UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                       WASHINGTON, D.C. 20549

                           FORM 10-KSB

[X]  Annual Report Pursuant to Section 13 or 15(d) of the
     Securities Exchange Act of 1934

For the year ended March 31, 2001
                                       OR
[ ]  Transition Report Pursuant to Section 13 or 15(d) of the
     Securities Exchange Act of 1934

For the transition period from _____________________to____________________

Commission file Number      000-12196
                            ---------

                                NVE Corporation
                                ---------------
             (Exact name of registrant as specified in its charter)

                 Minnesota                                      41-1424202
                 ---------                                      ----------
(State or other jurisdiction of incorporation)               I.R.S. Employer
                                                          Identification number


11409 Valley View Road, Eden Prairie, Minnesota                         55344
-----------------------------------------------                      ----------
(Address of principal executive offices)                             (Zip code)

Issuer's telephone number, including area code: (952) 829-9217
                                                --------------

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  Common
stock, $0.01 par value ("Common Stock")

Check whether the issuer: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
                      YES [X]        NO [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-B is not contained, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or
any amendment to this Form 10-KSB. [ ]

Issuer's revenues for the most recent fiscal year ended March 31, 2001
totaled $7,165,665.

Based upon the $1.00 per share closing sales price of the
registrant's common stock as of June 1, 2001, the aggregate
value of the shares of Common Stock held by nonaffiliates as of
such date was approximately $4,230,000.

Common Stock - 16,921,228 shares outstanding as of June 1, 2001.

Transitional Small Business Disclosure Format (check one)   YES [ ]   NO [X]

                   Documents Incorporated By Reference
Portions of the Proxy Statement for NVE Corporation's 2001 Annual Meeting of
Shareholders are incorporated by reference into Part III of this Form 10-KSB to
the extent described in Part III.
<PAGE>
                                   PART I

FORWARD LOOKING STATEMENTS
         Certain statements included in this Annual Report on Form 10-KSB,
except for the historical information contained herein, may be forward-looking
statements within the meaning of Section 21E of the Exchange Act, which are
subject to the safe harbor created by that statute, and further, may contain
forward-looking statements that are made in reliance upon the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. The words
or phrases "will likely result," "are expected to," "will continue," "is
anticipated," "estimate," "project," "believe" or similar expressions identify
forward-looking statements. Actual results may be different from those
described in the forward-looking statements. Future events involve risks and
uncertainties. Some of these risks and uncertainties are outside the control of
management. Readers are cautioned against placing undue reliance on the
forward-looking statements due to these risks and uncertainties and are
cautioned to review the historical information and statements of risk contained
in the Company's Securities and Exchange Commission reports.

ITEM 1.  BUSINESS.

HISTORY AND BACKGROUND
         NVE Corporation ("NVE" or "the Company") develops, produces and
markets components that combine giant magnetoresistance ("GMR") materials with
integrated circuits.

         On November 20, 2000, the shareholders of Nonvolatile Electronics,
Incorporated (NVE) approved the merger of the company with and into Premis
Corporation ("Premis"), a publicly-traded corporation, with Premis surviving
under the new name NVE Corporation. Premis developed, marketed and supported a
line of enterprise-wide solutions to meet the information needs of multi-store
specialty and general merchandise retailing chains. In November 1999, Premis
completed a series of transactions resulting in the sale of substantially all
of its operating assets. By September, 2000, Premis had ceased all business
operations.

         NVE was incorporated under the laws of the state of Minnesota in 1989
as the result of research completed by the Company's founder, Dr. James
Daughton, while employed with Honeywell. Historically, NVE has been a research
and development (R&D) company funded largely by government contracts, and to a
lesser extent by licenses, royalties and the sales of products and equity.
Contract R&D has not only supplied revenues, but additionally, it has
helped to supplement the R&D required for the product areas and fund operations.

         NVE first sold and shipped products using GMR materials in 1995,
and produced the first known products combining GMR materials with integrated
circuits in 1998. NVE is recognized as a leader in both the development and
application of GMR materials and other advanced magnetic materials. NVE's
largest customer is the United States government and, although no current
problems exist with respect to any government contract or with the Company's
vibrant relationship with the government funding vehicles, disqualification as
a vendor to the United States government would cause serious setbacks for the
Company on a going forward basis and would likely hamper future R&D activity.

         NVE developed the capability to deposit and optically define
conductor, dielectric and metal films, and to fully integrate circuit and
magnetic device design. Additionally, NVE acquired certification to
manufacture products under ISO 9001. The Company's product areas, including
sensors, signal isolators and nonvolatile memories, are discussed below.
<PAGE>
PRODUCTS
         SENSORS. Sensors combine integrated circuits with GMR material. This
GMR material is deposited in layers and lithographically formed into resistors
which change value when introduced to a magnetic field. The resistors are then
connected together with transistors to form circuits that are sensitive to
magnetic fields. These circuits are then packaged in much the same way as
conventional integrated circuits. Other products developed by NVE are
produced by similar methods.

         Sensors are quite small and they are very sensitive to magnetic
fields. In addition, they are able to operate at relatively high temperatures
(125 degrees Centigrade and higher). This combination of attributes should
allow them to be used in a variety of industrial control applications.

         Over the past year, NVE has concentrated its marketing efforts
on pneumatic cylinder position sensing. As a result, three of the top four
users of sensors have started integrating the NVE sensor, and several other
smaller users are in the process of converting to the NVE sensor. New
applications the Company may target include in-bearing sensors, pacemakers,
anti-skid brake systems ("ABS"), currency detection and medical electronics.

         The Company has a portfolio of US and foreign patents for the GMR
materials used in its sensor and a US patent for the circuit configuration. The
Company has also obtained know-how in the following areas: sputtering of the
GMR materials; maintenance of process and packaging compatibility with
integrated circuits; plating of thick magnetic materials for shielding and flux
concentration; sensor and circuit design; and testing techniques. At this time,
the Company does not know of any direct competitor that manufactures a similar
sensor.

         Historically, NVE has used a combination of distributors,
manufacturers' representatives and direct sales for sales of the sensor. The
Company plans to continue to use this combination for the foreseeable future.
Distributors handle smaller orders (typically under $1,000), while
manufacturers' representatives and direct sales account for larger orders. The
largest sensor order from NVE totaled approximately $100,000.

         NVE is in the process of developing sensors for the industrial
controls, ABS and currency detection markets. The Company will continue this
development, as it typically takes from three to five years from start of
development to sales in the automotive markets, and from one to three years
from the start of development to sales in the industrial controls market.

         ISOLATORS. Isolators reduce or eliminate ground noise in
communications carried by wire which is the result of connecting electrical
circuits having independent grounds. In some cases, isolators may also
provide for limited protection against electrical damage. The isolator
developed by NVE uses the ISOLOOP-Registered Trademark-, an integrated
coil made by integrated circuit techniques that is electrically insulated from
a sensor made from GMR resistors and integrated circuits, and packaged in a
standard integrated circuit package. The resulting isolator is faster and
smaller than any other existing known approach, as well as being very cost
competitive.
<PAGE>
         The two main competing technologies of which the Company is aware
are opto-isolators and inductive isolators. The fastest opto-isolators
currently run at frequencies below 20 million cycles per second, whereas
ISOLOOP isolators operate at 100 million cycles per second, with the potential
to run ten times faster than the frequency currently achieved. Inductive
isolators require special data encoding in order to transmit logic signals,
whereas ISOLOOP isolators do not require such signals. Furthermore, ISOLOOP
isolators require less board area than either the opto-isolators or the
inductive isolators.

