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What changed in NVE CORP /NEW/'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of NVE CORP /NEW/'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+82 added−91 removedSource: 10-K (2025-05-07) vs 10-K (2024-05-01)

Top changes in NVE CORP /NEW/'s 2025 10-K

82 paragraphs added · 91 removed · 60 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe either saw wafers to be sold in die form or send wafers to Asia for dicing and packaging. Other production operations include wafer-level inspection and testing.
Biggest changeWe build spintronics structures on wafers in our fabrication facility and do wafer-level inspection and testing. 4 Table of Contents We either dice wafers to be sold in die form, send wafers to Asia for dicing and packaging, or process wafers into Wafer-Level Chip-Scale Parts (WLCSPs). Packaged parts are returned to us to be tested, inventoried, and shipped.
Our wafer sources are based around the world; most of our packaging services take place in Asia. 5 Table of Contents Intellectual Property Patents As of March 31, 2024, we had more than 50 issued U.S. patents assigned to us.
Our wafer sources are based around the world; most of our packaging services take place in Asia. 5 Table of Contents Intellectual Property Patents As of March 31, 2025, we had more than 50 issued U.S. patents assigned to us.
Trademarks “NVE” and “IsoLoop” are our registered trademarks. Other trademarks we claim include “GMR Switch” and “GT Sensor.” Dependence on Major Customers We rely on several large customers for a significant percentage of our revenue, including Abbott Laboratories, Sonova AG, certain distributors, and certain other customers.
Trademarks “NVE” and “IsoLoop” are our registered trademarks. Other trademarks we claim include “GMR Switch” and “GT Sensor.” Dependence on Major Customers We rely on several large customers for a significant percentage of our revenue, including Abbott Laboratories, certain distributors, and certain other customers.
Our critical GMR conductor layers may be less than two nanometers, or five atomic layers, thick. 3 Table of Contents The second type of spintronic structure we use is based on tunneling magnetoresistance (TMR). Such devices are known as Spin-Dependent Tunnel (SDT) junctions or Magnetic Tunnel Junctions (MTJs).
Our critical GMR conductor layers may be less than two nanometers, or five atomic layers, thick. 3 Table of Contents A more advanced type of spintronic structure we use is based on tunneling magnetoresistance (TMR). Such devices are known as Spin-Dependent Tunnel (SDT) junctions or Magnetic Tunnel Junctions (MTJs).
Existing and future environmental laws and regulations could result in expenses related to emission abatement or remediation, but we are currently unable to estimate such expenses. 6 Table of Contents Human Capital Resources Employee Headcount We had 54 employees as of March 31, 2024, 46 of whom were full-time. We had no contingent workers.
Existing and future environmental laws and regulations could result in expenses related to emission abatement or remediation, but we are currently unable to estimate such expenses. 6 Table of Contents Human Capital Resources Employee Headcount We had 42 employees as of March 31, 2025, 41 of whom were full-time. We had no contingent workers.
Gender Demographics The gender demographics of our workforce compared to those of all Minnesota workers were as follows as of March 31, 2024: Gender NVE Minnesota Male 67% 50% Female 33% 50% As is the case with many technology companies, female employees are underrepresented in our workforce, particularly in engineer and technician jobs.
Gender Demographics The gender demographics of our workforce compared to those of all Minnesota workers were as follows as of March 31, 2025: Gender NVE Minnesota Male 69% 50% Female 31% 50% As is the case with many technology companies, female employees are underrepresented in our workforce, particularly in engineer and technician jobs.
Long-term product development programs in fiscal 2024 included: · extremely sensitive TMR sensors; · next-generation sensors for hearing aids and implanted medical devices; · wafer-level chip-scale devices; and · next-generation MRAM for antitamper applications. Our Competition Industrial Sensor Competition Several other companies either make or may have the capability to make GMR or TMR sensors.
Long-term product development programs in fiscal 2025 included: · ultrahigh-sensitivity TMR sensors; · next-generation sensors for hearing aids and implanted medical devices; · wafer-level chip-scale devices; and · next-generation MRAM for antitamper applications. Our Competition Industrial Sensor Competition Several other companies either make or may have the capability to make GMR or TMR sensors.
Government Regulations We are subject to government regulations including, but not limited to, regulations related to environmental matters, tax matters, securities regulations, conflict minerals, ethics and foreign corrupt practices, import and export controls, product safety and liability, workplace health and safety, labor and employment, and data privacy.
Government Regulations We are subject to government regulations including, but not limited to, regulations related to environmental matters, tax matters, securities regulations, conflict minerals, ethics and foreign corrupt practices, import and export controls, tariffs and duties on incoming and outgoing goods, product safety and liability, workplace health and safety, labor and employment, and data privacy.
Women and Families We have family-friendly policies and fully comply with the Minnesota Women’s Economic Security Act (WESA) by providing reasonable accommodations to employees for health conditions related to pregnancy or childbirth and up to 12 weeks of pregnancy and parental leave.
