10QSB 1 tenq.txt QUARTERLY REPORT 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, 2000 [ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act. NVE Corporation --------------- (Exact name of registrant as specified in its charter) Minnesota ---------- (State or other jurisdiction of incorporation) 0-12196 41-1424202 -------------------------------- ------------------------ Commission File Number I.R.S. Employer Identification number 11409 Valley View Road, Eden Prairie, Minnesota 55344 ----------------------------------------------- ---------- (Address of principal executive offices) (Zip code) Issuer's telephone number, including area code: (952) 829-9217 -------------- PREMIS Corporation 13220 County Road 6, Plymouth, Minnesota 55441 ---------------------------------------------- (Former name or former address, if changed since last report) 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 - 16,919,128 shares outstanding as of December 31, 2000. PART I - FINANCIAL INFORMATION ITEM 1. - FINANCIAL STATEMENTS NVE CORPORATION (A Development Stage Company) CONDENSED BALANCE SHEET DECEMBER 31, 2000 ASSETS Current assets: Cash $2,080,473 Grants and contracts receivable 1,370,885 Inventories 1,038,632 Prepaid expenses and other assets 111,876 ------------------- Total current assets 4,601,866 Fixed assets: Machinery and equipment 1,333,384 Furniture and fixtures 35,499 Leasehold improvements 352,640 Construction in progress 91,121 ------------------- 1,812,644 Less accumulated depreciation 1,287,640 ------------------- Total fixed assets 525,004 ------------------- Total 5,126,870 =================== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Note payable $ 288,296 Accounts payable 381,776 Accrued expenses 157,751 Deferred revenue 1,221,185 Billings in excess of costs on research 110,061 ------------------- Total current liabilities 2,159,069 Shareholders' equity: Common Stock 169,191 Accumulated paid-in capital 5,652,024 Accumulated Deficit (2,853,414) ------------------- Total shareholders' equity 2,967,801 ------------------- Total liabilities and shareholders' $5,126,870 ===================
SEE ACCOMPANYING NOTES. NVE CORPORATION (A Development Stage Company) CONDENSED STATEMENT OF OPERATIONS
THREE-MONTHS ENDED NINE MONTHS ENDED DECEMBER 31 DECEMBER 31 ProForma ProForma ProForma 2000 1999 2000 1999 ----------------------------------------------------------------------- Revenues: Research and development $1,061,777 $1,259,073 $3,248,854 $3,884,292 Product sales 169,416 128,746 78,555 227,641 License fees 1,431,250 - 1,793,750 400,000 ----------------------------------------------------------------------- Total revenues 2,662,443 1,387,819 5,521,159 4,511,933 Expenses: Research and development 1,197,348 1,331,023 3,634,758 3,849,665 Cost of sales 206,246 53,328 392,714 131,937 Selling, general and Administrative 378,619 198,112 870,185 824,152 ----------------------------------------------------------------------- Total expenses 1,782,213 1,582,363 4,897,657 4,805,754 ----------------------------------------------------------------------- Income (loss) from operations 880,230 (194,544) 623,502 (293,821) Royalty expense (9,913) - (9,913) - Interest income 13,481 4,066 24,749 10,576 Interest expense (7,123) (18,808) (23,528) (35,977) Other income 6,216 - 12,931 796 ----------------------------------------------------------------------- Net income (loss) $ 882,891 $ (209,286) $ 627,741 $ (318,426) ======================================================================= Net income (loss) per share, basic and diluted $ .05 $ (.01) $ .03 $ (.02) Weighted average shares outstanding - basic 16,891,893 15,928,239 16,830,403 15,883,346 diluted 18,501,060 15,928,239 18,439,570 15,883,346
SEE ACCOMPANYING NOTES. NVE CORPORATION (A Development Stage Company) CONDENSED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED DECEMBER 31 Pro-Forma Pro-Forma 2000 1999 ------------------------------------ OPERATING ACTIVITIES Net income (loss) $ 627,741 $(318,426) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 187,446 182,127 Changes in operating assets and liabilities: Grants and contracts receivable (412,727) (103,542) Inventories (454,656) (40,129) Prepaid expenses and other (30,249) (9,996) Accounts payable and accrued expenses 195,530 12,322 Deferred revenue 680,095 - Billings in excess of costs on research contracts 40,495 157,451 ------------------------------------ Net cash provided by operating activities 833,675 120,193 INVESTING ACTIVITIES Purchases of fixed assets (117,479) (222,281) ------------------------------------ Net cash used in investing activities (117,479) (222,281) FINANCING ACTIVITIES Net proceeds from sale of common stock 275 253,200 Net proceeds from sale of common stock in conjunction with merger 996,579 - Net proceeds from (repayment of) note payable (15,607) (32,112) ------------------------------------ Net cash provided by financing activities 981,247 221,088 ------------------------------------ Increase in cash 1,697,443 (121,387) Cash at beginning of period 383,031 685,015 ------------------------------------ Cash at end of period $2,080,473 $ 563,628 ====================================
