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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0001104659-01-501796.txt : 20010815
<SEC-HEADER>0001104659-01-501796.hdr.sgml : 20010815
ACCESSION NUMBER:		0001104659-01-501796
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20010630
FILED AS OF DATE:		20010814

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:		10QSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-09587
		FILM NUMBER:		1710046

	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>10QSB
<SEQUENCE>1
<FILENAME>j1494_10qsb.htm
<DESCRIPTION>10QSB
<TEXT>
<html>

<head>
<title>Prepared by MerrillDirect</title>
</head>

<body link=blue vlink=purple>

<div>

<div align=right><b><font size=2>

<hr size=2 width="100%" noshade color=black align=right>

</font></b></div>


<div align=right><b><font size=2>

<hr size=1 width="100%" noshade color=black align=right>

</font></b></div>


<p align=center><b><font size=5>UNITED STATES<br>
SECURITES AND EXCHANGE COMMISSION</font></b><b><font size=2><br>
Washington, DC 20549</font></b></p>

<p align=center><b><font size=5>FORM 10-QSB</font></b></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td width="5%" valign=top><b><font size=3 face=Wingdings>&#253;</font></b></td>
  <td width="94%" valign=top><b><font size=3>QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
  SECURITIES EXCHANGE ACT OF 1934</font></b></td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="94%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width="100%" colspan=2 valign=top><b><font size=2>For
  the quarterly period ended June 30, 2001</font></b></td>
 </tr>
 <tr>
  <td  align=center width="100%" colspan=2 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="5%" valign=top><b><font size=3 face=Wingdings>o</font></b></td>
  <td width="94%" valign=top><b><font size=3>TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
  SECURITIES EXCHANGE ACT OR 1934</font></b></td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="94%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width="100%" colspan=2 valign=top><b><font size=2>For
  the transition period from _____to _____</font></b></td>
 </tr>
</table>

<p><b><font size=2>&nbsp;</font></b></p>

<p align=center><b><font size=2>Commission file number 0-9587</font></b></p>

<p align=center><b><font size=2>&nbsp;</font></b></p>

<p align=center><b><font size=5>ELECTRO-SENSORS, INC.<br>
</font></b><font size=2>(Exact name of small business issuer as
specified in its charter)</font></p>

<div align=center>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td  align=center width="50%" valign=top><b><font size=2>Minnesota</font></b></td>
  <td  align=center width="50%" valign=top><b><font size=2>41-0943459</font></b></td>
 </tr>
 <tr>
  <td  align=center width="50%" valign=top><font size=2>(State or other
  jurisdiction of incorporation or organization)</font></td>
  <td  align=center width="50%" valign=top><font size=2>(IRS Employer
  Identification Number)</font></td>
 </tr>
</table>

</div>

<p><font size=2>&nbsp;</font></p>

<p align=center><b><font size=2>6111
Blue Circle Drive<br>
Minnetonka, Minnesota 55343-9108<br>
</font></b><font size=2>(Address of principal executive offices)</font></p>

<p align=center><font size=2>&nbsp;</font></p>

<p align=center><b><font size=2>(952)930-0100</font></b><font size=2><br>
(Issuer's telephone number)</font></p>

<p align=center><font size=2>&nbsp;</font></p>

<p align=center><font size=2>(Former name, former address and former fiscal
year, if changed since last report)</font></p>

<p align=center><font size=2>&nbsp;</font></p>

<p><font size=2>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.&nbsp; Yes </font><font size=2 face=Wingdings>&#253;</font><font size=2>&nbsp;&nbsp;&nbsp; No </font><font size=2 face=Wingdings>o</font><font size=2><br><br></font></p>

<p><font size=2>Shares of $0.10 par value common stock outstanding at August 10, 2001:
3,118,948<br><br></font></p>

<p><font size=2>Transitional Small Business Disclosure Format (Check one):&nbsp; Yes </font><font size=2 face=Wingdings>o</font><font size=2>&nbsp;&nbsp;&nbsp; No </font><font size=2 face=Wingdings>&#253;</font><font size=2><br><br></font></p>





<hr size=1 width="100%" noshade color=black align=right>






<hr size=2 width="100%" noshade color=black align=right>


<page>


<p>&nbsp;</p>

<p align=center><b><font size=2>TABLE
OF CONTENTS</font></b></p>

<p align=center><b><font size=2>&nbsp;</font></b></p>

<p><b><font size=2>PART I - FINANCIAL INFORMATION<br><br></font></b></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td width="7%" valign=top><font size=2>Item 1.</font></td>
  <td width="92%" valign=top><font size=2><a href="#FinancialStatements"   title="Click to goto Financial Statements">Financial Statements</a></font></td>
 </tr>
 <tr>
  <td width="7%" valign=top><font size=2>Item 2.</font></td>
  <td width="92%" valign=top><font size=2><a href="#ManagementsDiscussionAndAnalysisOfFinanc"   title="Click to goto Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations">Management's
  Discussion and Analysis or Plan of Operation</a></font></td>
 </tr>
</table>

<p><b><font size=2>PART II - OTHER INFORMATION<br><br></font></b></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td width="7%" valign=top><font size=2>Item 1.</font></td>
  <td width="92%" valign=top><font size=2><a href="#LegalProceedings" title="Click to goto Legal Proceedings">Legal
  Proceedings</a></font></td>
 </tr>
 <tr>
  <td width="7%" valign=top><font size=2>Item 2.</font></td>
  <td width="92%" valign=top><font size=2><a href="#ChangesInSecuritiesAndUseOfProceeds"   title="Click to goto Changes in Securities and Use of Proceeds">Changes in
  Securities and Use of Proceeds</a></font></td>
 </tr>
 <tr>
  <td width="7%" valign=top><font size=2>Item 3.</font></td>
  <td width="92%" valign=top><font size=2><a href="#DefaultsUponSeniorSecurities"   title="Click to goto Defaults Upon Senior Securities">Defaults Upon Senior
  Securities</a></font></td>
 </tr>
 <tr>
  <td width="7%" valign=top><font size=2>Item 4.</font></td>
  <td width="92%" valign=top><font size=2><a href="#SubmissionOfMattersToAVoteOfSecurityHold"   title="Click to goto Submission of Matters to a Vote of Security Holders">Submission
  of Matters to a Vote of Security Holders</a></font></td>
 </tr>
 <tr>
  <td width="7%" valign=top><font size=2>Item 5.</font></td>
  <td width="92%" valign=top><font size=2><a href="#OtherInformation" title="Click to goto Other Information">Other
  Information</a></font></td>
 </tr>
 <tr>
  <td width="7%" valign=top><font size=2>Item 6.</font></td>
  <td width="92%" valign=top><font size=2><a href="#ExhibitsAndReportsOnForm8k"   title="Click to goto Exhibits and Reports on Form 8-K">Exhibits and Reports on
  Form 8-K</a></font></td>
 </tr>
</table>

