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<SEC-DOCUMENT>0000724910-06-000018.txt : 20061018
<SEC-HEADER>0000724910-06-000018.hdr.sgml : 20061018
<ACCEPTANCE-DATETIME>20061018160936
ACCESSION NUMBER:		0000724910-06-000018
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20060930
FILED AS OF DATE:		20061018
DATE AS OF CHANGE:		20061018

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:		061151016

	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>q2q07.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>September 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="7"> <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 - 4,616,983 shares outstanding as of October
  13, 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 border="0" cellspacing="0" cellpadding="0" align="center">
  <tr>
    <td>
      <PRE><b>                                NVE CORPORATION
                                BALANCE SHEETS
                     SEPTEMBER 30, 2006 AND MARCH 31, 2006

                                                (Unaudited)
                                               Sept. 30, 2006   March 31, 2006</b>*<b>
                                               --------------   --------------
</b>ASSETS
Current assets
  Cash and cash equivalents                    $     363,268    $   1,288,362
  Short-term investments                             250,100        1,248,103
  Accounts receivable, net of allowance for
    uncollectible accounts of $15,000              2,141,414        1,667,029
  Inventories                                      2,248,131        2,149,769
  Deferred tax assets                              1,589,584        1,576,472
  Prepaid expenses and other assets                  238,343          231,412
                                               --------------   --------------
Total current assets                               6,830,840        8,161,147
Fixed assets
  Machinery and equipment                          4,372,765        4,149,080
  Leasehold improvements                             413,482          413,482
                                               --------------   --------------
                                                   4,786,247        4,562,562
  Less accumulated depreciation                    3,575,625        3,319,651
                                               --------------   --------------
Net fixed assets                                   1,210,622        1,242,911
Long-term investments                             13,075,943        8,354,861
                                               --------------   --------------
Total assets                                   $  21,117,405    $  17,758,919
                                               ==============   ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
  Accounts payable                             $     272,300    $     399,762
  Accrued payroll and other                          419,206          470,392
  Deferred revenue                                    39,107           77,373
  Capital lease obligations                             -              33,281
                                               --------------   --------------
Total current liabilities                            730,613          980,808

Shareholders' equity
  Common stock                                        46,170           46,150
  Additional paid-in capital                      17,425,642       16,042,637
  Accumulated other comprehensive loss              (116,529)        (166,908)
  Retained earnings                                3,031,509          856,232
                                               --------------   --------------
Total shareholders' equity                        20,386,792       16,778,111
                                               --------------   --------------
Total liabilities and shareholders' equity     $  21,117,405    $  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>
<br>
<hr>
<br clear="all" style="page-break-before:always;">
<table border="0" cellspacing="0" cellpadding="0" align="center">
  <tr>
    <td>
      <pre><b>                                NVE CORPORATION
                             STATEMENTS OF INCOME
                   QUARTERS ENDED SEPTEMBER 30, 2006 AND 2005
                                  (Unaudited)

                                            Quarter Ended September 30
                                                2006           2005
                                            ------------   ------------
</b>Revenue
  Product sales                             $ 3,777,060    $ 2,021,672
  Contract research and development             621,308      1,030,250
                                            ------------   ------------
Total revenue                                 4,398,368      3,051,922

Cost of sales                                 1,439,181      1,627,673
                                            ------------   ------------
Gross profit                                  2,959,187      1,424,249

Expenses
  Research and development                      566,246        517,939
  Selling, general, and administrative          535,213        394,980
                                            ------------   ------------
Total expenses                                1,101,459        912,919
                                            ------------   ------------

Income from operations                        1,857,728        511,330

Interest income                                 149,440         77,119
Interest expense                                   -            (1,695)
Other income                                     25,246          5,751
                                            ------------   ------------
Income before taxes                           2,032,414        592,505

Provision for income taxes                      748,943        228,537
                                            ------------   ------------
Net income                                  $ 1,283,471    $   363,968
                                            ============   ============

Net income per share - basic                $      0.28    $      0.08
                                            ============   ============
Net income per share - diluted              $      0.27    $      0.08
                                            ============   ============

Weighted average shares outstanding
  Basic                                       4,616,819      4,573,168
  Diluted                                     4,791,160      4,679,335


