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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0000351789-01-500005.txt : 20010409
<SEC-HEADER>0000351789-01-500005.hdr.sgml : 20010409
ACCESSION NUMBER:		0000351789-01-500005
CONFORMED SUBMISSION TYPE:	10KSB
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20001231
FILED AS OF DATE:		20010402

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ELECTRO SENSORS INC
		CENTRAL INDEX KEY:			0000351789
		STANDARD INDUSTRIAL CLASSIFICATION:	INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823]
		IRS NUMBER:				410943459
		STATE OF INCORPORATION:			MN
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10KSB
		SEC ACT:		
		SEC FILE NUMBER:	000-09587
		FILM NUMBER:		1588646

	BUSINESS ADDRESS:	
		STREET 1:		6111 BLUE CIRCLE DR
		CITY:			MINNETONKA
		STATE:			MN
		ZIP:			55343-9108
		BUSINESS PHONE:		9529300100

	MAIL ADDRESS:	
		STREET 1:		6111 BLUE CIRCLE DR
		CITY:			MINNETONKA
		STATE:			MN
		ZIP:			55343
</SEC-HEADER>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>1
<FILENAME>exhibit13.htm
<DESCRIPTION>EXHIBIT 13-ANNUAL REPORT TO SHAREHOLDERS
<TEXT>

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 3.2 Final//EN">

<HTML>

<head>
	<TITLE>EX-13 Annual Report to Shareholders</TITLE>
</head>

<body>
<br><br>
<center><img src="logo.gif" width=575 height=200 border=0></center>

<br><br><br>

<center><b><font face="Verdana,'Times New Roman'" size="+6" color="Black">Annual Report</font></b></center><br>

<center><b><font face="'Verdana','Times New Roman'" size="+5" color="Black">2000</font></b></center>

<br><br><br><br><br>

<font face="'Verdana','Times New Roman'" color="Black">
<b><font size="+1">Corporate Profile</font></b><br>
<b>Electro-Sensors, Inc. and Subsidiaries</b></font><br>
<hr size="5" color="Black"><br>

<font face="'Verdana','Times New Roman'" size="-1">
<b>Brief Summary of Business</b></font><br>

<p><font face="'Verdana','Times New Roman'" size="-1">Electro-Sensors, Inc. operates three distinct businesses.  The first is the Controls Division which carries the name of Electro-Sensors, Inc.  This division manufactures and markets a complete line of
speed monitoring and motor control systems for industrial machinery.  The Controls Division utilizes leading-edge technology to continuously improve its products and make them easier to use.  The Controls Division's goal is to manufacture the
industry-preferred product for every market served.  These products are sold through telemarketing and distributors to a wide variety of manufacturers, OEMs and processors to monitor the efficiency of process machinery.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The second business is AutoData Systems, a division of Electro-Sensors, Inc.  AutoData Systems designs and markets a desktop software based system that reads handprinted characters, checkmarks and bar
code information from scanned or faxed forms.  AutoData Systems products are designed to provide the capabilities to automate data collection and meet customers complete forms processing needs.  These software packages are sold through telemarketing to
end users, resellers and developers in the United States, Canada, Europe and Asia.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The third business is operated through a wholly owned subsidiary, Microflame, Inc.  Microflame produces small hand held gas torches used primarily by hobbyists, electronic kit assemblers, creators of
jewelry and do-it-yourselfers.  The Microflame products are sold through distributors to retailers of hardware, hobby craft and electronic products.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">In addition, through its ESI Investment Company subsidiary, the Company has invested funds in other companies and businesses.  The value of the Company's investments fluctuates.  It is the Company's
intention, over a substantial period of time, to liquidate such investments in order to finance expansion of its operating activities.  Although the Company has invested in other companies and businesses, Electro-Sensors, Inc. intends to remain primarily
an operating company.</font></p>

<br><br><br>

<font face="'Verdana','Times New Roman'" color="Black">
<b><font size="+1">Selected Financial Data (Consolidated)</font></b><br>
<b>Electro-Sensors, Inc. and Subsidiaries</b></font><br>

<hr size="5" color="Black">

<table align="right" cellpadding="2">
<tr>
<th align="center" width="432"><font face="'Verdana','Times New Roman'" size="-2">Fiscal Year Ended December 31<br>(in thousands, except per share data)</font></th></tr></TABLE><br><br><br>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="328"></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">2000</font></td>
    <td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">1999</font></td>
    <td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">1998</font></td>
    <td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">1997</font></td>
    <td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">1996</font></td>
    <td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">1995</font></td>
</tr>
</TABLE><br><br>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="328"><font face="'Verdana','Times New Roman'" size="-2">Net Sales</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">$6,010</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">$5,682</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">$6,358</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">$6,441</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">$6,143</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">$6,185</font></td>
</tr>
<tr>
	<td align="left" width="328"><font face="'Verdana','Times New Roman'" size="-2">Gross Profit</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">3,594</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">3,187</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">3,587</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">3,743</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">3,502</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">3,525</font></td>
</tr>
<tr>
	<td align="left" width="328"><font face="'Verdana','Times New Roman'" size="-2">Selling Expenses</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">1,470</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">1,717</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">1,806</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">1,637</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">1,339</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">1,214</font></td>
</tr>
<tr>
	<td align="left" width="328"><font face="'Verdana','Times New Roman'" size="-2">General and Administrative Expenses</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">778</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">706</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">778</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">752</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">948</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">777</font></td>
</tr>
<tr>
	<td align="left" width="328"><font face="'Verdana','Times New Roman'" size="-2">Research and Development Expenses</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">863</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">830</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">667</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">637</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">707</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">622</font></td>
</tr>
<tr>
	<td align="left" width="328"><font face="'Verdana','Times New Roman'" size="-2">Provision for Income Taxes</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">353</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">(55)</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">107</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">237</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">283</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">371</font></td>
</tr>
<tr>
	<td align="left" width="328"><font face="'Verdana','Times New Roman'" size="-2">Net Income</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">682</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">(22)</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">230</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">453</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">463</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">785</font></td>
</tr>
<tr>
	<td align="left" width="328"><font face="'Verdana','Times New Roman'" size="-2">Earnings Per Share</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">0.34</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">(0.01)</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">0.12</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">0.23</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">0.24</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">0.41</font></td>
</tr>
<tr>
	<td align="left" width="328"><font face="'Verdana','Times New Roman'" size="-2">Total Assets</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">27,132</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">8,379</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">9,078</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">10,895</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">11,485</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">13,181</font></td>
</tr>
<tr>
	<td align="left" width="328"><font face="'Verdana','Times New Roman'" size="-2">Shareholders' Equity</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">19,855</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">7,440</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">8,133</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">9,108</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">9,147</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2">9,466</font></td>
</tr>
</TABLE>

<br><br><br><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 2 -----</b></font></center>

<br><br><br><br><br><br>

<font face="'Verdana','Times New Roman'" color="Black">
<b><font size="+1">Letter to Shareholders</font></b><br>
<b>Electro-Sensors, Inc. and Subsidiaries</b></font><br>
<hr size="5" color="Black"><br><br><br>

<p><font face="'Verdana','Times New Roman'">March 16, 2001</font></p><br>

<p><font face="'Verdana','Times New Roman'"><b>LETTER TO THE SHAREHOLDERS:</b><br><br>The much-heralded year of 2000 is finished and it was a good year for Electro-Sensors, Inc.  The year started without any occurrence of the predicted computer glitches
or power failures.  Customers began refocusing on increasing productivity and new plant equipment.  Total net sales increased 5.8% to $6,009,753.  Operations generated $234,068 of the net income with the remainder coming from interest and investment
sales.  Sales in the production monitoring and motor control segment increased by 7.6%.  In the first quarter, the production monitoring segment fulfilled a large order for shaft speed sensors and displays as part of an upgrade project at the facilities
of a large end user.  Multiple unit orders to OEM customers recovered through the year as their customers installed new machinery.  Sales in the AutoData Systems division increased 3.9% over the previous year.  The new Scannable Office software product
was released for sale at the end of the first quarter.  This product allows users to design scannable forms in Microsoft Word and stores the scanned information in Microsoft Excel or Access databases.  An upgraded Survey+ 2000 software product was
released in June.  The Company's wholly owned subsidiary, Microflame, Inc., had decreased sales of 15.8%, but managed to generate a small profit due to reductions made in operating costs.</font></p>

<p><font face="'Verdana','Times New Roman'">Throughout the year we worked on documenting and formalizing our Quality Management System.  This was a team effort throughout the Company.  We were rewarded for our efforts by receiving certification to the
ISO9001:2000 international standard in February 2001.  This standard not only mandates documented quality processes, but more importantly requires customer satisfaction to be measured and used to gauge the effectiveness of the overall quality system.  We
are very proud of obtaining this certification as it demonstrates our commitment to producing high quality products that meet the needs of our customers.</font></p>

<p><font face="'Verdana','Times New Roman'">This annual report is a simpler format and lower cost than we have previously sent out.  This was done not only to save expenses, but also because many shareholders and investors use the Internet to get
corporate financial information.  They do not want paper that has to be stored in a file and physically retrieved.  We have also noticed the increase in sales leads and referrals through our web sites.  Please visit our web site (www.electro-sensors.com)
to learn more about Electro-Sensors, Inc. and the operating units.</font></p>

<p><font face="'Verdana','Times New Roman'">In January 2001, the Company increased the quarterly dividend by 50% by maintaining the $0.03/share payment on the post-split shares.  While we are pleased with the progress that these results show, we want to
be diligent in advancing the growth and value of the Company through new products, new customers, and increasing operational efficiencies.  We are committed to earning your support and confidence in us in the coming year!  Please join us for our annual
meeting on April 25, 2001 at the Radisson Hotel South in Bloomington, at 2:00 p.m.</font></p>

<p><font face="'Verdana','Times New Roman'">Sincerely,<br><br>Bradley D. Slye<br>President</font></p>

<br><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 3 -----</b></font></center>

<br><br><br><br><br><br>

<font face="'Verdana','Times New Roman'" color="Black">
<b><font size="+1">Management's Discussion and Analysis of Financial Condition and Results of Operations</font></b><br>
<b>Electro-Sensors, Inc. and Subsidiaries</b></font><br>
<hr size="5" color="Black"><br>

<p><font face="'Verdana','Times New Roman'"><b>RESULTS OF OPERATIONS<br>2000 vs. 1999</b></font></p>

<p><font face="'Verdana','Times New Roman'">The Company experienced sales of $6,009,753 for 2000, an increase of 5.8% when compared to sales of $5,682,301 for 1999.  The increase in sales resulted from increased sales in the Production Monitoring segment
and the continued growth of the Character Recognition Imaging segment.  However, the Company's wholly owned subsidiary, Microflame, Inc., continued to have declining sales.</font></p>

<p><font face="'Verdana','Times New Roman'">The Production Monitoring segment includes both the Speed Monitoring Systems and the Drive Control Systems divisions.  The combined sales inceased 7.6% during the year from volume increases in the signal
conditioner, speed switch and sensor products.</font></p>

<p><font face="'Verdana','Times New Roman'">Sales by the Character Recognition Imaging segment, which contains AutoData Systems, increased 3.9% during 2000.  The Scannable Office product had a significant contribution to sales, and offset decreased sales
of the AutoData PRO and SDK products. Scannable Office, released in March 2000, combines the Company's forms processing and character recognition technology with the versatility of Microsoft's Office suite.  Scannable Office &quotreads&quot and
automatically places extracted data directly into an Excel spreadsheet or Access database utilizing only a PC and scanner.  AutoData will continue to develop a marketing strategy in order to establish itself in an evolving market.</font></p>

<p><font face="'Verdana','Tmes New Roman'">Microflame sales declined 15.8% in 2000.  The sales decrease continues to reflect a decreased demand and weak consumer marketplace for the gas torch products.  Radio Shack's decision in 1998 to discontinue
buying the Company's two-gas torch product continued to impact 2000 sales.  The Company continued efforts to reduce operating costs, resulting in a slightly profitable year for this segment.</font></p>

<p><font face="'Verdana','Times New Roman'">The Company's cost of sales decreased in 2000 both as a percentage of sales and when compared to 1999.  The decrease in margin resulted from decreased fixed costs being distributed over more manufactured units,
and Microflame's fixed costs, since relocating to the Company's current facility in 1999, continued to add savings.</font></p>

<p><font face="'Verdana','Times New Roman'">Operating expenses decreased 4.4% when compared to 1999.  The decrease in expenses occurred primarily in the sales and marketing area.  This decrease offset the increase in the administrative and research and
development areas.</font></p>

<p><font face="'Verdana','Times New Roman'">ESI Investment continues to provide an alternative source of earnings for the Company through investments in marketable securities.  Gains realized in 2000 were due to the investment in August Technology
Corporation.  The cumulative net unrealized gain on securities was $19,228,728, $895,808, and $1,602,820 as of December 31, 2000, 1999 and 1998, respectively.  The Company recognizes gains and losses when realized and, therefore, the change in net
unrealized gains and losses on securities have not been reflected in the net income of the Company during the respective periods.  The Company's investments in marketable securities are subject to significant positive and negative changes in value.</font></p>

<br><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 4 -----</b></font></center>

<br><br><br><br><br><br>

<p><font face="'Verdana','Times New Roman'"><b>LIQUIDITY AND CAPITAL RESOURCES</b></font></p>

<p><font face="'Verdana','Times New Roman'">The Company continues to generate strong cash flows from operations.  Working capital and funds for capital expenditures have been provided through current earnings.  These funds have been placed in secure
short-term investments.  The funds are being used primarily for dividend distributions, working capital needs and general corporate purposes, which may include acquisitions.  Accounts receivable and inventories increased due to increased sales.  Accounts
payable decreased slightly.  The customer deposit amount resulted in 1999 from an existing customer prepaying plant upgrade orders with expected shipping dates in early 2000.  Those orders were shipped in 2000 and the customer deposit account was adjusted
accordingly.</font></p>

<p><font face="'Verdana','Times New Roman'">The Company experienced an increase in investments and the related accumulated other comprehensive income due to an increase in unrealized gain on investment securities.  This increase resulted primarily from
the Company's holdings of August Technology Corporation, which completed the process of registering its securities with the Securities Exchange Commission for sale in an offering.  The market's acceptance of this offering increased the value of the
Company's investment substantially.  In October of 2000, the Company filed Form 144 in order to make available shares of August Technology for sale on the open market.  The Company proceeded to sell a nominal amount of shares in the last quarter of 2000,
resulting in a realized gain.</font></p>

<p><font face="'Verdana','Times New Roman'">The Company carries its investments in unregistered closely-held securities on its balance sheet at cost which may not reflect the investments' fair value at any given time.  the Company believes that the
current fair value of the investments' fair value in unregistered holdings exceeds its carrying value.  The value of the Companys investments in marketable securities should be expected to fluctuate.</font></p>

<p><font face="'Verdana','Times New Roman'">Capital expenditures resulted mainly from the purchase of additional manufacturing and office equipment.  The Company does not anticipate the need for additional working capital from outside sources.</font></p>

<p><font face="'Verdana','Times New Roman'"><b>CHANGING PRICES AND INFLATION</b></font></p>

<p><font face="'Verdana','Times New Roman'">The Company did not experience any significant inflationary pressure during 2000.  Cost management programs and modest price increases have enabled the Company to minimize inflation's impact on operating
performance.  The Company continually works to control product cost increases through engineering improvements, selection and use of more cost efficient product components and through improved operating efficiency.</font></p>

<p><font face="'Verdana','Times New Roman'"><b>CAUTIONARY STATEMENT</b></font></p>

<p><font face="'Verdana','Times New Roman'">This Annual Report includes certain forward-looking statements, which provide current expectations or forecasts of future events and can be identified by the use of terminology such as &quotbelieve&quot,
&quotestimate&quot, &quotexpect&quot, &quotintend&quot, &quotmay&quot, &quotcould&quot, &quotwill&quot, and similar words or expressions.</font></p>

<p><font face="'Verdana','Times New Roman'">The Company cautions investors that actual results of future operations may materially differ from those anticipated in forward looking statements made in this document and elsewhere by or on behalf of the
Company due to a number of factors including: the uncertainty of market acceptance of products of the Company's AutoData Systems division; fluctuations in operating results due to the impact of non-recurring large orders for products and gains or losses
from sales on investment securities; competition from lower-priced and new products of competitors; and the availability of components for certain of the Company's products which may for periods of time be available only from a single supplier.  The
Company's forward-looking statements generally relate to its growth strategy, financial results, product development and sales efforts.  Forward-looking statements cannot be guaranteed and actual results may vary materially due to the uncertainties and
risks, known and unknown, associated with such statement.  The Company undertakes no obligation to update any forward-looking statements.  The Company notes these factors as permitted by the Private Securities Litigation Reform Act of 1995.  It is not
possible to foresee or identify all factors that could cause actual results to differ from expected or historic results.  As such, investors should not consider any list of such factors to be an exhaustive statement of all risks, uncertainties or
potentially inaccurate assumptions.  For additional information, see the Company's periodic filings with the Securities and Exchange Commission. </font></p>

