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’: We filed our press release with the quarterly results and our quarterly report on Form 10-Q with the SEC in the past hour following the close of the market. Those filings are available through our website. Comments we may make that relate to future plans, events, financial results or performance are forward-looking statements that are subject to certain risks and uncertainties including among others, such factors as risks in continued growth and revenue and profits, uncertainties related to agreements with large customers, uncertainties related to research and development contract funding, risks related to developing marketable products, uncertainties relating to the revenue potential of new products, risks of losses on our marketable securities and uncertainties related to economic environments, as well as the risk factors listed from time-to-time in our filings with the SEC including our most recent Annual Report on Form 10-K is updated in our recently filed quarterly report on Form 10-Q. The company undertakes no obligation to update forward-looking statements we may make. ’:

Thanks Dan and good afternoon. As Dan mentioned total revenue for the quarter increased 6% to $7.24 million, our 19th consecutive quarterly year-over-year increase in total revenue. The increase was despite a comparison to an extraordinary year ago quarter, its contract research and development revenue more than quadrupled. The revenue increase was due to a 12% increase in product sales to $6.19 million, our 22nd consecutive year-over-year increase in product sales, very robust sales into industrial markets more than offset weakness in medical device markets. The strength of industrial markets was encouraging and we continue to be quite optimistic about the medical device markets long term. Demographics are favorable in health care reform, could make medical devices available to more people. Quarterly contract R&D revenue decreased 20% to $1.05 million due to the successful completion of certain contracts and contract activities. Dan will talk more about contracts in a few minutes. Gross margin remained very strong, although it decreased to 71% of revenue compared to 72% last year due to a slightly less favorable product mix with the particularly strong sales into industrial markets. Total expenses increased 7% for the first quarter of fiscal 2011, compared to the first quarter of fiscal 2010 due to a 28% increase in research and development expense. The increase in research and development expense was due to a decrease in contract research and development activities which caused resources to be reallocated to expense R&D. We also increased product development activities. Interest income increased 29% to $476,000 for the quarter due to an increase in interest bearing marketable securities. Income before taxes for the quarter increased 6% compared to the first quarter of fiscal 2010 to $4.67 million and pre-tax margin with 65%. ’: ’: Cash flow strengthened our balance sheet considerably and a strong…

’: ’: ’: We also test parts at greater temperature which is up to 125 degree Celsius or 257 degrees Fahrenheit. This is done with custom equipment and now those production tests which were scattered around the building will be consolidated. There are currently two sections in our clean room: one, they have equipment primarily for spintronic layer deposition; the other is primarily photolithography and patterning. They have completed construction, it frees up space for a third day which will increase our capacity by separating photolithography and patterning into separate days. We filed agreements with two important customers in the past quarter. First, we executed a letter of intent relating to a supply agreement. We signed with Phonak AG last year. Phonak sells hearing instruments, hearing systems using our spintronic sensors. The letter of intense less pricing and defines terms for an amendment to the supply agreement, including an extension of the supply agreement term through March 31st, 2015, an expansion of NVE products under the scope of the agreement and minimum purchase requirement. Second, we executed a third amendment to a 2001 OEM supply agreement between us and Agilent Technologies. Agilent and later Avago, has distributed private label versions of certain of our couplers since 2002 under that agreement. Avago has an excellent reputation in the high performance coupler market, good distribution and expert customer support. The agreement would have expired last quarter, but the amendment extends the term for three more years. ’: ’: ’: In the past quarter, we introduced a new medical sensor designated the BD027 Low-Voltage Nanopower sensors which are lower voltage, lower power versions of our award wining BD020 sensors. The BD027 runs on a supply voltage as low 0.9 volts making it ideal for single battery implantable medical devices. Typical power consumption is…

Thank you. (Operator Instructions) Our first question comes from Steven Crowley of Craig-Hallum Capital.

