares outstanding – basic
  4,833,356   4,834,324 
Dilutive effect of stock options
  2,425   87 
Shares used in computing net income per share – diluted
  4,835,781   4,834,411 
10
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NOTE 5. FAIR VALUE OF FINANCIAL INSTRUMENTS
Our corporate bonds and money market funds are classified as available-for-sale securities and carried at estimated fair value. Unrealized holding gains and losses are included in accumulated other comprehensive income (loss) in the statement of shareholders’ equity. Corporate bonds with remaining maturities less than one year are classified as short-term, and those with remaining maturities greater than one year are classified as long-term. We consider all highly-liquid investments with maturities of three months or less when purchased, including money market funds, to be cash equivalents. Gains and losses on marketable security transactions are reported on the specific-identification method.

Contractual maturities of available-for-sale securities as of December 31, 2020 2021 are as follows:
Total<1 Year1–3 Years3–5 Years
$65,694,022$25,037,055$34,142,192$6,514,775

Total
  
<1 Year
  
1–3 Years
  
3–5 Years
 
$57,293,870  $30,114,318  $22,148,686  $5,030,866 
Total available-for-sale securities represented approximately 88%84% of our total assets. Marketable securities as of December 31, 2020 2021 had remaining maturities between eightthree weeks and 38 months.

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

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

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

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

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

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

As of December 31, 2020As of March 31, 2020
Level 1 Level 2 TotalLevel 1Level 2Total
Money market funds  $13,921,961  $-  $13,921,961  $7,903,433  $-  $7,903,433
Corporate bonds -  51,772,061  51,772,061  -  62,691,309  62,691,309
Total$13,921,961 $51,772,061 $65,694,022 $7,903,433 $62,691,309 $70,594,742

  
As of December 31, 2021
  
As of March 31, 2021
 
  
Level 1
  
Level 2
  
Total
  
Level 1
  
Level 2
  
Total
 
Money market funds
 $7,631,824  $0  $7,631,824  $10,143,196  $0  $10,143,196 
Corporate bonds
  0   49,662,046   49,662,046   0   54,717,626   54,717,626 
Total
 $7,631,824  $49,662,046  $57,293,870  $10,143,196  $54,717,626  $64,860,822 
Our available-for-sale securities as of December 31 and March 31, 2020, 2021, aggregated into classes of securities, were as follows:

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

Amortized
Cost		 Gross
Unrealized
Holding Gains		 Gross
Unrealized
Holding Losses		 Estimated
Fair
Value
Amortized
Cost		Gross
Unrealized
Holding Gains		Gross
Unrealized
Holding Losses		Estimated
Fair
Value
Money market
   funds		$13,921,961  $-  $-   $13,921,961  $7,903,433  $-  $-   $7,903,433
Corporate bonds   49,873,178  1,898,883  -   51,772,061  62,030,120  752,621  (91,432)  62,691,309
Total$63,795,139 $1,898,883 $-  $65,694,022 $69,933,553 $752,621 $(91,432) $70,594,742

  
As of December 31, 2021
  
As of March 31, 2021
 
  
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
 $7,631,824  $0  $0  $7,631,824  $10,143,196  $0  $0  $10,143,196 
Corporate bonds
  49,106,800   772,080   (216,834)  49,662,046   53,308,105   1,570,195   (160,674
)
  54,717,626 
Total
 $56,738,624  $772,080  $(216,834) $57,293,870  $63,451,301  $1,570,195  $(160,674
)
 $64,860,822 
11
10
Table
The following table shows the gross unrealized holding losses and fair value of Contents

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 31, 2021 and March 31,2021.
  
