What changed in this filing

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Item 1. Financial Statements

2023-01-25 compared with 2022-10-19 · 115 added, 423 removed, 188 unchanged (74% of the section changed)

2 unchanged sentences

BALANCE SHEETS

September 30, 2022

March 31, 2022*

December 31, 2022

March 31, 2022*

Current assets

Cash and cash equivalents

$ 3,583,539  

$ 10,449,510  

Marketable securities, short-term

10,326,647  

20,839,683  

Accounts receivable, net of allowance for uncollectible accounts of $ 15,000

5,860,414  

4,704,829  

5,794,849  

5,088,635  

Prepaid expenses and other assets

600,913  

420,520  

Total current assets

26,166,362  

41,503,177  

Machinery and equipment

9,603,049  

9,739,244  

Leasehold improvements

1,826,334  

1,810,872  

11,429,383  

11,550,116  

Less accumulated depreciation and amortization

10,990,224  

10,943,731  

Net fixed assets

439,159  

606,385  

Deferred tax assets

894,045  

483,469  

Marketable securities, long-term

39,514,685  

24,314,211  

Right-of-use asset –

operating lease

494,070  

560,250  

$ 67,508,321  

$ 67,467,492  

LIABILITIES AND SHAREHOLDERS’

Right-of-use asset – operating lease

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities

Accounts payable

$ 399,263  

$ 943,535  

Accrued payroll and other

2,861,151  

1,356,689  

Operating lease

157,830  

156,121  

Total current liabilities

3,418,244  

2,456,345  

Operating lease

374,941  

446,018  

Total liabilities

3,793,185  

2,902,363  

Shareholders’

Shareholders’ equity

Common stock, $ 0.01 par value, 6,000,000 shares authorized;

4,830,826 issued and outstanding as of September 30 and March 31, 2022

48,308  

4,830,826 issued and outstanding as of December 31 and March 31, 2022

Additional paid-in capital

19,303,570  

19,256,485  

Accumulated other comprehensive loss

( 1,784,035 )  

Retained earnings

46,147,293  

45,578,456  

Total shareholders’

63,715,136  

64,565,129  

Total liabilities and shareholders’

$ 67,508,321  

$ 67,467,492  

Total shareholders’ equity

Total liabilities and shareholders’ equity

*The March 31, 2022 Balance Sheet is derived from the audited financial statements contained in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022.

See accompanying notes. 

NVE CORPORATION

STATEMENTS OF INCOME

Quarter Ended September 30

Quarter Ended December 31,

Product sales

9 unchanged sentences

Provision for income taxes

Net income per share –

Net income per share – basic

Net income per share – diluted

Cash dividends declared per common share

1 unchanged sentence

STATEMENTS OF COMPREHENSIVE INCOME

Quarter Ended September 30

Unrealized loss from marketable securities, net of tax

Quarter Ended December 31,

Unrealized gain (loss) from marketable securities, net of tax

Comprehensive income

2 unchanged sentences

STATEMENTS OF INCOME

Six Months Ended September 30

Nine Months Ended December 31,

Product sales

$ 17,587,500  

Contract research and development

466,731  

Total revenue

18,054,231  

Cost of sales

4,054,628  

13,999,603  

Research and development

1,271,896  

Selling, general, and administrative

806,946  

Total expenses

2,078,842  

Income from operations

11,920,761  

Interest income

634,436  

Income before taxes

12,555,197  

Provision for income taxes

2,324,707  

$ 10,230,490  

Net income per share –

$ 2.12  

Net income per share –

$ 2.12  

Net income per share – basic

Net income per share – diluted

Cash dividends declared per common share

$ 2.00  

Weighted average shares outstanding

4,830,826  

STATEMENTS OF COMPREHENSIVE INCOME

Six Months Ended September 30

Nine Months Ended December 31,

Unrealized loss from marketable securities, net of tax

2 unchanged sentences

NVE CORPORATION

STATEMENTS OF SHAREHOLDERS ’

STATEMENTS OF SHAREHOLDERS ’ EQUITY

Comprehensive

1 unchanged sentence

Balance as of March 31, 2022

4,830,826  

$ 48,308  

$ 19,256,485  

$ ( 318,120 )  

$ 45,578,456  

$ 64,565,129  

Comprehensive income:

