UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended: December 31, 2002
[ ] Transition report under Section 13 or 15(d) of the
Securities Exchange Act.
000-12196 41-1424202
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Commission File Number I.R.S. Employer
Identification number
11409 Valley View Road, Eden Prairie, Minnesota 55344
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(Address of principal executive offices) (Zip code)
Issuer's telephone number, including area code: (952) 829-9217
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date:
Common Stock, $.01 Par Value - 4,172,328 shares outstanding as of January 24, 2003.
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements.
NVE CORPORATION
BALANCE SHEET
DECEMBER 31, 2002
Current assets:
Cash $ 365,489
Investment securities 5,655,474
Accounts receivable, net 1,350,930
Inventories 846,293
Prepaid expenses and other assets 178,846
-----------
Total current assets 8,397,032
Fixed assets:
Machinery and equipment 2,682,384
Furniture and fixtures 35,499
Leasehold improvements 365,187
Construction in progress 11,826
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3,094,896
Less accumulated depreciation 1,835,701
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Total fixed assets 1,259,195
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Total assets $9,656,227
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 386,696
Accrued payroll and other 492,581
Deferred revenue 1,082,028
Current portion of capital lease obligations 151,039
-----------
Total current liabilities 2,112,344
Capital lease obligations, less current portion 262,952
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Total liabilities 2,375,296
Shareholders' equity:
Common stock 41,634
Additional paid-in capital 12,114,278
Accumulated other comprehensive income 92,671
Accumulated deficit (4,967,652)
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Total shareholders' equity 7,280,931
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Total liabilities and shareholders' equity $9,656,227
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SEE ACCOMPANYING NOTES.
NVE CORPORATION
STATEMENTS OF OPERATIONS
Three Months Ended
December 31 December 30
2002 2001
--------------------------
Revenue
Contract research and development $1,673,502 $1,246,875
Product sales 565,633 402,168
License revenue 97,917 125,699
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Total revenue 2,337,052 1,774,742
Cost of sales 1,424,507 1,332,045
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Gross profit 912,545 442,697
Expenses
Research and development 327,472 475,266
Selling, general & administrative 420,862 405,368
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Total expenses 748,334 880,634
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Income (loss) from operations 164,211 (437,937)
Interest income 58,454 4,099
Interest expense (9,210) (21,346)
Other income (expense) 20,706 20,188
--------------------------
Net income (loss) 234,161 (434,996)
==========================
Net income (loss) per share-basic .06 (.13)
==========================
Net income (loss) per share-diluted .05 (.13)
==========================
Weighted average shares outstanding:
Basic 4,159,718 3,420,996
Diluted 4,466,199 3,420,996
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SEE ACCOMPANYING NOTES.
NVE CORPORATION
STATEMENTS OF OPERATIONS
Nine Months Ended
December 31 December 30
2002 2001
--------------------------
Revenue
Research and development $4,843,268 $3,319,218
Product sales 1,707,633 1,098,133
License Revenue 293,751 488,197
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Total Revenue 6,844,652 4,905,548
Cost of sales 4,273,553 3,815,892
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Gross profit 2,571,099 1,089,656
Expenses
Research and development 944,330 1,132,549
Selling, general & administrative 1,324,302 1,248,887
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Total expenses 2,268,632 2,381,436
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Income (loss) from operations 302,467 (1,291,780)
Interest income 154,134 18,683
Interest expense (32,108) (33,937)
Other income (expense) 62,193 100,715
--------------------------
Net income (loss) 486,686 (1,206,319)
==========================
Net income (loss) per share-basic .12 (.35)
==========================
Net income (loss) per share-diluted .11 (.35)
==========================
Weighted average shares outstanding:
Basic 4,118,523 3,399,101
Diluted 4,425,004 3,399,101
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SEE ACCOMPANYING NOTES.
