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<SEC-DOCUMENT>0000897101-05-002391.txt : 20051114
<SEC-HEADER>0000897101-05-002391.hdr.sgml : 20051111
<ACCEPTANCE-DATETIME>20051114091718
ACCESSION NUMBER:		0000897101-05-002391
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20050930
FILED AS OF DATE:		20051114
DATE AS OF CHANGE:		20051114

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:		051197004

	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>electro054672_10qsb.htm
<DESCRIPTION>FORM 10-QSB FOR THE QUARTER ENDED 9-30-2005
<TEXT>
<HTML>
<HEAD>
<TITLE>Electro-Sensors, Inc. Form 10-QSB, Dated: September 30, 2005</TITLE>
</HEAD>
<BODY>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A></FONT></P>

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<DIV STYLE="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV STYLE="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>
<BR>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=4>UNITED STATES<BR>SECURITIES AND
EXCHANGE COMMISSION</FONT><BR><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Washington, DC 20549 </FONT></H1>

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<HR WIDTH="20%" COLOR="Black">


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=6>Form 10-QSB </FONT></H1>


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<HR WIDTH="20%" COLOR="Black">


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<P ALIGN=center><FONT FACE="Wingdings">x</FONT><FONT FACE="Times New Roman, Times, Serif" SIZE="3">&nbsp;&nbsp;
<B>QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE<BR> SECURITIES EXCHANGE ACT OF 1934</B> </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="3"><B>For the
quarterly period ended September 30, 2005</B> </FONT></P>


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<P ALIGN=center><FONT FACE="Wingdings">o</FONT><FONT FACE="Times New Roman, Times, Serif" SIZE="3">&nbsp;&nbsp;
<B>TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE<BR>SECURITIES EXCHANGE ACT OF 1934</B> </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="3"><B>FOR THE
TRANSITION PERIOD FROM</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>TO</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT> </P>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Commission File
Number 0-9587</FONT></H1>


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<HR WIDTH="20%" COLOR="Black">


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="6"><B>ELECTRO-SENSORS, INC.</B> </FONT> <BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2">(Exact
name of small business issuer as specified in its charter) </FONT> </P>



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<TR VALIGN="BOTTOM">
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="3">Minnesota</FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="3">41-0943459</FONT></TH></TR>
<TR VALIGN="TOP">
     <TD WIDTH="50%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(State or other jurisdiction of incorporation or<BR>organization)</FONT></TD>
     <TD WIDTH="50%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(IRS Employer Identification No.)</FONT></TD></TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="3"><B>6111 Blue Circle
Drive<BR>Minnetonka, Minnesota 55343-9108</B> </FONT> <BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2">(Address of principal executive offices) </FONT> </P>


<!-- MARKER FORMAT-SHEET="Para Default" FSL="Default" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>(952) 930-0100</B></FONT><BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Issuer&#146;s telephone number) </FONT></P>

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<HR WIDTH="20%" COLOR="Black">


<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Check whether the issuer (1) filed
all reports required to be filed by Section 13 of 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.<BR>
Yes&nbsp; </FONT>
<FONT face="Wingdings">x</FONT>&nbsp;&nbsp;&nbsp;
<FONT FACE="Times New Roman, Times, Serif" SIZE=3>No&nbsp; </FONT><FONT face="Wingdings">o</FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).<BR>Yes&nbsp; </FONT>
<FONT face="Wingdings">o</FONT>&nbsp;&nbsp;&nbsp;
<FONT FACE="Times New Roman, Times, Serif" SIZE=3>No&nbsp; </FONT><FONT face="Wingdings">x</FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The number of shares outstanding of
the registrant&#146;s Common Stock, $0.10 par value, on November 14, 2005 was 3,248,516. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Transitional Small
Business Disclosure Format (check one): <BR>Yes&nbsp; </FONT>
<FONT face="Wingdings">o</FONT>&nbsp;&nbsp;&nbsp;
<FONT FACE="Times New Roman, Times, Serif" SIZE=3>No&nbsp; </FONT><FONT face="Wingdings">x</FONT></P>


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<BR>
<DIV STYLE="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV STYLE="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>



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<BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
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<BR>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A NAME="toc">ELECTRO-SENSORS</A>, INC.<BR>Form 10-QSB<BR>
For the Period Ended September 30, 2005</FONT></H1>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TABLE OF CONTENTS </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#part_i">PART I &#150; FINANCIAL
INFORMATION </A></FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 1.&nbsp;&nbsp;&nbsp;<A HREF="#financial_statements">Financial
Statements</A> </FONT></P>



<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#consolidated_balance_sheet">Consolidated Balance
Sheet &#150; As of September 30, 2005</A><BR>
<A HREF="#consolidated_statements_of_operations">Consolidated Statements of Operations &#150; For the Three and Nine Month Periods Ended September 30, 2005 and September 30, 2004</A><BR>
<A HREF="#cash_flows">Consolidated Statements of Cash Flows &#150; For the Nine Month Periods Ended September 30, 2005 and September 30, 2004</A><BR>
<A HREF="#notes">Notes to Consolidated Financial Statements </A></FONT></P>


<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Item 2.&nbsp;&nbsp;&nbsp;<A HREF="#discussion">Management&#146;s Discussion and Analysis or Plan of Operation</A><BR>
Item 3.&nbsp;&nbsp;&nbsp;<A HREF="#controls">Controls and Procedures </A></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#part_iiother_information">PART II &#150; OTHER
INFORMATION </A></FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 6.&nbsp;&nbsp;&nbsp;<A HREF="#exhibits">Exhibits</A> </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#signatures">SIGNATURES</A> </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#exhibit">EXHIBITS</A> </FONT></H1>



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<BR><BR><BR><BR><BR><BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
<!-- MARKER PAGE="sheet: 2; page: 2" -->
<BR>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A></FONT></P>



