[PART I – FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements) Unaudited Q2 2022 financial statements report total assets of $14.0 million, a net loss of $284 thousand, and a pending merger with Mobile X Global, Inc [Condensed Balance Sheets](index=4&type=section&id=Condensed%20Balance%20Sheets) Total assets slightly increased to $14.0 million by June 30, 2022, while current liabilities significantly rose to $1.1 million Condensed Balance Sheet Data (in thousands) | Account | June 30, 2022 (Unaudited) | December 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $6,429 | $6,713 | | Total current assets | $12,776 | $12,628 | | Total assets | $13,996 | $13,891 | | **Liabilities & Equity** | | | | Total current liabilities | $1,094 | $697 | | Total liabilities | $1,097 | $703 | | Total stockholders' equity | $12,899 | $13,188 | [Condensed Statements of Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) Q2 2022 saw a net loss of $284 thousand, a reversal from prior year's income, despite a 4.1% sales increase, due to surging operating expenses Financial Performance Summary (in thousands, except per share data) | Metric | Q2 2022 | Q2 2021 | Six Months 2022 | Six Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $2,564 | $2,462 | $4,699 | $4,363 | | Gross Profit | $1,408 | $1,376 | $2,574 | $2,366 | | Operating Income (Loss) | $(365) | $271 | $(379) | $267 | | Net Income (Loss) | $(284) | $214 | $(293) | $212 | | Diluted EPS | $(0.08) | $0.06 | $(0.09) | $0.06 | [Condensed Statements of Cash Flows](index=7&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) Operating activities used $272 thousand in cash for the first six months of 2022, a significant shift from prior year's generation, ending with $6.4 million cash Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash from (used in) operating activities | $(272) | $466 | | Net cash used in investing activities | $(9) | $(13) | | Net cash used in financing activities | $(3) | $(3) | | **Net (decrease) in cash** | **$(284)** | **$450** | [Notes to Condensed Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) Notes detail accounting policies and significant disclosures, primarily outlining the pending reverse triangular merger with Mobile X Global, Inc., expected to close in H2 2022 - On June 10, 2022, the company entered a reverse triangular merger agreement with Mobile X Global, Inc., where Mobile X will become a wholly-owned subsidiary of Electro-Sensors (ELSE)[50](index=50&type=chunk)[51](index=51&type=chunk) - Post-merger, former Mobile X stockholders will own approximately **76%** of the combined company, legacy ELSE shareholders about **11%**, and new investors about **13%**[53](index=53&type=chunk) - Legacy Electro-Sensors shareholders are expected to receive special cash dividends totaling approximately **$18.0 million**, or about **$4.83 per share** (pre-reverse split)[55](index=55&type=chunk) - The merger's closing, anticipated in H2 2022, is contingent on shareholder approval, securing **$20.0 million** in equity financing, and Nasdaq listing approval[57](index=57&type=chunk)[60](index=60&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses 7.7% sales growth driven by agricultural applications, offset by a 40.7% surge in operating expenses due to merger costs, leading to a net loss and negative operating cash flow [Results of Operations](index=18&type=section&id=Results%20of%20Operations) Net sales grew 4.1% in Q2 and 7.7% for six months, driven by agricultural applications, but a 145.6% surge in G&A expenses led to a Q2 operating loss of $365 thousand Net Sales Growth | Period | Net Sales 2022 (in thousands) | Net Sales 2021 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Q2 | $2,564 | $2,462 | +4.1% | | Six Months | $4,699 | $4,363 | +7.7% | - The sales increase was driven by broad-based strength in agricultural applications, including commodity refining and biofuels[74](index=74&type=chunk) - Total operating expenses for Q2 2022 increased by **60.5%** year-over-year, primarily due to a **145.6%** increase in General and Administrative expenses from merger-related legal and professional fees[77](index=77&type=chunk) - Research and development expenses decreased by **21.9%** in Q2 2022 due to lower third-party engineering costs[77](index=77&type=chunk) [Liquidity and Capital Resources](index=20&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and cash equivalents were $6.4 million, with operating cash flow shifting to a $272 thousand use due to merger expenses, while supply chain disruptions pose ongoing risks - Cash used in operating activities was **$272 thousand** for the first six months of 2022, a shift from **$466 thousand** generated in 2021, primarily due to the net loss from merger expenses[81](index=81&type=chunk) - The company faces significant supply chain disruptions, including difficulty sourcing parts, component price increases, and shipping delays[87](index=87&type=chunk) - The company's primary business development activity culminated in the June 10, 2022 announcement of the Merger