<p><b><font size=2><a href="#Signatures" title="Click to goto Signatures">SIGNATURES</a><page></font></b></p>

<p><b><font size=2>Part
I &#150; Financial Information</font></b></p>

<p><b><font size=2>Item
1</font></b></p>

<p><a name=FinancialStatements><b><font size=2>Financial Statements</font></b></a></p>

<p align=center><b><font size=2>Electro-Sensors, Inc.<br>
Balance Sheets<br>
(Unaudited)</font></b></p>

<table border=0 cellspacing=0 cellpadding=0 width=732>
 <tr>
  <td width="64%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=right width="15%" valign=bottom>&nbsp;</td>
  <td width="3%" valign=bottom>&nbsp;</td>
  <td  align=right width="15%" valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="64%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=center width="15%" valign=bottom><b><font   size=2>June 30, 2001</font></b></td>
  <td width="3%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
  <td  align=center width="15%" valign=bottom><b><font   size=2>December 31, 2000</font></b></td>
  <td width="0%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
 </tr>
 <tr>
  <td width="64%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=center width="15%" valign=bottom><div align=right><b><font   size=2><hr size=1 width="100%" noshade color=black align=right></font></b></div></td>
  <td width="3%" valign=bottom>&nbsp;</td>
  <td  align=center width="15%" valign=bottom><div align=right><b><font   size=2><hr size=1 width="100%" noshade color=black align=right></font></b></div></td>
  <td width="0%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="64%" colspan=3 valign=bottom><b><font size=2>Assets</font></b></td>
  <td  align=right width="15%" valign=bottom>&nbsp;</td>
  <td width="3%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="15%" valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
 </tr>
 <tr>
  <td width="64%" colspan=3 valign=bottom><b><font size=2>Current Assets</font></b></td>
  <td  align=right width="15%" valign=bottom>&nbsp;</td>
  <td width="3%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="15%" valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="62%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Cash</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>7,393,255 </font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>3,191,176 </font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="62%" colspan=2 valign=bottom><font size=2>Investments</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>1,500,000 </font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>3,266,753 </font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="62%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Trade Receivables, less
  allowance for doubtful<br>
  accounts of $37,140 and $26,500, respectively</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>643,535 </font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>730,577 </font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="62%" colspan=2 valign=bottom><font size=2>Inventories</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>842,998 </font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>922,610 </font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="62%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Other current assets</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>213,696 </font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>127,177 </font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="62%" colspan=2 valign=bottom><font size=2>Prepaid Income taxes</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>-</font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>74,606 </font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="3%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="60%" valign=bottom bgcolor="#cceeff"><b><font size=2>Total Current Assets</font></b></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><b><font   size=2>10,593,484 </font></b></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><b><font   size=2>8,312,899 </font></b></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><b><font size=2>&nbsp;</font></b></td>
 </tr>
 <tr>
  <td width="64%" colspan=3 valign=bottom><font size=2>Property &amp; Equipment, net</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>1,570,626 </font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>1,615,994 </font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="64%" colspan=3 valign=bottom bgcolor="#cceeff"><font size=2>Investments</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>15,433,042 </font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>17,202,689 </font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="64%" colspan=3 valign=bottom><b><font size=2>Total Assets</font></b></td>
  <td  align=right width="15%" valign=bottom><b><font   size=2>27,597,152 </font></b></td>
  <td width="3%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="15%" valign=bottom><b><font   size=2>27,131,582 </font></b></td>
  <td width="0%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
 </tr>
 <tr>
  <td width="64%" colspan=3 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="64%" colspan=3 valign=bottom><b><font size=2>Liabilities &amp; Shareholders'
  Equity</font></b></td>
  <td  align=right width="15%" valign=bottom>&nbsp;</td>
  <td width="3%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="15%" valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
 </tr>
 <tr>
  <td width="64%" colspan=3 valign=bottom bgcolor="#cceeff"><b><font size=2>Current Liabilities</font></b></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><b><font size=2>&nbsp;</font></b></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="62%" colspan=2 valign=bottom><font size=2>Accounts Payable</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>90,460 </font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>108,482 </font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="62%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Customer Deposits</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>8,098 </font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>6,493 </font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="62%" colspan=2 valign=bottom><font size=2>Accrued Expenses</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>254,825 </font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>234,212 </font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="62%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Deferred Taxes</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>637,000 </font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>1,047,900 </font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="62%" colspan=2 valign=bottom><font size=2>Accrued Income Taxes</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>1,411,447 </font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>-</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="3%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="60%" valign=bottom bgcolor="#cceeff"><b><font size=2>Total Current Liabilities</font></b></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><b><font   size=2>2,401,830 </font></b></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><b><font   size=2>1,397,087 </font></b></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><b><font size=2>&nbsp;</font></b></td>
 </tr>
 <tr>
  <td width="64%" colspan=3 valign=bottom><font size=2>Deferred Income Taxes</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>6,553,906 </font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>5,879,400 </font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="64%" colspan=3 valign=bottom bgcolor="#cceeff"><b><font size=2>Shareholders' Equity</font></b></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><b><font size=2>&nbsp;</font></b></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="62%" colspan=2 valign=bottom><font size=2>Common Stock par value $.10 per share; authorized <br>
  10,000,000 shares; issued 3,118,948 and 2,077,112 shares, </font><font   size=2>respectively.</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>311,895</font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>207,711 </font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="62%" colspan=2 valign=bottom><font size=2>Additional Paid-In Capital</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>988,378 </font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>985,410 </font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="62%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Retained Earnings</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>8,830,019 </font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font   size=2>6,391,246 </font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="62%" colspan=2 valign=bottom><font size=2>Accumulated other
  Comprehensive Income</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>8,511,124 </font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="15%" valign=bottom><font   size=2>12,270,728 </font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="64%" colspan=3 valign=bottom bgcolor="#cceeff"><b><font size=2>Total Shareholders' Equity</font></b></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><b><font   size=2>18,641,416 </font></b></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><b><font   size=2>19,855,095 </font></b></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><b><font size=2>&nbsp;</font></b></td>
 </tr>
 <tr>
  <td width="64%" colspan=3 valign=bottom><b><font size=2>Total Liabilities and
  Shareholders' Equity</font></b></td>
  <td  align=right width="15%" valign=bottom><b><font   size=2>27,597,152 </font></b></td>
  <td width="3%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="15%" valign=bottom><b><font   size=2>27,131,582</font></b></td>
  <td width="0%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
 </tr>