<br><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 5 -----</b></font></center>

<br><br><br><br><br><br>

<font face="'Verdana','Times New Roman'" color="Black">
<b><font size="+1">Consolidated Balance Sheets</font></b><br>
<b>Electro-Sensors, Inc. and Subsidiaries</b></font><br>

<hr size="5" color="Black"><br>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1"><b>December 31,</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1"><b>2000</b></font></td>
    <td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1">1999</font></td></tr></TABLE>

<hr size="1">

<div align="left"><font face="'Verdana','Times New Roman'"><b>ASSETS</b></font></div><br>
<div align="left"><font face="'Verdana','Times New Roman'"><b>CURRENT ASSETS:</b></font></div>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;Cash and cash equivalents, including temporary cash deposits of</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;&nbsp;$2,057,927 and $1,704,167, respectively</font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1"><b>$&nbsp;&nbsp;&nbsp;3,191,176</b></font></td>
    <td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1">$&nbsp;&nbsp;&nbsp;2,507,689</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;Investments</font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1"><b>3,266,753</b></font></td>
    <td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1">254,699</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;Trade receivables, less allowance for doubtful accounts,</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;&nbsp;2000 $26,500; 1999 $23,000</font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1"><b>730,577</b></font></td>
    <td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1">682,015</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;Inventories</font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1"><b>922,610</b></font></td>
    <td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1">867,144</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;Other current assets</font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1"><b>127,177</b></font></td>
    <td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1">86,166</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;Prepaid income taxes</font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1"><b>74,606</b></font></td>
    <td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1">125,609</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;<b>Total Current Assets</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1"><b>8,312,899</b></font></td>
    <td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1">4,523,322</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1"><b>PROPERTY AND EQUIPMENT</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1"><b>1,615,994</b></font></td>
    <td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1">1,690,387</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1"><b>INVESTMENTS</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1"><b>17,202,689</b></font></td>
    <td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1">2,164,902</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;<b>Total Assets</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1"><b>$&nbsp;27,131,582</b></font></td>
    <td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1">$&nbsp;&nbsp;&nbsp;8,378,611</font></td></tr></TABLE>

<hr size="3">

<div align="left"><font face="'Verdana','Times New Roman'"><b>LIABILITIES AND STOCKHOLDERS' EQUITY</b></font></div><br>
<div align="left"><font face="'Verdana','Times New Roman'"><b>CURRENT LIABILITIES:</b></font></div>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;Accounts payable</font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1"><b>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;108,482</b></font></td>
    <td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;144,324</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;Customer deposits</font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1"><b>6,493</b></font></td>
    <td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1">353,645</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;Accrued expenses</font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1"><b>234,212</b></font></td>
    <td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1">142,050</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;Deferred income taxes</font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1"><b>1,047,900</b></font></td>
    <td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1">1,500</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;<b>Total Current Liabilities</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1"><b>1,397,087</b></font></td>
    <td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1">641,519</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1"><b>DEFERRED INCOME TAXES</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1"><b>5,879,400</b></font></td>
    <td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1">297,100</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1"><b>COMMITMENTS AND CONTINGENCIES</b>&nbsp;(Notes 6 and 8)</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1"><b>STOCKHOLDERS' EQUITY:</b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;Common stock, par value $.10 per share; authorized 10,000,000 shares;</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;&nbsp;issued 2,077,112 and 1,985,608 shares, respectively</font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1"><b>207,711</b></font></td>
    <td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1">198,561</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;Additional paid-in capital</font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1"><b>985,410</b></font></td>
    <td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1">720,306</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;Retained earnings</font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1"><b>6,391,246</b></font></td>
    <td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1">5,949,317</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;Accumulated other comprehensive income</font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1"><b>12,270,728</b></font></td>
    <td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1">571,808</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;<b>Total Stockholders' Equity</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1"><b>19,855,095</b></font></td>
    <td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1">7,439,992</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="560"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;<b>Total Liabilities and Stockholders' Equity</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1"><b>$&nbsp;27,131,582</b></font></td>
    <td align="right" width="100"><font face="'Verdana','Times New Roman'" size="-1">$&nbsp;&nbsp;&nbsp;8,378,611</font></td></tr></TABLE>

<hr size="3">

<br><br><br><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 6 -----</b></font></center>

<br><br><br><br><br><br>

<font face="'Verdana','Times New Roman'" color="Black">
<b><font size="+1">Consolidated Statements of Income</font></b><br>
<b>Electro-Sensors, Inc. and Subsidiaries</b></font><br>

<hr size="5" color="Black"><br>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1"><b>Years Ended December 31,</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>2000</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">1999</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">1998</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1"><b>Net Sales</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>$&nbsp;&nbsp;&nbsp;6,009,753</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">$&nbsp;&nbsp;&nbsp;5,682,301</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">$&nbsp;&nbsp;&nbsp;6,358,262</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1"><b>Cost of Goods Sold</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>2,416,149</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">2,495,508</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">2,771,496</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;<b>Gross Profit</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>3,593,604</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">3,186,793</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">3,586,766</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1"><b>Operating Expenses:</b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;Selling</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>1,470,401</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">1,717,480</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">1,805,995</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;Administrative</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>778,254</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">706,308</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">778,429</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;Research and development</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>862,503</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">830,134</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">667,461</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;<b>Total Operating Expenses</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>3,111,158</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">3,253,922</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">3,251,885</font></td></tr></TABLE>

<hr size="1"><br>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;<b>Operating Income (Loss)</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>482,446</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">(67,129)</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">334,881</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1"><b>Nonoperating Income (Expense):</b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;Gain (loss) on sale of investment securities</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>536,006</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">0</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">23,748</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;Interest income</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>130,842</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">88,751</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">106,325</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;Other</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>(114,553)</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">(99,135)</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">(127,531)</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;<b>Total Nonoperating Income (Expense)</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>552,295</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">(10,384)</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">2,542</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1"><b>Income (Loss) Before Income Taxes</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>1,034,741</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">(77,513)</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">337,423</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1"><b>Federal and State Income Taxes</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>353,000</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">(55,100)</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">107,000</font></td></tr></TABLE>

<hr size="1"><br>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1"><b>Net Income (Loss)</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;681,741</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(22,413)</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;230,423</font></td></tr></TABLE>

<hr size="3">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1"><b>Income per Common Share:</b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;Basic</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.34</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(0.01)</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.12</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;Diluted</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.34</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(0.01)</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.12</font></td></tr></TABLE>

<hr size="3">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1"><b>Weighted Average Shares Outstanding:</b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;Basic</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>2,001,907</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">1,977,630</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">1,968,935</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;Diluted</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>2,029,713</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">1,977,952</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">1,975,648</font></td></tr></TABLE>

<hr size="3">

<br><br><br><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 7 -----</b></font></center>

<br><br><br><br><br><br>

<font face="'Verdana','Times New Roman'" color="Black">
<b><font size="+1">Consolidated Statements of Cash Flows</font></b><br>
<b>Electro-Sensors, Inc. and Subsidiaries</b></font><br>

<hr size="5" color="black"><br>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1"><b>Years Ended December 31,</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>2000</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">1999</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">1998</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1"><b>CASH FLOWS FROM OPERATING ACTIVITIES:</b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;Cash:</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;&nbsp;Received from customers</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>$&nbsp;&nbsp;5,614,039</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">$&nbsp;&nbsp;6,074,220</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">$&nbsp;&nbsp;6,384,022</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;&nbsp;Paid to suppliers and employees</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>(5,535,369)</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">(5,656,207)</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">(6,141,524)</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;Interest received</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>130,842</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">88,751</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">106,325</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;Interest taxes paid</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>(307,297)</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">0</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">(96,705)</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;Interest tax refund received</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>0</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">5,648</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">0</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1"><b>Net cash provided by (used in) operating activities</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>(97,785)</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">512,412</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">252,118</font></td></tr></TABLE>

<hr size="1"><br>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1"><b>CASH FLOWS FROM INVESTING ACTIVITIES:</b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;Purchase of property and equipment</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>(72,238)</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">(54,918)</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">(104,777)</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;Sales of marketable securities</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>819,068</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">0</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">31,099</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;Repayments of notes receivable</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>0</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">0</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">1,336</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1"><b>Net cash provided by (used in) investing activities</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>746,830</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">(54,918)</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">(72,342)</font></td></tr></TABLE>

<hr size="1"><br>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1"><b>CASH FLOWS FROM FINANCING ACTIVITIES:</b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;Dividends paid</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>(239,812)</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">(237,314)</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">(236,301)</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;Net proceeds (payments) on short-term borrowings</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>0</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">(44,843)</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">(195,932)</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;Proceeds from issuance of stock</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>74,274</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">18,746</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">29,378</font></td></tr></TABLE>

<hr size="-1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1"><b>Net cash provided by (used in) financing activities</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>34,442</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">(263,411)</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">(402,855)</font></td></tr></TABLE>

<hr size="1"><br>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1"><b>Net increase (decrease) in cash and cash equivalents</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>683,487</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">194,083</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">(223,079)</font></td></tr></TABLE><br>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1"><b>Cash and cash equivalents:</b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;Beginning</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>2,507,689</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">2,313,606</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">2,536,685</font></td></tr></TABLE>

<hr size="1"><br>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;Ending</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>$&nbsp;&nbsp;3,191,176</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">$&nbsp;&nbsp;2,507,689</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">$&nbsp;&nbsp;2,313,606</font></td></tr></TABLE>

<hr size="3">

<br><br><br><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 8 -----</b></font></center>

<br><br><br><br><br><br>

<font face="'Verdana','Times New Roman'" color="Black">
<b><font size="+1">Consolidated Statements of Cash Flows (continued)</font></b><br>
<b>Electro-Sensors, Inc. and Subsidiaries</b></font><br>

<hr size="5" color="black"><br>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1"><b>Years Ended December 31,</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>2000</b></font></td>
    <td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">1999</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">1998</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1"><b>RECONCILIATION OF NET INCOME (LOSS) TO NET CASH</b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1"><b>PROVIDED BY (USED IN) OPERATING ACTIVITIES:</b></font></td></tr></TABLE><br>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;&nbsp;Net income (loss)</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>$&nbsp;&nbsp;&nbsp;&nbsp;681,741</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">$&nbsp;&nbsp;&nbsp;&nbsp;(22,413)</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">$&nbsp;&nbsp;230,423</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;Adjustments to reconcile net income (loss) to net cash provided</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;by (used in) operating activities:</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>146,648</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">139,900</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">137,358</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;&nbsp;Realized (gain) loss on sale of investment securities, net</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>(536,006)</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">0</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">(23,748)</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;&nbsp;Deferred taxes</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>(5,300)</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">(21,100)</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">6,800</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;&nbsp;(Increase) decrease in:</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade receivables</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>(48,562)</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">38,274</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">25,760</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>(55,466)</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">107,468</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">(98,423)</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other current assets</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>(41,011)</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">(16,197)</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">6,952</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid income taxes</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>51,003</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">(28,352)</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">3,495</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;&nbsp;Increase (decrease) in:</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>(35,842)</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">2,075</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">44,251</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Customer deposits</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>(347,152)</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">353,645</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">0</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>92,162</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">(40,888)</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">(80,750)</font></td></tr></TABLE>

<hr size="1"><br>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1"><b>Net cash provided by (used in) operating activities</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>$&nbsp;&nbsp;&nbsp;&nbsp;(97,785)</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">$&nbsp;&nbsp;&nbsp;&nbsp;512,412</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">$&nbsp;&nbsp;&nbsp;&nbsp;252,118</font></td></tr></TABLE>

<hr size="3"><br>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1"><b>SUPPLEMENTAL SCHEDULE OF NONCASH</b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1"><b>INVESTING AND FINANCING ACTIVITIES:</b></font></td></tr></TABLE><br>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="484"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;&nbsp;Net change in unrealized holding gains on marketable securities</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1"><b>$&nbsp;18,332,920</b></font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">$&nbsp;&nbsp;(707,012)</font></td>
	<td align="right" width="90"><font face="'Verdana','Times New Roman'" size="-1">$&nbsp;(1,564,746)</font></td></tr></TABLE>

<hr size="3">

<br><br><br><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 9 -----</b></font></center>

<br><br><br><br><br><br>

<font face="'Verdana','Times New Roman'" color="Black">
<b><font size="+1">Consolidated Statements of Changes in Stockholders' Equity</font></b><br>
<b>Electro-Sensors, Inc. and Subsidiaries</b></font><br>

<hr size="5" color="black">

<table width="760">
<tr>
	<td align="center" width="174"><font face="'Verdana','Times New Roman'" size="-4"></font></td>
	<td align="center" width="73"><font face="'Verdana','Times New Roman'" size="-4"></font></td>
	<td align="center" width="73"><font face="'Verdana','Times New Roman'" size="-4"></font></td>
	<td align="center" width="73"><font face="'Verdana','Times New Roman'" size="-4">Additional</font></td>
	<td align="center" width="73"><font face="'Verdana','Times New Roman'" size="-4"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-4"></font></td>
	<td align="center" width="75"><font face="'Verdana','Times New Roman'" size="-4">Accum Other</font></td>
	<td align="center" width="60"><font face="'Verdana','Times New Roman'" size="-4"></font></td>
	<td align="center" width="75"><font face="'Verdana','Times New Roman'" size="-4"><b>Total</b></font></td></tr></TABLE>

<table width="760">
<tr>
	<td align="center" width="170"><font face="'Verdana','Times New Roman'" size="-4"></font></td>
	<td align="right" width="146"><font face="'Verdana','Times New Roman'" size="-4"><u>Common Stock Issued</u></font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-4">Paid-In</font></td>
	<td align="right" width="74"><font face="'Verdana','Times New Roman'" size="-4">Retained</font></td>
	<td align="right" width="79"><font face="'Verdana','Times New Roman'" size="-4">Comprehensive</font></td>
	<td align="right" width="78"><font face="'Verdana','Times New Roman'" size="-4">Comprehensive</font></td>
	<td align="center" width="58"><font face="'Verdana','Times New Roman'" size="-4">Notes</font></td>
	<td align="center" width="75"><font face="'Verdana','Times New Roman'" size="-4"><b>Stockholders'</b></font></td></tr></TABLE>

<table width="760">
<tr>
	<td align="center" width="170"><font face="'Verdana','Times New Roman'" size="-4"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-4">Shares</font></td>
	<td align="center" width="73"><font face="'Verdana','Times New Roman'" size="-4">Amount</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-4">Capital</font></td>
	<td align="right" width="74"><font face="'Verdana','Times New Roman'" size="-4">Earnings</font></td>
	<td align="center" width="79"><font face="'Verdana','Times New Roman'" size="-4">Income</font></td>
	<td align="center" width="78"><font face="'Verdana','Times New Roman'" size="-4">Income</font></td>
	<td align="center" width="58"><font face="'Verdana','Times New Roman'" size="-4">Receivable</font></td>
	<td align="center" width="75"><font face="'Verdana','Times New Roman'" size="-4"><b>Equity</b></font></td></tr></TABLE>

<hr size="1"><br>

<table width="760">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2"><b>Balance, December 31, 1997</b></font></td>
	<td align="right" width="77"><font face="'Verdana','Times New Roman'" size="-2">1,964,586</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">$&nbsp;&nbsp;196,459</font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2">$&nbsp;&nbsp;674,284</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">$&nbsp;6,214,922</font></td>
	<td align="right" width="70"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2">$&nbsp;&nbsp;&nbsp;2,023,566</font></td>
	<td align="right" width="59"><font face="'Verdana','Times New Roman'" size="-2">$&nbsp;(1,336)</font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"><b>$&nbsp;&nbsp;9,107,895</b></font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;Exercise of stock options</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">4,874</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">487</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">13,577</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="60"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"><b>14,064</b></font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;Repayment of note receivable</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="60"><font face="'Verdana','Times New Roman'" size="-2">1,336</font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"><b>1,336</b></font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;Unrealized gains (losses) on</font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;investments, net of</font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;reclassification adjustment</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2">(999,746)</font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2">(999,746)</font></td>
	<td align="right" width="60"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"><b>(999,746)</b></font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;Stock issued through the</font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employee Stock</font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase Plan</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">5,994</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">599</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">14,715</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="60"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"><b>15,314</b></font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;Dividend on common</font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;stock $.12 per share</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">(236,301)</font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="60"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"><b>(236,301)</b></font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;Net income (loss)</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">230,423</font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2">230,423</font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="60"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"><b>230,423</b></font></td></tr></TABLE>

