UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2025
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________________to____________________
Commission file number 000-12196
NVE Corporation
(Exact name of registrant as specified in its charter)
Minnesota 41-1424202
State or other jurisdiction of incorporation or organization (I.R.S. Employer Identification No.)
11409 Valley View Road, Eden Prairie, Minnesota 55344
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (952) 829-9217
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
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes
No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for
such shorter period that the registrant was required to submit such files). Yes
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer,
smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the
Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act
(15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of
the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of
incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period
pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
No
The aggregate market value of the voting stock held by non-affiliates of the Registrant, based on the closing price on
September 30, 2024, the last business day of the Registrant’s most recently completed second fiscal quarter, as reported on
the NASDAQ Stock Market, was approximately $265 million.
The number of shares of the registrant’s Common Stock (par value $0.01) outstanding as of March 31, 2025 was 4,837,166.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of our Proxy Statement for our 2025 Annual Meeting of Shareholders are incorporated by reference into
Items 10, 11, 12, 13, and 14 of Part III hereof.
2
NVE CORPORATION
INDEX TO FORM 10-K
PART I ........................................................................................................................................................................................ 3
Item 1. Business. ................................................................................................................................................................... 3
Our Strategy .................................................................................................................................................................. 4
Our Products and Markets ............................................................................................................................................. 4
Product Manufacturing .................................................................................................................................................. 4
Sales and Product Distribution ...................................................................................................................................... 5
New Product Status ....................................................................................................................................................... 5
Our Competition ............................................................................................................................................................ 5
Sources and Availability of Raw Materials.................................................................................................................... 5
Intellectual Property ...................................................................................................................................................... 6
Dependence on Major Customers .................................................................................................................................. 6
Government Regulations ............................................................................................................................................... 6
Environmental Matters .................................................................................................................................................. 6
Human Capital Resources ............................................................................................................................................. 7
Available Information .................................................................................................................................................... 8
Item 1A. Risk Factors. .......................................................................................................................................................... 9
Item 1B. Unresolved Staff Comments. ............................................................................................................................... 13
Item 2. Properties. ............................................................................................................................................................... 13
Item 3. Legal Proceedings. ................................................................................................................................................. 13
Item 4. Mine Safety Disclosures. ........................................................................................................................................ 13
PART II ..................................................................................................................................................................................... 14
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities. ..... 14
Market Information and Dividends ............................................................................................................................. 14
Shareholders ................................................................................................................................................................ 14
Stock Repurchase Program .......................................................................................................................................... 14
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.................................. 15
Item 8. Financial Statements and Supplementary Data. ..................................................................................................... 17
Item 9A. Controls and Procedures. ..................................................................................................................................... 17
Item 9B. Other Information. ............................................................................................................................................... 18
Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections. ............................................................... 18
PART III ................................................................................................................................................................................... 19
Item 10. Directors, Executive Officers and Corporate Governance. .................................................................................. 19
Item 11. Executive Compensation. ..................................................................................................................................... 19
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. ............ 19
Item 13. Certain Relationships and Related Transactions, and Director Independence. ..................................................... 19
Item 14. Principal Accounting Fees and Services. .............................................................................................................. 19
PART IV ................................................................................................................................................................................... 19
Item 15. Exhibits, Financial Statement Schedules. ............................................................................................................. 19
SIGNATURES .......................................................................................................................................................................... 21
Financial Statements
Report of Independent Registered Public Accounting Firm ............................................................................................. F-1
Balance Sheets .................................................................................................................................................................. F-2
Statements of Income ....................................................................................................................................................... F-3
Statements of Comprehensive Income ............................................................................................................................. F-3
Statements of Shareholders’ Equity .................................................................................................................................. F-4
Statements of Cash Flows ................................................................................................................................................. F-5
Notes to Financial Statements .......................................................................................................................................... F-6
3
PART I
FORWARD-LOOKING STATEMENTS
Some of the statements made in this Report or 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 terminology such as may, will, expect, anticipate, intend, believe, estimate, should, or continue,
or the negatives of these terms or other variations of 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 sales and revenues, risks and uncertainties related to tariffs, customs, duties,
and other trade barriers, risks and uncertainties related to future stock repurchases and dividend payments, and other specific
risks that may be alluded to in this Report or the documents incorporated by reference in this Report. For more information
regarding our risks and uncertainties, see Item 1A “Risk Factors” of this Report.
ITEM 1. BUSINESS.
In 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.
NVE History and Background
NVE is a Minnesota corporation headquartered in a suburb of Minneapolis. We were founded in 1989 by James M.
Daughton, Ph.D., a spintronics pioneer. Our common stock became publicly traded in 2000 through a reverse merger and became
NASDAQ listed in 2003. Since our founding, we have been awarded more than $50 million in government research contracts.
These contracts have helped us develop products and build our intellectual property portfolio. We have adopted a March 31 fiscal
year, so fiscal years referenced in this report end March 31.
Industry Background
Much of the electronics industry is devoted to the acquisition, storage, and transmission of information. We have focused on
three applications for our spintronic technology: magnetic sensors, couplers, and memories. Sensors acquire information,
couplers transmit information, and memories store information. In that sense, our technology can provide the eyes, nerves, and
brains of electronic systems.
Magnetic sensors can be used for many purposes including detecting the position or speed of robotics and mechanisms, or for
communicating with implantable medical devices. We believe our spintronic sensors are smaller, more precise, and more reliable
than competing devices.
Couplers are widely used in factory automation, providing reliable digital communication between electronic subsystems in
factories. For example, couplers are used to send high-speed data between robots and central controllers. As manufacturing
automation expands, there is a need for higher-speed data and more channel density. Because of their unique properties, we
believe our couplers transmit more data at higher speeds and over longer distances than conventional devices.
Near-term potential MRAM applications include mission-critical storage such as military, industrial, and antitamper
applications. Long term, MRAM could address the market for ubiquitous high-density memory.
Our Enabling Technology
Our designs are generally based on either giant magnetoresistance or tunneling magnetoresistance. These structures produce a
large change in electrical resistance depending on the electron spin orientation in a free layer.
In giant magnetoresistance (GMR) devices, resistance changes due to conduction electrons scattering at interfaces within the
devices. The GMR effect is only significant if the layer thicknesses are less than the mean free path of conduction electrons,
which is approximately five nanometers. Our critical GMR conductor layers may be less than two nanometers, or five atomic
layers, thick.
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A more advanced type of spintronic structure we use is based on tunneling magnetoresistance (TMR). Such devices are known
as Spin-Dependent Tunnel (SDT) junctions or Magnetic Tunnel Junctions (MTJs). SDT junctions use tunnel barriers that are so
thin that electrons can “tunnel” through a normally insulating material to cause a resistance change. SDT barrier thicknesses can
be in the range of one to four nanometers (less than ten molecular layers).
In our products, the spintronic elements are connected to integrated circuitry and encapsulated (“packaged”) in much the same
way as conventional integrated circuits.
Our Strategy
Our vision is to become the leading developer of practical spintronics technology and devices. Our spintronic technology
provides eyes, nerves, and brains for electronic systems, breathing life and intelligence into inanimate objects. Our unique
products support global trends of efficient energy conversion and smart, low-power end nodes for the “Internet of Things.” To
grow product sales, we plan to broaden our sensor and coupler product lines and enhance our product benefits in target markets.
Our Products and Markets
Sensor Products and Markets
Our sensor products detect the strength or gradient of magnetic fields and are often used to determine position or speed. GMR
or TMR elements change electrical resistance depending on the magnetic field. In many of our devices, sensor elements are
combined with foundry integrated circuitry or digital cores, and packaged in much the same way as conventional integrated
circuits. Our sensors are small, highly sensitive to magnetic fields, precise, and reliable. We sell standard (“catalog”) sensors, and
custom sensors designed to meet customers’ exact requirements.
Standard sensors
Our standard, or catalog sensors are generally used to detect the presence of a magnetic or metallic material to determine
position, rotation, or speed. We believe our spintronic sensors are smaller, more precise, more reliable, and lower power than
competing devices. Our major market for standard sensors is the Industrial Internet of Things (IIoT) for factory automation.
Custom and medical sensors
Our primary custom products are sensors for medical devices, which are customized to our customers’ requirements and
manufactured under stringent medical device quality standards. Many are used to replace electromechanical magnetic switches.
We believe our sensors have important advantages in medical devices compared to electromechanical switches, including no
moving parts for inherent reliability, and being smaller, more sensitive, and more precise. Our sensors can be customized for size,
range, and sensitivity to magnetic fields, electrical resistance, and embedded software.
Coupler Products and Markets
Our spintronic couplers combine a GMR sensor element and an integrated microscopic coil. The coil creates a small magnetic
field that is detected by the spintronic sensor, transmitting data almost instantly. Couplers are also known as “isolators” because
they electrically isolate the coupled systems. Our major coupler markets are power conversion and the IIoT. Our couplers enable
more efficient power conversion and interconnections to implement the IIoT for advanced factory automation.
Power Products and Markets
Power products include voltage regulators, interface ICs, DC-to-DC convertors, and products that combine couplers and DC-
to-DC convertors to transmit energy as well as data. Our isolated DC-to-DC convertors transfer energy between systems without
direct electrical connections and are used in energy conversion systems and industrial networks for the IIoT. Energy conversion
applications include battery energy storage systems and hybrid/electric vehicles.
MRAM Products and Markets
MRAM uses spintronics to store data. Unlike electrical charge, the spin of an electron is inherently permanent. We have
invented several types of memory cells including inventions related to advanced MRAM designs and MRAM for tamper
prevention or detection. Our MRAM strategy has been focused on low bit density for applications such as tamper prevention and
detection.
Product Manufacturing
Our product manufacturing includes “front-end” wafer production and “back-end” product testing. We believe having our own
U.S. wafer production and test capabilities is an advantage over competitors that outsource such operations.
Wafer production is a cleanroom area with specialized equipment to deposit, pattern, etch, and process spintronic materials.
Most of our products are fabricated in our facility using either raw silicon wafers or foundry wafers. Foundry wafers contain
conventional electronics that perform housekeeping functions such as voltage regulation and signal conditioning in our products.
