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| **Minnesota**                                                                                                      | **41-1424202**                                                                             |
|--------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------|
| State                            or other jurisdiction of incorporation or                            organization | (I.R.S.                            Employer Identification                            No.) |
|                                                                                                               |                                                                                            |
| **11409                            Valley View Road, Eden Prairie,                            Minnesota**          | **55344**                                                                                  |
| (Address of principal executive offices)                                                                           | (Zip Code)                                                                                 |

|                          Title              of each class                                  | Name              of each exchange on which registered |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------|
| **Common              stock, $0.01 par value (“Common Stock”)**                                                                                                                                                                                                                                                                                                                    | **The          NASDAQ Stock Market, LLC**              |

|      Large      accelerated filer [   ]                                                                                                  | Accelerated      filer [X]                                        |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------|
|      Non-accelerated          filer [   ] (Do not check if a smaller reporting          company)      | Smaller              reporting company [   ]  |

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PART                I

Item                1. Business.

Our                Strategy

Our                Products and Markets

Sensor                Products and Markets

Coupler                Products and Markets

MRAM                Products and Markets

Product                Manufacturing

Sales                and Product                Distribution

New                Product Status

Our                Competition

Principal                Suppliers and Raw                Materials

Intellectual                Property

Working                Capital Items

Major                Customers

Backlog

Seasonality

Research                and Development                Activities

Government                Regulations

Number                of Employees

Financial                Information About Geographical                Areas

Available                Information

Item                1A. Risk Factors.

Item                2. Properties.

Item                3. Legal Proceedings.

Item                4. Submission of Matters to a Vote of Security                Holders.

PART                II

Item                5. Market for Common Equity and Related Stockholder                Matters.

Stock                Price Performance                Graph

Item                6. Selected Financial Data.

Item                7. Management’s Discussion and Analysis of Financial                Condition and Results of Operation.

Results                of Operations

Liquidity                and Capital Resources

Item                7A. Quantitative and Qualitative Disclosures About Market                Risk.

Item                8. Financial Statements and Supplementary                Data.

Item                9A. Controls and Procedures.

PART                III

Item                10. Directors, Executive Officers and Corporate                Governance.

Item                11. Executive Compensation.

Item                12. Security Ownership of Certain Beneficial Owners and                Management and Related Stockholder Matters.

Item                13. Certain Relationships and Related Transactions, and                Director Independence.

Item                14. Principal Accountant Fees and Services.

PART                IV

Item                15. Exhibits and Financial Statement                Schedules.

SIGNATURES

FINANCIAL                STATEMENTS

Reports  of Independent Registered Public Accounting Firm

Balance                Sheets

Statements                of Income

Statements                of Shareholders’ Equity

Statements                of Cash Flows

Notes                to Financial                Statements

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PART  I

ITEM 1. BUSINESS.

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**

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|           •    | technological      innovations by us, our licensees, or our competitors;                                                                             |
|-------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|
|           •    | the announcement      of new products, product enhancements, contracts, or license agreements      by us, our licensees, or our competitors;         |
|           •    | the announcement      of changes in strategy or discontinuation of products by us or licensees;                                                      |
|           •    | changes in      requirements or demands for our products or technology;                                                                              |
|           •    | changes in      prices of our products and services or our competitors’ products and      services;                                             |
|           •    | quarterly      variations in our operating results;                                                                                                  |
|           •    | changes in      our revenue or revenue growth rates;                                                                                                 |
|           •    | changes in      revenue estimates, earnings estimates, or market projections by market analysts,      speculation in the press or analyst community; |
|           •    | short selling      and covering of short positions in our stock; and                                                                                 |
|           •    | general market      conditions or market conditions specific to particular industries served      by us, our customers, or our licensees.            |

ITEM 2. PROPERTIES.

ITEM 3. LEGAL PROCEEDINGS.

ITEM 4. 

PART    II

ITEM    5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

|             |  **Quarter            Ended** |
|-------------|------------------------------------|
| **3/31/08** |                                    | **12/31/07** |  | **9/30/07** |  | **6/30/07** |  | **3/31/07** |  | **12/31/06** |  | **9/30/06** |  | **6/30/06** |
| High        |                                    | $ | 31.73 |  | $ | 32.70 |  | $ | 41.95 |  | $ | 37.67 |  | $ | 32.30 |  | $ | 46.35 |  | $ | 39.85 |  | $ | 17.75 |
| Low         |                                    | $ | 19.50 |  | $ | 22.44 |  | $ | 29.44 |  | $ | 25.30 |  | $ | 20.75 |  | $ | 26.82 |  | $ | 14.06 |  | $ | 12.36 |

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**Tableof Contents**

|                                          | ** Balance          Sheet Data as of March 31** |
|------------------------------------------|------------------------------------------------------|
| **2008**                                 |                                                      | **2007** |  | **2006** |  |  **2005** |  |  **2004** |
| Cash,          cash equivalents, and     |
| marketable          securities           |                                                      | $ | 24,736,874 |  | $ | 18,289,191 |  | $ | 10,891,326 |  | $ | 7,717,264 |  | $ | 7,544,643 |
| Working          capital and             |
| marketable          securities           |                                                      | $ | 30,148,080 |  | $ | 22,850,508 |  | $ | 15,535,200 |  | $ | 11,342,300 |  | $ | 9,394,741 |
| Total          assets                    |                                                      | $ | 32,768,128 |  | $ | 25,010,494 |  | $ | 17,758,919 |  | $ | 14,190,004 |  | $ | 12,419,727 |
| Total          liabilities               |                                                      | $ | 1,254,646 |  | $ | 1,122,239 |  | $ | 980,808 |  | $ | 1,153,423 |  | $ | 1,686,483 |
| Total          shareholders’ equity |                                                      | $ | 31,513,482 |  | $ | 23,888,255 |  | $ | 16,778,111 |  | $ | 13,036,581 |  | $ | 10,733,244 |

|                                                                                                              | **       Income Statement Data for Years Ended March 31** |
|--------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------|
| **2008**                                                                                                     |                                                                | **2007** |  | **2006** |  | **2005** |  | **2004** |
| Revenue                                                                                                      |
| Product        sales                                                                                         |                                                                | $ | 18,505,650 |  | $ | 14,425,632 |  | $ | 8,345,967 |  | $ | 5,522,250 |  | $ | 5,393,540 |
| Contract        research                                                                                     |
| and        development                                                                                       |                                                                | 2,023,162 |  | 2,035,198 |  | 3,824,559 |  | 6,093,320 |  | 6,617,311 |
| Total        revenue                                                                                         |                                                                | $ | 20,528,812 |  | $ | 16,460,830 |  | $ | 12,170,526 |  | $ | 11,615,570 |  | $ | 12,010,851 |
|                                                                                                         |
| Gross        profit                                                                                          |                                                                | $ | 13,695,504 |  | $ | 10,673,172 |  | $ | 5,951,993 |  | $ | 4,604,836 |  | $ | 4,565,945 |
| Income        before taxes                                                                                   |                                                                | $ | 11,080,004 |  | $ | 7,191,803 |  | $ | 2,840,779 |  | $ | 1,619,850 |  | $ | 1,874,698 |
| Net income                                                                                                   |                                                                | $ | 7,187,384 |  | $ | 4,780,783 |  | $ | 1,797,746 |  | $ | 1,758,254 |  | $ | 2,107,720 |
| Net income        per share –                                                                          |
| diluted                                                                                                      |                                                                | $ | 1.51 |  | $ | 1.00 |  | $ | 0.39 |  | $ | 0.37 |  | $ | 0.45 |
| Weighted        average shares              |
| outstanding        – diluted                                                                           |                                                                |  | 4,763,101 |  |  | 4,771,297 |  |  | 4,667,994 |  |  | 4,733,955 |  |  | 4,726,759 |

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**Table of Contents**
ITEM 7.