NVE CORPORATION
STATEMENTS OF CASH FLOWS
Nine Months Ended
December 31 December 30
2002 2001
--------------------------
OPERATING ACTIVITIES
Net income (loss) $ 486,686 $(1,206,319)
Adjustments to reconcile net loss to net cash
provided used in operating activities:
Depreciation and amortization 370,398 233,452
Changes in operating assets and liabilities:
Accounts receivable (89,757) 188,753
Inventories (334,078) 107,195
Prepaid expenses and other (119,641) 39,992
Accounts payable and accrued expenses 63,795 (208,253)
Deferred revenue (483,279) 481,140
--------------------------
Net cash used in operating activities (105,876) (364,040)
INVESTING ACTIVITIES
Purchases of fixed assets (383,377) (855,310)
Purchases of investment securities (5,583,414) -
--------------------------
Net cash used in investing activities (5,966,791) (855,310)
FINANCING ACTIVITIES
Net proceeds from sale of common stock 6,224,766 89,599
(Repayment of) proceeds from notes payable and
capital lease obligations (323,868) 508,511
--------------------------
Net cash provided by financing activities 5,900,898 598,110
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Decrease in cash (171,769) (621,240)
Cash at beginning of period 537,258 1,492,080
--------------------------
Cash at end of period $ 365,489 $ 870,840
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SEE ACCOMPANYING NOTES.
NVE CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
1. INTERIM FINANCIAL INFORMATION The accompanying unaudited financial statements of NVE Corporation (the "Company") are consistent with accounting principles generally accepted in the United States and reporting with SEC regulations. In the opinion of management, these financial statements reflect all adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation of the financial statements. Although we believe that the disclosures are adequate to make the information presented not misleading, it is suggested that these condensed financial statements be read in conjunction with the audited financial statements and the notes included in our latest annual financial statements included in our report on Form 10-KSB. The results of operations for the three and nine month periods ended December 31, 2002 are not necessarily indicative of the results that may be expected for the full year ending March 31, 2003.
2. NATURE OF BUSINESS We develop and sell "spintronics" devices, which rely on electron spin rather than electron charge to acquire, store, and transmit information.
3. REVENUE RECOGNITION Revenue from product sales to direct customers is recognized upon shipment. Revenue from licensing and technology development programs, which is nonrefundable and for which no significant future obligations exist, is recognized when the license is signed. Revenue from licensing and technology development programs, which is refundable, recoupable against future royalties, or for which future obligations exist, is recognized when we have completed our obligations under the terms of the agreements. Revenue from royalties is recognized upon the shipment of product from our technology license partners to direct customers. Certain research and development activities are conducted for third parties and such revenue is recognized as the services are performed.
4. EARNINGS PER SHARE We calculate our income (loss) per share pursuant to Statement of Financial Accounting Standards No. 128 ("SFAS 128"), Earnings Per Share. Basic earnings per share is computed based upon the weighted average number of common shares issued and outstanding during each year. Diluted net income per share amounts assume conversion, exercise or issuance of all potential common stock instruments (stock options, warrants and convertible preferred stock). Potentially dilutive securities including warrants and stock options are excluded from diluted earnings per share during net loss periods because these securities would be anti-dilutive.
5. INVESTMENTS We classify and account for debt and equity securities in accordance with SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities. The Company's entire portfolio is classified as available for sale; thus, securities are recorded at fair market value and any associated unrealized gain or loss, net of tax, is included as a separate component of shareholders' equity, "Accumulated other comprehensive income."
6. COMPREHENSIVE INCOME The components of comprehensive income (loss) are as follows:
Three months ended
December 31 December 30
2002 2001
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Net income (loss) $234,161 $(434,996)
Change in unrealized gains 1,557 -
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Comprehensive income (loss) $235,718 $(434,996)
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Nine months ended
December 31 December 30
2002 2001
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Net income (loss) $486,686 $(1,206,319)
Change in unrealized gains 92,671 -
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Comprehensive income (loss) $579,357 $(1,206,319)
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7. INVENTORIES Inventories consist of the following:
Raw materials $ 347,901
Work-in-process 523,025
Finished goods 175,367
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1,046,293
Less obsolescence reserve (200,000)
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$ 846,293
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8. STOCK SPLIT We executed a one-for-five reverse split of our Common Stock to stockholders of record at the close of business on November 21, 2002. All share and per share amounts have been restated for both 2002 and 2001 in the accompanying financial statements.