         Isolators are commonly used in a variety of communication networks.
Differences in ground potentials between pieces of electronics gear are
virtually impossible to eliminate, and the resulting noise is often much larger
than the logic signals transmitted. The isolator can virtually eliminate this
noise.

         As a result of the high speed of the ISOLOOP isolators, signal
isolation in high speed communications will be possible for systems using
random signal transmission in wires. Isolation in back planes of PC's and other
high speed systems may enable these systems to operate at higher speeds.

         As ISOLOOP products have the potential for high growth, the Company
currently anticipates that the sales of isolator products will account for a
significant portion of the Company's revenues in the future.

         NVE has received a basic patent on the use of a magnetic sensor and
integrated coils to construct an isolator. Patents containing several
improvements on this basic patent have also been filed. These patents,
together with know-how in the design, processing, packaging and testing of the
ISOLOOP products, are the primary barriers to those competing with the
Company's isolator products.

         Initial distribution channels for isolators have been established in
the United States, Europe, Japan, Korea, China and Taiwan. Domestically, up to
the time of the Merger, NVE had used direct sales and appointed
distributors for distribution of its isolators, however, future distribution
may include the use of additional distributors or manufacturers'
representatives. Additionally, the Company has participated in initial
discussions with a major producer of opto-isolators who may be interested in
"private labeling" of ISOLOOP products. Isolators have been sold for design
analysis and low volume production. The Company believes that, initially, its
isolators may be used in applications of data communications in the industrial
and telecommunications markets. The typical time from design to production
orders in these markets is one to three years.

         MRAM. Magnetoresistive computer memory technology ("MRAM") is a
nonvolatile memory, meaning that data is retained after electrical power to the
memory chip is removed, invented by Dr. Arthur Pohm and Dr. James Daughton
while they were employed at Honeywell. In MRAM, data is stored in the magnetism
of thin films of iron, nickel and cobalt alloys and then recovered through the
magnetoresistive properties of devices made chiefly of these alloys. Dr. James
Daughton founded NVE with the intent to develop one or more commercial
applications for MRAM and other GMR products. After the discovery of GMR, and
in conjunction therewith, a considerable amount of innovative work in MRAM had
been done at NVE. NVE invented several memory cells and modes
of operation that are being adapted by several large companies including
Motorola, IBM and Honeywell. Although MRAM is not currently in production at
the Company or elsewhere, there are ongoing development efforts at various
companies, including Motorola, Honeywell, USTC, IBM and Hewlett Packard.
Motorola has announced that it plans to be in production of MRAM in 2004.
<PAGE>
         The advantages that MRAM has over other solid state nonvolatile memory
technologies are its ability to write fast (less than 100 billionths of a
second) and indefinitely (other competing technologies are limited to about one
million write cycles and will wear out with continuous writing in less than a
second). Applications that could potentially use these properties include:
cameras and copiers, reconfigurable computing, cell phones and other "imbedded"
memory applications.

         The Company believes its MRAM patent coverage is broad. It has its own
MRAM, intellectual property, as well as a license to use Honeywell MRAM
technology and rights under license agreements with Motorola and Union
Semiconductor Technology Corporation (USTC). If MRAM products are produced
under the Company's license agreements, it could potentially earn significant
revenues from initial payments and royalties.

         There is also potential for the Company to produce MRAM niche
products. The Company is currently funded under a research contract to develop
a memory chip for use in reconfigurable computing.

         As MRAM is still in development stages at the Company and elsewhere,
it is difficult to forecast the potential revenues that the Company could earn
from the licensing and sale of niche memory. Current forecasts anticipate minor
revenues from MRAM for the next several years, however, this forecast may
change if holders of MRAM licenses have success in their product development
and introduction.

CONTRACT R&D
         Contract R&D provides a majority of the Company's revenues. Contract
R&D was the source of NVE's underlying patents and product developments for the
sensor, isolator and MRAM products.

         The Company has over 30 US patents issued or pending, as well as
several foreign patents issued or pending. It is projected that activities in
this area will result in additional intellectual property, enhancement to
current product lines, license revenue and possibilities for future product
areas. While contract R&D will be a very important component of the Company's
business, the percentage of total revenues from contract R&D may shrink if
there is significant growth in product sales.

COMPETITION
         Three of the Company's chief competitors in sensors are Honeywell,
Allegro and Phillips. Honeywell and Phillips make magnetoresistive sensors
using a traditional nickel iron alloy rather than the GMR materials used by the
Company. Allegro makes very cost competitive sensors using a Silicon Hall,
however, Silicon Hall sensors are not as sensitive to magnetic fields as those
of the Company. These competitors, as well as several other sensor producers,
have greater financial resources and larger R&D budgets and more fully
developed distribution systems than those of the Company.
<PAGE>
         Agilient, a Hewlett Packard spin-off, is the leading producer of
high speed opto-isolators. Some of the other top producers of opto-isolators
are Infineon, NEC, Toshiba and Fairchild Semiconductor. Other non-optical
isolators use inductive or capacitive isolation. Competitors in this category
include Analog Devices, Linear Technology and Maxim. The Company believes
that its ISOLOOP has higher speed, higher noise immunity and smaller components
than these competitors. These competitors have greater financial resources
and larger R&D budgets and more fully developed distribution systems than
those of the Company.

         Motorola, IBM, Hewlett Packard, USTC and Honeywell have significant
R&D efforts in MRAM technology. Hewlett Packard and USTC have stated they plan
to introduce MRAM products in the next year, and Motorola has stated that it
plans to introduce MRAM products within the next couple of years. Significant
new inventions by larger companies with greater financial resources and R&D
budgets could erode the value of the Company's MRAM technology, and the
licenses thereto.

RESEARCH AND DEVELOPMENT
         In Fiscal 2001 the Company's research and development consisted
primarily of contract research and development and commercial product research
and development. Contract research and development is primarily for U.S.
government agencies, which fund such developments. Major commercial product
research and development programs in the past fiscal year included the
development of anti-skid brake sensors, new position sensors, and medical
sensors. The cost of these sensor programs were at least partially borne by
customers. Additional commercial product research and development was directed
toward new configurations of the Company's ISOLOOP products, including ultra-
high-speed data transceivers. The costs of ISOLOOP research and development are
generally not borne by customers.

         Total research and development expenses were $5.05 million and $5.22
million for the years ended March 31, 2001 and 2000, respectively, of which
$3.68 million and $4.39 million, respectively, was contract research and
development. The balance was primarily commercial product research and
development in both periods.

SUPPLIERS
         The Company has several single-source semiconductor foundry suppliers
for certain integrated circuit wafers critical to production of its commercial
products. Significant interruption of supply from any of these vendors could
have a material adverse effect on the Company.

EMPLOYEES
         As of March 31, 2001, the Company had 61 employees, 55 of whom were
full time. Of the full-time employees, there were five general and
administrative employees, six sales and marketing employees, 23 technicians and
27 scientists. Eleven employees have earned doctorate degrees. No employee of
the Company is represented by a labor union or is subject to a collective
bargaining agreement, and the Company believes that it maintains good relations
with its employees.

