else-20240630.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number 000-09587

ELECTRO-SENSORS, INC.

(Exact name of registrant as specified in its charter)

Minnesota	41-0943459
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

6111 Blue Circle Drive
Minnetonka, Minnesota 55343-9108

(Address of principal executive offices)

(952) 930-0100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.10 par value	ELSE	Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer ☐
Non-accelerated filer	☒	Smaller reporting company ☒
		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock, $0.10 par value, on August 8, 2024 was 3,428,021.

ELECTRO-SENSORS, INC.

Form 10-Q

For the Period Ended June 30, 2024

TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION	4

Item 1. Financial Statements (unaudited):	4

Condensed Balance Sheets – As of June 30, 2024 and December 31, 2023	4
Condensed Statements of Comprehensive Income (Loss) – For the Three and Six Months ended June 30, 2024 and June 30, 2023	5
Condensed Statements of Changes in Stockholders' Equity – For the Three and Six Months ended June 30, 2024 and June 30, 2023	6
Condensed Statements of Cash Flows – For the Six Months ended June 30, 2024 and June 30, 2023	7
Notes to Condensed Financial Statements	8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3. Quantitative and Qualitative Disclosures About Market Risk	19
Item 4. Controls and Procedures	19

PART II – OTHER INFORMATION	20

Item 1. Legal Proceedings	20
Item 1A. Risk Factors	20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3. Defaults Upon Senior Securities	20
Item 4. Mine Safety Disclosures	20
Item 5. Other Information	20
Item 6. Exhibits	20

SIGNATURES	21

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ELECTRO-SENSORS, INC.

CONDENSED BALANCE SHEETS

(in thousands except share and per share amounts)

	June 30, 2024		December 31, 2023
	(unaudited)
ASSETS

Current assets

Cash and cash equivalents	$	9,888	$	9,870
Investments		56		56
Trade receivables, less allowance for credit losses of $11 and $11, respectively		1,180		1,283
Inventories		1,865		1,751
Other current assets		177		179
Income tax receivable		41		0

Total current assets		13,207		13,139

Deferred income tax asset, net		330		355

Property and equipment, net		930		951

Total assets	$	14,467	$	14,445

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Accounts payable	$	199	$	291
Accrued expenses		439		323
Accrued income taxes		0		76

Total current liabilities		638		690

Commitments and contingencies

Stockholders’ equity

Common stock par value $0.10 per share; authorized 10,000,000 shares; 3,428,021 shares issued and outstanding		342		342
Additional paid-in capital		2,297		2,230
Retained earnings		11,190		11,183
Total stockholders’ equity		13,829		13,755

Total liabilities and stockholders’ equity	$	14,467	$	14,445

See accompanying notes to unaudited condensed financial statements

ELECTRO-SENSORS, INC.

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands except share and per share amounts)

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024		2023

Net sales	$	2,217		$	2,137		4,461		4,182
Cost of goods sold		1,170			1,069		2,334		2,092

Gross profit		1,047			1,068		2,127		2,090

Operating expenses
Selling and marketing		353			344		704		714
General and administrative		537			442		1,104		964
Research and development		264			238		526		506

Total operating expenses		1,154			1,024		2,334		2,184

Operating income (loss)		(107	)		44		(207	)	(94	)

Non-operating income
Interest expense		0			(1	)	0		(1	)
Interest income		109			95		225		188

Total non-operating income, net		109			94		225		187

Income before income tax expense		2			138		18		93

Income tax expense		6			22		11		21

Net income (loss)	$	(4	)	$	116		7		72

Other comprehensive income (loss)
Change in unrealized value of available-for-sale securities, net of income tax	$	0		$	2		0		(2	)
Other comprehensive income (loss)		0			2		0		(2	)

Net comprehensive income (loss)	$	(4	)	$	118		7		70

Net income (loss) per share data:

Basic
Net income (loss) per share	$	0.00		$	0.03		0.00		0.02
Weighted average shares		3,428,021			3,428,021		3,428,021		3,428,021

Diluted
Net income (loss) per share	$	0.00		$	0.03		0.00		0.02
Weighted average shares		3,428,021			3,443,394		3,428,021		3,443,930

See accompanying notes to unaudited condensed financial statements

ELECTRO-SENSORS, INC.

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands except share amounts)

For the three months ended June 30
	Common Stock Issued			Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity
	Shares	Amount		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity

March 31, 2024	3,428,021	$	342	$	2,259	$	11,194		$	0		$	13,795

Stock-based compensation expense					38								38
Net loss							(4	)					(4	)

Balance June 30, 2024 (unaudited)	3,428,021	$	342	$	2,297	$	11,190		$	0		$	13,829

March 31, 2023	3,428,021	$	342	$	2,163	$	10,864		$	(3	)	$	13,366

Other comprehensive income										2			2
Net income							116						116

Balance June 30, 2023 (unaudited)	3,428,021	$	342	$	2,163	$	10,980		$	(1	)	$	13,484

For the six months ended June 30
	Common Stock Issued			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity
	Shares	Amount		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity

December 31, 2023	3,428,021	$	342	$	2,230	$	11,183	$	0		$	13,755

Stock-based compensation expense					67							67
Net income							7					7

Balance June 30, 2024 (unaudited)	3,428,021	$	342	$	2,297	$	11,190	$	0		$	13,829

December 31, 2022	3,428,021	$	342	$	2,163	$	10,908	$	1		$	13,414

Other comprehensive loss									(2	)		(2	)
Net income							72					72

Balance June 30, 2023 (unaudited)	3,428,021	$	342	$	2,163	$	10,980	$	(1	)	$	13,484

See accompanying notes to unaudited condensed financial statements

ELECTRO-SENSORS, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Six Months Ended June 30,
	2024			2023
Cash flows from (used in) operating activities

Net income	$	7		$	72

Adjustments to reconcile net income to net cash from (used in) operating activities:

Depreciation		47			47
Deferred income taxes		25			(88	)
Stock-based compensation expense		67			0
Change in:
Trade receivables		103			(41	)
Inventories		(114	)		(170	)
Other current assets		2			(10	)
Accounts payable		(92	)		82
Accrued expenses		116			81
Income tax payable/receivable		(117	)		(20	)

Net cash from (used in) operating activities		44			(47	)

Cash flows used in investing activities

Purchase of property and equipment

TABLE OF CONTENTS

SEC Form 10-Q filed by Electro-Sensors Inc.