Unrealized loss on marketable securities, net of tax  

( 338,553 )  

Net income  

4,140,116  

Total comprehensive income  

3,801,563  

Stock-based compensation  

Cash dividends declared ($ 1.00 per share of common stock)  

( 4,830,826 )  

Balance as of June 30, 2022  

4,830,826  

48,308  

19,263,619  

( 656,673 )  

44,887,746  

63,543,000  

Unrealized loss on marketable securities, net of tax

Total comprehensive income

Stock-based compensation

Cash dividends declared ($1.00 per share of common stock)

Balance as of June 30, 2022

Comprehensive income:

Unrealized loss on marketable securities, net of tax

( 1,127,362 )

6,090,373  

Total comprehensive income

4,963,011  

Stock-based compensation

39,951  

Cash dividends declared ($1.00 per share of common stock)

( 4,830,826 )

Balance as of September 30, 2022

4,830,826  

$ 48,308  

$ 19,303,570  

$ ( 1,784,035 )  

$ 46,147,293  

$ 63,715,136  

See accompanying notes. 

Comprehensive income:

Unrealized gain on marketable securities, net of tax

Total comprehensive income

Stock-based compensation

Cash dividends declared ($1.00 per share of common stock)

Balance as of December 31, 2022

See accompanying notes.

NVE CORPORATION

STATEMENTS OF SHAREHOLDERS ’

STATEMENTS OF SHAREHOLDERS ’ EQUITY

Comprehensive

1 unchanged sentence

Balance as of March 31, 2021

4,833,232  

$ 48,332  

$ 19,338,127  

$ 1,101,119  

$ 50,404,364  

$ 70,891,942  

Comprehensive income:

Unrealized loss on marketable securities, net of tax

3,579,566  

Total comprehensive income

3,489,401  

Stock-based compensation  

Cash dividends declared ($ 1.00 per share of common stock)  

( 4,833,232 )  

Balance as of June 30, 2021  

4,833,232  

48,332  

19,345,365  

1,010,954  

49,150,698  

69,555,349  

Stock-based compensation

Cash dividends declared ($1.00 per share of common stock)

Balance as of June 30, 2021

Comprehensive income:

Unrealized loss on marketable securities, net of tax  

( 197,034 )  

Net income  

3,646,507  

Total comprehensive income  

3,449,473  

Unrealized loss on marketable securities, net of tax

Total comprehensive income

Stock-based compensation

56,999  

Cash dividends declared ($1.00 per share of common stock)

( 4,833,232 )

Balance as of September 30, 2021

4,833,232  

$ 48,332  

$ 19,402,364  

$ 813,920  

$ 47,963,973  

$ 68,228,589  

See accompanying notes. 

Exercise of stock options

Comprehensive income:

Unrealized loss on marketable securities, net of tax

Total comprehensive income

Stock-based compensation

Cash dividends declared ($1.00 per share of common stock)

Balance as of December 31, 2021

See accompanying notes.

NVE CORPORATION

STATEMENTS OF CASH FLOWS

Six Months Ended September 30

Nine Months Ended December 31,

OPERATING ACTIVITIES

14 unchanged sentences

Net cash provided (used) by investing activities

( 8,676,229 )

FINANCING ACTIVITIES

1 unchanged sentence

Cash used in financing activities

(Decrease) increase in cash and cash equivalents

Decrease in cash and cash equivalents

Cash and cash equivalents at beginning of period

2 unchanged sentences

Cash paid during the period for income taxes

See accompanying notes. 

NVE CORPORATION

1 unchanged sentence

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. 

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

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Although we believe that the disclosures are adequate to make the information presented not misleading, certain disclosures have been omitted as allowed, and it is suggested that these unaudited financial statements be read in conjunction with the audited financial statements and the notes included in our latest annual financial statements included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022.

The results of operations for the quarter and six months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the full fiscal year ending March 31, 2023.

The results of operations for the quarter and nine months ended December 31, 2022 are not necessarily indicative of the results that may be expected for the full fiscal year ending March 31, 2023.

Significant accounting policies

A description of our significant accounting policies is provided in Note 2 to the Financial Statements in our Annual Report on Form 10-K for the year ended March 31, 2022.

As of September 30, 2022, there were no changes to our significant accounting policies.

