Form DEFM14A ELECTRO SENSORS INC

Filed by a party other than the registrant  ☐

Check the appropriate box:

 

June 25, 2026

To the Shareholders of Electro-Sensors, Inc.:

You are cordially invited to attend a special meeting (the “Special Meeting”) of the shareholders of Electro-Sensors, Inc. (the “Company”), which we will hold at 2:00 p.m. Central Time, on July 21, 2026. The Special Meeting will be a virtual meeting of shareholders, which will be conducted via a live webcast. You will be able to participate in the virtual Special Meeting, vote and submit your questions via the live webcast by visiting www.virtualshareholdermeeting.com/ELSE2026SM. Formal notice of the Special Meeting, a proxy statement, and a proxy card accompany this letter.

At the Special Meeting, holders of our common stock, par value $0.10 per share (“Common Stock”), will be asked to consider and vote upon a proposal to adopt and approve an Agreement and Plan of Merger, dated as of April 20, 2026 (as it may be amended from time to time, the “Merger Agreement”), by and among the Company, steute Industrial Controls, Inc., a Connecticut corporation (“Parent”), and Steute Burwell, Inc., a Minnesota corporation and wholly-owned subsidiary of Parent (“Merger Sub”), as amended by an amendment thereto, dated June 22, 2026, by and among the parties thereto. Pursuant to the Merger Agreement, Merger Sub will merge with and into the Company, whereupon the separate corporate existence of Merger Sub will cease and the Company will continue its corporate existence under Minnesota law as the surviving corporation in the Merger and a wholly-owned subsidiary of Parent (the “Merger”). If the Merger is completed, then each share of our Common Stock will be converted into the right to receive $7.75 in cash (before giving effect to any required tax withholdings and without interest).

The board of directors of the Company (the “Board”) formed a special committee (the “Special Committee”) consisting of two independent directors of the Company, together with the Company’s President serving in a non-voting management advisory capacity, to evaluate alternatives and, if appropriate, negotiate the terms of a transaction (as described more fully in the enclosed proxy statement). The Board authorized the Special Committee to independently evaluate strategic alternatives, determine whether any proposed transaction was advisable and in the best interests of the Company, and make recommendations to the Board regarding any proposed transactions. Following review and consideration of the Special Committee, advice from the Company’s legal and financial advisors, and the factors described in the proxy statement, the Board has unanimously (a) determined that the Merger Agreement and the Merger are advisable, and in the best interests of, the Company, (b) approved the Merger Agreement and the Merger, and (c) resolved to recommend that the Company’s shareholders vote “FOR” the proposal to adopt the Merger Agreement. The Board recommends unanimously that you vote “FOR” the adoption of the Merger Agreement.

Pursuant to rules of the Securities and Exchange Commission, you also will be asked to vote at the Special Meeting on (i) a non-binding, advisory proposal to approve compensation that will or may become payable to our named executive officer in connection with the Merger, as described in the proxy statement, and (ii) a proposal to adjourn the Special Meeting from time to time, to a later date or dates, if necessary or appropriate, under certain circumstances, including for the purpose of soliciting additional proxies in favor of the proposals described in the proxy statement, in the event the Company does not receive the requisite shareholder vote to approve such proposals or establish a quorum. The Board also recommends unanimously that the shareholders of the Company vote “FOR” these proposals.

The enclosed proxy statement describes the Merger Agreement, the Merger and related agreements and provides specific information concerning the Special Meeting. In addition, you may obtain information about us from documents filed with the Securities and Exchange Commission. We urge you to read the entire proxy statement, including the annexes, carefully, as it sets forth the details of the Merger Agreement and other important information related to the Merger.

Your vote is very important, regardless of the number of shares of Common Stock you own. A majority vote of all the shares of Common Stock entitled to vote at the Special Meeting is required to approve the Merger

Agreement and consummate the transactions contemplated thereby, including the Merger. If you fail to vote on the Merger Agreement, the effect will be the same as a vote against the adoption of the Merger Agreement.