Each wafer may include thousands of devices. We build spintronics structures on wafers in our fabrication facility and do
wafer-level inspection and testing.
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We either dice wafers to be sold in die form, send wafers to Asia for dicing and packaging, or process wafers into Wafer-Level
Chip-Scale Parts (WLCSPs).
Packaged parts are returned to us to be tested, inventoried, and shipped. Alternatively, the process to convert wafers to
WLCSPs includes attaching solder balls, electrical testing, and wafer dicing.
Our facility has been certified under the ISO 9001:2015 quality management standard and is an Approved Place of
Manufacture under ECS/CIG 021-024: 2014.
Sales and Product Distribution
We rely on distributors who stock and resell our products in more than 75 countries. Distributors of our products include
America II Electronics, Inc., Angst+Pfister Sensors and Power, and Digi-Key Corporation. Our distributor agreements generally
renew annually. In addition, we distribute versions of some of our products under private-brand partnerships with large integrated
device manufacturers. These private-brand partnerships broaden our distribution and enhance our sales support, technical
support, and product awareness.
New Product Status
In the past year, we began marketing several new and improved products, including:
• high-sensitivity ultraminiature sensors;
• a new type of rotation sensor;
• our first Wafer-Level Chip-Scale sensors;
• advanced position sensors; and
• new product evaluation boards.
Long-term product development programs in fiscal 2025 included:
• ultrahigh-sensitivity TMR sensors;
• next-generation sensors for hearing aids and implanted medical devices;
• wafer-level chip-scale devices; and
• next-generation MRAM for antitamper applications.
Our Competition
Industrial Sensor Competition
Several other companies either make or may have the capability to make GMR or TMR sensors. Also, several competitors
make solid-state industrial magnetic sensors including silicon Hall-effect sensors and anisotropic magnetoresistive (AMR)
sensors. We believe those types of sensors are not as sensitive or power-efficient as our GMR or TMR sensors.
Medical Sensor Competition
Our sensors for medical devices face competition from electromechanical magnetic sensors and other solid-state magnetic
sensors. Electromechanical magnetic sensors such as reed and micro-electromechanical system (MEMS) switches have been in
use for several decades. Because our sensors have no moving parts, we believe they are inherently more reliable than
electromechanical magnetic sensors. We also believe our sensors are smaller than the smallest electromechanical magnetic
sensors, more precise in their magnetic switch points, and more sensitive. Compared to other solid-state sensors, our medical
sensors may have advantages in size, sensitivity to small magnetic fields, or electrical interface simplicity.
Coupler Competition
Competing coupler technologies include optical couplers, inductive couplers (transformers), capacitive couplers, and radio-
frequency modulation couplers.
Our strategy is to compete based on product features rather than to compete solely on price. Our couplers are smaller and
therefore require less circuit board space per channel than most competing couplers. Our other advantages over competing
technologies may include smaller size, higher immunity to transients, and longer product life.
MRAM Competition
Several emerging technologies could compete with MRAM.
Sources and Availability of Raw Materials
Our principal sources of raw materials include suppliers of raw silicon and semiconductor foundry wafers that are incorporated
into our products, and suppliers of device packaging services. Our wafer sources are based around the world; most of our
packaging services take place in Asia.
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Intellectual Property
Patents
As of March 31, 2025, we had more than 50 issued U.S. patents assigned to us. We also have a number of foreign patents,
several U.S. and foreign patents pending, and we have licensed patents from others. There are no patents we regard as critical to
our current business owned by us or licensed to us that expire in the next 12 months.
We have patents on advanced MRAM designs that we believe are important, including patents that relate to magnetothermal
MRAM, spin-momentum MRAM, and synthetic antiferromagnetic storage.
Some of our intellectual property has been developed with U.S. Government support. Under federal legislation, companies
normally may retain the principal worldwide patent rights to any invention developed with U.S. Government support.
Trademarks
“NVE” and “IsoLoop” are our registered trademarks. Other trademarks we claim include “GMR Switch” and “GT Sensor.”
Dependence on Major Customers
We rely on several large customers for a significant percentage of our revenue, including Abbott Laboratories, certain
distributors, and certain other customers. The loss of one or more of these customers could have a material adverse effect on us.
Government Regulations
We are subject to government regulations including, but not limited to, regulations related to environmental matters, tax
matters, securities regulations, conflict minerals, ethics and foreign corrupt practices, import and export controls, tariffs and
duties on incoming and outgoing goods, product safety and liability, workplace health and safety, labor and employment, and
data privacy. We incur and expect to continue to incur costs and expenses to comply with these regulations and may incur
penalties for any failure to do so.
Additionally, certain contracts require us to maintain facilities and personnel security clearances to protect classified
information. Such clearances are subject to Government audits and investigations, and any deficiencies or illegal activities
identified during the audits or investigations could result in the forfeiture or suspension of payments and civil or criminal
penalties.
Environmental Matters
We are subject to environmental laws and regulations particularly state and local laws and regulations relating to industrial
waste and emissions. Compliance with these laws and regulations has not had a material impact on our capital expenditures,
earnings, or competitive position to date. Existing and future environmental laws and regulations could result in expenses related
to emission abatement or remediation, but we are currently unable to estimate such expenses.
7
Human Capital Resources
Employee Headcount
We had 42 employees as of March 31, 2025, 41 of whom were full-time. We had no contingent workers. Our hiring was
limited in fiscal 2025, in line with depressed industry conditions.
Workforce Demographics
Although we are not required to file forms with the U.S. Equal Employment Opportunity Commission, we assessed our
demographics using the data collection procedures for EEOC form EEO-1. Specifically, we conducted a voluntary survey for
self-identification and supplemented those data with personnel data and observer identification. Minnesota data are from U.S.
Census Bureau data for the latest quarter available.
Gender Demographics
The gender demographics of our workforce compared to those of all Minnesota workers were as follows as of March 31, 2025:
Gender
NVE
Minnesota
Male
69%
50%
Female
31%
50%
As is the case with many technology companies, female employees are underrepresented in our workforce, particularly in
engineer and technician jobs. We provide opportunities for equipment operators (a job where female employees are well
represented) to advance to technician and engineer positions, including internal equipment training, tuition reimbursement, and
scheduling flexibility to attend classes.
Racial Demographics
Our workforce demographics by race as of March 31, 2025, were as follows:
Race
NVE
Minnesota
African American or Black
10%
8%
American Indian or Alaska Native
2%
1%
Asian
19%
6%
White or Caucasian
69%
83%
Educational Demographics
We have a highly educated workforce. Forty-three percent of our employees have bachelor’s or advanced degrees compared to
26% of all Minnesota workers.
Employee Turnover
Our voluntary employee turnover was 4% for fiscal 2025. Voluntary turnover is calculated as the number of regular full-time
employees as of March 31, 2024 who left voluntarily in the year ended March 31, 2025 (excluding retirements), divided by the
average number of employees. We define average number of employees as the average of the employees at the beginning and at
the end of the fiscal year.
Executive Demographics
We have three Named Executive Officers. All three are male; one identifies as African American.
Board of Directors Demographics
Two of our five directors are women; one identifies as Asian.
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Women and Families
We have family-friendly policies and fully comply with the Minnesota Women’s Economic Security Act (WESA) by providing
reasonable accommodations to employees for health conditions related to pregnancy or childbirth and up to 12 weeks of
pregnancy and parental leave. Additionally, Minnesota’s paid family and medical leave law, which provides paid time off during
or following a pregnancy, goes into effect on January 1, 2026. We are preparing for the timely implementation of such paid leave.
Employee Benefits
We offer employees excellent fringe benefits, including medical insurance coverage paid for mostly by the Company, dental
insurance, Company-paid life and accidental death and dismemberment insurance, Company-paid long-term disability insurance,
generous 401(k) matches, Company-funded Health Savings Accounts, Dependent Care Flexible Spending Accounts, ample
holidays and Paid Time Off, tuition reimbursement, and free coffee.
Employee Health and Safety
NVE is committed to providing a safe and healthy work environment. The Compensation Committee of our Board of Directors
oversees employee health and safety. We offer employees a variety of health and fitness resources in conjunction with our
medical insurance.
Employee Development and Training
NVE provides paid training including paid on-the-job training, specialized online training, tuition reimbursement, and paid
internships.
Employee Relations
None of our employees are represented by a labor union or are subject to a collective bargaining agreement. Based on periodic
employee surveys, we believe we have good relations with our employees.
Available Information
All reports we file with the SEC, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports
on Form 8-K, and proxy statements and additional proxy materials on Schedule 14A, as well as any amendments to those reports
and schedules, are accessible at no cost through the “Investors” section of our Website (www.nve.com). These filings are also
accessible through the SEC’s Website (www.sec.gov).
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ITEM 1A. RISK FACTORS.
We caution readers that the following important factors, among others, could affect our financial condition, operating results,
business prospects, or any other aspect of NVE, and could cause our actual results to differ materially from that projected or
estimated by us in the forward-looking statements made by us or on our behalf. Although we have attempted to list below the
important factors that do or may affect our financial condition, operating results, business prospects, or any other aspect of NVE,
other factors may in the future prove to be more important. New factors emerge from time to time and it is not possible for us to
predict all of such factors. Similarly, we cannot necessarily assess or quantify the impact of each such factor on the business or
the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in
forward-looking statements.
Risks Related to Our Business
The loss of supply from any of our key single-source wafer suppliers could substantially impact our ability to produce and
deliver products and seriously harm our business and financial condition.
Our critical suppliers include suppliers of certain raw silicon and semiconductor foundry wafers that are incorporated in our
products. We maintain inventory of some critical wafers, but we have not identified or qualified alternate suppliers for many of
the wafers now being obtained from single sources. Most of the dollar volume of our wafer purchases are from foreign
manufacturers, some of which have been subject to tariffs and could be subject to larger tariffs or restrictions in the future. Wafer
supplies could be affected by acts of God such as floods, typhoons, cyclones, earthquakes, or pandemics, and risks related to
extreme weather may be exacerbated by the effects of climate change. Wafer supply interruptions for any reason could seriously
jeopardize our ability to provide products that are critical to our business and operations and may cause us to lose revenue.
Shortages of any critical chemicals or supplies could impact our ability to produce and deliver products and cause loss of
revenue.