9. NEW ACCOUNTING PRONOUNCEMENTS On December 31, 2002, the FASB issued Statement 148 to provide alternative methods of transition to the fair value method of accounting for stock-based employee compensation. In addition, Statement No. 148 amends the disclosure provisions of Statement 123 to require disclosure in the summary of significant accounting policies of the effects of an entity's accounting policy with respect to stock-based employee compensation on reported net income and earnings per share in annual and interim financial statements. Statement 148 does not amend Statement No. 123 to require companies to account for their employee stock-based awards using the fair value method. However, the disclosure provisions are required for all companies with stock-based employee compensation, regardless of whether they utilize the fair value method of accounting described in Statement No. 123 or the intrinsic value method described in APB Opinion No. 25, Accounting for Stock Issued to Employees.
Statement No. 148 is effective for fiscal years ending after December 15, 2002, with earlier application permitted for entities with fiscal years ending prior to December 15, 2002, provided that financial statements for the 2002 fiscal year were not issued prior to the issuance of Statement No. 148 (December 31, 2002). The disclosure requirements for interim financial statements containing condensed financial statements are effective for interim periods beginning after December 15, 2002.
10. TECHNOLOGY EXCHANGE AGREEMENT On April 19, 2002 the Company closed a technology exchange agreement accompanied by an investment by Cypress Semiconductor Corporation ("Cypress"). Cypress purchased 686,600 shares of NVE Common Stock for $6.228 million. Cypress also received a warrant for the purchase of up to an additional 400,000 shares of Common Stock for $15.00 per share for a term of three years.
Item 2. Management's Discussion and Analysis or Plan of Operation.
General
We develop and sell "spintronics" devices, which are integrated circuit type devices that rely on electron spin rather than electron charge to acquire, store, and transmit information in electronic systems. We derive revenue from three sources:
1) contract spintronics research and development (principally government contracts);
2) commercial sales of spintronic sensor and coupler products; and
3) licenses for our magnetic random-access memory (MRAM) intellectual property.
Critical accounting policies
It is important to understand our significant accounting policies in order to understand our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. These accounting principles require us to make estimates and assumptions that affect amounts reported in our consolidated financial statements and the accompanying notes. Actual results are likely to differ from those estimates, but we do not believe such differences will materially affect our financial position or results of operations for the periods presented in this report.
Revenue recognition
Revenue from product sales to direct customers is recognized upon shipment. Revenue from licensing and technology development programs, which is nonrefundable and for which no significant future obligations exist, is recognized when the license is signed. Revenue from licensing and technology development programs, which is refundable, recoupable against future royalties, or for which future obligations exist, is recognized when we complete our obligations under the terms of the agreements. Revenue from royalties is recognized upon the shipment of product from our technology license partners to direct customers. Certain research and development activities are conducted for third parties and such revenue is recognized as the services are performed. Payments received from licensing and technology development programs relating to future obligations as well as prepayments for future discounts on product sales are recorded as deferred revenue.
Bad Debt
We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.
Inventory
We reduce the stated value of our inventory for excess quantities or obsolescence in an amount equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual future demand or market conditions are less favorable than those projected by management, additional reductions in stated value may be required.
Income Taxes
In determining the carrying value of our net deferred tax assets, we must assess the likelihood of sufficient future taxable income in certain tax jurisdictions, based on estimates and assumptions to realize the benefit of these assets. Our management evaluates the realizability of the deferred assets quarterly and assesses the need for valuation allowances or reduction of existing allowances quarterly.