Agreement with Mobile X Global, Inc[88](index=88&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=22&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable for the current reporting period - Not Applicable[91](index=91&type=chunk) [Controls and Procedures](index=22&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal controls during Q2 - The Company's principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of June 30, 2022[92](index=92&type=chunk) - No material changes occurred in the Company's internal control over financial reporting during Q2 2022[93](index=93&type=chunk) [PART II – OTHER INFORMATION](index=23&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Other Information Summary](index=23&type=section&id=Other%20Information%20Summary) This section confirms no legal proceedings, unregistered equity sales, or senior security defaults, and lists filed exhibits including amended bylaws and SOX certifications - The company reports no legal proceedings, unregistered sales of equity securities, or defaults upon senior securities[95](index=95&type=chunk) - Filed exhibits include amended bylaws and certifications by the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[95](index=95&type=chunk)[96](index=96&type=chunk) [Signatures](index=24&type=section&id=SIGNATURES) [Signatures](index=24&type=section&id=Signatures) The report was signed on August 2, 2022, by David L. Klenk, in his capacity as Chief Executive Officer and Chief Financial Officer - The Form 10-Q was signed on August 2, 2022, by David L. Klenk, the company's CEO and CFO[101](index=101&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 1 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission File Number 000-09587 ELECTRO-SENSORS, INC. (Exact name of registrant as specified in its charter) Minnesota 41-0943459 (State or other juris ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 Form 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 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 ...

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) The company's unaudited statements show increased total assets and a return to profitability, with improved net income and operating cash flow [Condensed Balance Sheets](index=4&type=section&id=Condensed%20Balance%20Sheets) Total assets and liabilities grew as of September 30, 2021, alongside a slight increase in stockholders' equity Condensed Balance Sheet Highlights (in thousands) | Account | Sep 30, 2021 (unaudited) | Dec 31, 2020 | | :--- | :--- | :--- | | **Total Current Assets** | $12,670 | $11,856 | | **Total Assets** | **$13,909** | **$13,319** | | **Total Current Liabilities** | $895 | $533 | | **Total Liabilities** | **$903** | **$545** | | **Total Stockholders' Equity** | **$13,006** | **$12,774** | [Condensed Statements of Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Statements%20of%20Comprehensive%20Income%20(Loss)) The company returned to profitability in Q3 and the first nine months of 2021, driven by a 10.2% increase in net sales Financial Performance (in thousands, except per share data) | Metric | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $2,154 | $1,899 | $6,517 | $5,914 | | Gross Profit | $1,204 | $992 | $3,570 | $3,089 | | Operating Income (Loss) | $20 | $(54) | $287 | $(176) | | Net Income (Loss) | $17 | $(46) | $229 | $(119) | | Basic EPS | $0.01 | $(0.01) | $0.07 | $(0.04) | [Condensed Statements of Cash Flows](index=7&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) Net cash from operations increased and investing activities generated a significant inflow due to Treasury bill maturities Net Cash Flow for Nine Months Ended Sep 30 (in thousands) | Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash from operating activities | $547 | $302 | | Net cash from (used in) investing activities | $2,987 | $(2,021) | | Net cash used in financing activities | $(4) | $(4) | | **Net increase (decrease) in cash** | **$3,530** | **$(1,723)** | | **Cash and cash equivalents, ending** | **$4,620** | **$7,062** | [Notes to Condensed Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) Notes clarify the company's business, revenue recognition policies, investment classifications, and inventory composition - The company manufactures and markets monitoring and control systems for industrial machine applications globally[18](index=18&type=chunk) - Revenue is recognized when control of the product is transferred to the customer, which **typically occurs upon shipment**[19](index=19&type=chunk) Inventories (in thousands) | Category | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Raw Materials | $921 | $922 | | Work In Process | $257 | $292 | | Finished Goods | $304 | $363 | | **Total Inventories, net** | **$1,477** | **$1,572** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=13&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses revenue growth from the agricultural sector, improved margins, and significant operational headwinds from COVID-19 [Results of Operations](index=14&type=section&id=Results%20of%20Operations) Sales