There are a number of critical chemicals and supplies that we require to make products. These include certain gases,
photoresists, polymers, metals, and specialized alloys. We maintain inventory of critical chemicals and materials, but in many
cases, we are dependent on single sources, and some of the materials could be subject to shortages or be discontinued by their
suppliers at any time. Supply interruptions or shortages for any reason could seriously jeopardize our ability to provide products
that are critical to our business and operations and may cause us to lose revenue.
A loss of supply from any of our packaging vendors could impact our ability to 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. We have alternate vendors or potential alternate vendors for the majority of our
products, but it could be expensive, time-consuming, or impractical to convert to another vendor in the event of a supply
interruption due to vendors’ business decisions, business conditions, or acts of God, including floods, typhoons, earthquakes, or
pandemics. Furthermore, we may not be able to recover work in process or finished goods at a packaging vendor in the event of
a disruption. Supply delays, interruptions, or loss of inventory could seriously jeopardize our ability to provide products that are
critical to our business and operations and may cause us to lose revenue.
We risk losing business to our competitors.
We have a number of competitors and potential competitors, many of whom have significantly greater financial, technical, and
marketing resources than us. We believe that our competition is increasing as technology and markets mature. This has meant
more competitors and more severe pricing pressure. In addition, our competitors may be narrowing or eliminating our
performance advantages. We expect these trends to continue, and we may lose business to competitors or it may be necessary to
significantly reduce our prices to acquire or retain business. These factors could have a material adverse impact on our financial
condition, revenue, gross profit margins, or income.
Failure to meet stringent customer requirements could result in the loss of key customers and reduce our sales.
Some of our customers, including certain medical device manufacturers, have stringent technical and quality requirements that
require our products to meet certain test and qualification criteria or to adopt and comply with specific quality standards. Certain
customers also periodically audit our performance. Failure to meet technical or quality requirements or a negative customer audit
could result in the loss of current sales revenue, customers, and future sales.
We may lose revenue if we are unable to renew customer agreements.
We have agreements with certain customers, including a Supplier Partnering Agreement, as amended, with Abbott
Laboratories, which expires December 31, 2025. We cannot predict if these agreements will be renewed, or if renewed, under
what terms. Although in the past we have continued to sell products to these customers without formal agreements, an inability to
agree on mutually acceptable terms could have a significant adverse impact on our revenue or profitability.
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Changes in tax law, in our tax rates, or in exposure to additional income tax liabilities may materially and adversely affect
our financial condition, results of operations, and cash flows.
Changes in law and policy relating to Federal or state corporate taxes, changes in tax rates, or changes in our eligibility for tax
credits could materially and adversely affect our financial condition, results of operations, and cash flows.
Some of our products are incorporated into medical devices, which could expose us to a risk of product liability claims and
such claims could seriously harm our business and financial condition.
Certain of our products are used in medical devices, including devices that help sustain human life. We are also marketing our
technology to other manufacturers of cardiac pacemakers and ICDs. Although we have indemnification agreements with certain
customers including provisions designed to limit our exposure to product liability claims, there can be no assurance that we will
not be subject to losses, claims, damages, liabilities, or expenses resulting from bodily injury or property damage arising from
the incorporation of our products in devices sold by our customers. Our indemnifying customers may not have the financial
resources to cover all liability. Existing or future laws or unfavorable judicial decisions could limit or invalidate the provisions of
our indemnification agreements, or the agreements may not be enforceable in all instances. A successful product liability claim
could require us to pay, or contribute to payment of, substantial damage awards, which would have a significant negative effect
on our business and financial condition.
We may lose revenue if we are unable to maintain important certifications.
Our quality management system is certified to the ISO 9001 standard, and some of our products are also subject to
independent certification and listings including by the VDE Institute and UL LLC. These certifications are subject to rigorous
conditions. Failure to achieve or maintain any of our certifications or listings could cause us to be disqualified by one or more of
our customers and could have a material adverse impact on our business and revenue.
Federal legislation may not protect us against liability for the use of our products in medical devices and a successful liability
claim could seriously harm our business and financial condition.
Although the Biomaterials Access Assurance Act of 1998 may provide us some protection against potential liability claims,
that Act includes significant exceptions to supplier immunity provisions, including limitations relating to negligence or willful
misconduct. A successful product liability claim could require us to pay, or contribute to payment of, substantial damage awards,
which would have a significant negative effect on our business and financial condition. Any product liability claim against us,
with or without merit, could result in costly litigation, divert the time, attention, and resources of our management, and have a
material adverse impact on our business.
The malfunction of our products in medical devices could lead to the need to recall devices incorporating our products from
the market, which may be harmful to our reputation and cause a significant loss of revenue.
The malfunction of our products that are incorporated in medical devices could lead to the recall of existing medical devices
incorporating our products. Even if assertions that our products caused or contributed to device failure do not lead to product
liability or contract claims, such assertions could harm our reputation and customer relationships. Any damage to our reputation
and/or the reputation of our products, or the reputation of our customers or their products could limit the market for our and our
customers’ products and harm our results of operations.
We may lose business and revenue if our critical production equipment fails.
Our production process relies on certain critical pieces of equipment for defining, depositing, and modifying the magnetic
properties of thin films. Some of this equipment was designed or customized by us, and some is no longer in production. While
we have an in-house maintenance staff, maintenance agreements for certain equipment, some critical spare parts, and back-ups
for some of the equipment, we cannot be sure we could repair or replace critical manufacturing equipment were it to fail.
We are subject to risks inherent in doing business in foreign countries that could impair our results of operations.
Foreign sales are a significant portion of our revenue and we rely on foreign suppliers, especially in Asia. Risks relating to
operating in foreign markets that could impair our results of operations include economic and political instability; acts of God,
including floods, typhoons, cyclones, and earthquakes; public health crises including, but not limited to, difficulties in
enforcement of contractual obligations and intellectual property rights; changes in regulatory requirements; changes in
import/export regulations and tariffs; transportation delays; and other uncertainties relating to the administration of, or changes
in, or new interpretations of, the laws, regulations, and policies of jurisdictions where we do business. Current or future U.S.
tariffs on imports could lead to supply-chain disruptions or increase our cost of imported materials, which could negatively
impact our profitability. Additionally, foreign tariffs on our exported products could increase the price of our products in
international markets, which could reduce revenues.
11
Public health crises could have an adverse effect on our operations and financial results.
The COVID-19 pandemic disrupted our supply chains and caused employee absences. Future public health crises could have a
material adverse effect on our results of operations or our financial condition.
Our business could be negatively impacted by cybersecurity events or information technology disruptions.
We face various cybersecurity threats, including threats to our information technology infrastructure and attempts to gain access to
our proprietary or classified information, and denial-of-service attacks. Additionally, there is a risk of disruptions due to failures of
our information technology infrastructure or service provider outages. We maintain policies and procedures for the mitigation of
information technology risks, and we maintain data backups, backup hardware, and some redundant systems. Our risk mitigation
measures may not be effective in all scenarios, however, and any cybersecurity events could disrupt our operations, harm our
reputation, expose us to liability, compromise our eligibility for research and development contracts involving sensitive or classified
information, or have other effects.
We face the risk of credit losses
Financial Accounting Standards Board Accounting Standards Update No. 2016-13, Financial Instruments-Credit Losses (Topic
326), Measurement of Credit Losses on Financial Statements requires us to measure our allowance for credit losses based on the
expected credit losses over the life of our receivables. Any increases in our allowance for credit losses would have a negative
impact on our financial results, including reducing our net income and net income per share.
We could incur losses on our marketable securities.
As of March 31, 2025, we held $39,996,216 in short-term and long-term marketable securities, representing approximately
62% of our total assets. Business conditions, bond-market conditions, and interest rate increases beyond our control or ability to
anticipate can cause credit-rating downgrades, increased default risk, or unrealized losses. Additionally, the assignment of a high
credit rating does not preclude the risk of default on any marketable security. Any impairments of our marketable securities could
impact our financial condition, income, or cash flows, or our ability to pay dividends.
We may not be able to enforce our intellectual property rights.
We protect our proprietary technology and intellectual property by seeking patents, trademarks, and copyrights, and by
maintaining trade secrets by entering into confidentiality agreements with employees, suppliers, customers, and prospective
customers depending on the circumstances. We hold patents or are the licensee of others owning patented technology covering
certain aspects of our products and technology. These patent rights may be challenged, rendered unenforceable, invalidated, or
circumvented. Efforts to enforce patent rights can involve substantial expense and may not be successful. Furthermore, others
may independently develop similar, superior, or parallel technologies to any technology developed by us, or our technology may
prove to infringe on patents or rights owned by others. Thus the patents held by or licensed to us may not afford us any
meaningful competitive advantage. Also, our confidentiality agreements may not provide meaningful protection of our
proprietary information. Our inability to maintain our proprietary rights could have a material adverse effect on our business,
financial condition, and results of operations.
12
Risks Related to Our Industry
We face an uncertain economic environment in the industries we serve, which could adversely affect our business.
The economic environment could have a material adverse impact on our business and revenue. An international “trade war”
could negatively impact the economic environment. We sell products in the semiconductor market, which has been especially
cyclical. We cannot predict the timing, strength, or duration of any economic slowdown, recession, semiconductor-industry
slowdown, or subsequent recovery.
Our business and our reliance on intellectual property exposes us to litigation risks.
If patent infringement claims or actions are asserted against us, we may be required to obtain a license or cross-license, modify
our existing technology, or design a new noninfringing technology. Such licenses or design modifications can be costly or could
increase the cost of our products. In addition, we may decide to settle a claim or action against us, which settlement could be
costly. We may also be liable for any past infringement, and we may be required to indemnify our customers against expenses
relating to possible infringement. If there is an adverse ruling against us in an infringement lawsuit, an injunction could be issued
barring production or sale of any infringing product. It could also result in a damage award equal to a reasonable royalty or lost
profits or, if there is a finding of willful infringement, treble damages. Any of these results would increase our costs or harm our
operating results.
Risks Related to Our Stock
Any decisions to reduce or discontinue paying cash dividends to our shareholders could cause the market price of our
common stock to decline.