Three months ended December 31, 2002 compared to three months ended December 30, 2001
The table shown below summarizes the percentage of revenue for the various items for the periods indicated:
Three months ended
December 31 December 30
2002 2001
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Revenue:
Research and development 71.6 % 70.2 %
Product sales 24.2 22.7
License fees 4.2 7.1
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Total revenue 100.0 100.0
Cost of sales 61.0 75.1
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Gross profit 39.0 24.9
Total expenses 29.0 49.5
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Net income (loss) 10.0 % (24.6)%
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Revenue for the three months ended December 31, 2002 was $2,337,052, an increase of 32% from revenue of $1,774,742 for the three months ended December 30, 2001. The revenue increase was due to increases in commercial product sales and research and development revenue. Commercial product sales increased 41% to $565,633 from $402,168. Research and development revenue increased 34% to $1,673,502 from $1,246,875 due to increased government contract revenue and increased revenue recognized under our agreement with Agilent Technologies, Inc. Increases in commercial product sales and research and development revenue were partially offset by a decrease in license revenue from $125,699 to $97,917. The decrease in license revenue was due to completion of revenue recognition for one of our MRAM license agreements.
Gross profit increased to 39% for the three months ended December 31, 2002 as compared to 25% for the three months ended December 30, 2001. Gross profit on commercial product sales and contract research and development increased 50% and 32%, respectively, for the three months ended December 31, 2002 as compared to (3%) and 26% for the three months ended December 30, 2001. This increase was due to higher yields on commercial products as well as increased margins on contract research and development.
Research and development expenses decreased 31% to $327,472 for the three months ended December 31, 2002 as compared to $475,266 in the three months ended December 30, 2001. The decrease was due to completion of the development of some of our commercial products.
Selling, general and administrative expenses for the three months ended December 31, 2002 increased by 4% to $420,862 compared to $405,368 for the Three months ended December 30, 2001. The increase was primarily due to an increase in product marketing.
Net income totaled $234,161 for the three months ended December 31, 2002 compared to a net loss of $434,996 for the three months ended December 30, 2001. The increase in net income was due to a change from operational losses to profits, lower interest expense from the retirement of high-cost debt, and higher interest income from our investments.
Nine months ended December 31, 2002 compared to nine months ended December 30, 2001
The table shown below summarizes the percentage of revenue for the various items for the periods indicated:
Nine Months Ended
December 30 December 31
2002 2001
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Revenue:
Research and development 70.8 % 67.7 %
Product sales 24.9 22.4
License fees 4.3 9.9
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Total revenue 100.0 100.0
Cost of sales 62.4 77.8
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Gross profit 37.6 22.2
Total expenses 30.5 46.8
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Net income (loss) 7.1 % (24.6)%
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Revenue for the nine months ended December 31, 2002 was $6,844,652, an increase of 40% from revenue of $4,905,548 for the nine months ended December 30, 2001. The revenue increase was due to increases in commercial product sales and research and development revenue. Commercial product sales increased 56% to $1,707,633 from $1,098,133. Research and development revenue increased 46% to $4,843,268 from $3,319,218 due to increased government contract revenue and increased revenue recognized under our agreement with Agilent Technologies, Inc. Increases in commercial product sales and research and development revenue were partially offset by a decrease in license revenue from $488,197 to $293,751. The decrease in license revenue was due to completion of revenue recognition for one of our MRAM license agreements.
Research and development expenses decreased by 17% to $944,330 for the nine months ended December 31, 2002 as compared to $1,132,549 in the nine months ended December 30, 2001. The decrease was due to completion of the development of some of our commercial products.
Gross profit margins increased to 38% for the nine months ended December 31, 2002 as compared to 22% for the nine months ended December 30, 2001. Gross profit on commercial product sales increased to 50% and gross profit on contract research and development increased to 29% for the nine months ended December 31, 2002 as compared to 14% and 13% for the nine months ended December 30, 2001. This increase was due to higher yields on commercial products as well as increased margins on contract research and development.
