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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0000724910-06-000011.txt : 20060719
<SEC-HEADER>0000724910-06-000011.hdr.sgml : 20060719
<ACCEPTANCE-DATETIME>20060719161627
ACCESSION NUMBER:		0000724910-06-000011
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20060630
FILED AS OF DATE:		20060719
DATE AS OF CHANGE:		20060719

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NVE CORP /NEW/
		CENTRAL INDEX KEY:			0000724910
		STANDARD INDUSTRIAL CLASSIFICATION:	SEMICONDUCTORS & RELATED DEVICES [3674]
		IRS NUMBER:				411424202
		STATE OF INCORPORATION:			MN
		FISCAL YEAR END:			0331

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-12196
		FILM NUMBER:		06969592

	BUSINESS ADDRESS:	
		STREET 1:		11409 VALLEY VIEW ROAD
		CITY:			EDEN PRAIRIE
		STATE:			MN
		ZIP:			55344
		BUSINESS PHONE:		9528299217

	MAIL ADDRESS:	
		STREET 1:		11409 VALLEY VIEW ROAD
		CITY:			EDEN PRAIRIE
		STATE:			MN
		ZIP:			55344

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PREMIS CORP
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>q1q07.htm
<TEXT>
<html>
<p align="center"> <font face="Times New Roman, Times, serif" size="5"><b>UNITED STATES<br>
  SECURITIES AND EXCHANGE COMMISSION</b></font><b><font face="Times New Roman, Times, serif" size="2"><br>
  Washington, D.C. &nbsp;&nbsp;20549</font></b></p>
<p align="center"><b><font face="Times New Roman, Times, serif" size="2"> <font size="5">FORM
  10-Q</font></font></b></p>
<p align="left"><font face="Times New Roman, Times, serif" size="1">(Mark One)<br>
  </font><font face="Times New Roman, Times, serif" size="2">[X] QUARTERLY REPORT
  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934<br>
  For the quarterly period ended &nbsp;&nbsp;<b><u>June 30, 2006</u></b></font></p>
<p align="center"><font face="Times New Roman, Times, serif" size="2">or</font></p>
<p align="left"><font face="Times New Roman, Times, serif" size="2">[&nbsp;&nbsp;]
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
  ACT OF 1934<br>
  For the transition period from <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>to&nbsp;<u>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u><br>
  <br>
  Commission File Number: <b><u>000-12196</u></b></font></p>
<div align="center"><font face="Times New Roman, Times, serif" size="5"> <b><u>NVE
  Corporation</u></b></font><font face="Times New Roman, Times, serif" size="2"><br>
  (Exact name of registrant as specified in its charter)</font><font face="Times New Roman, Times, serif" size="2"></font></div>
<font face="Times New Roman, Times, serif" size="2">
<div align="center">
  <p>&nbsp;</p>
</div>
</font>
<div align="center"></div>
<table border="0" cellspacing="0" cellpadding="0" width="100%">
  <tr>
    <td width="33%">
      <p align="center"><font face="Times New Roman, Times, serif" size="2"><b><u>Minnesota</u></b></font></p>
    </td>
    <td width="33%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">
        &nbsp;</font></div>
    </td>
    <td>
      <p align="center"><font face="Times New Roman, Times, serif" size="2"><b><u>41-1424202</u></b></font></p>
    </td>
  </tr>
  <tr>
    <td width="33%">
      <p align="center"><font face="Times New Roman, Times, serif" size="2">(State
        or other jurisdiction of incorporation or organization)</font></p>
    </td>
    <td width="33%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></div>
    </td>
    <td>
      <div align="center"><font size="2" face="Times New Roman, Times, serif">(IRS
        Employer Identification No.)</font></div>
    </td>
  </tr>
  <tr>
    <td width="33%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></div>
    </td>
    <td width="33%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">
        &nbsp;</font></div>
    </td>
    <td>
      <div align="center"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></div>
    </td>
  </tr>
  <tr>
    <td width="33%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif"><b><u>11409
        Valley View Road, Eden Prairie, Minnesota</u></b></font></div>
    </td>
    <td width="33%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></div>
    </td>
    <td>
      <p align="center"><font size="2" face="Times New Roman, Times, serif"><b><u>55344</u></b></font></p>
    </td>
  </tr>
  <tr>
    <td width="33%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">(Address
        of principal executive offices)</font></div>
    </td>
    <td width="33%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">
        &nbsp;</font></div>
    </td>
    <td>
      <p align="center"><font size="2" face="Times New Roman, Times, serif">(Zip
        Code)</font></p>
    </td>
  </tr>
  <tr>
    <td width="33%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></div>
    </td>
    <td width="33%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">
        &nbsp;</font></div>
    </td>
    <td>
      <div align="center"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></div>
    </td>
  </tr>
  <tr>
    <td width="33%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></div>
    </td>
    <td width="33%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2"><b><u>(952)
        829-9217</u></b></font></div>
    </td>
    <td>
      <div align="center"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></div>
    </td>
  </tr>
  <tr>
    <td width="33%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></div>
    </td>
    <td width="33%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">Registrant&#146;s
        telephone number, including area code<b>&nbsp;</b></font></div>
    </td>
    <td>
      <div align="center"><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></div>
    </td>
  </tr>
</table>
<p><font size="2" face="Times New Roman, Times, serif"><br>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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. &nbsp;[X]&nbsp;Yes
  &nbsp;[&nbsp;&nbsp;]&nbsp;No</font></p>
<p><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  Indicate by check mark whether the registrant is a large accelerated filer,
  an accelerated filer, or a non-accelerated filer. See definition of &#147;accelerated
  filer and large accelerated filer&#148; in Rule 12b-2 of the Exchange Act. (Check
  one): </font>
<table border="0" cellspacing="0" cellpadding="0" width="100%">
  <tr>
    <td width="33%">
      <p align="center"><font face="Times New Roman, Times, serif" size="2">Large
        accelerated filer&nbsp;[&nbsp;&nbsp;]</font></p>
    </td>
    <td width="33%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">Accelerated
        filer&nbsp;[&nbsp;&nbsp;]</font></div>
    </td>
    <td>
      <div align="center"><font face="Times New Roman, Times, serif" size="2">Non-accelerated
        filer&nbsp;[X]</font></div>
    </td>
  </tr>
</table>
<p><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark
  whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
  Act).&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[&nbsp;&nbsp;]&nbsp;Yes &nbsp;[X]&nbsp;No</font></p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate
  the number of shares outstanding of each of the issuer's classes of common stock,
  as of the latest practicable date.<br>
  <b>Common Stock, $0.01 Par Value - 4,616,703 shares outstanding as of July 15,
  2006</b></font></p>
<hr> <br clear="all" style="page-break-before:always;">
<div align="center"><b>
  <font face="Times New Roman, Times, serif" size="2">PART I--FINANCIAL INFORMATION</font></b>
</div>
<p><font face="Times New Roman, Times, serif" size="2"><b>Item 1. Financial Statements</b>.</font><br>
</p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>
      <PRE><b>                                NVE CORPORATION
                                BALANCE SHEETS
                       JUNE 30, 2006 AND MARCH 31, 2006

