NVE CORP - Form 10-Q SEC filing

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2023

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

For the transition period from to

Commission File Number: 000-12196

NVE CORPORATION

(Exact name of registrant as specified in its charter)

Minnesota		41-1424202
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

11409 Valley View Road, Eden Prairie, Minnesota		55344
(Address of principal executive offices)		(Zip Code)

(952) 829-9217
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

	Large accelerated filer ☐	Accelerated filer ☐
	Non-accelerated filer ☒	Smaller reporting company ☒
		Emerging growth company ☐

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

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	NVEC	The NASDAQ Stock Market, LLC

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, $0.01 Par Value – 4,833,401 shares outstanding as of July 14, 2023

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Balance Sheets

Statements of Income for the Quarters Ended June 3 0 , 202 3 and 202 2

Statements of Comprehensive Income for the Quarters Ended June 3 0 , 202 3 and 202 2

Statements of Shareholders’ Equity for the Quarter Ended June 3 0 , 202 3

Statements of Shareholders’ Equity for the Quarter Ended June 3 0 , 202 2

Statements of Cash Flows for the Quarters Ended June 3 0 , 202 3 and 202 2

Notes to Financial Statements

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

Item 4. Controls and Procedures

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

Item 4. Mine Safety Disclosures

Item 6. Exhibits

SIGNATURES

	(Unaudited) June 30, 2023			March 31, 2023*
ASSETS
Current assets
Cash and cash equivalents	$	1,439,933		$	1,669,896
Marketable securities, short-term (amortized cost of $12,300,315 as of June 30, 2023, and $15,696,135 as of March 31, 2023)		12,173,737			15,513,095
Accounts receivable, net of allowance for credit losses of $227,440 as of June 30, 2023, and $15,000 as of March 31, 2023		5,397,032			6,523,344
Inventories		6,292,162			6,417,010
Prepaid expenses and other assets		707,175			663,459
Total current assets		26,010,039			30,786,804
Fixed assets
Machinery and equipment		10,488,496			10,484,365
Leasehold improvements		1,956,309			1,956,309
		12,444,805			12,440,674
Less accumulated depreciation and amortization		11,172,258			11,095,236
Net fixed assets		1,272,547			1,345,438
Deferred tax assets		724,773			572,038
Marketable securities, long-term (amortized cost of $41,447,065 as of June 30, 2023, and $37,495,846 as of March 31, 2023)		39,719,369			36,125,047
Right-of-use asset – operating lease		392,370			425,843
Total assets	$	68,119,098		$	69,255,170

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	159,155		$	281,712
Accrued payroll and other		935,621			1,375,250
Operating lease		176,688			175,798
Total current liabilities		1,271,464			1,832,760
Operating lease		301,866			342,908
Total liabilities		1,573,330			2,175,668

Shareholders’ equity
Common stock, $0.01 par value, 6,000,000 shares authorized; 4,833,401 issued and outstanding as of June 30, 2023, and 4,830,826 as of March 31, 2023		48,334			48,308
Additional paid-in capital		19,423,479			19,295,442
Accumulated other comprehensive loss		(1,448,559	)		(1,213,858	)
Retained earnings		48,522,514			48,949,610
Total shareholders’ equity		66,545,768			67,079,502
Total liabilities and shareholders’ equity	$	68,119,098		$	69,255,170

	Quarter Ended June 30,
	2023		2022
Revenue
Product sales	$	8,700,092	$	7,072,961
Contract research and development		131,322		263,446
Total revenue		8,831,414		7,336,407
Cost of sales		2,079,623		1,651,847
Gross profit		6,751,791		5,684,560
Expenses
Research and development		695,992		601,918
Selling, general, and administrative		475,115		371,320
Credit loss expense		212,440		-
Total expenses		1,383,547		973,238
Income from operations		5,368,244		4,711,322
Interest income		436,526		283,059
Income before taxes		5,804,770		4,994,381
Provision for income taxes		1,401,040		854,265
Net income	$	4,403,730	$	4,140,116
Net income per share – basic	$	0.91	$	0.86
Net income per share – diluted	$	0.91	$	0.86
Cash dividends declared per common share	$	1.00	$	1.00
Weighted average shares outstanding
Basic		4,832,166		4,830,826
Diluted		4,840,571		4,830,871

							Accumulated
					Additional		Other
	Common Stock				Paid-In		Comprehensive			Retained
	Shares		Amount		Capital		Income (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		2,575		26		117,501								117,527
Comprehensive income:
Unrealized loss on marketable securities, net of tax								(234,701	)					(234,701	)
Net income											4,403,730			4,403,730
Total comprehensive income														4,169,029
Stock-based compensation						10,536								10,536
Cash dividends declared ($1.00 per share of common stock)											(4,830,826	)		(4,830,826	)
Balance as of June 30, 2023		4,833,401	$	48,334	$	19,423,479	$	(1,448,559	)	$	48,522,514		$	66,545,768