Board of Directors Demographics Two of our five directors are women; one identifies as Asian. 7 Table of Contents Women and Families We have family-friendly policies and fully comply with the Minnesota Women’s Economic Security Act (WESA) by providing reasonable accommodations to employees for health conditions related to pregnancy or childbirth and up to 12 weeks of pregnancy and parental leave.
Our distributor agreements generally renew annually. In addition, we distribute versions of some of our products under private-brand partnerships with large integrated device manufacturers. These private-brand partnerships broaden our distribution and enhance our sales support, technical support, and product awareness.
Distributors of our products include America II Electronics, Inc., Angst+Pfister Sensors and Power, and Digi-Key Corporation. Our distributor agreements generally renew annually. In addition, we distribute versions of some of our products under private-brand partnerships with large integrated device manufacturers. These private-brand partnerships broaden our distribution and enhance our sales support, technical support, and product awareness.
Workforce Demographics We assessed our demographics using the data collection procedures for U.S. Equal Employment Opportunity Commission form EEO-1. Specifically, we conducted a voluntary survey for self-identification and supplemented those data with personnel data and observer identification. Minnesota data are from U.S. Census Bureau data for the latest quarter available.
Specifically, we conducted a voluntary survey for self-identification and supplemented those data with personnel data and observer identification. Minnesota data are from U.S. Census Bureau data for the latest quarter available.
Most of our products are fabricated in our facility using either raw silicon wafers or foundry wafers. Foundry wafers contain conventional electronics that perform housekeeping functions such as voltage regulation and signal conditioning in our products. Each wafer may include thousands of devices. We build spintronics structures on wafers in our fabrication facility.
Foundry wafers contain conventional electronics that perform housekeeping functions such as voltage regulation and signal conditioning in our products. Each wafer may include thousands of devices.
Employee Racial Diversity Our workforce demographics by race as of March 31, 2024, were as follows: Race NVE Minnesota African American or Black 13% 8% American Indian or Alaska Native 2% 1% Asian 17% 6% White or Caucasian 69% 83% Black or African American and Asian employees are overrepresented in our workforce.
Racial Demographics Our workforce demographics by race as of March 31, 2025, were as follows: Race NVE Minnesota African American or Black 10% 8% American Indian or Alaska Native 2% 1% Asian 19% 6% White or Caucasian 69% 83% Educational Demographics We have a highly educated workforce.
Employee Health and Safety NVE is committed to providing a safe and healthy work environment. We offer employees a variety of health and fitness resources in conjunction with our medical insurance. Employee Development and Training NVE provides paid training including paid on-the-job training, specialized online training, 100% tuition reimbursement, and paid internships.
Employee Health and Safety NVE is committed to providing a safe and healthy work environment. The Compensation Committee of our Board of Directors oversees employee health and safety. We offer employees a variety of health and fitness resources in conjunction with our medical insurance.
Additionally, Minnesota’s paid family and medical leave law, which provides paid time off during or following a pregnancy, goes into effect on January 1, 2026. NVE is committed to the timely implementation of such paid leave. 7 Table of Contents Executive Diversity We have three Named Executive Officers . All are male; one is racially diverse.
Additionally, Minnesota’s paid family and medical leave law, which provides paid time off during or following a pregnancy, goes into effect on January 1, 2026. We are preparing for the timely implementation of such paid leave.
We are committed to hiring and promoting employees based on their acquired skills. Employee Relations None of our employees are represented by a labor union or are subject to a collective bargaining agreement. Based on periodic employee surveys, we believe we have good relations with our employees.
Employee Development and Training NVE provides paid training including paid on-the-job training, specialized online training, tuition reimbursement, and paid internships. Employee Relations None of our employees are represented by a labor union or are subject to a collective bargaining agreement. Based on periodic employee surveys, we believe we have good relations with our employees.
Our MRAM strategy has been focused on low bit density for applications such as tamper prevention and detection. Product Manufacturing Our product manufacturing includes “front-end” wafer production and “back-end” product testing. Wafer production is a cleanroom area with specialized equipment to deposit, pattern, etch, and process spintronic materials.
We have invented several types of memory cells including inventions related to advanced MRAM designs and MRAM for tamper prevention or detection. Our MRAM strategy has been focused on low bit density for applications such as tamper prevention and detection. Product Manufacturing Our product manufacturing includes “front-end” wafer production and “back-end” product testing.
Our couplers enable more efficient power conversion and interconnections to implement the IIoT for advanced factory automation. DC-to-DC Convertor Products and Markets Our isolated DC-to-DC convertors transfer energy between systems without direct electrical connections. These components are used in power conversion systems and industrial networks for the IIoT.
Our couplers enable more efficient power conversion and interconnections to implement the IIoT for advanced factory automation. Power Products and Markets Power products include voltage regulators, interface ICs, DC-to-DC convertors, and products that combine couplers and DC-to-DC convertors to transmit energy as well as data.