                            See accompanying notes.
</pre>
    </td>
  </tr>
</table>
<br>
<hr>
<br clear="all" style="page-break-before:always;">
<table border="0" cellspacing="0" cellpadding="0" align="center">
  <tr>
    <td>
      <pre><b>                                NVE CORPORATION
                             STATEMENTS OF INCOME
                  SIX MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
                                  (Unaudited)

                                             Six Months Ended Sept. 30
                                                2006           2005
                                            ------------   ------------
</b>Revenue
  Product sales                             $ 6,830,388    $ 3,805,922
  Contract research and development           1,203,175      2,271,548
                                            ------------   ------------
Total revenue                                 8,033,563      6,077,470

Cost of sales                                 2,839,002      3,308,791
                                            ------------   ------------
Gross profit                                  5,194,561      2,768,679

Expenses
  Research and development                    1,096,858        894,739
  Selling, general, and administrative          941,945        804,574
                                            ------------   ------------
Total expenses                                2,038,803      1,699,313
                                            ------------   ------------

Income from operations                        3,155,758      1,069,366

Interest income                                 261,346        145,438
Interest expense                                   (589)        (3,748)
Other income                                     25,246         36,566
                                            ------------   ------------
Income before taxes                           3,441,761      1,247,622

Provision for income taxes                    1,266,484        471,005
                                            ------------   ------------
Net income                                  $ 2,175,277    $   776,617
                                            ============   ============

Net income per share - basic                $      0.47    $      0.17
                                            ============   ============
Net income per share - diluted              $      0.45    $      0.17
                                            ============   ============

Weighted average shares outstanding
  Basic                                       4,616,704      4,571,524
  Diluted                                     4,791,046      4,677,691


                            See accompanying notes.
</pre>
    </td>
  </tr>
</table>
<br>
<hr>
<br clear="all" style="page-break-before:always;">
<table border="0" cellspacing="0" cellpadding="0" align="center">
  <tr>
    <td>
      <pre><b>                                NVE CORPORATION
                           STATEMENTS OF CASH FLOWS
                 SIX MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
                                  (Unaudited)

                                                     Six Months Ended Sept. 30
                                                        2006           2005
                                                    ------------   ------------
</b>OPERATING ACTIVITIES
Net income                                          $ 2,175,277    $   776,617
Adjustments to reconcile net income to net
  cash provided by operating activities:
    Depreciation and amortization                       259,395        284,884
    Gain on sale of fixed assets                           -           (25,500)
    Stock-based compensation                            120,036           -
    Excess tax benefits                              (1,102,564)          -
    Deferred income taxes                             1,222,184        458,005
    Changes in operating assets and liabilities:
      Accounts receivable                              (474,385)       311,173
      Inventories                                       (98,362)      (108,901)
      Prepaid expenses and other assets                  (6,931)        13,082
      Accounts payable and accrued expenses            (178,648)       106,187
      Deferred revenue                                  (38,266)      (127,851)
                                                    ------------   ------------
Net cash provided by operating activities             1,877,736      1,687,696

INVESTING ACTIVITIES
Proceeds from the sale of fixed assets                     -            25,500
Purchases of fixed assets                              (229,976)          -
Maturities of investment securities                   1,019,681           -
Purchases of investment securities                   (4,663,558)    (1,252,203)
                                                    ------------   ------------
Net cash used in investing activities                (3,873,853)    (1,226,703)


FINANCING ACTIVITIES
Net proceeds from sale of common stock                    1,740         28,313
Excess tax benefits                                   1,102,564           -
Repayment of capital lease obligations                  (33,281)       (32,992)
                                                    ------------   ------------
Net cash provided by (used in) financing activities   1,071,023         (4,679)
                                                    ------------   ------------

(Decrease) Increase in cash and cash equivalents       (925,094)       456,314
Cash and cash equivalents at beginning of period      1,288,362      1,240,205
                                                    ------------   ------------

Cash and cash equivalents at end of period          $   363,268    $ 1,696,519
                                                    ============   ============

Supplemental disclosures of cash flow information:
    Cash paid during the period for:
      Interest                                      $       589    $     3,748
      Income taxes                                  $    44,300    $    13,000