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  <td width=13></td>
  <td width=13></td>
  <td width=446></td>
  <td width=112></td>
  <td width=24></td>
  <td width=116></td>
  <td width=8></td>
 </tr>
</table>

<page>


<p>&nbsp;</p>

<p align=center><b><font size=2>Electro-Sensors, Inc.<br>
Income Statements<br>
(Unaudited)</font></b></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td  align=center width="40%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="13%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="2%" valign=bottom>&nbsp;</td>
  <td  align=center width="12%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="3%" valign=bottom>&nbsp;</td>
  <td  align=center width="12%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="2%" valign=bottom>&nbsp;</td>
  <td  align=center width="12%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="2%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width="40%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="27%" colspan=5 valign=bottom><b><font   size=2>Three Months Ended</font></b></td>
  <td  align=center width="3%" valign=bottom>&nbsp;</td>
  <td  align=center width="26%" colspan=5 valign=bottom><b><font   size=2>Six Months Ended</font></b></td>
  <td  align=center width="2%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width="40%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="27%" colspan=5 valign=bottom><b><font   size=2>June 30,</font></b></td>
  <td  align=center width="3%" valign=bottom>&nbsp;</td>
  <td  align=center width="26%" colspan=5 valign=bottom><b><font   size=2>June 30,</font></b></td>
  <td  align=center width="2%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="40%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="13%" colspan=2 valign=bottom><b><font   size=2>2001</font></b></td>
  <td  align=center width="2%" valign=bottom>&nbsp;</td>
  <td  align=center width="12%" colspan=2 valign=bottom><b><font   size=2>2000</font></b></td>
  <td  align=center width="3%" valign=bottom>&nbsp;</td>
  <td  align=center width="12%" colspan=2 valign=bottom><b><font   size=2>2001</font></b></td>
  <td  align=center width="2%" valign=bottom>&nbsp;</td>
  <td  align=center width="12%" colspan=2 valign=bottom><b><font   size=2>2000</font></b></td>
  <td width="2%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
 </tr>
 <tr>
  <td width="40%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="13%" colspan=2 valign=bottom><div align=right><b><font   size=2><hr size=1 width="100%" noshade color=black align=right></font></b></div></td>
  <td width="2%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" colspan=2 valign=bottom><div align=right><b><font   size=2><hr size=1 width="100%" noshade color=black align=right></font></b></div></td>
  <td width="3%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" colspan=2 valign=bottom><div align=right><b><font   size=2><hr size=1 width="100%" noshade color=black align=right></font></b></div></td>
  <td width="2%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" colspan=2 valign=bottom><div align=right><b><font   size=2><hr size=1 width="100%" noshade color=black align=right></font></b></div></td>
  <td width="2%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="40%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="13%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="2%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="12%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="3%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="12%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="2%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="12%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="2%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
 </tr>
 <tr>
  <td width="40%" colspan=2 valign=bottom bgcolor="#cceeff"><b><font size=2>Sales</font></b></td>
  <td  align=right width="13%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>1,183,979</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>1,295,193</font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>2,485,348</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>3,004,778</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="40%" colspan=2 valign=bottom><b><font size=2>Cost of Sales</font></b></td>
  <td  align=right width="13%" colspan=2 valign=bottom><font   size=2>440,472</font></td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom><font   size=2>497,205</font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom><font   size=2>915,168</font></td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom><font   size=2>1,113,485</font></td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="40%" colspan=2 valign=bottom bgcolor="#cceeff"><b><font size=2>Gross Margin</font></b></td>
  <td  align=right width="13%" colspan=2 valign=bottom bgcolor="#cceeff"><b><font   size=2>743,507</font></b></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><b><font   size=2>797,988</font></b></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><b><font   size=2>1,570,180</font></b></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><b><font   size=2>1,891,293</font></b></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><b><font size=2>&nbsp;</font></b></td>
 </tr>
 <tr>
  <td width="40%" colspan=2 valign=bottom><b><font size=2>Operating Expenses</font></b></td>
  <td  align=right width="13%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="38%" valign=bottom bgcolor="#cceeff"><font size=2>Selling</font></td>
  <td  align=right width="13%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>317,609</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>342,597</font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>611,914</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>704,410</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="38%" valign=bottom><font size=2>Administrative</font></td>
  <td  align=right width="13%" colspan=2 valign=bottom><font   size=2>247,785</font></td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom><font   size=2>207,162</font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom><font   size=2>510,485</font></td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom><font   size=2>491,459</font></td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="38%" valign=bottom bgcolor="#cceeff"><font size=2>Research &amp; Development</font></td>
  <td  align=right width="13%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>187,657</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>213,831</font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>375,685</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>436,368</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="40%" colspan=2 valign=bottom><b><font size=2>Total Operating Expenses</font></b></td>
  <td  align=right width="13%" colspan=2 valign=bottom><b><font   size=2>753,051</font></b></td>
  <td width="2%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="12%" colspan=2 valign=bottom><b><font   size=2>763,590</font></b></td>
  <td width="3%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="12%" colspan=2 valign=bottom><b><font   size=2>1,498,084</font></b></td>
  <td width="2%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="12%" colspan=2 valign=bottom><b><font   size=2>1,632,237</font></b></td>
  <td width="2%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
 </tr>
 <tr>
  <td width="40%" colspan=2 valign=bottom bgcolor="#cceeff"><b><font size=2>Income from Operations</font></b></td>
  <td  align=right width="13%" colspan=2 valign=bottom bgcolor="#cceeff"><b><font   size=2>(9,544</font></b></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><b><font size=2>)</font></b></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><b><font   size=2>34,398</font></b></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><b><font   size=2>72,096</font></b></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><b><font   size=2>259,056</font></b></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><b><font size=2>&nbsp;</font></b></td>
 </tr>
 <tr>
  <td width="40%" colspan=2 valign=bottom><b><font size=2>Other Income/(Expense)</font></b></td>
  <td  align=right width="13%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="38%" valign=bottom bgcolor="#cceeff"><font size=2>Interest Income</font></td>
  <td  align=right width="13%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>65,006</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>29,542</font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>98,504</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>58,236</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="38%" valign=bottom><font size=2>Sale of Investments</font></td>