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 December 31, 2021
                        
Corporate bonds
 $10,167,905  $(216,834) $0  $0  $10,167,905  $(216,834)
Total
 $10,167,905  $(216,834) $0  $0  $10,167,905  $(216,834)
                         
As of March 31, 2021
                        
Corporate bonds
 $10,322,539  $(160,674
)
 $0  $0  $10,322,539  $(160,674
)
Total
 $10,322,539  $(160,674
)
 $0  $0  $10,322,539  $(160,674
)
We did not consider any of our available-for-sale securities to be impaired as of December 31, 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 December 31, 2021.
NOTE 6. INVENTORIES
Inventories are shown in the following table:
Dec. 31,
2020		March 31,
2020
Raw materials$839,102$1,017,451
Work in process 1,959,6921,863,000
Finished goods1,043,6831,003,999
Total inventories$3,842,477$3,884,450

  
December 31,
2021
  
March 31,
2021
 
Raw materials
 $784,004  $660,678 
Work in process
  2,812,910   2,220,723 
Finished goods
  770,760   1,019,376 
Total inventories
 $4,367,675  $3,900,777 
NOTE 7. STOCK-BASED COMPENSATION
Stock-based compensation expense was $8,799 for the third quarter of fiscal 2022,$4,275 for the third quarter of fiscal 2021, $73,036 for the firstnine months of fiscal 2022, and $41,297 for the firstnine months of fiscal 2021, and $48,360 for the first nine months of fiscal 2020. There was no Stock-based compensation expense in the third quarter of fiscal 2020.2021. We calculate the share-based compensation expense using the Black-Scholes standard option-pricing model.

NOTE 8. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

We had no0 unrecognized tax benefits as of December 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 December 31, 2020 2021 we had no0 accrued interest related to uncertain tax positions. The tax years 2016 through 20192020 remain open to examination by the major taxing jurisdictions to which we are subject.

11
NOTE 9. LEASES
We conduct our operations in a leased facility under a non-cancellable lease expiring March 31, 2026. Our lease does not provide an implicit rate, so we used our incremental borrowing rate to determine the present value of lease payments. Lease expense is recognized on a straight-line basis over the lease term. Variable lease costs consist primarily of common area maintenance and real estate taxes which are paid based on actual costs incurred by the lessor. Details of our operating lease are as follows:

Quarter Ended
Dec. 31, 2020		Nine Months Ended
Dec. 31, 2020
Operating lease cost$38,641  $115,923
Variable lease cost 30,608   91,824 
Total$69,249  $207,747 
 
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for leases$44,433  $133,299
Remaining lease term 63 months
Discount rate 3.5%
 
     The following table presents the maturities of lease liabilities as of December 31, 2020:
 
Year Ending March 31Operating Leases
2021$(4,762)
2022152,703
2023156,121
2024159,592
2025163,224
2026165,947
Total lease payments 792,825
 
Imputed lease interest (72,207)
Total lease liabilities$720,618 

12
Table
  Quarter Ended
Dec. 31, 2021		  Nine Months Ended
Dec. 31, 2021		 
Operating lease cost $42,516  $127,546 
Variable lease cost  31,029   93,087 
Total $73,545  $220,633 
         
Cash paid for amounts included in the measurement of lease liabilities        
Operating cash flows for leases $37,962  $113,886 
Remaining lease term 51 months     
Discount rate  3.5%    
 The following table presents the maturities of Contents

lease liabilities as of December 31, 2021:
Year Ending March 31 Operating Leases 
2022  38,817 
2023  156,121 
2024  159,592 
2025  163,224 
2026  165,947 
Total lease payments  683,701 
Imputed lease interest  (48,096)
Total lease liabilities $635,605 
NOTE 10. STOCK REPURCHASE PROGRAM
On January 21, 2009 we announced that our Board of Directors authorized the repurchase of up to $2,500,000 of our Common Stock from time to time in open market, block, or privately negotiated transactions. The timing and extent of any repurchases depends on market conditions, the trading price of the company’s stock, and other factors, and subject to the restrictions relating to volume, price, and timing under applicable law. On August 27, 2015, we announced that our Board of Directors authorized up to $5,000,000 of additional repurchases. Our repurchase program does not have an expiration date and does not obligate us to purchase any shares. The Program may be modified or discontinued at any time without notice. We intend to finance any stock repurchases with cash provided by operating activities or maturating marketable securities. The remaining authorization was $3,762,040 as of December 31, 2020.

