Press Release July 1, 2003
NVE Receives Notice of SBIR Ineligibility
Major shareholder exploring restructuring to permit recertification effort

EDEN PRAIRIE, Minn.--July 1, 2003--NVE Corporation (NasdaqSC: NVEC) announced today that it has received notification that the U.S. Small Business Administration (SBA) has found that the Company does not meet eligibility standards to compete for awards under the SBA's Small Business Innovation Research (SBIR) program because of the Company's ownership structure.

One of the Company's major shareholders is considering changing the structure of its holdings in a way which would permit the Company to be recertified as eligible to compete for SBIR awards. There can be no assurance, however, of the successful consummation of the shareholder's restructuring, the Company's recertification, or the Company's continued SBIR eligibility.

Assuming a timely and successful recertification, the Company does not expect the finding to have a significant impact on its ongoing SBIR revenue or total revenue. The finding does not affect other U.S. Government award programs, and the Company been advised by legal counsel that the finding is unlikely to affect the approximately $4.977 million in active SBIR contracts already awarded to the Company. In the three months ended March 31, 2003, the Company was awarded approximately $290,000 in SBIR contracts, which represented approximately 11% of total revenue during that three-month period.

NVE is a leader in the practical commercialization of spintronics, which many experts believe represents the next generation of microelectronics. NVE licenses MRAM intellectual property and sells spintronic products including sensors and couplers to revolutionize data acquisition and transfer.