Selling, general and administrative expenses for the nine months ended December 31, 2002 increased by 6% to $1,324,302 compared to $1,248,887 for the nine months ended December 30, 2001. The increase was primarily due to higher expenses associated with a ramp-up in commercial selling activities.
Net income totaled $486,686 for the nine months ended December 31, 2002 compared to a net loss of $1,206,319 for the nine months ended December 30, 2001. The increase in net income was due to a change from operational losses to profits, and higher interest income on our increased investments.
Liquidity and capital resources
At December 31, 2002, we had $5,655,474 in available-for-sale securities, consisting of marketable fixed-income investments. We had cash on December 31, 2002 of $365,489 and working capital of $6,284,688. We believe our working capital is adequate for our current needs.
Recent Developments
On November 11, 2002, we announced plans for a one-for-five reverse split of our Common Stock, and also announced that our board of directors had authorized the repurchase of up to 50,000 post-split shares of our Common Stock. Through December 31, 2002 we had not repurchased any shares under the repurchase program.
We executed a one-for-five reverse split of our Common Stock to shareholders of record at the close of business on November 21, 2002. In conjunction with the reverse split, we changed our Common Stock CUSIP number to 629-445-20-6 from 629-445-10-7, and the trading symbol to NVCR from NVEC.
On January 22, 2003, our Common Stock began trading on the Nasdaq SmallCap Market under the symbol NVEC, which was the symbol prior to the November 21, 2002 reverse split. The CUSIP number was unchanged from the post-split number.
Outlook
Thus far our commercial product revenues have continued to grow rapidly, although we believe adverse economic conditions may be limiting our growth in our core industrial control market.
We continue to take steps related to our business strategy, which includes the following key elements:
o Grow our commercial product business by expanding distribution and product promotion
o Develop new products based on modules and designs we have developed
o Support product research and development with government contract research and development
o Deploy our MRAM intellectual property through manufacturing partnerships
In line with this strategy, we have invested in training and supporting our new representatives and distributors to maximize their productivity, and we delivered our first couplers to be distributed by Agilent Technologies, Inc. We expanded our "Hate Optos" advertising campaign, and produced a new sensor product-line catalog.
We announced several new sensor products and continued to invest in development of faster and more cost-effective coupler products. Contract research and development programs continue, including advanced sensors and couplers.
We continue our MRAM research, and supported our manufacturing partners, especially Cypress Semiconductor Corp.
We expect commercial product revenues to continue to grow, and we anticipate profitability to continue in the quarter ending March 31, 2003. In the fiscal year beginning April 2003, approximately $250,000 per quarter of contract research and development from Agilent milestone achievements and recognition of MRAM license revenues of approximately $98,000 per quarter will cease. We may be able to replace those revenue and profit sources with expanded commercial product sales, but there can be no assurance we will continue to be profitable.
Item 3. Controls and Procedures.
Within 90 days prior to the date of filing of this report, we carried out an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer and the Chief Financial Officer, of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective for gathering, analyzing and disclosing the information we are required to disclose in the reports we file under the Securities Exchange Act of 1934, within the time periods specified in the SEC's rules and forms. There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to the date of this evaluation.
PART II--OTHER INFORMATION
Item 5. Other Information
On January 22, 2003, our Common Stock began trading on the Nasdaq SmallCap Market. Prior to being listed on the Nasdaq SmallCap Market, our Common Stock was traded on the Over-the-Counter Bulletin Board.
On October 25, 2002, our Board approved amended Articles of Incorporation to adjust authorized shares in conjunction with a reverse split of our common stock. The amended Articles of Incorporation are filed herein.
We executed an amendment dated October 18, 2002 to our Agreement with Agilent Technologies, Inc. The amendment recognizes the completion of key milestones in the qualification of our technology, and adjusts certain tine periods accordingly. The amendment is filed herein.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits.
Exhibit 3: Amended and Restated Articles of Incorporation of the
Company as amended by the Board of Directors effective November 21,
2002.