SEE ACCOMPANYING NOTES. NVE CORPORATION (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS December 31, 2000 1. INTERIM FINANCIAL INFORMATIONT The accompanying unaudited condensed financial statements of NVE Corporation (the "Company") are consistent with generally accepted principles for financial 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 the Company believes that the disclosures are adequate to make the information presented not misleading, it is suggested that that these condensed financial statements be read in conjunction with the audited financial statements and the notes there to included in the company's latest annual financial statements included in the February 2, 2001 Form 8-K/A. The results of operations for the nine-month period ended December 31, 2000 are not necessarily indicative of the results that may be expected for the full year ending March 31, 2001. Merger On November 21, 2000, Nonvolatile Electronics, Incorporated (NVE) merged with NVE Corporation (f/k/a Premis Corporation). The merger has been accounted for using the reverse purchase method of accounting. As the Company issued shares of common stock of NVE Corporation in exchange for outstanding shares of common stock of Merged NVE, the pre-merger shareholders of the Company retain approximately 6% of the outstanding shares of common stock of the Company. In applying generally accepted accounting principles ("GAAP"), the merger was accounted for as a reverse acquisition by Merged NVE. Under GAAP, the merger is deemed to be equivalent, for accounting purposes, to Merged NVE's issuance of its capital stock in exchange for the fair market value of the assets and liabilities of the Company. As a result, no goodwill will be recorded, and the assets of Merged NVE will continue to be recorded at their historic values. Pro Forma Financial Statements These pro forma financial statements are presented as a combination of the respective statements of Nonvolatile Electronics, Incorporated (NVE) and NVE Corporation (f/k/a Premis Corporation) for the periods shown, and have been prepared pursuant to the rules of the SEC and, therefore, do not include all information and notes required by generally accepted accounting principles for complete financial statements. The pro forma financial statements and related notes are not necessarily indicative of the statements of operations that would have been reported had the merger of NVE Corporation occurred on the dates indicated. The following tables set forth the unaudited pro forma financial information of the Company (the "Pro Forma Financial Statements"), which consist of: (i) the unaudited pro forma statement of operations of the Company for the quarter ended December 31, 1999 giving effect to the merger of NVE Corporation as if such transaction had occurred on April 1, 1999, and (ii) the unaudited pro forma statements of operations of the Company for the nine months ended December 31, 2000 and 1999 giving effect to the merger of NVE Corporation as if such transaction had occurred on April 1, 1999. NVE CORPORATION UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED DECEMBER 31, 1999
NONVOLATILE NVE CORPORATION ELECTRONICS (F/N/A PREMIS INC. (NVE) CORPORATION) ADJUSTMENTS PRO FORMA ------------------------------------------------------------------- ----------------- Revenues Research and development 3,884,292 - - 3,884,292 Product sales 227,641 - - 227,641 License fees 400,000 - - 400,000 Systems - 3,199,000 (3,199,000) (1) - Maintenance fees and other revenue - 559,000 (559,000) (1) - ------------------------------------------------------------------- ----------------- 4,511,993 3,758,000 (3,758,000) 4,511,993 Expenses Research and development 3,849,665 - - 3,849,665 Cost of sales 131,937 124,000 (124,000) (1) 131,937 Selling, general & administrative 824,152 292,000 (292,000) (1) 824,152 ------------------------------------------------------------------- ----------------- Total expenses 4,805,754 416,000 (416,000) 4,805,754 ------------------------------------------------------------------- ----------------- Income (loss) from operations (293,821) 3,342,000 (3,342,000) (293,821) Royalty expense - - - - Interest income 10,576 116,000 (116,000) (1) 10,576 Investment in capital loss - (3,732,000) 3,732,000 (1) - Interest expense (35,977) - - (35,977) Other 796 257,000 (257,000) (1) 796 ------------------------------------------------------------------- ----------------- Net (loss) income before taxes (318,426) (17,000) 17,000 (318,426) Income taxes expense (benefit) - 244,000 (244,000) (1) - -------------------------------------------------------------------- ----------------- Net (loss) income (318,426) (261,000) 261,000 (318,426) =====================================================================================
NVE CORPORATION UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED DECEMBER 31, 2000
NONVOLATILE NVE CORPORATION ELECTRONICS (F/N/A PREMIS INC. (NVE) CORPORATION) ADJUSTMENTS PRO FORMA ------------------------------------------------------------------- ----------------- Revenues Research and development 3,248,854 - - 3,248,854 Product sales 478,555 - - 478,555 License fees 1,793,750 - - 1,793,750 Systems - - - - Maintenance fees and other revenue - 116,000 (116,000) (1) - ------------------------------------------------------------------- ----------------- 5,521,159 116,000 (116,000) 5,521,159 Expenses Research and development 3,634,758 95,000 (95,000) (1) 3,634,758 Cost of sales 392,714 61,000 (61,000) (1) 392,714 Selling, general & administrative 870,185 - - 870,185 ------------------------------------------------------------------- ----------------- Total expenses 4,897,657 156,000 (156,000) 4,897,657 ------------------------------------------------------------------- ----------------- Income (loss) from operations 623,502 (40,000) 40,000 623,502 Royalty expense (9,913) - - (9,913) Interest income 24,749 22,000 (22,000) 24,749 Investment in capital loss (23,528) - - (23,528) Interest expense 12,931 - - 12,931 Other - 6,000 (6,000) (1) - ------------------------------------------------------------------- ----------------- Net income (loss) before taxes 627,741 (12,000) 12,000 627,741 Income taxes expense (benefit) - - - - -------------------------------------------------------------------- ----------------- Net (loss) income 627,741 (12,000) 12,000 627,741 =====================================================================================
NVE CORPORATION UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 1999
NONVOLATILE NVE CORPORATION ELECTRONICS (F/N/A PREMIS INC. (NVE) CORPORATION) ADJUSTMENTS PRO FORMA ------------------------------------------------------------------- ----------------- Revenues Research and development 1,259,073 - - 1,259,073 Product sales 128,746 - - 128,746 License fees - - - - Systems - - - - Maintenance fees and other revenue - 55,000 (55,000) (1) - ------------------------------------------------------------------- ----------------- 1,387,819 55,000 (55,000) 1,387,819 Expenses Research and development 1,331,023 - - 1,331,023 Cost of sales 53,328 52,000 (52,000) (1) 53,328 Selling, general & administrative 198,112 30,000 (30,000) (1) 198,112 ------------------------------------------------------------------- ----------------- Total expenses 1,582,463 82,000 (82,000) 1,582,463 ------------------------------------------------------------------- ----------------- (Loss) income from operations (194,664) (27,000) 27,000 (194,664) Royalty expense - - - - Interest income 4,066 62,000 (62,000) (1) 4,066 Investment in capital loss (18,808) (3,732,000) 3,732,000 (1) (18,808) Interest expense - - - - Other - 238,000 (238,000) (1) - ------------------------------------------------------------------- ----------------- Net (loss) income before taxes (209,386) (3,459,000) 3,459,000 (209,386) Income taxes expense (benefit) - (50,000) 50,000 (1) - -------------------------------------------------------------------- ----------------- Net (loss) income (209,386) (3,409,000) 3,409,000 (209,386) =====================================================================================