                                                (Unaudited)
                                               June 30, 2006    March 31, 2006*
                                               --------------   --------------
</b>ASSETS
Current assets
  Cash and cash equivalents                    $   1,737,112    $   1,288,362
  Short-term investments                             749,295        1,248,103
  Accounts receivable, net of allowance for
    uncollectible accounts of $15,000              1,919,778        1,667,029
  Inventories                                      2,103,995        2,149,769
  Deferred tax assets                              1,593,096        1,576,472
  Prepaid expenses and other assets                  257,056          231,412
                                               --------------   --------------
Total current assets                               8,360,332        8,161,147
Fixed assets
  Machinery and equipment                          4,206,334        4,149,080
  Leasehold improvements                             413,482          413,482
                                               --------------   --------------
                                                   4,619,816        4,562,562
  Less accumulated depreciation                    3,443,755        3,319,651
                                               --------------   --------------
Net fixed assets                                   1,176,061        1,242,911
Long-term investments                              9,302,799        8,354,861
                                               --------------   --------------
Total assets                                   $  18,839,192    $  17,758,919
                                               ==============   ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
  Accounts payable                             $     287,593    $     399,762
  Accrued payroll and other                          431,779          470,392
  Deferred revenue                                     4,863           77,373
  Capital lease obligations                             -              33,281
                                               --------------   --------------
Total current liabilities                            724,235          980,808

Shareholders' equity
  Common stock                                        46,167           46,150
  Additional paid-in capital                      16,519,930       16,042,637
  Accumulated other comprehensive loss              (199,178)        (166,908)
  Retained earnings                                1,748,038          856,232
                                               --------------   --------------
Total shareholders' equity                        18,114,957       16,778,111
                                               --------------   --------------
Total liabilities and shareholders' equity     $  18,839,192    $  17,758,919
                                               ==============   ==============

*The March 31, 2006 Balance Sheet is from the audited financial statements
 contained in our Annual Report on Form 10-K for the year ended March 31, 2006.

                            See accompanying notes.
</PRE>
    </td>
  </tr>
</table>
<hr> <br clear="all" style="page-break-before:always;">
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>
      <PRE><b>                                NVE CORPORATION
                             STATEMENTS OF INCOME
                     QUARTERS ENDED JUNE 30, 2006 AND 2005
                                  (Unaudited)

                                               Quarter Ended June 30
                                                2006           2005
                                            ------------   ------------
</b>Revenue
  Product sales                             $ 3,053,328    $ 1,784,250
  Contract research and development             581,867      1,241,298
                                            ------------   ------------
Total revenue                                 3,635,195      3,025,548

Cost of sales                                 1,399,821      1,681,118
                                            ------------   ------------
Gross profit                                  2,235,374      1,344,430

Expenses
  Research and development                      530,612        376,800
  Selling, general, and administrative          406,732        409,594
                                            ------------   ------------
Total expenses                                  937,344        786,394
                                            ------------   ------------

Income from operations                        1,298,030        558,036

Interest income                                 111,906         68,319
Interest expense                                   (589)        (2,053)
Other income                                       -            30,815
                                            ------------   ------------
Income before taxes                           1,409,347        655,117

Provision for income taxes                      517,541        242,468
                                            ------------   ------------
Net income                                  $   891,806    $   412,649
                                            ============   ============

Net income per share - basic                $      0.19    $      0.09
                                            ============   ============
Net income per share - diluted              $      0.19    $      0.09
                                            ============   ============

Weighted average shares outstanding
  Basic                                       4,616,588      4,569,861
  Diluted                                     4,693,075      4,683,151


                            See accompanying notes.
</PRE>
    </td>
  </tr>
</table>
<hr> <br clear="all" style="page-break-before:always;">
<table width="102%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>
      <PRE><b>                                NVE CORPORATION
                           STATEMENTS OF CASH FLOWS
                      QUARTERS ENDED JUNE 30, 2006 AND 2005
                                  (Unaudited)

                                                       Quarter Ended June 30
                                                        2006           2005
                                                    ------------   ------------
</b>OPERATING ACTIVITIES
Net income                                          $   891,806    $   412,649
Adjustments to reconcile net income to net
  cash provided by operating activities:
    Depreciation and amortization                       126,080        143,142
    Gain on sale of fixed assets                           -           (25,500)
    Stock-based compensation                              2,569           -
    Excess tax benefits                                (446,187)          -
    Deferred income taxes                               473,241        240,468
    Changes in operating assets and liabilities:
      Accounts receivable                              (252,749)        77,752
      Inventories                                        45,774        (87,399)
      Prepaid expenses and other assets                 (25,644)          (117)
      Accounts payable and accrued expenses            (150,782)         1,130
      Deferred revenue                                  (72,510)       (47,441)
                                                    ------------   ------------
Net cash provided by operating activities               591,598        714,684

INVESTING ACTIVITIES
Proceeds from the sale of fixed assets                     -            25,500
Purchases of fixed assets                               (57,254)          -
Maturities of investment securities                     500,000           -
Purchases of investment securities                   (1,000,000)      (504,063)
                                                    ------------   ------------
Net cash used in investing activities                  (557,254)      (478,563)

FINANCING ACTIVITIES
Net proceeds from sale of common stock                    1,500          2,594
Excess tax benefits                                     446,187           -
Repayment of capital lease obligations                  (33,281)       (16,319)
                                                    ------------   ------------
Net cash provided by (used in) financing activities     414,406        (13,725)
                                                    ------------   ------------

Increase in cash and cash equivalents                   448,750        222,396
Cash and cash equivalents at beginning of period      1,288,362      1,240,205
                                                    ------------   ------------

Cash and cash equivalents at end of period          $ 1,737,112    $ 1,462,601
                                                    ============   ============

Supplemental disclosures of cash flow information:
    Cash paid during the period for:
      Interest                                      $       589    $     2,053
      Income taxes                                  $    44,300    $     2,000