Exhibit 10.1: Amendment dated October 18, 2002 to OEM Purchase Agreement with Agilent Technologies, Inc.
Exhibit 10.2: OEM Purchase Agreement with Agilent Technologies, Inc., incorporated by reference to our report on Form 10QSB filed October 26, 2001 (confidential treatment has been requested with respect to portions of this exhibit, and such confidential portions have been deleted and separately filed with the Securities and Exchange Commission pursuant to Rule24b-2 or Rule 406).
b. Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf of the undersigneds thereunto duly authorized.
NVE CORPORATION
Date: January 28, 2003 By /s/ Daniel A. Baker ------------------------------------- Daniel A. Baker President and Chief Executive Officer By /s/ Richard George ------------------------------------- Richard George Chief Financial Officer |
CERTIFICATIONS PURSUANT TO SECTION 302
I, Daniel A. Baker, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of NVE Corporation.
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report.
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls, which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: January 28, 2003 /s/ Daniel A. Baker ------------------------------------- Daniel A. Baker President and Chief Executive Officer |
I, Richard George, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of NVE Corporation.
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report.
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls, which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: January 28, 2003 /s/ Richard George ----------------------- Richard George Chief Financial Officer |
EX 3: AMENDED ARTICLES OF INCORPORATION EFFECTIVE 11/21/02
The purpose of this amendment is to effect a stock combination, and does not adversely affect the rights or preferences of the holders of outstanding shares of any class or series and will not result in the percentage of authorized shares of any class or series that remains unissued after the combination exceeding the percentage of authorized shares of that class or series that were unissued before the combination.
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
NVE CORPORATION
(formerly known as Premis Corporation, Inc.)
AS AMENDED BY THE BOARD OF DIRECTORS EFFECTIVE NOVEMBER 21, 2002
ARTICLE I
Name
The name of the Corporation is NVE Corporation.
ARTICLE II
Registered Office
The registered office of the Corporation is 11409 Valley View Road, Eden Prairie, Minnesota, 55344.
ARTICLE III
Authorized Capital
The aggregate number of shares of capital stock that the Corporation shall be authorized to issue is 10,000,000 shares, 6,000,000 of which shall be Common Stock, $.01 par value per share (the "Common Stock"), and 4,000,000 shares of which shall be undesignated shares of capital stock, $.01 par value per share (the "Undesignated Shares"). The Board of Directors is authorized to establish from the Undesignated Shares, by resolution adopted and filed in the manner provided by law, one or more classes or series of shares, to set forth the designation of each such class or series and to fix the relative rights and preferences of each such class or series to the full extent permitted by law. In addition, and without limitation of the foregoing, the Board of Directors is authorized to designate additional shares of any designated class or series of capital stock (including Common Stock and any class of junior or preferred stock) from the Undesignated Shares to the full extent permitted by law. The Board shall be authorized to issue shares of Common Stock to holders of Common Stock and to holders of any class or series of Undesignated Shares and to issue shares of any class or series of Undesignated Shares to holders of Common Stock
and to holders of any class or series of Undesignated Shares, in any case, for any purpose to the full extent permitted by law.
ARTICLE IV
Cumulative Voting Prohibition
No shareholder of the Corporation shall have any cumulative voting rights.
ARTICLE V
Preemptive Rights Prohibition
No shareholder of the Corporation shall have any preemptive rights to subscribe for, purchase or acquire any shares of the Corporation of any class, whether unissued or now or hereafter authorized, or any obligations or other securities convertible into or exchangeable for any such shares.
ARTICLE VI
Voting Requirements
The affirmative vote of the holders of a majority of the voting power of the shares represented and voting at a duly held meeting of the shareholders of the Corporation is required for an action of the shareholders, except where Chapter 302A of the Minnesota Statutes requires the affirmative vote of a majority of the voting power of all voting shares.
ARTICLE VII
Number of Directors
The number of directors of the Corporation shall be fixed in the manner provided in the bylaws.