<hr size="2"><br>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2"><b>Balance, December 31, 1998</b></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">1,975,454</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">197,545</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">702,576</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">6,209,044</font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"><u>(769,323)</u></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2">1,023,820</font></td>
	<td align="right" width="60"><font face="'Verdana','Times New Roman'" size="-2">0</font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"><b>8,132,985</b></font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;Unrealized gains (losses) on</font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;investments, net of</font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;reclassification adjustment</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;(452,012)</font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;(452,012)</font></td>
	<td align="right" width="60"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"><b>(452,012)</b></font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;Stock issued through the</font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employee Stock</font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase Plan</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">10,154</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">1,016</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">17,730</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="60"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"><b>18,746</b></font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;Dividend on common</font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;stock $.12 per share</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">(237,314)</font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="60"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"><b>(237,314)</b></font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;Net income (loss)</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">(22,413)</font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2">(22,413)</font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="60"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"><b>(22,413)</b></font></td></tr></TABLE>

<hr size="2"><br>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2"><b>Balance, December 31, 1999</b></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;1,985,608</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;&nbsp;198,561</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;&nbsp;720,306</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;5,949,317</font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"><u>(474,425)</u></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;571,808</font></td>
	<td align="right" width="60"><font face="'Verdana','Times New Roman'" size="-2">0</font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"><b>7,439,992</b></font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;Exercise of stock options</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">87,900</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">8,790</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">259,431</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="60"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"><b>268,221</b></font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;Unrealized gains (losses) on</font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;investments, net of</font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;reclassification adjustment</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2">11,698,920</font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2">11,698,920</font></td>
	<td align="right" width="60"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"><b>11,698,920</b></font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;Stock issued through the</font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employee Stock</font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase Plan</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">3,604</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">360</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">5,673</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="60"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"><b>6,033</b></font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;Dividend on common</font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;stock $.12 per share</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">(239,812)</font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="60"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"><b>(239,812)</b></font></td></tr></TABLE>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2">&nbsp;&nbsp;Net income (loss)</font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2">681,741</font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2">681,741</font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="60"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"><b>681,741</b></font></td></tr></TABLE>

<hr size="2"><br>

<table width="760" cellpadding="1">
<tr>
	<td align="left" width="174"><font face="'Verdana','Times New Roman'" size="-2"><b>Balance, December 31, 2000</b></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"><b>&nbsp;&nbsp;2,077,112</b></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"><b>$&nbsp;&nbsp;207,711</b></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"><b>$&nbsp;&nbsp;985,410</b></font></td>
	<td align="right" width="73"><font face="'Verdana','Times New Roman'" size="-2"><b>$&nbsp;6,391,246</b></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"><b>$12,380,661</b></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"><b>$12,270,728</b></font></td>
	<td align="right" width="60"><font face="'Verdana','Times New Roman'" size="-2"><b>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0</b></font></td>
	<td align="right" width="75"><font face="'Verdana','Times New Roman'" size="-2"><b>$19,855,095</b></font></td></tr></TABLE>

<hr size="3">

<br><br><br><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 10 -----</b></font></center>

<br><br><br><br><br><br>

<font face="'Verdana','Times New Roman'" color="Black">
<b><font size="+1">Notes to Consolidated Financial Statements</font></b><br>
<b>Electro-Sensors, Inc. and Subsidiaries</b></font><br>

<hr size="5" color="black">

<p><font face="'Verdana','Times New Roman'"><b>Note 1.&nbsp;&nbsp;Nature of Business and Significant Accounting Policies</b></font></p>

<p><font face="'Verdana','Times New Roman'" color="teal" size="-1"><b>Nature of Business:</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The accompanying consolidated financial statements include the accounts of Electro-Sensors, Inc. and its wholly owned subsidiaries: Microflame, Inc., and ESI Investment Company.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">Electro-Sensors, Inc. manufactures production monitoring and character recognition software systems, and Microflame, Inc. produces miniature brazing torches used for hobbies and crafts.  ESI
Investment Company manages a varied investment portfolio.  Intercompany accounts, transactions and earnings have been eliminated in consolidation.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">Electro-Sensors, Inc. markets its products to a number of different industries located throughout the United States and abroad.  The Company grants credit to customers under normal industry terms,
generally 30 days.  Microflame, Inc. also markets its products throughout the U.S. and abroad under normal credit terms.  The majority of Microflame, Inc. sales are concentrated in the hobby and craft industry.  ESI Investment Company has investments in
marketable securities, which are subject to normal market risks.</font></p>

<p><font face="'Verdana','Times New Roman'" color="teal" size="-1"><b>Significant accounting policies of the Company are summarized below:</b></font></p>

<p><font face="'Verdana','Times New Roman'" color="teal" size="-1"><b>Use of estimates:</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The preparation of financial statements in conformity with generally accepted accounting principles 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.</font></p>

<p><font face="'Verdana','Times New Roman'" color="teal" size="-1"><b>Cash and cash equivalents:</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.  Cash equivalents are
carried at cost plus accrued interest which approximates market value.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits.  The Company has not experienced any losses on such accounts.  The Company believes it is
not exposed to any significant credit risk on cash.</font><p>

<p><font face="'Verdana','Times New Roman'" color="teal"  size="-1"><b>Investments:</b></font>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company has a portfolio of investments.  Management determines the appropriate classification of securities at the date individual investments are acquired, and evaluates the appropriateness of
such classification at each balance sheet date.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company's investments consist of marketable equity securities, primarily common stocks, government debt securities, money-market funds and unregistered equity securities.  The estimated fair value
of marketable equity securities is based on quoted market prices and therefore subject to the inherent risk of market fluctuations.</font></p>

<br><br><br><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 11 -----</b></font></center>

<br><br><br><br><br><br>


<p><font face="'Verdana','Times New Roman'"><b>Note 1.&nbsp;&nbsp;Nature of Business and Significant Accounting Policies (Continued)</b></font></p>

<p><font face="'Verdana','Times New Roman'" color="teal" size="-1"><b>Significant accounting policies of the Company are summarized below: (continued)</b></font></p>

<p><font face="'Verdana','Times New Roman'" color="teal" size="-1"><b>Investments: (continued)</b></font><p>

<p><font face="'Verdana','Times New Roman'" size="-1">Since the Company does not buy investments in anticipation of short-term fluctuations in market prices, the investments in marketable equity securities has been classified as available-for-sale.
Available-for-sale securities are stated at fair value, and unrealized holding gains and losses, net of the related deferred tax effect, are reported as a separate component of stockholders' equity.  Dividends on marketable equity securities are
recognized in income when declared.  Investments in unregistered securities are reported at original cost.<br><br>Realized gains and losses, including losses from declines in value of specific securities determined by management to be other-than-temporary, are included in income.  Realized gains and losses are determined on the basis of the specific
securities sold.</font></p>

<p><font face="'Verdana','Times New Roman'" color="teal" size="-1"><b>Inventories:</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">Inventories include material, labor, and overhead and are valued at the lower of cost (first-in, first-out) or market.</font><p>

<p><font face="'Verdana','Times New Roman'" color="teal" size="-1"><b>Fair value of financial instruments:</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company's financial instruments consist of cash and cash equivalents, investments, short-term trade receivables and payables for which current carrying amounts approximate fair market value.</font>
</p>

<p><font face="'Verdana','Times New Roman'" color="teal" size="-1"><b>Property and equipment:</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">Property and equipment are recorded at cost.  Expenditures for renewals and betterments are capitalized and repairs and maintenance costs are charged to expense as incurred.  When items are disposed
of, the cost and accumulated depreciation are eliminated from the accounts, and any gain or loss is reflected in the results of operations.</font></p>

<p><font face="'Verdana','Times New Roman'" color="teal" size="-1"><b>Impairment of long-lived assets:</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the assets.  If these assets are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceeds the fair value of the assets.</font></p>

<p><font face="'Verdana','Times New Roman'" color="teal" size="-1"><b>Software revenue recognition:</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company recognizes revenue upon shipment of its character recognition software.  The product is sold to the end user and risk of loss is transferred, and the Company has no continuing obligations,
once its products are delivered to the shipper.  The Company recognizes revenue upon shipment, net of return reserves based on historical experience.  To recognize revenue, it must also be probable that the Company will collect the accounts receivable
from its customers.  In some situations, the Company receives advance payments from its customers.  Revenue associated with these advance payments is deferred until the product is shipped.  Warranty reserves are provided at the time revenue is recognized
for the estimated cost of replacing defective products.</font></p>

<br><br><br><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 12 -----</b></font></center>

<br><br><br><br><br><br>


<p><font face="'Verdana','Times New Roman'"><b>Note 1.&nbsp;&nbsp;Nature of Business and Significant Accounting Policies (Continued)</b></font></p>

<p><font face="'Verdana','Times New Roman'" color="teal" size="-1"><b>Significant accounting policies of the Company are summarized below: (continued)</b></font></p>

<p><font face="'Verdana','Times New Roman'" color="teal" size="-1"><b>Advertising costs:</b></font><p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company generally charges to expense the production costs of advertising the first time the advertising takes place, except for direct-response advertising, which is capitalized and amortized over
the expected period of future benefits.  Advertising expense was $375,833, $562,413, and $518,433 for the years ended December 31, 2000, 1999, and 1998, respectively.</font></p>

<p><font face="'Verdana','Times New Roman'" color="teal" size="-1"><b>Research and development:</b></font><p>

<p><font face="'Verdana','Times New Roman'" size="-1">Expenditures for research and development are expensed as incurred.</font></p>

<p><font face="'Verdana','Times New Roman'" color="teal" size="-1"><b>Depreciation:</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The cost of property and equipment is depreciated on the straight-line method over the estimated useful lives.</font></p>

<p><font face="'Verdana','Times New Roman'" color="teal" size="-1"><b>Estimated useful lives are as follows:</b></font></p>

<table width="760" cellpadding="2">
<tr>
	<td align="right" width="760"><font face="'Verdana','Times New Roman'" size="-1">Years</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="500"><font face="'Verdana','Times New Roman'" size="-1">Equipment</font></td>
	<td align="right" width="500"><font face="'Verdana','Times New Roman'" size="-1">5-10</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="500"><font face="'Verdana','Times New Roman'" size="-1">Furniture and fixtures</font></td>
	<td align="right" width="500"><font face="'Verdana','Times New Roman'" size="-1">10</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="500"><font face="'Verdana','Times New Roman'" size="-1">Building</font></td>
	<td align="right" width="500"><font face="'Verdana','Times New Roman'" size="-1">7-40</font></td></tr></TABLE><br>

<p><font face="'Verdana','Times New Roman'" size="-1">Depreciation expense for the years ended December 31, 2000, 1999, and 1998 was $146,648, $139,900, and $137,358, respectively.</font></p>

<p><font face="'Verdana','Times New Roman'" color="teal" size="-1"><b>Income taxes:</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">Deferred income taxes are provided on an asset and liability approach to financial accounting and reporting for income taxes.  The difference between the financial statement and tax bases of assets
and liabilities is determined annually.  Deferred income tax assets and liabilities are computed for those differences that have future tax consequences using the currently enacted tax laws and rates that apply to the periods in which they are expected to
affect taxable income.  Income tax expense is the current tax payable or refundable for the period plus or minus the net change in the deferred tax assets and liabilities.</font></p>

<p><font face="'Verdana','Times New Roman'" color="teal" size="-1"><b>Earnings per share:</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">Basic earnings per share (EPS) excludes dilution and is determined by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period.
Diluted EPS reflects the potential dilution that could occur if securities and other contracts to issue common stock were exercised or converted into common stock.  Diluted EPS is computed similarly to fully diluted earnings per share under current
accounting rules.</font></p>

<br><br><br><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 13 -----</b></font></center>

<br><br><br><br><br><br>

<p><font face="'Verdana','Times New Roman'"><b>Note 1.&nbsp;&nbsp;Nature of Business and Significant Accounting Policies (Continued)</b></font></p>

<p><font face="'Verdana','Times New Roman'" color="teal" size="-1"><b>Significant accounting policies of the Company are summarized below: (continued)</b></font></p>

<p><font face="'Verdana','Times New Roman'" color="teal" size="-1"><b>Earnings per share: (continued)</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The following information presents the Company's computations of basic and diluted EPS for the periods presented in the income statements.</font></p>

<hr size="3">

<table width="760" cellpadding="2">
<tr>
	<td align="center" width="304"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>Income</b></font></td>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>Shares</b></font></td>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>Per Share Amt</b></font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="304"><font face="'Verdana','Times New Roman'" size="-1"><b>2000:</b></font></td>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1"></font></td>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1"></font></td>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1"></font></td></tr></table>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="304"><font face="'Verdana','Times New Roman'" size="-1">Basic EPS</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;&nbsp;&nbsp;681,741</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">2,001,907</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.34</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="304"><font face="'Verdana','Times New Roman'" size="-1">Effect of dilutive employee stock options</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">27,806</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"></font></td></tr></table>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="304"><font face="'Verdana','Times New Roman'" size="-1">Diluted EPS</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;&nbsp;&nbsp;681,741</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">2,029,713</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.34</font></td></tr></TABLE>

<hr size="3">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="304"><font face="'Verdana','Times New Roman'" size="-1"><b>1999:</b></font></td>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1"></font></td>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1"></font></td>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1"></font></td></tr></table>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="304"><font face="'Verdana','Times New Roman'" size="-1">Basic EPS</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;&nbsp;&nbsp;(22,413)</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">1,977,630</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;&nbsp;&nbsp;(0.01)</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="304"><font face="'Verdana','Times New Roman'" size="-1">Effect of dilutive employee stock options</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">322</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"></font></td></tr></table>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="304"><font face="'Verdana','Times New Roman'" size="-1">Diluted EPS</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;&nbsp;&nbsp;(22,413)</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">1,977,952</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;&nbsp;&nbsp;(0.01)</font></td></tr></TABLE>

<hr size="3">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="304"><font face="'Verdana','Times New Roman'" size="-1"><b>1998:</b></font></td>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1"></font></td>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1"></font></td>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1"></font></td></tr></table>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="304"><font face="'Verdana','Times New Roman'" size="-1">Basic EPS</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;&nbsp;&nbsp;230,423</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">1,968,935</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.12</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="304"><font face="'Verdana','Times New Roman'" size="-1">Effect of dilutive employee stock options</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">6,713</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"></font></td></tr></table>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="304"><font face="'Verdana','Times New Roman'" size="-1">Diluted EPS</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;&nbsp;&nbsp;230,423</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">1,975,648</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.12</font></td></tr></TABLE>

<hr size="3">

<p><font face="'Verdana','Times New Roman'" color="teal" size="-1"><b>Recent accounting standards:</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">During 1998, the Company adopted SFAS No. 130, &quotReporting Comprehensive Income&quot, which requires disclosure of all changes in equity that result from transactions and economic events other than
transactions with owners.  Comprehensive income includes the Company's net income plus other comprehensive income items, which are excluded from net income.  The Company's other comprehensive income consists of unrealized gains (losses), net of income
taxes and reclassification adjustment for gains and losses included in net income.  This reclassification adjustment for gains and losses included in net income was $(205,282), $0, and $23,600 for 2000, 1999, and 1998, respectively.  The Company does not
have any additional transactions or other economic events which qualify as other comprehensive income as defined under SFAS No. 130, and adoption of SFAS No. 130 had no effect on the Company's results of operations, cash flows or financial position.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company has also adopted SFAS No. 131, &quotDisclosures about Segments of an Enterprise and Related Information.&quot  SFAS No. 131 establishes new standards for reporting information about
business segments and related disclosures about products and services, geographic areas and major customers, if applicable.  Under SFAS No. 131, operating segments are determined consistent with the way management organizes and evaluates financial
information internally for making decisions and assessing performance.  The Company's adoption of SFAS No. 131 had no effect on the Company's results of operations, cash flows or financial position.</font></p>

<br><br><br><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 14 -----</b></font></center>

<br><br><br><br><br><br>

<p><font face="'Verdana','Times New Roman'"><b>Note 2.&nbsp;&nbsp;Investments</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-2">The cost and estimated fair value of the investments are as follows:</font></p>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="center" width="115"><font face="'Verdana','Times New Roman'"size="-2"><b></b></font></td>
	<td align="center" width="115"><font face="'Verdana','Times New Roman'"size="-2"><b>Gross</b></font></td>
	<td align="center" width="115"><font face="'Verdana','Times New Roman'"size="-2"><b>Gross</b></font></td>
	<td align="center" width="115"><font face="'Verdana','Times New Roman'"size="-2"><b></b></font></td>
</tr>
</TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="center" width="115"><font face="'Verdana','Times New Roman'"size="-2"><b></b></font></td>
	<td align="center" width="115"><font face="'Verdana','Times New Roman'"size="-2"><b>Unrealized</b></font></td>
	<td align="center" width="115"><font face="'Verdana','Times New Roman'"size="-2"><b>Unrealized</b></font></td>
	<td align="center" width="115"><font face="'Verdana','Times New Roman'"size="-2"><b>Fair</b></font></td>
</tr>
</TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="center" width="115"><font face="'Verdana','Times New Roman'"size="-2"><b>Cost</b></font></td>
	<td align="center" width="115"><font face="'Verdana','Times New Roman'"size="-2"><b>Gain</b></font></td>
	<td align="center" width="115"><font face="'Verdana','Times New Roman'"size="-2"><b>Loss</b></font></td>
	<td align="center" width="115"><font face="'Verdana','Times New Roman'"size="-2"><b>Value</b></font></td>
</tr>
</TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-2"><b>December 31, 2000</b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-2">Treasury Bills</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;2,057,927</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;2,057,927</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-2">Money-market funds</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">772,499</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">0</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">0</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">772,499</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-2">Equity Securities</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">1,240,714</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">19,500,860</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">(272,132)</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">20,469,442</font></td></tr></TABLE>