                            See accompanying notes.
</PRE>
    </td>
  </tr>
</table>
<hr> <br clear="all" style="page-break-before:always;">
<font size="2" face="Times New Roman, Times, serif">
</font>
<div align="center"><font size="2" face="Times New Roman, Times, serif"><b>NVE
  CORPORATION<br>
  NOTES TO FINANCIAL STATEMENTS<br>
  JUNE 30, 2006<br>
  (Unaudited)</b> </font></div>
<p>
<p><font face="Times New Roman, Times, serif" size="2"><b>NOTE 1. NATURE OF BUSINESS</b>
  </font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
  develop, manufacture, and sell "spintronics" devices, a nanotechnology which
  relies on electron spin rather than electron charge to acquire, store, and transmit
  information. </font>
<p><p>
<p><font face="Times New Roman, Times, serif" size="2"><br><b>NOTE 2. INTERIM FINANCIAL
  INFORMATION</b> </font>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
  accompanying unaudited financial statements of NVE Corporation are consistent
  with accounting principles generally accepted in the United States and reporting
  with Securities and Exchange Commission rules and 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
  unaudited financial statements be read in conjunction with the audited financial
  statements and the notes included in our latest annual financial statements
  included in our Annual Report on Form 10-K for the fiscal year ended March 31,
  2006. The results of operations for the quarter ended June 30, 2006 are not
  necessarily indicative of the results that may be expected for the full fiscal
  year ending March 31, 2007. </font>
<p>
<p>
<p><font face="Times New Roman, Times, serif" size="2"><b><br>
  NOTE 3. INVESTMENTS</b> </font>
<p>
<p> <font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
  classify and account for debt and equity securities in accordance with Statement
  of Financial Accounting Standards (SFAS) No. 115, <i>Accounting for Certain
  Investments in Debt and Equity Securities</i>. Securities with original maturities
  greater than three months and remaining maturities less than one year are classified
  as short-term investments; securities with remaining maturities greater than
  one year are classified as long-term investments. </font>
<p>
<p> <font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
  entire portfolio of short-term and long-term investments consists of government-
  and corporate-backed notes and bonds, and 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." </font>
<p>
<p>
<p><font face="Times New Roman, Times, serif" size="2"><br>
  <b> NOTE 4. COMPREHENSIVE INCOME</b> </font>
<p>
<p> <font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
  components of comprehensive income are as follows: <br>
  </font><font face="Times New Roman, Times, serif" size="2"><br>
  </font>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>
      <PRE><b>
                                               Quarter Ended June 30
                                               2006             2005
                                           ------------     ------------
</b>Net income                                 $   891,806      $   412,649
Unrealized (loss) gain from investments        (32,270)          79,194
                                           ------------     ------------
Comprehensive income                       $   859,536      $   491,843
                                           ============     ============
</PRE>
    </td>
  </tr>
</table>
<font face="Times New Roman, Times, serif" size="2"><b><br>
</b> </font>
<hr> <br clear="all" style="page-break-before:always;">
<font face="Times New Roman, Times, serif" size="2">
<b>NOTE 5. INVENTORIES</b> </font>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories
  consisted of the following: <br>
  <br>
  </font>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>
      <PRE><b>                                      June 30       March 31
                                       2006           2006
                                   ------------   ------------
</b>       Raw materials               $   640,035    $   703,407
       Work-in-process                 940,455        740,578
       Finished goods                  728,505        850,784
                                   ------------   ------------
                                     2,308,995      2,294,769
       Less obsolescence reserve      (205,000)      (145,000)
                                   ------------   ------------
                                   $ 2,103,995    $ 2,149,769
                                   ============   ============
</PRE>
    </td>
  </tr>
</table>
<font face="Times New Roman, Times, serif" size="2"><br>
<b> NOTE 6. STOCK-BASED COMPENSATION </b> </font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective
  April 1, 2006 we adopted the provisions of, and accounts for stock-based compensation
  in accordance with, Financial Accounting Standards Board (FASB) Statement of
  Financial Accounting Standards (SFAS) No.&nbsp;123 (revised 2004), <i>Share-Based
  Payment</i>, which replaced SFAS No.&nbsp;123, <i>Accounting for Stock-Based
  Compensation</i> and supersedes Accounting Principles Board (APB) Opinion No.&nbsp;25,
  <i>Accounting for Stock Issued to Employees</i>. Under the fair value recognition
  provisions of SFAS No.&nbsp;123(R), we measure stock-based compensation cost
  at the grant date based on the fair value of the award and recognize the compensation
  expense over the requisite service period, which is generally the vesting period.
  We elected the modified-prospective method of adopting SFAS No.&nbsp;123(R),
  under which prior periods are not retroactively revised. The valuation provisions
  of SFAS No. 123(R) apply to awards granted after the April 1, 2006 effective
  date. Stock-based compensation expense for awards that were granted prior to
  the effective date but remain unvested on the effective date is being recognized
  over the remaining service period using the compensation cost estimated for
  our SFAS No.&nbsp;123 pro forma disclosures. The effect of our adoption of SFAS
  No.&nbsp;123(R) on our basic and diluted earning per share was less than $0.01
  for the quarter ended June 30, 2006. </font>
<p>
<p><font face="Times New Roman, Times, serif" size="2"><b><br>
  Stock Option Plan</b> </font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
  2000 Stock Option Plan, as amended, provides for issuance to employees, directors,
  and certain service providers of incentive stock options and nonstatutory stock
  options. Generally, the options may be exercised at any time prior to expiration,
  subject to vesting based on terms of employment. The period ranges from immediate
  vesting to vesting over a five-year period. The options have exercisable lives
  ranging from one year to ten years from the date of grant, and are generally
  not eligible to vest early in the event of retirement, death, disability, or
  change in control. Exercise prices are not less than fair market value of the
  underlying Common Stock at the date the options are granted.</font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
  March 28, 2005, in anticipation of the impact of SFAS No.&nbsp;123(R), the Compensation