As of December 31, 2022, there were no changes to our significant accounting policies.

RECENTLY ISSUED ACCOUNTING STANDARDS

Recently Adopted Accounting Standard

In May 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2021 - 04, Earnings Per Share (Topic 260 ), Debt—Modifications and Extinguishments (Subtopic 470 - 50 ), Compensation—Stock Compensation (Topic 718 ), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815 - 40 ) Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options .

ASU 2021 - 04 addresses issuers’

accounting for certain modifications or exchanges of freestanding equity-classified written call options.

We adopted ASU 2021 - 04 beginning with the quarter ended June 

In May 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options .

ASU 2021-04 addresses issuers’ accounting for certain modifications or exchanges of freestanding equity-classified written call options.

We adopted ASU 2021-04 beginning with the quarter ended June 30, 2022.

The adoption had no material impact on our financial statements.

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2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Statements .

2016 - 13 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected.

ASU 2016-13 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected.

The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset.

In November 

2018 the FASB issued ASU No.

2018 - 19, Codification Improvements to Topic  

326, Financial Instruments-Credit Losses , which clarifies codification and corrects unintended application of the guidance, and in November 2019, the FASB issued ASU No.

2019 - 11, Codification Improvements to Topic 326, Financial Instruments-Credit Losses , which clarifies or addresses specific issues about certain aspects of ASU 

In November 

2019 the FASB issued ASU No.

2019 - 10, Financial Instruments —

Credit Losses (Topic 

326 ), Derivatives and Hedging (Topic 815 ), and Leases (Topic 

In November 2018 the FASB issued ASU No.

2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses , which clarifies codification and corrects unintended application of the guidance, and in November 2019, the FASB issued ASU No.

2019-11, Codification Improvements to Topic 326, Financial Instruments-Credit Losses , which clarifies or addresses specific issues about certain aspects of ASU 2016-13.

In November 2019 the FASB issued ASU No.

2019-10, Financial Instruments — Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842):

Effective Dates , and in February 2020 the FASB issued ASU No.

2020 - 02, Financial Instruments —

Credit Losses (Topic  

326 ) and Leases (Topic 842 ):

2020-02, Financial Instruments — Credit Losses (Topic 326) and Leases (Topic 842):

Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.

119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No.

2016 - 02, Leases (Topic 

842 ) , both of which delay the effective date of ASU 

2016 - 13 by three years for certain Smaller Reporting Companies such as us.

In March 

2020, the FASB issued ASU No.

2016-02, Leases (Topic 842) , both of which delay the effective date of ASU 2016-13 by three years for certain Smaller Reporting Companies such as us.

In March 2020, the FASB issued ASU No.

2020-03, Codification Improvements to Financial Instruments ;

which modifies the measurement of expected credit losses of certain financial instruments.

In accordance with ASU 

2019 - 10 and ASU 

2020 - 02, ASU 

2016 - 13 is effective for certain Smaller Reporting Companies for financial statements issued for fiscal years beginning after December 

15, 2022 and interim periods within those fiscal years, which will be fiscal 2024 for us if we continue to be classified as a Smaller Reporting Company, with early adoption permitted.

We are evaluating the potential impact of ASU 

2016 - 13 on our financial statements.

In accordance with ASU 2019-10 and ASU 2020-02, ASU 2016-13 is effective for certain Smaller Reporting Companies for financial statements issued for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years, which will be fiscal 2024 for us if we continue to be classified as a Smaller Reporting Company, with early adoption permitted.

We are evaluating the potential impact of ASU 2016-13 on our financial statements.

NET INCOME PER SHARE

2 unchanged sentences

The following tables show the components of diluted shares:

Quarter Ended September 30

Weighted average common shares outstanding –

4,830,826  

Quarter Ended December 31,

Weighted average common shares outstanding – basic

Dilutive effect of stock options

Shares used in computing net income per share –

4,830,956  

Six Months Ended September 30

Weighted average common shares outstanding –

basic 4,830,826  

Dilutive effect of stock options 101  

Shares used in computing net income per share –

diluted 4,830,927  

Shares used in computing net income per share – diluted

Nine Months Ended December 31,

Weighted average common shares outstanding – basic

Dilutive effect of stock options

Shares used in computing net income per share – diluted

FAIR VALUE OF FINANCIAL INSTRUMENTS

Our corporate bonds and money market funds are classified as available-for-sale securities and carried at estimated fair value.