<hr size="1"><br>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">4,071,140</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">19,500,860</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">(272,132)</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">23,299,868</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-2">Less cash equivalents</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">(2,830,426)</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2"></font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2"></font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">(2,830,426)</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-2"><b>Total investments</b></font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;1,240,714</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">$19,500,860</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;(272,132)</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">$20,469,442</font></td></tr></TABLE>

<hr size="3">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-2"><b>December 31, 1999</b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-2">Treasury Bills</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;1,704,167</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;1,704,167</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-2">Money-market funds</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">203,807</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">0</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">0</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">203,807</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-2">Equity Securities</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">1,523,793</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">1,324,775</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">(428,967)</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">2,419,601</font></td></tr></TABLE>

<hr size="1"><br>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">3,431,767</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">1,324,775</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">(428,967)</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">4,327,575</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-2">Less cash equivalents</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">(1,907,974)</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2"></font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2"></font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">(1,907,974)</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-2"><b>Total investments</b></font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;1,523,793</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;1,324,775</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;(428,967)</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;2,419,601</font></td></tr></TABLE>

<hr size="3">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-2"><b>December 31, 1998</b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-2">Treasury Bills</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;1,866,859</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;1,866,859</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-2">Money-market funds</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">208,230</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">0</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">0</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">208,230</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-2">Equity Securities</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">1,523,793</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">1,983,263</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">(380,443)</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">3,126,613</font></td></tr></TABLE>

<hr size="1"><br>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">3,598,882</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">1,983,263</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">(380,443)</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">5,201,702</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-2">Less cash equivalents</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">(2,075,089)</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2"></font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2"></font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">(2,075,089)</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-2"><b>Total investments</b></font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;1,523,793</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;1,983,263</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;(380,443)</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;3,126,613</font></td></tr></TABLE>

<hr size="3"><br>

<p><font face="'Verdana','Times New Roman'" size="-2">Realized gains and losses on investments are as follows:</font></p>

<hr size="3">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-2">December 31,</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-2"><b>2000</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-2">1999</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-2">1998</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-2">Gross realized gains</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-2"><b>$&nbsp;&nbsp;&nbsp;796,624</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;&nbsp;&nbsp;&nbsp;23,748</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-2">Gross realized losses</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-2"><b>$&nbsp;&nbsp;(260,618)</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-2"><b>Net realized gain</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-2"><b>$&nbsp;&nbsp;&nbsp;536,006</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;&nbsp;&nbsp;&nbsp;23,748</font></td></tr></TABLE>

<hr size="3"><br>

<p><font face="'Verdana','Times New Roman'" size="-1">The change in the net unrealized holding gain on investments at December 31, 2000 and 1999 consisted of the following:</font></p>

<hr size="3">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="554"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2"><b>2000</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2">1999</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="554"><font face="'Verdana','Times New Roman'" size="-2">Unrealized gain on current portfolio of marketable equity securities</font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2"><b>$&nbsp;19,500,860</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;&nbsp;1,324,775</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="554"><font face="'Verdana','Times New Roman'" size="-2">Unrealized loss on current portfolio of marketable equity securities</font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2"><b>(272,132)</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2">(428,967)</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="554"><font face="'Verdana','Times New Roman'" size="-2">Related deferred tax effect</font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2"><b>(6,958,000)</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2">(324,000)</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="554"><font face="'Verdana','Times New Roman'" size="-2"><b>Total unrealized holding gain, net</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2"><b>$&nbsp;12,270,728</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;&nbsp;571,808</font></td></tr></TABLE>

<hr size="3">

<br><br><br><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 15 -----</b></font></center>

<br><br><br><br><br><br>

<p><font face="'Verdana','Times New Roman'"><b>Note 3.&nbsp;&nbsp;Inventories</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-2">Inventories used in the determination of cost of goods sold are as follows:</font></p>

<hr size="3">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-2">December 31,</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-2"><b>2000</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-2">1999</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-2">1998</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-2">Raw materials</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-2"><b>$&nbsp;&nbsp;630,985</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;&nbsp;580,908</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;&nbsp;671,545</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-2">Work in process</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'" size="-2"><b>129,723</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-2">126,151</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-2">124,055</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-2">Finished goods</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-2"><b>161,902</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-2">160,085</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-2">$179,012</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-2">Total inventories</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-2"><b>$&nbsp;&nbsp;922,610</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;&nbsp;867,144</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;&nbsp;974,612</font></td></tr></TABLE>

<hr size="3">

<p><font face="'Verdana','Times New Roman'"><b>Note 4.&nbsp;&nbsp;Property and Equipment</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-2">The following is a summary of property and equipment:</font></p>

<hr size="3">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="554"><font face="'Verdana','Times New Roman'" size="-2">December 31,</font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2"><b>2000</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2">1999</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="554"><font face="'Verdana','Times New Roman'" size="-2">Equipment</font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2"><b>$&nbsp;&nbsp;&nbsp;393,116</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;&nbsp;&nbsp;366,454</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="554"><font face="'Verdana','Times New Roman'" size="-2">Furniture and fixtures</font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2"><b>457,883</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2">422,241</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="554"><font face="'Verdana','Times New Roman'" size="-2">Building</font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2"><b>1,333,824</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2">1,333,823</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="554"><font face="'Verdana','Times New Roman'" size="-2">Land</font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2"><b>414,540</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2">414,540</font></td></tr></TABLE>

<hr size="1"><br>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="554"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2"><b>2,599,363</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2">2,537,058</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="554"><font face="'Verdana','Times New Roman'" size="-2">Less accumulated depreciation</font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2"><b>983,369</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2">846,671</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="554"><font face="'Verdana','Times New Roman'" size="-2"><b>Total property and equipment</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2"><b>$&nbsp;1,615,994</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;1,690,387</font></td></tr></TABLE>

<hr size="3">

<p><font face="'Verdana','Times New Roman'"><b>Note 5.&nbsp;&nbsp;Accrued Expenses</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-2">Accrued expenses at December 31, 2000 and 1999 include:</font></p>

<hr size="3">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="554"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2"><b>2000</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2">1999</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="554"><font face="'Verdana','Times New Roman'" size="-2">Wages and commissions</font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2"><b>$&nbsp;&nbsp;&nbsp;116,452</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;&nbsp;&nbsp;&nbsp;99,104</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="554"><font face="'Verdana','Times New Roman'" size="-2">Other</font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2"><b>117,760</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2">42,946</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="554"><font face="'Verdana','Times New Roman'" size="-2"><b>Total accrued expenses</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2"><b>$&nbsp;&nbsp;&nbsp;234,212</b></font></td>
	<td align="right" width="100"><font face="'Verdana','Times New Roman'"size="-2">$&nbsp;&nbsp;&nbsp;142,050</font></td></tr></TABLE>

<hr size="3"><br>

<p><font face="'Verdana','Times New Roman'"><b>Note 6.&nbsp;&nbsp;Commitments</b></font></p>

<p><font face="'Verdana','Times New Roman'" color="teal"><b>Lease commitments:</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-2">The Company is leasing office equipment under operating leases expiring at various dates through 2005.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-2">Minimum lease payments required under non-cancelable operating leases are as follows:</font></p>

<hr size="3">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="377"><font face="'Verdana','Times New Roman'" size="-2">Year</font></td>
	<td align="right" width="377"><font face="'Verdana','Times New Roman'"size="-2"><b>Amount</b></font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="377"><font face="'Verdana','Times New Roman'" size="-2">2001</font></td>
	<td align="right" width="377"><font face="'Verdana','Times New Roman'"size="-2"><b>$&nbsp;23,652</b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="377"><font face="'Verdana','Times New Roman'" size="-2">2002</font></td>
	<td align="right" width="377"><font face="'Verdana','Times New Roman'"size="-2"><b>23,652</b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="377"><font face="'Verdana','Times New Roman'" size="-2">2003</font></td>
	<td align="right" width="377"><font face="'Verdana','Times New Roman'"size="-2"><b>22,012</b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="377"><font face="'Verdana','Times New Roman'" size="-2">2004</font></td>
	<td align="right" width="377"><font face="'Verdana','Times New Roman'"size="-2"><b>19,716</b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="377"><font face="'Verdana','Times New Roman'" size="-2">2005</font></td>
	<td align="right" width="377"><font face="'Verdana','Times New Roman'"size="-2"><b>1,362</b></font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="377"><font face="'Verdana','Times New Roman'" size="-2"><b>Total minimum lease payments</b></font></td>
	<td align="right" width="377"><font face="'Verdana','Times New Roman'"size="-2"><b>$&nbsp;90,394</b></font></td></tr></TABLE>

<hr size="3">

<p><font face="'Verdana','Times New Roman'" size="-2">Rental expense charged to operations was $38,576, $36,451, and $83,629 for years ended December 31, 2000, 1999, and 1998, respectively.</font></p>

<br><br><br><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 16 -----</b></font></center>

<br><br><br><br><br><br>

<p><font face="'Verdana','Times New Roman'"><b>Note 7.&nbsp;&nbsp;Common Stock Options and Stock Purchase Plan</b></font></p>

<p><font face="'Verdana','Times New Roman'" color="teal"><b>Stock-based compensation:</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company has a stock option plan and an employee stock purchase and bonus plan.  Under the 1997 Stock Option Plan, the Company is authorized to grant up to 300,000 shares of its common stock.  The
Company granted 40,500 options under this plan during 2000, and at December 31, 2000, 148,500 shares remained available for grant under this plan.  Under the Employee Stock Purchase and Bonus Plan, the Company is authorized to sell and issue up to 100,000
shares of its common stock to its full-time employees.  During 2000, 1999, and 1998, 3,604, 10,154 and 5,994 shares, respectively, were issued under this plan.  At December 31, 2000, 69,089 shares were available for future issuance.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company applies Accounting Principles Board (&quotAPB&quot) No. 25, Accounting for Stock Issued to Employees, and related interpretations to account for its stock-based compensation plans, when
applicable, but has adopted the disclosure-only provisions of SFAS No. 123, Accounting for Stock-Based Compensation, which requires pro forma disclosures regarding the Company's stock-based compensation plans.</font></p>

<p><font face="'Verdana','Times New Roman'" color="teal"><b>Stock options:</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The 1997 Stock Option Plan includes both nonqualified and incentive stock options.  Payment for the shares may be made in cash, shares of the Company's common stock or a combination thereof.  Under
the terms of the plan, incentive stock options are granted at 100% of fair market value on the date of grant and may be exercised at various times depending upon the term of the option. The nonqualified stock options were granted to directors to purchase
shares of the Company's common stock. All existing options expire 10 years from the date of grant or one year from the date of death.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">A summary of stock options outstanding and exercisable under the plans is as follows:</font></p>

<hr size="3">

<table width="760" cellpadding="2">
<tr>
	<td align="center" width="377"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td align="center" width="377"><font face="'Verdana','Times New Roman'" size="-1"><u>Number of shares</u></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="center" width="376"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td align="center" width="189"><font face="'Verdana','Times New Roman'" size="-1"><u>Incentive Options</u></font></td>
	<td align="center" width="189"><font face="'Verdana','Times New Roman'" size="-1"><u>Director Options</u></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td align="center" width="115"><font face="'Verdana','Times New Roman'"size="-1">Stock</font></td>
	<td align="center" width="115"><font face="'Verdana','Times New Roman'"size="-1">Weighted Avg</font></td>
	<td align="center" width="115"><font face="'Verdana','Times New Roman'"size="-1">Stock</font></td>
	<td align="center" width="115"><font face="'Verdana','Times New Roman'"size="-1">Weighted Avg</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td align="center" width="115"><font face="'Verdana','Times New Roman'"size="-1">Options</font></td>
	<td align="center" width="115"><font face="'Verdana','Times New Roman'"size="-1">Exercise Price</font></td>
	<td align="center" width="115"><font face="'Verdana','Times New Roman'"size="-1">Options</font></td>
	<td align="center" width="115"><font face="'Verdana','Times New Roman'"size="-1">Exercise Price</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-1">Balance, December 31, 1997</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">71,260</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;&nbsp;&nbsp;3.23</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">58,500</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;&nbsp;&nbsp;3.88</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-1">Granted</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">23,000</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">3.67</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">4,000</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">3.88</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-1">Exercised</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">(374)</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">2.38</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">(4,500)</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">3.13</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-1">Forfeited</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">(886)</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">2.38</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">0</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">0</font></td></tr></TABLE>

<hr size="1"><br>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-1">Balance, December 31, 1998</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">93,000</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">3.41</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">58,000</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">3.95</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-1">Granted</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">78,000</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">2.20</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">6,000</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">3.00</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-1">Expired</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">0</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">0</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">(4,500)</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">3.25</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-1">Forfeited</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">(2,500)</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">3.73</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">0</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">0</font></td></tr></TABLE>

<hr size="1"><br>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-1">Balance, December 31, 1999</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">168,500</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">2.84</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">59,500</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">3.91</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-1">Granted</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">34,500</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">5.17</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">6,000</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">3.50</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-1">Exercised</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">(78,900)</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">3.02</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">(9,000)</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">3.31</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-1">Forfeited</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">(23,100)</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">4.23</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">0</font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1">0</font></td></tr></TABLE>

<hr size="1"><br>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-1"><b>Balance, December 31, 2000</b></font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1"><b>101,000</b></font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1"><b>$&nbsp;&nbsp;&nbsp;3.18</b></font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1"><b>56,500</b></font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1"><b>$&nbsp;&nbsp;&nbsp;3.96</b></font></td></tr></TABLE>

<hr size="3"><br>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="760"><font face="'Verdana','Times New Roman'" size="-1"><b>Options exercisable at</b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="290"><font face="'Verdana','Times New Roman'" size="-1"><b>December 31, 2000</b></font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1"><b>58,200</b></font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1"><b>$&nbsp;&nbsp;&nbsp;3.00</b></font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1"><b>56,500</b></font></td>
	<td align="right" width="115"><font face="'Verdana','Times New Roman'"size="-1"><b>$&nbsp;&nbsp;&nbsp;3.96</b></font></td></tr></TABLE>

<hr size="3">

<br><br><br><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 17 -----</b></font></center>

<br><br><br><br><br><br>

<p><font face="'Verdana','Times New Roman'"><b>Note 7.&nbsp;&nbsp;Common Stock Options and Stock Purchase Plan (Continued)</b></font></p>

<p><font face="'Verdana','Times New Roman'" color="teal"><b>Stock options: (continued)</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">Price range of outstanding options:</font></p>

<hr size="3">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="294"><font face="'Verdana','Times New Roman'" size="-1">As of December 31, 2000</font></td>
	<td align="center" width="230"><font face="'Verdana','Times New Roman'"size="-1">Incentive Options</font></td>
	<td align="center" width="230"><font face="'Verdana','Times New Roman'"size="-1">Directors Options</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="294"><font face="'Verdana','Times New Roman'" size="-1">Options</font></td>
	<td align="center" width="230"><font face="'Verdana','Times New Roman'"size="-1">$2.00 to $5.75</font></td>
	<td align="center" width="230"><font face="'Verdana','Times New Roman'"size="-1">$3.00 to $4.75</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="294"><font face="'Verdana','Times New Roman'" size="-1">Expiration dates</font></td>
	<td align="center" width="230"><font face="'Verdana','Times New Roman'"size="-1">2007 to 2010</font></td>
	<td align="center" width="230"><font face="'Verdana','Times New Roman'"size="-1">2001 to 2010</font></td></tr></TABLE>

<hr size="3"><br>

<p><font face="'Verdana','Times New Roman'" color="teal"><b>Stock purchase plan:</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Employee Stock Purchase and Bonus Plan (the Employee Stock Plan) allows employees to set aside up to 10% of their earnings for the purchase of shares of the Company's common stock. Shares are
purchased annually under the Employee Stock Plan at a price equal to 85% of the market price on the last day of the calendar year.</font></p>

<p><font face="'Verdana','Times New Roman'" color="teal"><b>Compensation costs:</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company applies Accounting Principles Board Opinion No. 25, &quotAccounting for Stock Issued to Employees,&quot and related interpretations in accounting for its stock option plans. Accordingly,
no compensation cost has been recognized in the accompanying statements of operations. Had compensation cost been recognized based on the fair values of options at the grant dates consistent with the provisions of SFAS No. 123, &quotAccounting for
Stock-Based Compensation,&quot the Company's net income and net income per common share would have been decreased to the following pro forma amounts:</font></p>