  Committee of our Board of Directors approved an immediate and full acceleration
  of vesting of all stock options outstanding under our Stock Option Plan with
  an exercise price greater than $20 per share. As a result of the acceleration,
  out-of-the-money options to purchase 42,125 shares of our Common Stock became
  immediately exercisable as of March 28, 2005.</font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
  January 1, 2006 we terminated our Employee Stock Purchase Plan in anticipation
  of SFAS No.&nbsp;123(R), which we believed otherwise would have required recognizing
  expenses associated with the issuance of shares under SFAS No.&nbsp;123(R).</font>
<p>
<hr> <br clear="all" style="page-break-before:always;">
<font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
  did not grant any stock options during the quarters ended June&nbsp;30, 2006
  or 2005. As of June&nbsp;30, 2006 there were 198,230 shares available for stock
  option grants under our Stock Option Plan, and the unrecorded deferred stock-based
  compensation balance related to stock options was $9,402.</font>
<p><br>
  <font face="Times New Roman, Times, serif" size="2"><b>Valuation assumptions</b>
  </font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
  use the Black-Scholes standard option pricing model to determine the fair value
  of stock options. The determination of the fair value of the awards on the date
  of grant using the Black-Scholes model is affected by the our stock price as
  well as assumptions of other variables, including projected employee stock option
  exercise behaviors, risk-free interest rate, expected volatility of our stock
  price in future periods and expected dividends. </font>
<p><font face="Times New Roman, Times, serif" size="2"><b><i><br>
  Expected life</i></b> </font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
  analyze historical employee exercise and termination data to estimate the expected
  life assumption. We believe historical data currently represents the best estimate
  of the expected life of a new employee option. Prior to adopting SFAS No.&nbsp;123(R),
  we estimated that the expected life was equal to the option term. For determining
  the fair value of options under SFAS No.&nbsp;123(R) we use different expected
  lives for officers and directors than we use for our general employee population.
  We examined the historical pattern of option exercises to determine if there
  was a discernable pattern as to how different classes of employees exercised
  their options. Our analysis showed that officers and directors held their stock
  options for a longer period of time before exercising compared to the rest of
  our employee population.</font>
<p><br>
  <i><font face="Times New Roman, Times, serif" size="2"><b>Risk-free interest
  rate</b> </font></i>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
  rate is based on the yield of U.S. Treasury securities on the grant date for
  maturities similar to the expected lives of the options. </font>
<p><br>
  <i><font face="Times New Roman, Times, serif" size="2"><b>Volatility</b></font></i><font face="Times New Roman, Times, serif" size="2">
  </font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
  use historical volatility to estimate the expected volatility of our common
  stock. </font>
<p><br>
  <i><font face="Times New Roman, Times, serif" size="2"><b>Dividend yield</b>
  </font></i>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
  assume a dividend yield of zero because we do not anticipate paying dividends
  in the foreseeable future.</font>
<p><br>
  <font face="Times New Roman, Times, serif" size="2"><b>Expenses related to share-based
  payments</b> </font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SFAS
  No. 123(R) requires compensation cost for share-based awards to be recognized
  over the requisite service period, which is the award vesting term. The amount
  of stock-based compensation expense recognized during a period is based on the
  portion of the awards that are ultimately expected to vest. We estimate pre-vesting
  option forfeitures at the time of grant by analyzing historical data and revise
  those estimates in subsequent periods if actual forfeitures differ from those
  estimates. Ultimately, the total expense recognized over the vesting period
  will only be for those awards that vest.</font>
<p>
<hr> <br clear="all" style="page-break-before:always;">
<font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Expenses
  and costs related to share-based payments are presented in the same line or
  lines as cash compensation paid to the same employees. Stock-based compensation
  recognized in the quarter ended June&nbsp;30, 2006 was $2,569. This amount was
  included in "Selling, general and administrative expense." The effect of our
  adoption of SFAS No.&nbsp;123(R) on our basic and diluted earning per share
  was less than $0.01 for the quarter ended June&nbsp;30, 2006.</font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
  of June 30, 2006, stock-based compensation cost related to nonvested awards
  not yet recognized was $9,402. This amount will be recognized over the weighted
  average period of 11 months.</font>
<p> <font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
  total effect of non-cash stock-based payments is presented in the line titled
  "Stock-based compensation" on our Statements of Cash Flows. Prior to the adoption
  of Statement 123(R), we presented all tax benefits of deductions resulting from
  the exercise of stock options as operating cash flows in the Statement of Cash
  Flows. Statement 123(R) requires the cash flows resulting from the tax benefits
  resulting from tax deductions in excess of the compensation cost recognized
  for those options (excess tax benefits) to be classified as financing cash flows.</font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior
  to April 1, 2006 we accounted for our stock-based employee compensation plans
  under the recognition and measurement principles of APB Opinion No.&nbsp;25
  and related interpretations. The following table illustrates the effect on net
  earnings and net earnings per share for the quarter ended June 30, 2005 if we
  had applied the fair value recognition provisions of SFAS No. 123 to our stock-based
  employee compensation:</font><br>
  <br>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>
      <PRE><b>                                                        Quarter Ended
                                                        June 30, 2005
                                                        -------------
</b>           Net income applicable to common shares:
             As reported                                 $   412,649
             Pro forma adjustment for stock options          (10,319)
                                                        -------------
             Pro forma net income                        $   402,330
                                                        =============
          Earnings per share:
             Basic - as reported                         $      0.09
             Basic - pro forma                           $      0.09

