Company: ELSE
Filing Date: 2025-09-12
Form Type: 10-Q/A
Source: 0000897101-25-000510
Chunk: 4

Company: ELECTRO SENSORS INC
Filing Date: 2025-09-12
Form: 10-Q/A
Chunk 4
---
 typically occurs upon shipment. Service revenue is recognized when provided to the customer and typically takes less than a week to provide. Fair Value Measurements The carrying value of cash equivalents, trade receivables, accounts payable, and other financial working capital items approximates fair value at June 30, 2025and December 31, 2024, due to the short maturity nature of these instruments. Stock-Based Compensation The Company records compensation expense for stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes-Merton (“BSM”) option pricing model. The Company uses historical data, among other factors, to estimate the expected price volatility, the expected option life, and the expected forfeiture rate. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for the estimated life of the option.

| 9 |

ELECTRO-SENSORS, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS FOR THE PERIOD ENDED JUNE 30, 2025 (in thousands except share and per share amounts) (unaudited)

Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (US GAAP) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Current significant estimates, including the underlying assumptions, consist of realizability of trade receivables, and valuation of deferred tax assets/liabilities, inventory, investments, and stock compensation expense. It is at least reasonably possible that these estimates may change in the near term.

Net Income per Common Share Basic income per share excludes dilution and is determined by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted net income per share reflects the potential dilution that could occur if securities such as options or restricted stock units were exercised or converted into common stock. Diluted earnings per share ("Diluted EPS") considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential shares would have an anti-dilutive effect. Diluted EPS also excludes the impact of common shares issuable upon the exercise of outstanding stock options in periods in which the option exercise price is greater than the average market price of our common stock during the period. For the three-month periods ended June 30, 2025, and 2024, 83,064and