NVEC 10-K & 10-Q changes, risk factors and insider trading
Nve Corp. · Nasdaq · Semiconductors & Related Devices · CIK 724910 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Changes in state regulatory requirements may materially and adversely affect our financial condition, results of operations, and cash flows.”
Largest changes
“Changes in state regulatory requirements may materially and adversely affect our financial condition, results of operations, and cash flows.”see in full comparison
“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.”see in full comparison
“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 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.”see in full comparison
“Minnesota state legislation effective January 1, 2026 mandated paid family and medical leave, which has increased our employment costs and expenses. The provisions may also increase our risk of employee absences. Future changes in state regulatory requirements, such as paid leave, mandatory healthcare coverage, or unemployment insurance, may adversely impact our financial results.”see in full comparison
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, U.S. import restrictions, geopolitical conflicts, or acts of God, including floods, typhoons, earthquakes, or pandemics.see in full comparisonFurthermore, 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.
see in full comparisonFinancialAccountingStandardsstandardsBoard Accounting Standards Update No. 2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Statements requiresrequire 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.
Full comparison: every changed paragraph (14)
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 largerincreased tariffs or restrictions in the future. Wafer supplies could be affected by geopolitical conflicts or 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.
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, U.S. import restrictions, geopolitical conflicts, 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.
Changes in law and policy relating to Federal or state corporate taxes, changes in tax rates, or changes in our eligibility for tax deductions and credits could materially and adversely affect our financial condition, results of operations, and cash flows.
Changes in state regulatory requirements may materially and adversely affect our financial condition, results of operations, and cash flows.
Minnesota state legislation effective January 1, 2026 mandated paid family and medical leave, which has increased our employment costs and expenses. The provisions may also increase our risk of employee absences. Future changes in state regulatory requirements, such as paid leave, mandatory healthcare coverage, or unemployment insurance, may adversely impact our financial results.
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.
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.
Although the Biomaterials Access Assurance Act of 1998 may provide us some protection against potential liability claims, that Act includesand related case law provide 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.
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 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.
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; geopolitical conflicts; 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.
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 and distributed 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.
Financial Accounting Standardsstandards Board Accounting Standards Update No. 2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Statements requiresrequire 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.
The economic environment could have a material adverse impact on our business and revenue. AnGeopolitical internationalconflicts or “trade warwars” 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.
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 generallyoften more than our current cash flow from operations, recentlong-term anddividends declaredat dividendcurrent amountsrates may berequire unsustainable.increased earnings. Any reduction or discontinuance by us of cash dividends could cause the market price of our common stock to decline.
Management's Discussion & Analysis (MD&A)
Largest changes
“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.”see in full comparison
In addition to cash dividends to shareholders paid in fiscalsee in full comparison2025,2026, on May7,6,2025,2026, 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 31,2025,2026, to be paid May30,29,2025.2026. 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.
“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. …”see in full comparison
“Our effective tax rate, which is the provision for income taxes as a percentage of income before taxes, decreased to 15% for fiscal 2026 compared to 16% for fiscal 2025. The decrease in our effective tax rate was primarily due to an increase in research and development and manufacturing tax credits, partially offset by a decrease in foreign-derived intangible income deductions. The fiscal 2026 provision for income taxes included $1,067,993 in advanced manufacturing investment tax credits. …”see in full comparison
“Net cash used in investing activities for fiscal 2026 consisted of $15,242,719 of marketable securities purchases and $2,189,138 of fixed asset purchases, partially offset by $13,800,000 in proceeds from maturities of marketable securities. Fixed asset purchases were primarily of production equipment. We expect fixed asset purchases to decrease significantly in fiscal 2027 with the completion of our expansion.”see in full comparison
Total expensessee in full comparisonincreaseddecreased25%15% for fiscal20252026 compared to fiscal20242025 duetoa33%13%increasedecrease in research and development expense andaan13%18%increasedecrease in selling, general, and administrative expense. Theincreasedecrease in research and development expense was due toincreasedthenewcompletionproductofdevelopment.some of our wafer-level chip scale packaging activities and reassignment of some research and development resources to manufacturing. Theincreasedecrease in selling, general, and administrative expenses was primarily due toincreasedreassignmentsalesof some selling, general andmarketingadministrativeactivities.resources to manufacturing and new product development.