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We also make products that combine couplers and DC-to-DC convertors to transmit power as well as data. MRAM Products and Markets MRAM uses spintronics to store data. Unlike electrical charge, the spin of an electron is inherently permanent. We have invented several types of memory cells including inventions related to advanced MRAM designs and MRAM for tamper prevention or detection.
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Our isolated DC-to-DC convertors transfer energy between systems without direct electrical connections and are used in energy conversion systems and industrial networks for the IIoT. Energy conversion applications include battery energy storage systems and hybrid/electric vehicles. MRAM Products and Markets MRAM uses spintronics to store data. Unlike electrical charge, the spin of an electron is inherently permanent.
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Packaged parts are returned to us to be tested, inventoried, and shipped. 4 Table of Contents Our facility has been certified under the ISO 9001:2015 quality management standard and is an Approved Place of Manufacture under ECS/CIG 021-024: 2014. We believe having our own U.S. wafer production and test capabilities is an advantage over competitors that outsource such operations.
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We believe having our own U.S. wafer production and test capabilities is an advantage over competitors that outsource such operations. Wafer production is a cleanroom area with specialized equipment to deposit, pattern, etch, and process spintronic materials. Most of our products are fabricated in our facility using either raw silicon wafers or foundry wafers.
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We significantly increased our product testing capacity in the two most recent fiscal years in response to increased demand for our products. Sales and Product Distribution We rely on distributors who stock and resell our products in more than 75 countries. Distributors of our products include America II Electronics, Inc., Angst+Pfister Sensors and Power, Avnet companies, and Digi-Key Corporation.
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Alternatively, the process to convert wafers to WLCSPs includes attaching solder balls, electrical testing, and wafer dicing. Our facility has been certified under the ISO 9001:2015 quality management standard and is an Approved Place of Manufacture under ECS/CIG 021-024: 2014. Sales and Product Distribution We rely on distributors who stock and resell our products in more than 75 countries.
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New Product Status In the past year, we began marketing several new and improved products, including: · more products combining data couplers with isolated DC-to-DC convertors to transmit power as well as data; · ultra-high isolation data couplers; · extended temperature isolated network transceivers · new MRAM products for antitamper applications; and · new product evaluation boards.
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New Product Status In the past year, we began marketing several new and improved products, including: · high-sensitivity ultraminiature sensors; · a new type of rotation sensor; · our first Wafer-Level Chip-Scale sensors; · advanced position sensors; and · new product evaluation boards.
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We believe this is because we are close to immigrant population clusters, have a multilingual workforce, provide equal pay, and equal opportunity for advancement, and have a culture of acceptance. Educational Demographics We have a highly educated workforce. Thirty-nine percent of our employees have bachelor’s or advanced degrees compared to 26% of all Minnesota workers.
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Our hiring was limited in fiscal 2025, in line with depressed industry conditions. Workforce Demographics Although we are not required to file forms with the U.S. Equal Employment Opportunity Commission, we assessed our demographics using the data collection procedures for EEOC form EEO-1.
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Employee Diversity, Equity, Inclusion, and Accessibility Our goal is to promote diversity, equity, inclusion, and accessibility in our recruitment of directors, managers, and other employees. We have policies to prevent discrimination based on gender, race, disability, ethnicity, nationality, religion, sexual orientation, gender identity, or gender expression.
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Forty-three percent of our employees have bachelor’s or advanced degrees compared to 26% of all Minnesota workers. Employee Turnover Our voluntary employee turnover was 4% for fiscal 2025.
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We take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their gender, race, disability, ethnicity, nationality, religion, sexual orientation, gender identity, or gender expression. We also take affirmative action to employ and advance veterans in employment. We have a number of initiatives to maintain and increase our diversity.
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Voluntary turnover is calculated as the number of regular full-time employees as of March 31, 2024 who left voluntarily in the year ended March 31, 2025 (excluding retirements), divided by the average number of employees. We define average number of employees as the average of the employees at the beginning and at the end of the fiscal year.
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For example, we participate in Dunwoody College of Technology’s Pathways to Careers (P2C) program and the Minnesota Technology Association’s SciTech internship program as a qualified employer. P2C is focused on preparing underserved and underrepresented individuals for college success and immediate jobs.
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Executive Demographics We have three Named Executive Officers . All three are male; one identifies as African American.
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The SciTech internship program has an objective of increasing the participation of women and students of color in science, technology, engineering, and mathematics.
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Board of Directors Diversity We meet and are committed to continuing to meet the board diversity goals of NASDAQ Listing Rule 5605(f)(1), including at least two Diverse directors by December 31, 2026. Additionally, we plan to nominate an ethnically diverse director in the Proxy Statement for our 2024 Annual Meeting of Shareholders.
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An ethnically diverse director would meet the racial/ethnic diversity recommendations of Institutional Shareholder Services for Russell 3000 companies.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe sell our products in the semiconductor market, which has been highly cyclical. We cannot predict the timing, strength, or duration of any economic slowdown, recession, semiconductor-industry slowdown, or subsequent recovery. The economic environment could have a material adverse impact on our business and revenue. Our business and our reliance on intellectual property exposes us to litigation risks.
