Nve Corp 10-K for FY2021

Nve Corp (NVEC)

10-K 2021-05-05 For: 2021-03-31

Added on April 07, 2026

About this 10-K

Nve Corp filed this 10-K on May 5, 2021, covering the fiscal year ended March 31, 2021 (FY2021).

Headline figures

Fiscal year ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $21.37M; down 15.9% from $25.41M a year earlier
Net income: $11.69M; down 19.5% from net income of $14.53M a year earlier
Diluted EPS: $2.42; down 19.3% from $3.00 a year earlier

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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)

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

	Large accelerated filer [ ]	Accelerated filer [ ]
	Non-accelerated filer [X]	Smaller reporting company [X]
		Emerging growth company [ ]

	•	new smart sensors for the Internet of Things;
	•	new TMR magnetic sensors and magnetic switches;
	•	data couplers with isolated power convertors; and
	•	couplers with improved Common-Mode Transient Immunity for more efficient power control.

	•	new TMR sensors;
	•	custom integrated circuits for smart sensors; and
	•	power conversion integrated circuits.

	•	the announcement of new products, product enhancements, or contracts 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 analyst community 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 corporate income tax rates or changes in other tax provisions;
	•	changes in tariffs, customs, duties, or other trade barriers in foreign jurisdictions where we purchase raw materials or sell our products;
	•	the impact or perceived impact of the COVID-19 pandemic on general economic conditions, our industry, or our revenues or net income;
	•	our stock repurchase and dividend policies and decisions.

				Total number of	Max. approximate
Period	Total	Average		shares purchased	dollar value of
	number	price		as part of publicly	shares that may
	of shares	paid		announced	yet be purchased
	purchased	per share		program	under the program
April 1, 2020 – June 30, 2020	-	$	-	-	$	3,853,459
July 1, 2020 – September 30, 2020	1,806	$	50.62	1,806	$	3,762,040
October 1, 2020 – December 31, 2020	-	$	-	-	$	3,762,040
January 1, 2021 – March 31, 2021	-	$	-	-	$	3,762,040
	1,806			1,806

	Percentage of Revenue Year Ended March 31				Year- to-Year Change
	2021		2020		Year- to-Year Change
Revenue
Product sales	96.1	%	96.0	%	(15.8	)%
Contract research and development	3.9	%	4.0	%	(18.4	)%
Total revenue	100.0	%	100.0	%	(15.9	)%
Cost of sales	19.3	%	19.2	%	(15.7	)%
Gross profit	80.7	%	80.8	%	(16.0	)%
Expenses
Research and development	14.9	%	14.5	%	(13.7	)%
Selling, general, and administrative	6.2	%	5.2	%	(0.1	)%
Total expenses	21.1	%	19.7	%	(10.1	)%
Income from operations	59.6	%	61.1	%	(17.9	)%
Interest income	7.1	%	7.0	%	(16.2	)%
Income before taxes	66.7	%	68.1	%	(17.7	)%
Income tax provision	12.0	%	10.9	%	(8.2	)%
Net income	54.7	%	57.2	%	(19.5	%