<hr size="3">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-1">Years Ended December 31,</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>2000</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">1999</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">1998</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-1">Net income</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;As reported</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>$&nbsp;681,741</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;(22,413)</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;230,423</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;Pro forma</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>$&nbsp;645,161</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;(65,142)</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;194,656</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-1">Net Income</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;As reported</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>$&nbsp;&nbsp;&nbsp;0.34</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;&nbsp;(0.01)</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;&nbsp;&nbsp;0.12</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;Pro forma</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>$&nbsp;&nbsp;&nbsp;0.32</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;&nbsp;(0.03)</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;&nbsp;&nbsp;0.10</font></td></tr></TABLE>

<hr size="3"><br>

<p><font face="'Verdana','Times New Roman'" size="-1">The weighted average fair values of options granted and Employee Stock Plan shares were as follows:</font></p>

<hr size="3">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="454"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1">1987 and 1997 Plan</font></td>
		<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1">Employee Stock</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1">Employees</font></td>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1">Directors</font></td>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1">Plan</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-1">1998 grants</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;1.22</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;1.29</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;0.63</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-1">1999 grants</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;0.98</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;1.38</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;0.45</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-1">2000 grants</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;2.12</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;1.07</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;1.91</font></td></tr></TABLE>

<hr size="3">

<p><font face="'Verdana','Times New Roman'" size="-1">The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions used for grants in fiscal 1999 and 2000:</font></p>

<hr size="3">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="454"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>2000</b></font></td>
		<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1">1999</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="454"><font face="'Verdana','Times New Roman'" size="-1">Risk-free interest rate</font></td>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>5.44%-6.46%</b></font></td>
		<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1">4.71%-6.27%</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="454"><font face="'Verdana','Times New Roman'" size="-1">Expected life of options</font></td>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>5 years</b></font></td>
		<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1">7 years</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="454"><font face="'Verdana','Times New Roman'" size="-1">Expected life of Employee Stock Plan shares</font></td>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>3 months</b></font></td>
		<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1">3 months</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="454"><font face="'Verdana','Times New Roman'" size="-1">Expected volatility</font></td>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>84%-113%</b></font></td>
		<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1">61%-76%</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="454"><font face="'Verdana','Times New Roman'" size="-1">Expected dividend yield</font></td>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>3.65%</b></font></td>
		<td align="center" width="150"><font face="'Verdana','Times New Roman'"size="-1">5.34%</font></td></tr></TABLE>

<hr size="3">

<br><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 18 -----</b></font></center>

<br><br><br><br><br><br>

<p><font face="'Verdana','Times New Roman'"><b>Note 7.&nbsp;&nbsp;Common Stock Options and Stock Purchase Plan (Continued)</b></font></p>

<p><font face="'Verdana','Times New Roman'" color="teal"><b>Compensation costs: (continued)</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The tax benefits associated with the exercise of stock options or issuance of shares under the Company's stock option plans, not related to expenses recognized for financial reporting purposes, have
been credited to capital in excess of par value in the accompanying consolidated balance sheets.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The following table summarizes stock options outstanding at December 31, 2000:</font></p>

<hr size="3">

<table width="760" cellpadding="2">
<tr>
	<td align="center" width="188"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td align="center" width="188"><font face="'Verdana','Times New Roman'"size="-1"></font></td>
	<td align="center" width="188"><font face="'Verdana','Times New Roman'"size="-1">Weighted Avg</font></td>
	<td align="center" width="188"><font face="'Verdana','Times New Roman'"size="-1">Weighted Avg</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="center" width="188"><font face="'Verdana','Times New Roman'" size="-1">Exercise</font></td>
	<td align="center" width="188"><font face="'Verdana','Times New Roman'"size="-1"></font></td>
	<td align="center" width="188"><font face="'Verdana','Times New Roman'"size="-1">Contractual</font></td>
	<td align="center" width="188"><font face="'Verdana','Times New Roman'"size="-1">Exercise</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="center" width="188"><font face="'Verdana','Times New Roman'" size="-1">Price Range</font></td>
	<td align="center" width="188"><font face="'Verdana','Times New Roman'"size="-1">Options</font></td>
	<td align="center" width="188"><font face="'Verdana','Times New Roman'"size="-1">Life Remaining</font></td>
	<td align="center" width="188"><font face="'Verdana','Times New Roman'"size="-1">Price</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="center" width="188"><font face="'Verdana','Times New Roman'" size="-1">$2.00-$3.00</font></td>
	<td align="center" width="188"><font face="'Verdana','Times New Roman'"size="-1">54,500</font></td>
	<td align="center" width="188"><font face="'Verdana','Times New Roman'"size="-1">8.70</font></td>
	<td align="center" width="188"><font face="'Verdana','Times New Roman'"size="-1">$2.27</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="center" width="188"><font face="'Verdana','Times New Roman'" size="-1">$3.01-$4.52</font></td>
	<td align="center" width="188"><font face="'Verdana','Times New Roman'"size="-1">69,000</font></td>
	<td align="center" width="188"><font face="'Verdana','Times New Roman'"size="-1">5.93</font></td>
	<td align="center" width="188"><font face="'Verdana','Times New Roman'"size="-1">$3.65</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="center" width="188"><font face="'Verdana','Times New Roman'" size="-1">$4.53-$5.75</font></td>
	<td align="center" width="188"><font face="'Verdana','Times New Roman'"size="-1">34,000</font></td>
	<td align="center" width="188"><font face="'Verdana','Times New Roman'"size="-1">5.72</font></td>
	<td align="center" width="188"><font face="'Verdana','Times New Roman'"size="-1">$4.99</font></td></tr></TABLE>

<hr size="3"><br>

<p><font face="'Verdana','Times New Roman'"><b>Note 8.&nbsp;&nbsp;Benefit Plans</b></font></p>

<p><font face="'Verdana','Times New Roman'" color="teal"><b>Employee stock ownership plan:</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company sponsors an employee stock ownership plan (ESOP) that covers substantially all employees who work 1,000 or more hours during the year. The ESOP has, at various times, secured financing
from the Company to purchase the Company's shares on the open market.  When the Plan purchases shares with the proceeds of the Company loans, the shares are pledged as collateral for its debt.  The shares are maintained in a suspense account until
released and allocated to participant accounts.   The Plan owns 142,819 shares of the Company's stock at December 31, 2000.  All shares held by the Plan have been released and allocated.  The dividends paid by the Company on shares held by the Plan are
allocated to the participant accounts.  The Plan had no debt to the Company at December 31, 2000.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">ESOP compensation expense was $18,000, $0 and $36,000, for the years ended December 31, 2000, 1999 and 1998, respectively.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">In the event a terminated ESOP participant desires to sell his or her shares of the Company's stock and the shares are not readily tradable, the Company may be required to purchase the shares from the
participant at their fair market value. At December 31, 2000, 142,819 shares of the Company's stock, with an aggregate fair market value of approximately $458,000, are held by ESOP participants, who if terminated, would be subject to the repurchase
requirement.</font></p>

<p><font face="'Verdana','Times New Roman'" color="teal"><b>Profit sharing plan and savings plan:</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company has a salary reduction and profit sharing plan which conforms to IRS provisions for 401(k) plans.  The Company may make profit sharing contributions with the approval of the Board of
Directors.  The Board of Directors agreed to make an $18,000 contribution for 2000 in addition to its matching of 401(k) salary reductions.</font></p>

<br><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 19 -----</b></font></center>

<br><br><br><br><br><br>

<p><font face="'Verdana','Times New Roman'"><b>Note 9.&nbsp;&nbsp;Income Taxes</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The components of the income tax provision for the years ended December 31, 2000, 1999 and 1998, are as follows:</font></p>

<hr size="3">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>2000</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">1999</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">1998</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-1">Current:</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;Federal</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>$&nbsp;&nbsp;344,700</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;&nbsp;(35,000)</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;&nbsp;96,371</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;State</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>13,600</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">1,000</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">3,829</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-1">Deferred:</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;Federal</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>(23,600)</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">(2,000)</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">6,300</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;State</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>18,300</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">(19,100)</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">500</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-1"><b>Total federal and state income taxes</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>$&nbsp;&nbsp;353,000</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;&nbsp;(55,100)</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;&nbsp;107,000</font></td></tr></TABLE>

<hr size="3"><br>

<p><font face="'Verdana','Times New Roman'" size="-1">The 2000 current federal tax component includes a $12,100 tax credit carryback.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The 1999 current federal tax component consists of a net operating loss carryback and a portion of a tax credit carryback.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The provision for income taxes for the years ended December 31, 2000, 1999 and 1998, differs from the amount obtained by applying the U.S. federal income tax rate to pretax income due to the following:
</font></p>

<hr size="3">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>2000</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">1999</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">1998</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-1">Computed 'expected' tax expense</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>$&nbsp;&nbsp;362,000</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;&nbsp;(26,000)</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;&nbsp;115,000</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="760"><font face="'Verdana','Times New Roman'" size="-1">Increase (decrease) in taxes from:</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;State income taxes, net of federal benefit</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>9,000</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">(11,900)</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">2,500</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;&nbsp;Credits</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>(12,100)</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">(24,200)</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">(15,700)</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-1">Other</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>(5,900)</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">7,000</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">5,200</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-1"><b>Total federal and state income taxes</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>$&nbsp;&nbsp;353,000</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;&nbsp;(55,100)</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;&nbsp;107,000</font></td></tr></TABLE>

<hr size="3"><br>

<p><font face="'Verdana','Times New Roman'" size="-1">The components of the net deferred tax asset (liability) consist of:</font></p>

<hr size="3">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="454"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>2000</b></font></td>
		<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">1999</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="454"><font face="'Verdana','Times New Roman'" size="-1">Deferred tax assets:</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="454"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;Vacation disallowance</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22,700</b></font></td>
		<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23,100</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="454"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;Allowance for doubtful accounts</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>9,600</b></font></td>
		<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">8,300</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="454"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;Tax carryforwards</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>28,400</b></font></td>
		<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">31,600</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="454"><font face="'Verdana','Times New Roman'" size="-1"><b>Total deferred tax assets</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;60,700</b></font></td>
		<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;63,000</font></td></tr></TABLE>

<hr size="1"><br>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="454"><font face="'Verdana','Times New Roman'" size="-1">Deferred tax liabilities:</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="454"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;Depreciation</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>$&nbsp;&nbsp;&nbsp;(30,000)</b></font></td>
		<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">&nbsp;&nbsp;&nbsp;(37,600)</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="454"><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;Unrealized investment holding gain</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>(6,958,000)</b></font></td>
		<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">(324,000)</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="454"><font face="'Verdana','Times New Roman'" size="-1"><b>Total deferred liabilities</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>$(6,988,000)</b></font></td>
		<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;(361,600)</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="454"><font face="'Verdana','Times New Roman'" size="-1"><b>Net deferred tax asset (liability)</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b>$(6,927,300)</b></font></td>
		<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$&nbsp;(298,600)</font></td></tr></TABLE>

<hr size="3">

<br><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 20 -----</b></font></center>

<br><br><br><br><br><br>

<p><font face="'Verdana','Times New Roman'"><b>Note 9.&nbsp;&nbsp;Income Taxes (Continued)</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The 2000 tax carryforwards component of deferred tax assets in 2000 consists entirely of a federal tax credit carryforward expiring in 2020.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The 1999 tax carryforwards component of deferred tax assets in 1999 consists of $1,500 resulting from state tax carryforward, $1,200 resulting from federal charitable contributions carryforward,
$16,800 state tax credit carryforward, and $12,100 federal tax credit carryforward.  These carryforwards expire in 2014, 2004, 2014, and 2019, respectively.</font></p>

<p><font face="'Verdana','Times New Roman'"><b>Note 10.&nbsp;&nbsp;Subsequent Event</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company declared a 3-for-2 stock split effected in the form of a 50% stock dividend.  The stock dividend is payable on February 26, 2001 to shareholders of record on February 12, 2001.</font></p>

<p><font face="'Verdana','Times New Roman'"><b>Note 11.&nbsp;&nbsp;Segment Information</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company has four reportable operating segments based on the nature of its product lines:  Production Monitoring, Character Recognition, Brazing Torches, and Investments.  The Production Monitoring
Division manufactures and markets a complete line of speed monitoring and motor control systems for industrial machinery.  The Character Recognition Division designs and markets a desktop software based system that reads hand-printed characters, check
marks and bar code information from scanned or faxed forms.  Sales of this system include software and can include hardware.  The Brazing Torches Division produces small hand held gas torches used primarily by hobbyists, electronic kit assemblers,
creators of jewelry and do-it-yourselfers.  The Investments Division holds investments in marketable and nonmarketable securities.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The accounting policies of the segments are the same as those described in Note 1.  In evaluating segment performance, management focuses on sales and income before taxes.</font></p>

<br><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 21 -----</b></font></center>

<br><br><br><br><br><br>

<p><font face="'Verdana','Times New Roman'"><b>Note 11.&nbsp;&nbsp;Segment Information: (continued)</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-3">The following is financial information relating to the operating segments:</font></p>

<hr size="3">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3"><b></b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>2000</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">1999</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">1998</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3"><b>Net Revenue</b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Production Monitoring</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>$&nbsp;&nbsp;&nbsp;4,825,250</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">$&nbsp;&nbsp;&nbsp;4,483,083</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">$&nbsp;&nbsp;&nbsp;5,099,753</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Character Recognition</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>922,325</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">887,967</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">785,680</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Brazing Torches</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>262,178</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">311,251</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">472,829</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Investments</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>0</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">0</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">0</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>6,009,753</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">5,682,301</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">6,358,262</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3"><b>Sales in Foreign Countries</b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Production Monitoring</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>295,744</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">280,673</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">305,400</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Character Recognition</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>65,073</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">19,115</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">34,640</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Brazing Torches</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>7,574</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">17,057</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">8,500</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Investments</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>0</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">0</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">0</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>368,391</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">316,845</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">348,540</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3"><b>Interest Income</b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Production Monitoring</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>118,457</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">82,499</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">100,875</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Character Recognition</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>0</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">0</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">0</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Brazing Torches</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>0</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">0</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">0</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Investments</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>12,385</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">6,251</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">5,450</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>130,842</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">88,750</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">106,325</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3"><b>Depreciation Expense</b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Production Monitoring</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>126,699</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">114,538</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">123,992</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Character Recognition</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>18,517</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">23,836</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">11,840</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Brazing Torches</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>1,432</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">1,526</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">1,526</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Investments</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>0</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">0</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">0</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>146,648</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">139,900</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">137,358</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3"><b>Capital Purchases</b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Production Monitoring</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>72,238</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">34,549</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">89,037</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Character Recognition</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>0</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">20,369</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">15,740</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Brazing Torches</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>0</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">0</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">0</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Investments</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>0</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">0</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">0</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>72,238</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">54,918</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">104,777</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3"><b>Total Assets</b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Production Monitoring</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>5,503,085</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">5,526,271</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">5,370,902</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Character Recognition</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>83,504</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">225,513</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">263,070</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Brazing Torches</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>102,594</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">58,003</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">175,328</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Investments</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>21,442,399</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">2,568,824</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">3,268,415</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>27,131,582</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">8,378,611</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">9,077,715</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3"><b>Net Income (Loss) Before Taxes</b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Production Monitoring</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>749,612</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">543,271</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">824,676</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Character Recognition</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>(237,099)</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">(499,258)</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">(316,545)</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Brazing Torches</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>23,012</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">(85,074)</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">(155,149)</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Investments</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>499,216</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">(36,452)</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">(15,559)</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>1,034,741</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">(77,513)</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">337,423</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3"><b>Income Tax Expense (Benefit)</b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Production Monitoring</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>256,000</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">175,900</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">356,400</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Character Recognition</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>(81,000)</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">(200,600)</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">(193,400)</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Brazing Torches</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>8,000</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">(18,000)</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">(51,000)</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;Investments</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>170,000</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">(12,400)</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">(5,000)</font></td></tr></TABLE>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'" size="-3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3"><b>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;353,000</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(55,100)</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-3">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;107,000</font></td></tr></TABLE>

<hr size="3">

<br><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 22 -----</b></font></center>

<br><br><br><br><br><br>

<font face="'Verdana','Times New Roman'" color="Black">
<b><font size="+1">Independent Auditor's Report</font></b><br>
<b>Electro-Sensors, Inc. and Subsidiaries</b></font><br>

<hr size="5" color="black">

<p><font face="'Verdana','Times New Roman'" size="-1">The Board of Directors and Stockholders<br>Electro-Sensors, Inc.<br>Minneapolis, Minnesota</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">We have audited the accompanying consolidated balance sheets of Electro-Sensors, Inc. and Subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of income, changes in
stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial
statements based on our audits.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Electro-Sensors, Inc. and Subsidiaries as of December 31,
2000 and 1999, and the results of their operations and their cash flows for the three years in the period ended December 31, 2000, in conformity with generally accepted accounting principles.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">SCHWEITZER KARON & BREMER, LLC<br>Certified Public Accountants<br>Minneapolis, Minnesota<br>February 23, 2001</font></p>

