Company: ELSE
Filing Date: 2025-05-12
Form Type: 10-Q
Source: 0000897101-25-000245
Chunk: 4

Company: ELECTRO SENSORS INC
Filing Date: 2025-05-12
Form: 10-Q
Item: Part I, Item 2
Chunk 4
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 other strategic alternatives and that existing cash, cash equivalents, and investments and any cash generated from operations will be sufficient to meet these cash requirements through at least the next 12 months.
 
Supply Chain and Labor Dynamics
 
We purchase parts and materials from various manufacturers and distributors.  While we believe our supply chain has begun to stabilize, we still occasionally see unexpected price increases and delivery delays requiring us to intervene and remediate. To meet these challenges, we are seeking additional sources for components and modifying product designs to accommodate new components that are more readily available at competitive prices. There is no guarantee that we will continue to be successful in modifying these designs and sourcing alternative components and material. As a result, we could experience significant delays in receiving certain components needed to make timely customer deliveries, as well as increased costs that erode gross margins. Current supply chain dynamics may have a negative effect on the efficiency of our operations, our customer base, and the domestic or worldwide economy.  Recent geopolitical and economic dynamics, including actual or potential tariffs, may have a negative
impact on our business.  We will monitor
and remediate situations as they occur. 
However, we may not be able to fully remediate, and it may have a
negative impact on our business.

Furthermore, the labor market for qualified employees able to fill our various open positions is challenging and becoming more costly.  These factors may result in delays in filling these positions and negatively impact profit margins. In addition, we may experience changes in transportation and freight availability that may make it difficult to have materials and components shipped to us, or our products shipped to customers, in a timely and cost-effective manner. While we continue to closely monitor and manage each of these activities, our actions may not be successful and may result in a negative effect on our sales and profit margins.

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Future Corporate and Business Development Activities
 
We continue to seek growth opportunities, both internally through our existing portfolio of products, technologies, and markets, as well as externally through technology partnerships or related-product or business acquisitions. In addition, we may make strategic or other investments that we believe present good opportunities for the Company and its shareholders. The Company's Board of Directors established a special committee and continues to explore business development and other strategic alternatives.
 
Off-balance Sheet Arrangements
 
As of March 31, 2025, the Company had no off-balance sheet arrangements or transactions.

Item 3. Quantitative and Qualitative Disclosures About Market Risk