growth in the agricultural sector and improved factory utilization drove higher net sales and gross margins Net Sales Growth (in thousands) | Period | 2021 | 2020 | Increase $ | Increase % | | :--- | :--- | :--- | :--- | :--- | | Three Months | $2,154 | $1,899 | $255 | 13.4% | | Nine Months | $6,517 | $5,914 | $603 | 10.2% | - Gross margin increased in Q3 2021 to **55.9%** and for the nine-month period to **54.8%** due to improved factory utilization[49](index=49&type=chunk) - General and administrative expenses increased by **47.6% in Q3** and **14.8% in the nine-month period**, primarily due to higher legal and professional fees[50](index=50&type=chunk) [Liquidity and Capital Resources](index=16&type=section&id=Liquidity%20and%20Capital%20Resources) A significant increase in cash and cash equivalents, fueled by operations and investments, ensures sufficient liquidity for the next year - Cash generated from operating activities was **$547 thousand** for the first nine months of 2021, up from $302 thousand in the prior year[55](index=55&type=chunk) - Cash from investing activities was **$2,987 thousand**, a reversal from a $2,021 thousand use of cash in 2020, due to proceeds from Treasury Bill maturities[56](index=56&type=chunk) - The company believes its **cash position is sufficient** to meet requirements for at least the next 12 months[58](index=58&type=chunk) [COVID-19 Pandemic Discussion](index=17&type=section&id=COVID-19%20Pandemic%20Discussion) The company faces ongoing operational challenges from the pandemic, including supply chain disruptions, price increases, and labor shortages - The company is experiencing **significant disruptions in its supply chain**, resulting in difficulty sourcing parts and component price increases[61](index=61&type=chunk) - **Delays in shipping and transportation services** may adversely affect the ability to make timely deliveries to customers[61](index=61&type=chunk) - The labor market for qualified production employees is **challenging**, which may result in delays in filling open positions[61](index=61&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=18&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable for the current quarterly report - Not Applicable[65](index=65&type=chunk) [Item 4. Controls and Procedures](index=18&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - The Company's disclosure controls and procedures were **effective** as of September 30, 2021[66](index=66&type=chunk) - There were **no material changes** in the Company's internal control over financial reporting during the third quarter of 2021[67](index=67&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=19&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings during the period - None[69](index=69&type=chunk) [Item 1A. Risk Factors](index=19&type=section&id=Item%201A.%20Risk%20Factors) This section is not applicable for the current Form 10-Q filing - Not Applicable[69](index=69&type=chunk) [Item 6. Exhibits](index=19&type=section&id=Item%206.%20Exhibits) Filed exhibits include CEO/CFO certifications under Sarbanes-Oxley and iXBRL-formatted financial statements - The following exhibits were filed with the report[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk]: * **31.1**: Certification of CEO and CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 * **32.1**: Certification of CEO and CFO Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 * **101**: Financial information formatted in iXBRL

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 1 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, 2021 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission File Number 000-09587 ELECTRO-SENSORS, INC. (Exact name of registrant as specified in its charter) Minnesota 41-0943459 (State or other jurisd ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 1 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission File Number 000-09587 ELECTRO-SENSORS, INC. (Exact name of registrant as specified in its charter) Minnesota 41-0943459 (State or other juris ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 Form 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 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 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 1 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission File Number 000-09587 ELECTRO-SENSORS, INC. (Exact name of registrant as specified in its charter) Minnesota 41-0943459 (State or other j ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 1 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, 2020 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission File Number 000-09587 ELECTRO-SENSORS, INC. (Exact name of registrant as specified in its charter) Minnesota 41-0943459 (State or other jurisd ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 1 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission File Number 000-09587 ELECTRO-SENSORS, INC. (Exact name of registrant as specified in its charter) Minnesota 41-0943459 (State or other juris ...