Exhibit #	Description
3.1	Amended and Restated Articles of Incorporation of the company as amended by the Board of Directors effective November 21, 2002 (incorporated by reference to the Form 10-QSB for the period ended December 31, 2002).
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 between the company and Glenborough Properties, LP (incorporated by reference to the Form 10-QSB for the period ended September 30, 2002).
10.2	First amendment to lease between the company and Glenborough dated September 18, 2002 (incorporated by reference to the Form 10-QSB for the period ended September 30, 2002).
10.3	Second amendment to lease between the company and Glenborough dated December 1, 2003 (incorporated by reference to the Form 10-QSB for the period ended December 31, 2003).
10.4	Third amendment to lease between the company and Carlson Real Estate (incorporated by reference to the Form 8-K/A filed December 20, 2007).
10.5	Fourth amendment to lease between the company and the Barbara C. Gage Revocable Trust (incorporated by reference to our Current Report on Form 8-K/A filed August 3, 2011).
10.6	Fifth amendment to lease between the company and GRE – Bryant Lake, LLC (incorporated by reference to our Current Report on Form 8-K/A filed March 3, 2020).
10.7†	Employment Agreement between the company and Daniel A. Baker dated January 29, 2001 (incorporated by reference to the Form 10-KSB for the year ended March 31, 2001).
10.8†	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).
10.9	Indemnification Agreement by and between Pacesetter, Inc., a St. Jude Medical Company, d.b.a. St. Jude Medical Cardiac Rhythm Management Division, and the company (incorporated by reference to the Form 8-K filed September 27, 2005).
10.10+	Supplier Partnering Agreement by and between St. Jude and the company (incorporated by reference to the Form 8-K filed January 4, 2006).
10.11+	Amendment No. 1 to Supplier Partnering Agreement between St. Jude and the company (incorporated by reference to the Form 8-K/A filed September 10, 2007).
10.12+	Amendment No. 2 to Supplier Partnering Agreement between St. Jude and the company (incorporated by reference to the Form 8-K/A filed December 18, 2009).
10.13+	Amendment No. 3 to Supplier Partnering Agreement between St. Jude and the company (incorporated by reference to the Form 8-K/A filed September 16, 2010).
10.14	Amendment No. 4 to Supplier Partnering Agreement between St. Jude and the company (incorporated by reference to the Form 8-K/A filed February 7, 2011).
10.15	Supplier Quality Agreement between St. Jude and the company (incorporated by reference to the Form 8-K filed February 10, 2016).
10.16	Amendment No. 5 to Supplier Partnering Agreement between St. Jude and the company (incorporated by reference to the Form 8-K/A filed April 21, 2016).
10.17	Amendment No. 6 to Supplier Partnering Agreement between Abbott and the company (incorporated by reference to the Form 8-K/A filed December 21, 2020).
10.18	Amendment No. 7 to Supplier Partnering Agreement between Abbott and the company (filed with this Annual Report on Form 10-K).
10.19+	Supply Agreement by and between the company and Sonova AG (incorporated by reference to the Form 8-K/A filed November 16, 2015).
10.20*	First Amendment to Supply Agreement by and between the company and Sonova AG (incorporated by reference to the Form 8-K/A filed February 18, 2020).
23.1	Consent of Boulay PLLP.
31.1	Certification by Daniel A. Baker pursuant to Rule 13a-14(a)/15d-14(a).
31.2	Certification by Curt A. Reynders pursuant to Rule 13a-14(a)/15d-14(a).
32	Certification by Daniel A. Baker and Curt A. Reynders pursuant to 18 U.S.C. Section 1350.
101.INS	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

Name	Title	Date
/s/Terrence W. Glarner Terrence W. Glarner	Director and Chairman of the Board	May 5, 2021
/s/Daniel A. Baker Daniel A. Baker	Director, President & Chief Executive Officer (Principal Executive Officer)	May 5, 2021
/s/Curt A. Reynders Curt A. Reynders	Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer)	May 5, 2021
/s/Patricia M. Hollister Patricia M. Hollister	Director	May 5, 2021
/s/Richard W. Kramp Richard W. Kramp	Director	May 5, 2021
/s/Gary R. Maharaj Gary R. Maharaj	Director	May 5, 2021

	•	Determination of whether products and services are considered distinct performance obligations that should be accounted for separately versus together as it relates to product sales and research and development contracts.
	•	Determination of stand-alone selling prices for each distinct performance obligation and for products and services that are not sold separately.
	•	The pattern of delivery (i.e., timing of when revenue is recognized) for each distinct performance obligation.
	•	Estimation of variable consideration when determining the amount of revenue to recognize (e.g., customer credits, incentives, and in certain instances, estimation of customer usage of products and services).

	•	We evaluated the Company’s accounting policies and related disclosures for compliance with applicable revenue recognition accounting guidance.
	•	We obtained an understanding of the design and implementation of internal controls related to the Company’s revenue recognition process, including the identification of performance obligations and allocation of transaction price.
	•	We performed analytical procedures to test the reasonableness of recorded balances.
	•	We performed procedures to test the transactions were recorded in the appropriate accounting period.
	•	We selected a sample of product sales and contract research agreements and performed the following procedures:

	–	Tested the existence and accuracy of the transaction by obtaining and agreeing terms to the underlying contract.
	–	Evaluated management’s identification of significant terms for completeness, including the identification of distinct performance obligations and variable consideration.
	–	We evaluated the reasonableness of management’s estimate of stand-alone selling prices for products and services that are not sold separately.
	–	Tested the underlying costs driving recognition of revenue related to contract research and development contracts.
	–	Evaluated whether the transaction was accounted for in accordance with the Company’s policies.