ITEM 2.  PROPERTIES.
         The principal offices of the Company are located at 11409 Valley View
Road, Eden Prairie, Minnesota 55344. The Company leases this space, which
consists of approximately 20,000 square feet of office, production, and
laboratory space. The lease agreement has a term of five years, expiring
on December 31, 2003.
<PAGE>
ITEM 3.  LEGAL PROCEEDINGS.
         The Company is not currently a party to any pending legal proceeding
nor is any property of the Company subject to such proceeding. Furthermore, the
Company is not aware of any potential claims, by any governmental authority or
otherwise, that may be brought against it.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
         No matters were submitted to security holders during the quarter ended
March 31, 2001.
<PAGE>
                                  PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
         The Company's Common Stock is traded on the OTC Bulletin Board
under the symbol, "NVEC." The following table sets forth, for the fiscal
quarters indicated, a summary of the range of high and low bid information of
the common stock of the Company. Prices through the second quarter of fiscal
year ended March 31, 2001 ("Fiscal 2001"), represent high and low bids as
reported on the OTC Bulletin Board. Prices for the third quarter of Fiscal 2001
represent high and low bids as reported on the OTC Bulletin Board for the post-
dividend and post-merger period of December 6, 2000, to December 31, 2001.
Prices for the fourth quarter of Fiscal 2001 represent high and low bids as
reported on the OTC Bulletin Board. Such bid information reflects inter-dealer
prices, without retail mark-up, mark-down or commissions and does not
necessarily reflect actual transactions.
<TABLE>
<CAPTION>
                                                     COMMON STOCK
                                                     ------------
                                                  LOW            HIGH
                                                 ------         ------
        <S>                                      <C>            <C>
        FISCAL 2000 (YEAR ENDED MARCH 31, 2000)
        First Quarter                            $.594          $ .938
        Second Quarter                            .734           1.000
        Third Quarter                             .250           1.282
        Fourth Quarter                            .375           1.406

        FISCAL 2001 (YEAR ENDED MARCH 31, 2001)
        First Quarter                            $.438          $1.031
        Second Quarter                            .438            .818
        Third Quarter                              .75           1.250
        Fourth Quarter                            .875           1.438
</TABLE>

         The Company has never paid or declared any cash dividends on its
common stock. On December 4, 1999, in connection with the final sale of assets,
Premis Corporation made a distribution in partial liquidation to its
shareholders. The Company does not anticipate paying any dividends in
the foreseeable future, and intends to retain any earnings it may generate to
provide for the operation and projected expansion of its business.

         The Company issued unregistered securities in fiscal year 2001 under
Rule 506 of Regulation D promulgated under Section 4(2) of the Securities Act
of 1933, as amended. Approximately 15.9 million shares were issued to
approximately 75 shareholders of Nonvolatile Electronics, Incorporated, in
connection with the merger by and between Nonvolatile Electronics, Incorporated
and Premis Corporation. The Company also issued approximately 69,000 shares to
three individuals in connection with the exercise of warrants provided in
exchange for services rendered.

         The Company has approximately 175 shareholders of record, and
approximately 980 total shareholders.
<PAGE>
ITEM 6.
                           MANAGEMENT'S DISCUSSION
                 AND ANALYSIS OF FINANCIAL CONDITION AND
                           RESULTS OF OPERATIONS

GENERAL
         The Company is in the business of developing, producing and selling
components that combine certain magnetic materials with integrated circuits.
Over the past several years, NVE engaged in materials and device research and
development funded principally by contracts and grants from agencies of the US
government. NVE was able to license some of its technology, principally
nonvolatile memory technology, and has used license payments to establish
product designs and production of sensor and isolator products. The Company
will seek to expand product revenue while still relying on government contracts
for basic technology development. The expansion of product revenue will require
additional product development and marketing expenditures as well as increased
working capital to fund receivables and inventories.

PRO FORMA COMBINED FINANCIAL INFORMATION
         On November 21, 2000, Nonvolatile Electronics, Incorporated (NVE)
merged with NVE Corporation (f/k/a Premis Corporation). The merger has been
accounted for using the reverse purchase method of accounting. As the Company
issued shares of common stock of NVE Corporation in exchange for outstanding
shares of common stock of Merged NVE, the pre-merger shareholders of the
Company retain approximately 6% of the outstanding shares of common stock of
the Company. In applying generally accepted accounting principles ("GAAP"), the
merger was accounted for as a reverse acquisition by Merged NVE. Under GAAP,
the merger is deemed to be equivalent, for accounting purposes, to Merged NVE's
issuance of its capital stock in exchange for the fair market value of the
assets and liabilities of the Company. As a result, no goodwill was recorded,
and the assets of Merged NVE will continue to be recorded at their historic
values.

         The following pro forma financial statement is presented as a
combination of the respective statements of Nonvolatile Electronics,
Incorporated (NVE) and NVE Corporation (f/k/a Premis Corporation) for the for
the year ended March 31, 2000, giving effect to the merger of NVE Corporation
as if such transaction had occurred on April 1, 1999. The statement has been

prepared pursuant to the rules of the SEC and, therefore, does not include all
information and notes required by generally accepted accounting principles for
complete financial statements. The pro forma statement is not necessarily
indicative of the statements of operations that would have been reported had
the merger of NVE Corporation occurred on the dates indicated.
<PAGE>
                                 NVE CORPORATION
           UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
                         FOR THE YEAR ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
                                         NONVOLATILE      NVE CORP.
                                         ELECTRONICS      (F/K/A
                                         INC. (NVE)     PREMIS CORP.)  ADJUSTMENTS    PRO FORMA
                                         --------------------------------------------------------
<S>                                      <C>            <C>            <C>            <C>
Revenues
  Research and development               $5,118,729                                   $5,118,729
  Product sales                             372,805                                      372,805
  License fees                              483,333                       250,000(2)     733,333
  System sales                                           3,198,703    (3,198,703)(1)           -
  Maintenance fees and other revenue                       658,590      (658,590)(1)           -
                                         --------------------------------------------------------
                                          5,974,867      3,857,293    (3,607,293)      6,224,867
Expenses
  Research and development                5,223,708                                    5,223,708
  Cost of sales                             204,754                                      204,754
  Selling, general & administrative       1,017,872        434,456      (434,456)(1)   1,017,872
  Maintenance fees and other                               176,521      (176,521)(1)           -
                                         --------------------------------------------------------
Total expenses                            6,446,334        610,977      (610,977)      6,446,334
                                         --------------------------------------------------------
(Loss) income from operations              (471,467)     3,246,316    (2,996,316)       (221,467)

  Gain on sale of Premis Systems Canada           -      1,529,537    (1,529,537)(1)           -
  Interest income                            15,083        129,705                       144,788
  Interest expense                          (44,019)        34,132                        (9,887)
  Option to purchase technology                                                                -

   Other                                                                                       -
                                         --------------------------------------------------------
(Loss) income before extraordinary item    (500,403)     4,939,690    (4,525,853)        (86,066)
Cumulative effect of accounting change     (611,110)                     611,110 (2)           -
Taxes                                                     (244,328)      244,328 (1)           -
                                         --------------------------------------------------------
Net (loss) income                        (1,111,513)     4,695,362    (3,670,415)        (86,066)
                                         ========================================================

Net loss per share - basic and diluted                        0.92

Weighted average shares outstanding                      5,099,412    11,506,168 (3)  16,927,523
</TABLE>

The following is a summary of the adjustments reflected in the unaudited pro
forma consolidated statements of operations:

         1. Reflects the elimination of discontinued operations of NVE
            Corporation prior to merger.

         2. Reflects the impact of SAB 101 adoption which occurred
            January 1, 2000.

         3. Represents the increase in the number of outstanding shares of
            common stock to reflect the reverse stock-split of 0.2 shares of
            common stock of NVE Corporation and, similarly, as of the date of
            merger, the conversion of all outstanding Nonvolatile Electronics,
            Incorporated (NVE) common shares into 3.5 shares of NVE Corporation
            common stock.
<PAGE>
RESULTS FROM OPERATIONS

         Results reported herein are for prior periods and not necessarily
indicative of results which may be expected in the future. Management has made
no predictions or estimates as to future operations, and no inferences as to
future operations should be drawn.