             Diluted - as reported                       $      0.09
             Diluted - pro forma                         $      0.09
</PRE>
    </td>
  </tr>
</table>
<br>
<b><font size="2" face="Times New Roman, Times, serif">Tax effects of stock-based
compensation </font></b>
<p>
<p><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock
  based compensation recognized in the quarter ended June 30, 2006 was entirely
  from incentive stock options, thus neither our income tax expense or deferred
  taxes were affected.</font>

<hr> <br clear="all" style="page-break-before:always;">
  <font size="2" face="Times New Roman, Times, serif"><b>General Stock Option
  Information</b> </font>
<p>
<p><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
  following table summarizes stock option activity during the three months ended
  June 30, 2006: </font><br>
  <br>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>
      <PRE><b>                                                         Weighted
                                                         Average
                                             Options     Exercise
                                           Outstanding    Price
                                           -----------   --------
</b>          Balance at March 31, 2006           312,130    $ 14.47
          Granted                                -           -
          Exercised                            (1,750)   $  0.86
          Terminated                             -           -
                                           -----------   --------
          Balance at June 30, 2006            310,380    $ 14.55
                                           ===========</PRE>
    </td>
  </tr>
</table>
<br>
<font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
summary of the status of our nonvested shares as of June 30, 2006, and changes
during the quarter ended June 30, 2006, is presented below: <br>
</font><br>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>
      <PRE><b>                                                          Weighted
                                                          Average
                                                         Grant-Date
            Nonvested Shares                  Shares     Fair Value
            ---------------------------      ---------   ----------
</b>            Nonvested at March 31, 2006         3,500     $   6.05
            Granted                              -             -
            Vested                             (1,750)    $   6.05
            Forfeited                            -             -
                                             ---------   ----------
            Nonvested at June 30, 2006          1,750     $   6.05
                                             =========
</PRE>
    </td>
  </tr>
</table>
<font size="2" face="Times New Roman, Times, serif"><br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following tables summarize information concerning
stock options outstanding and exercisable at June 30, 2006: <br>
</font><br>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>
      <PRE><b>               Options Outstanding                      Options Exercisable
- -----------------------------------------------------  ---------------------
                                           Weighted                 Weighted
                               Weighted    Remaining                 Average
                               Average    Contractual               Exercise
   Ranges of       Number      Exercise      Life        Number      Price
Exercise Prices  Outstanding    Price       (years)    Outstanding  Average
- ---------------  -----------  ----------  -----------  -----------  --------
</b>$  0.86 - 10.00     106,630   $    5.86          4.2      104,880   $  5.85
  10.01 - 16.93     153,750       15.17          8.4      153,750     15.17
  21.99 - 58.27      50,000       31.16          7.9       50,000     31.16
- ---------------  -----------  ----------  -----------  -----------  --------
                    310,380   $   14.55          6.9      308,630   $ 14.59
                 ===========                           ===========</PRE>
    </td>
  </tr>
</table>
<font face="Times New Roman, Times, serif" size="2"> <br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The total intrinsic value of options exercised during
the three months ended June 30, 2006 was $26,693. At June 30, 2006 the total intrinsic
value of options outstanding was $1,026,663, of which $1,011,967 were exercisable. The total intrinsic value at March 31, 2006 is based on our closing stock price
on the last trading day of the quarter for in-the-money options. We issue new
shares to satisfy share option exercises.</font>
<b><font face="Times New Roman, Times, serif" size="2">
<hr> <br clear="all" style="page-break-before:always;">
NOTE 7. INCOME TAXES</font></b>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred
  income taxes reflect the net tax effects of temporary differences between the
  carrying amount of assets and liabilities for financial reporting purposes and
  the amounts used for income tax purposes.</font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
  do not expect to pay taxes in the near future because we have the carryforward
  of prior years' stock-based compensation deductions available to offset future
  taxes. These amounts could be subject to limitation under Internal Revenue Code
  Section&nbsp;382. Under SFAS No. 109, <i>Accounting for Income Taxes</i>, stock-based
  compensation deductions for tax return purposes do not reduce taxes reported
  for book purposes but are credited to "Additional paid-in capital." Tax provisions
  of $473,241 and $240,468 were credited to "Additional paid-in capital" for the
  quarters ended June 30, 2006 and 2005. Regardless of our expectations, there
  can be no assurance that we will generate any specific level of continuing earnings.</font>
<p><br>
  <font face="Times New Roman, Times, serif" size="2"><b>NOTE 8. CONTINGENCIES</b>
  </font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
  February 10, 2006 a lawsuit was filed against NVE and certain of its current
  and former executive officers and directors in the U.S. District Court for the
  District of Minnesota by an individual shareholder seeking to represent a class
  of purchasers of our common stock during the period from May 22, 2003 through
  February 11, 2005. On March 6 and March 7, 2006, two additional lawsuits were
  filed in the same court by two additional NVE shareholders, with the same proposed
  class period, purporting to represent the same class. All of the complaints
  make similar allegations that the defendants violated the Securities Exchange
  Act of 1934 by issuing material misrepresentations concerning NVE's projected
  revenues and product technology, which artificially inflated the market price
  of our common stock. Two related actions brought by individual shareholders
  who seek to represent NVE derivatively have been filed in Hennepin County District
  Court. Those lawsuits allege that certain officers and directors violated their
  fiduciary duties to the company. We believe the lawsuits are wholly without
  merit and intend to vigorously defend the actions. We have incurred legal expenses
  and expect to incur additional legal expenses related to the suits. Based on
  our evaluation of the likelihood of prevailing we have not recorded a liability
  on our balance sheet. Insurance may cover a portion of any judgments. In addition
  to these lawsuits, we are subject to various litigation matters from time to
  time in the normal course of our business. We currently believe that the ultimate
  outcome of these proceedings will not have a material adverse affect on our
  financial position or results of operations. However, because of the nature
  and inherent uncertainties of litigation, should the outcome of these actions
  be unfavorable, our business, financial position, and results of operations
  could be materially and adversely affected.</font>
<hr> <br clear="all" style="page-break-before:always;">
  <font face="Times New Roman, Times, serif" size="2"><b>Item 2. Management's
  Discussion and Analysis of Financial Condition and Results of Operation.</b>
  </font>
<p>
<p>
<p><font face="Times New Roman, Times, serif" size="2"><b>Forward-looking statements</b>
  </font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Some
  of the statements made in this Report or in the documents incorporated by reference
  in this Report and in other materials filed or to be filed by us with the Securities
  and Exchange Commission as well as information included in verbal or written
  statements made by us constitute forward-looking statements within the meaning
  of the Private Securities Litigation Reform Act of 1995. These statements are
  subject to the safe harbor provisions of the reform act. Forward-looking statements
  may be identified by the use of the terminology such as may, will, expect, anticipate,
  intend, believe, estimate, should, or continue, or the negatives of these terms
  or other variations on these words or comparable terminology. To the extent
  that this Report contains forward-looking statements regarding the financial
  condition, operating results, business prospects or any other aspect of NVE,
  you should be aware that our actual financial condition, operating results and
  business performance may differ materially from that projected or estimated
  by us in the forward-looking statements. We have attempted to identify, in context,
  some of the factors that we currently believe may cause actual future experience
  and results to differ from their current expectations. These differences may
  be caused by a variety of factors, including but not limited to competition
  including entry of new competitors, variations in costs that are beyond our
  control, adverse federal, state and local government regulations, unexpected
  costs, lower sales and net income or higher net losses than forecasted, our
  dependence on significant suppliers, our ability to meet stringent customer
  technical requirements, our ability to consummate additional license agreements,
  our ability to continue eligibility for SBIR awards, failure to obtain new customers,
  the possible fluctuation and volatility of our operating results and financial
  condition, inability to carry out marketing and sales plans, loss of key executives,
  and other specific risks that may be alluded to in this Report. Further information
  regarding our risks and uncertainties, are contained in Item 1A "Risk Factors"
  of our Annual Report on Form&nbsp;10-K for the year ended March&nbsp;31,&nbsp;2006.</font>
<p><br>
  <font face="Times New Roman, Times, serif" size="2"><b>General</b> </font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
  develop, manufacture, and sell devices using "spintronics," a nanotechnology
  we helped pioneer, which utilizes electron spin rather than electron charge
  to acquire, store and transmit information. We are a licensor of spintronic
  magnetic random access memory technology, commonly referred to as MRAM, which
  we believe has the potential to revolutionize electronic memory. We also manufacture
  high-performance spintronic products including sensors and couplers to revolutionize
  data sensing and transmission.</font>
<hr> <br clear="all" style="page-break-before:always;">
  <font face="Times New Roman, Times, serif" size="2"><b>Quarter ended June 30,
  2006 compared to the quarter ended June 30,&nbsp;2005</b> </font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
  table below summarizes certain summary information for various items for the
  periods indicated:</font><br>
  <br>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>
      <PRE><b>                                     Percentage of Revenue            Period-
                                     Quarter ended June 30           to-Period
                                     2006             2005            Change
                                    -------          -------         ---------
</b>Revenue
  Product sales                      84.0 %           59.0 %           71.1 %
  Research and development           16.0 %           41.0 %          (53.1)%
                                    -------          -------
Total revenue                       100.0 %          100.0 %           20.1 %
Cost of sales                        38.5 %           55.6 %
                                    -------          -------
Gross profit                         61.5 %           44.4 %