Full comparison: every changed paragraph (22)
Deferred Tax Assets Estimation
We had net deferred tax liabilities of $248,284 as of March 31, 2026 and net deferred tax assets of $1,867,069 as of March 31, 2025. Net deferred tax liabilities as of March 31, 2026 include $139,228 for stock-based compensation deductions and net deferred tax assets as of March 31, 2025 include $118,810 for stock-based compensation deductions.
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.
Total revenue for fiscal 20252026 decreasedincreased 13%1.8% compared to fiscal 20242025 due to a 16%2.4% decreaseincrease in product sales, partially offset by aan 112%11% increasedecrease in contract research and development revenue. The decreaseincrease in product sales was primarily due to decreasedprice increases and increased purchases by existing customers. The increasedecrease in contract research and development revenue was due to newthe contractscompletion inof fiscalcertain 2025.research and development contracts.
Gross profit aswas a percentage79% of revenue increasedfor fiscal 2026 compared to 84% for fiscal 2025 from 77% for fiscal 2024.2025. The increasedecrease in gross margin percentage was due to a moreless profitable product mix and a larger portion of direct rather thanincreased distributor sales. Distributor sales typically have lower gross margin than direct sales.
Total expenses increaseddecreased 25%15% for fiscal 20252026 compared to fiscal 20242025 due to a 33%13% increasedecrease in research and development expense and aan 13%18% increasedecrease in selling, general, and administrative expense. The increasedecrease in research and development expense was due to increasedthe newcompletion productof development.some of our wafer-level chip scale packaging activities and reassignment of some research and development resources to manufacturing. The increasedecrease in selling, general, and administrative expenses was primarily due to increasedreassignment salesof some selling, general and marketingadministrative activities.resources to manufacturing and new product development.
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 decreased by $131,465 for fiscal 2026 compared to fiscal 2025. Other income in fiscal 2025 was primarily from reclaiming precious metals used in our manufacturing process.process in the prior year.
Our effective tax rate, which is the provision for income taxes as a percentage of income before taxes, decreased to 15% for fiscal 2026 compared to 16% for fiscal 2025. The decrease in our effective tax rate was primarily due to an increase in research and development and manufacturing tax credits, partially offset by a decrease in foreign-derived intangible income deductions. The fiscal 2026 provision for income taxes included $1,067,993 in advanced manufacturing investment tax credits. We expect such credits to decrease significantly in fiscal 2027 since we expect manufacturing equipment purchases to decrease significantly with the completion of our expansion.
The 12% decrease in netNet income increased 1% to $15,199,195 for fiscal 20252026 compared to $15,064,516 the prior yearyear. The increase was primarily due to increased revenue, decreased revenueexpenses, and increaseddecreased operating expenses,taxes, partially offset by increaseddecreased gross profit margin.margin and decreased other income.
Cash and cash equivalents were $1,714,040 as of March 31, 2026, compared to $8,036,564 as of March 31, 2025, compared to $10,283,550 as of March 31, 2024.2025. The $2,246,986$6,322,524 decrease in cash and cash equivalents was due to $19,225,522$19,348,664 of cash used in financing activities and $3,631,857 of net cash used in financinginvesting activities, partially offset by $14,310,418$16,657,997 of cash provided by operating activities and $2,668,118 of net cash provided by investing 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 20252026 and 2024.2025. Net cash provided by operating activities wasincreased to $16,657,997 for fiscal 2026 compared to $14,310,418 for fiscal 2025 compared to $18,247,411 for fiscal 2024.2025.
Non-cash operating lease expenses decreased $107,863 primarily due to our receipt of a $100,000 leasehold improvement allowance.
Accounts receivable decreased $180,327 primarily due to the timing of customer payments.
Inventories decreased $366,262 primarily due to increased product sales and conversion of raw materials and work-in-process inventories to finished goods to support increased product demand.