  <td  align=right width="13%" colspan=2 valign=bottom><font   size=2>2,737,663</font></td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom><font   size=2>-</font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom><font   size=2>4,164,230</font></td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom><font   size=2>-</font></td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="40%" colspan=2 valign=bottom bgcolor="#cceeff"><b><font size=2>Total Other Income</font></b></td>
  <td  align=right width="13%" colspan=2 valign=bottom bgcolor="#cceeff"><b><font   size=2>2,802,669</font></b></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><b><font   size=2>29,542</font></b></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><b><font   size=2>4,262,734</font></b></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><b><font   size=2>58,236</font></b></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><b><font size=2>&nbsp;</font></b></td>
 </tr>
 <tr>
  <td width="40%" colspan=2 valign=bottom><b><font size=2>Income/(Loss) before
  Discontinued Operations<br>&nbsp; &nbsp;&nbsp;and Income Taxes</font></b></td>
  <td  align=right width="13%" colspan=2 valign=bottom><b><font   size=2>2,793,125</font></b></td>
  <td width="2%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" colspan=2 valign=bottom><b><font   size=2>63,940</font></b></td>
  <td width="3%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" colspan=2 valign=bottom><b><font   size=2>4,334,830</font></b></td>
  <td width="2%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" colspan=2 valign=bottom><b><font   size=2>317,292</font></b></td>
  <td width="2%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="40%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Provision for Income Taxes</font></td>
  <td  align=right width="13%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>980,434</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>21,800</font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>1,535,459</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>113,150</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="40%" colspan=2 valign=bottom><b><font size=2>Income/(Loss) from Continuing
  Operations</font></b></td>
  <td  align=right width="13%" colspan=2 valign=bottom><b><font   size=2>1,812,691</font></b></td>
  <td width="2%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="12%" colspan=2 valign=bottom><b><font   size=2>42,140</font></b></td>
  <td width="3%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="12%" colspan=2 valign=bottom><b><font   size=2>2,799,371</font></b></td>
  <td width="2%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="12%" colspan=2 valign=bottom><b><font   size=2>204,142</font></b></td>
  <td width="2%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
 </tr>
 <tr>
  <td width="40%" colspan=2 valign=bottom bgcolor="#cceeff"><b><font size=2>Discontinued Operations:</font></b></td>
  <td  align=right width="13%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="38%" valign=bottom><font size=2>Income/(Loss) from
  Discontinued Operations</font></td>
  <td  align=right width="13%" colspan=2 valign=bottom><font   size=2>(2,524</font></td>
  <td width="2%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom><font   size=2>7,193</font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom><font   size=2>(3,510</font></td>
  <td width="2%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom><font   size=2>9,167</font></td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="38%" valign=bottom bgcolor="#cceeff"><font size=2>Loss on Disposal of Segment</font></td>
  <td  align=right width="13%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>(69,229</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="3%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>(69,229</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>-</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="40%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="13%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="2%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="3%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="2%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" colspan=2 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="2%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="40%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="13%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="40%" colspan=2 valign=bottom bgcolor="#cceeff"><b><font size=2>Net Income</font></b></td>
  <td  align=right width="13%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>1,740,938</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>49,333</font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>2,726,632</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>213,309</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="40%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="13%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="2%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="3%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="2%" valign=bottom>&nbsp;</td>
  <td  align=right width="12%" colspan=2 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="2%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="40%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="13%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="40%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="13%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="40%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="13%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="40%" colspan=2 valign=bottom bgcolor="#cceeff"><b><font size=2>Net Income/(Loss) Per Share
  Data:</font></b></td>
  <td  align=right width="13%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="40%" colspan=2 valign=bottom><b><font size=2>Basic:</font></b></td>
  <td  align=right width="13%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="38%" valign=bottom bgcolor="#cceeff"><font size=2>Income/(loss) from continuing
  operations</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="12%" valign=bottom bgcolor="#cceeff"><font   size=2>0.58</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font   size=2>0.01</font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font   size=2>0.90</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="11%" valign=bottom bgcolor="#cceeff"><font   size=2>0.07</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="38%" valign=bottom><font size=2>Net income/(loss) per share</font></td>
  <td  align=right width="13%" colspan=2 valign=bottom><font   size=2>0.56</font></td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom><font   size=2>0.02</font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom><font   size=2>0.87</font></td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom><font   size=2>0.07</font></td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="38%" valign=bottom bgcolor="#cceeff"><font size=2>Shares used in per share
  calculations</font></td>
  <td  align=right width="13%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>3,118,948</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>2,988,945</font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>3,118,948</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>2,985,384</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="40%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="13%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="40%" colspan=2 valign=bottom bgcolor="#cceeff"><b><font size=2>Diluted:</font></b></td>
  <td  align=right width="13%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="38%" valign=bottom><font size=2>Income/(loss) from continuing
  operations</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="12%" valign=bottom><font   size=2>0.56</font></td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>0.01</font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>0.86</font></td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="11%" valign=bottom><font   size=2>0.07</font></td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="38%" valign=bottom bgcolor="#cceeff"><font size=2>Net income/(loss) per share</font></td>
  <td  align=right width="13%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>0.54</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>0.02</font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>0.85</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>0.07</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="38%" valign=bottom><font size=2>Shares used in per share
  calculations</font></td>
  <td  align=right width="13%" colspan=2 valign=bottom><font   size=2>3,240,749</font></td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom><font   size=2>3,088,412</font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom><font   size=2>3,225,828</font></td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="12%" colspan=2 valign=bottom><font   size=2>3,061,424</font></td>
  <td width="2%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
</table>