                            See accompanying notes.
</pre>
    </td>
  </tr>
</table>
<br>
<hr>
<br clear="all" style="page-break-before:always;">
<div align="center"><font size="2" face="Times New Roman, Times, serif"><b>NVE
  CORPORATION<br>
  NOTES TO FINANCIAL STATEMENTS<br>
  SEPTEMBER 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 September 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;
  therefore 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:</font><p>
<table border="0" cellspacing="0" cellpadding="0" align="center">
  <tr>
    <td>
      <pre><b>                                            Quarter Ended September 30
                                               2006             2005
                                           ------------     ------------
</b>Net income                                 $ 1,283,471      $   363,968
Unrealized gain (loss) from investments         82,649          (51,720)
                                           ------------     ------------
Comprehensive income                       $ 1,366,120      $   312,248
                                           ============     ============


 <b>                                          Six Months Ended September 30
                                               2006             2005
                                           ------------     ------------
</b>Net income                                 $ 2,175,277      $   776,617
Unrealized gain from investments                50,379           27,474
                                           ------------     ------------
Comprehensive income                       $ 2,225,656      $   804,091
                                           ============     ============
</pre>
    </td>
  </tr>
</table>
<br>
<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 border="0" cellspacing="0" cellpadding="0" align="center">
  <tr>
    <td>
      <PRE><b>                             September 30       March 31
                                 2006             2006
                             ------------     ------------
</b>Raw materials                $   806,299      $   703,407
Work-in-process                  960,284          740,578
Finished goods                   686,548          850,784
                             ------------     ------------
                               2,453,131        2,294,769
Less obsolescence reserve       (205,000)        (145,000)
                             ------------     ------------
                             $ 2,248,131      $ 2,149,769
                             ============     ============
</PRE>
    </td>
  </tr>
</table>
<br>
<br>
<b> <font face="Times New Roman, Times, serif" size="2">NOTE 6. STOCK-BASED COMPENSATION</font></b>
<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>. 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 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. 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.
  </font>
<p><br><font face="Times New Roman, Times, serif" size="2"><b>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><br>
<br>
<hr><br clear="all" style="page-break-before:always;">
<font face="Times New Roman, Times, serif" size="2"><b>Valuation assumptions</b></font>
<p>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
  use the Black-Scholes standard option pricing model to determine the fair value
  of stock options. </font><font face="Times New Roman, Times, serif" size="2">The
  following assumptions were used to estimate the fair value of options granted
  during the periods indicated:<br>
  <br>
  </font>
<table border="0" cellspacing="0" cellpadding="0" align="center">
  <tr>
    <td>
      <pre><b>                          Quarters Ended Sept. 30         Six Mos. Ended Sept. 30
                           2006            2005            2006            2005
                          -------         -------         -------         -------</b>
Risk-free interest rate     4.9 %           3.9 %           4.9 %           3.9 %
Expected volatility          81 %            85 %            81 %            85 %
Expected life (years)       6.5            10.0             6.5            10.0
Dividend yield                0 %             0 %             0 %             0 %
</pre>
    </td>
  </tr>
</table>

<br>
<br>
<font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
determination of the fair value of the awards on the date of grant using the Black-Scholes
model is affected by our stock price as well as assumptions of other variables,
including projected employee stock option exercise behaviors, risk-free interest
rate, and expected volatility of our stock price in future periods. Our estimates
and assumptions affect the amounts reported in the financial statements and accompanying
notes. </font><font face="Times New Roman, Times, serif" size="2"></font><br>
<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 discernible 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>
<br><br>
<hr><br clear="all" style="page-break-before:always;">
  <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;</font><font face="Times New Roman, Times, serif" size="2">The
  following table shows the effect of our adoption of SFAS No.&nbsp;123(R) on
  our net income and earning per share for the quarter and six months ended September
  30, 2006</font><font face="Times New Roman, Times, serif"><font size="2">. </font><font face="Times New Roman, Times, serif" size="2">
  </font><font face="Times New Roman, Times, serif" size="2">Expenses and costs
  related to share-based payments are presented in the same line or lines as cash
  compensation paid to the same employees. </font><font face="Times New Roman, Times, serif" size="2"></font><font face="Times New Roman, Times, serif" size="2"></font><font size="2">The
  effect of SFAS No.&nbsp;123(R) is included in selling, general, and administrative
  expenses and </font><font face="Times New Roman, Times, serif" size="2">presented
  in the line titled "Stock-based compensation" on our Statements of Cash Flows</font></font><font face="Times New Roman, Times, serif" size="2">:</font>
<p>
<table border="0" cellspacing="0" cellpadding="0" align="center">
  <tr>
    <td>
      <pre><b>                                           Quarter Ended      Six Mos. Ended
                                           Sept. 30, 2006     Sept. 30, 2006
                                           --------------     --------------
</b>Effect of SFAS No.&nbsp;123(R) on net income          (78,402)           (80,971)