         The March 31, 2000 information presented has been calculated by adding
the three months ended March 31, 2000 to the year ended December 31, 1999
results of operations and subtracting the three months ended March 31, 1999.
March 31, 2000 information also includes adjustments for a change in accounting
principle.

         The table shown below summarizes the percentage of revenues for the
various items for the periods indicated.

<TABLE>
<CAPTION>
                                           Years Ended March 31,
                                           2001             2000
                                         -------          -------
<S>                                      <C>              <C>
Revenue:
  Research and development                62.0 %           82.2 %
  Product sales                           10.4              6.0
  License fees                            27.6             11.8
                                         -------          -------
Total revenues                           100.0            100.0
Total expenses                            98.2            101.4
                                         -------          -------
Net (loss) income                          1.8 %           (1.4)%
                                         =======          =======
</TABLE>
<PAGE>
         Revenues for the fiscal year ended March 31, 2001 ("Fiscal 2001") were
$7,165,000, an increase of 15% from revenues of $6,225,000 for the year ended
March 31, 2000 ("Fiscal 2000"). The increase in revenue was due to increased
license fees and product sales, offset by a decline in research and development
revenues.

         Research and development expenses decreased by 3% to $5,048,000 for
Fiscal 2001, as compared to $5,224,000 for Fiscal 2000. The decrease was due to
a lower volume of research contracts as the Company emphasized product sales
rather than contract research and development.

         Selling, general and administrative expenses for Fiscal 2001 increased
by 34% to $1,369,000 compared to $1,018,000 in the prior year. The increase is
due in part to higher expenses associated with commercial selling activities.

         Other Income/Expenses showed a gain of $16,000 for Fiscal 2001
compared to $135,000 for Fiscal 2000. This was primarily due to lower interest
income and higher interest expense.

         NVE had a net income for Fiscal 2001 of $127,000 compared to a net
loss of $86,000 for Fiscal 2000. Higher license revenue in 2001 more than
offset higher expenses associated with increased investment in commercial
selling activities.

FOREIGN CURRENCY TRANSACTIONS
         Due to product sales abroad, the Company has some limited revenue
risks from fluctuations in values of foreign currency. Foreign sales are
generally made in US currency, and currency transaction gains or losses in the
past two fiscal years were not significant.

LIQUIDITY AND CAPITAL RESOURCES
         Cash flow for Fiscal 2001 shows an increase of $1,110,000. The Company
had cash on March 31, 2001 of $1,492,000. The increase in cash is primarily due
to increased license revenue and cash from the merger. Cash continues to be
used for investing in commercial selling activities. Management believes
working capital is adequate for its current needs.

INFLATION
         Inflation has not had a significant impact on the operations of
NVE since its inception. Prices for products of NVE and for the materials and
labor going into their products are governed by market conditions. It is
possible that inflation in future years could impact both materials and labor
in the production of NVE's products. Rates paid by the US Government on
research and development contracts are adjustable with inflation.

ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
         Financial Statements and Notes are set forth on this Form
10-KSB following the signature page.

ITEM 8.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16 (A) OF THE EXCHANGE ACT.
         None.
<PAGE>
                                  PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

EXECUTIVE OFFICERS OF THE COMPANY
         The executive officers of the Company at the time of the filing of
this Form 10-KSB are as follows:

         Daniel A. Baker, President, Chief Executive Officer and Director, age
43, was elected as an officer and director of the Company in January, 2001. He
previously served as the President, Chief Executive Officer and Director of
Printware, Inc., from 1993 to the time he joined the Company. Dr. Baker has
25 years of experience in high-tech industries and has held executive positions
with both Minntech Corporation and Percom Data Corporation. He personally holds
15 patents. Dr. Baker earned Ph.D. and M.S. degrees in engineering from the
University of Minnesota, an M.B.A. in finance from the University of Minnesota
and a B.S. in engineering from Case Western Reserve University.

         James Daughton, Chief Technical Officer and Director, age 64, has
been a director of the Company since its inception and Chief Technical Officer
since January, 2001. Prior to January 2001, Dr. Daughton had served as NVE's
Chairman and Chief Executive Officer. From 1974 to 1989, Dr. Daughton held
various positions in research and product development, including the position
of Vice President of The Solid State Development Center for Honeywell, Inc.
From 1964 to 1974, Dr. Daughton held various positions in the development of
magnetic and semiconductor memory devices for IBM Corporation. Dr. Daughton
received a doctorate in electrical engineering from Iowa State University in
1963. He is a member of advisory boards at Iowa State University and the
University of New Orleans, and is an adjunct professor of physics at the
University of Minnesota. He has more than 20 issued or pending patents,
primarily dealing with thin magnetic films and devices.

         Richard George, Treasurer and Chief Financial Officer, age 57, has
served as the Chief Financial Officer of NVE since March, 1995. From 1991 to
1995, Mr. George served as Controller for NVE. From 1966 to 1991, Mr. George
held various financial and financial management positions in the areas of
operations and contracts at Honeywell Inc. Mr. George received a B.A. in
economics in 1966 from the University of Minnesota, where he later took
graduate courses in law and management.

         Other information required by this Item will be contained in the
Company's Proxy Statement for its 2001 Annual Meeting of Shareholders and is
incorporated herein by reference.
<PAGE>
ITEM 10.  EXECUTIVE COMPENSATION.
         The information required by Item 10 is incorporated herein by
reference to the section titled "Executive Compensation" contained in the
Company's Proxy Statement for its 2001 Annual Meeting of Shareholders.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
         The information required by Item 11 is incorporated herein by
reference to the section entitled "Security Ownership Of Certain Beneficial
Owners and Management" contained in the Company's Proxy Statement for its 2001
Annual Meeting of Shareholders.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
         The information required by Item 12 is incorporated herein by
reference to the section entitled "Certain Transactions" contained in the
Company's Proxy Statement for its 2001 Annual Meeting of Shareholders.
<PAGE>
                                    PART IV

ITEM 13.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) Exhibits.
     2.1  Agreement and Plan of Merger, dated as of September 22, 2000, by and
          between Nonvolatile Electronics, Incorporated and Premis
          Corporation.(1)

     3.1  Articles of Incorporation of NVE Corporation.(1)

     3.2  By-laws of NVE Corporation.(2)

     10.1 NVE Corporation 2000 Stock Option Plan.(3)

     10.2 Employment Agreement between the Company and Daniel A. Baker
          (filed herewith).

------------------------
(1)  Incorporated by reference to the Company's Definitive Proxy Statement on
     Schedule 14A filed on November 16, 2000.