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**Tableof Contents**

Results  of Operations

|                                                                                      | **Percentage          of Revenue          Year Ended March 31** |     | **Year-to-Year Change          Years Ended March 31** |
|--------------------------------------------------------------------------------------|-----------------------------------------------------------------|----------|---------------------------------------------------------------------------|
| **2008**                                                                             |                                                                 | **2007** |                                                                      | **2006** | **2007          to          2008** |  | **2006          to          2007** |
| Revenue                                                                              |
| Product            sales                                                             | 90.1                                                            | %        |                                                                           | 87.6 | % |  | 68.6 | % |  | 28.3 | % |  | 72.8 | % |
| Contract research and development       | 9.9                                                             | %        |                                                                           | 12.4 | % |  | 31.4 | % |  | (0.6 | )% |  | (46.8 | )% |
| Total            revenue                                                             | 100.0                                                           | %        |                                                                           | 100.0 | % |  | 100.0 | % |  | 24.7 | % |  | 35.3 | % |
| Cost            of sales                                                             | 33.3                                                            | %        |                                                                           | 35.2 | % |  | 51.1 | % |  | 18.1 | % |  | (6.9 | )% |
| Gross            profit                                                              | 66.7                                                            | %        |                                                                           | 64.8 | % |  | 48.9 | % |  | 28.3 | % |  | 79.3 | % |
| Expenses                                                                             |
| Selling,            general, and administrative                                      | 10.5                                                            | %        |                                                                           | 11.9 | % |  | 14.4 | % |  | 10.7 | % |  | 11.1 | % |
| Research and development                                                   | 7.2                                                             | %        |                                                                           | 13.2 | % |  | 14.2 | % |  | (31.6 | )% |  | 26.2 | % |
| Total            expenses                                                            | 17.7                                                            | %        |                                                                           | 25.1 | % |  | 28.6 | % |  | (11.7 | )% |  | 18.6 | % |
| Income            from operations                                                    | 49.0                                                            | %        |                                                                           | 39.8 | % |  | 20.3 | % |  | 53.5 | % |  | 164.9 | % |
| Net            interest and other income                                             | 5.0                                                             | %        |                                                                           | 3.9 | % |  | 3.0 | % |  | 59.6 | % |  | 74.8 | % |
| Income            before taxes                                                       | 54.0                                                            | %        |                                                                           | 43.7 | % |  | 23.3 | % |  | 54.1 | % |  | 153.2 | % |
| Income            tax provision                                                      | 19.0                                                            | %        |                                                                           | 14.7 | % |  | 8.5 | % |  | 61.5 | % |  | 131.2 | % |
| Net            income                                                                | 35.0                                                            | %        |                                                                           | 29.0 | % |  | 14.8 | % |  | 50.3 | % |  | 165.9 | % |

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**Tableof Contents**

|                                    | **Payments        Due by Period** |
|------------------------------------|-----------------------------------|
| **Contractual        Obligations** |                                   | **Total** |  | **<1 Year** |  | **1-3        Years** |  | **3-5        Years** |  | **>5 Years** |
| Operating        Lease Obligations |                                   | $ | 1,931,517 |  | $ | 232,491 |  | $ | 486,839 |  | $ | 755,788 |  | $ | 456,399 |
| Purchase        Obligations        |                                   |   | 138,350 |  |   | 138,350 |  |   | - |  |   | - |  |   | - |
| Total                              |                                   | $ | 2,069,867 |  | $ | 370,841 |  | $ | 486,839 |  | $ | 755,788 |  | $ | 456,399 |

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**Tableof Contents**

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKETRISK.

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**Tableof Contents**
ITEM                        8. FINANCIAL STATEMENTS AND SUPPLEMENTARY                        DATA.

|                                                 | **Unaudited;            Quarter Ended**        |
|-------------------------------------------------|------------------------------------------------|
|                                                 |                                                | **March            31, 2008** |  | **Dec.            31, 2007** |  | **Sept.          30, 2007** |  |  **June          30, 2007** |
| Revenue                                         |
| Product            sales                        |                                                | $ | 5,674,879 |  | $ | 4,249,809 |  | $ | 4,311,862 |  | $ | 4,269,100 |
| Contract            research and development    |                                                |   | 374,505 |  |   | 515,716 |  |   | 692,758 |  |   | 440,183 |
| Total            revenue                        |                                                |  | 6,049,384 |  |  | 4,765,525 |  |  | 5,004,620 |  |  | 4,709,283 |
| Cost            of sales                        |                                                |   | 1,876,335 |  |   | 1,663,045 |  |   | 1,850,960 |  |   | 1,442,968 |
| Gross            profit                         |                                                |  | 4,173,049 |  |  | 3,102,480 |  |  | 3,153,660 |  |  | 3,266,315 |
| Expenses                                        |
| Selling,            general, and administrative |                                                |  | 526,882 |  |  | 492,771 |  |  | 575,422 |  |  | 563,743 |
| Research            and development             |                                                |   | 318,889 |  |   | 347,344 |  |   | 314,037 |  |   | 507,637 |
| Total            expenses                       |                                                |  | 845,771 |  |  | 840,115 |  |  | 889,459 |  |  | 1,071,380 |
| Income            from operations               |                                                |  | 3,327,278 |  |  | 2,262,365 |  |  | 2,264,201 |  |  | 2,194,935 |
| Income            before taxes                  |                                                |   | 3,564,330 |  |   | 2,585,160 |  |   | 2,511,058 |  |   | 2,419,456 |
| Net            income                           |                                                | $ | 2,252,982 |  | $ | 1,702,            293 |  | $ | 1,644,774 |  | $ | 1,587,335 |
| Net          income per share – diluted   |                                                | $ | 0.47 |  | $ | 0.36 |  | $ | 0.34 |  | $ | 0.33 |
|                                                 | **             Unaudited; Quarter Ended** |
|                                                 |                                                |  **March 31, 2007** |  |  **Dec.          31, 2006** |  |  **Sept.          30, 2006** |  |  **June          30, 2006** |
| Revenue                                         |
| Product            sales                        |                                                | $ | 4,192,307 |  | $ | 3,402,937 |  | $ | 3,777,060 |  | $ | 3,053,328 |
| Contract            research and development    |                                                |   | 372,911 |  |   | 459,112 |  |   | 621,308 |  |   | 581,867 |
| Total            revenue                        |                                                |  | 4,565,218 |  |  | 3,862,049 |  |  | 4,398,368 |  |  | 3,635,195 |
| Cost            of sales                        |                                                |   | 1,563,493 |  |   | 1,385,163 |  |   | 1,439,181 |  |   | 1,399,821 |
| Gross            profit                         |                                                |  | 3,001,725 |  |  | 2,476,886 |  |  | 2,959,187 |  |  | 2,235,374 |
| Expenses                                        |
| Selling,            general, and administrative |                                                |  | 529,667 |  |  | 479,387 |  |  | 535,213 |  |  | 406,732 |
| Research            and development             |                                                |   | 534,967 |  |   | 544,779 |  |   | 566,246 |  |   | 530,612 |
| Total            expenses                       |                                                |  | 1,064,634 |  |  | 1,024,166 |  |  | 1,101,459 |  |  | 937,344 |
| Income            from operations               |                                                |  | 1,937,091 |  |  | 1,452,720 |  |  | 1,857,728 |  |  | 1,298,030 |
| Income            before taxes                  |                                                |   | 2,139,985 |  |   | 1,610,057 |  |   | 2,032,414 |  |   | 1,409,347 |
| Net            income                           |                                                | $ | 1,553,953 |  | $ | 1,051,553 |  | $ | 1,283,471 |  | $ | 891,806 |
| Net          income per share – diluted   |                                                | $ | 0.33 |  | $ | 0.22 |  | $ | 0.27 |  | $ | 0.19 |

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PART                          III

ITEM10. 

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**Tableof Contents**

ITEM  11.

ITEM 12. 

|                                      | **Number      of Securities to be Issued Upon Exercise of Outstanding Options,Warrants,      and Rights** |    | **Weighted-Average          Exercise Price of Outstanding Options, Warrants, and Rights** |    | **Number      of Securities Remaining Available for Future Issuance Under Equtiy Compensation      Plans (Excluding Securities Reflected in Column (A))** |
|--------------------------------------|---------------------------------------------------------------------------------------------------------------------|---------|-------------------------------------------------------------------------------------------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Plan        Category**             |                                                                                                                     | **(A)** | **(B)**                                                                                   | **(C)** |
| Equity        compensation plans     |
| approved        by security holders  |                                                                                                                     | 308,400 |                                                                                           | $16.09  |                                                                                                                                                                | 178,230 |
|                                 |
| Equity        compensation plans not |
| approved        by security holders  |                                                                                                                     | -       |                                                                                           | -       |                                                                                                                                                                | - |
|                                      |                                                                                                                |         |                                                                                           |    |                                                                                                                                                                |  |   |
| Total        at March 31, 2008       |                                                                                                                     | 308,400 |                                                                                           | $16.09  |                                                                                                                                                                | 178,230 |

ITEM 13. 

ITEM 14. 