<page>


<p>&nbsp;</p>

<p align=center><b><font size=2>Electro-Sensors, Inc</font></b><font size=2><br>
</font><b><font size=2>Statements of Cash Flows<br>
(Unaudited)</font></b></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td  align=center width="60%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="17%" valign=bottom>&nbsp;</td>
  <td  align=center width="3%" valign=bottom>&nbsp;</td>
  <td  align=center width="17%" valign=bottom>&nbsp;</td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width="60%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="17%" valign=bottom><b><font   size=2>Six Months Ended</font></b></td>
  <td  align=center width="3%" valign=bottom>&nbsp;</td>
  <td  align=center width="17%" valign=bottom><b><font   size=2>Six Months Ended</font></b></td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="17%" valign=bottom><b><font   size=2>June 30, 2001</font></b></td>
  <td width="3%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
  <td  align=center width="17%" valign=bottom><b><font   size=2>June 30, 2000</font></b></td>
  <td width="1%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="17%" valign=bottom><div align=right><b><font   size=2><hr size=1 width="100%" noshade color=black align=right></font></b></div></td>
  <td width="3%" valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom><div align=right><b><font   size=2><hr size=1 width="100%" noshade color=black align=right></font></b></div></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom><b><font size=2>Reconciliation of Net Income to
  Net Cash</font></b></td>
  <td  align=right width="17%" valign=bottom>&nbsp;</td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom><b><font size=2>Provided by Operating Activites:</font></b></td>
  <td  align=right width="17%" valign=bottom>&nbsp;</td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>&nbsp;</td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Net Income</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff"><font   size=2>2,726,632</font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff"><font   size=2>213,309</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>&nbsp;</td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Adjustments to reconcile net income to net cash provided<br>
  by/(used in) operating activites:</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="3%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>&nbsp;</td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="58%" valign=bottom bgcolor="#cceeff"><font size=2>Provision for losses on trade
  receivables</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff"><font   size=2>(10,640</font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="58%" valign=bottom><font size=2>Loss on Disposal of Segment</font></td>
  <td  align=right width="17%" valign=bottom><font   size=2>71,753</font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="58%" valign=bottom bgcolor="#cceeff"><font size=2>Depreciation</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff"><font   size=2>60,919</font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff"><font   size=2>69,696</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="58%" valign=bottom><font size=2>Deferred Taxes</font></td>
  <td  align=right width="17%" valign=bottom><font   size=2>219,533</font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom><font   size=2>6,367</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="58%" valign=bottom bgcolor="#cceeff"><font size=2>Realized gain on sale of
  investments</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff"><font   size=2>(4,164,230</font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>&nbsp;</td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom><font size=2>Change in Assets and Liabilities:</font></td>
  <td  align=right width="17%" valign=bottom>&nbsp;</td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="58%" valign=bottom bgcolor="#cceeff"><font size=2>Trade receivables</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff"><font   size=2>(61,682</font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff"><font   size=2>(4,157</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="58%" valign=bottom><font size=2>Inventory</font></td>
  <td  align=right width="17%" valign=bottom><font   size=2>(79,612</font></td>
  <td width="3%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="17%" valign=bottom><font   size=2>(91,890</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="58%" valign=bottom bgcolor="#cceeff"><font size=2>Prepaid Expenses</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff"><font   size=2>86,519</font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff"><font   size=2>48,120</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="58%" valign=bottom><font size=2>Prepaid Income Taxes</font></td>
  <td  align=right width="17%" valign=bottom><font   size=2>(74,606</font></td>
  <td width="3%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="17%" valign=bottom><font   size=2>125,609</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="58%" valign=bottom bgcolor="#cceeff"><font size=2>Accounts Payable</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff"><font   size=2>(18,022</font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff"><font   size=2>3,698</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="58%" valign=bottom><font size=2>Customer Deposits</font></td>
  <td  align=right width="17%" valign=bottom><font   size=2>1,605</font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom><font   size=2>(353,645</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="58%" valign=bottom bgcolor="#cceeff"><font size=2>Accrued Expenses</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff"><font   size=2>20,613</font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff"><font   size=2>131,127</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="58%" valign=bottom><font size=2>Accrued income taxes</font></td>
  <td  align=right width="17%" valign=bottom><font   size=2>1,411,447</font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom><font   size=2>94,150</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="58%" valign=bottom bgcolor="#cceeff"><font size=2>Deferred Income taxes</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff"><font   size=2>-</font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="3%" valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom><font size=2>Net cash provided by operating activities</font></td>
  <td  align=right width="17%" valign=bottom><font   size=2>190,229</font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom><font   size=2>242,384</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="3%" valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom><font size=2>Cash flows from investing activities:</font></td>
  <td  align=right width="17%" valign=bottom>&nbsp;</td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="58%" valign=bottom bgcolor="#cceeff"><font size=2>Proceeeds from sale of
  investments</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff"><font   size=2>4,205,032</font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="58%" valign=bottom><font size=2>Purchase of property and
  equipment</font></td>
  <td  align=right width="17%" valign=bottom><font   size=2>(18,475</font></td>
  <td width="3%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="17%" valign=bottom><font   size=2>(30,598</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="3%" valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Net cash provided by/(used in) investing activities</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff"><font   size=2>4,186,557</font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff"><font   size=2>(30,598</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="3%" valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>&nbsp;</td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Cash flows from financing activities:</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="58%" valign=bottom><font size=2>Proceeds from issuance of
  stock</font></td>
  <td  align=right width="17%" valign=bottom><font   size=2>6,538</font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom><font   size=2>38,008</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="58%" valign=bottom bgcolor="#cceeff"><font size=2>Proceeds from disposed segment</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff"><font   size=2>5,000</font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="58%" valign=bottom><font size=2>Prinicipal payments received
  on note receivable</font></td>
  <td  align=right width="17%" valign=bottom><font   size=2>1,000</font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="58%" valign=bottom bgcolor="#cceeff"><font size=2>Dividends Paid</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff"><font   size=2>(187,245</font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff"><font   size=2>(119,431</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="58%" valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="3%" valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom><font size=2>Net cash used in financing activities</font></td>
  <td  align=right width="17%" valign=bottom><font   size=2>(174,707</font></td>
  <td width="3%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="17%" valign=bottom><font   size=2>(81,423</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="3%" valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom><font size=2>Net increase in cash and cash equivalents</font></td>
  <td  align=right width="17%" valign=bottom><font   size=2>4,202,079</font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom><font   size=2>130,363</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom><font size=2>Cash and cash equivalents, beginning</font></td>
  <td  align=right width="17%" valign=bottom><font   size=2>3,191,176</font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom><font   size=2>2,507,689</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="3%" valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom><font size=2>Cash and cash equivalents, ending</font></td>
  <td  align=right width="17%" valign=bottom><font   size=2>7,393,255</font></td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom><font   size=2>2,638,052</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="3%" valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>&nbsp;</td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom bgcolor="#cceeff"><b><font size=2>Supplemental Schedule of
  Non-Cash Investing and<br></font></b><font size=2>&nbsp;</font><b><font   size=2>Financing Activities</font></b></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="3%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>&nbsp;</td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Net change in unrealized gain/(loss) on marketable securities.</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff"><font   size=2>3,495,598</font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff"><font   size=2>25,393,187</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="3%" valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>&nbsp;</td>
  <td width="3%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Issuance of Note Receivable related to sale of segment.</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff"><font   size=2>36,000</font></td>
  <td width="3%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" valign=bottom bgcolor="#cceeff"><font   size=2>-</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="60%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="3%" valign=bottom>&nbsp;</td>
  <td  align=right width="17%" valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
</table>