Biggest changeThe economic environment could have a material adverse impact on our business and revenue. An international “trade war” 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.
Failure to meet technical or quality requirements or a negative customer audit could result in the loss of current sales revenue, customers, and future sales. 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, 2024.
Failure to meet technical or quality requirements or a negative customer audit could result in the loss of current sales revenue, customers, and future sales. 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, 2025.
While we have an in-house maintenance staff, maintenance agreements for certain equipment, some critical spare parts, and back-ups for some of the equipment, we cannot be sure we could repair or replace critical manufacturing equipment were it to fail. 10 Table of Contents We are subject to risks inherent in doing business in foreign countries that could impair our results of operations.
While we have an in-house maintenance staff, maintenance agreements for certain equipment, some critical spare parts, and back-ups for some of the equipment, we cannot be sure we could repair or replace critical manufacturing equipment were it to fail. We are subject to risks inherent in doing business in foreign countries that could impair our results of operations.
We maintain inventory of critical chemicals and materials, but in many cases, we are dependent on single sources, and some of the materials could be subject to shortages or be discontinued by their suppliers at any time. The Russia-Ukraine crisis could cause or exacerbate shortages.
We maintain inventory of critical chemicals and materials, but in many cases, we are dependent on single sources, and some of the materials could be subject to shortages or be discontinued by their suppliers at any time.
If patent infringement claims or actions are asserted against us, we may be required to obtain a license or cross-license, modify our existing technology, or design a new noninfringing technology. Such licenses or design modifications can be costly or could increase the cost of our products.
Our business and our reliance on intellectual property exposes us to litigation risks. If patent infringement claims or actions are asserted against us, we may be required to obtain a license or cross-license, modify our existing technology, or design a new noninfringing technology. Such licenses or design modifications can be costly or could increase the cost of our products.
Some of our customers, including certain medical device manufacturers, have stringent technical and quality requirements that require our products to meet certain test and qualification criteria or to adopt and comply with specific quality standards. Certain customers also periodically audit our performance.
Failure to meet stringent customer requirements could result in the loss of key customers and reduce our sales. Some of our customers, including certain medical device manufacturers, have stringent technical and quality requirements that require our products to meet certain test and qualification criteria or to adopt and comply with specific quality standards. Certain customers also periodically audit our performance.
Similarly, we cannot necessarily assess or quantify the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in forward-looking statements. Risks Related to Our Business We face a tight labor market, competition for employees, and wage inflation.
Similarly, we cannot necessarily assess or quantify the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in forward-looking statements.
Additionally, the assignment of a high credit rating does not preclude the risk of default on any marketable security. Any impairments of our marketable securities could impact our financial condition, income, or cash flows, or our ability to pay dividends. We may not be able to enforce our intellectual property rights.
Any impairments of our marketable securities could impact our financial condition, income, or cash flows, or our ability to pay dividends. We may not be able to enforce our intellectual property rights.
Foreign sales are a significant portion of our revenue and we rely on suppliers in China, India, Malaysia, Taiwan, Thailand, and other foreign countries.
Foreign sales are a significant portion of our revenue and we rely on foreign suppliers, especially in Asia.
We purchase some wafers from manufacturers in China, which have been subject to tariffs and could be subject to further tariffs or restrictions in the future. Wafer supply could be affected by 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 supplies could be affected by 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.
Although these events did not materially impact our business, future 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.
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.
Our business could be negatively impacted by cybersecurity events or information technology disruptions. We face various cyber security threats, including threats to our information technology infrastructure and attempts to gain access to our proprietary or classified information, and denial-of-service attacks. Additionally, there is a risk of disruptions due to failures of our information technology infrastructure or service provider outages.
Future public health crises could have a material adverse effect on our results of operations or our financial condition. Our business could be negatively impacted by cybersecurity events or information technology disruptions. 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 attacks.
Labor shortages could impact our revenue and profitability, and increases in labor costs could adversely affect our profit margins and results of operations. The loss of supply from any of our key single-source wafer suppliers could substantially impact our ability to produce and deliver products and seriously harm our business and financial condition.
Risks Related to Our Business The loss of supply from any of our key single-source wafer suppliers could substantially impact our ability to produce and deliver products and seriously harm our business and financial condition. Our critical suppliers include suppliers of certain raw silicon and semiconductor foundry wafers that are incorporated in our products.
We expect these trends to continue, and we may lose business to competitors or it may be necessary to significantly reduce our prices to acquire or retain business.
In addition, our competitors may be narrowing or eliminating our performance advantages. We expect these trends to continue, and we may lose business to competitors or it may be necessary to significantly reduce our prices to acquire or retain business. These factors could have a material adverse impact on our financial condition, revenue, gross profit margins, or income.
We cannot predict if these agreements will be renewed, or if renewed, under what terms. Although in the past we have continued 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.
Although in the past we have continued 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. 9 Table of Contents Changes in tax law, in our tax rates, or in exposure to additional income tax liabilities may materially and adversely affect our financial condition, results of operations, and cash flows.