PART  IV

**ITEM    15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.****(a) Financial Statements and Schedules**         The financial statements are provided pursuant    to Item 8 of this Report. Financial statement schedules have been omitted    since they are either not required or not applicable, or the required information    is shown in the financial statements or notes. 20**Tableof Contents****(b)                          Exhibits**** Exhibit #****Description**3.1Amended        and Restated Articles of Incorporation of the company as amended by the        Board of Directors effective November 21, 2002 (incorporated by reference        to our Quarterly Report on Form 10-QSB for the period ended December 31,        2002).3.2Bylaws          of the company as amended by the Board of Directors effective December          18, 2007 (incorporated by reference to our Current Report on Form 8-K          filed December 19, 2007).4Form                                    of Common Stock Certificate (incorporated by                                    reference to our Registration                                    Statement on Form S-8 filed July 20,                                    2001).10.1Lease                                    dated October 1, 1998 between the company and                                    Glenborough Properties, L.P.                                    (incorporated by reference to our Quarterly Report                                    on Form 10-QSB for the                                    period ended September 30, 2002).10.2First          amendment to lease between the company and Glenborough Properties, L.P.          dated September 18, 2002 (incorporated by reference to our Quarterly          Report on Form 10-QSB for the period ended September 30, 2002).10.3Second                                    amendment to lease between the company and Glenborough                                    Properties, L.P.                                    dated December 1, 2003 (incorporated by reference                                    to our Quarterly Report                                    on Form 10-QSB for the period ended December                                    31,                                    2003).10.4Notification                                    from Glenborough Properties, L.P. relating to                                    change in building ownership                                    (incorporated by reference to our Current Report                                    on Form 8-K filed October                                    11, 2005).10.5Notification                                    from Carlson Real Estate Company, Inc. relating                                    to change in building                                    ownership (incorporated by reference to our Current                                    Report on Form 8-K                                    filed October 11, 2005).10.6Third amendment to lease between the company and Carlson Real Estate Company, Inc. dated December 17, 2007(incorporated by reference to our Current Report on Form 8-K/A filed December 20, 2007).10.7*Employment          Agreement between the company and Daniel A. Baker dated January 29,          2001 (incorporated by reference to our Annual Report on Form 10-KSB          for the year ended March 31, 2001).10.8*NVE                                    Corporation 2000 Stock Option Plan as Amended                                    July 19, 2001 by the                                    shareholders (incorporated by reference to our                                    Registration Statement on                                    Form S-8 filed July 20, 2001).10.9+Agreement                                    between the company and Agilent Technologies,                                    Inc. dated September 27,                                    2001 (incorporated by reference to our Quarterly                                    Report on Form 10-QSB for                                    the period ended September 30,                                    2001).10.10Amendment                                    dated October 18, 2002 to Agreement between the                                    company and Agilent                                    Technologies, Inc. (incorporated by reference                                    to our Quarterly Report on                                    Form 10-QSB for the period ended December 31,                                    2002).10.11Notification                                    from Agilent Technologies of planned sale of                                    Agilent’s Semiconductor                                    Product Group (incorporated by reference to our                                    Current Report on Form 8-K                                    filed October 19, 2005).10.12Report                                    of completion of the divestiture of Agilent’s Semiconductor Products                                    business (incorporated by reference to our Current                                    Report on Form 8-K/A                                    filed December 6, 2005).10.13Amendment Number 2 to OEM Purchase Agreement dated September 10, 2007 to Agreement between AgilentTechnologies, Inc. (and subsequently assigned to Avago Technologies, Inc.) and the company (incorporated byreference to our Exhibit 10.5 filed with our Current Report on Form 8-K/A filed September 11, 2007).10.14*Amendment          No. 1 dated March 28, 2005 to Stock Option Agreement dated May 7, 2004          between the Company and Daniel A. Baker (incorporated by reference to          our Current Report on Form 8-K filed March 30, 2005).10.15Amendment                                    No. 1 dated March 28, 2005 to Stock Option Agreement                                    dated August 17, 2004                                    between the Company and Patricia M. Hollister                                    (incorporated by reference                                    to our Current Report on Form 8-K filed March                                    30,                                    2005).10.16Indemnification                                    Agreement by and between Pacesetter, Inc., a                                    St. Jude Medical Company,                                    d.b.a. St. Jude Medical Cardiac Rhythm Management                                    Division, and the                                    company (incorporated by reference to our Current                                    Report on Form 8-K filed                                    September 27, 2005).10.17+Supplier                                    Partnering Agreement by and between Pacesetter,                                    Inc., a St. Jude Medical                                    Company, d.b.a. St. Jude Medical Cardiac Rhythm                                    Management Division, and                                    the company (incorporated by reference to our                                    Current Report on Form 8-K                                    filed January                                    4, 2006).10.18+Amendment Number 1 to Supplier Partnering Agreement dated September 6, 2007 between Pacesetter, Inc., a St.Jude Medical Company, d.b.a. St. Jude Medical Cardiac Rhythm Management Division, and the company(incorporated by reference to our Current Report on Form 8-K/A filed September 10, 2007).10.19*Verbal          agreement with Curt A. Reynders (incorporated by reference to Item 1.01          of our Current Report on Form 8-K filed January 18, 2006).23Consent                                    of Ernst & Young LLP.31.1Certification                                    by Daniel A. Baker pursuant to Rule                                    13a-14(a)/15d-14(a).31.2Certification                                    by Curt A. Reynders pursuant to Rule                                    13a-14(a)/15d-14(a).32Certification                                    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.__________*Indicates a management contract or compensatory plan or arrangement.  +Confidential portions of this exhibit have been deleted and filed separately with the SEC under a request for confidentialtreatment pursuant to Rule 24b-2 or Rule 406.Copies of documents filed as exhibits to our Form 10-K  may be accessed from the “Investors” section of our Website (www.nve.com),  or obtained by making a written request to Curt A. Reynders, our Chief  Financial Officer. 21**Tableof Contents****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 its behalf by                          the undersigned, thereunto duly authorized.