Future dividends will be subject to Board approval and will consider factors including our results of operations, cash and
marketable security balances, the timing of securities maturations, estimates of future cash requirements, fixed asset
requirements, and other factors our Board may deem relevant. Because they are generally more than our current cash flow from
operations, recent and declared dividend amounts may be unsustainable. Any reduction or discontinuance by us of cash
dividends could cause the market price of our common stock to decline.
The price of our common stock may be adversely affected by significant price fluctuations due to a number of factors, many
of which are beyond our control.
From time to time our stock price has decreased sharply and could decline in the future. The market price of our common stock
may be significantly affected by many factors, some of which are beyond our control, including:
• the announcement of new products or product enhancements by us or our competitors;
• delays in our introduction of new products or technologies or market acceptance of these products or technologies;
• loss of customers, decreases in customers’ purchases, or decreases in customers’ purchase prices;
• changes in demand for our customers’ products;
• quarterly variations in our financial results, revenue, or revenue growth rates;
• speculation in the press or elsewhere about our business, potential revenue, or potential earnings;
• general economic conditions or market conditions specific to industries we or our customers serve or may serve;
• legal proceedings involving us, including intellectual property litigation or class action litigation;
• changes in Federal or state corporate income tax rates, tax credits, or other changes in tax policies;
• changes in tariffs, customs, duties, or other trade barriers in foreign jurisdictions where we purchase raw materials or sell
our products; and
• our stock repurchase and dividend policies and decisions.
13
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 1C. CYBERSECURITY.
We recognize the increasing importance of cybersecurity and its potential impact on our business operations, financial
condition, and reputation. We are committed to protecting our information assets and have implemented a comprehensive
cybersecurity risk management program to identify, assess, and mitigate cybersecurity risks. We have not experienced any
material cybersecurity incidents in the last three years.
Board of Directors Oversight of Cybersecurity
Our Board of Directors Audit Committee has ultimate oversight of cybersecurity risks. The Committee is composed of
independent directors with cybersecurity expertise. Management briefs the Committee on cybersecurity and information security
at least annually.
Cybersecurity Risk Management
We operate under written cybersecurity policies and procedures, and we use a risk-based approach to information security and
periodically assess our cybersecurity risks. Our risk management strategy is based on the following principles:
• Our business does not require us to collect personal customer information. We minimize other cybersecurity risks by using
specialized service providers for sensitive operations such as payroll processing, credit card transactions, email, and
remote data backup. We verify our information service providers’ cybersecurity policies.
• Identify and assess cybersecurity risks through a variety of methods, including audits to information security standards,
threat testing, and vulnerability scanning.
• Prioritize risks based on their potential severity, likelihood, and detectability.
• Controls to mitigate risks, including access controls, data protection, data backups, redundant systems, and incident
response plans. We keep our controls up-to-date.
• Actions to correct any deficiencies and reduce or eliminate vulnerabilities.
• Written cybersecurity contingency plans, including plans for various specific scenarios.
• Training and testing for all employees on cybersecurity risks, mitigation, and best practices. New employees are required
to complete cybersecurity training and testing, and annual training and testing is required for all employees.
Cybersecurity Governance
Our cybersecurity governance is designed to ensure that risks are managed consistently and effectively. Key elements are:
• Written policies and procedures that govern the use of information technology and the handling of sensitive information.
• Written incident response plans.
• Regular cybersecurity reporting to the Audit Committee.
We have a full-time information technology specialist who reports directly to our CEO and is responsible for assessing and
managing cybersecurity risks. Both our information technology specialist and our CEO have extensive experience managing our
cybersecurity. We have not engaged third-party service providers for cybersecurity, because we believe it is better to have the
expertise in-house.
ITEM 2. PROPERTIES.
Our principal executive offices and manufacturing facility are located at 11409 Valley View Road, Eden Prairie, Minnesota,
55344, and leased under an agreement expiring May 31, 2031. The space consists of 21,362 square feet of offices, laboratories,
and production areas. We expanded the facility’s production space in the past fiscal year, and we currently believe the facility
will meet our needs through the term of the lease. We hold no investments in real estate.
ITEM 3. LEGAL PROCEEDINGS.
In the ordinary course of business, we may become involved in litigation. At this time, we are not aware of any material
pending or threatened legal proceedings or other proceedings contemplated by governmental authorities that we expect would
have a material adverse impact on our future results of operation and financial condition.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
14
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND
ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information and Dividends
Our Common Stock trades on the Capital Market tier of the NASDAQ Stock Market under the symbol NVEC.
Dividends have been funded from net cash provided by operating activities and proceeds from maturities of marketable
securities. Our dividend policy is subject to change at any time, and future dividends will be subject to Board approval and
subject to the company’s results of operations, cash and marketable security balances, our forecasts of future cash requirements,
and other factors our Board may deem relevant.
Shareholders
We had 49 shareholders of record as of March 31, 2025. There are also several thousand beneficial holders of our common
stock in “street name,” whose shares of record are held by banks, brokers, and other financial institutions.
Securities Authorized for Issuance Under Equity Compensation Plans
Information regarding our securities authorized for issuance under equity compensation plans will be included in the section
“Equity Compensation Plan Information” of our Proxy Statement for our 2025 Annual Meeting of Shareholders and is
incorporated by reference into Item 12 of this Report.
Stock Repurchase Program
We did not repurchase any shares in fiscal 2025 or fiscal 2024. Our Stock Repurchase Program may be modified or
discontinued at any time without notice.
15
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
You should read this discussion together with our financial statements and notes included elsewhere in this Report. In addition
to historical information, the following discussion contains forward-looking information that involves risks and uncertainties.
Our actual future results could differ materially from those presently anticipated due to a variety of factors, including those
discussed in Item 1A of this Report.
General
We develop and sell devices that use “spintronics,” a nanotechnology that relies on electron spin rather than electron charge to
acquire, store, and transmit information. We manufacture high-performance spintronic products including sensors and couplers to
revolutionize data sensing and transmission. We also receive contracts for research and development and are a licensor of
spintronic magnetoresistive random access memory technology, commonly known as MRAM.
Application of Critical Accounting Policies and Estimates
In accordance with SEC guidance, those material accounting policies that we believe are the most critical to an investor’s
understanding of our financial results and condition and require complex management judgment are discussed below.
Marketable Securities
Marketable securities consist of debt investments and are recorded at their estimated fair value. Debt securities are considered
available for sale. Unrealized holding gains and losses on available-for-sale debt securities are excluded from earnings and are
reported as a separate component of accumulated other comprehensive income until realized. The costs of available-for-sale debt
marketable securities are determined by specific identification for purposes of computing unrealized and realized gains and
losses.
Available-for-sale debt marketable securities are classified as short-term or long-term on the balance sheet based on their
maturity date or expectations regarding future sales. We evaluated the available-for-sale debt securities for impairment and
available-for-sale debt securities in loss position for greater than twelve months during fiscal 2025 and 2024.
We monitor our debt marketable securities to determine whether a loss exists related to the credit quality of the issuer. If the
present value of the cash flows expected to be collected from the security is less than the amortized cost basis of the security,
then a credit loss exists and an allowance against the security for credit losses is recorded. The allowance is limited to the amount
by which fair value is below amortized cost, recognizing that the investment could be sold at fair value. Credit losses continue to
be remeasured in subsequent reporting periods. Credit losses and recoveries related to debt securities are included in other
income (expenses) in the income statement. When developing an estimate of expected credit losses, we consider all relevant
information including, historical experience, current conditions and reasonable forecast of expected future cash flows. There
were no credit losses and recoveries during fiscal 2025 or 2024.
Inventory Valuation
Inventories are stated at the lower of cost or net realizable value. Cost is determined by the first in, first out method. Where
there is evidence that inventory could be disposed of at less than carrying value, the inventory is written down to the net
realizable value in the current period. Additionally, we periodically examine our inventory in the context of inventory turnover,
sales trends, competition, and other market factors, and we record provisions to inventory reserve when we determine certain
inventory is unlikely to be sold. If reserved inventory is subsequently sold, corresponding reductions in inventory and inventory
reserves are made. Our inventory reserve was $215,000 as of March 31, 2025 and March 31, 2024.
Deferred Tax Assets Estimation
In determining the carrying value of our net deferred tax assets, we must assess the likelihood of sufficient future taxable
income in certain tax jurisdictions, based on estimates and assumptions to realize the benefit of these assets. We evaluate the
realizability of the deferred assets quarterly and assess the need for valuation allowances or reduction of existing allowances
quarterly. No valuation allowance was recorded as we believe it is more likely than not that all of the deferred tax assets will be
realized.
We had $1,867,069 of net deferred tax assets as of March 31, 2025 and $1,453,704 as of March 31, 2024. Net deferred tax
assets include $118,810 in deferred tax assets for stock-based compensation deductions as of March 31, 2025, and $101,668 as of
March 31, 2024.
16
Results of Operations
The following table summarizes the percentage of revenue and year-to-year changes for various items for the last two fiscal
years:
Percentage of Revenue
Year Ended March 31,
Year-
to-Year
2025
2024
Change
Revenue
Product sales
95.2%
98.0%
(15.7)%
Contract research and development
4.8%
2.0%
112.0 %
Total revenue
100.0%
100.0%
(13.2)%
Cost of sales
16.4%
22.7%
(37.5)%
Gross profit
83.6%
77.3%
(6.0)%
Expenses
Research and development
14.1%
9.2%
33.1 %
Selling, general, and administrative
7.7%
5.9%
13.4%
Credit loss expense
-%
0.0
-
Total expenses
21.8%
15.1%
25.1%
Income from operations
61.8%
62.2%
(13.6)%
Interest income
7.4%
6.5%
(2.0)%
Other income
0.5%
-%
-
Income before taxes
69.7%
68.7%
(11.9)%
Provision for income taxes
11.5%
11.2%
(11.0)%
Net income
58.2%
57.5%
(12.0)%
Total revenue for fiscal 2025 decreased 13% compared to fiscal 2024 due to a 16% decrease in product sales, partially offset
by a 112% increase in contract research and development revenue. The decrease in product sales was primarily due to decreased
purchases by existing customers. The increase in contract research and development revenue was due to new contracts in fiscal
2025.