Total expenses                       25.8 %           26.0 %           19.2 %
                                    -------          -------
Income from operations               35.7 %           18.4 %          132.6 %
Net interest and other income         3.1 %            3.2 %           14.7 %
                                    -------          -------
Income before taxes                  38.8 %           21.6 %          115.1 %
Provision for income taxes           14.2 %            8.0                -
                                    -------          -------
Net income                           24.6 %           13.6 %          116.1 %
                                    =======          =======
</PRE>
    </td>
  </tr>
</table>
<font face="Times New Roman, Times, serif" size="2"><br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenue for the quarter ended June 30, 2006
(the first quarter of fiscal 2007) was $3,635,328, an increase of 20% from $3,025,548
for the quarter ended June 30, 2005 (the first quarter of fiscal 2006). The increase
was due to a 71% increase in product sales to $3,053,328 from $1,784,250, partially
offset by a 53% decrease in contract research and development revenue to $581,867
from $1,241,298. The decrease in contract research and development revenue was
due to shifts to company-funded research from contract-funded research and a decrease
in U.S. Government contract awards to us.</font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross
  profit margin increased to 61% of revenue for the first quarter of fiscal 2007
  from 44% for the same quarter of fiscal 2006. The increase was due to a more
  profitable revenue mix consisting of a higher percentage of product sales and
  higher product margins due to price increases for calendar 2006, and the full
  deployment of lower-cost coupler designs.</font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research
  and development expense increased 41% to $530,612 for the quarter ended June&nbsp;30,
  2006 compared to $376,800 for the quarter ended June&nbsp;30, 2005. The increase
  was due to efforts to develop new and improved products and a shift to company-funded
  research from contract-funded research.</font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
  interest and other income increased 15% to $111,317 for the quarter ended June&nbsp;30,
  2006 from $97,081 for the quarter ended June&nbsp;30, 2005. The increase was
  due to the retirement of all of our debt and an increase in interest-bearing
  investments. The increase in net interest and other income was partially offset
  by a $25,500 gain on the sale of fixed assets in the quarter ended June&nbsp;30,
  2005, as no such sale occurred in the quarter ended June&nbsp;30, 2006.</font>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
  income totaled $891,806 for the quarter ended June&nbsp;30, 2006 compared to
  $412,649 for the quarter ended June&nbsp;30, 2005. The increase in net income
  was primarily due to increases in revenue and gross profit, partially offset
  by increases in expenses. </font>
<hr> <br clear="all" style="page-break-before:always;">
<font face="Times New Roman, Times, serif" size="2"> <b>Liquidity and capital
resources</b></font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
  June&nbsp;30,&nbsp;2006 we had $11,789,206 in cash plus investments compared
  to $10,891,326 at March&nbsp;31,&nbsp;2006. Our entire portfolio of short-term
  and long-term investments is classified as available for sale. The increase
  in cash plus investments was primarily due to cash generated from operations,
  partially offset by purchases of fixed assets and payments of capital lease
  obligations. </font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts
  receivable increased to $1,919,778 at June&nbsp;30, 2006 from $1,667,029 at
  March&nbsp;31, 2006. The increase was due to increased revenue and the timing
  of payments for research and development contracts.</font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred
  revenue was $4,863 at June&nbsp;30, 2006 compared to $77,373 at March&nbsp;31,
  2006. The decrease was primarily due to our partial satisfaction of the obligations
  related to a government contract and of a prepayment under our 2001 agreement
  with Agilent Technologies, Inc., as amended.</font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
  retired our capital lease obligations in the past quarter, eliminating all of
  our debt. Capital lease obligations were $33,281 at March&nbsp;31, 2006. While
  we are not currently planning additional borrowing, we may have the ability
  to borrow using certain of our production equipment assets as collateral if
  necessary.</font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
  made capital expenditures of $57,254 in the quarter ended June&nbsp;30, 2006,
  primarily for equipment to increase our production capacity for very small parts.
  We had commitments of approximately $90,000 at June&nbsp;30, 2006 for capital
  expenditures for equipment to improve manufacturing efficiency. We evaluate
  capital investments as needs and opportunities arise so our capital expenditures
  could deviate significantly from our expectations. We will likely fund future
  capital expenditures from operating profits or our cash and cash equivalents.</font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
  believe our working capital is adequate for our needs at least for the next
  12 months. </font>
<p>
<p>
<p><font face="Times New Roman, Times, serif" size="2"><b><br>
  Our outlook</b> </font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
  expect product revenue to increase in the remainder of fiscal 2007 compared
  to fiscal 2006 due to sales of new coupler and sensor products, anticipated
  growth of our sales into the medical device market, and price increases we implemented
  for calendar year 2006.</font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contract
  research and development revenue may continue to decrease in fiscal 2007 compared
  to the prior year due to more limited availability of Government research funds,
  our shift in emphasis from contract-funded to company-funded research, particularly
  new product development, and our focusing of contract research on certain strategic
  areas.</font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
  expect gross profit margins to continue to increase in the remainder of fiscal
  2007 compared to the prior year due price increases we implemented for calendar
  year 2006, manufacturing efficiencies and a planned continued shift in our revenue
  mix to product sales from research and development revenue. Our product sales
  have generally had higher gross profit margins than our research and development
  revenue.</font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling,
  general and administrative expenses could increase in the future due to legal
  expenses or expenses associated with plans to acquire additional MRAM license
  agreements.</font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research
  and development expense may continue to increase in fiscal 2007 compared to
  the prior year as we develop new products and continue to shift to company-funded
  research and development from contract-funded research and development. </font>
<hr> <br clear="all" style="page-break-before:always;">
<font face="Times New Roman, Times, serif" size="2"><b> Item 3. Quantitative
  and Qualitative Disclosures About Market Risk.</b> </font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
  are subject to interest rate risks on cash, cash equivalents, and available-for-sale
  securities. Our investments in fixed-rate debt securities, which were classified
  as available-for-sale as of June&nbsp;30, 2006, have remaining maturities from
  one to 59 months, and are exposed to the risk of fluctuating interest rates.
  Available-for-sale securities had a market value of $10,052,094 at June&nbsp;30,
  2006, representing 53% of our total assets. The primary objective of our investment
  activities is to preserve capital. We have not used derivative financial instruments
  in our investment portfolio.</font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
  performed a sensitivity analysis assuming a hypothetical 10% adverse movement
  in interest rates applicable to fixed-rate instruments maturing during the next
  twelve months that are subject to reinvestment risk. As of June&nbsp;30, 2006,
