Company: ELSE
Filing Date: 2025-03-19
Form Type: 10-K
Source: 0000897101-25-000160
Chunk: 14

Company: ELECTRO SENSORS INC
Filing Date: 2025-03-19
Form: 10-K
Item: Item 1B
Chunk 14
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 balance, we would write off the balance to the allowance for credit losses.  Any change in our allowance for credit losses could cause a material increase or decrease in our general and administrative expenses.

Valuation of deferred tax assets/liabilities

We estimate our deferred tax assets and liabilities based on current tax laws and rates. The tax laws and rates could change in the future to either disallow the deductions or increase or decrease the tax rates. We recognize changes in deferred tax assets and liabilities in the period in which the tax law changes become effective. Any change in our deferred tax assets or liabilities could have a material negative or positive effect on our income tax provision.

Valuation of inventory

We purchase inventory based on estimated demand of products. It is possible that the inventory we have purchased will not be used in the products that our customers need or will not meet future technological requirements. If we are unable to use the inventory in our products and it does not meet future technological requirements, we would be required to remove the items from inventory and expense the amount in cost of goods sold.

Valuation of investments

Our
investments in available-for-sale securities are valued at market prices in an
open market. The prices are subject to normal fluctuations that could be
either negative or positive. Even though these equity securities were only
valued at $56 at December 31, 2024, changes in
the value of these equity securities could affect our profitability.  Treasury Bills accounted for as cash
equivalents are adjusted to fair value monthly and any change is reported as interest income on the Statement of Comprehensive Income.

 Valuation of stock-based compensation expense

We estimate the expected life and forfeiture rates of stock options granted when calculating the value of options using the Black-Scholes-Merton model. The actual life and forfeiture rate could differ from what we estimated. Changes in the life or forfeiture rate of stock options could have a negative or positive impact on our stock-based compensation.

Additional information regarding our significant accounting policies is provided below in Part II, Item 8, Financial Statements and Supplementary Data – Notes to Financial Statements, Note 1, Nature of Business and Significant Accounting Policies.

 Item 7A.           Quantitative and Qualitative Disclosures About Market Risk. 

Not applicable.

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 Item 8.              Financial Statements and Supplementary Data. 

INDEX TO FINANCIAL STATEMENTS 

Report of Independent Registered Public Accounting Firm (Auditor ID: 542)
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Financial Statements

Balance Sheets
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