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 decreasedincreased $255,935$1,427,001 primarily due to theincreased differencesaccrued inbond Federalinterest and Stateoverpayment taxesof compared toFederal estimated taxes paid.for fiscal 2026.
Accrued payroll and other current liabilities decreased $173,557 primarily due to the payment of federal and state taxes balance due as of March 31, 2025 in the first quarter of fiscal 2026.
Net cash used in investing activities for fiscal 2026 consisted of $15,242,719 of marketable securities purchases and $2,189,138 of fixed asset purchases, partially offset by $13,800,000 in proceeds from maturities of marketable securities. Fixed asset purchases were primarily of production equipment. We expect fixed asset purchases to decrease significantly in fiscal 2027 with the completion of our expansion.
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.
Net cash used in financing activities in fiscal 20252026 consisted of $19,339,684$19,348,664 of cash dividends paid to shareholders, partially offset by $114,162 in proceeds from the exercise of stock options.shareholders.
In addition to cash dividends to shareholders paid in fiscal 2025,2026, on May 7,6, 2025,2026, 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, 2025,2026, to be paid May 30,29, 2025.2026. 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.
What changed in the latest 10-Q
Risk Factors
There have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026.
Removed heading “Changes in state regulatory requirements may materially and adversely affect our financial condition, results of operations, and cash flows.”
Removed heading ““We may lose revenue if we are unable to renew customer agreements”
Largest changes
“Changes in state regulatory requirements may materially and adversely affect our financial condition, results of operations, and cash flows.”see in full comparison
““We may lose revenue if we are unable to renew customer agreements”see in full comparison
“We have agreements with certain customers, including a Supplier Partnering Agreement, as amended, with Abbott Laboratories, which expires December 31, 2027. We cannot predict if these agreements will be renewed, or if renewed, under what terms. Although it is possible we could continue 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.””see in full comparison
“Additionally, the following risk factor is replaced in its entirety by the following to reflect an amendment to our Supplier Partnering Agreement with Abbott Laboratories that extended the term of the Agreement through December 31, 2027:”see in full comparison
“Minnesota state legislation effective January 1, 2026 mandates paid leave, which has increased our employment costs and expenses. The provisions may also increase our risk of employee absences. Future changes in state regulatory requirements, such as paid leave, mandatory healthcare coverage, or unemployment insurance, may adversely impact our financial results.”see in full comparison
Full comparison: every changed paragraph (6)
There have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025 except the following risk factor is added:2026.
Changes in state regulatory requirements may materially and adversely affect our financial condition, results of operations, and cash flows.
Minnesota state legislation effective January 1, 2026 mandates paid leave, which has increased our employment costs and expenses. The provisions may also increase our risk of employee absences. Future changes in state regulatory requirements, such as paid leave, mandatory healthcare coverage, or unemployment insurance, may adversely impact our financial results.
Additionally, the following risk factor is replaced in its entirety by the following to reflect an amendment to our Supplier Partnering Agreement with Abbott Laboratories that extended the term of the Agreement through December 31, 2027:
“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, 2027. We cannot predict if these agreements will be renewed, or if renewed, under what terms. Although it is possible we could continue 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.”