2021. We have not repurchased any of our Common Stock during fiscal 2022.
NOTE 11. INFORMATION AS TO EMPLOYEE STOCK PURCHASE, SAVINGS, AND SIMILAR PLANS
All of our employees are eligible to participate in our 401(k)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 $21,579 for the third quarter of fiscal 2022,$22,571 for the third quarter of fiscal 2021, $22,4562021, $76,995 for the third quarterfirstnine months of fiscal 2020,2022, and $69,227 for the firstnine months of fiscal 2021, and $68,512 for the first nine months of fiscal 2020.

2021.
NOTE 12. SUBSEQUENT EVENTS
On January 20, 2021 19, 2022 we announced that our Board had declared a quarterly cash dividend of $1.00 per share of Common Stock to be paid February 26, 2021 28, 2022to shareholders of record as of the close of business February 1, 2021.

January 31, 2022.
13
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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

Further information regarding our risks and uncertainties are contained in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended March 31, 20202021 as updated in our Quarterly Reports on Form 10-Q for the quarters ended June 30, 2020, September 30, 2020, and Item 1A herein.

of this report.
General
NVE Corporation, referred to as NVE, we, us, or our, develops and sells devices that use spintronics, a nanotechnology that relies on electron spin rather than electron charge to acquire, store and transmit information. We manufacture high-performance spintronic products including sensors and couplers that are used to acquire and transmit data.

Critical accounting policies
A description of our critical accounting policies is provided in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended March 31, 2020.2021. As of December 31, 20202021 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, 20202021 compared to quarter ended December 30, 2019
31, 2020
The table shown below summarizes the percentage of revenue and quarter-to-quarter changes for various items:

Percentage of Revenue
Quarter Ended December 31		Quarter-
to-Quarter
Change
20202019
Revenue
Product sales96.9%95.3%2.8%
Contract research and development3.1%4.7%(33.8)%
Total revenue100.0%100.0%1.1%
Cost of sales16.5%19.5%(14.9)%
Gross profit83.5%80.5%5.0%
Expenses
Research and development10.7%12.0%(9.0)%
Selling, general, and administrative4.8%5.1%(5.1)%
Total expenses15.5%17.1%(7.8)%
Income from operations68.0%63.4%8.4%
Interest income5.6%6.9%(17.6)%
Income before taxes73.6%70.3%5.8%
Provision for income taxes13.5%12.6%8.6%
Net income60.1%57.7%5.2%

  
Percentage of Revenue
Quarter Ended December 31
  
Quarter-
to-Quarter
 
  
2021
  
2020
  
Change
 
Revenue
            
Product sales
   94.1
%
  96.9
%
   (6.6)
%
Contract research and development
   5.9
%
   3.1
%
   86.1
%
Total revenue
  100.0
%
  100.0
%
   (3.7)
%
Cost of sales
   22.0
%
   16.5
%
   28.8
%
Gross profit
   78.0
%
   83.5
%
   (10.1)
%
Expenses
            
Research and development
   9.5
%
  10.7
%
   (15.1)
%
Selling, general, and administrative
   4.3
%
   4.8
%
   (12.6)
%
Total expenses
   13.8
%
   15.5
%
   (14.3)
%
Income from operations
   64.2
%
   68.0
%
   (9.2)
%
Interest income
   4.5
%
   5.6
%
   (22.3)
%
Income before taxes
   68.7
%
   73.6
%
   (10.2)
%
Provision for income taxes
   13.6
%
   13.5
%
   (3.3)
%
Net income
   55.1
%
  60.1
%
   (11.7)
%
Total revenue for the quarter ended December 31, 2021 (the third quarter of fiscal 2022) decreased 4% compared to the quarter ended December 31, 2020 (the third quarter of fiscal 2021) increased 1% compared to the quarter ended December 31, 2019 (the third quarter of fiscal 2020). The increasedecrease was due to a 3% increase7% decrease in product sales partially offset by a 34% decreasean 86% increase in contract research and development revenue.
The increasedecrease in product sales in the third quarter of fiscal 2022 from the prior-year quarter was primarily due to increased purchases by existing customers.raw materials shortages and longer lead-times for critical materials and services. The decreaseincrease in contract research and development revenue was due to new contracts.
Gross profit as a percentage of revenue decreased to 78% the third quarter of fiscal 2022 from 84% the third quarter of fiscal 2021 primarily due to revenue mix and increased costs.
Total expenses decreased 14% in the third quarter of fiscal 2021 was due to the completion of certain contracts.