**NVE                          CORPORATION**(Registrant)/s/                          Daniel A. Bakerby                          Daniel                          A. BakerPresident                          and Chief Executive OfficerDate May  19, 2008Pursuant                          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 and in the                          capacities and on the dates indicated. **Name** **Title****Date** /s/                                    Terrence W. GlarnerTerrence                                    W. GlarnerDirector                                    andChairman                                    of the BoardMay          19, 2008/s/                                    Daniel A. BakerDaniel                                    A. BakerDirector,     President                                    & Chief Executive Officer(Principal                                    Executive Officer)May          19, 2008/s/                                    Curt A. ReyndersCurt                                    A. ReyndersTreasurer                                    andChief                                    Financial Officer(Principal                                    Financial andAccounting                                    Officer)May          19, 2008/s/                                    James D. HartmanJames                                    D. HartmanDirectorMay          19, 2008/s/                                    Patricia M. HollisterPatricia                                    M. HollisterDirectorMay          19, 2008/s/                                    Robert H. IrishRobert                                    H. IrishDirectorMay          19, 2008 22**Tableof Contents****NVE                          CORPORATION****INDEX                          TO****FINANCIAL                          STATEMENTS**   Reports                                    of Independent Registered Public                                    Accounting FirmF-2Balance                                    SheetsF-4Statements                                    of IncomeF-5Statements                                    of Shareholders’                                    EquityF-6Statements                                    of Cash FlowsF-7Notes                                    to Financial                                    StatementsF-8 F-1**Tableof Contents****REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**TheBoard of Directors and Shareholders of NVE CorporationWe have audited NVE Corporation’s internal control over financial reportingas of March 31, 2008, based on criteria established in *Internal Control -Integrated Framework* issued by the Committee of Sponsoring Organizations ofthe Treadway Commission (the COSO criteria). NVE Corporation’s managementis responsible for maintaining effective internal control over financial reporting,and for its assessment of the effectiveness of internal control over financialreporting included in the accompanying report of management entitled Management’sAnnual Report on Internal Control Over Financial Reporting. Our responsibilityis to express an opinion on NVE Corporation’s internal control over financialreporting based on our audit.We conducted our audit in accordance with the standards of the Public CompanyAccounting Oversight Board (United States). Those standards require that we planand perform the audit to obtain reasonable assurance about whether effective internalcontrol over financial reporting was maintained in all material respects. Ouraudit included obtaining an understanding of internal control over financial reporting,assessing the risk that a material weakness exists, testing and evaluating thedesign and operating effectiveness of internal control based on the assessed risk,and performing such other procedures as we considered necessary in the circumstances.We believe that our audit provides a reasonable basis for our opinion.A company’s internal control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertainto the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparationof financial statements in accordance with generally accepted accounting principles,and that receipts and expenditures of the company are being made only in accordancewith authorizations of management and directors of the company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorizedacquisition, use, or disposition of the company’s assets that could havea material effect on the financial statements.Because of its inherent limitations, internal control over financial reportingmay not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may becomeinadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate.In our opinion, NVE Corporation maintained, in all material respects, effectiveinternal control over financial reporting as of March 31, 2008, based onthe COSO criteria.We also have audited, in accordance with the standards of the Public Company AccountingOversight Board (United States), the balance sheets of NVE Corporation as of March 31,2008 and 2007, and the related statements of income, shareholders’ equity,and cash flows for each of the three years in the period ended March 31,2008, and our report dated May 14, 2008 expressed an unqualified opinion thereon./s/ Ernst & Young LLPMinneapolis, MinnesotaMay 14, 2008 F-2**Tableof Contents****REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**The Board of Directors and Shareholders of NVE Corporation  We have audited the accompanying balance sheets of NVE Corporation as of March 31,  2008 and 2007, and the related statements of income, shareholders’ equity,  and cash flows for each of the three years in the period ended March 31,  2008. 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 the standards of the Public Company  Accounting Oversight Board (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,  2008 and 2007, and the results of its operations and its cash flows for each  of the three years in the period ended March 31, 2008, in conformity with  U.S. generally accepted accounting principles.As discussed in Note 2, Summary of Significant Accounting Policies, to thefinancial statements, effective April 1, 2006, the Company adopted Statementof Financial Accounting Standards No. 123 (revised 2004), *Share-BasedPayment* using the modified prospective method.We also have audited, in accordance with the standards of the Public Company AccountingOversight Board (United States), NVE Corporation’s internal control overfinancial reporting as of March 31, 2008, based on criteria established in*Internal Control - Integrated Framework* issued by the Committeeof Sponsoring Organizations of the Treadway Commission and our report dated May14, 2008 expressed an unqualified opinion thereon./s/ Ernst & Young LLPMinneapolis, MinnesotaMay 14, 2008 F-3**Table ofContents****NVE                              CORPORATION****BALANCE                              SHEET****S****MARCH      31, 2008 and 2007** **March            31****2008****2007**ASSETSCurrent          assetsCash            and cash equivalents $1,885,867$397,423Marketable            securities, short term795,728982,415Accounts            receivable, net of allowance for   uncollectible            accounts of $15,0003,226,0272,005,005Inventories 2,456,8042,016,858Deferred            tax assets 453,4051,328,106Prepaid            expenses and other assets  529,616  333,587 Total          current assets9,347,4477,063,394Fixed          assetsMachinery            and equipment 5,205,2884,458,948Leasehold            improvements 436,794  413,482  5,642,0824,872,430Less            accumulated depreciation  4,276,680  3,834,683 Net          fixed assets1,365,4021,037,747Marketable          securities, long term 22,055,279  16,909,353 Total          assets$32,768,128 $25,010,494  LIABILITIES          AND SHAREHOLDERS’ EQUITYCurrent          liabilitiesAccounts            payable $434,808$502,595Accrued            payroll and other 632,338590,287Deferred            revenue 187,50029,357Total            current liabilities1,254,6461,122,239 Shareholders’          equityCommon            stock 46,38746,274Additional            paid-in capital18,539,53818,289,248Accumulated            other comprehensive income (loss)103,158(84,282)Retained            earnings  12,824,399  5,637,015 Total          shareholders’ equity 31,513,482  23,888,255 Total          liabilities and shareholders’ equity$32,768,128 $25,010,494 See                            accompanying notes. F-4**Tableof Contents****NVE                            CORPORATION****STATEMENTS                            OF INCOME****YEARS    ENDED MARCH 31, 2008, 2007, and 2006**  **Year            Ended March 31****2008****2007** **2006**RevenueProduct            sales$18,505,650$14,425,632$8,345,967Contract            research and development 2,023,162  2,035,198  3,824,559 Total          revenue20,528,81216,460,83012,170,526 Cost          of sales 6,833,308  5,787,658  6,218,533 Gross          profit13,695,50410,673,1725,951,993 ExpensesSelling,            general, and administrative2,158,8181,950,9991,756,142Research            and development 1,487,907  2,176,604  1,724,825 Total          expenses 3,646,725  4,127,603  3,480,967  Income          from operations10,048,7796,545,5692,471,026 Interest          income974,990621,577332,784Interest          expense-(589)(6,051)Other          income 56,235  25,246  43,020 Income          before taxes11,080,0047,191,8032,840,779 Provision            for income taxes3,892,6202,411,0201,043,033          Net          income$7,187,384 $4,780,783 $1,797,746  Net          income per share – basic$1.55 $1.03 $0.39  Net          income per share – diluted$1.51 $1.00 $0.39  Weighted          average shares outstandingBasic4,635,4704,620,3714,580,684Diluted4,763,1014,771,2974,667,994 See                            accompanying notes. F-5**Tableof Contents****NVE                            CORPORATION****STATEMENTS                            OF SHAREHOLDERS’ EQUITY****YEARS    ENDED MARCH 31, 2008, 2007, and 2006** **Accumulated            Other            Comprehen-            sive Income            (Loss)****Additional            Paid-In            Capital** **Retained            Earnings            (Deficit)**                           **Common            Stock****Shares****Amount**  **Total**Balance              at March 31, 20054,569,784$45,698$14,064,625$(132,228)$(941,514)$13,036,581Exercise              of stockoptions              and warrants38,720387173,547--173,934Shares              issued pursuantto              employee stockpurchase              plan6,4496579,967--80,032Comprehensive              income:Unrealized              loss on marketable securities---(34,680)(34,680)Net              income----1,797,7461,797,746Total              comprehensiveincome1,763,066Tax              benefit of stock-based              compensation 1,724,498  1,724,498 Balance              at March 31, 20064,614,95346,15016,042,637(166,908)856,23216,778,111Exercise              of stockoptions              and warrants12,43012426,355--26,479Comprehensive              income:Unrealized              gain on marketable securities---82,62682,626Net              income----4,780,7834,780,783Total              comprehensiveincome4,863,409Stock-based              compensation136,370136,370Tax              benefit of stock-based              compensation 2,083,886  2,083,886 Balance              at March 31, 20074,627,383 46,274 18,289,248 (84,282) 5,637,015 23,888,255 Exercise              of stockoptions              and warrants11,30011346,911--47,024Comprehensive              income:Unrealized              gain on marketable securities---187,440187,440Net              income----7,187,384   7,187,384Total              comprehensiveincome7,374,824Stock-based              compensation169,606169,606Tax              benefit of