Effect of SFAS No.&nbsp;123(R) on net income
  per share:
    Basic                                  $       (0.02)     $       (0.02)
    Diluted                                $       (0.02)     $       (0.02)</pre>
    </td>
  </tr>
</table>
<br>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior
  to the adoption of SFAS No.&nbsp;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. SFAS No.&nbsp;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 and six months ended September
  30, 2005 if we had applied the fair value recognition provisions of SFAS No.
  123 to our stock-based employee compensation:</font>
<p>
<table border="0" cellspacing="0" cellpadding="0" align="center">
  <tr>
    <td>
      <PRE><b>                                                Quarter Ended
                                                Sept. 30, 2005
                                                --------------
</b>Net income:
  As reported                                   $     363,968
  Pro forma adjustment for stock options             (105,084)
                                                --------------
  Pro forma net income                          $     258,884
                                                ==============
Net income per share:
  Basic - as reported                           $        0.08
  Basic - pro forma                             $        0.06
  Diluted - as reported                         $        0.08
  Diluted - pro forma                           $        0.06


<b>                                                Six Mos. Ended
                                                Sept. 30, 2005
                                                --------------
</b>Net income:
  As reported                                   $     776,617
  Pro forma adjustment for stock options             (115,403)
                                                --------------
  Pro forma net income                          $     661,214
                                                ==============
Net income per share:
  Basic - as reported                           $        0.17
  Basic - pro forma                             $        0.14
  Diluted - as reported                         $        0.17
  Diluted - pro forma                           $        0.14</PRE>
    </td>
  </tr>
</table>
<p>
<hr><br clear="all" style="page-break-before:always;">
<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;Deferred
  taxes for the quarter and six months ended September 30, 2006 were increased
  by $39,065 due to stock-based compensation.</font>
<p><font size="2" face="Times New Roman, Times, serif"><b><br>
  General stock option information</b> </font> </p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
  following table summarizes stock option activity during the six months ended
  September 30, 2006: </font> </p>
<p>
<table border="0" cellspacing="0" cellpadding="0" align="center">
  <tr>
    <td>
      <pre><b>                                                 Weighted
                                                 Average
                                   Options       Exercise
                                 Outstanding      Price
                                 -----------     --------
</b>Balance at March 31, 2006           312,130      $ 14.47
Granted                              12,000      $ 20.12
Exercised                            (2,030)     $  0.86
Terminated                             -             -
                                 -----------     --------
Balance at September 30, 2006       322,100      $ 14.76
                                 ===========</pre>
    </td>
  </tr>
</table>
<br>
<p>
<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 September 30, 2006, and changes
during the six months ended September 30, 2006, is presented below:</font>
<p>
<table border="0" cellspacing="0" cellpadding="0" align="center">
  <tr>
    <td>
      <PRE><b>                                                  Weighted
                                                  Average
                                                 Grant-Date
Nonvested Shares                    Shares       Fair Value
- ---------------------------        ---------     ----------
</b>Nonvested at March 31, 2006           3,500       $   6.05
Granted                              12,000       $  20.12
Vested                               (9,250)      $  17.46
Forfeited                              -          $    -
                                   ---------     ----------
Nonvested at September 30, 2006       6,250       $  16.18
                                   =========
</PRE>
    </td>
  </tr>
</table>
<font size="2" face="Times New Roman, Times, serif"><br>
<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following tables summarize information concerning
stock options outstanding and exercisable at September 30, 2006: <br>
</font><br>
<table border="0" cellspacing="0" cellpadding="0" align="center">
  <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      106,350    $  5.87           3.9       104,600    $  5.87
  10.01 - 20.12      165,750      15.53           8.0       161,250      15.40
  21.99 - 58.27       50,000      31.16           7.6        50,000      31.16
                  -----------   --------   -----------   -----------   --------
                     322,100    $ 14.76           6.6       315,850    $ 14.74
                  ===========                            ===========</PRE>
    </td>
  </tr>
</table>
<br>
<hr><br clear="all" style="page-break-before:always;">
<font face="Times New Roman, Times, serif" size="2"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
total intrinsic value of options exercised during the six months ended September
30, 2006 was $34,898. At September 30, 2006 the total intrinsic value of options
outstanding was $5,005,599 of which $4,920,279 were exercisable. The total intrinsic
value at September 30, 2006 is based on our closing stock price on the last trading
day of the quarter for in-the-money options.</font><p>
<br>