(2)  Incorporated by reference to the Company's filing on Form 8-K dated
     November 21, 2000.

(3)  Incorporated by reference to the Company's filing on Form 8-K/A dated
     February 2, 2001.


(b) Reports on Form 8-K.
         The Company submitted an Amended Form 8-K dated February 2, 2001,
Amendment No. 1 relating to the merger between Nonvolatile Electronics,
Incorporated and Premis Corporation, including financial statement schedules
for the period ended September 30, 2000.
<PAGE>
                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on behalf of the undersigneds thereunto duly authorized.


                                       NVE CORPORATION


Dated:   June 1, 2001                  By /s/ Daniel A. Baker
                                          -------------------------------------
                                          Daniel A. Baker
                                          President and Chief Executive Officer



                                       By /s/ Richard George
                                          -------------------------------------
                                          Richard George
                                          Chief Financial Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant on the dates in the capacities indicated.

          Name                         Title                          Date
    ------------------     -------------------------------        ------------

/s/ Terrence Glarner               Director and                   June 1, 2001
    ------------------         Chairman of the Board              ------------
    Terrence Glarner

/s/ Daniel A. Baker                   Director,                   June 1, 2001
    ------------------     President & Chief Executive Officer    ------------
    Daniel A. Baker           (Principal Executive Officer)

/s/ Richard George                   Treasurer and                June 1, 2001
    ------------------          Chief Financial Officer            ------------
    Richard George             (Principal Financial and
                                  Accounting Officer)

/s/ James Daughton                  Director and                  June 1, 2001
    ------------------         Chief Technical Officer            ------------
    James Daughton

/s/ Herbert Goronkin                   Director                   June 1, 2001
    ------------------                                            ------------
    Herbert Goronkin

/s/ Robert Irish                       Director                   June 1, 2001
    ------------------                                            ------------
    Robert Irish
<PAGE>
                         REPORT OF INDEPENDENT AUDITORS

Board of Directors
NVE Corporation


         We have audited the accompanying balance sheet of NVE Corporation
as of March 31, 2001 and the related statements of operations, shareholders'
equity and cash flows for the years ended March 31, 2001 and December 31, 1999,
and the three-month period ended March 31, 2000. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

         We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of NVE Corporation at
March 31, 2001 and the results of its operations and its cash flows for the
years ended March 31, 2001 and December 31, 1999, and the three-month period
ended March 31, 2000 in conformity with accounting principles generally
accepted in the United States.

         As discussed in Note 2 to the financial statements, effective
January 1, 2000, the Company changed its method of accounting for recognizing
revenue on technology licensing activities.


/s/ Ernst & Young LLP
Minneapolis, Minnesota
May 15, 2001
<PAGE>
                                 NVE CORPORATION
                                  BALANCE SHEET
                                  MARCH 31, 2001
<TABLE>
<S>                                                                           <C>
ASSETS
Current assets:
   Cash                                                                       $1,492,080
   Grants and contracts receivable                                             1,316,728
   Inventories                                                                 1,087,816
   Prepaid expenses and other assets                                              73,879
                                                                              ----------
Total current assets                                                           3,970,503
Fixed assets:
   Machinery and equipment                                                     1,500,823
   Furniture and fixtures                                                         35,499
   Leasehold improvements                                                        352,640
   Construction in progress                                                      165,802
                                                                              ----------
                                                                               2,054,764
   Less accumulated depreciation                                               1,356,469
                                                                              ----------
Assets                                                                           698,295
                                                                              ----------
Total                                                                         $4,668,798
                                                                              ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Note payable                                                               $  267,888
   Accounts payable                                                              384,300
   Accrued expenses                                                              237,244
   Deferred revenue                                                            1,315,422
                                                                              ----------
Total current liabilities                                                      2,204,854
Shareholders' equity:
   Common Stock                                                                  169,213
   Additional paid-in capital                                                  5,648,627
   Accumulated Deficit                                                        (3,353,896)
                                                                              -----------
Total shareholders' equity                                                     2,463,944
                                                                              -----------
Total liabilities and shareholders' equity                                    $4,668,798
                                                                              ===========
</TABLE>

                                        SEE ACCOMPANYING NOTES.
<PAGE>
                                 NVE CORPORATION
                             STATEMENT OF OPERATIONS
     YEAR ENDED MARCH 31, 2001, THREE MONTHS ENDED MARCH 31, 2000, AND
                           YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
                                         YEAR ENDED      THREE MONTHS ENDED          YEAR ENDED
                                         MARCH 31,             MARCH 31,             DECEMBER 31,
                                            2001          2000          1999           1999
                                         --------------------------------------------------------
                                                                       (unaudited)
<S>                                      <C>            <C>            <C>            <C>
Revenues
  Research and development               $4,441,259     $1,239,488     $1,149,117     $5,028,358
  Product sales                             749,407        140,113         41,823        274,515
  License fees                            1,974,999         83,333        100,000        500,000
                                         --------------------------------------------------------
                                          7,165,665      1,462,934      1,290,940      5,802,873
Expenses
  Research and development                5,047,924      1,241,713      1,064,576      5,046,571
  Cost of sales                             638,219         45,740         35,031        194,045
  Selling, general & administrative       1,368,767        352,627        295,779        961,024
                                         --------------------------------------------------------
Total expenses                            7,054,910      1,640,080      1,395,386      6,201,640
                                         --------------------------------------------------------

Income (loss) from operations               110,755       (177,146)      (104,446)      (398,767)

  Royalty expense                           (21,239)             -              -              -
  Interest income                            52,514          3,712          8,789         20,160
  Interest expense                          (33,919)        (8,043)        (8,750)       (44,726)
  Other income                               19,147              -              -              -
                                         --------------------------------------------------------
Income (loss) before cumulative effect
  of a change in accounting principle       127,258       (181,477)      (104,407)      (423,333)

Cumulative effect of a change
  in accounting principle                         -       (611,110)             -              -
                                         --------------------------------------------------------

Net income (loss)                           127,258       (792,587)      (104,407)      (423,333)
                                         ========================================================

Net income (loss) per share, basic and
  diluted, before cumulative effect of
  a change in accounting principle              .01           (.01)         (.01)           (.03)

Net income (loss) per share, basic and
  diluted, from cumulative effect of
  a change in accounting principle                -           (.04)             -              -
                                         --------------------------------------------------------
Net income (loss) per
  basic and diluted share                       .01           (.05)          (.01)          (.03)
                                         ========================================================

Pro forma net loss and net loss per
  share assuming change in accounting
  principle is applied retroactively:
    Net loss                                      -              -        (21,074)       (90,000)
    Net loss per basic and diluted share          -              -              -              -

Weighted average shares outstanding:
  Basic                                  16,852,042     16,561,400     15,947,191     15,873,469
  Diluted                                17,708,709     16,561,400     15,947,191     15,873,469
</TABLE>