stock-based              compensation 33,773  33,773 Balance              at March 31, 20084,638,683 $46,387 $18,539,538 $103,158  $12,824,399  $31,513,482  See                            accompanying notes. F-6**Tableof Contents****NVE                            CORPORATION****STATEMENTS                            OF CASH FLOWS****YEARS    ENDED MARCH 31, 2008, 2007, and 2006**  **Year            Ended March 31****2008****2007****2006**OPERATING            ACTIVITIESNet            income$7,187,384$4,780,783$1,797,746Adjustments            to reconcile net income to net cashprovided            by operating activities:Depreciation            and amortization560,528530,050569,886Stock-based            compensation169,606136,370-Excess            tax benefits(33,773)(2,083,886)-Gain            (loss) on sale of fixed assets601-(24,581)Gain            on marketable securities, net(56,837)--Deferred            income taxes806,3072,289,687990,083Changes            in operating assets and liabilities:Accounts            receivable(1,221,022)(337,976)618,443Inventories(439,946)132,911(577,010)Prepaid            expenses and other assets(196,029)(102,175)(100,539)Accounts            payable and accrued expenses(25,736)222,72884,797Deferred            revenue 158,143  (48,016) (189,982)Net            cash provided by operating activities6,909,2265,520,4763,168,843 INVESTING            ACTIVITIESPurchases            of fixed assets(817,596)(321,997)(74,110)Proceeds            from sale of fixed assets1,500-25,500Purchases            of marketable securities(16,518,287)(9,506,521)(3,258,612)Proceeds            from maturities and sales of marketable securities 11,832,804) 1,340,019  - Net            cash used in investing activities(5,501,579)(8,488,499)(3,307,222) FINANCING            ACTIVITIESNet            proceeds from sale of common stock47,02426,479253,966Excess            tax benefits33,7732,083,886-Repayment          of capital lease obligations -  (33,281) (67,430)Net            cash provided by financing activities 80,797  2,077,084  186,536  Increase            (decrease) in cash and cash equivalents1,488,444(890,939)48,157Cash            and cash equivalents at beginning of year 397,423  1,288,362  1,240,205  Cash            and cash equivalents at end of year$1,885,867 $397,423 $1,288,362  Supplemental            disclosures of cash flow information:Cash            paid during the year for:Interest$-$589$6,051Income            taxes$3,254,313$44,300$52,950 See                            accompanying notes. F-7**Tableof Contents****NVE CORPORATION  NOTES TO FINANCIAL STATEMENTS****NOTE 1. DESCRIPTION OF BUSINESS**     We develop and sell devices that use spintronics,a nanotechnology that relies on electron spin rather than electron charge to acquire,store, and transmit information.**NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESCash and Cash Equivalents**     We consider all highly-liquid investments with maturitiesof three months or less when purchased to be cash equivalents.**Fair Value of Financial Instruments**     The carrying amount of cash and cash equivalents,accounts receivable, and accounts payable approximates fair value because of theshort maturity of these instruments. Fair values of marketable securities arebased on quoted market prices.**Marketable Securities**     We classify and account for marketable securitiesin accordance with Financial Accounting Standards Board (FASB) Statement of FinancialAccounting Standards (SFAS) No. 115, Accounting for Certain Investments inDebt and Equity Securities. Securities with original maturities greater than threemonths and remaining maturities less than one year are classified as short-termmarketable securities; securities with remaining maturities greater than one yearare classified as long-term marketable securities. Securities not due at a singlematurity date are classified by their average life.     We classify all of our marketable securities asavailable-for-sale, thus securities are recorded at fair market value and anyassociated unrealized gain or loss, net of tax, is included as a separate componentof shareholders’ equity, “Accumulated other comprehensive income.”We use a specific-identification cost basis to determine gains and losses.     We determine whether our marketable securities haveother than temporary impairments in accordance with SFAS 115 Paragraph 16,which indicates that an other-than-temporary impairment exists if it is probablethat the investor will be unable to collect all amounts due according to the contractualterms of a debt security. If we judged a decline in fair value for any securityto be other than temporary, the cost basis of the individual security would bewritten down. In accordance with SAB Topic 5M, we consider a number of factorsin determining whether other-than-temporary impairment exists, including: creditmarket conditions; the credit ratings of the securities; historical default ratesfor securities of comparable credit rating; the presence of insurance of the securitiesand, if insured, the financial condition of the insurer; the effect of marketinterest rates on the value of the securities; and the duration and extent ofany unrealized losses. We also consider our ability to hold the securities tomaturity based on our financial condition and anticipated cash flows. We havedetermined that no write-downs were required on available-for-sale securitiesduring fiscal 2008, 2007, or 2006.**Concentration of Risk and Financial Instruments**     Financial instruments potentially subject to significantconcentrations of credit risk consist principally of cash equivalents, marketablesecurities, and accounts receivable.     We invest our excess cash in U.S. Government agencysecurities, corporate- and municipal-backed notes and bonds, and other money marketinstruments. Our investment policy prescribes investment only in high-grade securities,and limits the amount of credit exposure to any one issuer.     Our customers include Agencies of the U.S. Governmentand other customers throughout the world. We generally do not require collateralfrom our customers, but we perform ongoing credit evaluations of their financialcondition. More information on accounts receivable is contained in the sectiontitled “Accounts Receivable and Allowance for Doubtful Accounts” ofthis Note.     Additionally, we are dependent on critical suppliersincluding our packaging vendors and suppliers of certain raw silicon and semiconductorwafers that are incorporated in our products.**Accounts Receivable and Allowance for Doubtful Accounts**     Accounts receivable are recorded net of an allowancefor doubtful accounts. We make estimates of the uncollectibility of accounts receivable.We specifically analyze accounts receivable, historical bad debts, and customercredit-worthiness when evaluating the adequacy of the allowance. We had no chargesor provisions to our allowance for doubtful accounts in fiscal 2008 or fiscal2007. Charges and provisions to our allowance for doubtful accounts were $157for fiscal 2006.. F-8**Tableof Contents****Inventories**       Inventories are stated at the lower of cost or  net realizable value. Cost is determined by the first in, first out method.  We record inventory reserves when we determine certain inventory is unlikely  to be sold based on sales trends, turnover, competition, and other market factors.**Product Warranty**       In general we warrant our products to be free  from defects in material and workmanship for one year. We maintain a reserve  for the estimated cost of maintaining product warranties.**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 five-year useful life. We record  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.**Revenue Recognition**       We recognize product revenue in accordance with  SAB No. 101, Revenue Recognition in Financial Statements, as amended by  SAB No. 104 and codified in SAB Topic 13, Revenue Recognition.**Product Revenue Recognition**       We recognize product revenue on shipment because  the terms of our sales are FOB shipping point, meaning that our customers (end  users and distributors) take title and assume the risks and rewards of ownership  upon shipment. Our customers may return defective products for refund or replacement  under warranty, and have other very limited rights of return. We maintain reserves  based on historical returns.       Shipping charges billed to customers are included  in product sales and the related shipping costs are included in selling, general,  and administrative expense. Such shipping costs were $28,930 for fiscal 2008  and $18,219 for fiscal 2007.       Payments from our distributors are not contingent  on resale or any other matter other than the passage of time, and delivery of  products is not dependent on the number of units resold to the ultimate customer.  There are no other significant acceptance criteria, pricing or payment terms  that would affect revenue recognition.       Under our agreement dated September 27, 2001  with Agilent Technologies, Inc. to distribute our couplers under its brand,  Agilent provided a refundable prepayment of $500,000. In accordance with SAB  No. 101 and SAB Topic 13A as amended by SAB No. 104, we classified  this prepayment as “Deferred revenue.” In accordance with the agreement,  we recognized the prepayment as revenue at a rate equal to a percentage of the  sale price to Agilent when we shipped products to Agilent or Avago Technologies,  Inc., and reduced deferred revenue by a corresponding amount. Inventory costs  associated with amortization of the prepayment were recognized as “Costs  of sales” as revenue was recognized. The 2001 prepayment was fully satisfied  during fiscal 2007. We executed Amendment No. 2 to the Agreement between  us and Agilent effective as of June 27, 2007. Among other provisions, Amendment  No. 2 provided for a nonrefundable payment of $250,000 by Avago to us.  In accordance with SAB No. 101 and SAB Topic 13A as amended by SAB  No. 104, we are recognizing revenue from the $250,000 payment over the  Amendment term ending June 27, 2010.**Accounting for Commissions and Discounts**       We sometimes utilize independent sales representatives  that provide services relating to promoting our products and facilitating product  sales but do not purchase our products. We pay commissions to sales representatives  based on the amount of revenue facilitated, and such commissions are recorded  as selling, general, and administrative expenses.       