Unrealized holding gains and losses are included in accumulated other comprehensive income (loss) in the statement of shareholders’

Unrealized holding gains and losses are included in accumulated other comprehensive income (loss) in the statement of shareholders’ equity.

Corporate bonds with remaining maturities less than one year are classified as short-term, and those with remaining maturities greater than one year are classified as long-term.

1 unchanged sentence

Gains and losses on marketable security transactions are reported on the specific-identification method.

Contractual maturities of available-for-sale securities as of September 30, 2022 are as follows: 

1–3 Years

3–7 Years

$ 51,598,609  

$ 12,083,924  

$ 24,387,794  

$ 15,126,891  

Total available-for-sale securities represented approximately 76 % of our total assets.

Marketable securities as of September 30, 2022 had remaining maturities between 14 weeks and 79 months.

Contractual maturities of available-for-sale securities as of December 31, 2022 are as follows:

Total available-for-sale securities represented approximately 79% of our total assets as of December 31, 2022.

Marketable securities as of December 31, 2022 had remaining maturities between six days and 76 months.

Generally accepted accounting principles establish a framework for measuring fair value, provide a definition of fair value, and prescribe required disclosures about fair-value measurements.

4 unchanged sentences

The categories within the valuation hierarchy are described as follows:

Level 1 –

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

Level 2 –

Financial instruments with quoted prices in active markets for similar assets or liabilities.

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

Level 2 – Financial instruments with quoted prices in active markets for similar assets or liabilities.

Level 2 fair value measurements are determined using either prices for similar instruments or inputs that are either directly or indirectly observable, such as interest rates.

Level 3 –

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

Money market funds are included on the balance sheets in “Cash and cash equivalents.”

Corporate bonds are included on the balance sheets in “Marketable securities, short term”

and “Marketable securities, long term.”

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

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

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

As of September 30, 2022

As of December 31, 2022

As of March 31, 2022

Money market funds

$ 1,757,277  

$ 6,756,993  

Corporate bonds

49,841,332  

45,153,894  

$ 1,757,277  

$ 49,841,332  

$ 51,598,609  

$ 6,756,993  

$ 45,153,894  

Our available-for-sale securities as of September 30 and March 31, 2022, aggregated into classes of securities, were as follows:

As of September 30, 2022

Our available-for-sale securities as of December 31 and March 31, 2022, aggregated into classes of securities, were as follows:

As of December 31, 2022

As of March 31, 2022

Money market funds

$ 1,757,277  

$ 6,756,993  

Corporate bonds

52,125,043  

( 2,283,711 )  

49,841,332  

45,561,114  

230,085  

$ 53,882,320  

$ ( 2,283,711 )  

$ 51,598,609  

$ 52,318,107  

$ 230,085  

$ ( 637,305 )

The following table shows the gross unrealized holding losses and fair value of our available-for-sale securities with unrealized holding losses, aggregated by class of securities and length of time that individual securities had been in a continuous unrealized loss position as of September 30 and March 

Less Than 12 Months

12 Months or Greater

As of September 30, 2022

As of December 31, 2022

Corporate bonds

$ 40,510,241  

$ ( 1,327,302 )  

$ 9,331,091  

$ ( 956,409 )  

$ 49,841,332  

$ ( 2,283,711 )

$ 40,510,241  

$ ( 1,327,302 )  

$ 9,331,091  

$ ( 956,409 )  

$ 49,841,332  

$ ( 2,283,711 )

As of March 31, 2022

Corporate bonds

$ 6,306,750  

$ 9,738,338  

$ ( 613,578 )  

$ 16,045,088  

$ ( 637,305 )

$ 6,306,750  

$ 9,738,338  

$ ( 613,578 )  

$ 16,045,088  

$ ( 637,305 )

None of the securities were impaired at acquisition, and subsequent declines in fair value are not attributed to declines in credit quality.

When evaluating for impairment we assess indicators that include, but are not limited to, earnings performance, changes in underlying credit ratings, market conditions, bona fide offers to purchase or sell, and ability to hold until maturity.

Because we believe it is more likely than not we will recover the cost basis of our investments, we did not consider any of our marketable securities to be impaired as of September 30, 2022.