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. We risk losing business to our competitors. We have a number of competitors and potential competitors, many of whom have significantly greater financial, technical, and marketing resources than us.
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.
As of March 31, 2024, we held $52,548,876 in short-term and long-term marketable securities, representing approximately 79% of our total assets. Business conditions, bond-market conditions, and interest rate increases beyond our control or ability to anticipate can cause credit-rating downgrades, increased default risk, or unrealized losses.
Business conditions, bond-market conditions, and interest rate increases beyond our control or ability to anticipate can cause credit-rating downgrades, increased default risk, or unrealized losses. Additionally, the assignment of a high credit rating does not preclude the risk of default on any marketable security.
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. In the past fiscal year, there were industry-wide semiconductor wafer shortages.
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 larger tariffs or restrictions in the future.
In the past fiscal year, we recorded significant expenses under this standard, although most of these expenses were later reversed. Any future 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. We could incur losses on our marketable securities.
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. We could incur losses on our marketable securities. As of March 31, 2025, we held $39,996,216 in short-term and long-term marketable securities, representing approximately 62% of our total assets.
Public health crises could have an adverse effect on our operations and financial results. The COVID-19 pandemic disrupted our supply chains and caused employee absences. Future public health crises could have a material adverse effect on our results of operations or our financial condition. We are subject to risks associated with the availability of natural resources and energy.
Additionally, foreign tariffs on our exported products could increase the price of our products in international markets, which could reduce revenues. 10 Table of Contents Public health crises could have an adverse effect on our operations and financial results. The COVID-19 pandemic disrupted our supply chains and caused employee absences.
We believe that our competition is increasing as technology and markets mature. This has meant more competitors and more severe pricing pressure. In addition, our competitors may be narrowing or eliminating our performance advantages.
We risk losing business to our competitors. We have a number of competitors and potential competitors, many of whom have significantly greater financial, technical, and marketing resources than us. We believe that our competition is increasing as technology and markets mature. This has meant more competitors and more severe pricing pressure.
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. We have experienced cyber security events and disruptions such as viruses, ransomware, hacker attacks, and limited server, Website, and e-mail outages.
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.
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In the past two fiscal years, we have experienced increased competition for employees, increased employee turnover, and increased wage inflation. The labor market has been especially tight in Minnesota. We have significantly increased the wages we pay to remain competitive and attract new workers, especially production workers.
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We cannot predict if these agreements will be renewed, or if renewed, under what terms.
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Sanctions against Russia could affect supplies or prices of materials supplied by Russia, including materials we use such as aluminum, copper, helium, magnesium, manganese, nickel, palladium, platinum, and titanium. Materials supplied by Ukraine include neon, which may be used to produce some of our foundry wafers.
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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.
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Furthermore, we may not be able to recover work in process or finished goods at a packaging vendor in the event of a disruption. Additionally, certain of our packaging vendors are in flood-susceptible areas. Flooding risks to such vendors may increase in the future due to possible higher ocean levels, extreme weather, and other potential effects of climate change.
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These factors could have a material adverse impact on our financial condition, revenue, gross profit margins, or income. 9 Table of Contents Failure to meet stringent customer requirements could result in the loss of key customers and reduce our sales.
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Changes in tax law, in our tax rates, or in exposure to additional income tax liabilities may materially and adversely affect our financial condition, results of operations, and cash flows.
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We use significant resources such as electricity, natural gas, and water in our operations. New or increased climate change regulation could increase our energy costs, for example, due to carbon pricing impacts on natural gas or electrical utilities.
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Furthermore, environmental regulations or the impacts of climate change could curtail the availability of electricity we need for production or increase the incidence of power outages. Increased natural resource or energy costs, or decreased availability, could have adverse effects on our results of operations by increasing our costs and expenses or requiring us to change our production processes.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeCybersecurity Governance Our cybersecurity governance is designed to ensure that risks are managed consistently and effectively. Key elements are: · Written policies and procedures that govern the use of information technology and the handling of sensitive information. · Written incident response plans. · Regular cybersecurity reporting to the Audit Committee.
Biggest changeKey elements are: · Written policies and procedures that govern the use of information technology and the handling of sensitive information. · Written incident response plans. · Regular cybersecurity reporting to the Audit Committee. We have a full-time information technology specialist who reports directly to our CEO and is responsible for assessing and managing cybersecurity risks.
We minimize other cybersecurity risks by using specialist service providers for sensitive operations such as payroll processing, credit card transactions, email, and remote data backup.
We minimize other cybersecurity risks by using specialized service providers for sensitive operations such as payroll processing, credit card transactions, email, and remote data backup.
We keep our controls up-to-date. · Actions to correct deficiencies and reduce or eliminate vulnerabilities. · Written cybersecurity contingency plans. · Training and testing for all employees on cybersecurity risks, mitigation, and best practices. New employees are required to complete cybersecurity training and testing, and all employees must complete annual training and testing .