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

     Total expenses decreased 8% in the third quarter of fiscal 20212022 compared to the third quarter of fiscal 20202021 due to a 9%15% decrease in research and development expense and a 5%13% decrease in selling, general, and administrative expense. The decrease in research and development expense was primarily due to staffing changes and the completion of certain product development activities. The decrease in selling, general, and administrative expense was primarily due to staffing changes.

Interest income for the third quarter of fiscal 20212022 decreased 18%22% due to a decrease in our marketableavailable-for-sale securities and money market funds and a decrease in the average interest rates on those securities and funds.

securities.
The 5% increase12% decrease in net income in the third quarter of fiscal 20212022 compared to the prior-year quarter was primarily due to increased product sales, increaseddecreased revenue, decreased gross profit margin, and decreased expenses,interest income partially offset by decreased contract research and development revenue and decreased interest income.

expenses. 
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Nine months ended December 31, 20202021 compared to nine months ended December 31, 2019
2020
The table shown below summarizes the percentage of revenue and period-to-periodquarter-to-quarter changes for various items:

Percentage of Revenue
Nine Months Ended Dec. 31		Period-
to-Period
Change
20202019
Revenue
Product sales95.8%95.7%(19.4)%
Contract research and development4.2%4.3%(21.0)%
Total revenue100.0%100.0%(19.5)%
Cost of sales18.4%19.2%(22.9)%
Gross profit81.6%80.8%(18.7)%
Expenses
Research and development15.5%13.9%(10.2)%
Selling, general, and administrative6.6%5.3%(0.2)%
Total expenses22.1%19.2%(7.4)%
Income from operations59.5%61.6%(22.2)%
Interest income7.5%7.0%(14.2)%
Income before taxes67.0%68.6%(21.4)%
Provision for income taxes11.8%10.7%(11.0)%
Net income55.2%57.9%(23.3)%

  
Percentage of Revenue
Nine Months Ended December 31
  
Period-
to-Period
 
  
2021
  
2020
  
Change
 
Revenue
            
Product sales
   96.2
%
  95.8
%
   31.3
%
Contract research and development
   3.8
%
   4.2
%
   17.4
%
Total revenue
  100.0
%
   100.0
%
   30.7
%
Cost of sales
   23.2
%
  18.4
%
   64.7
%
Gross profit
   76.8
%
  81.6
%
   23.1
%
Expenses
            
Research and development
   10.4
%
  15.5
%
   (11.9)
%
Selling, general, and administrative
   6.0
%
   6.6 
%
   19.3
%
Total expenses
   16.4
%
   22.1
%
   (2.6)
%
Income from operations
   60.4
%
   59.5
%
   32.6
%
Interest income
   4.2
%
   7.5
%
   (25.5)
%
Income before taxes
  64.6
%
  67.0
%
   26.1
%
Provision for income taxes
   11.8
%
  11.8
%
   31.5
%
Net income
   52.8
%
  55.2
%
   24.9
%
Total revenue for the nine months ended December 31, 2020 decreased 20%2021 increased 31% compared to the nine months ended December 31, 2019,2020. The increase was due to a 19% decrease31% increase in product sales and a 21% decrease17% increase in contract research and development revenue.