Gross profit as a percentage of revenue increased to 84% for fiscal 2025 from 77% for fiscal 2024. The increase in gross
margin percentage was due to a more profitable product mix and a larger portion of direct rather than distributor sales.
Total expenses increased 25% for fiscal 2025 compared to fiscal 2024 due to a 33% increase in research and development
expense and a 13% increase in selling, general, and administrative expense. The increase in research and development expense
was due to increased new product development. The increase in selling, general, and administrative expenses was primarily due
to increased sales and marketing activities.
Interest income for fiscal 2025 decreased 2% due to a decrease in marketable securities, partially offset by higher yields on
marketable securities purchased during the past year.
Other income for fiscal 2025 was primarily from reclaiming precious metals used in our manufacturing process.
The 12% decrease in net income for fiscal 2025 compared to the prior year was primarily due to decreased revenue and
increased operating expenses, partially offset by increased gross profit margin.
Liquidity and Capital Resources
Overview
Our liquidity and operating capital requirements are primarily for purchases of raw materials such as foundry wafers,
purchases of packaging services, and the maintenance of work-in-process inventories.
Cash and cash equivalents were $8,036,564 as of March 31, 2025, compared to $10,283,550 as of March 31, 2024. The
$2,246,986 decrease in cash and cash equivalents was due to $19,225,522 of net cash used in financing activities, partially offset
by $14,310,418 of cash provided by operating activities and $2,668,118 of net cash provided by investing activities.
Operating Activities
Net cash provided by operating activities related to product sales and research and development contract revenue was our
primary source of working capital for fiscal 2025 and 2024. Net cash provided by operating activities was $14,310,418 for fiscal
2025 compared to $18,247,411 for fiscal 2024.
17
Accounts receivable increased $444,435 during fiscal 2025 due to increased revenue in the fourth quarter of fiscal 2025
compared to the prior-year quarter and the timing of customer payments. Inventory increased $290,498 during fiscal 2025 due to
increased costs and our decisions to maintain inventories as a buffer against supply-chain disruptions or other disruptions such as
tariffs.
Prepaid expenses and other assets decreased $255,935 primarily due to the differences in Federal and State taxes compared to
estimated taxes paid.
Investing Activities
Net cash provided by investing activities in fiscal 2025 consisted of $15,205,000 in proceeds from maturities of marketable
securities, partially offset by $1,257,109 of fixed asset purchases and $11,279,773 of marketable securities purchases. Fixed asset
purchases consist primarily of a $1,125,437 downpayment on production equipment that has not been placed into service, and is
expected to be delivered in fiscal 2026. We plan to significantly increase fixed asset purchases in fiscal 2026 compared to fiscal
2025 to between $2,000,000 and $3,000,000 to support increases in production capacity and new product development. These
plans are subject to change. We expect to finance future capital equipment purchases with a combination of cash provided by
operating activities and marketable security maturities.
Financing Activities
Net cash used in financing activities in fiscal 2025 consisted of $19,339,684 of cash dividends paid to shareholders, partially
offset by $114,162 in proceeds from the exercise of stock options.
In addition to cash dividends to shareholders paid in fiscal 2025, on May 7, 2025, we announced that our Board had declared a
cash dividend of $1.00 per share of Common Stock, or $4,837,166 based on shares outstanding as of March 31, 2025, to be paid
May 30, 2025. 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 supply-chain shortages, the impacts
of cost inflation, and other factors the Board may deem relevant. Furthermore, dividends may be modified or discontinued at any
time without notice.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Financial statements and accompanying notes are included in this Report beginning on page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
Management, with the participation of the Chief Executive Officer and Principal 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 times specified in
the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief
Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based
on such evaluation, although there have been changes in personnel involved in our controls, processes, and procedures, our Chief
Executive Officer and Principal Financial Officer concluded that, as of March 31, 2025, our disclosure controls and procedures
were effective.
18
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such
term is defined in Rule 13a-15(f) under the Exchange Act. Our management, including our Chief Executive Officer and Principal
Financial Officer, assessed the effectiveness of our internal control over financial reporting as of March 31, 2025. In making this
assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in the 2013 Internal Control—Integrated Framework. Based on our assessment using the criteria set forth by COSO in
the 2013 Internal Control—Integrated Framework, management concluded that our internal control over financial reporting was
effective as of March 31, 2025.
Our management, including our Chief Executive Officer and Principal Financial Officer, does not expect that our internal
control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the
design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud, if any, within NVE have been detected. Our internal controls over
financial reporting, however, are designed to provide reasonable assurance that the objectives of internal control over financial
reporting are met.
Changes in Internal Controls
During the year ended March 31, 2025, there was no change in our internal control over financial reporting that materially
affected or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION.
Insider Trading Policies
Our insider trading policies and procedures are filed as Exhibit 19 to this Report.
Rule 10b5-1 Plan Disclosures for Section 16 Officers and Directors
During the quarter ended March 31, 2025, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the
Company adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements (in each case,
as defined in Item 408(a) of Regulation S-K). There are no such plans currently in effect.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
Not applicable.
19
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
We have insider trading policies and procedures, which are filed as Exhibit 19 to this Report. Additionally, a section titled
“Delinquent Section 16(a) Reports” to be included in our Proxy Statement for our 2025 Annual Meeting of Shareholders will set
forth information regarding delinquent Section 16(a) reports required by Item 10. The section titled “Proposal 1. Election of
Board of Directors” will set forth certain information regarding our directors and executive officers required by Item 10, the
section titled “Information About Our Executive Officers” will set forth information regarding our executive officers required by
Item 10, the section titled “Corporate Governance” will set forth information regarding our corporate governance and code of
ethics required by Item 10, and the section titled “Option-Grant Timing Practices” will contain information required by Item 10.
The information in these sections to be included in the Proxy Statement for our 2025 Annual Meeting of Shareholders is
incorporated by reference into this section of this Report.
ITEM 11. EXECUTIVE COMPENSATION.
The information in the sections “Executive Compensation,” “Compensation Discussion and Analysis,” “Corporate
Governance – Board Committees – Compensation Committee Interlocks and Insider Participation,” and “Director
Compensation” to be included in the Proxy Statement for our 2025 Annual Meeting of Shareholders is incorporated by reference
into this section.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.
The information in the sections “Equity Compensation Plan Information” and “Security Ownership” to be included in the
Proxy Statement for our 2025 Annual Meeting of Shareholders is incorporated by reference into this section. Information
regarding the material features of our 2000 Stock Option Plan, as amended, is contained in Note 6 to the Financial Statements
included elsewhere in this Report.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
The information in the sections “Security Ownership – Transactions With Related Persons, Promoters, and Certain Control
Persons” and “Corporate Governance – Board Composition and Independence” to be included in our Proxy Statement for our
2025 Annual Meeting of Shareholders is incorporated by reference into this section.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
The information in the sections “Audit Committee Disclosure – Fees Billed to Us by Our Independent Registered Public
Accounting Firm During Fiscal 2025 and 2024” and “Audit Committee Disclosure – Audit Committee Pre-Approval Policy” to
be included in the Proxy Statement for our 2025 Annual Meeting of Shareholders is incorporated by reference into this section.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a) Financial Statements and Schedules
Financial statements are provided pursuant to Item 8 of this Report. Certain financial statement schedules have been omitted
because they are not required, not applicable, or the required information is provided in other financial statements or the notes to
the financial statements.
(b) Exhibits
A list of exhibits is on the following page.
20
Exhibit #
Description
3.1
Amended and Restated Articles of Incorporation of the company as amended by the Board of Directors effective
August 3, 2003 (incorporated by reference to our Form 8-K filed August 7, 2023).
3.2
Bylaws of the company as amended by the Board of Directors effective May 6, 2020.
4
Description of the registrant’s securities registered pursuant to Section 12 of the Securities Exchange Act of 1934.
10.1
Lease dated October 1, 1998, with Glenborough Properties, LP (incorporated by reference to our Form 10-QSB for the
period ended September 30, 2002).
10.2
First amendment to lease with Glenborough dated September 18, 2002 (incorporated by reference to our Form 10-
QSB for the period ended September 30, 2002).
10.3
Second amendment to lease with Glenborough dated December 1, 2003 (incorporated by reference to our Form 10-
QSB for the period ended December 31, 2003).
10.4
Third amendment to lease with Carlson Real Estate (incorporated by reference to our Form 8-K/A filed December 20,
2007).
10.5
Fourth amendment to lease with the Barbara C. Gage Revocable Trust (incorporated by reference to our Form 8-K/A
filed August 3, 2011).
10.6
Fifth amendment to lease with GRE – Bryant Lake, LLC (incorporated by reference to our Form 8-K/A filed March 3,
2020).
10.7
Sixth amendment to lease with GRE – Bryant Lake, LLC (incorporated by reference to our Form 8-K/A filed
November 7, 2024).
10.8†
Employment Agreement with Daniel A. Baker dated January 29, 2001 (incorporated by reference to our Form 10-KSB
for the year ended March 31, 2001).
10.9†
NVE Corporation 2000 Stock Option Plan as Amended July 19, 2001, by the shareholders (incorporated by reference
to our Registration Statement on Form S-8 filed July 20, 2001).
10.10
Indemnification Agreement by and between Pacesetter, Inc., a St. Jude Medical Company, and the company
(incorporated by reference to our Form 8-K filed September 27, 2005).
10.11+
Supplier Partnering Agreement by and between St. Jude and the company (incorporated by reference to our Form 8-K
filed January 4, 2006).
10.12
Amendment No. 4 to St. Jude Supplier Partnering Agreement (incorporated by reference to our Form 8-K/A filed
February 7, 2011).
10.13
Supplier Quality Agreement between St. Jude and the company (incorporated by reference to our Form 8-K filed
February 10, 2016).
10.14
Amendment No. 5 to St. Jude Supplier Partnering Agreement (incorporated by reference to our Form 8-K/A filed
April 21, 2016).
10.15*
Amendment No. 8 to Abbott Supplier Partnering Agreement (incorporated by reference to our Form 8-K/A filed
February 2, 2022).
10.16*
Amendment No. 10 to Supplier Partnering Agreement between Abbott and the company (incorporated by reference to
our Form 8-K/A filed January 3, 2024).