We keep our controls up-to-date. · Actions to correct any deficiencies and reduce or eliminate vulnerabilities. · Written cybersecurity contingency plans, including plans for various specific scenarios. · Training and testing for all employees on cybersecurity risks, mitigation, and best practices.
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New employees are required to complete cybersecurity training and testing, and annual training and testing is required for all employees . Cybersecurity Governance Our cybersecurity governance is designed to ensure that risks are managed consistently and effectively.
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Both our information technology specialist and our CEO have extensive experience managing our cybersecurity. We have not engaged third-party service providers for cybersecurity, because we believe it is better to have the expertise in-house.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES. Our principal executive offices and manufacturing facility are located at 11409 Valley View Road, Eden Prairie, Minnesota, 55344, and leased under an agreement expiring March 31, 2026. The space consists of 21,362 square feet of offices, laboratories, and production areas.
Biggest changeITEM 2. PROPERTIES. Our principal executive offices and manufacturing facility are located at 11409 Valley View Road, Eden Prairie, Minnesota, 55344, and leased under an agreement expiring May 31, 2031. The space consists of 21,362 square feet of offices, laboratories, and production areas.
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We have expanded the facility’s production space in recent years and have limited options to further expand production in the current facility. We are exploring options for future expansion if necessary. We hold no investments in real estate.
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We expanded the facility’s production space in the past fiscal year, and we currently believe the facility will meet our needs through the term of the lease. We hold no investments in real estate.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeStock Repurchase Program We did not repurchase any shares in fiscal 2024. We repurchased 264 shares in fiscal 2023. The Stock Repurchase Program may be modified or discontinued at any time without notice. 14 Table of Contents
Biggest changeStock Repurchase Program We did not repurchase any shares in fiscal 2025 or fiscal 2024. Our Stock Repurchase Program may be modified or discontinued at any time without notice. 14 Table of Contents
Securities Authorized for Issuance Under Equity Compensation Plans Information regarding our securities authorized for issuance under equity compensation plans will be included in the section “Equity Compensation Plan Information” of our Proxy Statement for our 2024 Annual Meeting of Shareholders and is incorporated by reference into Item 12 of this Report.
Securities Authorized for Issuance Under Equity Compensation Plans Information regarding our securities authorized for issuance under equity compensation plans will be included in the section “Equity Compensation Plan Information” of our Proxy Statement for our 2025 Annual Meeting of Shareholders and is incorporated by reference into Item 12 of this Report.
Our dividend policy is subject to change at any time, and future dividends will be subject to Board approval and subject to the company’s results of operations, cash and marketable security balances, our forecasts of future cash requirements, and other factors our Board may deem relevant. Shareholders We had 52 shareholders of record as of March 31, 2024.
Our dividend policy is subject to change at any time, and future dividends will be subject to Board approval and subject to the company’s results of operations, cash and marketable security balances, our forecasts of future cash requirements, and other factors our Board may deem relevant. Shareholders We had 49 shareholders of record as of March 31, 2025.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeNet deferred tax assets included $101,668 in deferred tax assets for stock-based compensation deductions as of March 31, 2024, and $71,734 as of March 31, 2023. 15 Table of Contents Results of Operations The following table summarizes the percentage of revenue and year-to-year changes for various items for the last two fiscal years: Percentage of Revenue Year Ended March 31, Year- to-Year 2024 2023 Change Revenue Product sales 98.0 % 97.2 % (21.4 )% Contract research and development 2.0 % 2.8 % (44.5 )% Total revenue 100.0 % 100.0 % (22.1 )% Cost of sales 22.7 % 21.1 % (16.0 )% Gross profit 77.3 % 78.9 % (23.7 )% Expenses Research and development 9.2 % 6.8 % 5.7 % Selling, general, and administrative 5.9 % 5.1 % (9.7 )% Credit loss expense 0.0 % - - Total expenses 15.1 % 11.9 % (0.8 )% Income from operations 62.2 % 67.0 % (27.8 )% Interest income 6.5 % 3.8 % 34.5 % Income before taxes 68.7 % 70.8 % (24.5 )% Provision for income taxes 11.2 % 11.5 % (24.0 )% Net income 57.5 % 59.3 % (24.5 )% Total revenue for fiscal 2024 decreased 22% compared to fiscal 2023 due to a 21% decrease in product sales and a 45% decrease in contract research and development revenue.
Biggest changeNet 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. 15 Table of Contents Results of Operations The following table summarizes the percentage of revenue and year-to-year changes for various items for the last two fiscal years: Percentage of Revenue Year Ended March 31, Year- to-Year 2025 2024 Change Revenue Product sales 95.2 % 98.0 % (15.7 )% Contract research and development 4.8 % 2.0 % 112.0 % Total revenue 100.0 % 100.0 % (13.2 )% Cost of sales 16.4 % 22.7 % (37.5 )% Gross profit 83.6 % 77.3 % (6.0 )% Expenses Research and development 14.1 % 9.2 % 33.1 % Selling, general, and administrative 7.7 % 5.9 % 13.4 % Credit loss expense - % 0.0 - Total expenses 21.8 % 15.1 % 25.1 % Income from operations 61.8 % 62.2 % (13.6 )% Interest income 7.4 % 6.5 % (2.0 )% Other income 0.5 % - % - Income before taxes 69.7 % 68.7 % (11.9 )% Provision for income taxes 11.5 % 11.2 % (11.0 )% Net income 58.2 % 57.5 % (12.0 )% Total revenue for fiscal 2025 decreased 13% compared to fiscal 2024 due to a 16% decrease in product sales, partially offset by a 112% increase in contract research and development revenue.