The decreaseincrease in product sales from the prior-year period was primarily due to decreased purchase volumesincreased purchases by existing customers.customers, and sales increased in most of our markets and product lines. The decreaseincrease in contract research and development revenue was due to new contracts.
Gross profit as a percentage of revenue decreased to 77% for the completionfirst nine months of certain contracts.

     Total expenses decreased 7%fiscal 2022 from 82% for the first nine months of fiscal 2021 primarily due to revenue mix and increased costs.
Total expenses decreased 3% for the first nine months of fiscal 2022 compared to the first nine months of fiscal 2020 primarily2021 due to a 10%12% decrease in research and development expense, partially offset by a 19% increase in selling, general, and administrative expense. The decrease in research and development expense was primarily due to staffing changes and the completion of certain product development activities.

 The increase in selling, general, and administrative expense was primarily due to increased employee compensation expense.
Interest income for the first nine months of fiscal 20212022 decreased 14%26% due to a decrease in our marketableavailable-for-sale securities and money market funds and a decrease in the average interest rates on those securities and funds.

securities.
The 23% decrease25% increase in net income in the first nine months of fiscal 20212022 compared to the prior-year period was primarily due to a decreasean increase in revenue.

product sales.
The Impact of the COVID-19 Pandemic
     The
We believe the impact of the COVID-19 pandemic had a significant impact on total revenuecustomer demand was significantly less in the quarter and net income for the nine months ended December 31, 20202021 compared to the prior-year period due to its effects on market conditions in certain industries, especially medical devices.periods. We believe the effectsimpact of the pandemic on our business subsidedsupply chain, however, was significantly more in the quarter and nine months ended December 31, 2020, however.

2021 than in the prior-year periods. The effects of the pandemic also increased labor and materials costs and expenses for the quarter and nine months ended December 31, 2021.
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Liquidity and Capital Resources
Overview
Cash and cash equivalents were $13,988,308$8,967,657 as of December 31, 20202021 compared to $8,065,594$10,427,340 as of March 31, 2020.2021. The $5,922,714 increase$1,459,683 decrease in cash and cash equivalents during first nine months of fiscal 2022 was due to $8,531,068$14,499,696 of cash used in financing activities partially offset by $9,098,330 in net cash provided by operating activities and $11,986,373$3,941,683 of cash provided by investing activities.
Operating Activities
Net cash provided by operating activities partially offsetrelated to product sales and research and development contract revenue as our primary source of working capital for the current and prior year quarters. Net cash provided by $14,594,727operating activities was $9,098,330 for first nine months of cash usedfiscal 2022 and $8,531,068 for the first nine months of fiscal 2021.
Accounts receivable increased by $1,073,922 during first nine months of fiscal 2022 primarily due to the timing of sales to and payments from customers.
Prepaid expenses and other assets increased by $435,067 due to the timing of estimated tax payments.
 
Inventories increased $466,898 due primarily to our decisions to increase work in financing activities.

process in order to mitigate longer vendor lead-times.
Investing Activities
Cash provided by investing activities induring the nine months ended December 31, 2020 was due to $12,000,0002021 consisted of $4,000,000 in proceeds from maturities of marketable security maturities,securities, partially offset by $13,627 of fixed asset purchases.$58,317 in capital expenditures. Capital expenditures can vary from periodquarter to periodquarter depending on our needs and equipment purchasing opportunities.

 We have ordered several pieces of production equipment to increase our capacity. Therefore, we currently expect significantly more capital expenditures during fiscal 2022 than the $62,727 we invested in fiscal 2021.
Financing Activities
     We paid $14,503,308
Cash used in financing activities during the nine months ended December 31, 2021 consisted of $14,499,696 of cash dividends and repurchased $91,419 of our Common Stockpaid to shareholders. In addition to cash dividends to shareholders paid in the first nine months of fiscal 2021. In addition to cash dividends paid in the first nine months of fiscal 2021,2022, on January 20, 202119, 2022 we announced that our Board had declared a cash dividend of $1.00 per share of Common Stock, or $4,833,232$4,833,714 based on shares outstanding as of January 15, 2021,14, 2022, to be paid February 26, 2021.28, 2022. We plan to fund dividends through cash provided by operating activities and proceeds from maturities of marketable securities. All future dividends will be subject to Board approval and subject to the company’s results of operations, cash and marketable security balances, estimates of future cash requirements, the impacts of the COVID-19 pandemic, and other factors the Board may deem relevant. Furthermore, dividends may be modified or discontinued at any time without notice.