<font face="Times New Roman, Times, serif" size="2"> <b>NOTE 7. INCOME TAXES</b></font>
<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 significant cash 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 $1,261,249 and $458,005 were credited to "Additional
  paid-in capital" for the six months ended September 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><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
  February&nbsp;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&nbsp;22, 2003 through
  February&nbsp;11, 2005. On March&nbsp;6 and March&nbsp;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. These
  lawsuits were subsequently consolidated into a single case and a consolidated
  complaint was filed. The consolidated complaint generally alleges that the defendants
  violated the Securities Exchange Act of 1934 by issuing material misrepresentations
  concerning NVE&#146;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 and expect to continue to incur legal expenses related to these
  lawsuits. 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>
<br><br>
<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> <br>
  <br>
<hr> <br clear="all" style="page-break-before:always;">
<font face="Times New Roman, Times, serif" size="2"><b>Quarter ended September
30, 2006 compared to quarter ended September 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 border="0" cellspacing="0" cellpadding="0" align="center">
  <tr>
    <td>
      <PRE><b>                                      Percentage of Revenue           Period-
                                     Quarter ended Sept. 30          to-Period
                                     2006             2005            Change
                                    -------          -------         ---------
</b>Revenue
  Product sales                      85.9 %           66.2 %           86.8 %
  Research and development           14.1 %           33.8 %          (39.7)%
                                    -------          -------
Total revenue                       100.0 %          100.0 %           44.1 %
Cost of sales                        32.7 %           53.3 %
                                    -------          -------
Gross profit                         67.3 %           46.7 %

Total expenses                       25.1 %           29.9 %           20.7 %
                                    -------          -------
Income from operations               42.2 %           16.8 %          263.3 %
Net interest and other income         4.0 %            2.6 %          115.2 %
                                    -------          -------
Income before taxes                  46.2 %           19.4 %          243.0 %
Provision for income taxes           17.0 %            7.5 %          227.7 %
                                    -------          -------
Net income                           29.2 %           11.9 %          252.6 %
                                    =======          =======
</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 September 30,
2006 (the second quarter of fiscal 2007) was $4,398,368, an increase of 44% from
$3,051,922 for the quarter ended September 30, 2005 (the second quarter of fiscal
2006). The increase was due to an 87% increase in product sales to $3,777,060
from $2,021,672, partially offset by a 40% decrease in contract research and development
revenue to $621,308 from $1,030,250. 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 67% of revenue for the second quarter of fiscal 2007
  from 47% for the same quarter of fiscal 2006. The increase was due to higher
  product margins and a more profitable revenue mix consisting of 86% product
  sales versus 66% in the prior-year quarter.</font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research
  and development expense increased 9% to $566,246 for the quarter ended September&nbsp;30,
  2006 compared to $517,939 for the quarter ended September&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><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling,
  general and administrative expenses for the quarter ended September 30, 2006
  increased 36% to $535,213 compared to $394,980 for the quarter ended September
  30, 2005. The increase was primarily due to a $117,467 effect of SFAS No.&nbsp;123(R).
  $114,898 of the effect of SFAS No.&nbsp;123(R) was attributable to the automatic
  award of options on 12,000 shares of Common Stock to our directors on their
  initial election or reelection at our Annual Meeting of Shareholders.</font>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest
  income increased 94% to $149,440 for the quarter ended September&nbsp;30, 2006
  from $77,119 for the quarter ended September&nbsp;30, 2005. The increase was
  due to higher interest rates as well as an increase in interest-bearing investments,
  which were purchased primarily with cash generated from operations.</font></p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
  income totaled $1,283,471 for the quarter ended September&nbsp;30, 2006 compared
  to $363,968 for the quarter ended September&nbsp;30, 2005. The increase in net
  income was primarily due to increases in revenue and gross profit, partially
  offset by increases in expenses and provision for income taxes.</font>
<p> <font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted
  net income per share increased to $0.27 for the quarter ended September 30,
  2006 from $0.08 for the quarter ended September 30, 2005. The effect of SFAS
  No.&nbsp;123(R) was to reduce diluted net income per share by $0.02 for the
  quarter ended September 30, 2006.<br>
  </font><br>