Our inventory reserve was $215,000 as of March 31, 2024 and March 31, 2023. Deferred Tax Assets Estimation 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 inventory reserve was $215,000 as of March 31, 2025 and March 31, 2024. Deferred Tax Assets Estimation 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.
In addition to cash dividends to shareholders paid in fiscal 2024, on May 1, 2024, we announced that our Board had declared a cash dividend of $1.00 per share of Common Stock, or $4,833,676 based on shares outstanding as of April 26, 2024, to be paid May 31, 2024.
In addition to cash dividends to shareholders paid in fiscal 2025, on May 7, 2025, 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, to be paid May 30, 2025.
Application of Critical Accounting Policies and Estimates In accordance with SEC guidance, those material accounting policies that we believe are the most critical to an investor’s understanding of our financial results and condition and require complex management judgment are discussed below. Investment Valuation Our investments consist primarily of corporate obligations.
Application of Critical Accounting Policies and Estimates In accordance with SEC guidance, those material accounting policies that we believe are the most critical to an investor’s understanding of our financial results and condition and require complex management judgment are discussed below. Marketable Securities Marketable securities consist of debt investments and are recorded at their estimated fair value.
We had $1,453,704 of net deferred tax assets as of March 31, 2024, and $572,038 as of March 31, 2023.
We had $1,867,069 of net deferred tax assets as of March 31, 2025 and $1,453,704 as of March 31, 2024.
The $8,613,654 increase in cash and cash equivalents was due to $18,247,411 of net cash provided by operating activities and $9,580,084 of net cash provided by investing activities, partially offset by $19,213,841 of net cash used in financing activities. 16 Table of Contents 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 fiscal 2024 and 2023.
The $2,246,986 decrease in cash and cash equivalents was due to $19,225,522 of net cash used in financing activities, partially offset by $14,310,418 of cash provided by operating activities and $2,668,118 of net cash provided by investing activities. 16 Table of Contents 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 fiscal 2025 and 2024.
Total expenses decreased 1% for fiscal 2024 compared to fiscal 2023 due to a 10% decrease in selling, general, and administrative expense, partially offset by a 6% increase in research and development expense. The increase in research and development expense was due to increased new product development activities.
The increase in research and development expense was due to increased new product development. The increase in selling, general, and administrative expenses was primarily due to increased sales and marketing activities. 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.
Liquidity and Capital Resources Overview Our liquidity and operating capital requirements are primarily for purchases of raw materials such as foundry wafers, purchases of packaging services, and the maintenance of work-in-process inventories. We maintain most of our marketable securities as long-term to maximize yield and fund future dividends.
Liquidity and Capital Resources Overview Our liquidity and operating capital requirements are primarily for purchases of raw materials such as foundry wafers, purchases of packaging services, and the maintenance of work-in-process inventories. Cash and cash equivalents were $8,036,564 as of March 31, 2025, compared to $10,283,550 as of March 31, 2024.
The decrease in product sales was primarily due to decreased purchases by existing customers due to the downturn in the semiconductor industry. The decrease in contract research and development revenue was due to fewer research and development contracts in fiscal 2024 compared to the prior year.
The decrease in product sales was primarily due to decreased purchases by existing customers. The increase in contract research and development revenue was due to new contracts in fiscal 2025. Gross profit as a percentage of revenue increased to 84% for fiscal 2025 from 77% for fiscal 2024.
Our lower effective tax rate was primarily due to Federal tax credits and deductions. The 25% decrease in net income for fiscal 2024 compared to the prior year was primarily due to decreased revenue, partially offset by decreased expenses and increased interest income.
Other income for fiscal 2025 was primarily from reclaiming precious metals used in our manufacturing process. The 12% decrease in net income for fiscal 2025 compared to the prior year was primarily due to decreased revenue and increased operating expenses, partially offset by increased gross profit margin.
Net cash provided by operating activities was $18,247,411 for fiscal 2024 compared to $19,091,498 for fiscal 2023. Accounts receivable decreased $3,368,997 during fiscal 2024 due to decreased revenue and the timing of customer payments. Inventory increased $741,575 during fiscal 2024 primarily due to our decision to increase raw material and finished goods inventories in anticipation of a semiconductor industry recovery.
Net cash provided by operating activities was $14,310,418 for fiscal 2025 compared to $18,247,411 for fiscal 2024. 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.