<p align=center><b><font size=2>&nbsp;</font></b></p>

<p align=center><b><font size=2>Electro-Sensors, Inc. and Subsidiaries</font></b><font size=2><br>
<b>Notes to
Consolidated Financial Statements<br>
June 30, 2001<br>
(Unaudited)</b></font></p>

<p><font size=2>Note A:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Nature of
Business</font></p>

<p><font size=2>Electro-Sensors, Inc. (the Company), operates two 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&#146;s goal is to manufacture the industry-preferred
product for every market served. These products are sold through an internal
sales staff and distributors to a wide variety of manufacturers, OEMS and
processors to monitor the efficiency of process machinery. The Company markets
its products to a number of different industries located throughout the United
States and abroad. The Company owns marketable securities, which have
experienced significant appreciation in value since the related company&#146;s IPO
in 2000. During late 2000 and the first six months of 2001, the Company has
recognized income from the sale of a portion of its holdings.</font></p>

<p><font size=2>The second business is AutoData Systems (ADS), a division of
Electro-Sensors, Inc. ADS designs and markets a desktop software based system
that reads handprinted characters, checkmarks and bar code information from
scanned or faxed forms. ADS products are designed to provide capabilities to
automate data collection through telemarketing to end users, resellers and
developers in the United States, Canada, Europe and Asia.</font></p>

<p><font size=2>The Company had previously operated a third business, Microflame, Inc.
(MFI), a wholly owned subsidiary, which was sold in May 2001 (see Item 2:
Results of Operations for further discussion). MFI produced small hand held gas
torches used primarily by hobbyists, electronic kit assemblers and creators of
jewelry.&nbsp; MFI products were sold through
distributors to retailers of hardware, hobby craft and electronic products.</font></p>

<p><font size=2>Note B:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Basis of
Presentation</font></p>

<p><font size=2>The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included.</font></p>

<p><font size=2>Intercompany accounts, transactions and earnings are eliminated through
consolidation.</font></p>

<p><font size=2>The Balance Sheet at December 31, 2000 has been derived from the
Company&#146;s audited financial statements for the year ended December 31, 2000,
but does not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.</font></p>

<p><font size=2>For further information, refer to the financial statements and footnotes
thereto included in the Company&#146;s annual report on Form 10-K for the year ended
December 31, 2000.</font></p>

<p><font size=2>Note C:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Comprehensive
Income</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td  align=center width="43%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="22%" colspan=3 valign=bottom><font   size=2>Three Months
  Ended</font></td>
  <td  align=center width="8%" valign=bottom>&nbsp;</td>
  <td  align=center width="22%" colspan=3 valign=bottom><font   size=2>Six Months
  Ended</font></td>
  <td  align=center width="2%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width="43%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="22%" colspan=3 valign=bottom><font   size=2>June 30,</font></td>
  <td  align=center width="8%" valign=bottom>&nbsp;</td>
  <td  align=center width="22%" colspan=3 valign=bottom><font   size=2>June 30,</font></td>
  <td  align=center width="2%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width="43%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="22%" colspan=3 valign=bottom>
<hr size=1 width="100%" noshade color=black align=center></td>
  <td  align=center width="8%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=center></td>
  <td  align=center width="22%" colspan=3 valign=bottom>
<hr size=1 width="100%" noshade color=black align=center></td>
  <td  align=center width="2%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="43%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="9%" valign=bottom><font   size=2>2001</font></td>
  <td  align=center width="2%" valign=bottom>&nbsp;</td>
  <td  align=center width="10%" valign=bottom><font   size=2>2000</font></td>
  <td  align=center width="8%" valign=bottom>&nbsp;</td>
  <td  align=center width="10%" valign=bottom><font   size=2>2001</font></td>
  <td  align=center width="3%" valign=bottom>&nbsp;</td>
  <td  align=center width="9%" valign=bottom><font   size=2>2000</font></td>
  <td  align=center width="2%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="43%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="9%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=center></td>
  <td  align=center width="2%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=center></td>
  <td  align=center width="10%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=center></td>
  <td  align=center width="8%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=center></td>
  <td  align=center width="10%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=center></td>
  <td  align=center width="3%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=center></td>
  <td  align=center width="9%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=center></td>
  <td  align=center width="2%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="43%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Net Income</font></td>
  <td  align=right width="9%" valign=bottom bgcolor="#cceeff"><font   size=2>1,740,938</font></td>
  <td width="2%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>49,333</font></td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>2,726,632</font></td>
  <td  align=right width="3%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="9%" valign=bottom bgcolor="#cceeff"><font   size=2>213,309</font></td>
  <td  align=right width="2%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="43%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="9%" valign=bottom>&nbsp;</td>
  <td width="2%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="8%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom>&nbsp;</td>
  <td  align=right width="3%" valign=bottom>&nbsp;</td>
  <td  align=right width="9%" valign=bottom>&nbsp;</td>
  <td  align=right width="2%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="43%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Other comprehensive gain:</font></td>
  <td  align=right width="9%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="2%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="3%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="9%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="2%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="41%" valign=bottom><font size=2>Change in unrealized value of investments, net</font></td>
  <td  align=right width="9%" valign=bottom><font   size=2>3,080,700</font></td>
  <td width="2%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom><font   size=2>16,016,048</font></td>
  <td  align=right width="8%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom><font   size=2>1,476,200</font></td>
  <td  align=right width="3%" valign=bottom>&nbsp;</td>
  <td  align=right width="9%" valign=bottom><font   size=2>17,087,753</font></td>
  <td  align=right width="2%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="41%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="9%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="2%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="3%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="9%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="2%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="41%" valign=bottom><font size=2>Less: Reclassification adjustment for gains
  included in net income</font></td>
  <td  align=right width="9%" valign=bottom><font   size=2>(3,412,608</font></td>
  <td width="2%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="10%" valign=bottom><font   size=2>-</font></td>
  <td  align=right width="8%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom><font   size=2>(5,236,804)</font></td>
  <td  align=right width="3%" valign=bottom>&nbsp;</td>
  <td  align=right width="9%" valign=bottom><font   size=2>-</font></td>
  <td  align=right width="2%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="41%" valign=bottom>&nbsp;</td>
  <td  align=right width="9%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=right></td>
  <td width="2%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=right></td>
  <td  align=right width="8%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=right></td>
  <td  align=right width="3%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=right></td>
  <td  align=right width="9%" valign=bottom>
<hr size=1 width="100%" noshade color=black align=right></td>
  <td  align=right width="2%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="41%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="9%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="2%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="8%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="3%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="9%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="2%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="43%" colspan=2 valign=bottom><font size=2>Total comprehensive income</font></td>
  <td  align=right width="9%" valign=bottom><font   size=2>1,409,030</font></td>
  <td width="2%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom><font   size=2>16,065,981</font></td>
  <td  align=right width="8%" valign=bottom>&nbsp;</td>
  <td  align=right width="10%" valign=bottom><font   size=2>(1,033,972)</font></td>
  <td  align=right width="3%" valign=bottom>&nbsp;</td>
  <td  align=right width="9%" valign=bottom><font   size=2>17,301,062</font></td>
  <td  align=right width="2%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="43%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="9%" valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="2%" valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td  align=right width="8%" valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td  align=right width="10%" valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td  align=right width="3%" valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td  align=right width="9%" valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td  align=right width="2%" valign=bottom>&nbsp;</td>
 </tr>
</table>