10.17*
Amendment No. 11 to Supplier Partnering Agreement between Abbott and the company (incorporated by reference to
our Form 8-K/A filed February 13, 2025).
19
Insider Trading Policies and Procedures.
23
Consent of Boulay PLLP.
31.1
Certification by Daniel A. Baker pursuant to Rule 13a-14(a)/15d-14(a).
31.2
Certification by Daniel Nelson pursuant to Rule 13a-14(a)/15d-14(a).
32
Certification by Daniel A. Baker and Daniel Nelson pursuant to 18 U.S.C. Section 1350.
97
Clawback Policy (incorporated by reference to our Form 10-K filed May 1, 2024).
101.INS
XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
†Indicates a management contract or compensatory plan or arrangement.
+Confidential portions deleted and filed separately with the SEC.
*Certain confidential portions redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K. The omitted information is (i) not
material and (ii) would likely cause us competitive harm if publicly disclosed. We agree to furnish supplementally an unredacted
copy of the exhibit to the Securities and Exchange Commission on its request.
21
ITEM 16. FORM 10-K SUMMARY.
We have elected not to include an optional Form 10-K Summary.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NVE CORPORATION
(Registrant)
by Daniel A. Baker
President and Chief Executive Officer
Date
May 7, 2025
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Name(1)
Title
Date
Director and
May 7, 2025
Terrence W. Glarner
Chairman of the Board
Director,
May 7, 2025
Daniel A. Baker
President & Chief Executive Officer
(Principal Executive Officer)
Principal Financial Officer
May 7, 2025
Daniel Nelson
Director
May 7, 2025
Patricia M. Hollister
Director
May 7, 2025
James W. Bracke
Director
May 7, 2025
Kelly Wei
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
NVE Corporation
Opinion on the Financial Statements
We have audited the accompanying balance sheets of NVE Corporation (the Company) as of March 31, 2025 and 2024, and the
related statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the years in the two-year
period ended March 31, 2025, and the related notes (collectively referred to as the financial statements). In our opinion, the
financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2025 and 2024,
and the results of its operations and its cash flows for each of the years in the two-year period ended March 31, 2025, in
conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over
financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting,
but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due
to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or
required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial
statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no
critical audit matters.
PCAOB ID: 542
We have served as the Company’s auditor since 2019.
Minneapolis, Minnesota
May 7, 2025
F-2
NVE CORPORATION
BALANCE SHEETS
March 31, 2025
March 31, 2024
ASSETS
Current assets
Cash and cash equivalents
$
8,036,564
$
10,283,550
Marketable securities, short-term (amortized cost of $13,730,266 as of March 31,
2025, and $12,283,630 as of March 31, 2024)
13,691,593
11,917,779
Accounts receivable, net of allowance for credit losses of $15,000
3,589,268
3,144,833
Inventories, net
7,449,083
7,158,585
Prepaid expenses and other assets
433,414
689,349
Total current assets
33,199,922
33,194,096
Fixed assets
Machinery and equipment
11,758,205
10,501,096
Leasehold improvements
1,956,309
1,956,309
13,714,514
12,457,405
Less accumulated depreciation and amortization
11,727,615
11,403,383
Net fixed assets
1,986,899
1,054,022
Deferred tax assets
1,867,069
1,453,704
Marketable securities, long-term (amortized cost of $26,353,692 as of March 31, 2025,
and $31,417,890 as of March 31, 2024)
26,304,623
30,788,301
Right-of-use asset – operating lease
917,349
289,910
Total assets
$
64,275,862
$
66,780,033
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable
$
214,691
$
127,154
Accrued payroll and other
871,169
729,215
Operating lease
83,010
179,372
Total current liabilities
1,168,870
1,035,741
Long-term operating lease liability
838,221
175,775
Total liabilities
2,007,091
1,211,516
Shareholders’ equity
Common stock, $0.01 par value, 6,000,000 shares authorized; 4,837,166 issued and
outstanding as of March 31, 2025 and 4,833,676 as of March 31, 2024
48,372
48,337
Additional paid-in capital
19,821,106
19,554,812
Accumulated other comprehensive loss
(68,544)
(777,637)
Retained earnings
42,467,837
46,743,005
Total shareholders’ equity
62,268,771
65,568,517
Total liabilities and shareholders’ equity
$
64,275,862
$
66,780,033
See accompanying notes.
F-3
NVE CORPORATION
STATEMENTS OF INCOME
Year Ended March 31,
2025
2024
Revenue
Product sales
$
24,632,102
$
29,218,063
Contract research and development
1,242,592
586,116
Total revenue, net
25,874,694
29,804,179
Cost of sales
4,235,780
6,772,533
Gross profit
21,638,914
23,031,646
Expenses
Research and development
3,635,519
2,731,434
Selling, general, and administrative
2,009,246
1,771,833
Credit loss expense
-
9,514
Total expenses
5,644,765
4,512,781
Income from operations
15,994,149
18,518,865
Interest income
1,909,218
1,948,720
Other income
135,370
-
Income before taxes
18,038,737
20,467,585
Provision for income taxes
2,974,221
3,342,886
Net income
$
15,064,516
$
17,124,699
Net income per share – basic
$
3.12
$
3.54
Net income per share – diluted
$
3.11
$
3.54
Cash dividends declared per common share
$
4.00
$
4.00
Weighted average shares outstanding
Basic
4,835,069
4,833,146
Diluted
4,839,154
4,839,705
STATEMENTS OF COMPREHENSIVE INCOME
Year Ended March 31,
2025
2024
Net income
$
15,064,516
$
17,124,699
Unrealized gain on marketable securities, net of tax
709,093
436,221
Comprehensive income
$
15,773,609
$
17,560,920
See accompanying notes.
F-4
NVE CORPORATION
STATEMENTS OF SHAREHOLDERS’ EQUITY
Common Stock
Additional
Paid-In
Accumulated
Other
Comprehen-
sive Income
Retained
Shares
Amount
Capital
(Loss)
Earnings
Total
Balance as of March 31, 2023
4,830,826
$
48,308
$ 19,295,442
$
(1,213,858) $ 48,949,610
$ 67,079,502
Exercise of stock options, net of
shares withheld for exercise price
2,850
29
117,434
117,463
Comprehensive income:
Unrealized gain on marketable
securities, net of tax
436,221
436,221
Net income
17,124,699
17,124,699
Total comprehensive income
17,560,920
Stock-based compensation
141,936
141,936
Cash dividends ($4.00 per share of
common stock)
(19,331,304)
(19,331,304)
Balance as of March 31, 2024
4,833,676
$
48,337
$ 19,554,812
$
(777,637) $ 46,743,005
$ 65,568,517
Exercise of stock options, net of
shares withheld for exercise price
3,490
35
114,127
114,162
Comprehensive income:
Unrealized gain on marketable
securities, net of tax
709,093
709,093
Net income
15,064,516
15,064,516
Total comprehensive income
15,773,609
Stock-based compensation
152,167
152,167
Cash dividends ($4.00 per share of
common stock)
(19,339,684)
(19,339,684)
Balance as of March 31, 2025
4,837,166
$
48,372
$ 19,821,106
$
(68,544) $ 42,467,837
$ 62,268,771
See accompanying notes.
F-5
NVE CORPORATION
STATEMENTS OF CASH FLOWS
Year Ended March 31,
2025
2024
OPERATING ACTIVITIES
Net income
$
15,064,516
$
17,124,699
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation
324,232
308,147
Bond discount amortization
(307,666)
(106,354)
Provision for current estimate of credit losses
-
9,514
Stock-based compensation
152,167
141,936
Deferred income taxes
(611,969)
(1,003,844)
Non-cash operating lease credit
(61,355)
(27,626)
Changes in operating assets and liabilities:
Accounts receivable
(444,435)
3,368,997)
Inventories
(290,498)
(741,575)
Prepaid expenses and other assets
255,935
(25,890)
Accounts Payable
87,537
(154,558)
Accrued Payroll and other
141,954
(646,035)
Net cash provided by operating activities
14,310,418
18,247,411
INVESTING ACTIVITIES
Purchases of fixed assets
(1,257,109)
(16,731)
Purchases of marketable securities
(11,279,773)
(6,103,185)
Proceeds from maturities of marketable securities
15,205,000
15,700,000
Net cash provided by investing activities
2,668,118
9,580,084
FINANCING ACTIVITIES
Net proceeds from exercise of stock options
114,162
117,463
Payment of dividends to shareholders
(19,339,684)
(19,331,304)
Net cash used in financing activities
(19,225,522)
(19,213,841)
(Decrease) increase in cash and cash equivalents
(2,246,986)
8,613,654
Cash and cash equivalents at beginning of year
10,283,550
1,669,896
Cash and cash equivalents at end of year
$
8,036,564
$
10,283,550
Supplemental disclosures of cash flow information:
Cash paid during the year for income taxes
$
3,311,534
$
4,539,071
See accompanying notes.
F-6
NVE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF BUSINESS
We develop and sell devices that use spintronics, a nanotechnology that relies on electron spin rather than electron charge to acquire,
store, and transmit information. We operate in one reportable segment. Our CEO is our “Chief Operating Decision Maker” as defined
under Accounting Standards Update 2023-07. Our CEO assesses our performance and allocates resources based on net income and
total assets, which are the same amounts in all material respects as those reported on the statements of income and balance sheets.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
We consider all highly liquid investments with maturities of three months or less when purchased to be cash equivalents.
Concentration of Risk and Financial Instruments
Financial instruments potentially subject to significant concentrations of credit risk consist principally of cash equivalents,
marketable securities, and accounts receivable.
Cash and cash equivalents have been maintained in financial institutions we believe have high credit quality, however, these
accounts may not be federally insured.
We have invested our excess cash in corporate-backed and municipal-backed bonds and money market instruments. Our investment
policy prescribes purchases of only high-grade securities and limits the amount of credit exposure to any one issuer.
Our customers are throughout the world. We generally do not require collateral from our customers, but we perform ongoing credit
evaluations of their financial condition. More information on accounts receivable is contained in the paragraph titled “Accounts
Receivable and Allowance for Credit Losses” of this note.