Our stocking distributors take title and assume  the risks and rewards of product ownership. We recognize discounts to our distributors  in accordance with Emerging Issues Task Force Issue No. 01‐09, Accounting  for Consideration Given by a Vendor to a Customer. EITF 01‐09 addresses  whether a vendor should recognize consideration given to a customer as an expense  or as an offset to revenue being recognized from that same customer. We presume  consideration given to a customer is a reduction in revenue unless both of the  following conditions are met: (i) we receive an identifiable benefit in  exchange for the consideration and the identifiable benefit is sufficiently  separable from the customer’s purchase of our products such that we could  have purchased the products or services from a third party; and (ii) we  can reasonably estimate the fair value of the benefit received. Under EITF 01‐09  we recognize discounts provided to our distributors as reductions in revenue.       Under certain limited circumstances, our distributors  may earn commissions for activities unrelated to their purchases of our products,  such as for facilitating the sale of custom products or research and development  contracts with third parties. We recognize any such commissions as selling, general, and administrative expenses. F-9**Tableof Contents****Research and Development Contract Revenue Recognition**     We recognize government contract revenue in accordancewith Accounting Research Bulletin No. 43, Chapter 11, Government Contracts.Revenue and gross profit are recognized as work is performed, based on actualcosts incurred.     Our government research and development contractsmay be either firm-fixed-price or cost-plus-fixed-fee. Cost-plus-fixed-fee contractsare cost-reimbursement contracts that also provide for payment to us of a negotiatedfee that is fixed at the inception of the contract. Cost-plus-fixed-fee contractsnormally require us to complete and deliver the specified end product (such asa final report of research accomplishing the goal or target) within the estimatedcost, if possible, as a condition for payment of the entire fixed fee. Our researchand development contracts do not contain post-shipment obligations.     Our commercial research and development contractsare generally firm-fixed-price contracts. Firm-fixed-price contracts provide fora price that is not subject to any adjustment based on our cost in performingthe contract. We apply the percentage-of-completion method to these contractsfor revenue recognition.**Revenue Recognition of Up-Front Fees**     We account for nonrefundable up-front fees fromlicensing and technology development programs in accordance with SAB Topic 13A.Revenue from up-front fees is deferred and recognized over the periods that thefees are earned. We recognize revenue from licensing and technology developmentprograms which is refundable, recoupable against future royalties, or for whichfuture obligations exist over the term of the agreement.**Income Taxes**     We account for income taxes using the liabilitymethod. Deferred income taxes are provided for temporary differences between thefinancial reporting and tax bases of assets and liabilities. We provide valuationallowances against deferred tax assets if we determine that it is less likelythan not that we will be able to utilize the deferred tax assets.**Research and Development Expense Recognition**     Research and development costs are expensed as theyare incurred.**Stock-Based Compensation**     Effective April 1, 2006 we adopted the provisionsof, and began accounting for, stock-based compensation in accordance with, SFASNo. 123 (revised 2004), Share-Based Payment. Under the fair value recognitionprovisions of SFAS No. 123(R), we measure stock-based compensation cost atthe grant date based on the fair value of the award and recognize the compensationexpense over the requisite service period, which is generally the vesting period.We estimate pre-vesting option forfeitures at the time of grant by analyzing historicaldata and revise those estimates in subsequent periods if actual forfeitures differfrom those estimates. Ultimately, the total expense recognized over the vestingperiod will only be for those awards that vest. We elected the modified-prospectivemethod of adopting SFAS No. 123(R) so that prior periods are not retroactivelyrevised. The valuation provisions of SFAS No. 123(R) apply to awards grantedafter the April 1, 2006 effective date. Stock-based compensation expensefor awards that were granted prior to the effective date but remain unvested onthe effective date is being recognized over the remaining service period usingthe compensation cost estimated for our SFAS No. 123 pro forma disclosures.**Net Income Per Share**     We calculate our net income per share in accordancewith SFAS No. 128, Earnings per Share. Basic earnings per share are computedbased on the weighted-average number of common shares issued and outstanding duringeach year. Diluted net income per share amounts assume conversion, exercise orissuance of all potential common stock instruments (stock options and warrants).The following table reflects the components of common shares outstanding in accordancewith SFAS No. 128:**Year Ended          March 31****2008****2007****2006**Weighted            average common shares outstanding – basic4,635,4704,620,3714,580,684Effect            of dilutive securities:Stock            options123,195146,15481,927Warrants4,4364,7725,383Shares            used in computing net income per share – diluted4,763,1014,771,2974,667,994**Use of Estimates**       The preparation of financial statements in conformity  with accounting principles generally accepted in the United States requires  us to make estimates and assumptions that affect the amounts reported in the  financial statements and accompanying notes. Actual results could differ from  those estimates.F-10**Tableof Contents****Recent Accounting Pronouncements**       In September 2006 the FASB issued SFAS No. 157,  Fair Value Measurements. SFAS No. 157 establishes a framework for measuring  fair value, clarifies the definition of fair value, and requires additional  disclosures about fair-value measurements. SFAS No. 157 applies only to  fair value measurements that are already required or permitted by other accounting  standards (except for measurements of share-based payments) and is expected  to increase the consistency of those measurements. SFAS No. 157, as issued,  is effective for fiscal years beginning after November 15, 2007. In February  2008, the FASB issued FASB Staff Position (FSP) SFAS No. 157-2, Effective Date  of FASB Statement No. 157 (FSP SFAS No. 157-2) that deferred of the effective  date of SFAS No. 157 for one year for certain nonfinancial assets and nonfinancial  liabilities. Accordingly, we adopted certain parts of SFAS No. 157 at the beginning  of fiscal year 2009 and we will adopt the remaining parts of SFAS No. 157  at the beginning of fiscal year 2010. We currently do not expect the adoption  in fiscal 2009 to result in a material impact to our financial statements. We  are evaluating the impact of the remaining parts of SFAS No. 157 that will  be adopted in fiscal 2010.       In February 2007 the FASB issued SFAS No. 159,  The Fair Value Option for Financial Assets and Financial Liabilities ‐  Including an amendment of FASB Statement No. 115, which permits entities  to choose to measure many financial instruments and certain other items at fair  value. We adopted SFAS No. 159 as of the beginning of fiscal 2009, and  we currently do not expect the adoption to have a material impact on our financial  statements.**NOTE 3. MARKETABLE SECURITIES**       As of March 31, 2008 and 2007 our marketable  securities were as follows:**Adjusted****Cost****Gross          Unrealized****Gains****Gross          Unrealized          Losses****Estimated      Fair Market      Value**As            of March 31, 2008U.S.            agency securities$2,435,145$8,018$(11,308)$2,431,855Corporate            notes and bonds7,094,79358,702(9,157)7,144,338Municipal            notes and bonds 13,159,161 149,104 (33,451) 13,274,814Total            marketable securities$22,689,099$215,824$(53,916)$22,851,007As            of March 31, 2007U.S.            agency securities$9,862,712$4,031$(122,620)$9,744,123Corporate            notes and bonds 8,156,755 21,735 (30,845) 8,147,645Total            marketable securities$18,019,467$25,766$(153,465)$17,891,768     Marketable securities with remaining maturitiesless than one year are classified as short-term, and those with remaining maturitiesgreater than one year are classified as long-term. The maturities of our marketablesecurities as of March 31, 2008 were as follows:**Total** **<1          Year** **1-3          Years** **3-5          Years** **>5          Years**$            22,851,007$795,728$1,349,776$20,705,503$-     Thefollowing table shows the gross unrealized losses and fair value of our investmentswith unrealized losses, aggregated by investment category and length of time thatindividual securities have been in a continuous unrealized loss position at March 31,2008:**Less        Than 12 Months****12        Months or Greater****Total****Fair      Market      Value****Gross      Unrealized****Losses****Fair      Market      Value****Gross      Unrealized****Losses****Fair      Market      Value****Gross      Unrealized****Losses**U.S.      agency securities$847,586$(6,193)$494,885$(5,115)$1,342,471$(11,308)Corporate      notes and bonds 3,506,909(9,157)- - 3,506,909 (9,157)Municipal      notes and bonds 3,323,926 (33,451) - -  3,323,926 (33,451)Total$7,678,421$(48,801)$494,885$(5,115)$8,173,306$(53,916)     Our gross unrealized losses on U.S. agency securitiesrelate to two securities and were primarily caused by market fluctuations. Becauseagency issues are of very high credit quality, and because we have the abilityand intent to hold both investments until a recovery of fair value, which maybe maturity, we do not consider either of the investments to be other-than-temporarilyimpaired at March 31, 2008.F-11**Table ofContents**        Three bonds make up the gross unrealized lossesfor corporate notes and bonds, and another three bonds make up such losses formunicipal notes and bonds. These losses were primarily due to interest rate fluctuationsand market-price movements. For each corporate- and municipal-backed bond withan unrealized loss, we determined that it was not probable that we would not collectall amounts due. In reaching this determination, we considered factors includingthe credit ratings of the bonds and historical default rates for securities ofcomparable credit rating. Because we determined that it was not probable thatwe would not collect all amounts due, and because we have the ability and intentto hold the bonds until a recovery of fair value, which may be maturity, we donot consider our corporate- or municipal-backed notes and bonds to be other-than-temporarilyimpaired at March 31, 2008.