<page>


<p>&nbsp;</p>

<p><font size=2>Note D:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investments</font></p>

<p><font size=2>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 size=2>The Company&#146;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, is subject to the
inherent risk of market fluctuations.</font></p>

<p><font size=2>Since the Company does not buy investments in anticipation of short-term
fluctuations in market prices, the investments in marketable equity securities
have 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&#146; equity. Dividends on marketable equity securities are recognized
in income when declared. Investments in unregistered securities are reported at
original cost.</font></p>

<p><font size=2>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 size=2>Note E:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; New Accounting
Pronouncements</font></p>

<p><font size=2>In December 1999, the Securities and Exchange Commission (SEC) issued
Staff Accounting Bulletin No.101 (SAB 101), &#147;Revenue Recognition in Financial
Statements.&#148; SAB 101 summarizes certain of the SEC&#146;s views in applying
generally accepted accounting principles to revenue recognition in financial
statements. In October 2000, the SEC issued additional written guidance to
further supplement SAB 101.&nbsp; The Company
adopted SAB 101 upon its issuance by the SEC.&nbsp;
The adoption of SAB 101 did not have any material effect on the
Company&#146;s revenues or revenue recognition policy.<page></font></p>

<p><b><font size=2>Item
2</font></b></p>

<p><a name=ManagementsDiscussionAndAnalysisOfFinanc><b><font size=2>Management&#146;s Discussion and Analysis of Financial
Condition and Results of Operations</font></b></a></p>

<p><b><font size=2>Results
of Operations</font></b></p>

<p><font size=2>Net sales decreased 8.6% to $1,183,979 for the three month period ended
June 30, 2001, compared to net sales of $1,295,193 for the same period in
fiscal 2000. Net sales decreased by a total of 17.8%, for the six month period
ended June 30, 2001, to $2,485,348 compared to $3,004,778 for the same period
in fiscal 2000.The decrease is due primarily to a significant sale,
approximately 400 units, which had occurred during the first quarter of fiscal
2000 in the Controls Division to one of its customers. The decrease is also due
to decreased net sales in the Company&#146;s AutoData Division. The primary decrease
in net sales is due to the restructuring of the sales department and the
redirection of its focus.&nbsp; Although
AutoData&#146;s net sales have decreased, the Division recognized net income for the
six months ended June 30, 2001 of $25,870 compared to a net loss of $75,480 in
the comparable period of fiscal 2000. The Company&#146;s net sales, overall, has
also been affected by the decrease in capital spending by its customers as a
result of the general decline of the global economy during the first half of
fiscal 2001.</font></p>

<p><font size=2>The Company&#146;s gross margin for the three and six month periods ended
June 30, 2001 remained consistent compared to the same periods in fiscal 2000.
The Company expects the gross margin as a percentage of net sales to remain
consistent throughout the second half of fiscal 2001.</font></p>

<p><font size=2>Selling and research &amp; development expenses for the three and six
month periods ended June 30, 2001 decreased compared to the same periods in
fiscal 2000 due to a reduction in the employee base in the Company&#146;s AutoData
Division in the first half of fiscal 2001. Operating expenses in total as a
percentage of net sales increased for the three and six month periods ended
June 30, 2001 when compared to the same periods in fiscal 2000. This is
consistent with management&#146;s expectation that operating expenses would remain
relatively consistent between periods while experiencing a decrease in net
sales.</font></p>

<p><font size=2>The most significant increase in income from continuing operations
experienced by the Company during the six months ended June 30, 2001 compared
to the same period in fiscal 2000 is due to the sale of investments in
marketable securities held by the Company.</font></p>

<p><font size=2>In recent years, the Company&#146;s wholly owned subsidiary, Microflame,
Inc., has incurred operating losses. As a result, the Company made the decision
to sell the division. Microflame was sold during the second quarter of 2001,
resulting in a loss from discontinued operations of $72,739 for the first six
months of 2001 as compared to income of $9,167 for the first six months in 2000.<page></font></p>

<p><b><font size=2>Liquidity
and Capital Resources</font></b></p>

<p><font size=2>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.&nbsp; The Company does not anticipate the need for
additional working capital from outside sources.</font></p>

<p><b><font size=2>Part
II &#150; Other Information</font></b></p>

<p><b><font size=2>Item 1. <a name=LegalProceedings>Legal Proceedings</a></font></b></p>

<p><font size=2>There were no material developments in previously reported legal
proceedings.</font></p>

<p><font size=2>I<b>tem 2. <a name=ChangesInSecuritiesAndUseOfProceeds>Changes in Securities and Use of
Proceeds</a></b></font></p>

<p><font size=2>No changes have been made to any registered securities.</font></p>

<p><b><font size=2>Item 3. <a name=DefaultsUponSeniorSecurities>Defaults
Upon Senior Securities</a></font></b></p>

<p><font size=2>No event constituting a default has occurred with respect to any senior
security of the Registrant.</font></p>

<p><b><font size=2>Item 4. <a name=SubmissionOfMattersToAVoteOfSecurityHold>Submission of Matters to a Vote
of Security Holders</a></font></b></p>

<p><font size=2>The following matters were voted on by shareholders during the period
covered by this Form 10-Q:</font></p>