	Total		<1 Year		1–3 Years		3–6 Years
Money market funds	$	1,294,300	$	1,294,300	$	-	$	-
Corporate bonds		51,893,106		12,173,737		27,318,977		12,400,392
Total	$	53,187,406	$	13,468,037	$	27,318,977	$	12,400,392

Credit Rating		Fair Value
AAA	$	2,564,149
AA		6,626,736
AA-		20,804,539
A+		7,893,562
A		9,387,766
A-		5,910,654
Total	$	53,187,406

	As of June 30, 2023						As of March 31, 2023
	Level 1		Level 2		Total		Level 1		Level 2		Total
Money market funds	$	1,294,300	$	-	$	1,294,300	$	906,141	$	-	$	906,141
Corporate bonds		-		51,893,106		51,893,106		-		51,638,142		51,638,142
Total	$	1,294,300	$	51,893,106	$	53,187,406	$	906,141	$	51,638,142	$	52,544,283

	As of June 30, 2023									As of March 31, 2023
	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	$	1,294,300	$	-	$	-		$	1,294,300	$	906,141	$	-	$	-		$	906,141
Corporate bonds		53,747,380		1		(1,854,275	)		51,893,106		53,191,981		1,007		(1,554,846	)		51,638,142
Total	$	55,041,680	$	1	$	(1,854,275	)	$	53,187,406	$	54,098,122	$	1,007	$	(1,554,846	)	$	52,544,283

	Less Than 12 Months					12 Months or Greater					Total
	Estimated Fair Value		Gross Unrealized Holding Losses			Estimated Fair Value		Gross Unrealized Holding Losses			Estimated Fair Value		Gross Unrealized Holding Losses

As of June 30, 2023
Corporate bonds	$	36,594,686	$	(934,611	)	$	15,298,420	$	(919,664	)	$	51,893,106	$	(1,854,275	)
Total	$	36,594,686	$	(934,611	)	$	15,298,420	$	(919,664	)	$	51,893,106	$	(1,854,275	)

As of March 31, 2023
Corporate bonds	$	37,084,628	$	(590,967	)	$	13,294,817	$	(963,879	)	$	50,379,445	$	(1,554,846	)
Total	$	37,084,628	$	(590,967	)	$	13,294,817	$	(963,879	)	$	50,379,445	$	(1,554,846	)


Allowance for credit losses as of March 31, 2023	$	15,000
Change in provision for current expected credit losses		212,440
Allowance for credit losses as of June 30, 2023	$	227,440

		June 30, 2023		March 31, 2023
Raw materials	$	1,741,172	$	1,601,962
Work in process		2,914,014		3,781,894
Finished goods		1,636,976		1,033,154
Total inventories	$	6,292,162	$	6,417,010

Year Ending March 31,	Operating Lease Liabilities
2024	$	134,207
2025		182,271
2026		184,995
Total lease payments		501,473
Imputed lease interest		(22,919	)
Total lease liabilities	$	478,554

Exhibit #	Description
10	Second Amendment Sonova Supply Agreement (incorporated by reference to the Form 8-K/A filed July 19, 2023).

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 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH	Inline XBRL Taxonomy Extension Schema Document

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

		NVE CORPORATION
		(Registrant)


July 19, 2023		/s/ DANIEL A. BAKER
Date		Daniel A. Baker
		President and Chief Executive Officer


July 19, 2023		/s/ DANIEL NELSON
Date		Daniel Nelson
		Principal Financial Officer

	Quarter Ended June 30, 2023
Operating lease cost	$	37,754

Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for leases	$	44,433
Remaining lease term	33 months
Discount rate		3.5	%

	Percentage of Revenue Quarter Ended June 30,				Quarter- to-Quarter
	2023		2022		Change
Revenue
Product sales	98.5	%	96.4	%	23.0	%
Contract research and development	1.5	%	3.6	%	(50.2	)%
Total revenue	100.0	%	100.0	%	20.4	%
Cost of sales	23.5	%	22.5	%	25.9	%
Gross profit	76.5	%	77.5	%	18.8	%
Expenses
Research and development	7.9	%	8.2	%	15.6	%
Selling, general, and administrative	5.4	%	5.1	%	28.0	%
Credit loss expense	2.4	%	-	%	-	%
Total expenses	15.7	%	13.3	%	42.2	%
Income from operations	60.8	%	64.2	%	13.9	%
Interest income	4.9	%	3.9	%	54.2	%
Income before taxes	65.7	%	68.1	%	16.2	%
Provision for income taxes	15.8	%	11.7	%	64.0	%
Net income	49.9	%	56.4	%	6.4	%

SEC Form 10-Q filed by NVE Corporation