                                        SEE ACCOMPANYING NOTES.
<PAGE>
                                 NVE CORPORATION
                        STATEMENT OF SHAREHOLDERS' EQUITY
     YEAR ENDED MARCH 31, 2001, THREE MONTHS ENDED MARCH 31, 2000, AND
                           YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
                                                                          Additional
                               Preferred Stock         Common Stock         Paid-in   Accumulated
                              Shares     Amount      Shares     Amount      Capital     Deficit        Total
                             ----------------------------------------------------------------------------------
<S>                          <C>         <C>        <C>         <C>       <C>         <C>           <C>
Balance, December 31, 1998    1,675,000  $ 16,750    2,562,992  $ 25,630  $4,342,426  $(2,265,234)  $2,119,572

  Issuance of common stock                             191,336     1,914     366,498                   368,412
  Net loss for year ended
    December 31, 1999                                                                    (423,333)    (423,333)
                             ----------------------------------------------------------------------------------

Balance, December 31, 1999    1,675,000    16,750    2,754,328    27,544   4,708,924   (2,688,567)   2,064,651

  Issuance of common stock                              59,500       595      24,122                    24,717
  Net loss for three months
    ended March 31, 2000                                                                 (792,587)    (792,587)
                             ----------------------------------------------------------------------------------

Balance, March 31, 2000       1,675,000    16,750    2,813,828    28,139   4,733,046   (3,481,154)   1,296,781

  Exercise of stock
    options and warrants                                47,120       471       6,444                     6,915
  Repurchase of common stock                            (3,823)      (38)    (19,022)                  (19,060)
  Recapitalization in
    connection with merger
    of Premis Corp.          (1,675,000)  (16,750)  14,064,103   140,641     928,159                 1,052,050
  Net income for year ended
    March 31, 2001                                                                 -      127,258      127,258
                             ----------------------------------------------------------------------------------
Balance, March 31, 2001               -  $      -   16,921,228  $169,213  $5,648,627  $(3,353,896)  $2,463,944
                             ==================================================================================
</TABLE>

                                             SEE ACCOMPANYING NOTES.
<PAGE>
                                 NVE CORPORATION
                              STATEMENT OF CASH FLOWS
     YEAR ENDED MARCH 31, 2001, THREE MONTHS ENDED MARCH 31, 2000, AND
                           YEAR ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>
                                         YEAR ENDED      THREE MONTHS ENDED          YEAR ENDED
                                         MARCH 31,             MARCH 31,             DECEMBER 31,
                                            2001          2000          1999           1999
                                         --------------------------------------------------------
                                                                       (unaudited)
<S>                                      <C>            <C>            <C>            <C>
OPERATING ACTIVITIES
Net income (loss)                        $  127,258     $(792,587)     $ (104,407)    $ (423,333)
Adjustments to reconcile net income
   (loss) to net cash provided by
   (used in) operating activities:
     Depreciation and amortization          256,275        67,249          54,850        236,977
     Cumulative effect of a change
     in accounting principle                      -       611,110               -              -
     Changes in operating
       assets and liabilities:
       Grants and contracts receivable     (358,570)       (2,844)        (63,608)      (167,191)
       Inventories                         (503,841)       79,241        (128,654)      (168,784)
       Prepaid expenses and other           (32,252)        1,049          (3,381)       (17,127)
       Accounts payable and
         accrued expenses                   271,837        11,802         (89,809)       (73,278)
       Deferred revenue                     787,645       (83,333)              -              -
       Billings in excess of costs on
         research contracts                 (82,879)      (56,594)        (62,436)        95,055
                                         --------------------------------------------------------
Net cash provided by (used in)
   operating activities                     465,473      (164,907)       (397,445)      (517,681)

INVESTING ACTIVITIES
Purchases of fixed assets                  (359,556)      (27,180)        (70,170)      (292,409)
                                         --------------------------------------------------------
Net cash used in investing activities      (359,556)      (27,180)        (70,170)      (292,409)
                                         --------------------------------------------------------

FINANCING ACTIVITIES
Net proceeds from sale of common stock        6,915        24,717           7,881        261,081
Repurchase of common stock                  (19,060)            -               -              -
Net proceeds from sale of common stock
  from merger                             1,052,050             -               -              -
Net proceeds from (repayment of)
  note payable                              (36,015)      (13,985)              -        (32,112)
                                         --------------------------------------------------------
Net cash provided by financing activities 1,003,890        10,732           7,881        228,969
                                         --------------------------------------------------------
Increase (decrease) in cash               1,109,807      (181,355)       (459,734)      (581,121)
Cash at beginning of period                 382,273       563,628       1,144,749      1,144,749
                                         --------------------------------------------------------
Cash at end of period                    $1,492,080     $ 382,273      $  685,015        563,628
                                         ========================================================
</TABLE>

                                         SEE ACCOMPANYING NOTES.
<PAGE>
                                 NVE CORPORATION
                          NOTES TO FINANCIAL STATEMENTS

1.   DESCRIPTION OF BUSINESS
         NVE Corporation ("NVE" or "the Company") develops, produces and
markets components that combine giant magnetoresistance ("GMR") materials with
integrated circuits. It has historically been a research and development
company funded largely by government contracts, and to a lesser extent by
product sales, licenses and royalties. The Company first sold and shipped
products using GMR materials in 1995 and produced the first known products
combining GMR materials with integrated circuits in 1998. The Company has the
capability to deposit and optically define conductor, dielectric and metal
films, and to fully integrate circuit and magnetic device design. The Company's
product areas include sensors, signal isolators and Magnetoresistive Random
Access Memory ("MRAM"). The Company is in the product development and
introduction stage for these products and has not earned significant revenue
from its operations. Nearly all revenues are generated from sources within the
United States.

Basis of Presentation
         On November 21, 2000, then privately-owned Nonvolatile Electronics,
Incorporated ("NVE") and publicly-held Premis Corporation completed a merger
with Premis surviving under the new name NVE Corporation. The Company issued
new shares of Common Stock in exchange for outstanding shares of NVE capital
stock. The shares of Common Stock issued to NVE shareholders represented 94% of
the common shares outstanding immediately following the consummation of the
merger. In applying generally-accepted accounting principles ("GAAP"), the
Merger has been deemed to be equivalent, for accounting purposes, to NVE's
issuance of capital stock in exchange for the fair-market value of the assets
and liabilities of the Company. As a result, no goodwill has been recorded, and
the assets of NVE are recorded at their historic values.

         Concurrent with the merger, NVE Corporation adopted the Premis
Corporation fiscal year ended March 31. The audited transition period report
from January 1, 2000, to March 31, 2000 has been presented along with the
unaudited comparative prior period transition period from January 1, 1999 to
March 31, 1999.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a remaining maturity
of three months or less when purchased to be cash equivalents.

REVENUE RECOGNITION
Revenue from product sales to direct customers is recognized upon shipment.
Revenue from licensing and technology development programs, which is
nonrefundable and for which no significant future obligations exist, is
recognized when the license is signed. Revenue from licensing and technology
development programs, which is refundable, recoupable against future royalties,
or for which future obligations exist, is recognized when the Company has
completed its obligations under the terms of the agreements. Revenue from
royalties is recognized upon the shipment of product from the Company's
technology license partners to direct customers. Certain research and
development activities are conducted for third parties and such revenue is
recognized as the services are performed.
<PAGE>
NEW ACCOUNTING PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition," which provides
guidance on the recognition, presentation and disclosure of revenue in
financial statements. SAB 101 requires that license and other up-front fees
received from research collaborators be recognized over the term of the
agreement unless the fee is in exchange for products delivered or services
performed that represent the culmination of a separate earnings process.
Effective January 1, 2000, the Company adopted SAB 101. As a result of the
adoption, the Company reported a cumulative effect of a change in accounting
principle in the amount of $611,110, or $.04 per share, which represents the
deferral of recoupable up-front license fees for which the earnings process is
not complete. The Company recognized $333,332 and $83,333 of revenue that was
included in the cumulative effect adjustment for the year ended March 31, 2001
and the three months ended March 31, 2000, respectively. The effect of that
revenue was to increase income by the amounts reported.

