Electro-Sensors(ELSE) - 2022 Q3 - Quarterly Report

Financial Performance - Net sales for Q3 2022 were $2,216, an increase of $62, or 2.9%, from $2,154 in Q3 2021[73] - Net sales for the nine months ended September 30, 2022, were $6,915, an increase of $398, or 6.1%, from $6,517 in the same period in 2021[73] - Gross profit for Q3 2022 decreased by $41 to $1,163, or 3.4%, compared to Q3 2021, with a gross margin of 52.5%[74] - Total operating expenses for Q3 2022 decreased by $140, or 11.8%, to $1,044, representing 47.1% of net sales[76] - Income before income tax expense for Q3 2022 was $154, an increase of $133 compared to $21 in Q3 2021[78] Cash Flow and Liquidity - Cash and cash equivalents were $9,518 at September 30, 2022, up from $6,713 at December 31, 2021[81] - Cash used in operating activities was $213 for the nine months ended September 30, 2022, compared to cash generated of $547 in the same period in 2021[82] - Cash from investing activities was $2,991 for the nine months ended September 30, 2022, compared to $2,987 in the same period in 2021[83] - The company believes its cash on hand and generated from operations will be sufficient to meet cash requirements for at least the next 12 months[85] Business Environment and Challenges - The lingering effects of COVID-19 continue to create uncertainty in the business, potentially negatively affecting 2022 financial results[86] - Supply chain disruptions are causing difficulties in sourcing components and materials, along with price increases for many components, which may adversely affect sales and profit margins[87] Growth Strategy - The company is actively seeking growth opportunities through internal product development and external technology partnerships or acquisitions, with increased business development activities noted in the second half of 2021 and the first nine months of 2022[88] Internal Controls and Compliance - As of September 30, 2022, the company had no off-balance sheet arrangements or transactions[89] - The company's disclosure controls and procedures were deemed effective as of September 30, 2022, following management's evaluation[92] - There were no changes in the company's internal control over financial reporting during Q3 2022 that materially affected its internal controls[93]