<!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3><A NAME="part_i">PART I.</A>&nbsp;&nbsp;&nbsp;<A NAME="financial">FINANCIAL
INFORMATION</A> </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Item 1. <A NAME="financial_statements">Financial
Statements</A> </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ELECTRO-SENSORS, INC.
AND SUBSIDIARIES<BR><A NAME="consolidated_balance_sheet">CONSOLIDATED BALANCE SHEET</A></FONT></H1>




<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH><TH></TH>
     <TH COLSPAN="2" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>September 30,<BR>
2005<BR>
(unaudited)</FONT></TH></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD WIDTH=86% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>ASSETS</B> </FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH="9%" ALIGN="RIGHT" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>CURRENT ASSETS</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  6,856,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investments</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6,662,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade receivables, less allowance for doubtful accounts of $9,000</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>510,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>865,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other current assets</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>68,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Total current assets</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14,961,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Property and equipment, net</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,362,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>TOTAL ASSETS</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2> 16,323,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=3></TD><TD></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>LIABILITIES AND STOCKHOLDERS&#146; EQUITY</B> </FONT></TD><TD colspan=4 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>LIABILITIES</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    109,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>253,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>50,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes payable</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>110,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income tax</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2,374,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>TOTAL LIABILITIES</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  2,896,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>STOCKHOLDERS&#146; EQUITY</B> </FONT></TD><TD COLSPAN=4 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common stock par value $0.10 per share; authorized 10,000,000 shares; issued 3,241,016</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>324,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,158,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Retained earnings</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7,937,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive income</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4,008,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>TOTAL STOCKHOLDERS&#146; EQUITY</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>13,427,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>TOTAL LIABILITIES AND STOCKHOLDERS&#146; EQUITY</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2> 16,323,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=3></TD><TD></TD></TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See accompanying notes
to consolidated financial statements </FONT></P>



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<BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
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<BR>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ELECTRO-SENSORS, INC.
AND SUBSIDIARIES<BR><A NAME="consolidated_statements_of_operations">CONSOLIDATED STATEMENTS OF OPERATIONS</A><BR>(Unaudited)</FONT></H1>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH><TH></TH>
     <TH COLSPAN="5" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Three Months Ended<BR>
September 30,</FONT></TH><TH></TH>
     <TH COLSPAN="5" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Nine Months Ended<BR>
September 30,</FONT></TH></TR>

<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH><TH></TH>
     <TH COLSPAN="2" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>2005</FONT></TH><TH WIDTH="3%" STYLE="font-weight:BOLD;"></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1>2004</FONT></TH><TH></TH>
     <TH COLSPAN="2" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>2005</FONT></TH><TH WIDTH="3%" STYLE="font-weight:BOLD;"></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1>2004</FONT></TH></TR>

<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD WIDTH=47% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Net sales</B> </FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD WIDTH="9%" ALIGN="RIGHT" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  1,206,000</FONT></TD>
        <TD WIDTH="3%" ALIGN="LEFT" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD WIDTH=9% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  1,243,000</FONT></TD>
        <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD WIDTH="9%" ALIGN="RIGHT" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  3,557,000</FONT></TD>
        <TD WIDTH="3%" ALIGN="LEFT" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD WIDTH=9% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  3,664,000</FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Cost of goods sold</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>470,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>453,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,368,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,368,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Gross profit</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>736,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>790,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2,189,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2,296,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Operating expenses:</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Selling and marketing</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>318,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>341,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>938,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>968,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;General and administrative</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>246,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>254,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>833,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>775,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Research and development</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>205,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>206,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>624,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>566,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Total operating expenses</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>769,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>801,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2,395,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2,309,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Operating loss</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(33,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(11,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(206,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(13,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Non-operating income (expense):</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Gain (loss) on sale of investment securities</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>543,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>807,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>425,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Interest income</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>52,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>19,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>125,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>43,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Other income</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>11,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Equity in losses of equity method investee</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(129,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(40,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(140,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(165,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Total non-operating income (loss)</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>469,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(20,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>803,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>312,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Income (loss) before income taxes</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>436,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(31,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>597,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>299,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Federal and state income tax provision</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>175,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>237,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>187,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Net income (loss)</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    261,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    (35,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    360,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    112,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=3></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=3></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=3></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=3></TD><TD></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Net income per share data:</B> </FONT></TD><TD COLSPAN=13 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Basic</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Net income (loss) per share</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>       0.08</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>      (0.01</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>       0.11</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>       0.03</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Weighted average shares</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3,234,472</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3,218,009</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3,227,136</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3,202,089</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Diluted</B> </FONT></TD><TD COLSPAN=13 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Net income (loss) per share</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>       0.08</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>      (0.01</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>       0.11</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>       0.03</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Weighted average shares</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3,330,726</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3,326,575</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3,327,822</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3,312,835</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Dividends paid per share</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>       0.04</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>       0.04</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>       0.12</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>       0.12</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
</TABLE>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See accompanying notes
to consolidated financial statements  </FONT></P>



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<BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A></FONT></P>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ELECTRO-SENSORS, INC.
AND SUBSIDIARIES<BR>CONSOLIDATED STATEMENTS OF <A NAME="cash_flows">CASH FLOWS</A><BR>(Unaudited) </FONT></H1>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=100%>

<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH><TH></TH>
     <TH COLSPAN="5" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Nine Months Ended<BR>September 30,</FONT></TH></TR>