A couple of questions driven by the performance in your prepared commentary. You spoke to the character of products business in the first quarter with quite strong activity out of the industrial side your business and some weakness on the medical device side of the equation over the short term. Should we view the weakness in the medical business as a temporary phenomenon that we have just lived through, is it an ongoing phenomenon? What can you tell us about the ingredient shift for that side of your business as we look forward?

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Okay. And then, your comments about the industrial side of the business certainly sound encouraging at first blush, besides it being quite strong in the period, what you can tell us about the ingredient set going forward there, are those drivers whether their applications or products or particular customers seemingly still on good stead.

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Okay and then in terms of the contract research and development and the variability we saw in that revenue line in the first quarter, I am trying to rationalize some of your comments about kind of the definitive completion of some projects, contracts that should lead to commercial product revenues in the future. ’:

Maybe what we could do is I could first talk about the possible transition from contract R&D to production and then maybe Curt can talk about what we see for prospects going forward or what our visibility is there. And if we successfully complete an R&D project we hope to demonstrate the feasibility of a particular part or device or approach. But there can be a gap in between the completion of the R&D and that product moving into production. I think as you correctly point out all those production revenue can generally be much larger and grow much more quickly than contract R&D. And the reason we do contract R&D is twofold to do. ’: And then it takes time for the products to ramp up, but we think it bodes very well for the long term. And Curt, do you want to address the visibility of contract R&D revenue? ’: And then it takes time for the products to ramp up, but we think it bodes very well for the long term. And Curt, do you want to address the visibility of contract R&D revenue?

Steve, contract R&D is really, really hard to predict and as you probably noticed over years it can be lumpy. Revenue can be affected, by not only when contracts and when we may get follow-on contracts, but also could be affected by particular tasks within contracts. ’:

Understood, as we try and build a model we are coming off a March quarter that was a high watermarks for contract R&D and the June quarter represented the lowest quarter in the last I guess seven. It is reasonable to expect as we go forward that the likely performance of that business segment should be kind of between those two goal posts or is there a much wider range of outcomes?

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Our next question comes from David Wu of GC Research.

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The reason I asked that question is because once again into the December quarter, late September or December quarter, hopefully two things happened. The industrial, one hears about the companies that reported numbers, their September guidance is pretty good in the industrial automation side, and if you can get your inventory correction done in the quarter, we could pretty well have both of these end markets go up, sometime either late September or the December quarter. Is that a reasonable scenario?

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And if I would look at the capacity planning you are putting in place in that 1900 square feet conversion, should I think about revenues, product revenues capability well in excess of $10 million a quarter?

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Exactly.

Thank you. And our next question comes from the line of Patrick Kirksey of Perimeter.

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Just a quick follow up as it relates to the anti-tamper MRAM. In terms of your capacity expansion and some of the capabilities that you are adding and detailed in your prepared commentary, I trust having the ability to add advance spintronic structures to products, ducktail the necessary capability for you to manufacture that lower density MRAM in-house or mine mixing apples and oranges there.

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And in terms of your recent accomplishment of delivering prototypes with working memory bits, you are delivering those prototypes to prospective customers directly in contrast to our prior discussion about wireless.

Yes, in that case we are dealing more directly with customers. That tends to be, at least initially that tends to be military aerospace and the protection of high-value assets and longer-term it could move into a more of a business model similar to what we envision for automotive and for consumer electronics with Tier I suppliers, where the end users tend to limit their number of suppliers and look to buy modules from their direct suppliers, the Tier I supplier. So longer-term, that might move that direction, but in the near-term we are more tightly coupled with the customers in that kind of business.

And you are targeting, it sounds like multiple customers at this stage with those prototypes?

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’: Well, I think we are about out of time. So, I do want to thank you. We were pleased to report strong product growth and strong earnings for the quarter. We look forward to seeing some of you at our annual meeting two weeks from tomorrow and we plan to speak with you again in October to report our second quarter results. Thank you again for participating in the call.

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