Because we believe it is more likely than not we will recover the cost basis of our investments, we did not consider any of our marketable securities to be impaired as of December 31, 2022.

Inventories are shown in the following table:

September 30, 2022  

March 31, 2022

December 31, 2022

March 31, 2022

Raw materials

$ 1,324,358  

Work in process

3,829,498  

Finished goods

640,993  

Total inventories

$ 5,794,849  

STOCK-BASED COMPENSATION

Stock-based compensation expense was $ 39,951 for the second quarter of fiscal 2023, $ 56,999 for the second quarter of fiscal 2022, $ 47,085 for the first six months of fiscal 2023, and $ 64,237 for the first six months of fiscal 2022.

Stock-based compensation expense was $ 7,133 for the third quarter of fiscal 2023, $ 8,799 for the third quarter of fiscal 2022, $ 54,218 for the first nine months of fiscal 2023, and $ 73,036 for the first nine months of fiscal 2022.

We calculate the share-based compensation expense using the Black-Scholes standard option-pricing model.

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.

Federal and state income taxes payable as of September 

30, 2022 of approximately $ 1,457,000 are included in accrued expenses.

We had no unrecognized tax benefits as of September 30, 2022, and we do not expect any significant unrecognized tax benefits within 12 months of the reporting date.

As of December 31, 2022, federal and state estimated tax overpayments of $ 291,000 were included in prepaid assets.

We had no unrecognized tax benefits as of December 31, 2022, and we do no t 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 September 30, 2022 we had no accrued interest related to uncertain tax positions.

The tax years 2018 through 2022 remain open to examination by the major taxing jurisdictions to which we are subject. 

As of December 31, 2022 we had no accrued interest related to uncertain tax positions.

The tax years 2018 through 2022 remain open to examination by the major taxing jurisdictions to which we are subject.

We conduct our operations in a leased facility under a non-cancellable lease expiring March 31, 2026.

2 unchanged sentences

Variable lease costs consist primarily of common area maintenance and real estate taxes which are paid based on actual costs incurred by the lessor.

Details of our operating lease are as follows: 

Quarter Ended September 30, 2022 

Six Months Ended September 30, 2022

Operating lease cost $ 42,515  

$ 85,031  

Variable lease cost  

30,126  

61,315  

Total $ 72,641  

$ 146,346  

Cash paid for amounts included in the measurement of lease liabilities  

Details of our operating lease are as follows:

Quarter Ended December 31, 2022

Nine Months Ended December 31, 2022

Operating lease cost

Variable lease cost

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows for leases

$ 42,723  

87,156  

Remaining lease term 42 months  

Discount rate  

 The following table presents the maturities of lease liabilities as of September 30, 2022:

Year Ending March 31 Operating Leases  

78,487  

159,592  

163,224  

165,947  

Total lease payments  

567,250  

Imputed lease interest  

Total lease liabilities $ 532,771  

Remaining lease term

Discount rate

The following table presents the maturities of lease liabilities as of December 31, 2022:

As of December 31, 2022

Operating Leases

Total lease payments

Imputed lease interest

Total lease liabilities

STOCK REPURCHASE PROGRAM

On January 21, 2009 we announced that our Board of Directors authorized the repurchase of up to $ 2,500,000 of our Common Stock from time to time in open market, block, or privately negotiated transactions.

The timing and extent of any repurchases depends on market conditions, the trading price of the company’s stock, and other factors, and subject to the restrictions relating to volume, price, and timing under applicable law.

On August 27, 2015, we announced that our Board of Directors authorized up to $5,000,000 of additional repurchases.

2 unchanged sentences

We intend to finance any stock repurchases with cash provided by operating activities or maturating marketable securities.

The remaining authorization was $ 3,598,519 as of September 30, 2022.

We did not repurchase any of our Common Stock during the first six months of fiscal 2023.

The remaining authorization was $ 3,598,519 as of December 31, 2022.

We did no t repurchase any of our Common Stock during the first nine months of fiscal 2023.

INFORMATION AS TO EMPLOYEE STOCK PURCHASE, SAVINGS, AND SIMILAR PLANS

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Employees may contribute up to the Internal Revenue Code maximum.

We make matching contributions of 100 % of the first 3 % of participants’

salary deferral contributions.