<hr> <br clear="all" style="page-break-before:always;">
<font face="Times New Roman, Times, serif" size="2"><b>Six months ended September
30, 2006 compared to six months ended September 30, 2005</b></font>
<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 border="0" cellspacing="0" cellpadding="0" align="center">
  <tr>
    <td>
      <pre><b>                                     Percentage of Revenue            Period-
                                    Six Months Ended Sept. 30        to-Period
                                     2006             2005            Change
                                    -------          -------         ---------
</b>Revenue
  Product sales                      85.0 %           62.6 %           79.5 %
  Research and development           15.0 %           37.4 %          (47.0)%
                                    -------          -------
Total revenue                       100.0 %          100.0 %           32.2 %
Cost of sales                        35.3 %           54.4 %
                                    -------          -------
Gross profit                         64.7 %           45.6 %

Total expenses                       25.4 %           28.0 %           20.0 %
                                    -------          -------
Income from operations               39.3 %           17.6 %          195.1 %
Net interest and other income         3.5 %            2.9 %           60.4 %
                                    -------          -------
Income before taxes                  42.8 %           20.5 %          175.9 %
Provision for income taxes           15.8 %            7.7 %          168.9 %
                                    -------          -------
Net income                           27.0 %           12.8 %          180.1 %
                                    =======          =======</pre>
    </td>
  </tr>
</table>
<p><font size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
  revenue for the six months ended September 30, 2006 was $8,033,563, an increase
  of 32% from revenue of $6,077,470 for the six months ended September 30, 2005.
  The increase was due to an 80% increase in product sales to $6,830,388 from
  $3,805,922, partially offset by a 47% decrease in contract research and development
  revenue to $1,203,175 from $2,271,548. 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 size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross
  profit margin increased to 65% for the first six months of fiscal 2007 from
  46% for the first six months fiscal 2006. The increase was due to a more profitable
  revenue mix consisting of a higher percentage of product sales, and increased
  product margins. Increased product margins were due to price increases for calendar
  2006 and deployment of lower-cost coupler designs.</font></p>
<p>
<p><font size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research
  and development expenses increased 23% to $1,096,858 for the six months ended
  September 30, 2006 compared to $894,739 for the six months ended September 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;Selling,
  general and administrative expenses for the six months ended September 30, 2006
  increased 17% to $941,945 compared to $804,574 for the six months ended September
  30, 2005. The increase was primarily due to a $120,036 effect of SFAS No.&nbsp;123(R)</font><font face="Times New Roman, Times, serif" size="2">.
  $114,898 of the effect of SFAS No.&nbsp;123(R) was attributable to the automatic
  award of options on 12,000 shares of Common Stock to our directors on their
  initial election or reelection</font><font face="Times New Roman, Times, serif" size="2">
  at our Annual Meeting of Shareholders</font><font face="Times New Roman, Times, serif" size="2">.</font></p>
<p><font size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest
  income increased 80% to $261,346 for the six months ended September 30, 2006
  from $145,438 for the six months ended September 30, 2005. The increase was
  due to higher interest rates as well as an increase in interest-bearing investments,
  which were purchased primarily with cash generated from operations.</font></p>
<p><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
  income totaled $2,175,277 for the six months ended September 30, 2006 compared
  to $776,617 for the six months ended September 30, 2005. The increase in net
  income was primarily due to increases in revenue and gross profit, partially
  offset by increases in expenses and provision for income taxes.</font></p>
<p><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted
  net income per share increased to $0.45 for the six months ended September 30,
  2006 from $0.17 for the six months ended September 30, 2005. The effect of SFAS
  No.&nbsp;123(R) was to reduce diluted net income per share by $0.02 for the
  six months ended September 30, 2006.</font><br>
  <br>
<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
  September&nbsp;30,&nbsp;2006 we had $13,689,311 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 in the first quarter of fiscal 2007. </font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts
  receivable increased to $2,141,414 at September&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><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred
  revenue decreased to $39,107 at September&nbsp;30, 2006 compared to $77,373
  at March&nbsp;31, 2006. The decrease was primarily due to the satisfaction during
  the six months ended September 30, 2006 of our remaining $4,863 in obligations
  under a prepayment under our 2001 agreement, as amended, with Agilent Technologies,
  Inc., and the satisfaction of the obligations related to a government contract.</font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
  completely retired our capital lease obligations in June 2006, eliminating all