<div align=center>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td width="3%" valign=top><font size=2>(a)</font></td>
  <td width="96%" colspan=7 valign=top><font size=2>The Annual Meeting of shareholders was held
  April 25, 2001.</font></td>
 </tr>
 <tr>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="96%" colspan=7 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="3%" valign=top><font size=2>(b)</font></td>
  <td width="96%" colspan=7 valign=top><font size=2>Approval of setting number of Directors at
  five.</font></td>
 </tr>
 <tr>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="96%" colspan=7 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="3%" valign=top><font size=2>(c)</font></td>
  <td width="96%" colspan=7 valign=top><font size=2>Election of Directors as follows:</font></td>
 </tr>
 <tr>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="96%" colspan=7 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td   width="5%" colspan=2>&nbsp;</td>
  <td width="23%" valign=top bgcolor="#cceeff"><font size=2>Brad D. Slye</font></td>
  <td width="14%" valign=top bgcolor="#cceeff"><font size=2>2,775,928</font></td>
  <td width="6%" valign=top bgcolor="#cceeff"><font size=2>For</font></td>
  <td width="13%" valign=top bgcolor="#cceeff"><font size=2>190,097</font></td>
  <td width="21%" valign=top bgcolor="#cceeff"><font size=2>Withheld Authority</font></td>
  <td   width="14%">&nbsp;</td>
 </tr>
 <tr>
  <td   width="5%" colspan=2>&nbsp;</td>
  <td width="23%" valign=top><font size=2>Pete R. Peterson</font></td>
  <td width="14%" valign=top><font size=2>2,775,928</font></td>
  <td width="6%" valign=top><font size=2>For</font></td>
  <td width="13%" valign=top><font size=2>190,097</font></td>
  <td width="21%" valign=top><font size=2>Withheld Authority</font></td>
  <td   width="14%">&nbsp;</td>
 </tr>
 <tr>
  <td   width="5%" colspan=2>&nbsp;</td>
  <td width="23%" valign=top bgcolor="#cceeff"><font size=2>Joseph A. Marino</font></td>
  <td width="14%" valign=top bgcolor="#cceeff"><font size=2>2,775,928</font></td>
  <td width="6%" valign=top bgcolor="#cceeff"><font size=2>For</font></td>
  <td width="13%" valign=top bgcolor="#cceeff"><font size=2>190,097</font></td>
  <td width="21%" valign=top bgcolor="#cceeff"><font size=2>Withheld Authority</font></td>
  <td   width="14%">&nbsp;</td>
 </tr>
 <tr>
  <td   width="5%" colspan=2>&nbsp;</td>
  <td width="23%" valign=top><font size=2>John S. Strom</font></td>
  <td width="14%" valign=top><font size=2>2,775,928</font></td>
  <td width="6%" valign=top><font size=2>For</font></td>
  <td width="13%" valign=top><font size=2>190,097</font></td>
  <td width="21%" valign=top><font size=2>Withheld Authority</font></td>
  <td   width="14%">&nbsp;</td>
 </tr>
 <tr>
  <td   width="5%" colspan=2>&nbsp;</td>
  <td width="23%" valign=top bgcolor="#cceeff"><font size=2>Geoffrey W. Miller</font></td>
  <td width="14%" valign=top bgcolor="#cceeff"><font size=2>2,775,928</font></td>
  <td width="6%" valign=top bgcolor="#cceeff"><font size=2>For</font></td>
  <td width="13%" valign=top bgcolor="#cceeff"><font size=2>190,097</font></td>
  <td width="21%" valign=top bgcolor="#cceeff"><font size=2>Withheld Authority</font></td>
  <td   width="14%">&nbsp;</td>
 </tr>
 <tr>
  <td   width="5%" colspan=2>&nbsp;</td>
  <td width="23%" valign=top>&nbsp;</td>
  <td width="14%" valign=top>&nbsp;</td>
  <td width="6%" valign=top>&nbsp;</td>
  <td width="13%" valign=top>&nbsp;</td>
  <td width="21%" valign=top>&nbsp;</td>
  <td   width="14%">&nbsp;</td>
 </tr>
 <tr>
  <td width="3%" valign=top><font size=2>(d)</font></td>
  <td width="96%" colspan=7 valign=top><font size=2>Approval of Schweitzer Karon &amp; Bremer
  LLC as independent auditors.</font></td>
 </tr>

<!-- DO NOT remove the following table row. It is needed for  .               the proper rendering of tables containing misaligned cells.-->
 <tr height=0>
  <td width=26></td>
  <td width=14></td>
  <td width=168></td>
  <td width=102></td>
  <td width=50></td>
  <td width=101></td>
  <td width=156></td>
  <td width=104></td>
 </tr>
</table>

</div>

<p><b><font size=2>Item 5. <a name=OtherInformation>Other Information</a></font></b></p>

<p><font size=2>This Form 10-Q contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, including statements regarding the Company&#146;s
expectations, beliefs, intentions or strategies regarding the future.
Forward-looking statements include, without limitation, statements regarding
the extent and timing of future revenues and expenses and customer demand. These
statements include, but are not limited to, changes in worldwide general
economic conditions, cyclicality of capital spending by customers,
Electro-Sensors, Inc. ability to keep pace with technological developments and
evolving industry standards, worldwide competition and Electro-Sensors, Inc.
ability to protect its existing intellectual property from challenges from
third parties and other factors.</font></p>

<p><font size=2>All forward-looking statements in the document are based on information
available to the Company as of the date hereof, and the Company assumes no
obligation to update any such forward-looking statements. It is important to
note that the Company&#146;s actual results could differ materially from those in
such forward-looking statements. The forward-looking statements of the Company
are subject to risks and uncertainties. Some of the factors that could cause
future results to materially differ from the Company&#146;s recent results or those
projected in the forward-looking statements are detailed in our Annual Report
on Form 10-K for the year ended December 31, 2000, filed with the SEC.</font></p>

<p><b><font size=2>Item 6. <a name=ExhibitsAndReportsOnForm8k>Exhibits and
Reports on Form 8-K</a></font></b></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td width="3%" valign=top><font size=2>(a)</font></td>
  <td width="96%" valign=top><font size=2>Exhibits &#150; No
  exhibits are attached to this filing of Form 10-Q.</font></td>
 </tr>
 <tr>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="96%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="3%" valign=top><font size=2>(b)</font></td>
  <td width="96%" valign=top><font size=2>Reports on Form 8-K
  &#150; No reports on Form 8-K were filed during the six months ended June 30,
  2001.</font></td>
 </tr>
</table>

<page>


<p>&nbsp;</p>

<p><a name=Signatures><b><font size=2>Signatures</font></b></a></p>

<p><font size=2>Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.</font></p>

<p><font size=2>&nbsp;</font></p>

<p><font size=2>Electro-Sensors, Inc.</font></p>

<p><font size=2>&nbsp;</font></p>

<p><b><font size=2>By:</font></b><font size=2> <u>/s/
Bradley D. Slye</u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; August
14, 2001</font></p>

<p><font size=2>Bradley D. Slye, President</font></p>

<p><font size=2>(Principal Financial Officer)</font></p>

<p><font size=2>&nbsp;</font></p>

<p><font size=2>&nbsp;</font></p>

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