In June, 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS
No. 133 establishes accounting and reporting standards for derivative
instruments and for hedging activities. It requires an entity recognize all
derivatives as either assets or liabilities at fair value. This statement is
effective for all fiscal quarters beginning after June 15, 2000. The Company
adopted SFAS No. 133 effective April 1, 2001. The adoption of SFAS No. 133 did
not impact the Company's financial position or its results of operations.

INVENTORIES
Inventories are stated at lower of cost, first-in, first-out (FIFO) method, or
market.

FIXED ASSETS
Fixed assets are stated at cost. Depreciation of machinery and equipment, and
furniture and fixtures is recorded over the estimated useful lives of the
assets, generally five years, using the straight-line method. Amortization of
leasehold improvements is recorded using the straight-line method over the
lesser of the lease term or useful life of five years.

SUBLICENSE AGREEMENT
The sublicense agreement is stated at cost. Amortization was recorded over the
ten-year life of the agreement using the straight-line method.

STOCK-BASED COMPENSATION
The Company has adopted the disclosure-only provisions of Statement of FASB No.
123, "Accounting for Stock-Based Compensation," but applies Accounting
Principles Board ("APB") Opinion No. 25 and related interpretations in
accounting for its plans. Under APB 25, when the exercise price of employee
stock options equals the market price of the underlying stock on the date of
grant, no compensation expense is recognized.

NET INCOME PER COMMON SHARE
The Company calculates its income (loss) per share pursuant to SFAS No. 128,
"Earnings Per Share." Basic earnings per share is computed based upon the
weighted average number of common shares issued and outstanding during each
year. Diluted net income per share amounts assume conversion, exercise or
issuance of all potential common stock instruments (stock options, warrants and
convertible preferred stock). Potentially dilutive securities including
warrants and stock options are excluded from diluted earnings per share for all
periods except fiscal year 2001 because these securities would be anti-
dilutive. Stock options were not included in the computation of diluted
earnings per share per share if the exercise prices of the options were greater
than the market price of the common stock. The following table reflects the
components of common shares outstanding in accordance with SFAS 128. The
results for March 31, 2000 and December 31, 1999 reflect the conversion of NVE
shares at a rate of 3.5:1 and the conversion of Premis Corporation shares at a
ratio of 1:5.
<PAGE>
<TABLE>
<CAPTION>
                                               YEAR ENDED  3 MOS. ENDED        YEAR ENDED
                                                MARCH 31,    MARCH 31,   MARCH 31,     DEC. 31,
                                                  2001         2000        1999          1999
                                               --------------------------------------------------
<S>                                            <C>          <C>          <C>          <C>
Weighted avg. common shares outstanding-basic  16,852,042   16,561,400   15,947,191   15,873,469
Effect of dilutive securities:
  Stock options                                   848,374            -            -            -
  Stock warrants                                    8,293            -            -            -
                                               --------------------------------------------------
Shares used in computing net income (loss)
  per common share - diluted                   17,708,709   16,561,400   15,947,191   15,873,469
                                               ==================================================
</TABLE>

SEGMENT INFORMATION
The Company follows the provisions of SFAS No. 131, "Disclosures About Segments
of an Enterprise and Related Information." The Company derives its revenue from
one industry segment, government contracts. Until such time as the Company
diversifies its operations, this pronouncement has no significant impact on the
reporting practices of the Company.

INCOME TAXES
The Company accounts for income taxes using the liability method. Deferred
income taxes are provided for temporary differences between the financial
reporting and tax bases of assets and liabilities.

USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from the estimates.

FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash and cash equivalents,
short-term trade receivables and accounts and note payable. The carrying values
of the Company's financial instruments approximate fair value due to their
short-term nature.

ACCOUNTING FOR LONG-LIVED ASSETS
The Company records losses on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount.

3.   INVENTORIES
Inventories consist of the following:

<TABLE>
<CAPTION>
                                           MARCH 31,
                                            2001
                                         -----------
   <S>                                   <C>
   Raw materials                         $  346,151
   Work-in-progress                         589,099
   Finished goods                           302,566
                                         ----------
                                          1,237,816
   Less obsolescence reserve               (150,000)
                                         -----------
                                         $1,087,816
                                         ===========
</TABLE>
<PAGE>
4.   INCOME TAXES
As of March 31, 2001, the Company had net operating loss carry forwards of
approximately $3,158,000 which expire in fiscal years 2006 through 2020 and
$128,000 in research and development credits which can be used to offset
federal income taxes. Credits will expire in fiscal years 2004 through 2006.
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. Significant components
of the Company's deferred tax assets and liabilities are as follows:

<TABLE>
<CAPTION>
                                                          MARCH 31,
                                                             2001
                                                         ------------
   <S>                                                   <C>
   Deferred tax assets:
     Net operating loss carryforwards                    $ 1,140,000
     Book over tax depreciation                               53,000
     Accrued vacation                                        161,000
     Tax credit carryforward                                 128,000
                                                         ------------
                                                           1,482,000
   Valuation allowance                                    (1,482,000)
                                                         ------------
                                                         $         -
                                                         ============
</TABLE>

5.   NOTES PAYABLE
The Company has a note payable to a bank totaling $267,888 at March 31, 2001.
The note accrues interest at a rate equal to 1.5% above the bank's index rate
(9.0% at March 31, 2001). The note was amended in July 2000 and requires
monthly payments of $6,532 with a balloon payment of the outstanding principal
due July 15, 2001. Substantially all of the Company's assets are pledged as
collateral on the note.

Interest paid was $31,769, $44,726 and $8,043 for the years ended March 31,
2001 and December 31, 1999, and the three-month period ended March 31, 2000,
respectively.

6.   STOCK OPTIONS AND WARRANTS
The Company has an Employee Incentive Stock Option Plan. The plan provides for
issuance to employees, Directors, and certain service providers of incentive
stock options and non-statutory stock options. Generally, the options may be
exercised at any time prior to expiration, subject to vesting based on terms
of employment. Options granted are exercisable over a one- to six-year period
or a one- to seven-year period from date of grant at prices not less than fair
market value at the date the options are granted as determined by the Board of
Directors. A summary of the Incentive Stock Options is shown in the following
table:
<PAGE>
<TABLE>
<CAPTION>
                                                                             WEIGHTED AVERAGE
                                                  SHARES       OPTIONS        EXERCISE PRICE
                                                 RESERVED    OUTSTANDING         PER SHARE
                                              -----------------------------------------------
   <S>                                        <C>             <C>                   <C>
   Balance at December 31, 1998                2,268,787       1,508,500             .13
     Granted                                     (82,250)         82,250             .17
     Exercised                                         -         (29,750)            .09
     Terminated                                    8,750          (8,750)            .15
                                              ---------------------------

   Balance at December 31, 1999                2,195,287       1,552,250             .13
     Granted                                    (169,750)        169,750             .17
     Exercised                                         -        (208,250)            .11
     Terminated                                   47,250         (47,250)            .13
                                              ---------------------------

   Balance at March 31, 2000                   2,072,787       1,466,500             .14
     Adjustment for change in stock plans     (1,443,037)           -                  -
     Granted                                    (631,500)        631,500             .96
     Exercised                                         -         (96,250)            .07
     Terminated                                    1,750          (1,750)            .16
                                              ---------------------------
   Balance at March 31, 2001                           *       2,000,000            $.49
                                              ===========================
</TABLE>
*Pursuant to a certain employment agreement, the Company has committed to
378,250 option shares in excess of those authorized. The company plans to
seek shareholder approval to amend the Company's 2000 Stock Option Plan to
increase the shares reserved for issuance under the Plan.