Adjustment notes to unaudited pro forma financial statements: 1) Reflects the elimination of discontinued operations of NVE Corporation prior to the merger. Earnings Per Share The Company calculates its 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 years because these securities would be anti-dilutive. All per share amounts have been restated, based on the same conversion resulting from the merger. Sublicense Agreement The Company's former president, James Daughton, upon founding the Company, obtained a Technology License Agreement with Honeywell International (the "Agreement"). The Agreement, which has been sublicensed to the Company, allows the use and sublicense of certain property dealing with MRAM technology in markets which are not central to the present or presently intended business markets of Honeywell International, the developer of the technology. In December 2000, the Company and Honeywell International entered into a new Agreement under which the Company gave up the right to further sublicense Honeywell MRAM technology from this date forward in exchange for a lump sum payment of $1.25 million. Under this Agreement, the Company retains the right to access and use the Honeywell MRAM technology for product development. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS RESULTS OF OPERATIONS FOR THE THREE AND NINE-MONTHS ENDED DECEMBER 31, 2000. Revenues for the three and nine months ended December 31, 2000 were $2,662,443 and $5,521,159 respectively, which represent a increase of 92% and 22%, respectively, from revenues of $1,387,819 and $4,511,933 in the corresponding period of the prior year. The increases in revenue were due primarily to increased license revenue and product sales. License revenue increased to $1,793,750 in the nine months from $400,000 primarily as the result of the agreement with Honeywell International which resulted in a payment of $1,250,000. Product sales increased in the three months by 32% to $169,416 from $128,746 and by 102% for the nine months to $478,555 from $227,641 in the prior year. Research and Development revenue decreased by 16% and 16% respectively in the three and nine months as several large programs were completed in the current year. Expenses increased by 13% and 2% respectively to $1,782,213 and $4,897,657 in the three and nine months from $1,582,363 and $4,805,754 in the same periods of the prior year. Research and development expenses decreased by 11% and 6% to $1,197,348 and $3,634,758 in the three and nine months from $1,331,023 and $3,849,665 primarily as a result of the completion of the Department of Commerce Advanced Technology Program (ATP) which partially funded isolator development. The program required matching funds from the Company. Costs of sales for products increased by 287% and 198% in the three and nine months and were the result of significant increases in product revenues and the startup of isolator product sales in the second quarter of the year. Selling, general and administrative expenses increased by 91% and 6% in the three and nine months to $378,619 and $870,185 from $198,112 and $824,152 in the prior year. The three and nine months include increases in legal fees and professional fees dealing with the merger, licensing activities and patent expenses. Net income of $882,891 and $627,741 for the three and nine months are compared to losses of ($209,286) and ($318,426)for the prior year. New research and development programs in the third quarter of the fiscal year will not require matching funds similar to the ATP investments. Growth in license revenue in the third quarter from the Honeywell Agreement produced an operating profit for the full nine months, offsetting the investments in isolator product introductions made in the nine months ended December 31, 2000. LIQUIDITY AND CAPITAL RESOURCES The Company had cash on December 31, 2000 of $2,080,473 compared with $563,628 on December 31, 1999. The increase in cash is primarily due to the collection of receivables from government contracts, receipt of license payments and cash received in the merger. Management believes working capital is adequate for its current needs. PART II--OTHER INFORMATION Item #6 Exhibits and Reports of Form 8-K a. Exhibits None. b. Reports on Form 8-K A report on Form 8-K was filed December 6, 2000 and amended February 2, 2001. That report is hereby incorporated by reference. NVE CORPORATION (A Development Stage Company) SIGNATURES In accordance with the requirement of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NVE CORPORATION Registrant Date: February 13, 2001 /s/ RICHARD GEORGE ________________________ Richard George CHIEF FINANCIAL OFFICER (Principal Financial Officer) Date: February 13, 2001 /s/ DANIEL A. BAKER ________________________ Daniel A. Baker PRESIDENT AND CHIEF EXECUTIVE OFFICER (Principal Executive Officer)