Additionally, we are dependent on critical suppliers including our packaging vendors and suppliers of certain raw silicon and
semiconductor wafers that are incorporated in our products. Recent changes in tariffs and trade regulations may increase the risks of
supply interruptions.
Marketable securities
Our marketable securities consist of corporate bonds and money market funds and are classified as available for sale. Marketable
securities are initially recognized at cost. Marketable securities considered to be “purchased financial assets with credit deterioration”
are initially recognized at cost, less any allowance for expected credit losses. Unrealized holding gains and losses are reported in other
comprehensive income, net of applicable taxes, until realized. All marketable securities are carried on the balance sheet at fair value.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. We use a three-level fair value hierarchy in estimating and reporting fair values of our
marketable securities:
Level 1 – Securities whose fair values are determined using quoted prices in active markets for identical securities.
Level 2 – Securities whose fair values are determined using quoted prices for similar securities in active markets or quoted prices
for identical securities in markets that are not active.
Level 3 – Securities whose fair values are determined using unobservable inputs.
Corporate bonds with remaining maturities of less than one year are classified as short-term and those with remaining maturities of
one year or more 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.
Accounts Receivable and Allowance for Credit Losses
We extend credit terms to customers in the normal course of business. We perform ongoing credit valuations of customers’ financial
condition, and generally require no collateral. We maintain an allowance for expected credit losses on accounts receivables, which is
recorded as an offset to accounts receivable. Changes in the allowance for credit losses are included as a component of operating
expenses in the Statements of Income and Statements of Comprehensive Income. We assesses credit losses on a collective basis where
similar risk characteristics exist. Risk characteristics we consider include customer type, geography, market, credit risk, and receivable
age. Receivables that do not share risk characteristics with other receivables, or where known collectability issues exist, are evaluated
on an individual basis.
F-7
In determining the allowance for credit losses, the Company considers historical loss rates, adjusted for current market conditions,
and reasonable and supportable forecasts of future economic conditions, when applicable. Accounts considered to be uncollectible are
written off against the allowance for credit losses.
Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is determined by the first in, first out method. We record
inventory reserves when we determine certain inventory is unlikely to be sold based on sales trends, turnover, competition, and other
market factors.
Product Warranty
In general, we warranty our products to be free from defects in material and workmanship for one year.
Fixed Assets
Fixed assets are stated at cost. Depreciation of machinery and equipment is recorded over the estimated useful lives of the assets,
generally five years, using the straight-line method. Amortization of leasehold improvements is recorded using the straight-line
method over the lesser of the remaining term of the lease and five-year useful life. We record losses on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those asset groups
are less than the assets’ carrying amount. We did not identify any indicators of impairment during fiscal 2025 or 2024. Depreciation
expense related to fixed assets was $324,232 for fiscal 2025 and $308,147 for fiscal 2024.
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, and 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, on product shipment or delivery to our customer or distributor as determined by agreed-on shipping terms. Shipping charges
billed to customers are included in product sales and the related shipping costs are included in cost of sales as incurred. 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 as the performance obligations are satisfied. 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 use the proportion of total contract consideration attributable to performance milestones achieved as the
measurement of progress toward 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. Accounts receivable as of March 31, 2025 and 2024 are
reported on the balance sheets. Accounts receivable, net of allowance for credit losses, as of April 1, 2023 were $6,523,344. A contract
asset is recognized when we have a right to consideration from the transfer of goods or services to a customer but have not completed
our performance obligation. A contract liability is recognized when we have been paid by a customer but have not yet satisfied the
performance obligation by transferring goods or services. We had no material contract assets or contract liabilities as of March 31,
2025, or 2024.
Our performance obligations related to product sales and contract research and development contracts are satisfied in one year or
less. Unsatisfied performance obligations represent contracts with an original expected duration of one year or less. As permitted
under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, we are using the practical
expedient not to disclose the value of these unsatisfied performance obligations. We also use the practical expedient in which we do
not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period
between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less.
Income Taxes
We account for income taxes using the asset and liability method. Deferred income taxes are provided for temporary differences
between the financial reporting and tax bases of assets and liabilities. We provide valuation allowances against deferred tax assets if
we determine that it is less likely than not that we will be able to utilize the deferred tax assets.
Research and Development Expense Recognition
Research and development costs are expensed as they are incurred. Customer-sponsored research and development costs are
included in cost of sales.
F-8
Stock-Based Compensation
We measure stock-based compensation cost at the grant date based on the fair value of the award and recognize the compensation
expense over the requisite service period, which is generally the vesting period. We recognize any forfeitures as they occur.
Net Income Per Share
Net income per basic share is computed based on the weighted average number of common shares issued and outstanding during the
year. Net income per diluted share amounts assume the exercise of all stock options. The following table shows the components of
diluted shares:
Year Ended March 31,
2025
2024
Weighted average common shares outstanding – basic
4,835,069
4,833,146
Dilutive effect of stock options
4,085
6,559
Shares used in computing net income per share – diluted
4,839,154
4,839,705
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to make
estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could
differ from those estimates. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
for more information on estimates and assumptions.
Reclassification
The presentation of certain items in the statement of cash flows for the year ended March 31, 2024 has been changed to conform to
the classifications used for the year ended March 31, 2025. These reclassifications had no effect on shareholders’ equity, net income,
or comprehensive net income as previously reported.
NOTE 3. NEW ACCOUNTING STANDARDS NOT YET ADOPTED
In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2024-03,
Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). ASU 2024-03 aims
to enhance transparency for users of financial statements by requiring public business entities to disaggregate specific expense
categories. In January 2025, the FASB issued ASU No. 2025-01, Income Statement—Reporting Comprehensive Income—Expense
Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, which clarified the effective date for non-calendar year-
end entities such as us. ASU 2024-03 mandates disclosures in the notes to financial statements detailing the composition and trends of
key expense categories within major income statement captions. These enhanced disclosures are intended to help investors more
effectively assess the entity’s performance, understand its cost structure, and make more accurate forecasts of future cash flows. For
public business entities, ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods within
annual reporting periods beginning after December 15, 2027, which for us will be for fiscal 2028 and for interim reporting periods
beginning with the first quarter of fiscal 2029. The adoption will result in disclosure changes only.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures.
ASU 2023-09 requires additional quantitative and qualitative income tax disclosures to enable financial statements users to better
assess how an entity’s operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects
for future cash flows. For public business entities, ASU 2023-09 is effective for annual periods beginning after December 15, 2024,
which will be fiscal 2026 for us. The adoption will result in disclosure changes only.
We do not expect the adoption of other accounting standards that have been issued or proposed by the FASB or other standards-
setting bodies that do not require adoption until a future date to have a material impact on our financial statements when they are
adopted.
NOTE 4. MARKETABLE SECURITIES
The following table shows the major categories of our marketable securities and cash equivalents and their contractual maturities as
of March 31, 2025:
Total
<1 Year
1–3 Years
3–5 Years
Money market funds
$
7,905,042 $
7,905,042 $
- $
-
Treasury securities
4,715,238
-
4,715,238
-
Corporate bonds
35,280,978
13,691,593
14,679,135
6,910,250
Total
$
47,901,258 $
21,596,635 $
19,394,373 $
6,910,250
F-9
Total marketable securities and money market funds represent approximately 75% of our total assets as of March 31, 2025.
Marketable securities as of March 31, 2025, had remaining maturities between six weeks and 49 months.
Money market funds are included on the balance sheets in “Cash and cash equivalents.” Corporate bonds are included in
“Marketable securities, short-term” and “Marketable securities, long-term.” Treasury securities are included in “Marketable securities,
long-term.” Accrued interest receivables were $340,241 as of March 31, 2025, and $460,627 as of March 31, 2024, and are included in
the balance sheets in “Prepaid expenses and other assets.”
We monitor the credit ratings of our marketable securities at least quarterly as reported by Standard & Poor’s. The following table
summarizes the fair values of our marketable securities as of March 31, 2025, aggregated by credit rating:
Credit Rating
Fair Value
AAA
$
12,620,280
AA+
3,909,789
AA
9,819,477
AA-
18,594,307
A+
2,957,405
Total
$
47,901,258
The following table shows the estimated fair value of our marketable securities, aggregated by fair value hierarchy inputs used in
estimating their fair values:
As of March 31, 2025
As of March 31, 2024
Level 1
Level 2
Total
Level 1
Level 2
Total
Money market funds
$
7,905,042
$
-
$
7,905,042
$
9,842,796
$
-
$
9,842,796
Treasury securities
-
4,715,238
4,715,238
-
-
-
Corporate bonds
-
35,280,978
35,280,978
-
42,706,080
42,706,080
Total
$
7,905,042
$ 39,996,216
$ 47,901,258
$
9,842,796
$ 42,706,080
$ 52,548,876
Our available-for-sale securities as of March 31, 2025 and 2024, aggregated into classes of securities, were as follows:
As of March 31, 2025
As of March 31, 2024
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
$ 7,905,042 $
- $
-
$ 7,905,042 $ 9,842,796 $
- $
- $ 9,842,796
Treasury securities
4,699,686
15,552
-
4,715,238
-
-
-
-
Corporate bonds
35,384,272
55,858
(159,152)
35,280,978
43,701,520
930
(996,370)
42,706,080
Total
$47,989,000 $
71,410 $ (159,152) $47,901,258 $53,544,316 $
930 $ (996,370) $52,548,876
The following table shows the gross unrealized holding losses and estimated fair value of our marketable securities, aggregated by
category of securities and length of time that individual securities had been in a continuous unrealized loss position as of March 31,
2025 and 2024:
Less Than 12 Months
12 Months or Greater
Total
Estimated
Fair
Value
Gross
Unrealized
Holding
Losses
Estimated
Fair
Value
Gross
Unrealized
Holding
Losses
Estimated
Fair
Value
Gross
Unrealized
Holding
Losses
As of March 31, 2025
Corporate bonds
$
7,323,059
$
(31,808) $ 21,020,717
$
(127,344) $ 28,343,776
$
(159,152)
Total
$
7,323,059
$
(31,808) $ 21,020,717
$
(127,344) $ 28,343,776
$
(159,152)
As of March 31, 2024
Corporate bonds
$
3,154,764
$
(4,902) $ 36,551,534
$
(991,468) $ 39,706,298
$
(996,370)
Total
$
3,154,764
$
(4,902) $ 36,551,534
$
(991,468) $ 39,706,298
$
(996,370)
F-10
None of the securities were impaired at acquisition, and subsequent declines in fair value are attributable to interest rate increases.