As of March 31, 2001 and 2000 and December 31, 1999 there were exercisable
options outstanding covering 1,124,958, 752,510 and 884,597 shares,
respectively, at a weighted average exercise price of $.32, $.11 and $.11 per
share, respectively. The fair value of options granted was $.98, $.17 and $.15
for 2001, 2000 and 1999 respectively. The remaining average exercisable life
was 4.0 years at March 31, 2001.

The Company has elected to follow APB No. 25, "Accounting for Stock Issued to
Employees," and related Interpretations in accounting for its employee stock
options because, as discussed below, the alternative fair value accounting
provided for under SFAS No. 123, "Accounting for Stock Based Compensation,"
requires use of option valuation models that were not developed for use in
valuing employee stock options. Under APB 25, because the exercise price of the
Company's employee stock options equals the market price of the underlying
stock on the date of grant, no compensation expense is recognized.

Pro forma information regarding net income and income per share is required by
SFAS 123, and has been determined as if the Company had accounted for its
employee stock options under the fair value method of that Statement. The fair
value for these options was estimated at the date of grant using the Black-
Scholes option pricing model with the following weighted average assumptions:
risk-free interest rate of 5.6% for fiscal year 2001 and 6.0% for 2000, and
1999 respectively, expected volatility of 55%, a weighted-average expected life
of the options of four to six years, and no dividend yield.

Option valuation models were developed for use in estimating the fair value
of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of
highly subjective assumptions. Because the Company's employee stock options
have characteristics significantly different from those of traded options,
and because changes in the subjective input assumptions can materially affect
the fair value estimate, in management opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of its
employee stock options.

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. The Company's pro
forma information follows:
<PAGE>
<TABLE>
<CAPTION>
                                                     YEAR ENDED  3 MOS. ENDED  YEAR ENDED
                                                      MARCH 31,    MARCH 31,    DEC. 31,
                                                         2001        2000        1999
                                                     -------------------------------------
   <S>                                               <C>          <C>          <C>
   Net (loss) income applicable to common shares:
        As reported                                  $ 127,268    $(792,587)   $(423,333)
        Pro forma adjustment for stock options        (228,649)      (1,489)   $ (10,775)
        Pro forma net (loss) income                   (101,341)    (794,076)    (434,108)
</TABLE>

During the initial phase-in period, the effects of applying SFAS 123 for
recognizing compensation cost may not be representative of the effects on
reported net income for future years because the options in the Incentive Stock
Option Plans vest over several years and additional awards will be made in the
future.

In fiscal year 2001, the Company issued five-year warrants in return for
leasing rights. The warrants issued were exercisable immediately to purchase
up to 20,370 shares of the Company's Common Stock at an exercise price of $.57
per share. The value assigned to these warrants of $13,823 is being amortized
over the 36-month life of the leases.

7.   COMMON STOCK
The authorized stock of the Company is stated as 30,000,000 shares of Common
Stock, $.01 par value and 50,000,000 shares of all types. The Company's
Board of Directors may designate any series and fix any relative rights and
preferences to authorized but undesignated stock.

8.   PREFERRED STOCK
At March 31, 2001, the Company had no Preferred Stock outstanding. Prior to the
merger the Company had 1,675,000 shares of Preferred Stock outstanding, all of
which was converted to Common Stock at a 3.5:1 ratio.

9.   SUBLICENSE AGREEMENT
The Company's founder, upon founding the Company, obtained a Technology
License Agreement (the "Agreement") with Honeywell Inc. (now Honeywell
International Inc.). The Agreement, which has been sublicensed to the Company,
allows the use and sublicense of certain property dealing with MRAM technology
in markets which are not central to the present or presently intended business
markets of Honeywell, the developer of the technology.

In December 2000, the Company and Honeywell entered into a new agreement
under which the Company gave up the right to further sublicense Honeywell
MRAM technology from this date forward in exchange for a lump sum payment of
$1.2 million. Under this agreement, the Company retains the right to access
and use the Honeywell MRAM technology for product development.

10.   LICENSE AGREEMENTS
The Company has entered into two separate license agreements which provided for
advanced payments plus royalties of 1.0% based upon revenue generated by the
respective parties. To date, no royalty revenue has been recognized under
either agreement.
<PAGE>
11.   LEASES
The Company leases its facility under an operating lease that expires on
December 31, 2003. Operating expenses, including maintenance, utilities, real
estate taxes and insurance, are paid by the Company.

The Company also leases various pieces of equipment under operating leases.
Terms of the leases range from 36 to 60 months through March 2005, with
payments due the first of each month.

Total rent expense for operating leases, including building and equipment, was
$773,517, $659,464 and $156,610 for the years ended March 31, 2001 and December
31, 1999, and the three-month period ended March 31, 2000, respectively.

Future minimum payments under non-cancelable operating leases, consist of the
following at March 31, 2001:

<TABLE>
<CAPTION>
  YEAR                                OPERATING LEASE
  ENDED                                FUTURE MINIMUM
 MARCH 31,                                   PAYMENTS
 ---------                            ---------------
   <S>                                   <C>
   2002                                  $ 411,100
   2003                                    378,228
   2004                                    269,322
   2005                                      7,796
   2006                                          -
                                         ---------
   Total minimum lease payments          $ 382,746
                                         =========
</TABLE>

12.  COMMITMENTS
Minnesota Technology, Inc. (formerly the "Greater Minnesota Corporation"), a
Minnesota nonprofit economic development organization, provided a grant of
$60,000 to the Company in funds for the research and development of new
products. The Company must repay the grant plus interest at a rate of 8% in
the form of a royalty of not less than $60,000 at the rate of 2.5% of sales
of products developed, unless the grant is terminated by the Minnesota
Technology, Inc. or the research is unsuccessful. The grant was accounted for
as a reduction in the cost of the research and development, and any payments
made to Minnesota Technology, Inc. will be charged to operations as royalty
expense. No royalties have been paid under this agreement.

13.  EMPLOYEE BENEFIT PLAN
The Company has a 401(k) savings plan. All employees are eligible to
participate in the plan the first quarter subsequent to attaining the age of
21. Employees may contribute up to 15% of their gross wages. Effective January
1, 1999, the Company began matching contributions equal to 100% of the first 2%
of elective salary deferral contributions made by eligible participants. The
Company made matching contributions of $60,884, $55,839 and $15,510 for the
years ended March 31, 2001 and December 31, 1999, and the three months ended
March 31, 2000, respectively.