Management's Discussion & Analysis (MD&A)
Removed heading “Nine months ended December 31, 2025, compared to nine months ended December 31, 2024”
Largest changes
“Nine months ended December 31, 2025, compared to nine months ended December 31, 2024”see in full comparison
Quarter endedsee in full comparisonDecemberJune31,30,2025,2026, compared to quarter endedDecemberJune31,30,20242025
“Total expenses decreased 12% for the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025, due to a 9% decrease in research and development expense and a 19% decrease in selling, general, and administrative expense. The decrease in research and development expense was due to the completion of some of our wafer-level chip scale packaging activities and reassignment of some research and development resources to manufacturing. …”see in full comparison
“Prepaid expenses and other assets increased by $323,301 primarily due to increased accrued bond interest and a decrease in federal and state taxes due. The decrease in taxes due was because we deducted previously unamortized research and development expenses in the quarter ended December 31, 2025 as permitted under the Federal budget reconciliation bill enacted July 4, 2025. We expect accelerated deductions of previously unamortized research and development expenses to reduce our cash taxes for the full fiscal year ending March 31, 2026 by approximately $1,100,000.”see in full comparison
“Total revenue for the nine months ended December 31, 2025 increased 0.4% compared to the nine months ended December 31, 2024. The increase was due to a 0.8% increase in product sales, partially offset by an 8% decrease in contract research and development revenue. The decrease in contract research and development revenue was primarily due to the timing of revenue recognition and fewer research and development contracts for the nine months ended December 31, 2025, compared to the prior-year period.”see in full comparison
Total operating expensessee in full comparisondecreasedincreasedby 13%50% for the firstnine monthsquarter of fiscal20262027 compared to the firstnine monthsquarter of fiscal2025,2026, due toana8%31%decreaseincrease in research and development expense andaan22%81%decreaseincrease in selling, general, and administrative expense. Thedecreaseincrease in research and development expense was due totheincreasedcompletion of some of our wafer-level chip scale packaging activitiesstaffing andreassignmentnewof some research andproduct developmentresources to manufacturing.activities. Thedecreaseincrease in selling, general, and administrative expenses was primarily due totheincreasedtimingperformance-basedof marketing activities, and reassignment of some selling, general and administrative resources to manufacturing and new product development.compensation.
Full comparison: every changed paragraph (32)
Further information regarding our risks and uncertainties is contained in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended March 31, 2025 as updated in Part II, Item 1A of this report.2026.
NVE CorporationCorporation, 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.
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, 2025.2026. As of DecemberJune 31,30, 2025,2026, our critical accounting policies and estimates continued to include marketable securities valuation, inventory valuation, and deferred tax assets estimation.
Quarter ended DecemberJune 31,30, 2025,2026, compared to quarter ended DecemberJune 31,30, 20242025
Total revenue for the quarter ended DecemberJune 31,30, 20252026 (the thirdfirst quarter of fiscal 20262027) increased 23%81% compared to the quarter ended DecemberJune 31,30, 20242025 (the thirdfirst quarter of fiscal 20252026). The increase was due to aan 16%82% increase in product sales and a 335%53% increase in contract research and development revenue. The increase in product sales was due to increases in both defense and non-defense sales, as well as increases in sales through both direct and distributor channels. The increase in contract research and development revenue was due to newprogress researchon and developmentexisting contracts.
Gross margin for the third quarter of fiscal 2026 was 79% of revenue compared to 84% 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. Distributor sales typically have lower gross margin than direct sales.
Total expenses decreased 12% for the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025, due to a 9% decrease in research and development expense and a 19% decrease in selling, general, and administrative expense. The decrease in research and development expense was due to the completion of some of our wafer-level chip scale packaging activities and reassignment of some research and development resources to manufacturing. The decrease in selling, general, and administrative expenses was primarily due to the timing of marketing activities and reassignment of some selling, general and administrative resources to manufacturing and new product development.
Interest income decreased 3% due to decrease in our marketable securities portfolio as proceeds from bond maturities partially funded dividends and fixed asset purchases. Other income decreased by $135,057, which was primarily from reclaiming precious metals used in our manufacturing process in the prior-year quarter.
Our effective tax rate, which is the provision for income taxes as a percentage of income before taxes, increased to 20% for the third quarter of fiscal 2026 from 15% for the third quarter of fiscal 2025. The increase in our effective tax rate was primarily due to the unfavorable non-cash impact of tax law changes on certain tax deductions this fiscal year.
We currently expect a full-year tax rate of 16% to 17% for fiscal 2026. This expectation includes the unfavorable impact of tax law changes and the favorable impact of $700,000 to $1,000,000 in anticipated advanced manufacturing investment tax credits.
The increase in net income in the third quarter of fiscal 2026 compared to the prior-year quarter was primarily due to increased revenue and decreased expenses, partially offset by decreased gross margin, decreased interest and other income, and an increase in our effective tax rate.