We are currently planning $4,000,000 to $5,000,000 of investments during fiscal years 2025 and 2026 to increase our production capacity and capabilities. 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.
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. Financing Activities Net cash used in financing activities in fiscal 2025 consisted of $19,339,684 of cash dividends paid to shareholders, partially offset by $114,162 in proceeds from the exercise of stock options.
Investing Activities Net cash provided by investing activities in fiscal 2024 consisted of $15,700,000 in proceeds from maturities of marketable securities, partially offset by $16,731 of fixed asset purchases and $6,103,185 of marketable securities purchases. Our capital expenditures can vary significantly from year to year depending on our needs, strategic goals, and equipment purchasing opportunities.
Investing Activities 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.
Removed
We have generally invested excess cash in high-quality investment-grade long-term marketable securities with less than five years to maturity.
Added
Debt securities are considered available for sale. Unrealized holding gains and losses on available-for-sale debt securities are excluded from earnings and are reported as a separate component of accumulated other comprehensive income until realized. The costs of available-for-sale debt marketable securities are determined by specific identification for purposes of computing unrealized and realized gains and losses.
Removed
We classify all of our marketable securities as available-for-sale, thus securities are recorded at fair value and any associated unrealized gain or loss, net of tax, is included as a separate component of shareholders’ equity, “Accumulated other comprehensive income.” If we judged a decline in fair value for any security to be other than temporary, the cost basis of the individual security would be written down and a charge recognized to net income.
Added
Available-for-sale debt marketable securities are classified as short-term or long-term on the balance sheet based on their maturity date or expectations regarding future sales. We evaluated the available-for-sale debt securities for impairment and available-for-sale debt securities in loss position for greater than twelve months during fiscal 2025 and 2024.
Removed
The fair values for our securities are determined based on quoted market prices as of the valuation date and observable prices for similar assets.
Added
We monitor our debt marketable securities to determine whether a loss exists related to the credit quality of the issuer.
Removed
We consider a number of factors in determining whether other-than-temporary impairment exists, including credit market conditions; the credit ratings of the securities; historical default rates for securities of comparable credit rating; the presence of insurance of the securities and, if insured, the credit rating and financial condition of the insurer; the effect of market interest rates on the value of the securities; and the duration and extent of any unrealized losses.
Added
If the present value of the cash flows expected to be collected from the security is less than the amortized cost basis of the security, then a credit loss exists and an allowance against the security for credit losses is recorded.
Removed
We also consider the likelihood that we will be required to sell the securities prior to maturity based on our financial condition and anticipated cash flows.
Added
The allowance is limited to the amount by which fair value is below amortized cost, recognizing that the investment could be sold at fair value. Credit losses continue to be remeasured in subsequent reporting periods. Credit losses and recoveries related to debt securities are included in other income (expenses) in the income statement.
Removed
If any of these conditions and estimates change in the future, or, if different estimates are used, the fair value of the investments may change significantly and could result in an other-than-temporary decline in value, which could have an adverse impact on our results of operations. Inventory Valuation Inventories are stated at the lower of cost or net realizable value.
Added
When developing an estimate of expected credit losses, we consider all relevant information including, historical experience, current conditions and reasonable forecast of expected future cash flows. There were no credit losses and recoveries during fiscal 2025 or 2024. Inventory Valuation Inventories are stated at the lower of cost or net realizable value.
Removed
Gross profit as a percentage of revenue decreased to 77% for fiscal 2024 from 79% for fiscal 2023. The decrease was due to increases in material, labor, and production overhead costs.
Added
The increase in gross margin percentage was due to a more profitable product mix and a larger portion of direct rather than distributor sales. Total expenses increased 25% for fiscal 2025 compared to fiscal 2024 due to a 33% increase in research and development expense and a 13% increase in selling, general, and administrative expense.
Removed
The decrease in selling, general, and administrative expense was primarily due to decreased performance-based accruals. Interest income for fiscal 2024 increased 35% due to increased yields on marketable securities purchased in fiscal 2024. Our effective tax rate was 16% for fiscal 2024 and fiscal 2023 compared to the statutory tax rate of 21%.
Added
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 decreased $255,935 primarily due to the differences in Federal and State taxes compared to estimated taxes paid.
Removed
Cash and cash equivalents were $10,283,550 as of March 31, 2024, compared to $1,669,896 as of March 31, 2023.
Added
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.
Removed
This will enable us to quickly respond to sales opportunities and to mitigate supply-chain risks. Accounts payables and accrued expenses decreased $964,152 during fiscal 2024 due to decreased performance-based accrual and the timing of purchases and vendor payments.
Removed
Financing Activities Net cash used in financing activities in fiscal 2024 consisted of $19,331,304 of cash dividends paid to shareholders, partially offset by $117,463 in proceeds from the exercise of stock options.
Removed
Labor Practices In the past fiscal year, we significantly increased average pay to attract, retain, and motivate top-performing employees despite a tight labor market. These increased compensation costs are allocated to cost of sales and expenses in our income statements.

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