Financial Performance - Net sales for 2023 were $8,555, a decrease of $474, or 5.2%, from $9,029 in 2022[75]. - Gross profit for 2023 decreased $596, or 12.3%, to $4,245 from $4,841 in 2022, with a gross margin of 49.6% compared to 53.6% in 2022[76]. - Total operating expenses decreased $605, or 12.4%, to $4,273 in 2023 from $4,878 in 2022, representing 50.0% of net sales[77]. - Operating loss was $28 in 2023 compared to $37 in 2022, a decrease of $9, or 24.3%[78]. - Non-operating income increased $297 to $406 in 2023 from $109 in 2022, primarily due to higher interest income[79]. - Net income for 2023 was $275 compared to $100 in 2022, an increase of $175, or 175.0%[83]. - Cash generated from operating activities was $130 in 2023 compared to cash used in operating activities of $147 in 2022, an increase of $277[92]. - Total stockholders' equity increased to $13,755,000 in 2023 from $13,414,000 in 2022, reflecting a 2.5% growth[126]. - The total federal and state income taxes for 2023 amounted to $103, compared to a tax provision of $(28) in 2022[211]. Research and Development - The company aims to continue investing in research and development to create new products and enhance existing ones, which is crucial for future sales growth[44]. - Research and development expenses increased $137, or 16.4%, to $973 in 2023 compared to $836 in 2022[81]. - Research and development expenses rose to $973,000 in 2023, up from $836,000 in 2022, indicating a 16.4% increase[158]. Supply Chain and Operations - The company experienced supply chain disruptions in 2023, leading to increased costs for parts and materials, and has been modifying product designs to accommodate more readily available components[34]. - The company is facing supply chain disruptions and price increases for components, which may affect profit margins and operational efficiency[97]. Employee Relations - The company had 35 full-time employees as of December 31, 2023, and emphasizes the importance of employee relations and retention for maintaining competitive advantage[47]. - The Company has an employee stock ownership plan (ESOP) covering substantially all employees, with 94,434 shares held by participants as of December 31, 2023[206]. Mergers and Acquisitions - The company announced a terminated merger agreement with Mobile X Global, Inc. on January 30, 2023, and is exploring other business development opportunities[41]. - The merger agreement with Mobile X was terminated due to unavailability of necessary PIPE investment financing amid challenging financial market conditions[189]. Investments and Cash Flow - Cash and cash equivalents were $9,870 and $7,646 at December 31, 2023 and 2022, respectively, reflecting an increase in available funds[91]. - Cash generated from investing activities increased to $2,100 in 2023 from $964 in 2022, primarily due to increased maturities of Treasury Bills[93]. - Cash used in financing activities was $6 in 2023, a significant decrease from cash generated of $116 in 2022[94]. - The company purchased Treasury Bills totaling $13,830,000 in 2023, compared to $6,971,000 in 2022, marking a 98.5% increase[128]. Intellectual Property - The company holds six patents related to its production monitoring systems and actively seeks to protect its intellectual property[38]. - The company has established the HazardPRO trademark and intends to register it, reflecting its commitment to brand recognition and market presence[37]. Market Presence - In 2023, international sales represented approximately 10% of total revenues, with sales occurring in countries such as Canada, Mexico, and the United Kingdom[29]. - The company sells a range of products from simple sensors to complex integrated monitoring systems, targeting industries such as manufacturing and power generation[29]. - The company continues to explore new industries and applications to expand sales and may consider acquiring compatible businesses as part of its growth strategy[30]. Stock and Compensation - The Company had issued 25,000 shares and had 175,000 options outstanding under the 2013 Equity Incentive Plan, with 95,000 options exercisable[192]. - The Company granted 105,000 restricted stock units in 2023, with a weighted-average grant-date fair value of $4.11[202]. - The unrecognized compensation expense related to outstanding stock options is $111, expected to be recognized over four years[198]. - The Company recognized compensation expense of approximately $38 for stock options and $29 for restricted stock units during the year ended December 31, 2023[198][203]. - The company incurred stock-based compensation expenses of $67,000 in 2023, significantly higher than $3,000 in 2022[128]. Financial Position - Total current assets rose to $13,139 in 2023, compared to $12,813 in 2022, with cash and cash equivalents increasing to $9,870 from $7,646[122]. - The company reported total inventories of $1,751,000 as of December 31, 2023, slightly up from $1,745,000 in 2022, showing a marginal increase[180]. - The total property and equipment net value decreased to $951,000 in 2023 from $975,000 in 2022, representing a decline of approximately 2.46%[183]. - Accrued expenses decreased to $323,000 in 2023 from $350,000 in 2022, reflecting a reduction of about 7.71%[185]. - The company reported an allowance for credit losses of $11 against trade receivables of $1,283 in 2023, reflecting a cautious approach to credit risk[122]. - The allowance for credit losses on trade receivables remained stable at $11,000 for both 2023 and 2022[140]. - The company had no customers exceeding 10% of accounts receivable as of December 31, 2023, compared to one customer at 12% in 2022[141]. Accounting and Compliance - The company adopted a new accounting standard on January 1, 2023, which had no significant impact on the financial statements[166]. - The lease expense for the year ended December 31, 2023, was $1, a decrease from the previous year[187].
Electro-Sensors(ELSE) - 2023 Q4 - Annual Report