	March 31, 2021		March 31, 2020
ASSETS
Current assets
Cash and cash equivalents	$	10,427,340	$	8,065,594
Marketable securities, short-term		7,678,957		19,084,814
Accounts receivable, net of allowance for uncollectible accounts of $15,000		1,964,281		2,694,018
Inventories		3,900,777		3,884,450
Prepaid expenses and other assets	391,278		655,835
Total current assets		24,362,633		34,384,711
Fixed assets
Machinery and equipment		9,254,664		9,280,062
Leasehold improvements	1,810,872		1,797,245
		11,065,536		11,077,307
Less accumulated depreciation and amortization	10,728,853		10,494,840
Net fixed assets		336,683		582,467
Deferred tax assets	73,538		108,119
Marketable securities, long-term	47,038,669		43,606,495
Right-of-use asset – operating lease	689,216		816,358
Total assets	$	72,500,739	$	79,498,150

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	336,591	$	186,993
Accrued payroll and other	540,474		482,074
Operating lease	150,273		127,134
Total current liabilities		1,027,338		796,201
Operating lease	581,459		706,600
Total liabilities	1,608,797		1,502,801

Shareholders’ equity
Common stock, $0.01 par value, 6,000,000 shares authorized; 4,833,232 issued and outstanding as of March 31, 2021 and 4,835,038 as of March 31, 2020		48,332		48,350
Additional paid-in capital		19,338,127		19,383,956
Accumulated other comprehensive income		1,101,119		516,523
Retained earnings	50,404,364		58,046,520
Total shareholders’ equity	70,891,942		77,995,349
Total liabilities and shareholders’ equity	$	72,500,739	$	79,498,150

	Year Ended March 31
	2021			2020
Revenue
Product sales	$	20,540,557		$	24,400,192
Contract research and development	825,689			1,011,971
Total revenue		21,366,246			25,412,163
Cost of sales	4,121,461			4,889,295
Gross profit	17,244,785			20,522,868
Expenses
Research and development		3,184,754			3,690,539
Selling, general, and administrative	1,316,427			1,317,543
Total expenses	4,501,181			5,008,082
Income from operations		12,743,604			15,514,786
Interest income		1,498,148			1,787,117
Income before taxes		14,241,752			17,301,903
Provision for income taxes	2,547,368			2,775,261
Net income	$	11,694,384		$	14,526,642
Net income per share – basic	$	2.42		$	3.00
Net income per share – diluted	$	2.42		$	3.00
Cash dividends declared per common share	$	4.00		$	4.00
Weighted average shares outstanding
Basic	4,834,054		4,845,627
Diluted	4,834,462		4,847,294

						Additional Paid-In Capital			Accumulated Other Comprehen- sive Income (Loss)				Retained Earnings
	Common Stock
	Shares		Amount													Total
Balance as of March 31, 2019	4,846,010		$	48,460		$	19,910,558		$	(82,725	)		$	62,903,918		$	82,780,211
Exercise of stock options	2,000			20			112,340										112,360
Repurchase of common stock	(12,972	)		(130	)		(687,302	)									(687,432	)
Comprehensive income:
Unrealized gain on marketable securities, net of tax										599,248		599,248
Net income														14,526,642			14,526,642
Total comprehensive income																	15,125,890
Stock-based compensation						48,360										48,360
Cash dividends declared ($4.00 per share of common stock)													(19,384,040		)	(19,384,040		)
Balance as of March 31, 2020	4,835,038		$	48,350		$	19,383,956		$	516,523			$	58,046,520		$	77,995,349
Repurchase of common stock	(1,806	)		(18	)		(91,401	)									(91,419	)
Comprehensive income:
Unrealized gain on marketable securities, net of tax										584,596		584,596
Net income														11,694,384			11,694,384
Total comprehensive income																	12,278,980
Stock-based compensation						45,572										45,572
Cash dividends declared ($4.00 per share of common stock)													(19,336,540		)	(19,336,540		)
Balance as of March 31, 2021	4,833,232		$	48,332		$	19,338,127		$	1,101,119			$	50,404,364		$	70,891,942

	Year Ended March 31
	2021			2020
OPERATING ACTIVITIES
Net income	$	11,694,384		$	14,526,642
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		542,926			549,969
Stock-based compensation		45,572			48,360
Deferred income taxes		(129,155	)		77,779
Changes in operating assets and liabilities:
Accounts receivable		729,737			301,620
Inventories		(16,327	)		380,426
Prepaid expenses and other assets		391,699			(394,504	)
Accounts payable and accrued expenses		105,996			405,481
Net cash provided by operating activities		13,364,832			15,895,773

INVESTING ACTIVITIES
Purchases of fixed assets		(62,727	)		(52,041	)
Purchases of marketable securities		(10,512,400	)		(7,196,330	)
Proceeds from maturities and sales of marketable securities		19,000,000			12,500,000
Net cash provided by investing activities		8,424,873			5,251,629