Our matching contributions were $ 23,751 f or the second quarter of fiscal 2023, $ 26,831 for the second quarter of fiscal 2022, $ 52,177 for the first six months of fiscal 2023, and $ 55,415 for the first six months of fiscal 2022.

We make matching contributions of 100 % of the first 3 % of participants’ salary deferral contributions.

Our matching contributions were $ 21,484 for the third quarter of fiscal 2023, $ 21,579 for the third quarter of fiscal 2022, $ 73,661 for the first nine months of fiscal 2023, and $ 76,995 for the first nine months of fiscal 2022.

SUBSEQUENT EVENTS

On October 19, 2022 we announced that our Board had declared a quarterly cash dividend of $ 1.00 per share of Common Stock to be paid November 30, 2022 to shareholders of record as of the close of business October 31, 2022 .

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

Forward-looking statements

Some of the statements made in this Report or in the documents incorporated by reference in this Report and in other materials filed or to be filed by us with the Securities and Exchange Commission (“SEC”) as well as information included in verbal or written statements made by us constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These statements are subject to the safe harbor provisions of the reform act.

Forward-looking statements may be identified by the use of the terminology such as may, will, expect, anticipate, intend, believe, estimate, should, or continue, or the negatives of these terms or other variations on these words or comparable terminology.

To the extent that this Report contains forward-looking statements regarding the financial condition, operating results, business prospects or any other aspect of NVE, you should be aware that our actual financial condition, operating results and business performance may differ materially from that projected or estimated by us in the forward-looking statements.

We have attempted to identify, in context, some of the factors that we currently believe may cause actual future experience and results to differ from their current expectations.

These differences may be caused by a variety of factors, including but not limited to risks related to our reliance on several large customers for a significant percentage of revenue, our dependence on critical suppliers and packaging vendors, uncertainties related to the economic environments in the industries we serve, uncertainties related to future sales and revenues, risks and uncertainties related to future stock repurchases and dividend payments, and other specific risks that may be alluded to in this Report or in the documents incorporated by reference in this Report.

Further information regarding our risks and uncertainties are contained in Part I, Item 1A “Risk Factors”

of our Annual Report on Form 10-K for the year ended March 31, 2022.

NVE Corporation, referred to as NVE, we, us, or our, develops and sells devices that use spintronics, a nanotechnology that relies on electron spin rather than electron charge to acquire, store and transmit information.

We manufacture high-performance spintronic products including sensors and couplers that are used to acquire and transmit data.

Critical accounting policies

A description of our critical accounting policies is provided in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended March 31, 2022.

As of September 30, 2022 our critical accounting policies and estimates continued to include investment valuation, inventory valuation, and deferred tax assets estimation.

Quarter ended September 30, 2022 compared to quarter ended September 30, 2021

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

Percentage of Revenue

Quarter Ended September 30

Product sales

Contract research and development

Total revenue

Cost of sales

Research and development

Selling, general, and administrative

Total expenses

Income from operations

Interest income

Income before taxes

Provision for income taxes

Total revenue for the quarter ended September 30, 2022 (the second quarter of fiscal 2023) increased 57% compared to the quarter ended September 30, 2021 (the second quarter of fiscal 2022).

The increase was due to a 59 % increase in product sales and a 5% increase in contract research and development revenue.

The increase in product sales was primarily due to increased purchases by existing customers and new customers.

Sales increased in most of our markets and product lines.

The increase in contract research and development revenue was due to new contracts.

Total expenses decreased 7% for the second quarter of fiscal 2023 compared to the second quarter of fiscal 2022 due to a 5% decrease in research and development expense and a 10% decrease in selling, general, and administrative expense.

The decreases in expenses were primarily due to the reallocation of resources to revenue-generating activities.

Interest income for the second quarter of fiscal 2023 increased 19% due to an increase in our available-for-sale securities and an increase in their average interest rate.

The 67% increase in net income in the second quarter of fiscal 2023 compared to the prior-year quarter was primarily due to increased revenue and decreased expenses.

Six months ended September 30, 2022 compared to six months ended September 30, 2021

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

Percentage of Revenue

Six Months Ended September 30

Product sales

Contract research and development

Total revenue

Cost of sales

Research and development

Selling, general, and administrative

Total expenses

Income from operations

Interest income

Income before taxes

Provision for income taxes

Total revenue for the six months ended September 30, 2022 (the first six months of fiscal 2023) increased 29% compared to the six months ended September 30, 2021 (the first six months of fiscal 2022).