  our analysis indicated that these hypothetical market movements would not have
  a material effect on our financial position, results of operations, or cash
  flow.</font>
<p><br>
  <font face="Times New Roman, Times, serif" size="2"><b>Item 4. Controls and
  Procedures.</b> </font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
  maintain disclosure controls and procedures designed to ensure that information
  required to be disclosed in our Securities Exchange Act of 1934 (the "Exchange
  Act") reports is recorded, processed, summarized and reported within the time
  periods specified in the SEC's rules and forms and that such information is
  accumulated and communicated to our management, including our Chief Executive
  Officer and Chief Financial Officer, as appropriate, to allow for timely decisions
  regarding required disclosure. In designing and evaluating the disclosure controls
  and procedures, we recognize that any controls and procedures, no matter how
  well designed and operated, can provide only reasonable assurance of achieving
  the desired control objectives, and we are required to apply judgment in evaluating
  the cost-benefit relationship of possible controls and procedures.</font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
  of the end of the period covered by this Report, we conducted an evaluation,
  under the supervision and with the participation of our principal executive
  officer and principal financial officer, of our disclosure controls and procedures
  (as defined in Rules&nbsp;13a 14(c) and 15d 14(c) under the Exchange Act). Based
  on this evaluation, our principal executive officer and principal financial
  officer concluded that our disclosure controls and procedures are effective
  to ensure that information required to be disclosed by us in reports that we
  file or submit under the Exchange Act is (i) recorded, processed, summarized
  and reported within the time periods specified in SEC rules and forms; and (ii)
  is accumulated and communicated to the our management, including our Chief Executive
  Officer and Chief Financial Officer, as appropriate, to allow for timely decisions
  regarding required disclosure. There was no change in our internal control over
  financial reporting during our most recently completed fiscal quarter that has
  materially affected, or is reasonably likely to materially affect, our internal
  control over financial reporting. </font>
<hr>
<div align="center"><br clear="all" style="page-break-before:always;">
  <b> <font size="2" face="Times New Roman, Times, serif">PART II--OTHER INFORMATION</font></b>
</div>
<p>
<p><font face="Times New Roman, Times, serif" size="2"><b>Item 1A. Risk Factors.</b>
  </font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
  have been no material changes from the risk factors disclosed in our Annual
  Report on Form&nbsp;10-K for the year ended March&nbsp;31, 2006.</font>
<p><br>
  <font face="Times New Roman, Times, serif" size="2"><b>Item 6. Exhibits.</b></font>
  <br>
  <br>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2"><b><u>Exhibit
        #</u></b></font></div>
    </td>
    <td>
      <div align="center"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></div>
    </td>
    <td width="88%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2"><b><u>Description</u></b></font></div>
    </td>
  </tr>
  <tr>
    <td width="8%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></div>
    </td>
    <td>
      <div align="center"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></div>
    </td>
    <td width="88%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></div>
    </td>
  </tr>
  <tr>
    <td width="8%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">31.1</font></div>
    </td>
    <td>
      <div align="center"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></div>
    </td>
    <td width="88%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">
        Certification by Daniel A. Baker pursuant to Rule 13a-14(a)/15d-14(a).
        </font></div>
    </td>
  </tr>
  <tr>
    <td width="8%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2"></font></div>
    </td>
    <td>
      <div align="center"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></div>
    </td>
    <td width="88%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2"></font></div>
    </td>
  </tr>
  <tr>
    <td width="8%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">31.2</font></div>
    </td>
    <td>
      <div align="center"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></div>
    </td>
    <td width="88%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">
        Certification by Curt A. Reynders pursuant to Rule 13a-14(a)/15d-14(a).</font></div>
    </td>
  </tr>
  <tr>
    <td width="8%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></div>
    </td>
    <td>
      <div align="center"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></div>
    </td>
    <td width="88%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></div>
    </td>
  </tr>
  <tr>
    <td width="8%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">32</font></div>
    </td>
    <td>
      <div align="center"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></div>
    </td>
    <td width="88%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">Certification
        by Daniel A. Baker and Curt A. Reynders pursuant to 18 U.S.C. Section
        1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
        2002.</font></div>
    </td>
  </tr>
</table>
<p>&nbsp;</p>
<hr>
<div align="center"><br clear="all" style="page-break-before:always;">
  <font face="Times New Roman, Times, serif" size="2"><b>SIGNATURES</b></font>
</div>
<p style="text-indent:.5in;"><font face="Times New Roman, Times, serif" size="2">
  Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.</font></p>
<table border="0" cellspacing="0" cellpadding="0" width="100%">
  <tr>
    <td width="25%">
      <p align="center"><font size="2" face="Times New Roman, Times, serif"><b>&nbsp;</b></font></p>
    </td>
    <td>
      <p align="left"><font size="2" face="Times New Roman, Times, serif"><b><u>NVE
        CORPORATION</u></b></font></p>
    </td>
  </tr>
  <tr>
    <td width="25%">
      <p align="center"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></p>
    </td>
    <td>
      <p align="left"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Registrant)</font></p>
    </td>
  </tr>
  <tr>
    <td width="25%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></div>
    </td>
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr>
    <td width="25%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif"><b><u>July
        19, 2006</u></b></font></div>
    </td>
    <td>
      <div align="left"><font size="2" face="Times New Roman, Times, serif"><u>/s/
        DANIEL A. BAKER&nbsp;</u></font></div>
    </td>
  </tr>
  <tr>
    <td width="25%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">Date</font></div>
    </td>
    <td>
      <div align="left"><font size="2" face="Times New Roman, Times, serif"> By:
        Daniel A. Baker</font></div>
    </td>
  </tr>
  <tr>
    <td width="25%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></div>
    </td>
    <td><font size="2" face="Times New Roman, Times, serif"> President and Chief
      Executive Officer</font></td>
  </tr>
  <tr>
    <td width="25%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></div>
    </td>
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr>
    <td width="25%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif"><b><u>July
        19, 2006</u></b></font></div>
    </td>
    <td>
      <div align="left"><font size="2" face="Times New Roman, Times, serif"><u>/s/
        CURT A. REYNDERS&nbsp;</u></font></div>
    </td>
  </tr>
  <tr>
    <td width="25%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">Date</font></div>
    </td>
    <td>
      <div align="left"><font size="2" face="Times New Roman, Times, serif"> By:
        Curt A. Reynders</font></div>
    </td>
  </tr>
  <tr>
    <td width="25%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></div>
    </td>
    <td><font size="2" face="Times New Roman, Times, serif"> Chief Financial Officer</font></td>
  </tr>
</table>
<p>&nbsp;</p>
<p>&nbsp;</p>
<hr>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>2
<FILENAME>ex31-dab.htm
<DESCRIPTION>CERTIFICATION BY DANIEL A. BAKER PURSUANT TO RULE 13A-14(A)/15D-14(A)
<TEXT>

