NVE CORP /NEW/

Previous wording

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 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 ofcredit losses, 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.

Current wording

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 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, 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 in the documents incorporated by reference in this Report.

Previous wording

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 fiscal year ended March 31, 2024. As of December 31, 2024, our critical accounting policies and estimates continued to include investment valuation, inventory valuation, and deferred tax assets estimation.

Current wording

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 fiscal year ended March 31, 2025. As of June 30, 2025, our critical accounting policies and estimates continued to include marketable securities valuation, inventory valuation, and deferred tax assets estimation.

Previous wording

Total revenue for the quarter ended December 31, 2024 (the third quarter of fiscal 2025) decreased 25% compared to the quarter ended December 31, 2023 (the third quarter of fiscal 2024). The decrease was due to a 22% decrease in product sales and a 74% decrease in contract research and development revenue. The decrease in product sales was due to decreased purchases by existing customers. The decrease in contract research and development revenue was due to the completion of certain contracts.

Current wording

Total revenue for the quarter ended June 30, 2025 (the first quarter of fiscal 2026) decreased 10% compared to the quarter ended June 30, 2024 (the first quarter of fiscal 2025). The decrease was due to an 11% decrease in product sales, partially offset by a 17% increase in contract research and development revenue. The decrease in product sales was primarily due to decreased defense industry sales during the quarter ended June 30, 2025, compared to the prior-year quarter. Defense industry sales can be highly variable because of procurement cycles. The increase in contract research and development revenue was due to new research and development contracts.

Previous wording

Gross margin for the third quarter of fiscal 2025 was 84% of revenue, compared to 80% the prior-year quarter. The increase in gross margin percentage was due to a more profitable product mix and a larger portion of direct rather than distributor sales.

Current wording

Gross margin for the first quarter of fiscal 2026 was 81% of revenue, compared to 86% the prior-year quarter. The decrease in gross margin percentage was due to a less profitable product mix and increased distributor sales for the quarter ended June 30, 2025, compared to the prior-year quarter.

Previous wording

Total expenses increased 40% for the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024 due to a 61% increase in research and development expense and a 12% increase in selling, general, and administrative expense. The increase in research and development expense was due to increased new product development activities. The increase in selling, general, and administrative expenses was primarily due to increased sales and marketing activities.

Current wording

Total operating expenses decreased 20% for the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025, due to an 18% decrease in research and development expense and a 23% decrease in selling, general, and administrative expense. The decrease in research and development expense was due to completion of some of our wafer-level chip scale packaging activities and reallocation of some research and development resources to manufacturing. The decrease in selling, general, and administrative expenses was primarily due to the timing of sales and marketing activities, and reallocation of some general and administrative resources to manufacturing.

Previous wording

Our effective tax rate, which is the provision for income taxes as a percentage of income before taxes, decreased to 15% for the third quarter of fiscal 2025 compared to 16% for the third quarter of fiscal 2024. The decrease in our effective tax rate compared to the prior-year quarter was due changes in the timing and amounts of federal tax credits and deductions.

Current wording

Our effective tax rate, which is the provision for income taxes as a percentage of income before taxes, increased to 17% for the first quarter of fiscal 2026 compared to 16% for the first quarter of fiscal 2025. The increase in our effective tax rate compared to the prior-year quarter was due to changes in the timing and amounts of federal tax credits and deductions. We currently expect to realize advanced manufacturing investment tax credits of between $700,000 an $800,000 if we deploy equipment as planned in fiscal 2026.

Previous wording

The 27% decrease in net income in the third quarter of fiscal 2025 compared to the prior-year quarter was primarily due to decreased revenue, increased operating expenses, and decreased interest income, partially offset by increased gross profit margin, increased other income, and a lower effective tax rate.

Current wording

The 13% decrease in net income in the first quarter of fiscal 2026 compared to the prior-year quarter was primarily due to decreased revenue and decreased gross margin, partially offset by decreased operating expenses.

Previous wording

Cash and cash equivalents were $5,485,684 as of December 31, 2024, compared to $10,283,550 as of March 31, 2024. The $4,797,866 decrease in cash and cash equivalents during the first nine months of fiscal 2025 was due to $2,237,563 of cash used in investing activities and $14,388,356 of net cash used in financing activities, partially offset by $11,828,053 in net cash provided by operating activities.

Current wording

Cash and cash equivalents were $3,222,552 as of June 30, 2025, compared to $8,036,564 as of March 31, 2025. The $4,814,012 decrease in cash and cash equivalents during the first quarter of fiscal 2026 was due to $5,167,506 of net cash used in investing activities and $4,837,166 of cash used in financing activities, partially offset by $5,190,660 in net cash provided by operating activities.

Previous wording

Accounts receivable decreased $1,789,769 during the first nine months of fiscal 2025 primarily due to decreased revenue and the timing of customer payments. Inventories increased $629,039 primarily due to our decision to increase inventories in anticipation of a semiconductor industry recovery. Prepaid expenses and other assets increased $47,132 primarily due to the timing of federal estimated tax payments. Accrued payroll and other expenses decreased $217,626 primarily due to decreased accrual for performance-based compensation.

Current wording

Accounts receivable decreased $1,335,447 during the first quarter of fiscal 2026 primarily due to the timing of customer payments. Prepaid expenses and other assets increased $196,757 primarily due to increased accrued bond interest and prepaid insurance. Accrued payroll and other liabilities increased $523,259 primarily due to the timing of estimated tax payments.

Previous wording

Cash used by investing activities during the nine months ended December 31, 2024, consisted of $11,279,773 of marketable securities purchases and $1,162,790 of fixed asset purchases, partially offset by $10,205,000 in proceeds from maturities of marketable securities. Fixed asset purchases consisted primarily of a $1,125,437 downpayment on production equipment expected to be delivered in fiscal 2026. We plan to significantly increase fixed asset purchases in fiscal 2025 and 2026 compared to fiscal 2024 to support increases in production capacity and new product development.

Current wording

Cash used by investing activities during the quarter ended June 30, 2025, consisted of $10,108,982 of marketable securities purchases and $1,058,524 of fixed asset purchases, partially offset by $6,000,000 in proceeds from maturities of marketable securities. Fixed asset purchases were production equipment.

Previous wording

Cash used in financing activities during the nine months ended December 31, 2024, consisted of $14,502,518 of cash dividends paid to shareholders, partially offset by $114,162 in proceeds from stock option exercises.

Current wording

Cash used in financing activities during the quarter ended June 30, 2025, consisted of $4,837,166** **of cash dividends paid to shareholders.