**NOTE  4. INVENTORIES**       Inventories consisted of the following:**March          31****2008****2007**Raw          materials$741,361$862,440Work-in-process1,184,062811,261Finished        goods 811,381  583,157 2,736,8042,256,858Less          inventory reserve (280,000) (240,000)Total          inventories$2,456,804 $2,016,858 **NOTE 5. STOCK-BASED COMPENSATION**       On April 1, 2006 we adopted SFAS 123(R),  which requires the measurement and recognition based on estimated fair values  of compensation expense for all share-based payment awards made to employees  and directors. SFAS 123(R) applies to awards including stock options and  employee stock purchase plans. SFAS 123(R) superseded Accounting Principles  Board (APB) Opinion No. 25, which we previously applied, for periods beginning  in fiscal 2007.       We adopted SFAS 123(R) using the modified  prospective transition method, which requires application of the accounting  standard as of April 1, 2006, the first day of fiscal 2007. Our financial  statements as of and for the fiscal years ended March 31, 2008 and 2007  reflect the impact of SFAS 123(R). In accordance with the modified prospective  transition method, our Financial Statements for prior periods have not been  restated to reflect the impact of SFAS 123(R). Therefore, the results for  fiscal 2008 and 2007 are not directly comparable to prior years.**Stock Option Plan**       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.**Valuation assumptions**       We use the Black-Scholes standard option-pricing  model to determine the fair value of stock options. The following assumptions  were used to estimate the fair value of options granted:**Year            Ended March 31****2008****2007****2006**Risk-free            interest rate4.2%4.9%3.9%Expected            volatility70%81%85%Expected            life (years)3.56.510Dividend            yield0%0%0%     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. F-12**Table  of Contents*****Expected life***       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. 123(R), we estimated that the expected life  was equal to the option term. For determining the fair value of options under  SFAS No. 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.***Risk-free interest rate***       The risk-free 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.***Volatility***       We use historical volatility to estimate the expected  volatility of our common stock.***Dividend yield***       We assume a dividend yield of zero because we  do not anticipate paying dividends in the foreseeable future.**Expenses related to share-based payments**       The following table shows the effect of our adoption  of SFAS No. 123(R) on our net income and earning per share for fiscal 2008  and 2007. Expenses and costs related to share-based payments are presented in  the same line or lines as cash compensation paid to the same employees. The  effect of SFAS No. 123(R) is included in “Selling, general, and administrative  expenses” and presented in the line titled “Stock-based compensation”  on our Statements of Cash Flows:**Year          Ended March 31****2008****2007**Effect            of SFAS No. 123(R) on net income$(169,606)$(136,370)Effect            of SFAS No. 123(R) on net income per share:Basic$(0.04)$(0.03)Diluted$(0.04)$(0.03)          Prior to the adoption of SFAS  No. 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. 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.          Prior to April 1, 2006  we accounted for our stock-based employee compensation plans under the recognition  and measurement principles of APB Opinion No. 25 and related interpretations.  The following table illustrates the effect on net earnings and net earnings  per share for fiscal 2006 if we had applied the fair value recognition provisions  of SFAS No. 123 to our stock-based employee compensation:  **Year            Ended            March 31, 2006**Net            income:As            reported$1,797,746Pro            forma adjustment for stock options (478,549)Pro forma        net income$1,319,197 Net            income per share:Basic            – as reported$0.39Basic            – pro forma$0.29 Diluted            – as reported$0.39Diluted            – pro forma$0.28**Tax effects of stock-based compensation**       Stock-based compensation increased deferred taxes  for fiscal 2008 by $60,599. F-13**Table      of Contents****General stock option information**         A summary of the status of our nonvested shares    at March 31, 2008 and changes during fiscal 2008 is presented below:**Nonvested            Shares****Shares** **Weighted            Average Grant-Date Fair Value**  Nonvested            at March 31, 20076,250$16.18Granted8,000$34.71Vested(11,250)$28.31Forfeited- $- Nonvested            at March 31, 20083,000 $20.12     The  following table summarizes information about options outstanding and options  exercisable at March 31, 2008:**Options          Outstanding** **Options          Exercisable****Ranges          of****Exercise          Prices** **Number****Outstanding****Weighted ****Average** **Exercise****Price****Weighted** **Remaining****Contractual****Life****(years)****Number****Outstanding****Weighted        Average        Exercise        Price**$         5.10 -   7.3584,650$6.533.084,650$6.5310.01 - 20.12165,75015.536.7162,75015.4421.99 - 58.2758,000 31.656.758,000 31.65308,400$16.095.6305,450$16.05     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. Exercise prices are not less than fair market value as determined by our Board at the date the options are granted.     A summary of our incentive stock options and warrants are shown in the following table:**Option**** Shares            Reserved****Options            Outstanding****Weighted          Average Option Exercise Price per Share****Warrants            Outstanding****Weighted            Average Warrant Exercise Price per Share**Balance            at March 31, 2005240,530308,550$13.10413,889$14.92Granted(56,500)56,500$15.48--Exercised-(38,720)$4.49--Terminated14,200 (14,200)$15.95(401,292)$14.96 Balance            at March 31, 2006198,230312,130$14.4712,597$13.51Granted(12,000)12,000$20.12--Exercised-(12,430)$2.13--Terminated- -  -(2,597)$2.86 Balance            at March 31, 2007186,230311,700$15.1810,000$16.28Granted(8,000)8,000$34.71--Exercised-(11,300)$4.16--Terminated- -  --  - Balance            at March 31, 2008178,230 308,400 $16.0910,000 $16.28      Exercisable options were outstanding covering 305,400shares at March 31, 2008; 305,450 shares at March 31, 2007; and 308,630shares at March 31, 2006 at weighted-average exercise prices of $16.05, $15.16,and $14.56 per share. The remaining weighted-average exercisable life was 5.6,6.3, and 7.1 years.     No warrants were issued in fiscal 2008, 2007, or 2006. Exercisable warrants covering 10,000 shares with a weighted-average exercise price of $16.28 were outstanding at March 31, 2008 and 2007. Exercisable warrants covering 12,597 shares at a weighted-average exercise price of $13.51 per share were outstanding at March 31, 2006. Remaining weighted-average exercisable life was 4.9, 5.9, and 5.6 years at March 31, 2008, 2007, and 2006. F-14**Tableof Contents**     The  total intrinsic value of options exercised during fiscal 2008 was $312,256.  At March 31, 2008 the total intrinsic value of options outstanding was  $3,070,608, of which $3,034,398 were exercisable. Intrinsic value is based on  our closing stock price on the last trading day of the fiscal year for in-the-money  options.       The total fair value of grants was $145,520 in  fiscal 2008. At March 31, 2008, there was $30,674 of total unrecognized  stock-based compensation expense, adjusted for estimated forfeitures, which  is expected to be recognized over a weighted-average period of 17 months  and will be adjusted for any future changes in estimated forfeitures.**NOTE 6. INCOME TAXES**       Income tax provisions for fiscal 2006 through  2008 consisted of the following:**Year          Ended March 31****2008****2007****2006**Current          taxesFederal$2,808,433$2,338,592$852,969State314,904278,309104,531 Deferred          taxesFederal719,197(188,476)76,196State 50,086  (17,405) 9,337 Income        tax provision$3,892,620 $2,411,020 $1,043,033      A reconciliation of income tax provisions at theU.S. statutory rate for fiscal 2006 through 2008 is as follows: **Year        Ended March 31****2008****2007****2006**Tax expense        at U.S. statutory rate$3,767,201$2,445,214$929,165State        income taxes, net of Federal benefit238,861179,984113,868Other87,512(50,311)-Benefit        of tax credits-(61,302)-Change        in valuation allowance (200,954) (102,565) -Income        tax provision$3,892,620 $2,411,020 $1,043,033     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 our deferred tax assets and liabilities as of March 31,  2008 and 2007 were as follows:**March            31****2008****2007**Deferred            tax assetsDeferred            revenue$68,035$10,729Vacation            accrual95,30186,498Inventory            reserve101,59887,711            Depreciation68,668-Tax            credits-481,534Stock-based            compensation deductions106,681573,524Unrealized            (gain) loss(58,748)46,669Other 71,870 41,441Net            deferred tax assets$453,405$1,328,106     We had no tax credits at March 31, 2008. Wehad $481,534 of tax credits at March 31, 2007, which could be used to offsetfuture taxable income. We also had $1,443,223 in stock-based compensation deductionsat March 31, 2007 that were used to offset taxable income in fiscal 2008.       