<br><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 23 -----</b></font></center>

<br><br><br><br><br><br>

<font face="'Verdana','Times New Roman'" color="Black">
<b><font size="+1">Price Range of Common Stock</font></b><br>
<b>Electro-Sensors, Inc. and Subsidiaries</b></font><br>

<hr size="5" color="black">

<p><font face="'Verdana','Times New Roman'" size="-1">The Company's Common Stock trades on the Nasdaq Small Cap tier of The Nasdaq Stock Market<sup><font size="-1">SM</font></sup> under the symbol &quotELSE&quot.  The following table sets forth the
quarterly high and low reported last sales prices for the Company's common stock over the past two years as reported on the Nasdaq system.</font></p>

<table width="760" cellpadding="2">
<tr>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'" size="-1"><b></b></font></td>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'"size="-1"><b><u>Period</u></b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b><u>High</u></b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1"><b><u>Low</u></b></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'" size="-1"><b>2000</b></font></td>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'"size="-1"><b>First Quarter</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$4.604</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$1.313</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'" size="-1"><b></b></font></td>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'"size="-1"><b>Second Quarter</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$6.542</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$1.500</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'" size="-1"><b></b></font></td>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'"size="-1"><b>Third Quarter</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$5.000</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$3.042</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'" size="-1"><b></b></font></td>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'"size="-1"><b>Fourth Quarter</b></font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$4.000</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$2.083</font></td></tr></TABLE>

<br>

<table width="760" cellpadding="2">
<tr>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'" size="-1">1999</font></td>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'"size="-1">First Quarter</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$3.500</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$2.688</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'" size="-1"><b></b></font></td>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'"size="-1">Second Quarter</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$3.250</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$2.438</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'" size="-1"><b></b></font></td>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'"size="-1">Third Quarter</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$3.000</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$2.063</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td align="center" width="150"><font face="'Verdana','Times New Roman'" size="-1"><b></b></font></td>
	<td align="left" width="302"><font face="'Verdana','Times New Roman'"size="-1">Fourth Quarter</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$2.313</font></td>
	<td align="right" width="150"><font face="'Verdana','Times New Roman'"size="-1">$1.688</font></td></tr></TABLE>

<p><font face="'Verdana','Times New Roman'" size="-1">On March 16, 2001 there were approximately 550 shareholders of record.  Electro-Sensors, Inc. paid cash dividends on its common stock of $0.12 per share in 1999 and 2000 on a quarterly basis.</font></p>


<br><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 24 -----</b></font></center>

<br><br><br><br><br><br>

<font face="'Verdana','Times New Roman'" color="Black">
<b><font size="+1">Investor Information</font></b><br>
<b>Electro-Sensors, Inc. and Subsidiaries</b></font><br>

<hr size="5" color="black">

<p><font face="'Verdana','Times New Roman'" size="-1"><b>Annual Meeting</b><br>The annual meeting of shareholders will be held at the Radisson South, 7800 Normandale Boulevard, Minneapolis, Minnesota on April 25, 2001, at 2:00 p.m. local time.  All
shareholders are welcome to attend and take part in the discussion of company affairs.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1"><b>Board of Directors</b><br>Bradley D. Slye<br><i>Chairman of the Board<br>President of Electro-Sensors, Inc.</i><br><br>P. R. Peterson<br><i>President of P. R. Peterson Company<br>Secretary of
Electro-Sensors, Inc.</i><br><br>John S. Strom<br><i>Retired</i><br><br>Joseph A. Marino<br><i>President/Chief Executive Officer<br>Applied Biometrics, Inc.</i><br><br>Geoffrey W. Miller<br><i>Vice President Operations and Finance<br>of Amsan MN, Inc.</i></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1"><b>Officers</b><br>Bradley D. Slye<br><i>President</i><br><br>P. R. Peterson<br><i>Secretary</i></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1"><b>Transfer Agent &amp Registrar</b><br>Firstar Trust Company<br>Corporate Trust Services<br>1555 North River Center Drive<br>Suite 301<br>Milwaukee, WI 53212</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1"><b>Auditors</b><br>Schweitzer Karon &amp Bremer, LLC<br>1400 TCF Tower<br>Minneapolis, MN 55402</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1"><b>Counsel</b><br>Fredrikson &amp Byron, P.A.<br>1100 International Centre<br>900 Second Avenue South<br>Minneapolis, MN 55402</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1"><b>Form 10-KSB Available</b><br>A copy of Electro-Sensors, Inc. Form 10-KSB annual report filed with the Securities and Exchange Commission is available without charge to shareholders by writing to:<br>
&nbsp;&nbsp;&nbsp;Electro-Sensors, Inc.<br>&nbsp;&nbsp;&nbsp;Attn:&nbsp;Investor Relations<br>&nbsp;&nbsp;&nbsp;6111 Blue Circle Drive<br>&nbsp;&nbsp;&nbsp;Minnetonka, MN 55343</font></p>

<br><br><br><br>

<p><font face="'Verdana','Times New Roman'" size="-2"><b>CAUTIONARY STATEMENT</b><br>The Company cautions investors that actual results of future operations may materially differ from those anticipated in forward looking statements made in this document
and elsewhere by or on behalf of the Company due to a number of factors including: the uncertainty of market acceptance of products of the Company's AutoData Systems division; fluctuations in operating results due to the impact of non-recurring large
orders for produtcts and gains or losses from sales on investment securities; competition from lower-priced and new products of competitors; and the availability of components for certain of the Company's products which may for periods of time be
available only from a single supplier.  For additional information, see the Company's periodic filings with the Securities and Exchange Commission.</font></p>

<br><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 25 -----</b></font></center>

<br><br><br><br><br><br>

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<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>2
<FILENAME>exhibit23.htm
<DESCRIPTION>EXHIBIT 23-CONSENT OF INDEPENDENT CERTIFIED ACCTS
<TEXT>

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 3.2 Final//EN">

<HTML>
<head>
	<TITLE>EX-23 Consent of Independent Certified Accountants</TITLE>
</head>

<body>

<center><font face="'Verdana','Times New Roman'" size="-1"><b>Exhibit 23</b></font></center><br>

<center><font face="'Verdana','Times New Roman'" size="-1"><b>Consent of Independent Certified Accountants</b></font></center><br>

<p><font face="'Verdana','Times New Roman'" size="-1">We have issued our report, dated March 22, 2001, accompanying the consolidated financial statements included or incorporated by reference in the Annual Report on Form 10-KSB of Electro-Sensors, Inc.
for the year ended December 31, 2000.  We hereby consent to the incorporation by reference of the above-mentioned report in the Prospectus constituting part of the registration statements on Forms S-8 of Electro-Sensors, Inc. (File No. 333-40037), (File
No. 333-08603), and (File No. 33-48955).</font><p><br><br>

<p><font face="'Verdana','Times New Roman'" size="-1">/s/ Schweitzer Karon &amp Bremer, LLC<br>Certified Public Accountants<br>Minneapolis, Minnesota<br>March 29, 2001.</font></p>
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</DOCUMENT>
<DOCUMENT>
<TYPE>10KSB
<SEQUENCE>4
<FILENAME>form10ksb.htm
<DESCRIPTION>FORM 10-KSB
<TEXT>

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 3.2 Final//EN">

<HTML>
<head>
	<TITLE>Form 10-KSB</TITLE>
</head>

<body>

<center><font face="'Verdana','Times New Roman'" size="-1"><b>SECURITIES AND EXCHANGE COMMISSION</b></font></center>

<center><font face="'Verdana','Times New Roman'" size="-1"><b>Washington,&nbsp;DC&nbsp;20549</b></font></center><br>

<center><font face="'Verdana','Times New Roman'" size="-1"><b>Form 10-KSB</b></font></center><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>[X]&nbsp;ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</b></font></center><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>For the fiscal ended December 31, 2000</b></font></center><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>[&nbsp;&nbsp;]&nbsp;TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</b></font></center><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>For the transition period from <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>to <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></b></font></center><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>Commission file number 0-9587</b></font></center><br><br>

<center><font face="'Verdana','Times New Roman'" size="-1"><b>ELECTRO-SENSORS, INC.</b></font></center>
<center><font face="'Verdana','Times New Roman'" size="-2">(Name of Small Business Issuer in its Charter)</font></center><br>

<table width="760" cellpadding="2">
<tr>
    <td align="center" width="428"><font face="'Verdana','Times New Roman'" size="-2"><b>Minnesota</b></font></td>
    <td align="center" width="328"><font face="'Verdana','Times New Roman'" size="-2"><b>41-0943459</b></font></td>
</tr>
<tr>
    <td align="center" width="428"><font face="'Verdana','Times New Roman'" size="-2">(State or Other Jurisdiction of Incorporation or Organization)</font></td>
    <td align="center" width="328"><font face="'Verdana','Times New Roman'" size="-2">(IRS Employer Identification Number)</font></td></tr></TABLE><br><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>6111 Blue Circle Drive<br>Minnetonka, Minnesota 55343-9108</b></font></center>
<center><font face="'Verdana','Times New Roman'" size="-2">(Address of Principal Executive Offices; Zip Code)</font></center><br>

<center><font face="'Verdana','Times New Roman'" size="-2"><b>Issuer's Telephone Number Including Area Code: (952) 930-0100</b></font></center><br>

<center><font face="'Verdana','Times New Roman'" size="-2">Securities registered under Section 12(b) of the Act: None</font></center><br>

<center><font face="'Verdana','Times New Roman'" size="-2">Securities registered under Section 12(g) of the Act: Common Stock, $0.10 par value</font></center><br><br>

<p><font face="'Verdana','Times New Roman'" size="-1">Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days.<br>[X] Yes  [&nbsp;&nbsp;] No</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">Check if no disclosure of delinquent filers pursuant to Item 405 of Regulation S-B is contained in this form, and no disclosure will be contained, to the best of the registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.&nbsp;&nbsp;[X]</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The issuer's revenues for the fiscal year ended December 31, 2000 were $6,009,753.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The aggregate market value of the Issuer's Common Stock held by non-affiliates (persons other than officers, directors, or holders of more than 5% of the outstanding stock) as of March 16, 2001, was
approximately $3,336,743 based on the closing sale price of the Issuer's Common Stock on such date.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">Shares of Common Stock, $0.10 par value, outstanding on March 16, 2001: 3,118,932</font></p>

<center><font face="'Verdana','Times New Roman'" size="-1"><b>DOCUMENTS INCORPORATED BY REFERENCE</b></font></center>

<p><font face="'Verdana','Times New Roman'" size="-1">Portions of the Registrant's Annual Report to Shareholders for the fiscal year ended December 31, 2000 are incorporated into Part II of this Form 10-KSB.  Portions of the Registrant's Proxy Statement
for its 2001 Annual Meeting of Shareholders are incorporated by reference into Part III of this Form 10-KSB.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">Transitional Small Business Disclosure Format (check one): [&nbsp;&nbsp;] Yes  [X] No</font></p><br><br>

<div align="center"><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 1 -----</b></font></div>

<hr size="2" color=#cc9966><br>

<div align="center"><font face="'Verdana','Times New Roman'" size="-1"><b>INDEX</b></font></div><br>
<font face="'Verdana','Times New Roman'" size="-1"><b>Part I</b><br><br>
Item 1. Description of Business<br>
Item 2. Description of Property<br>
Item 3. Legal Proceedings<br>
Item 4. Submission of Matters to a Vote of Security Holders<br><br>
<b>Part II</b><br><br>
Item 5. Market for Common Equity and Related Stockholder Matters<br>
Item 6. Management's Discussion and Analysis or Plan of Operation<br>
Item 7. Financial Statements<br>
Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure<br><br>
<b>Part III</b><br><br>
Item 9. Directors, Executive Officers and Control Persons; Compliance with Section 16(a) of the Exchange Act<br>
Item 10. Executive Compensation<br>
Item 11. Security Ownership of Certain Beneficial Owners and Management<br>
Item 12. Certain Relationships and Related Transactions<br>
Item 13. Exhibits and Reports on Form 8-K<br><br>
<b>Signatures</b></font><br><br><br><br>

<div align="center"><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 2 -----</b></font></div>

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<div align="center"><font face="'Verdana','Times New Roman'" size="-1"><b>PART I</b></font></div><br>

<font face="'Verdana','Times New Roman'" size="-1"><b>ITEM 1.  DESCRIPTION OF BUSINESS</b></font><br><br>

<font face="'Verdana','Times New Roman'" size="-1" color=#008000><b>GENERAL</b></font>

<p><font face="'Verdana','Times New Roman'" size="-1">Electro-Sensors, Inc. (the &quotCompany&quot), a Minnesota corporation, is engaged in three distinct business lines: (i) the manufacture and distribution of industrial production monitoring and
process control systems through its Controls division, (ii) the manufacture and distribution of small as torches and related accessories through its Microflame, Inc. subsidiary, and (iii) the development and distribution of PC-based software for both
automated survey processing and hand printed character recognition through its AutoData Systems division.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">In addition, through its ESI Investment Co. subsidiary, the Company periodically invests in other businesses and companies.  Although Electro-Sensors, Inc., through its ESI Investment Co. subsidiary,
invests in other businesses or companies, Electro-Sensors, Inc. does not intend to become an investment company and intends to remain primarily an operating company.  Unless indicated otherwise, the term &quotCompany&quot, when used herein, includes the
Company and its subsidiaries.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1" color=#008000><b>NARRATIVE DESCRIPTION OF BUSINESS</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">(1) PRINCIPAL PRODUCTS AND MARKETS</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1"><i>PRODUCTION MONITORING SYSTEMS - CONTROLS DIVISION</i></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company's Controls Division manufactures and sells several different types of monitoring systems that measure actual machine production and operation rates, as well as systems that regulate the
speed of related machines in production processes.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1"><b>Speed Monitoring Systems</b><br>The Company's traditional products have compared machine revolutions per minute or speed against acceptable rates as determined by the customers.  The monitors
generally have the same general operating principle and use a non-contracting sensing head that translates the speed at which a shaft rotates into analog readouts.  The systems include both the sensing device and a signal-generating pulser disc or wrap
that attaches to the rotating shaft.  The systems vary in complexity from a simple system that detects gross slow-downs or stoppages to more sophisticated systems that warn of deviations from precise tolerances and that permit various subsidiary
operations to be determined through monitoring a single critical shaft speed.  In 1987, the Company created a separate Drive Control Systems Unit to market products that regulate machine speeds.  The Company's Controls Division's traditional products
remain in the &quotSpeed Monitoring Systems Unit.&quot </font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Speed Monitoring Systems monitoring controls include a line of digital products that translate sensor impulses from its production monitoring systems into digital readouts indicating production
counts or rates, such as parts, gallons, or board feet.  Speed Monitoring Systems also manufactures and sells alarm systems, tachometers, and other devices that translate impulses from the sensors into alarm signals, computer inputs, or digital displays
that are understandable to and usable by the customer.</font></p><br><br>

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<p><font face="'Verdana','Times New Roman'" size="-1">Speed Monitoring Systems manufactures and sells two production monitoring devices that do not operate by measuring shaft speeds.  These devices are the tilt switch and vibration monitor.  A tilt
switch is designed to alert the operator when a storage bin or production system reaches a certain capacity, for example, when grain fills a silo.  A vibration monitor will alert an operator when the vibration in a production system exceeds a certain level.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">Speed Monitoring Systems production monitoring systems are sold to businesses in all major standard industrial classifications, including food processing, chemicals, agricultural, mining, utility,
forest products, steel, tire, glass and electronics.  Any business that uses machinery with a rotating shaft is a potential customer.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">Speed Monitoring Systems markets its speed monitoring systems primarily through four home office sales people who deal directly with customers, and a number of non-exclusive distributors located
throughout the United States.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company advertises its products in national industrial periodicals that cover a wide range of industrial products.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1"><b>Drive Control Systems</b><br>The Company has developed and introduced products that not only monitor machine operation levels, but that also regulate the speed of related machines in the same
production sequence to ensure that the performance of the various machine(s) is coordinated.  These distinct features have allowed the Company to market these products under the Drive Control Systems name due to the intricate customer needs.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">Drive Control Systems markets a line of digital control products for motors that require a complete closed loop P.I.D. (proportional integral derivative) control.  The closed loop controllers increase
production speed and reduce waste.  Product samples are the MicroSpeed, MS332, and MicroLength closed loop controllers.  The MicroSpeed functions as a speed control for motors transporting variable loads, mixing chambers that combine raw materials in
varying ratios and accordingly require varying speed ratios, and screw conveyor feeding systems.  For example, the MicroSpeed will digitally establish a designated motor speed and maintain that speed regardless of loading.  The MS332 functions as a fully
digital, bi-directional event synchronizer for motors requiring precise control of speed and angular position with no gain or loss of shaft revolution.  The MS332 digitally synchronizes the speed of two or more motors to maintain the continuous position
relationship between the independent motor applications.  The MicroLength functions as a position/length controller designed specifically to replace preset counter systems by improving accuracy and cycle time efficiencies.  Typical MicroLength
applications include cut-to-length and material feed applications.  The MicroLength converts shaft speed feedback into given length motor advancement.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">In 1988, the Company entered into a sales agreement with MKS MaschinenKontroll Systeme GmbH (&quotMKS&quot), the West German manufacturer of a Synchronous Drive Controller (&quotSDC&quot) product line
giving the Company exclusive rights to distribute in the United States the drive control products manufactured by MKS.  MKS is the manufacturer of the Synchronizer, a drive control product that coordinates a number of motors in a production machine.  The
Synchronizer was designed for use as a precision speed reference for use with DC regenerative drives.  The MKS product line enables manufacturers to match speed/velocity and phase/position of independently driven machines so they operate together.
Applications include synchronizing overhead and floor conveyors and load sharing of multiple motors that includes draw control involving web processes, precision conveyors and electronic line shaft applications.</font></p><br><br>