We do not intend to sell, and it is not more likely than not that we will be required to sell, these securities before recovery of their
amortized cost basis. The issuers continue to make timely interest payments on these securities.
Unrealized gains on our marketable securities and their tax effects are as follows:
Year Ended March 31,
2025
2024
Unrealized gain on marketable securities
$
907,698
$
558,399
Tax effects
(198,605)
(122,178)
Unrealized gain on marketable securities, net of tax
$
709,093
$
436,221
NOTE 5. INVENTORIES
Inventories are shown in the following table:
March 31,
2025
2024
Raw materials
$
1,608,632
$
1,982,657
Work in process
3,609,273
2,641,085
Finished goods
2,231,178
2,534,843
Total inventories
$
7,449,083
$
7,158,585
NOTE 6. STOCK-BASED COMPENSATION
Stock Option Plan
Our 2000 Stock Option Plan, as amended, provides for issuance to employees, directors, and certain service providers of incentive
stock options and nonstatutory stock options. Generally, the options may be exercised at any time prior to expiration, subject to
vesting based on terms of employment. The period ranges from immediate vesting to vesting in one year. The options have exercisable
lives of ten years from the date of grant and are generally not eligible to vest early in the event of retirement, death, disability, or
change in control. Exercise prices are not less than fair market value of the underlying Common Stock at the date the options are
granted. Stock-based compensation expense was $152,167 in fiscal 2025 and $141,936 in fiscal 2024.
Valuation assumptions
We use the Black-Scholes-Merton option-pricing model to determine the fair value of stock options. The following assumptions
were used to estimate the fair value of options granted:
Year Ended March 31,
2025
2024
Risk-free interest rate
4.0–4.6 %
4.2–5.0 %
Expected volatility
40–42 %
40–42 %
Expected life (years)
5.0
5.0
Dividend yield
4.6–5.0 %
4.5–5.0 %
The determination of the fair value of the awards on the date of grant using the Black-Scholes-Merton model is affected by our
stock price as well as assumptions of other variables, including projected stock option exercise behaviors, risk-free interest rate, and
expected volatility of our stock price in future periods. Our estimates and assumptions affect the amounts reported in the financial
statements and accompanying notes.
Expected life
We analyze historical exercise and termination data to estimate the expected life assumption. We believe historical data currently
represents the best estimate of the expected life of a new option.
Risk-free interest rate
The risk-free rate is based on the yield of U.S. Treasury securities on the grant date for maturities similar to the expected lives of the
options.
Volatility
We use historical volatility to estimate the expected volatility of our common stock.
F-11
Dividend yield
We assumed a 4.6% to 5% dividend yield for fiscal 2025 and 4.5% to 5% dividend yield for fiscal 2024 based on the dividend yield
on the date the options were granted.
Tax effects of stock-based compensation
Stock-based compensation increased deferred tax assets by $17,142 for fiscal 2025 and by $29,934 for fiscal 2024.
General stock option information
The following table summarizes the activity for all stock options outstanding for the years ended March 31, 2025 and 2024:
2025
2024
Shares
Weighted Average
Exercise Price
Shares
Weighted Average
Exercise Price
Options outstanding at beginning of year
36,000
$
69.50
34,500
$
66.26
Granted
6,500
81.96
6,500
79.29
Exercised
(9,000 )
61.06
(5,000 )
59.85
At March 31,
33,500
$
74.19
36,000
$
69.50
Options exercisable at March 31,
31,000
$
73.56
33,500
$
65.12
Weighted average grant date fair value of
options granted during the year
$
22.77
$
22.15
Of the 9,000 stock options exercised during the year ended March 31, 2025, 7,000 were exchanged in a cashless net option exercise
which resulted into the issuance of 1,490 common shares. Of the 5,000 stock options exercised during the year ended March 31, 2024,
2,000 were exchanged in a cashless net option exercise which resulted into the issuance of 850 common shares.
The following table summarizes additional information about stock options outstanding and exercisable at March 31, 2025:
Options Outstanding
Options Exercisable
Options
Outstanding
Weighted Average
Remaining
Contractual
Life (Years)
Weighted
Average
Exercise
Price
Aggregate
Intrinsic Value
Options
Exercisable
Weighted
Average
Exercise
Price
Aggregate
Intrinsic Value
33,500
6.13
$
74.19
$
94,190
31,000
$
73.56
$
94,190
The total fair value of options granted was $147,986 in fiscal 2025 and $143,943 in fiscal 2024. There was $4,181 of unrecognized
stock-based compensation as of March 31, 2024 related to nonvested options, which was recognized in the first quarter of fiscal 2025.
There was no unrecognized stock-based compensation as of March 31, 2025 related to nonvested options.
NOTE 7. INCOME TAXES
Income tax provisions for fiscal 2025 and 2024 consisted of the following:
Year Ended March 31,
2025
2024
Current taxes
Federal
$
3,403,776
$
4,145,804
State
182,414
200,926
Deferred taxes
Federal
(587,356)
(963,470)
State
(24,613)
(40,374)
Income tax provision
$
2,974,221
$
3,342,886
F-12
A reconciliation of income tax provisions at the U.S. statutory rate for fiscal 2025 and 2024 is as follows:
Year Ended March 31,
2025
2024
Tax expense at U.S. statutory rate
$
3,788,135 $
4,298,193
State income taxes, net of Federal benefit
158,741
180,115
R&D and manufacturing tax credits
(202,166)
(68,894)
Tax effect of foreign-derived intangible income deduction
(816,143)
(1,125,817)
Other
45,654
59,289
Income tax provision
$
2,974,221 $
3,342,886
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and
liabilities as of March 31, 2025 and 2024 were as follows:
March 31,
2025
2024
Paid time off accrual
$
67,594
$
64,190
Inventory reserve
47,042
47,042
Depreciation and amortization
(118,314)
(127,839)
Stock-based compensation deductions
118,810
101,668
Unrealized loss on marketable securities
19,198
217,802
Section 174 R&D expense
1,417,015
930,946
UNICAP 263A inventory
311,729
202,339
Other
3,995
17,556
Deferred tax assets
$
1,867,069
$
1,453,704
We had no unrecognized tax benefits as of March 31, 2025, and we do not expect any significant unrecognized tax benefits within
12 months of the reporting date. We recognize interest and penalties related to income tax matters in income tax expense. As of
March 31, 2025 we had no accrued interest related to uncertain tax positions. Federal and State taxes payable were $243,394 as of
March 31, 2025 and estimated taxes overpayment was $31,250 as of March 31, 2024. The tax years ended March 31, 2021 through
March 31, 2025 remain open to examination by the major taxing jurisdictions to which we are subject.
NOTE 8. LEASES
We conduct our operations in a leased facility under a non-cancellable lease expiring May 31, 2031. Effective November 4, 2024 we
executed an Amendment extending our lease, which would have expired March 31, 2026 without the Amendment. Liabilities under
the lease Amendment are included in the lease-liabilities table below. For further details on obligations under our lease as amended,
refer to our Form 8-K/A filed on November 7, 2024. We have an option to extend the lease for an additional five years at the market
rent subject to certain terms and conditions.
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. Details of our operating lease are as follows:
Year Ended March 31,
2025
2024
Operating lease cost
$ 168,449
$ 151,014
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for leases
$ 182,271
$ 178,640
Right-of-use assets obtained in exchange for new lease liabilities
Operating lease
710,665
Remaining lease term (months)
74
24
Discount rate
7.8%
3.5%
F-13
The following table presents the maturities of lease liabilities as of March 31, 2025:
Year Ending March 31,
Operating
Lease
Liabilities
2026
84,995
2027
172,142
2028
213,284
2029
220,216
2030
227,373
2031
234,762
2032
40,399
Total lease payments
1,193,171
Imputed lease interest
(271,940)
Total lease liabilities
$
921,231
NOTE 9. CONCENTRATIONS
The following table summarizes customers comprising 10% or more of revenue for the two most recent fiscal years:
% of
Revenue
% of Accounts
Receivable
Year Ended March 31,
2025
2024
2025
2024
Customer A
35%
23%
26%
21%
Customer B
19%
3%
40%
31%
We do not currently believe the receivable balances from these customers represent significant credit risks based on our analysis of
the likelihood of default.
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, tax considerations, 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. We intend to finance any stock repurchases with cash provided by operating activities or
maturating marketable securities.
Our repurchase program does not have an expiration date and does not obligate us to purchase any shares, and in recent years we
have focused on cash dividends as a more efficient way to return capital to our shareholders. The remaining authorization was
$3,520,369 as of March 31, 2025.The repurchase program may be modified or discontinued at any time without notice.
NOTE 11. INFORMATION AS TO EMPLOYEE STOCK PURCHASE, SAVINGS, AND SIMILAR PLANS
All of our employees except interns are eligible to participate in our 401(k) savings plan the first quarter after reaching age 18.
Employees may contribute up to the Internal Revenue Code maximum. We make matching contributions of 100% of the first 3% of
participants’ before-tax salary deferral contributions. Our matching contributions were $94,912 for fiscal 2025 and $101,931 for fiscal
2024.
NOTE 12. SUBSEQUENT EVENTS
On May 7, 2025 we announced that our Board had declared a quarterly cash dividend of $1.00 per share of Common Stock to be
paid May 30, 2025 to shareholders of record as of the close of business May 19, 2025.
F-14
EXHIBIT INDEX
Exhibit #
Description
19
Insider Trading Policies and Procedures.
23
Consent of Boulay PLLP.
31.1
Certification by Daniel A. Baker pursuant to Rule 13a-14(a)/15d-14(a).
31.2
Certification by Daniel Nelson pursuant to Rule 13a-14(a)/15d-14(a).
32
Certification by Daniel A. Baker and Daniel Nelson pursuant to 18 U.S.C. Section 1350.
101.INS
XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
www.nve.com/AnnualReports