ARTICLE VIII
Director Action by Written Consent
Any action required or permitted to be taken at a meeting of the board of directors of the Corporation not needing approval by the shareholders under Chapter 302A of the Minnesota Statutes may be taken by written action signed by the number of directors that would be required to take such action at a meeting of the board of directors at which all directors were present.
ARTICLE IX
Limitation of Director Liability
No director of the Corporation shall be personally liable to the Corporation or its shareholders for monetary damages for any breach of fiduciary duty as a director; provided, however, that this provision shall not eliminate or limit the liability of a director:
a. for any breach of the director's duty of loyalty to the Corporation or its shareholders;
b. for actions or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;
c. under Section 302A.559 or 80A.23 of the Minnesota Statutes;
d. for any transaction from which the director derived an improper personal benefit; or
e. for any act or omission occurring prior to the date when this amendment to the Articles of Incorporation became effective.
If Chapter 302A of the Minnesota Statutes, the Minnesota Business Corporation Act, is hereafter amended to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the Corporation in addition to the limitation on the personal liability provided herein, shall be limited to the fullest extent permitted by the amended Chapter 302A of the Minnesota Statutes. Any repeal or modification of this Article by the shareholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the Corporation at the time of such repeal or modification.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 4th day of November, 2002.
NVE Corporation
/s/ Daniel A. Baker
--------------------------------
Daniel A. Baker, President & CEO
STATE OF MINNESOTA ) The foregoing instrument was
)ss. Acknowledged before me on this
County of Hennepin ) 4th day of November, 2002.
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/s/ Curt A. Reynders
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(Notary Public)
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(Notorial Seal)
Agilent/NVE OEM Purchase Agreement Amendment No. 1 October 18, 2002
AMENDMENT TO
OEM PURCHASE AGREEMENT
THIS AMENDMENT ("AMENDMENT") TO OEM PURCHASE AGREEMENT BY AND BETWEEN AGILENT
TECHNOLOGIES, INC. AND NVE CORPORATION ("AGREEMENT") IS EXECUTED BY AND BETWEEN
AGILENT TECHNOLOGIES, INC. AND NVE CORPORATION AND IS MADE EFFECTIVE AS OF
OCTOBER 18, 2002.
WHEREAS, the parties desire to amend the Agreement as set forth in this
Amendment.
NOW, THEREFORE, in consideration of the background set forth above and for the
mutual promises and covenants contained in this Amendment and for other good
and valuable consideration, the parties agree as follows:
1. Section 4.1.a. of the Agreement is hereby amended to read as follows:
"No later than seven (7) days after the execution of this Agreement, Agilent shall pay to Supplier an initial $500,000 NRE. By November 15, 2002 Agilent shall pay NVE additional NRE of $250,000, and by February 15, 2003, Agilent shall pay NVE NRE of an additional $250,000."
2. The conditions of Section 4.1.b. are considered to be met as of the date of this amendment for the purposes of the Agreement.
3. Exhibit B is hereby amended so that the column headers in the table listing OEM Product prices and the timeline for price reductions for each such product will read S+18 (18 months after the signing of the Agreement) rather than S+12 (12 months after the signing).
4. Section 1.3 of the Agreement is hereby amended so that the Term of the Agreement will continue for five (5) years and nine (9) months from the Commencement Date.
5. Except as expressly amended above, all other terms, covenants and conditions of the Agreement will continue in full force and effect without change or modification. All capitalized terms used in this Amendment, but not otherwise defined in this Amendment, will have the meaning assigned to them in the Agreement.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties to this Amendment have caused this instrument to be executed by their respective duly authorized representatives as of the day and year set forth above.
AGILENT TECHNOLOGIES, INC. NVE CORPORATION BY: /s/ Tan Bian Ee BY: /s/ Daniel Baker Printed Name: Tan Bian Ee Printed Name: Daniel Baker Title: President, Agilent Singapore & Malasia Title: President & CEO |