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<p><font face="'Verdana','Times New Roman'" size="-1">The Drive Control Systems product sales accounted for approximately 17% in 1998, 15% in 1999, and 13% in 2000.  The Company expects to continue to expend resources in 2001 in development and marketing
of products for its Drive Control Systems division.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company believes that significant savings in both time and materials can be achieved by manufacturing companies by adding drive control technology to existing manufacturing processes to coordinate
operation of related machines.  The Company intends to continue to market its products for sale in this &quotretrofit&quot market and also to companies building new manufacturing machinery or processing systems.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1"><b>AutoData Systems</b><br>The Company initially invested in AutoData Systems as a development project chartered to create opportunities using proprietary, pattern recognition technology.  The outcome
of the project was a Windows<SUP><FONT SIZE="-2">TM</FONT></SUP> software-based system that reads hand-printed characters, check marks, and bar code information from scanned or faxed forms.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The system offers customers a new data entry solution that converts information from forms into a text file compatible with most computer databases.  This intelligent, data entry alternative, saves
time, strain and money compared to the current method of manual data entry.  The basis of the handprint reading capability is the Associative Pattern Memory<sup><font size="-2">TM</font></sup> (APM), a patented, pattern recognition algorithm.  The APM is a trainable, neural network based memory that was incorporated in a Windows Dynamic Link Library (DLL).  This DLL is the foundation of the two products
marketed by AutoData Systems.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">AutoData Systems became an operating unit in January 1993.  The first software package, AutoData PRO<sup><font size="-2">TM</font></sup>, was released in May 1993.  This software was designed for the
end user.  AutoData PRO served as a utility software package designed to process only check mark and hand print information from scanned forms.  The software would allow the user to export the data in an ASCII file format.  In September 1993, AutoData PRO
II was released as an upgrade along with AutoData SDK.  AutoData SDK II allows Windows developers to embed the AutoData DLL into their application in order to provide automated data entry from scanned or faxed forms.  AutoData released Survey in 1996.
Survey is a software package that utilizes the check mark recognition technology to automate the data entry processing of responding participant questionnaires.  AutoData has directed Survey toward the Healthcare Industry.  Recently, AutoData has released
Scannable Office, a new software package that combines the forms processing and character recognition technology with the versatility of Microsoft Office suite.  The software enhances Microsoft Word with tools to create scannable forms effortlessly.
Scannable Office &quotreads&quot and automatically places extracted data directly into an Excel spreadsheet or Access database utilizing only a PC and a scanner.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1"><b>Microflame Gas Torches</b><br>Microflame manufactures and sells four kinds of miniature brazing torches, under the names Cub, Super Cub, Microflame and Dragon.  During the past several years, a
significant portion of Microflame product sales have been from its Cub and Super Cub miniature hand-held torches.  Both the Cub and Super Cub torches utilize butane, which mixes with ambient air to develop a flame about the size of a pencil.  The Cub
torch is sold exclusively to Radio Shack stores.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company's &quotMicroflame&quot torch is composed of two high pressure cylinders, one containing fuel and the other containing an oxidizer, which produces a flame with a tip the size of a pencil
point.  Microflame sells several kits based upon this basic torch.  The kits differ in the number of replacement cylinders, brazing rods and other accessories which they contain.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company's fourth torch, marketed under the name &quotDragon&quot, has a unique flame-action lever that operates on isobutane which, when mixed with ambient air, produces a larger flame other than
the Company's other torches.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">Microflame's products are used primarily by hobbyists, electronic kit assemblers, creators of jewelry and do-it-yourselfers.</font></p><br><br>

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<p><font face="'Verdana','Times New Roman'" size="-1">(2) MARKETING AND DISTRIBUTION</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">Speed Monitoring Systems markets its speed monitoring systems primarily through four home office salespeople who deal directly with customers, and a number of non-exclusive distributors located
throughout the United States.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">In 1987, the Company reorganized its Controls Division and created a &quotDrive Control Systems&quot unit through which its closed loop controls and SDC are marketed.  The Company has established a
separate marketing process for the Drive Control Systems unit products, which are marketed through manufacturers representatives, integrators, and in-house application personnel.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The AutoData Systems division markets its products primarily through one home office salesperson who deals directly with customers, and a number of non-exclusive distributors located throughout the
United States, Canada, Europe and Asia.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">Microflame's products are sold both directly by the Company and through manufacturers representatives.  Direct sales are made to both domestic and international accounts.  These accounts consist of
hobby, hardware, electronic, jewelry repair, do-it-yourselfers and other miscellaneous accounts.  Examples of miscellaneous accounts are catalog and mail order houses, premium and incentive gift outlets, government and industrial users, and dental and
optical users.  There are also a few dealers and consumers with whom the Company deals directly because they are located in pockets of the country not served by existing sales outlets.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company uses two manufacturers representatives in the sale of its Microflame products, each of whom has an exclusive territory within the United States.  These representatives collectively have a
network of wholesale distributors and dealers in the hobby, hardware and electronics fields and are responsible for seeking out additional qualified new distributors.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">(3) STATUS OF NEW PRODUCTS</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">See Item 10 below.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">(4) COMPETITION</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The potential market for the Company's monitoring products includes a broad range of industrial and commercial businesses.  Design, quality and multiplicity of application, rather than price, are the
focus of competition in selling these products.  The Company has substantial competition for its production monitoring systems.  Many of these competitors are well established and larger in terms of total sales volume.  Among the larger competitors are
Danaher Controls, Red Lion Controls, Control Concepts, 4B Elevator Components Ltd., Durant Corp. and Contrex, Inc.  The Company's competitive advantages are that its products are sold as ready-to-install units and that its products have a wide range of
applications.  The Company's major disadvantages include the fact that its major competitors are much larger, have a broader variety of sensing instruments, and have larger sales forces and established names.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">AutoData competitors are essentially in the same product entry phase of marketing their software products to users and developers.  The essential differences are that few competitors have their own
technology and some have larger sales volume because they have been in the market longer.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The market for Microflame gas torches consists primarily of hobbyists, electronic kit assemblers, creators of jewelry and do-it-yourselfers.  Competitive products come from foreign sources, but are of
a totally different design that projects them as a soldering iron rather than a torch.  Large propane torches are sold in the home improvement market by Cooper Tools and Bernz-O-Matic which both have established names and broader product lines than
Microflame.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">(5) SOURCES AND AVAILABILITY OF RAW MATERIALS</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Controls Division purchases parts and materials for its production monitoring systems from various manufacturers and distributors.  In some instances, these materials are manufactured in
accordance with proprietary designs.  Multiple sources of these supplies and materials are readily available, and the Controls Division is not dependent on any single sources for these supplies and materials.  The Controls Division has not experienced any
problem of short supply or delays from its suppliers.  AutoData Systems purchases supplies and materials from various suppliers and is not dependent on any single source for such supplies.</font></p><br><br>

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<hr size="2" color=#cc9966><br>

<p><font face="'Verdana','Times New Roman'" size="-1">Except for small compressed gas cylinders used in Microflame's gas torches, Microflame's parts and materials are purchased from various manufacturers and distributors.  There are multiple sources of
necessary supplies and materials available to Microflame, and Microflame is not now dependent on any single source for these supplies and materials.  Compressed gas cylinders are purchased from two sources as follows:</font></p>

<table width="400" cellpadding="2">
<tr>
    <td width="30" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="220" align="left"><font face="'Verdana','Times New Roman'" size="-1">Leland Limited, Inc.</font></td>
    <td width="70" align="right"><font face="'Verdana','Times New Roman'" size="-1">7.6%</font></td>
	<td width="30" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td></tr>
<tr>
    <td width="30" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="220" align="left"><font face="'Verdana','Times New Roman'" size="-1">Nittan, Inc. (Japan)</font></td>
    <td width="70" align="right"><font face="'Verdana','Times New Roman'" size="-1">92.4%</font></td>
	<td width="30" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td></tr></table>

<p><font face="'Verdana','Times New Roman'" size="-1">The loss of either of these sources or significant delays in delivery from either of these sources could result in serious shortages which would have a material adverse effect on Microflame's
business.  However, the Company has not yet experienced any shortage or delay in shipment from any of these suppliers.  The cylinders are shipped in compliance with applicable D.O.T. regulations for gas containers.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">(6) CUSTOMER DEPENDENCE</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company is not dependent upon a single customer or a few customers for a material portion of sales of any of its products.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">(7) PATENTS AND TRADEMARKS</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company holds no patents, concessions, licenses or franchises that relate to its production monitoring systems; however, AutoData has obtained six patents related to its recognition technology.
</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The names &quotMicroflame&quot, &quotElectro-Sensors&quot and &quotAutoData&quot are trademarks registered with the U.S. Patent and Trademark Office, respectively as Reg. No. 809916, Reg. No.
1,142,310 and Reg. No. 1,874,543.  The Company believes its trademarks have been and will be useful in developing and protecting market recognition for its products.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">PPT Vision, Inc. has granted the Company an exclusive license which allows the Company to incorporate a patented neural network algorithm in its products.  The initial use of this algorithm will be in
the Company's automated computer entry group under the name &quotAutoData Systems.&quot </font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">(8) GOVERNMENTAL APPROVALS</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company is not required to obtain governmental approval of its products.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">(9) EFFECT OF GOVERNMENTAL REGULATIONS</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company does not believe that any existing or proposed governmental regulations will have a material effect on its business.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">(10) RESEARCH AND DEVELOPMENT</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company has spent the following amounts on research and development during the past two fiscal years:</font></p>

<table width="240" cellpadding="2">
<tr>
    <td width="30" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="60" align="left"><font face="'Verdana','Times New Roman'" size="-1">2000:</font></td>
    <td width="100" align="right"><font face="'Verdana','Times New Roman'" size="-1">$862,503</font></td>
	<td width="30" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td></tr>
<tr>
    <td width="30" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="60" align="left"><font face="'Verdana','Times New Roman'" size="-1">1999:</font></td>
    <td width="100" align="right"><font face="'Verdana','Times New Roman'" size="-1">$830,134</font></td>
	<td width="30" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td></tr></table>

<p><font face="'Verdana','Times New Roman'" size="-1">These expenditures were incurred by the Controls Division and AutoData Systems.  The Company is not
conducting research and development with respect to products sold by its Microflame subsidiary.  The Company's development projects are undertaken based upon the identified specific needs of the Company's customer base.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">During fiscal 2000, the Company has continued to fund the AutoData Systems development activities.  The project goal is to create low cost software based systems that enable computers to accurately
read hand printed characters.  In January 1992, the Company acquired an exclusive license from PPT Vision, Inc. (&quotPPT&quot) which offers the Company protection of the algorithm necessary for the reading technology.  The Company has also developed two
recognition patents.</font></p><br><br>

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<hr size="2" color=#cc9966><br>

<p><font face="'Verdana','Times New Roman'" size="-1">In the process of developing the reading software, the Company has refined its vision of the initial product.  The Company's goal is to develop a technology that provides a data entry method that
saves time, strain and money compared to the current method of keystroke data entry.  The product produced by the Company will enter the hand printed information on forms into a database faster and more accurately than could be typed in by data entry
personnel.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">Larry Werth, former president of PPT, has been hired as a Research Scientist charged with finalizing the software.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">(11) ENVIRONMENTAL COMPLIANCE</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">Compliance with federal, state and local environmental provisions has only nominal effect on current or anticipated capital expenditures and has had no material effect on earnings or on the
competitive position of the Company.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">(12) EMPLOYEES</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">As of March 1, 2001, the Company had 34 employees, one of whom is engaged by its Microflame subsidiary and 33 whom are engaged in work for its Controls Division.</font></p><br>

<p align="center"><font face="'Verdana','Times New Roman'" size="-1"><b>CAUTIONARY STATEMENTS</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company wishes to caution investors that the following important factors, among others, in some cases have affected and in the future could affect the Company's actual results of operations and
cause such results to differ materially from those anticipated in forward-looking statements made in this document and elsewhere by or on behalf of the Company.  Forward-looking statements provide current expectations or forecasts of future events and can
be identified by the use of terminology such as &quotbelieve&quot, &quotestimate&quot, &quotexpect&quot, &quotintend&quot, &quotmay&quot, &quotcould&quot, &quotwill&quot and similar words or expressions.  The Company's forward-looking statements generally
relate to its growth strategy, financial results, product development and sales efforts.  Forward-looking statements cannot be guaranteed and actual results may vary materially due to the uncertainties and risks, known and unknown, associated with such
statements.  The Company undertakes no obligation to update any forward-looking statements.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1"><i>UNCERTAINTY OF MARKET ACCEPTANCE OF NEW DIVISION</i></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company's AutoData Systems division is in an early stage of development.  There can be no assurance that the Company will be able to successfully market the products offered by the AutoData
Systems division.  The ability of the Company to achieve acceptable growth will be highly dependent on market acceptance of these products.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1"><i>FLUCTUATIONS IN OPERATING RESULTS</i></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company's AutoData Systems division has experienced an increase in sales; however, the Company's Speed Monitoring division, Drive Control Systems, and the Company's subsidiary, Microflame, Inc.,
have experienced sales declines.  Sales by the AutoData Systems division have been, and are expected to continue to be, subject to quarterly fluctuations due to product competition and acceptance.  There can be no assurance that the AutoData Systems
division sales will continue to increase or that sales by the Speed Monitoring division, Drive Control System or Microflame, Inc. will improve.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">Further, investments by the Company's subsidiary, ESI Investment Co., are subject to significant positive and negative changes in value.  In particular, significant investments by ESI Investment Co.
in PPT Vision and August Technology has experienced substantial value fluctuations, which are expected to continue.  The Company's current intention is to gradually liquidate its investment securities to finance expansion of its operating activities.  As
a result of the foregoing factors, the Company believes that its results of operations will continue to fluctuate from period to period.  Therefore, there can be no assurance that the Company's earnings growth will equal that of prior years.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1"><i>COMPETITION</i></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company's operating activities are subject to intense competition.  There can be no assurance that the Company will be able to effectively compete within its existing markets or the new market it
is entering through its AutoData Systems division.  Further, there can be no assurance that others will not enter these markets.  Competition in these markets is based primarily on price, which subjects the Company to increasing pressures to make price
adjustments to remain competitive.  Such price adjustments, if any, may have an adverse impact on the Company's results of operations if not offset by an increase in revenues or a reduction in expenses.  Many of the Company's competitors are large,
well-established companies.</font></p><br><br>

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<hr size="2" color=#cc9966><br>

<p><font face="'Verdana','Times New Roman'" size="-1"><i>NEW PRODUCT DEVELOPMENT</i></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company's future success is dependent in part on its ability to develop new products.  Difficulties or delays in the Company's ability to develop, produce, test and market new products would have
a material adverse effect on future sales growth.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1"><i>DEPENDENCE ON SUPPLIERS</i></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company currently purchases, and will in the future purchase, parts and components from vendors.  While the Company attempts to have more than a single source of supply for each part and
component, it is possible from time to time that the Company will have only one supplier for any single part or component.  Should a supplier by unwilling or unable to supply and such part or component in a timely manner, the Company's business could be
materially adversely affected.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company notes these factors as permitted by the Private Securities Litigation Reform Act of 1995.  It is not possible to foresee or identify all factors that could cause actual results to differ
from expected or historic results.  As such, investors should not consider any list of such factors to be an exhaustive statement of all risks, uncertainties or potentially inaccurate assumptions.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1"><b>ITEM 2.  DESCRIPTION OF PROPERTY</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company owns and occupies a 25,000 square foot facility at 6111 Blue Circle Drive, Minnetonka, Minnesota 55343.  All operating entities are located within this facility.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1"><b>ITEM 3.  LEGAL PROCEEDINGS</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">None.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1"><b>ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">There were no matters submitted to a vote of security holders during the fourth quarter of 2000.</font></p><br>

<div align="center"><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 9 -----</b></font></div>