  of our debt. Capital lease obligations were $33,281 at March&nbsp;31, 2006.</font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
  made capital expenditures of $229,976 in the six months ended September&nbsp;30,
  2006, primarily for equipment to increase our production capacity for very small
  parts. 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 sales 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. The past two fiscal years our product sales have been
  less in the quarters ended December 31 than the immediately preceding quarters.
  This may be due in part to distributor ordering patterns or customer vacations
  and shutdowns late in the calendar year. This pattern may continue in the quarter
  ending December 31, 2006. Furthermore, we rely on several large customers for
  a large percentage of our revenue, and we expect certain customers to decrease
  their orders in the balance of the fiscal year compared to previous quarters
  because of their inventory status. Additionally, orders from our large customers
  can be canceled, postponed, or reduced without cause, and the loss of any of
  these customers could have a significant impact on our revenue and our profitability.</font>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contract
  research and development revenue will likely 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 to 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. There can be no assurance, however, that margin increases in sequential
  quarters will continue.</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>
<p>
<p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling,
  general and administrative expenses could continue to increase in the future
  due to expenses associated with compliance with the requirements of Section
  404 of the Sarbanes-Oxley Act of 2002 and legal expenses.</font>
<br><br>
<hr> <br clear="all" style="page-break-before:always;">
<font face="Times New Roman, Times, serif" size="2"><b>Recent accounting pronouncements</b></font>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
  September 2006, the Securities and Exchange Commission Office of the Chief Accountant and Divisions of Corporation
  Finance and Investment Management released Staff Accounting Bulletin No. 108,
  <i>Considering the Effects of Prior Year Misstatements when Quantifying Misstatements
  in Current Year Financial Statements</i>, that provides interpretive guidance
  on how the effects of the carryover or reversal of prior year misstatements
  should be considered in quantifying a current year misstatement. The SEC staff
  believes that registrants should quantify errors using both a balance sheet
  and an income statement approach and evaluate whether either approach results
  in quantifying a misstatement that, when all relevant quantitative and qualitative
  factors are considered, is material. This pronouncement is effective beginning
  in our fiscal year ending March 31, 2007. SAB No. 108 has had no material impact
  on our financial statements.</font>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
  July 2006 the Financial Accounting Standards Board (FASB) issued FASB Interpretation
  No. 48, <i>Accounting for Uncertainty in Income Taxes--an interpretation of
  FASB Statement No. 109</i>, which prescribes a recognition threshold and measurement
  attribute for the financial statement recognition and measurement of a tax position
  taken or expected to be taken in a tax return. FIN 48 will be effective beginning
  in our fiscal year ending March 31, 2008. We have not yet evaluated the possible
  impact of implementation on our financial statements.</font>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
  September 2006, the FASB issued SFAS No. 157, <i>Fair Value Measurements</i>.
  This statement provides a single definition of fair value, a framework for measuring
  fair value, and expanded disclosures concerning fair value. Previously, different
  definitions of fair value were contained in various accounting pronouncements
  creating inconsistencies in measurement and disclosures. SFAS No. 157 applies
  under those previously issued pronouncements that prescribe fair value as the
  relevant measure of value, except SFAS No. 123(R) and related interpretations
  and pronouncements that require or permit measurement similar to fair value
  but are not intended to measure fair value. SFAS No. 157 will be effective beginning
  in our fiscal year ending March 31, 2009. We currently do not expect the adoption
  of SFAS No. 157 to have a material impact our financial statements.</font><p><br>
<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;The
  primary objective of our investment activities is to preserve principal while
  at the same time maximizing yields without significantly increasing risk. To
  achieve this objective, we maintain our portfolio of cash equivalents, short-term
  and long-term investments in a variety of securities, including government and
  corporate obligations and money market funds. Short-term and long-term marketable
  securities are generally classified as available-for sale-and consequently are
  recorded on the balance sheet at fair value with unrealized gains or losses
  reported as a separate component of accumulated other comprehensive income (loss),
  net of estimated tax. Our investments as of September&nbsp;30, 2006 have remaining
  maturities from six to 60 months. Available-for-sale securities had a market
  value of $13,326,043 at September&nbsp;30, 2006, representing approximately
  63% of our total assets.<p>
  <br>
<hr><br clear="all" style="page-break-before:always;">
<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. <br>
  <br>
  </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;
  Other than with respect to the risk factors below, there have been no material