Nine months ended December 31, 2025, compared to nine months ended December 31, 2024
The table shown below summarizes the percentage of revenue and year-to-year changes for various items:
Total revenue for the nine months ended December 31, 2025 increased 0.4% compared to the nine months ended December 31, 2024. The increase was due to a 0.8% increase in product sales, partially offset by an 8% decrease in contract research and development revenue. The decrease in contract research and development revenue was primarily due to the timing of revenue recognition and fewer research and development contracts for the nine months ended December 31, 2025, compared to the prior-year period.
Gross margin for the first nine months of fiscal 2026 was 79% of revenue, compared to 85% for the first nine months of fiscal 2025. The decrease in gross margin percentage was due to a less profitable product mix and increased distributor sales for the nine months ended December 31, 2025, compared to the prior-year period. Distributor sales typically have lower gross margin than direct sales.
Total operating expenses decreasedincreased by 13%50% for the first nine monthsquarter of fiscal 20262027 compared to the first nine monthsquarter of fiscal 2025,2026, due to ana 8%31% decreaseincrease in research and development expense and aan 22%81% decreaseincrease in selling, general, and administrative expense. The decreaseincrease in research and development expense was due to theincreased completion of some of our wafer-level chip scale packaging activitiesstaffing and reassignmentnew of some research andproduct development resources to manufacturing.activities. The decreaseincrease in selling, general, and administrative expenses was primarily due to theincreased timingperformance-based of marketing activities, and reassignment of some selling, general and administrative resources to manufacturing and new product development.compensation.
Interest income decreased 10% due to a decrease in our marketable securities portfolio as proceeds from bond maturities partially funded dividends and fixed asset purchases in the prior fiscal year.
The 79% increase in net income in the first quarter of fiscal 2027 compared to the prior-year quarter was primarily due to increased revenue, partially offset by increased operating expenses and decreased interest income.
Our effective tax rate increased to 19% for the first nine months of fiscal 2026 compared to 16% for the first nine months of fiscal 2025. The increase in our effective tax rate was primarily due to the non-cash impact of tax law changes on certain tax deductions this fiscal year.
Net income for first nine months of fiscal 2026 decreased 8% from the prior-year period to $10.3 million, or $2.12 per diluted share. The decrease was primarily due to decreased gross margin, decreased other income, and an increase in our effective tax rate, partially offset by decreased expenses.
Cash and cash equivalents were $3,408,531$2,896,148 as of DecemberJune 31,30, 2025,2026, compared to $8,036,564$1,714,040 as of March 31, 2025.2026. The $4,628,033$1,182,108 decreaseincrease in cash and cash equivalents during the first nine monthsquarter of fiscal 20262027 was due to $2,288,676$5,306,318 of net cash usedprovided inby investingoperating activities and $14,511,498$712,956 of net cash provided by investing activities, partially offset by $4,837,166 of cash used in financing activities, partially offset by $12,172,141 in net cash provided by 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 the current and prior-year periods.quarters.
Accounts receivable increased $3,136,772 during the first quarter of fiscal 2027 primarily due to increased sales and timing of customer payments. Inventories decreased $409,594 primarily due to increased sales. Prepaid expenses and other assets decreased $1,174,494 as the accrual for fiscal 2027 federal and state taxes offset prior-year’s estimated taxes overpayment.
Non-cash operating lease expenses increased by $105,896 primarily due to our receipt of a $100,000 leasehold improvement allowance.
Accounts receivable decreased by $1,106,223 during the first nine months of fiscal 2026 primarily due to the timing of customer payments.
Inventories decreased by $177,285 due to increased product sales.
Prepaid expenses and other assets increased by $323,301 primarily due to increased accrued bond interest and a decrease in federal and state taxes due. The decrease in taxes due was because we deducted previously unamortized research and development expenses in the quarter ended December 31, 2025 as permitted under the Federal budget reconciliation bill enacted July 4, 2025. We expect accelerated deductions of previously unamortized research and development expenses to reduce our cash taxes for the full fiscal year ending March 31, 2026 by approximately $1,100,000.