<div style="font-family:Times New Roman;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Exhibit
    31.1</font></b></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">CERTIFICATION</font></b></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">I, Daniel A. Baker, certify that:</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
    </font>I have reviewed this Quarterly Report on Form 10-Q of NVE Corporation;</p>

<p style="margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Based on my knowledge, this 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 report;</p>

<p style="margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Based on my knowledge, the
financial statements, and other financial information included in this 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 report;</p>

<p style="margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>The registrant&#146;s other certifying
officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the registrant and have:</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Designed such disclosure controls
and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, 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
report is being prepared;</p>

<p style="margin:0in 0in .0001pt 1.5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Evaluated the effectiveness of the
registrant&#146;s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such
evaluation; and</p>

<p style="margin:0in 0in .0001pt 1.5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Disclosed in this report any change
in the registrant&#146;s internal control over financial reporting that occurred
during the registrant&#146;s most recent fiscal quarter (the registrant&#146;s fourth
fiscal quarter in the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the registrant&#146;s internal control
over financial reporting; and</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>The registrant&#146;s other certifying
officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant&#146;s auditors and the
audit committee of the registrant&#146;s board of directors (or persons performing
the equivalent functions):</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>All significant deficiencies and
material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the
registrant&#146;s ability to record, process, summarize and report financial
information; and</p>

<p style="margin:0in 0in .0001pt 1.5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Any fraud, whether or not material,
that involves management or other employees who have a significant role in the
registrant&#146;s internal control over financial reporting.</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="100%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
        <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Date:
          July 19, 2006</font></p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="50%" valign="top" style="padding:0in 0in 0in 0in;width:50.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="19%" valign="top" style="border:none;border-bottom:solid windowtext 1.0pt;padding:0in 0in 0in 0in;width:19.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ DANIEL A.
  BAKER</font></p>
  </td>
  <td width="31%" valign="top" style="padding:0in 0in 0in 0in;width:31.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="50%" valign="top" style="padding:0in 0in 0in 0in;width:50.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="50%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:50.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Daniel A. Baker</font></p>
  </td>
 </tr>
 <tr>
  <td width="50%" valign="top" style="padding:0in 0in 0in 0in;width:50.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="50%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:50.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">President and
  Chief Executive Officer</font></p>
  </td>
 </tr>
</table>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<div style="margin:0in 0in .0001pt;"><hr size="2" width="100%" noshade color="gray" align="left"></div>

</div>
</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>3
<FILENAME>ex31-car.htm
<DESCRIPTION>CERTIFICATION BY CURT A. REYDERS PURSUANT TO RULE 13A-14(A)/15D-14(A)
<TEXT>

<div style="font-family:Times New Roman;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Exhibit
    31.2</font></b></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">CERTIFICATION</font></b></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">I, Curt A. Reynders, certify that:</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
    </font>I have reviewed this Quarterly Report on Form 10-Q of NVE Corporation;</p>

<p style="margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Based on my knowledge, this 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 report;</p>

<p style="margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Based on my knowledge, the
financial statements, and other financial information included in this 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 report;</p>

<p style="margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>The registrant&#146;s other certifying
officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the registrant and have:</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Designed such disclosure controls
and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, 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
report is being prepared;</p>

<p style="margin:0in 0in .0001pt 1.5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Evaluated the effectiveness of the
registrant&#146;s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such
evaluation; and</p>

<p style="margin:0in 0in .0001pt 1.5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Disclosed in this report any change
in the registrant&#146;s internal control over financial reporting that occurred
during the registrant&#146;s most recent fiscal quarter (the registrant&#146;s fourth
fiscal quarter in the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the registrant&#146;s internal control
over financial reporting; and</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>The registrant&#146;s other certifying
officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant&#146;s auditors and the
audit committee of the registrant&#146;s board of directors (or persons performing
the equivalent functions):</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>All significant deficiencies and
material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the
registrant&#146;s ability to record, process, summarize and report financial
information; and</p>

<p style="margin:0in 0in .0001pt 1.5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Any fraud, whether or not material,
that involves management or other employees who have a significant role in the
registrant&#146;s internal control over financial reporting.</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Date:
    July 19, 2006</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="54%" valign="top" style="padding:0in 0in 0in 0in;width:54.62%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="20%" valign="top" style="border:none;border-bottom:solid windowtext 1.0pt;padding:0in 0in 0in 0in;width:20.38%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ CURT A.
  REYNDERS</font></p>
  </td>
  <td width="25%" valign="top" style="padding:0in 0in 0in 0in;width:25.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="54%" valign="top" style="padding:0in 0in 0in 0in;width:54.62%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="45%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:45.38%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Curt A. Reynders</font></p>
  </td>
 </tr>
 <tr>
  <td width="54%" valign="top" style="padding:0in 0in 0in 0in;width:54.62%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="45%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:45.38%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Chief Financial
  Officer</font></p>
  </td>
 </tr>
</table>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<div style="margin:0in 0in .0001pt;"><hr size="2" width="100%" noshade color="gray" align="left"></div>

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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>4
<FILENAME>ex32.htm
<DESCRIPTION>CERTIFICATION BY DANIEL A. BAKER AND CURT A. REYNDERS PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
<TEXT>

<div style="font-family:Times New Roman;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Exhibit
    32</font></b></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">CERTIFICATION PURSUANT TO SECTION 906</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C.
SECTION 1350)</font></b></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The undersigned certify pursuant to
18 U.S.C. Section 1350, that to the undersigned&#146;s knowledge:</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
    </font>The accompanying Quarterly Report of NVE Corporation (the &#147;Company&#148;)
    on Form 10-Q for the quarter ended June 30, 2006, fully complies with the
    requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
    and</p>

<p style="margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>The information contained in the
Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Date:
    July 19, 2006</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="19%" valign="top" style="border:none;border-bottom:solid windowtext 1.0pt;padding:0in 0in 0in 0in;width:19.16%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ DANIEL A.
  BAKER</font></p>
  </td>
  <td width="80%" valign="top" style="padding:0in 0in 0in 0in;width:80.84%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Daniel A. Baker</font></p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">President and
  Chief Executive Officer</font></p>
  </td>
 </tr>
</table>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="20%" valign="top" style="border:none;border-bottom:solid windowtext 1.0pt;padding:0in 0in 0in 0in;width:20.58%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ CURT A.
  REYNDERS</font></p>
  </td>
  <td width="79%" valign="top" style="padding:0in 0in 0in 0in;width:79.42%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Curt A. Reynders</font></p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Chief Financial
  Officer</font></p>
  </td>
 </tr>
</table>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">A signed original of this written
statement required by Section 906 has been provided to the Company and will be
retained by the Company and furnished to the Securities and Exchange Commission
or its staff upon request.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<div style="margin:0in 0in .0001pt;"><hr size="2" width="100%" noshade color="gray" align="left"></div>

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</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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