<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH><TH></TH>
     <TH COLSPAN="2" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>2005</FONT></TH><TH WIDTH="3%" STYLE="font-weight:BOLD;"></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1>2004</FONT></TH></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD WIDTH=73% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Cash flows from operating activities</B> </FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH="9%" ALIGN="RIGHT" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
        <TD WIDTH="3%" ALIGN="LEFT" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH=9% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Net income</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    360,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    112,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Adjustments to reconcile net income to net cash used in operating activities:</FONT></TD><TD COLSPAN=7 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Depreciation</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>75,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>68,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Realized gain on sale of investments</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(807,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(426,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Equity in loss of equity method investee</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>140,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>165,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;(Increase)/decrease in:</FONT></TD><TD COLSPAN=7 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Trade receivables</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>49,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(60,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Inventory</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(55,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(46,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Other current assets</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Prepaid income taxes</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>127,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(53,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Increase/(decrease) in:</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Accounts payable</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(53,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>54,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Accrued expenses</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>45,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Deferred revenue</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(18,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Prepaid income taxes</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>110,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(96,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Net cash used in operating activities</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(67,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(232,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=3></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=3></TD><TD></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Cash flows from investing activities:</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Proceeds from sale of investments</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>825,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>772,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Purchase of equity securities</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(326,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Payment for purchase of investments</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(160,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Purchase of property and equipment</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(35,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(21,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Net cash provided by investing activities</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>790,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>265,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=3></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=3></TD><TD></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Cash flows from financing activities:</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Proceeds from issuance of stock</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>56,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>109,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Dividends paid</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(387,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(385,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Net cash used in financing activities</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(331,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(276,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=3></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=3></TD><TD></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Net increase/(decrease) in cash &amp; cash equivalents</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>392,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(243,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Cash &amp; cash equivalents, beginning</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6,464,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6,862,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Cash &amp; cash equivalents, ending</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6,856,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6,619,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=3></TD><TD WIDTH="3%" STYLE="font-weight:BOLD;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=3></TD><TD></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Supplemental schedule of non-cash investing and financing activities</B> </FONT></TD><TD COLSPAN=7 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Net change in unrealized loss on investments</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="9%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>   (654,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (8,461,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
</TABLE>



<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See accompanying notes
to consolidated financial statements  </FONT></P>



<!-- MARKER FORMAT-SHEET="Page Break" FSL="Workstation" -->
<BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
<!-- MARKER PAGE="sheet: 2; page: 2" -->



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ELECTRO-SENSORS, INC.
AND SUBSIDIARIES<BR><A NAME="notes">NOTES</A> TO CONSOLIDATED FINANCIAL STATEMENTS<BR>(Unaudited)</FONT></H1>


<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Note 1. Nature of
Business </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The accompanying consolidated
financial statements include the accounts of Electro-Sensors, Inc. and its wholly owned
subsidiaries, ESI Investment Company and Senstar Corporation. Senstar Corporation does not
have any business transactions. Intercompany accounts, transactions and earnings have been
eliminated in consolidation. The consolidated entity is referred
to as &#147;the Company.&#148;</FONT></P>


<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company operates two distinct
businesses. The first is the Controls Division, which 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, manufacturer&#146;s representatives, and distributors to a wide
variety of manufacturers, OEM&#146;s and processors to monitor process machinery
operations. The Controls Division markets its products to a number of different industries
located throughout the United States and abroad. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company&#146;s second primary
business is AutoData<SUP>&reg;</SUP> Systems (ADS). ADS designs and markets a desktop
software based system that reads hand printed characters, checkmarks and bar code
information from scanned or faxed forms. ADS products are designed to provide capabilities
to automate data collection and are sold by internal sales staff to end users, resellers
and developers in the United States, Canada, Europe and Asia. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ESI Investment Company (INV) owns
marketable securities which have experienced significant appreciation in value since the
IPO of August Technology in 2000. August Technology Corporation designs, manufactures, and
sells automated defect inspection systems used in the manufacture of microelectronic
devices. The Company has recognized income from the sale of its holdings in August
Technology Corporation. See Note 6 for additional information regarding its investments.
The Company&#146;s investments in marketable securities are subject to normal market
risks, and are extremely concentrated in one security. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Note 2. Basis of
Presentation </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The accompanying unaudited
consolidated financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America for interim financial
information and with the instructions to Form 10-QSB. Accordingly, they do not include all
of the information and footnotes required by accounting principles generally accepted in
the United States of America for complete financial statements. It is the opinion of
management that the unaudited condensed consolidated financial statements include all
adjustments, consisting of normal recurring accruals, necessary to fairly state the
financial position and results of operations for the three and nine month periods ended
September 30, 2005 and September 30, 2004. The results of interim periods may not be
indicative of results to be expected for the year. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>This report should be read together
with the Company&#146;s annual report on Form 10-KSB for the year ended December 31, 2004,
including the audited financial statements and footnotes therein. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Note 3. Revenue
Recognition </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Revenue recognition of
production monitoring equipment: </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>All production monitoring equipment
is shipped without an evaluation or acceptance period. Revenues from the sale of the
products and any related warranty costs are recognized at the time of shipment. The
Company&#146;s distributors are not granted any price protection. Sales to all customers,
including distributors, are final and no right of return after shipment exists. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Software revenue
recognition: </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company recognizes revenue upon
shipment of its character recognition software. The product is sold to the end user and
risk of loss is transferred, and the Company has no continuing obligations, once its
products are delivered to the shipper. The Company recognizes revenue upon shipment, net
of return reserves based on historical experience. To recognize revenue, it must also be
probable that the Company will collect the accounts receivable from its customers. In some
situations, the Company receives advance payments from its customers. Revenue associated
with these advance payments is deferred until the product is shipped. </FONT></P>



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<BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A></FONT></P>


<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Note 4. Stock-Based
Compensation </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In accordance with Accounting
Principles Board (APB) Opinion No. 25 and related interpretations, the Company uses the
intrinsic value-based method for measuring stock-based compensation cost which measures
compensation cost as the excess, if any, of quoted market price of the Company&#146;s
common stock at the grant date over the amount the employee must pay for the stock. The
Company&#146;s general policy is to grant stock options at fair value at the date of
grant. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Had compensation cost been recognized
based on the fair values of options at the grant dates consistent with the provisions of
Statement of Financial Accounting Standards (SFAS) No. 123, &#147;Accounting for Stock
Based Compensation,&#148; the Company&#146;s net income and basic and diluted net income
per common share would have been changed to the following pro forma amounts: </FONT></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH><TH></TH>
     <TH COLSPAN="5" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Three Months
Ended<BR>September 30,</FONT></TH><TH></TH>
     <TH COLSPAN="5" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Nine Months
Ended<BR>September 30,</FONT></TH></TR>