FINANCING ACTIVITIES
Proceeds from exercise of stock options		-			112,360
Repurchase of common stock		(91,419	)		(687,432	)
Payment of dividends to shareholders		(19,336,540	)		(19,384,040	)
Net cash used in financing activities		(19,427,959	)		(19,959,112	)

Increase in cash and cash equivalents		2,361,746			1,188,290
Cash and cash equivalents at beginning of year	8,065,594			6,877,304

Cash and cash equivalents at end of year	$	10,427,340		$	8,065,594

Supplemental disclosures of cash flow information:
Cash paid during the year for income taxes	$	2,438,788		$	2,586,661

Total			<1 Year			1–3 Years			3–5 Years
$	64,860,822		$	17,822,153		$	36,716,130		$	10,322,539

	As of March 31, 2021						As of March 31, 2020
	Level 1		Level 2		Total		Level 1		Level 2		Total
Money market funds	$	10,143,196	$	-	$	10,143,196	$	7,903,433	$	-	$	7,903,433
Corporate bonds		-		54,717,626		54,717,626		-		62,691,309		62,691,309
Total	$	10,143,196	$	54,717,626	$	64,860,822	$	7,903,433	$	62,691,309	$	70,594,742

	As of March 31, 2021									As of March 31, 2020
	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Estimated Fair Value		Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Estimated Fair Value
Money market funds	$	10,143,196	$	-	$	-		$	10,143,196	$	7,903,433	$	-	$	-		$	7,903,433
Corporate bonds		53,308,105		1,570,195		(160,674	)		54,717,626		62,030,120		752,621		(91,432	)		62,691,309
Total	$	63,451,301	$	1,570,195	$	(160,674	)	$	64,860,822	$	69,933,553	$	752,621	$	(91,432	)	$	70,594,742

		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, 2021
	Corporate bonds	$	10,322,539	$	(160,674	)	$	-	$	-	$	10,322,539	$	(160,674	)
	Total	$	10,322,539	$	(160,674	)	$	-	$	-	$	10,322,539	$	(160,674	)

As of March 31, 2020
	Corporate bonds	$	19,525,169	$	(91,432	)	$	-	$	-	$	19,525,169	$	(91,432	)
	Total	$	19,525,169	$	(91,432	)	$	-	$	-	$	19,525,169	$	(91,432	)

	March 31
	2021		2020
Raw materials	$	660,678	$	1,017,451
Work in process		2,220,723		1,863,000
Finished goods	1,019,376		1,003,999
Total inventories	$	3,900,777	$	3,884,450

Ranges of Exercise Prices	Number Outstanding	Weighted Average Exercise Price		Weighted Remaining Contractual Life (years)
$49.86 – $67.69	22,000	$	59.85	5.3
$76.13 – $107.86	8,000	92.00		6.9
	30,500	$	68.28	5.7

	Option Shares Reserved		Options Outstanding		Weighted Average Option Exercise Price
At March 31, 2019	135,230		22,000		$	70.89
Granted	(4,000	)	4,000		$	67.65
Exercised	-		(2,000	)	$	56.18
At March 31, 2020	131,230		24,000		$	71.58
Granted	(6,500	)	6,500		$	56.12
At March 31, 2021	124,730		30,500		$	68.28

Year Ending March 31	Operating Leases
2022	152,703
2023	156,121
2024	159,592
2025	163,224
2026	165,947
Total lease payments	797,587
Imputed lease interest	(65,855		)
Total lease liabilities	$	731,732

	% of Revenue for Year Ended March 31
	2021	2020
Customer A	22%	24%
Customer B	15%	14%
Customer C	Less than 10%	10%

1.	Section 1, Term of Agreement, is hereby deleted and replaced with the following
	1.	Term of Agreement. This Agreement begins on January 1, 2006 and will remain in force through November 30, 2021, unless terminated earlier.
2.	If any provisions of this Amendment and the Agreement conflict, the provisions of this Amendment shall prevail. Except as specifically amended herein, all terms and conditions of the Agreement shall remain in full force and effect.
3.	Each party represents that it has authority to enter into this Amendment. This Amendment may be executed in counterparts, each of which for all purposes shall be deemed an original, and all of which constitute, collectively, one agreement. Facsimile or electronically transmitted signatures shall be deemed effective as originals.

	/s/ DANIEL A. BAKER
	Daniel A. Baker
	President and Chief Executive Officer