<hr size="2" color=#cc9966><br>

<div align="center"><font face="'Verdana','Times New Roman'" size="-1"><b>PART II</b></font></div><br>

<p><font face="'Verdana','Times New Roman'" size="-1"><b>ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The section entitled &quotPrice Range of Common Stock&quot in the Company's 2000 Annual Report to Shareholders is incorporated herein by reference.  Although there were 172 shareholders of record as
of March 16, 2001, the Company has approximately 750 beneficial shareholders.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1"><b>ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The section entitled &quotManagement's Discussion and Analysis of Financial Condition and Results of Operations&quot in the 2000 Annual Report to Shareholders is incorporated herein be reference.</font>
</p>

<p><font face="'Verdana','Times New Roman'" size="-1"><b>ITEM 7.  FINANCIAL STATEMENTS</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The Company's financial statements and notes contained in the 2000 Annual Report to Shareholders are incorporated herein by reference.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1"><b>ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">None.</font></p><br><br>

<div align="center"><font face="'Verdana','Times New Roman'" size="-1"><b>PART III</b></font></div><br>

<p><font face="'Verdana','Times New Roman'" size="-1"><b>ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The names, ages and positions of the Company's executive officers are as follows:</font></p>

<table width="610" cellpadding="2">
<tr>
	<td width="30" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="120" align="left"><font face="'Verdana','Times New Roman'" size="-1"><u><b>Officer Name</b></u></font></td>
	<td width="50" align="center"><font face="'Verdana','Times New Roman'" size="-1"><u><b>Age</b></u></font></td>
	<td width="400" align="left"><font face="'Verdana','Times New Roman'" size="-1"><u><b>Position</b></u></font></td></tr></TABLE>

<table width="610" cellpadding="2">
<tr>
	<td width="30" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="120" align="left"><font face="'Verdana','Times New Roman'" size="-1">Bradley D. Slye</font></td>
	<td width="50" align="center"><font face="'Verdana','Times New Roman'" size="-1">41</font></td>
	<td width="400" align="left"><font face="'Verdana','Times New Roman'" size="-1">Chairman of the Board of Directors and President</font></td></tr></TABLE><br>

<table width="610" cellpadding="2">
<tr>
	<td width="30" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="120" align="left"><font face="'Verdana','Times New Roman'" size="-1">Peter R. Peterson</font></td>
	<td width="50" align="center"><font face="'Verdana','Times New Roman'" size="-1">67</font></td>
	<td width="400" align="left"><font face="'Verdana','Times New Roman'" size="-1">Secretary and Director</font></td></tr></TABLE>

<p><font face="'Verdana','Times New Roman'" size="-1">Mr. Slye has been the Chairman of the Board and President of the Company since January 1997.  Prior to becoming President, Mr. Slye has served as a Design Engineer for the Company (1987-1990) and as
Engineering Manager (1990-1997).  Mr. Slye is also a director of August Technology.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">Mr. Peterson has served as Secretary of the Company since 1973 and served as Chairman of the Board (1969-1989).  Mr. Peterson is also a director of PPT Vision, Inc.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The executive officers of the Company are elected each year by the Board of Directors at its first meeting or by written action following the annual meeting of shareholders to serve during the
following year or until their successors are elected and qualified.</font></p><br><br>

<div align="center"><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 10 -----</b></font></div>

<hr size="2" color=#cc9966><br>

<p><font face="'Verdana','Times New Roman'" size="-1">The information required by Item 9 relating to directors and compliance with Section 16(a) is incorporated herein by reference to the sections entitled &quotElection of Directors&quot and &quotSection
16(a) Beneficial Ownership Reporting Compliance&quot which appear in the Company's definitive proxy statement for its 2001 Annual Meeting of Shareholders.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1"><b>ITEM 10. EXECUTIVE COMPENSATION</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The information required by Item 10 is incorporated herein by reference to the section entitled &quotExecutive Compensation&quot which appears in the Company's definitive proxy statement for its 2001
Annual Meeting of Shareholders.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1"><b>ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">The information required by Item 11 is incorporated herein by reference to the section entitled &quotShareholdings of Principal Shareholders and Management&quot which appears in the Company's
definitive proxy statement for its 2001 Annual Meeting of Shareholders.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1"><b>ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">None.</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1"><b>ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K</b></font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">&nbsp;&nbsp;(a) Exhibits.<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See &quotExhibit Index&quot on page following signatures.<br>&nbsp;&nbsp;(b) Reports on Form 8-K.<br>&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;No reports on Form 8-K were filed during the fourth quarter ended December 31, 2000.</font></p><br><br>

<div align="center"><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 11 -----</b></font></div>

<hr size="2" color=#cc9966><br>


<center><font face="'Verdana','Times New Roman'" size="-1"><b>SIGNATURES</b></font></center>

<p><font face="'Verdana','Times New Roman'" size="-1">Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Registrant has caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.</font>
</p>

<table width="760" cellpadding="2">
<tr>
	<td width="200" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="50" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="200" align="left"><font face="'Verdana','Times New Roman'" size="-1"><b>ELECTRO-SENSORS, INC.</b></font></td>
	<td width="30" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td></tr>
<tr>
	<td width="200" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="50" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="200" align="left"><font face="'Verdana','Times New Roman'" size="-1">(&quotRegistrant&quot)</font></td>
	<td width="30" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td></tr>
<tr>
	<td width="200" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="50" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="200" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="30" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td></tr>
<tr>
	<td width="200" align="left"><font face="'Verdana','Times New Roman'" size="-1">Dated: March 27, 2001</font></td>
	<td width="50" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="200" align="left"><font face="'Verdana','Times New Roman'" size="-1">By: <u>/s/ Bradley D. Slye</u></font></td>
	<td width="30" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td></tr>
<tr>
	<td width="200" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="50" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="200" align="left"><font face="'Verdana','Times New Roman'" size="-1">Bradley D. Slye</font></td>
	<td width="30" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td></tr>
<tr>
	<td width="200" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="50" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="200" align="left"><font face="'Verdana','Times New Roman'" size="-1">President</font></td>
	<td width="30" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td></tr></table><br>

<p><font face="'Verdana','Times New Roman'" size="-1">Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons on behalf of the Registrant, in the capacities, and on the dates, indicated.
</font></p>

<center>(Power of Attorney)</center><br>

<p><font face="'Verdana','Times New Roman'" size="-1">Each person whose signature appears below constitutes and appoints BRADLEY D. SLYE and PETER R. PETERSON as his true and lawful attorneys-in-fact and agents, each acting alone, with full power of
substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments to this Annual Report on Form 10-KSB and to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all said attorneys-in-fact and agents, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.</font></p>

<table width="710" cellpadding="2">
<tr>
	<td width="200" align="left"><font face="'Verdana','Times New Roman'" size="-1"><u><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Signature&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</b></u></font></td>
	<td width="350" align="left"><font face="'Verdana','Times New Roman'" size="-1"><u><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Title&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</b></u></font></td>
	<td width="150" align="left"><font face="'Verdana','Times New Roman'" size="-1"><u><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Date&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</b></u></font></td></tr></TABLE><br>

<table width="710" cellpadding="2">
<tr>
	<td width="200" align="left"><font face="'Verdana','Times New Roman'" size="-1"><u>/s/ Bradley D. Slye</u></font></td>
	<td width="350" align="left"><font face="'Verdana','Times New Roman'" size="-1">Chairman, President and Director (CEO</font></td>
	<td width="150" align="left"><font face="'Verdana','Times New Roman'" size="-1">March 27, 2001</font></td></tr></TABLE>

<table width="710" cellpadding="2">
<tr>
	<td width="200" align="left"><font face="'Verdana','Times New Roman'" size="-1">Bradley D. Slye</font></td>
	<td width="350" align="left"><font face="'Verdana','Times New Roman'" size="-1">Principal Accounting Officer)</font></td>
	<td width="150" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td></tr></table><br>

<table width="710" cellpadding="2">
<tr>
	<td width="200" align="left"><font face="'Verdana','Times New Roman'" size="-1"><u>/s/ Peter R. Peterson</u></font></td>
	<td width="350" align="left"><font face="'Verdana','Times New Roman'" size="-1">Director and Secretary</font></td>
	<td width="150" align="left"><font face="'Verdana','Times New Roman'" size="-1">March 27, 2001</font></td></tr></TABLE>

<table width="710" cellpadding="2">
<tr>
	<td width="200" align="left"><font face="'Verdana','Times New Roman'" size="-1">Peter R. Peterson</font></td>
	<td width="350" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="150" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td></tr></table><br>

<table width="710" cellpadding="2">
<tr>
	<td width="200" align="left"><font face="'Verdana','Times New Roman'" size="-1"><u>/s/ John S. Strom</u></font></td>
	<td width="350" align="left"><font face="'Verdana','Times New Roman'" size="-1">Director</font></td>
	<td width="150" align="left"><font face="'Verdana','Times New Roman'" size="-1">March 27, 2001</font></td></tr></TABLE>

<table width="710" cellpadding="2">
<tr>
	<td width="200" align="left"><font face="'Verdana','Times New Roman'" size="-1">John S. Strom</font></td>
	<td width="350" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="150" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td></tr></table><br>

<table width="710" cellpadding="2">
<tr>
	<td width="200" align="left"><font face="'Verdana','Times New Roman'" size="-1"><u>/s/ Joseph A. Marino</u></font></td>
	<td width="350" align="left"><font face="'Verdana','Times New Roman'" size="-1">Director</font></td>
	<td width="150" align="left"><font face="'Verdana','Times New Roman'" size="-1">March 27, 2001</font></td></tr></TABLE>

<table width="710" cellpadding="2">
<tr>
	<td width="200" align="left"><font face="'Verdana','Times New Roman'" size="-1">Joseph A. Marino</font></td>
	<td width="350" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="150" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td></tr></table><br>

<table width="710" cellpadding="2">
<tr>
	<td width="200" align="left"><font face="'Verdana','Times New Roman'" size="-1"><u>/s/ Geoffrey W. Miller</u></font></td>
	<td width="350" align="left"><font face="'Verdana','Times New Roman'" size="-1">Director</font></td>
	<td width="150" align="left"><font face="'Verdana','Times New Roman'" size="-1">March 27, 2001</font></td></tr></TABLE>

<table width="710" cellpadding="2">
<tr>
	<td width="200" align="left"><font face="'Verdana','Times New Roman'" size="-1">Geoffrey W. Miller</font></td>
	<td width="350" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="150" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td></tr></table><br><br><br><br>

<div align="center"><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 12 -----</b></font></div>

<hr size="2" color=#cc9966><br>

<center><font face="'Verdana','Times New Roman'" size="-1"><b>SECURITIES AND EXCHANGE COMMISSION<br>Washington, DC 20549</b></font></center><br>

<center><font face="'Verdana','Times New Roman'" size="-1"><b>EXHIBIT INDEX TO FORM 10-KSB</b></font></center><br>

<table width="760" cellpadding="2">
<tr>
	<td width="377" align="left"><font face="'Verdana','Times New Roman'" size="-1">For the fiscal year ended</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td width="377" align="left"><font face="'Verdana','Times New Roman'" size="-1">December 31, 2000</font></td>
	<td width="377" align="right"><font face="'Verdana','Times New Roman'" size="-1">Commission File No. 0-9587</font></td></tr></TABLE>

<hr size="1">

<center><b><font face="'Verdana','Times New Roman'" size="-1">ELECTRO-SENSORS, INC.</font></b></center>

<hr size="1">

<table width="760" cellpadding="2">
<tr>
	<td width="100" align="left"><font face="'Verdana','Times New Roman'" size="-1"><u><b>Exhibit</b></u></font></td>
	<td width="20" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="634" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td></tr></table><br>

<table width="760" cellpadding="2">
<tr>
	<td width="100" align="left"><font face="'Verdana','Times New Roman'" size="-1">3.1</font></td>
	<td width="20" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="634" align="left"><font face="'Verdana','Times New Roman'" size="-1">Registrant's Restated Articles of Incorporation, as amended--incorporated by reference to Exhibit 3.1 to the Company's 1991 Form 10-K*</font></td></tr></TABLE><br>

<table width="760" cellpadding="2">
<tr>
	<td width="100" align="left"><font face="'Verdana','Times New Roman'" size="-1">3.2</font></td>
	<td width="20" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="634" align="left"><font face="'Verdana','Times New Roman'" size="-1">Registrant's Bylaws, as amended to date--incorporated by reference to Exhibit 3.2 to the Company's 1997 Form 10-KSB*</font></td></tr></TABLE><br>

<table width="760" cellpadding="2">
<tr>
	<td width="100" align="left"><font face="'Verdana','Times New Roman'" size="-1">10.5**</font></td>
	<td width="20" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="634" align="left"><font face="'Verdana','Times New Roman'" size="-1">Electro-Sensors Inc. 1987 Stock Option Plan--incorporated by reference to Exhibit A to the Company's Proxy Statement dated April 21, 1987 for the Company's 1987 Annual
Meeting of Shareholders*</font></td></tr></TABLE><br>

<table width="760" cellpadding="2">
<tr>
	<td width="100" align="left"><font face="'Verdana','Times New Roman'" size="-1">10.6**</font></td>
	<td width="20" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="634" align="left"><font face="'Verdana','Times New Roman'" size="-1">Electro-Sensors, Inc. 1997 Stock Option Plan and forms of Incentive and Nonqualified Stock Option Agreements thereunder--incorporated by reference to Exhibit 10.6 to the
Company's 1997 Form 10-KSB*</font></td></tr></TABLE><br>

<table width="760" cellpadding="2">
<tr>
	<td width="100" align="left"><font face="'Verdana','Times New Roman'" size="-1">13</font></td>
	<td width="20" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="634" align="left"><font face="'Verdana','Times New Roman'" size="-1">2000 Annual Report to Shareholders</font></td></tr></TABLE><br>

<table width="760" cellpadding="2">
<tr>
	<td width="100" align="left"><font face="'Verdana','Times New Roman'" size="-1">21</font></td>
	<td width="20" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="634" align="left"><font face="'Verdana','Times New Roman'" size="-1">Subsidiaries of Registrant:</font></td></tr></TABLE><br>

<table width="760" cellpadding="2">
<tr>
	<td width="124" align="left"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td width="150" align="left"><font face="'Verdana','Times New Roman'" size="-2"><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></font></td>
	<td width="30" align="left"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td width="450" align="left"><font face="'Verdana','Times New Roman'" size="-2"><u>State of Incorporation</u></font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td width="124" align="left"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td width="150" align="left"><font face="'Verdana','Times New Roman'" size="-2">Microflame, Inc.</font></td>
	<td width="30" align="left"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td width="450" align="left"><font face="'Verdana','Times New Roman'" size="-2">Minnesota</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td width="124" align="left"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td width="150" align="left"><font face="'Verdana','Times New Roman'" size="-2">ESI Investment Co.</font></td>
	<td width="30" align="left"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td width="450" align="left"><font face="'Verdana','Times New Roman'" size="-2">Minnesota</font></td></tr></TABLE>

<table width="760" cellpadding="2">
<tr>
	<td width="124" align="left"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td width="150" align="left"><font face="'Verdana','Times New Roman'" size="-2">Senstar Corporation</font></td>
	<td width="30" align="left"><font face="'Verdana','Times New Roman'" size="-2"></font></td>
	<td width="450" align="left"><font face="'Verdana','Times New Roman'" size="-2">Minnesota</font></td></tr></TABLE><br>

<table width="760" cellpadding="2">
<tr>
	<td width="100" align="left"><font face="'Verdana','Times New Roman'" size="-1">23</font></td>
	<td width="20" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="634" align="left"><font face="'Verdana','Times New Roman'" size="-1">Consent of Independent Certified Public Accountants</font></td></tr></TABLE><br>

<table width="760" cellpadding="2">
<tr>
	<td width="100" align="left"><font face="'Verdana','Times New Roman'" size="-1">24</font></td>
	<td width="20" align="left"><font face="'Verdana','Times New Roman'" size="-1"></font></td>
	<td width="634" align="left"><font face="'Verdana','Times New Roman'" size="-1">Power of Attorney from certain Directors and Officers (see Signature page)</font></td></tr></TABLE><br>

<hr align="left" width="250" size="1">

<p><font face="'Verdana','Times New Roman'" size="-1">*Incorporated by reference to a previously filed report or document--SEC File No. 0-9587</font></p>

<p><font face="'Verdana','Times New Roman'" size="-1">**Management contract or compensatory plan or arrangement</font><br><br><br><br>

<div align="center"><font face="'Verdana','Times New Roman'" size="-2"><b>----- Page 13 -----</b></font></div>

<hr size="2" color=#cc9966><br>

<center><a href="exhibit13.htm"><font face="'Verdana','Times New Roman'" size="-1">Exhibit 13 - Annual Report 2000</font></a></center><br>
<center><a href="exhibit23.htm"><font face="'Verdana','Times New Roman'" size="-1">Exhibit 23 - Consent of Independent Certified Accountants</font></a></center><br>

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