<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="5" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN="5" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>


<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH><TH></TH>
     <TH COLSPAN="2" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=1> 2005</FONT></TH><TH></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1> 2004</FONT></TH><TH></TH>
     <TH COLSPAN="2" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=1> 2005</FONT></TH><TH></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1> 2004</FONT></TH></TR>

<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD WIDTH=42% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Net income (loss):</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH="10%" ALIGN="RIGHT" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
        <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH=10% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
        <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH="10%" ALIGN="RIGHT" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
        <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH=10% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;As reported</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="10%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    261,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    (35,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="10%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    360,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    112,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Pro forma</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="10%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    247,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    (68,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="10%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    318,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>     67,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Basic net income (loss) per common share:</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;As reported</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="10%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0.08</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(0.01</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="10%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0.11</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0.03</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Pro forma</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="10%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0.08</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(0.02</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="10%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0.10</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0.02</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Diluted net income (loss) per common share:</FONT></TD><TD COLSPAN=13 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;As reported</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="10%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0.08</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(0.01</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="10%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0.11</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0.03</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Pro forma</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="10%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0.07</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(0.02</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="10%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0.10</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0.02</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Stock based compensation:</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;As reported</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="10%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="10%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Pro forma</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="10%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>     14,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>     33,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="10%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>     42,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>     45,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:BOLD;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The company did not grant any options
during the nine months ended September 30, 2005. Please read the information in
&#147;Recent Accounting Standards&#148; elsewhere in this report for additional
information on our stock option accounting. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Note 5. Net Income Per
Share </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company&#146;s basic net income
per share amounts have been computed by dividing net income by the weighted average number
of outstanding common shares. The Company&#146;s diluted net income per share is computed
by dividing net income by the weighted average number of outstanding common shares and
common share equivalents relating to stock options and warrants, when dilutive. For the
three months ended September 30, 2005, 96,254 shares of common stock equivalents were
included in the computation of diluted net income per share. For the nine months ended
September 30, 2005, 100,686 shares of common stock equivalents were included in the
computation of diluted net income per share. For the three months ended September 30,
2004, 108,566 shares of common stock equivalents were included in the computation of
diluted net income per share. For the nine months ended September 30, 2004, 110,746 shares
of common stock equivalents were included in the computation of diluted net income per
share. </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Note 6. Investments </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>INV&#146;s investments consist of
equity securities, primarily common stocks, government debt securities and money market
funds. The estimated fair value of publicly traded equity securities (other than those
accounted for based upon the equity method of accounting) is based on quoted market
prices, and therefore subject to the inherent risk of market fluctuations. Shares of
common stock for which there is no readily determinable value (i.e., no quoted market
price) are accounted for on a historical cost method (unless accounted for based upon the
equity method of accounting). 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. Since the Company
generally does not buy investments in anticipation of short-term fluctuations in market
prices, investments in equity securities are classified as available-for-sale (unless
accounted for on the equity method of accounting). Available-for-sale securities with
readily determinable values are stated at fair value, and unrealized holding gains and
losses, net of the related deferred tax effect, are reported as separate component of
stockholders&#146; equity. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Realized gains and losses on
securities, including losses from declines in value of specific securities determined by
management to be other-than-temporary (unless accounted for on the equity method of
accounting), are included in income in the period realized. The Company&#146;s significant
investment in equity securities is 600,115 shares of August Technology Corporation whose
shares are traded on the Nasdaq Stock Exchange with a September 30, 2005 market value of
approximately $6,403,000 with an approximate cost of $60,000. </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A></FONT></P>


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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Investment Reported on
Equity Method: </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>At September 30, 2005, the Company
owned 551,759 shares of PPT, which is approximately 18.4% of PPT&#146;s outstanding common
stock. The fair value of its holdings based on the quoted market price at September 30,
2005 was approximately $684,000 with an approximate cost of $2,434,000. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Since the Company owns approximately
18.4% of PPT&#146;s outstanding stock, and the Company&#146;s Secretary, Peter R Peterson
owns approximately 22.2% of PPT&#146;s outstanding stock, it has been determined that the
Company has &#147;significant influence&#148; over the operations of PPT, and as a result
its ownership interest should be reported using the equity method of accounting for
investments. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Under the equity method of
accounting, the Company&#146;s proportionate share of PPT net income/(loss) is included in
the Company&#146;s net income/(loss) with a corresponding increase or decrease in the
carrying value of its investment. Losses in excess of invested amounts are not recognized
in the financial statements, but rather are suspended and applied against future equity in
earnings for the investee until exhausted. At September 30, 2005, the Company had
approximately $1,024,000 in suspended losses from its investment in PPT that will be used
to offset future recognition of equity method earnings from the investment. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In April 2004, INV purchased 20% of a
la mode, LLC&#146;s outstanding membership interests for $160,000. As of July 2005, a la
mode, LLC ceased operations. The company wrote off its investment in a la mode, LLC during
the third quarter of 2005. </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Note 7. Comprehensive
Income </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Comprehensive income includes the
Company&#146;s net income plus other comprehensive income items that are excluded from net
income. The Company&#146;s other income consists of unrealized gains (losses), net of
income taxes and reclassification adjustments for gains and losses included in net income. </FONT></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH><TH></TH>
     <TH COLSPAN="5" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Three Months
Ended<BR>September 30,</FONT></TH><TH></TH>
     <TH COLSPAN="5" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Nine Months
Ended<BR>September 30,</FONT></TH></TR>

<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="5" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN="5" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>


<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH><TH></TH>
     <TH COLSPAN="2" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=1> 2005</FONT></TH><TH WIDTH="3%" STYLE="font-weight:bold;"></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1> 2004</FONT></TH><TH></TH>
     <TH COLSPAN="2" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=1> 2005</FONT></TH><TH WIDTH="3%" STYLE="font-weight:bold;"></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1> 2004</FONT></TH></TR>

<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="3%" STYLE="font-weight:bold;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="3%" STYLE="font-weight:bold;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD WIDTH=51% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Net Income (Loss)</B> </FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD WIDTH="8%" ALIGN="RIGHT" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    261,000</FONT></TD>
        <TD WIDTH="3%" ALIGN="LEFT" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD WIDTH=8% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    (35,000</FONT></TD>
        <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD WIDTH="8%" ALIGN="RIGHT" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    360,000</FONT></TD>
        <TD WIDTH="3%" ALIGN="LEFT" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD WIDTH=8% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    112,000</FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Other Comprehensive Gain (Loss):</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Change in unrealized gain on investments, net of tax</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="8%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(353,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2,389,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="8%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>87,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(5,456,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Less:</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Reclassification adjustment for gains included in net income</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="8%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(330,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="8%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(492,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(298,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="3%" STYLE="font-weight:bold;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="3%" STYLE="font-weight:bold;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Total comprehensive income (loss)</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="8%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>   (422,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (2,424,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="8%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    (45,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="3%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (5,642,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><HR NOSHADE COLOR=#000000 SIZE=3></TD><TD WIDTH="3%" STYLE="font-weight:bold;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=3></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><HR NOSHADE COLOR=#000000 SIZE=3></TD><TD WIDTH="3%" STYLE="font-weight:bold;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=3></TD><TD></TD></TR>
</TABLE>



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<BR><BR><BR><BR><BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A></FONT></P>


<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Note 8. Segment
Information </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company has three reportable
operating segments based on the nature of its product lines: production monitoring,
character recognition, and investments. The production monitoring division (or Controls
Division) manufactures and markets a complete line of speed monitoring and motor control
systems for industrial machinery. The character recognition division (or ADS) designs and
markets a desktop software-based system that reads hand-printed characters, checkmarks,
and bar code information from scanned or faxed forms. Sales of this system include
software and can include hardware. The investments division (or INV) holds investments in
freely tradable and restricted securities. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In evaluating segment performance,
management focuses on sales and income before taxes. The Company has no inter-segment
sales. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following is financial
information relating to the continuing operating segments: </FONT></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH><TH></TH>
     <TH COLSPAN="5" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Three Months
Ended<BR>September 30,</FONT></TH><TH></TH>
     <TH COLSPAN="5" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Nine Months
Ended<BR>September 30,</FONT></TH></TR>

<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="5" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN="5" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>


<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH><TH></TH>
     <TH COLSPAN="2" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=1> 2005</FONT></TH><TH WIDTH="4%" STYLE="font-weight:bold;"></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1> 2004</FONT></TH><TH></TH>
     <TH COLSPAN="2" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=1> 2005</FONT></TH><TH WIDTH="4%" STYLE="font-weight:bold;"></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1> 2004</FONT></TH></TR>

<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="4%" STYLE="font-weight:bold;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="4%" STYLE="font-weight:bold;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD WIDTH=51% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;<B>External sales</B> </FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH="8%" ALIGN="RIGHT" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
        <TD WIDTH="4%" ALIGN="LEFT" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH=8% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
        <TD WIDTH=4% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH="8%" ALIGN="RIGHT" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
        <TD WIDTH="4%" ALIGN="LEFT" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH=8% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Production monitoring</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="8%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  1,076,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="4%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  1,031,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="8%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  3,158,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="4%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  3,090,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Character recognition</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="8%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>130,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="4%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>212,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="8%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>399,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="4%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>574,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Investments</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="8%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="4%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="8%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="4%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="4%" STYLE="font-weight:bold;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="4%" STYLE="font-weight:bold;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Total</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="8%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  1,206,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="4%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  1,243,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="8%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  3,557,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="4%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  3,664,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="4%" STYLE="font-weight:bold;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="4%" STYLE="font-weight:bold;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Net income before taxes</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Production monitoring</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="8%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    117,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="4%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>     97,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="8%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    268,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="4%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    373,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Character recognition</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="8%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(16,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="4%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="8%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(76,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="4%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(34,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#d6f3e8">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Investments</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="8%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>335,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="4%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(137,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT" WIDTH="8%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>405,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="4%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(40,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="4%" STYLE="font-weight:bold;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD WIDTH="4%" STYLE="font-weight:bold;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Total</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="8%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    436,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="4%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    (31,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN="RIGHT" WIDTH="8%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    597,000</FONT></TD>
        <TD ALIGN="LEFT" WIDTH="4%" STYLE="font-weight:bold;"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    299,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><HR NOSHADE COLOR=#000000 SIZE=3></TD><TD WIDTH="4%" STYLE="font-weight:bold;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=3></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT" WIDTH="1%" STYLE="font-weight:bold;"><HR NOSHADE COLOR=#000000 SIZE=3></TD><TD WIDTH="4%" STYLE="font-weight:bold;"></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=3></TD><TD></TD></TR>
</TABLE>



<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Certain expenses related to the
conduct of our investment activities are included in general and administrative expenses
in the accompanying consolidated statements of operations, but have been allocated to net
income from our INV segment in the above table. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Recent Accounting
Standards: </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In December 2004, the FASB issued
SFAS No. 123 (revised 2004), &#147;Share-Based Payment&#148;, that focuses primarily on
accounting for transactions in which an entity obtains employee services in share-based
payment transactions. This statement replaces SFAS No. 123, &#147;Accounting for
Stock-Based Compensation&#148;, and supersedes APB Opinion No. 25, &#147;Accounting for
Stock Issued to Employees.&#148; Beginning January 1, 2006, we will be required to expense
the fair value of employee stock options and similar awards. As a public company, we are
allowed to select from two alternative transition methods, each having different reporting
implications. The impact of SFAS No. 123R has not been determined at this time. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Item 2.
Management&#146;s <A NAME="discussion">Discussion</A> and Analysis or Plan of Operation </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>RESULTS OF OPERATIONS </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We set forth below a discussion of
certain aspects of our results of operations for the three and nine month periods ended
September 30, 2005 compared to the same periods in 2004. Percentage changes for each item
discussed below are shown in the aggregate for the Company on a consolidated basis, as
well as separately (i.e., on a non-consolidated basis) for the Controls Division and ADS. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B><I>Net Sales</I></B></U> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Net sales for the three month period
ended September 30, 2005 were $1,206,000, a decrease of $37,000 or 3.0% from $1,243,000
for the same period in 2004. The decrease from the three months ended September 30, 2005
compared the same period in 2004 includes an increase in net sales from the Controls
Division of $45,000 or 4.4%. ADS had a decrease in net sales of $82,000 or 38.7% for the
three months ended September 30, 2005 compared to the same period in 2004. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>For the nine month period ended
September 30, 2005, net sales were $3,557,000, a decrease of $107,000 or 2.9% from
$3,664,000 for the same period in 2004. For the nine months ended September 30, 2005, the
Controls Division contributed an increase in net sales of $68,000 or 2.2%. The Controls
Division has experienced an increase in sales for 2005 due in part to the recovery in the
US economy and increased capital spending by our installed customer base. The bulk of our
sales volume continues to be derived from the Speed Monitoring product lines to the grain
and feed markets, as well as other key industrial markets. For the nine months ended
September 30, 2005, ADS contributed a decrease in net sales of $175,000 or 30.5%. All
products contributed to this decrease. </FONT></P>



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<BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
<!-- MARKER PAGE="sheet: 2; page: 2" -->

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A></FONT></P>


<!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B><I>Cost of Goods Sold</I></B></U> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company&#146;s cost of goods sold
increased $17,000 or 3.8% for the three months ended September 30, 2005 compared to the
same period in 2004. For the nine months ended September 30, 2005, the cost of goods sold
remained the same when compared to the same period in 2004. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B><I>Gross Profit</I></B></U> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Gross margins for the three month
period ended September 30, 2005 were 61.6% versus 63.6% compared to the same period in
2004. For the nine months ended September 30, 2005 gross margins were 61.5% versus 62.7%
compared to the same period in 2004. The decreases in margins are due primarily to the
decrease in sales and cost of living increase in wages and salaries for production
employees. The Company continues its efforts to effectively manage and reduce production
costs in both divisions. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B><I>Operating Expenses</I></B></U> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Total operating expenses decreased
$32,000 or 4.0% for the three months ended September 30, 2005 compared to the same period
in 2004. Of this decrease, the Controls Division contributed an increase in operating
expenses of $23,000 or 4.0%, which was partially offset by a decrease in operating expense
for ADS. ADS contributed a decrease of $33,000 or 15.7%. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>For the nine months ended September
30, 2005 operating expenses increased $86,000 or 3.7% compared to the same period for
2004. Of this increase, the Controls Division contributed an increase of $224,000 or
13.9%, which was partially offset by a decrease in operating expenses for ADS. ADS
decrease in operating expenses was $67,000 or 10.7%. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Selling and marketing costs decreased
$23,000 or 6.7% for the three months ended September 30, 2005 compared to the same period
in 2004. Of this decrease, the Controls Division contributed a decrease of $5,000 or 1.9%.
ADS contributed a decrease of $18,000 or 25.0%. For the nine months ended September 30,
2005, selling and marketing costs decreased $30,000 or 3.1% compared to the same period in
2004. Of this decrease, the Controls Division contributed an increase of $43,000 or 6.0%,
offset partially by a decrease in ADS of $73,000 or 29.3%. The increase in selling and
marketing costs for the Controls Division is primarily due to increased commission expense
for manufacturers&#146; representatives. The decrease in selling and marketing costs for
ADS is primarily due to fewer personnel. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>General and administrative costs
decreased $8,000 or 3.1% for the three months ended September 30, 2005 compared to the
same period in 2004. For the nine months ended September 30, 2005, general and
administrative costs increased $58,000 or 7.5%. Of this decrease for the three months
ended September 30, 2005, the Controls Division contributed an increase of $15,000 or
7.1%, offset partially by a decrease in ADS of $1,000 or 4.5%. Of the increase for the
nine months ended September 30, 2005, the Controls Division contributed an increase of
$121,000 or 19.2%. ADS had an increase for the nine months ended September 30, 2005 of
$8,000 or 11.0%. The primary reason for the G&amp;A increasing costs are due to additional
and heightened costs of being a publicly held company. We expect these costs to
significantly increase over the next 2 years as we prepare for our Sarbanes-Oxley Act
internal controls compliance costs. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Research and development costs
decreased $1,000 or 0.5% for the three months ended September 30, 2005 compared to the
same period in 2004. For the nine months ended September 30, 2005, research and
development costs increased $58,000 or 10.2% compared to the same period in 2004. Of the
decrease for the three months ended September 30, 2005, the Controls Division contributed
an increase of $14,000 or 15.7%, offset partially by a decrease in ADS of $15,000 or
12.8%. For the nine months ended September 30, 2005, the Controls Division contributed an
increase of $60,000 or 22.8%, offset by a decrease in ADS of $2,000 or 0.7%. The increase
in the Controls Division was due to additional lab testing and prototype development
including product testing and certification at nationally recognized test labs. The
decrease in ADS is due to fewer personnel. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B><I>Non-Operating Income
(Loss)</I></B></U> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Non-operating income increased by
$489,000 for the three month period ended September 30, 2005 compared to the same period
for 2004. For the nine months ended September 30, 2005, compared to the same period in
2004, non-operating income increased $491,000. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Gain on the sale of investment
securities increased $544,000 for the three month period ended September 30, 2005 compared
to the same period in 2004. For the nine month period ended September 30, 2005, gain on
sale of investment securities increased $382,000 compared to the same period in 2004.
These increases are a direct result of increased August Technology stock sales. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Interest income increased $33,000
when comparing the three months ended September 30, 2005 to the same period in 2004. For
the nine months ended September 30, 2005, the increase was $82,000 compared to the same
period in 2004. This increase was due to the higher interest rates received on treasury
bills. </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Equity in losses of equity method
investee increased $89,000 for the three months ended September 30, 2005 compared to the
same period in 2004. For the nine months ended September 30, 2005, the loss decreased
$25,000. The increase for the three month period ended September 30, 2005 is due to the
write off of the investment in a la mode, LLC. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B><I>Income Before Income Taxes</I></B></U> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Income before income taxes increased
$467,000, to an income before income tax of $436,000 for the three-month period ended
September 30, 2005 compared to the same period in 2004. For the nine month period ended
September 30, 2005, income before income taxes was $597,000, an increase of $298,000
compared to the same period for 2004. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Controls Division had income
before income tax of $117,000 for the three months ended September 30, 2005 compared to
$97,000 for the same period in 2004, an increase of $20,000. For the nine months ended
September 30, 2005, the Controls Division had income before taxes of $268,000 compared to
$373,000 for the same period in 2004, a decrease of $105,000. This decrease is primarily
due to increased operating expenses. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ADS had net loss before income taxes
of $16,000 for the three months ended September 30, 2005 compared to the net income before
income taxes of $9,000 for same period in 2004. For the nine months ended September 30,
2005, ADS had a loss of $76,000 compared to a loss of $42,000 for the same period in 2004.
These losses are a direct result of decreased sales. </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>LIQUIDITY AND CAPITAL
RESOURCES </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Cash and cash equivalents were
$6,856,000 at September 30, 2005 and $6,619,000 at September 30, 2004. Cash used in
operating activities of $67,000&nbsp;for the nine months ended September 30, 2005 was
primarily a result of our net operating loss adjusted for non-cash charges. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Cash provided by investing activities
was $790,000 for the nine month period ended September 30, 2005 and $265,000 for the same
period in 2004.&nbsp; Proceeds from the sale of investments for the nine months ended
September 30, 2005 increased to $825,000 from $772,000 compared to the same period in 2004
and cash used for the purchase of investments decreased to $0 from $160,000 compared to
the same period in 2004. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Cash used in financing activities was
$331,000&nbsp;and $276,000 for the nine months ended September 30, 2005 and September 30,
2004, respectively. During the nine months ended September 30, 2005 and 2004, the Company
paid aggregate dividends of $387,000 and $385,000, respectively. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our ongoing cash requirements will be
primarily for capital expenditures, acquisitions, research and development and working
capital.&nbsp; Management believes that cash on hand and any cash provided by operations
will be sufficient to meet our cash requirements through at least the next 12 months. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>INV&#146;s primary investments are
600,115 shares of August Technology Corporation and 551,759 shares of PPT Vision, Inc.
both of which are traded on the Nasdaq Stock Exchange. The investment in PPTV is accounted
for under the equity method of accounting. These stocks are subject to fluctuations in
price and could have a negative effect on the liquidity of the Company. </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>FORWARD-LOOKING
STATEMENTS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>This Form 10-QSB 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, but are not limited to, statements regarding the
extent and timing of future revenues and expenses and customer demand, the market value of
our investment securities, future financial condition and availability of capital
resources, changes in worldwide general economic conditions, cyclical capital spending by
customers, the Company&#146;s ability to keep pace with technological developments and
evolving industry standards, worldwide competition, and the Company&#146;s ability to
protect its existing intellectual property from challenges from third parties and other
factors. Any statement that is not based solely upon historical facts, including
strategies for the future and the outcome of events that have not yet occurred, is
considered a forward-looking statement. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>All forward-looking statements in
this 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 differ materially from the Company&#146;s recent results or those projected in
the forward-looking statements are detailed in the Company&#146;s Annual Report on Form
10-KSB for the year ended December&nbsp;31, 2004, filed with the Securities and Exchange
Commission. </FONT></P>



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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Item 3. <A NAME="controls">Controls</A> and
Procedures. </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>As of the end of the period covered
by this report, the Company conducted an evaluation, under the supervision and with the
participation of the principal executive officer and principal financial officer, of the
Company&#146;s disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934 (the &#147;Exchange Act&#148;)). Based
on this evaluation, the principal executive officer and principal financial officer
concluded that the Company&#146;s disclosure controls and procedures are effective to
ensure that information required to be disclosed by the Company in reports that it files
or submits under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in Securities and Exchange Commission rules and forms. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>There was no change in the
Company&#146;s internal control over financial reporting during the Company&#146;s most
recently completed fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the Company&#146;s internal control over financial reporting. </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3><A NAME="part_iiother_information">PART II.&nbsp;&nbsp;&nbsp;OTHER INFORMATION</A> </FONT></H1>


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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Item 6. <A NAME="exhibits">Exhibits</A> </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See Exhibit Index following signature
page. </FONT></P>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3><A NAME="signatures">SIGNATURES</A> </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In accordance with the requirements
of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized. </FONT></P>



<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="95%">
<TR><TD colspan="2"></TD>
<TD COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Electro-Sensors, Inc.</B> </FONT></TD></TR>
<TR><TD colspan="4">&nbsp;</TD></TR><TR><TD colspan="4">&nbsp;</TD></TR>
<TR VALIGN=TOP><TD WIDTH="5%"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Date:</FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>November 14, 2005
</FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By:&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD WIDTH=45%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/&nbsp;Bradley D. Slye
</FONT><HR NOSHADE="NOSHADE" COLOR="BLACK" SIZE="1"></TD></TR>
<TR><TD colspan="3"></TD><TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Bradley D. Slye</FONT></TD></TR>
<TR><TD colspan="3">&nbsp;</TD><TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Chief Executive Officer and
Principal Accounting Officer</FONT></TD></TR>
</TABLE>
<BR>




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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3><A NAME="exhibit">EXHIBIT</A> INDEX </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ELECTRO-SENSORS, INC. </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>FORM 10-QSB FOR
QUARTER ENDED September 30, 2005 </FONT></H1>


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<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE="1"><B>Exhibit</B> </FONT><HR SIZE="1" COLOR="Black"></TD>
<TD  WIDTH=2%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH="88%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"><B>Description</B> </FONT><HR SIZE="1" COLOR="Black"></TD>
</TR>
</TABLE>
<BR>



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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>31.1  </FONT></TD>
<TD WIDTH=2%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Certification
of CEO and CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>32.1  </FONT></TD>
<TD WIDTH=2%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Certification
of CEO and CFO Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 </FONT></TD>
</TR>
</TABLE>
<BR>





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<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>2
<FILENAME>electro054672_ex31-1.htm
<DESCRIPTION>CERTIFICATION OF CEO/CFO PURSUANT TO SECTION 302
<TEXT>
<HTML>
<HEAD>
<TITLE>Electro-Sensors, Inc. Exhibit 31.1 to Form 10-QSB, Dated: September 30, 2005</TITLE>
</HEAD>
<BODY>

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<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="3"><B>Exhibit 31.1</B> </FONT> </P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>CERTIFICATION PURSUANT
TO<BR>SECTION 302 OF THE SARBANES OXLEY-ACT OF 2002 </FONT></H1>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I, Bradley D. Slye, Chief Executive
Officer and Chief Financial Officer of Electro-Sensors, Inc., certify that: </FONT></P>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I
have reviewed this report on Form 10-QSB of Electro-Sensors Inc.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Based
on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements  made, in
light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the small business issuer as
of, and for, the periods presented in this report; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
small business issuer&#146;s other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and
have: </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a)  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Designed
such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material
information relating to the small business issuer, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b)  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Evaluated
the effectiveness of the small business issuer&#146;s disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c)  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Disclosed
in this report any change in the small business issuer&#146;s internal control
over financial reporting that occurred during the small business issuer&#146;s
most recent fiscal quarter (the small business issuer&#146;s fourth fiscal
quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the small business issuer&#146;s
internal control over financial reporting; and </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5.  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
small business issuer&#146;s other certifying officers and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the small business issuer&#146;s auditors and the audit committee
of the small business issuer&#146;s board of directors (or persons performing
the equivalent functions): </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a)  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>All
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the small business issuer&#146;s ability to record, process,
summarize and report financial information; and </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b)  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Any
fraud, whether or not material, that involves management or other employees who
have a significant role in the small business issuer&#146;s internal control
over financial reporting. </FONT></TD>
</TR>
</TABLE>


<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="95%">
<TR><TD colspan="2"></TD>
<TD COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR><TD colspan="4">&nbsp;</TD></TR><TR><TD colspan="4">&nbsp;</TD></TR>
<TR VALIGN=TOP><TD WIDTH="5%"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Date:</FONT></TD>
<TD WIDTH=45%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>November 14, 2005
</FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By:&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/&nbsp;Bradley D. Slye
</FONT><HR NOSHADE="NOSHADE" COLOR="BLACK" SIZE="1"></TD></TR>
<TR><TD colspan="3"></TD><TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Bradley D. Slye</FONT></TD></TR>
<TR><TD colspan="3">&nbsp;</TD><TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Principal Executive Officer
 and Principal Accounting Officer</FONT></TD></TR>
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<TYPE>EX-32.1
<SEQUENCE>3
<FILENAME>electro054672_ex32-1.htm
<DESCRIPTION>CERTIFICATION OF CEO/CFO PURSUANT TO SECTION 906
<TEXT>
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<TITLE>Electro-Sensors, Inc. Exhibit 32.1 to Form 10-QSB, Dated: September 30, 2005</TITLE>
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<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="3"><B>Exhibit 32.1</B> </FONT> </P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>CERTIFICATION PURSUANT
TO<BR>SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</FONT></H1>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In connection with the Quarterly
Report of Electro-Sensors, Inc. (the &#147;Company&#148;) on Form 10-QSB for the quarter
ended September 30, 2005 as filed with the Securities and Exchange Commission (the
&#147;Report&#148;), I, Bradley D. Slye, Chief Executive Officer and Chief Financial
Officer of the Company, certify, pursuant to 18 U.S.C. &sect;1350, as adopted pursuant to
&sect;906 of the Sarbanes-Oxley Act of 2002, that: </FONT></P>

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<TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1) </FONT></TD>
<TD WIDTH=97%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and  </FONT></P></TD>
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<TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2) </FONT></TD>
<TD WIDTH=97%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company.  </FONT></P></TD>
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<TR><TD colspan="2"></TD>
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<TR><TD colspan="4">&nbsp;</TD></TR><TR><TD colspan="4">&nbsp;</TD></TR>
<TR VALIGN=TOP><TD WIDTH="5%"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Date:</FONT></TD>
<TD WIDTH=45%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>November 14, 2005
</FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By:&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/&nbsp;Bradley D. Slye
</FONT><HR NOSHADE="NOSHADE" COLOR="BLACK" SIZE="1"></TD></TR>
<TR><TD colspan="3"></TD><TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Bradley D. Slye</FONT></TD></TR>
<TR><TD colspan="3">&nbsp;</TD><TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Principal Executive Officer
and Principal Accounting Officer</FONT></TD></TR>
</TABLE>
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