  changes from the risk factors disclosed in our Annual Report on Form 10-K for
  the fiscal year ended March 31, 2006. The two risk factors below were disclosed
  on the Form 10-K and have been updated in light of requirements to evaluate
  our internal controls under Section&nbsp;404 of the Sarbanes-Oxley Act and consolidation
  of class action litigation.</font>
<p><br>
  <font face="Times New Roman, Times, serif" size="2"><b><i>While we believe that
  we currently have adequate internal control over financial reporting in place,
  in the future we expect our management will be required to evaluate our internal
  control over financial reporting under Section&nbsp;404 of the Sarbanes-Oxley
  Act of 2002 and any adverse results from such evaluation could result in a loss
  of investor confidence in our financial reports and have an adverse affect on
  our financial results and the market price of our common stock.</i></b></font>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
  required by Section&nbsp;404 of the Sarbanes-Oxley Act of 2002, the SEC adopted
  rules&nbsp;requiring each public company to include a management report assessing
  the effectiveness of its internal control over financial reporting in Annual
  Reports on Form&nbsp;10-KSB or 10-K, and the independent registered public accounting
  firm auditing such company&#146;s financial statements must attest to and report
  on management&#146;s assessment of the effectiveness of the internal control
  over financial reporting. We expect this requirement to apply to our Annual
  Report for the fiscal year ending March&nbsp;31, 2007 because we appear to have
  met the criteria for being an &#147;Accelerated Filer&#148; as of September&nbsp;30,
  2006. Under current regulations we will also be required to comply with Section&nbsp;404
  in our Annual Report for the fiscal year ending March&nbsp;31, 2008. While we
  currently anticipate being able to fully implement the requirements relating
  to compliance with Section&nbsp;404 in a timely fashion, we cannot be certain
  as to the timing of completion of our evaluation, testing and remediation actions
  or the impact of such activities on our operations due in large part to the
  lack of precedent available by which to measure compliance with such requirements.
  We may incur significant expenses in order to comply with the requirements.
  If we are not able to implement the requirements of Section&nbsp;404 in a timely
  manner or with adequate compliance, investors could lose confidence in the reliability
  of our financial statements, which could result in a decrease in the market
  price of our common stock. <b></b>In addition, to the extent we or our independent
  registered public accounting firm identify a significant deficiency in our internal
  control over financial reporting, the resources and costs required to remediate
  such deficiency could have a material adverse impact on our future results of
  operations.</font></p>
<p><font face="Times New Roman, Times, serif" size="2"><br>
  <b><i>We are presently involved in class action litigation.</i></b></font></p>
<p><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
  February&nbsp;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&nbsp;22, 2003 through
  February&nbsp;11, 2005. On March&nbsp;6 and March&nbsp;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. These
  lawsuits were subsequently consolidated into a single case and a consolidated
  complaint was filed. The consolidated complaint generally alleges that the defendants
  violated the Securities Exchange Act of 1934 by issuing material misrepresentations
  concerning NVE&#146;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 and expect to continue to incur legal expenses related to these
  lawsuits. Although insurance may cover a portion of any judgments, if we do
  not prevail in these lawsuits we may be required to pay substantial amounts
  which could have a material adverse impact on our future results of operation
  and financial condition. </font><br><br>
<hr><br clear="all" style="page-break-before:always;">
<font face="Times New Roman, Times, serif" size="2"><b>Item 4. Submission of Matters to a Vote of Security Holders.</b></font>
<p><font face="Times New Roman, Times, serif" size="2"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
  Annual Meeting of Shareholders was held on August 14, 2006. Proxies for the
  meeting were solicited pursuant to Regulation 14 under the Exchange Act. There
  was no solicitation in opposition to the nominees as listed in our proxy statement.
  There were 4,616,703 shares of common stock entitled to vote at the meeting
  with a majority represented at the meeting. All of our directors and director
  nominees attended the meeting. Each director nominee was elected to serve as
  a director until our next Annual Meeting of Shareholders. Each director nominee,
  Terrence W. Glarner, Daniel A. Baker, James D. Hartman, Patricia M. Hollister,
  and Robert H. Irish received more than 98% of the shares voted in their favor.</font></p>
<hr> <br clear="all" style="page-break-before:always;">
<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>October 18, 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>October 18, 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:
          October 18, 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. REYNDERS 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:
    October 18, 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>

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<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 September 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:
    October 18, 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>

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