Realizations of stock-based compensation deductions  are credited to “Additional paid-in capital” and included in “Tax  benefit of stock-based compensation” on our statements of shareholders’  equity. Credits of $33,773 in fiscal 2008, $2,083,886 in fiscal 2007, and $990,083  in fiscal 2006 to “Additional paid-in capital” were due principally  to the reversal of valuation allowances against deferred tax assets for carryforwards  of net operating losses that were attributable to stock-based F-15**Tableof Contents**compensation deductions. The reversals occurred as a result of the actual utilizationof such net operating loss carryforwards in those respective years. The “Additionalpaid-in capital” credits also included the tax benefit of stock-based compensationdeductions in those years. In fiscal 2006, the amount credited to “Additionalpaid-in capital” was the full tax benefit of the deduction. In fiscal 2008and 2007, following our adoption of FAS 123(R), the amounts credited to “Additionalpaid-in capital” were the tax benefits of the deductions to the extent theyexceeded the corresponding compensation expense recognized for financial reportingpurposes, in accordance with paragraph 62 of FAS 123(R).     In fiscal 2006, “Tax benefit of stock-basedcompensation” on our statements of shareholders’ equity represented(i) the full tax benefit of deductions for stock-based compensation consistingof realized current-year deductions, and (ii) reversals of valuation allowancesagainst deferred tax assets for net operating loss carryforwards attributableto stock-based compensation deductions. In fiscal 2008 and 2007, following ouradoption of FAS 123(R), “Tax benefit of stock-based compensation”represented: (i) in accordance with paragraph 62 of FAS 123(R),the tax benefits of deductions for stock-based compensation to the extent theyexceeded the corresponding compensation expense recognized for financial reportingpurposes, and (ii) reversals of valuation allowances against deferred taxassets for net operating loss carryforwards attributable to stock-based compensationdeductions.     Cash we received from the exercise of stock optionsrelated to excess tax benefits is included in “Net proceeds from sale ofcommon stock” in the statement of cash flows for the year in which the optionwas exercised and cash received by us.     During fiscal 2006 we reversed $990,083 of our valuationallowance due to the utilization of net operating loss carryforwards from stockbased compensation, and $820,398 of the remaining valuation allowance was reverseddue to our assessment that it was more likely than not that we would earn sufficientoperating income to realize $1,576,472 of the remaining deferred tax assets. Weprovided a valuation allowance of $1,855,848 as of March 31, 2006 becausewe did not believe that it was more likely than not that we would utilize theremaining deferred tax assets before they expire. During fiscal 2007 we reversedthe $1,855,848 valuation allowance due to our assessment that it was more likelythan not that we would earn sufficient operating income to realize the remainingdeferred tax assets. We exhausted our stock-based compensation deductions duringfiscal 2008.     We have $311,584 of net operating losses that expirein fiscal 2020. These net operating losses are subject to limitation under Section 382of the Internal Revenue Code.     In July 2006 the Financial Accounting StandardsBoard issued Interpretation No. 48, Accounting for Uncertainty in IncomeTaxes ‐ an interpretation of FASB Statement No. 109, which prescribesa recognition threshold and measurement attribute for the financial statementrecognition and measurement of a tax position taken or expected to be taken ina tax return. FIN 48 seeks to reduce the diversity in practice associatedwith certain aspects of the recognition and measurement related to accountingfor income taxes. This interpretation is effective for fiscal years beginningafter December 15, 2006. We adopted the provisions of FIN 48 on April 1,2007. We recognized no material adjustment in the liability for unrecognized incometax benefits as a result of the adoption, and at the adoption date of April 1,2007 we had no unrecognized tax benefits that would affect our effective tax rateif recognized. At March 31, 2008 we had no unrecognized tax benefits. Wedo not believe unrecognized tax benefits will significantly change within twelvemonths of the reporting date. We recognize interest and penalties related to incometax matters in income tax expense. As of March 31, 2008 we had no accruedinterest related to uncertain tax positions. The tax years 2003 through 2007 remainopen to examination by the major taxing jurisdictions to which we are subject.**NOTE 7. SEGMENT INFORMATION**     We operate in one reportable segment. We manufactureand sell spintronic products, and we receive contracts for research and development.     U.S. Government Agencies accounted for less than10% of our total revenue in fiscal 2008, 10% in fiscal 2007, and 22% in fiscal2006. A second customer accounted for approximately 17% of total revenue in fiscal2008, 23% in fiscal 2007, and 18% in fiscal 2006. A third customer accounted forapproximately 10% of total revenue in fiscal 2008 and 11% in fiscal 2007. Revenueby geographic region was as follows: **Year          Ended March 31****2008****2007****2006**United          States$10,792,550$9,901,667$8,254,566Europe5,981,9403,568,0142,160,473Asia3,274,7002,577,9611,451,903Other 479,622 413,188 303,584Total          Revenue$20,528,812$16,460,830$12,170,526 F-16**Tableof Contents****NOTE8. COMMITMENTS AND CONTINGENCIESLeases**       Lease payments were $224,712 for fiscal 2008,  $193,010 for fiscal 2007, and $200,441 for fiscal 2006. In fiscal 2008 we executed  a third amendment extending the operating lease for our facility through December 31,  2015. We pay operating expenses including maintenance, utilities, real estate  taxes, and insurance in addition to rental payments. We also lease a piece of  office equipment under an operating lease expiring September 2009 with payments  due quarterly. Our future minimum lease payments are shown in the following  table:**Year        Ending March 31****2009****2010****2011****2012****2013****2014****2015****2016****Total**$232,491$242,191$244,648$248,280$251,911$255,596$259,495$196,904$1,931,517**Other Contingencies**       On February 10, 2006 the first of three lawsuits  was filed in the U.S. District Court for the District of Minnesota against NVE  and certain of its current and former executive officers and directors by individual  shareholders seeking to represent a class of purchasers of our common stock.  These lawsuits were subsequently consolidated into a single case and a consolidated  complaint was filed seeking unspecified damages. The consolidated complaint  generally alleged that the defendants violated the Securities Exchange Act by  issuing material misrepresentations concerning NVE’s projected revenues  and product technology, which artificially inflated the market price of our  common stock. On July 3, 2007 the U.S. District Court granted our motion  to dismiss these consolidated lawsuits, with prejudice. The plaintiffs filed  an appeal from the Court’s order and the appeal is still pending. Two related  actions brought by individual shareholders who seek to represent NVE derivatively  were filed in Hennepin County District Court. These related actions were subsequently  consolidated into a single case and an amended derivative complaint was filed.  The derivative action has been stayed pending a resolution of the appeal from  the U.S. District Court’s order.       Because there is a possibility of a successful  appeal by the plaintiffs and the court has yet to rule on the derivative action,  we are unable to determine the ultimate disposition of these lawsuits and have  therefore not recorded a liability on our balance sheet related to these actions.  We have incurred legal expenses related to these lawsuits and could incur additional  expenses.**NOTE 9. COMMON STOCK**       Our authorized stock is stated as six million  shares of common stock, $0.01 par value, and ten million shares of all types.  Our Board may designate any series and fix any relative rights and preferences  to authorized but undesignated stock.**NOTE 10. CYPRESS WARRANT**       In 2002 we issued a warrant to Cypress Semiconductor  Corporation for the purchase of up to 400,000 shares of Common Stock at $15  per share. The warrant accompanied an investment in NVE by Cypress and a technology  exchange agreement between NVE and Cypress. In April 2005 the warrant expired  with no shares exercised.**NOTE 11. INFORMATION AS TO EMPLOYEE STOCK PURCHASE, SAVINGS, AND SIMILAR  PLANS401(k) Employee Savings Plan**       All of our employees are eligible to participate  in our 401(k) savings plan the first quarter after reaching age 21. Employees  may contribute up to the Internal Revenue Service maximum. In calendar year  2005 we made matching contributions equal to 100% of the first 2% of elective  salary deferral contributions made by eligible participants. In 2006 we began  making matching contributions of 100% of the first 3% of participants’  salary deferral contributions. Our matching contributions were $94,585 for fiscal  2008, $97,674 for fiscal 2007, and $93,606 for fiscal 2006.**Employee Stock Purchase Plan**     In 2001 our shareholders approved and we implementedan Employee Stock Purchase Plan, which allowed us to issue up to 200,000 sharesof Common Stock. The Plan was terminated effective January 1, 2006 in anticipationof the impact of SFAS No. 123(R), which would have required us to recognizeexpenses associated with the issuance of shares under the plan. We issued 6,449shares of Common Stock under the plan for fiscal 2006. F-17**Tableof Contents****EXHIBIT                                                            INDEX**** Exhibit #****Description** 23Consent        of Ernst & Young LLP. 31.1Certification      by Daniel A. Baker pursuant to Rule 13a-14(a)/15d-14(a). 31.2Certification      by Curt A. Reynders pursuant to Rule 13a-14(a)/15d-14(a). 32Certification      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.