Accrued payroll and other current liabilities decreased by $366,459 primarily due to the payment of federal and state taxes balance due as of March 31, 2025 and decreased accrual for performance-based compensation.
Cash provided by investing activities during the quarter ended June 30, 2026, consisted $5,000,000 in proceeds from maturities of marketable securities, partially offset by $4,230,211 of marketable securities purchases and $56,833 of fixed asset purchases. We currently expect fixed asset purchases in the fiscal year ending March 31, 2027, to be significantly less than for the year ended March 31, 2026 with the completion of our expansion in the past fiscal year.
Cash used by investing activities during the nine months ended December 31, 2025, consisted of $10,108,982 of marketable securities purchases and $2,179,694 of fixed asset purchases, partially offset by $10,000,000 in proceeds from maturities of marketable securities. Fixed asset purchases were primarily production equipment.
Cash used in financing activities during the nine monthsquarter ended DecemberJune 31,30, 2025,2026, consisted of $14,511,498$4,837,166 of cash dividends paid to shareholders.
In addition to cash dividends paid to shareholders paid in the first nine monthsquarter of fiscal 2026,2027, on JanuaryJuly 21,22, 2026, we announced that our Board of Directors had declared a cash dividend of $1.00 per share of Common Stock, or $4,837,166 based on shares outstanding as of DecemberJune 31,30, 2025,2026, to be paid on FebruaryAugust 27,31, 2026.
NVEC insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 4 filings (1 insider, 7 trade dates, 48,371 shares, about $5.2M). Net open-market shares: -48,371 (purchases minus sales); net value about -$5.2M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-08 | Baker Daniel A |
Open-market sale | 19,140 | $101.54 | $1.9M |
| 2026-09-08 | Baker Daniel A |
Open-market sale | 2,000 | $101.00 | $202.0K |
| 2026-08-27 | Baker Daniel A |
Open-market sale | 2,000 | $109.00 | $218.0K |
| 2026-08-27 | Baker Daniel A |
Open-market sale | 2,000 | $110.00 | $220.0K |
| 2026-08-25 | Baker Daniel A |
Open-market sale | 1,731 | $107.00 | $185.2K |
| 2026-08-17 | Baker Daniel A |
Open-market sale | 1,500 | $121.50 | $182.2K |
| 2026-08-12 | Wei Xuan Kelly |
Disposition to issuer | 538 | $123.00 | $66.2K |
| 2026-07-29 | Baker Daniel A |
Open-market sale | 15,222 | $114.08 | $1.7M |
| 2026-07-28 | Baker Daniel A |
Open-market sale | 3,260 | $117.57 | $383.3K |
| 2026-07-27 | Baker Daniel A |
Option exercise | 1,061 | $117.55 | $124.7K |
| 2026-07-27 | Baker Daniel A |
Option exercise | 757 | $117.55 | $89.0K |
| 2026-07-27 | Baker Daniel A |
Open-market sale | 1,518 | $117.56 | $178.5K |
| 2026-07-27 | Baker Daniel A |
Option exercise | 864 | $117.55 | $101.6K |
| 2026-07-27 | Baker Daniel A |
Option exercise | 1,344 | $117.55 | $158.0K |
| 2026-07-27 | Baker Daniel A |
Option exercise | 853 | $117.55 | $100.3K |
| 2026-07-27 | Baker Daniel A |
Option exercise | 1,496 | $117.55 | $175.9K |
| 2026-07-27 | Wei Xuan Kelly |
Option exercise | 538 | $117.38 | $63.2K |
Well-known investors holding NVEC (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Renaissance Technologies | 2026-06-30 | 170,730 | $17.8M | 0.02% | Reduced 2% |
| Two Sigma Investments | 2026-06-30 | 76,384 | $8.0M | 0.01% | Reduced 4% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 11,192 | $1.2M | 0.0% | Added 27% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 11,043 | $723.3K | — | Sold out |
| D. E. Shaw & Co. | 2026-06-30 | 1,940 | $202.8K | 0.0% | New position |