The increase was due to a 29% increase in product sales and a 19% increase in contract research and development revenue.

The increase in product sales was primarily due to increased purchases by existing customers and new customers.

Sales increased in most of our markets and product lines.

The increase in contract research and development revenue was due to new contracts.

Gross profit as a percentage of revenue increased to 78% for the first six months of fiscal 2023 from 76% for the first six months of fiscal 2022 primarily due to increased prices partially offset by increased costs.

Total expenses decreased 16% for the first six months of fiscal 2023 compared to the first six months of fiscal 2022 due to a 16% decrease in research and development expense and a 15% decrease in selling, general, and administrative expense.

The decreases in expenses were primarily due to the reallocation of resources to revenue-generating activities.

Interest income for the first six months of fiscal 2023 increased 9% due to an increase in our available-for-sale securities and an increase in their average interest rate.

The 42% increase in net income in the first six months of fiscal 2023 compared to the prior-year period was primarily due to increased revenue and decreased expenses.

Supply Chain Disruptions

Supply chain disruptions related to the COVID-19 pandemic may have favorably affected product sales in the quarter and six months ended September 30, 2022 since we believe the disruptions may have been less severe for us than for our competitors.

We believe supply chain disruptions also had an unfavorable impact on our costs of sales.

Liquidity and Capital Resources

Cash and cash equivalents were $3,583,539 as of September 30, 2022 compared to $10,449,510 as of March 31, 2022.

The $6,865,971 decrease in cash and cash equivalents during the first six months of fiscal 2023 was due to $9,661,652 of cash used in financing activities for dividend payments and $6,555,557 of cash used by investing activities, partially offset by $9,351,238 in net cash provided by operating activities.

Operating Activities

Net cash provided by operating activities related to product sales and research and development contract revenue as our primary source of working capital for the current and prior-year quarters.

Net cash provided by operating activities was $9,351,238 for the first six months of fiscal 2023 compared to $6,458,196 for the first six months of fiscal 2022.

Accounts receivable increased $1,155,585 during the first six months of fiscal 2023 primarily due to increased product sales.

Inventories increased $706,214 due primarily to our decisions to increase work in process in order to mitigate longer vendor lead-times.

Accounts payable and accrued expenses increased $890,822 due primarily due to a $1,504,462 increase in accrued expenses partially offset by a $544,272 decrease in accounts payable and a $69,368 net decrease in current and long-term operating lease liabilities.

The increase in accrued expenses was due to increases in income taxes payable and deferred revenue.

The decrease in accounts payable was due to the timing of vendor payments.

Investing Activities

Cash used by investing activities during the six months ended September 30, 2022 consisted of $25,381,057 of 

marketable securities purchases and $24,500 of fixed asset purchases, partially offset by $18,750,000 in proceeds from maturities of marketable securities and the receipt of a $100,000 tenant improvement allowance.

Fixed asset purchases can vary from quarter to quarter depending on our needs and equipment purchasing opportunities.

We have ordered additional new production equipment to increase our production capacity.

Therefore we currently expect significantly more fixed asset purchases during fiscal 2023 than the $484,579 we invested in fiscal 2022.

Financing Activities

Cash used in financing activities during the six months ended September 30, 2022 consisted of $9,661,652 of cash dividends paid to shareholders.

In addition to cash dividends to shareholders paid in second quarter of fiscal 2023, on October 19, 2022 we announced that our Board had declared a cash dividend of $1.00 per share of Common Stock, or $4,830,826 based on shares outstanding as of October 14, 2022, to be paid November 30, 2022.

We plan to fund dividends through cash provided by operating activities and proceeds from maturities of marketable securities.

All future dividends will be subject to Board approval and subject to the company’s results of operations, cash and marketable security balances, estimates of future cash requirements, and other factors the Board may deem relevant.

Furthermore, dividends may be modified or discontinued at any time without notice.

On January 25, 2023 we announced that our Board of Directors had declared a quarterly cash dividend of $ 1.00 per share of Common Stock to be paid February 28, 2023 to shareholders of record as of the close of business January 30, 2023 .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements