“Sailing the way to innovation”

Sensorship Annual Report

Table of ContentsOur Mission.....................................................................................................................................3Our Vision.......................................................................................................................................3Core Values.....................................................................................................................................3Letter to Shareholders......................................................................................................................4Business...........................................................................................................................................5Risks................................................................................................................................................5Financial Statements........................................................................................................................5Product Development......................................................................................................................7Products...........................................................................................................................................8Company Accomplishments............................................................................................................9Looking Forward...........................................................................................................................10Board of Directors.........................................................................................................................11

Our Mission

Our mission is to be the leading manufacturer of sensors of the Industry by selling the highest quality sensors. Our success is measured through customer satisfaction and amount of market share.

Our Vision

Our company will provide leading, quality products and service through dedicated employees and innovative efforts. We aim to create strong mutual relationships with our customers by providing excellence in both product and service in the sensor industry. Providing competitive edge to our customers by selling them highest quality sensors.

Core Values

Excellence: We value and encourage creativity, thoughtfulness and ambition. We strive to be the best and most innovative company and this is only accomplished through a commitment to excellence.

Quality: We value doing things right and performing our tasks the right way the first time, every time.

Leadership: We value and encourage leadership and accountability. It not only harvests strong employees but a strong company culture overall.

Teamwork: We value teamwork amongst all members of the organization, we are only as strong as our weakest link and our success is tied to every single member of this company as we are only successful due to the collective hard work of our employees.

Letter to Shareholders

To Our Shareholders,

Fiscal year 2021 was of great success, and we hope to strive for improved results for the future. In the past three years we’ve seen our profits grow an astounding 69% from about $28 million in 2019 to $47.37 million this past year. With nearly $400 million in sales, we aim to increase our shareholder wealth through improvements to increase contribution margin, advancing our forecasting technology, and lowering product cost. Due to our economic success we will continue to pay dividends into the foreseeable future as well as retiring some of our old debts.

After the breakup of the monopolistic industry, we were able to bring our company to a stable, profitable state, all while continuing to provide quality and innovative customer products and service. It is a testament to our company’s strength that we were able to do this. We will continue to be profitable and we will continue to grow.

With our current retained earnings of $149.4 million, we have a strong standpoint to be able to expand our operations with low risk and have the potential to grow beyond our current position. It will allow us to pay off some of our debts and at the same time it will allow us to reinvest in the company and become even more innovative than we were in the past. Our position is allowing for a better Sensorship which means better products and bigger profits.

Our primary objective is to maximize returns to shareholders. Based on our company’s current position, it is possible to achieve these growths and continue to do so in the future. We will achieve this growth through our commitment to excellence and through our commitment to building an even stronger and smarter Sensorship team.

We spend an inordinate amount of time developing leadership and our talented employees. Due to our belief in teamwork and commitment our commitment to innovation that is something that will never stop. It’s what allows us to grow, adapt and succeed in the competitive market. You can expect more dedication more growth and more innovation as this team takes Sensorship into the future.

Sincerely,

Eric Walton

Chairman and CEO

BusinessSensorship operates within the Sensors Industry, NAICS code 334413. We manufacturer

sensors and sell them to other manufacturers who in turn sell their products to consumers.

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SensorshipAvarage

Year

Stock Price

RisksA majority of our products are within the Size, Performance, and High end. Size,

Performance, and High end markets are the fastest growing and costly to develop.

Financial Statements

Income StatementFor the Year Ended December 31,

2021 2020 2019(In millions)

Sales   $

397,520   $

355,590   $

262,455

Cost of Goods Sold   $(237,36

1)   $(199,34

6)   $(143,39

7)Gross Revenue   $   $   $

160,159 156,244 119,058 Operating Expenses

Inventory Carry $

(4,456)   $

(3,758)   $

(3,567)  

Depreciation $(22,96

0) $(22,26

7) $(15,40

0)Research and

Development $

(3,822)   $

(2,152)   $

(4,553)  

Marketing $(12,50

0) $(13,40

0) $(10,80

0)

Selling $(16,50

0)   $(16,50

0)   $(14,40

0)  

Administration $

(6,220)   $

(4,653)   $

(3,853)  

Net Operating Expenses   $

(66,458)   $

(62,730)   $

(52,573)

Other Expense   $

(3,520)   $

(5,250)   $

(9,040)

EBIT   $

90,181   $

88,264   $

57,445

Interest Expense $

(15,812) $

(18,192) $

(13,474)

Taxes   $

(26,029)   $

(24,525)   $

(15,390)

Profit Sharing   $

(967)   $

(911)   $

(572)

Net Profit   $

47,373   $

44,636   $

28,009

For the Year Ended December 31,2021 2020 2019

Assets (In thousands)Current Assets            

Cash $

47,937 $

69,421 $

59,868

Accounts Receivable   $

32,673   $

29,227   $

21,572

Inventory   $

37,132   $

31,315   $

29,724

Total Current Assets   $

117,742   $

129,963   $

111,164 Fixed Assets

Plant & Equipment $   $   $  

344,400 334,000 251,800 Accumulated

Depreciation $(152,133

)   $(129,173

)   $(106,907

)  

Total Fixed Assets   $

192,267   $

204,827   $

144,893

Total Assets   $

310,009   $

334,790   $

256,057              Liabilities & EquityCurrent Liabilities            

Accounts Payable $

19,987 $

16,515 $

13,370

Current Debt $

10,400   $

30,000   $

39,050  

Total Current Liabilities $

30,387 $

46,515 $

52,420 Long Term Liabilities            

Bonds Payable   $

113,750   $

113,750   $

73,750 Total Long Term Liabilities  

$ 144,137  

$ 160,265  

$ 126,170

Stockholder's Equity            

Common Stock $

16,466 $

18,360 $

18,360

Retained Earnings $

149,405   $

156,163   $

111,527  Total Stockholder's Equity  

$ 165,871  

$ 174,523  

$ 129,887

Total liabilities and Stockholder's Equity  

$ 310,008  

$ 334,788  

$ 256,057

Product Development

We believe in giving our customers the best products possible catering to their every need. It is because of this belief that research and development has become one of the key factors in our company’s success. We work intensely together on researching what the customer wants and how to provide it to them. Not only do we consult amongst ourselves but we consult experts who can an accurate review of our decisions. Once these reviews are completed we then do all

we can to develop the products quickly and efficiently because we pride ourselves on our innovation and our ability to introduce it to the customers.

Products

We focus our products in three core segments. These segments include the High End, Performance, and Size segments. However we desire to cater to all customers and because of this we also cater to other markets such as the Low End and Traditional segments for those who are a little more sensitive to price. Our High End products Apple and Avatar are the top of the line in the industry providing the customer with everything it could possibly want. These products operate on a superior level all while being extremely reliable and not being too bulky in size. Our Performance products Adam and Aft are built to last they are the toughest and most reliable products on the market. Agape and Area leaves our consumers with a highly efficient product with all they could possibly desire in the most compact way possible.

Company Accomplishments

Through TQM initiatives, we reduced our R&D cycle time by 40%, labor costs by 14%, material costs by 11.8%, and administrative costs by 60% all while increasing demand by 14.4%.

With quality Human Resources, we were able to achieve a turnover rate of 6.4%, and increase our worker’s productivity index to 131.5%.

Through successful usage of our R&D department and close monitoring of customers wants and desires we were able to achieve the highest customer survey scores in every market segment with the exception of low end.

In the past 8 years, we have managed to achieve the highest cumulative total profit of $178 million, in the sensor industry.

We have successfully become the industry leader which is evidenced by our market share of 25.47%.

We achieved the highest ROA in the industry at 15.3% which shows that we are the most efficient company when it comes to utilizing our asset base.

As well as having the highest ROA we have also achieved the highest ROE at 28.6%. This indicates that we are the best at turning our shareholders investments into profits.

Our stock prices have reached a closing value of $226.63, almost twice the value of the other leading companies.

Looking Forward

We will focus on increasing market share in low and traditional markets. Increase capacity on Able and Adam products.

Board of Directors

Eric Walton; Chief Executive OfficerGraduated from York College of Pennsylvania with a Bachelor’s degree in accounting. After graduating he decided to take a position as a staff accountant at a then up and coming Sensorship. After several years of dedicated employment and hard work Eric was incrementally

moved up in the company to become its eventual and current CEO.

Michael Gable; Chief Operations Officer Graduated from York College of Pennsylvania with a Bachelor’s degree in Marketing. Upon graduation, he was offered a position as a marketing representative for Sensorship. Through several promotions and marketing positions held in the past fifteen years, Michael was offered his current position of Chief Operations Officer in 2012.

Sarah Bradley; Chief Financial OfficerGraduated from Harrisburg Area Community College(HACC) with a Business Administration

Associate in 2008 and transferred to York College of Pennsylvania(YCP), obtaining a Bachelors of Accounting in 2013. Was offered sales forecast analyst position within our company upon graduating YCP and accepted. After five years and several promotions, Sarah received her current position as Chief Financial Officer.