We currently believe our working capital and cash generated from operations will be adequate for our needs at least for the next 12 months.

Off-Balance-Sheet Arrangements
     Our off-balance sheet arrangements consist of purchase commitments. We believe such arrangements have no material current or anticipated future effect on our profitability, cash flows, or financial position.

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Item 4. Controls and Procedures.
Disclosure Controls and Procedures
Management, with the participation of the Chief Executive Officer and ChiefPrincipal 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 ChiefPrincipal Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on such evaluation,Although there have been changes in personnel involved in our Chief Executive Officercontrols, processes, and Chief Financial Officerprocedures, our management concluded that, as of December 31, 2020,2021, our disclosure controls and procedures were effective.

Changes in Internal Controls
During the quarter ended December 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.


PART II–II–OTHER INFORMATION

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

Item 1A. Risk Factors.
There have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 20202021 as updated in our Quarterly Report on Form 10-Q for the quarters ended June 30, 20202021 and September 30, 2020, except the following risk factors are replaced in their entirety by the following to update the effects of the COVID-19 pandemic:

2021.
The loss of supply from any of our packaging vendors could impact our ability to produce and deliver products and cause loss of revenue.
     We are dependent on our packaging vendors. Because of the unique materials our products use, the complexity of some of our products, unique magnetic requirements, and high isolation voltage specifications, many of our products are more challenging to package than conventional integrated circuits. Some of our products use processes or tooling unique to a particular packaging vendor, and it might be expensive, time-consuming, or impractical to convert to another vendor in the event of a supply interruption due to vendors’ business decisions, business condition, or acts of God, including floods, typhoons, earthquakes, or pandemics. Leadtimes for packaging services have increased during the COVID-19 pandemic and there have been shortages of raw materials our packaging vendors need for their process. One of our packaging vendors was forced to suspend its factory operations from late March 2020 until mid-May 2020 and was permitted only limited operation from mid-May through August 2020 pursuant to COVID-19 government orders, and restrictions could be reimposed in the future. Additionally, certain of our packaging vendors are in flood-susceptible areas. Flooding risks to such vendors may increase in the future due to possible higher ocean levels, extreme weather, and other potential effects of climate change. We have alternate vendors or potential alternate vendors for the majority of our products, but it can be expensive, time-consuming, and technically challenging to convert to alternate vendors. Furthermore, we may not be able to recover work in process or finished goods at a packaging vendor in the event of a disruption. Any supply interruptions or loss of inventory could seriously jeopardize our ability to provide products that are critical to our business and operations and may cause us to lose revenue.

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

Item 4. Mine Safety Disclosures.
     Not applicable.


None.
 
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Item 6. Exhibits.
Exhibit #
Description
  10
31
Amendment No. 6 to Supplier Partnering Agreement between Abbott and the company (incorporated by reference to the Form 8-K/A filed December 21, 2020).
  31.1
Certification by Daniel A. Baker pursuant to Rule 13a-14(a)/15d-14(a).
 31.2Certification 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
101.INS
Inline XBRL Instance Document
 (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH     
Inline XBRL Taxonomy Extension Schema Document
101.CAL
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


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SIGNATURES

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

NVE CORPORATION
 
(Registrant)

 
January 20, 202119, 2022
/s/ DANIEL A. BAKER
Date
Daniel A. Baker
President, and Chief Executive Officer,
and Principal Financial Officer

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



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