If you own shares of record, you will find enclosed a proxy card and an envelope in which to return the card(s). Whether or not you plan to attend this meeting, please sign, date and return your enclosed proxy card(s), or vote over the phone or Internet, as soon as possible so that your shares can be voted at the meeting in accordance with your instructions. You can revoke your proxy before the Special Meeting and issue a new proxy as you deem appropriate. You will find the procedures to follow if you wish to revoke your proxy in the enclosed proxy statement.

If you hold your shares in “street name” through a broker, bank or other nominee, you should follow the directions provided by your broker, bank or other nominee regarding how to instruct your broker, bank or other nominee to vote your shares.

The Board has fixed the close of business on June 10, 2026 as the record date for the determination of shareholders entitled to notice of and to vote at the Special Meeting. All shareholders are cordially invited to attend the virtual Special Meeting at www.virtualshareholdermeeting.com/ELSE2026SM. If you have any questions regarding the completion of the enclosed proxy card, please call the Company at (952) 930-0100.

NOTICE: Please retain a copy of the 16 Digit Control Number that is printed on your proxy card as you will need it to enter the virtual Special Meeting as a verified shareholder.

BY ORDER OF THE BOARD OF DIRECTORS,

 

David L. Klenk

President

 

Minnetonka, Minnesota

Dated: June 25, 2026

 

Notice is hereby given that the Special Meeting of Shareholders of Electro-Sensors, Inc. (the “Company”) will be held on Tuesday, July 21, 2026 at 2:00 p.m. Central Time. The Special Meeting will be a virtual meeting of shareholders, which will be conducted via a live webcast. You will be able to participate in the virtual Special Meeting, vote and submit your questions via the live webcast by visiting www.virtualshareholdermeeting.com/ELSE2026SM for the following purposes:

Accompanying this Notice of Special Meeting is a Proxy Statement, Form of Proxy and the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

The Board of Directors has fixed the close of business on June 10, 2026 as the record date for the determination of shareholders entitled to notice of and to vote at the Special Meeting of Shareholders. All shareholders are cordially invited to attend the virtual Special Meeting at www.virtualshareholdermeeting.com/ELSE2026SM.

To ensure that we achieve a quorum, however, whether or not you plan to attend the Special Meeting webcast, the Board of Directors requests that you either (1) promptly complete, sign, date and return the enclosed proxy card solicited by the Board of Directors, or (2) vote electronically following the process described in this proxy statement or in other materials you receive. The proxy is revocable and will not be used if you attend the Special Meeting and vote in person or otherwise provide notice of your revocation. If you have any questions regarding the completion of the enclosed proxy card, please call the Company at (952) 930-0100.

NOTICE: Please retain a copy of the 16 Digit Control Number that is printed on your proxy card as you will need it to enter the virtual Special Meeting as a verified shareholder.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:

The Proxy Statement, Form of Proxy, and Annual Report on Form 10-K are available at www.proxyvote.com

BY ORDER OF THE BOARD OF DIRECTORS,

 

David L. Klenk

President

 

Minnetonka, Minnesota

Dated: June 25, 2026

The following questions and answers address briefly some questions you may have regarding the Special Meeting, the Merger Agreement and the Merger. These questions and answers may not address all questions that may be important to you as a shareholder of the Company. It is important that you also refer to the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to or incorporated by reference in this proxy statement.

This proxy statement, which you should read carefully, contains important information about the Merger, the Merger Agreement, the Special Meeting and the matters to be voted on at the Special Meeting. The enclosed materials allow you to submit a proxy to vote your shares of our Common Stock without attending the Special Meeting and to ensure that your shares of our Common Stock are represented and voted at the Special Meeting.

You have been identified as a shareholder of the Company as of the close of business on the Record Date and are invited to attend the Special Meeting to vote on the proposals described in this proxy statement. However, you do not need to attend the Special Meeting to vote your shares. See below under “How do I vote?”

Under the Merger Agreement, either the Company or Parent may terminate the Merger Agreement if the Merger has not been completed on or before the End Date, provided that (i) this termination right is not available to a party whose actions or failure to act materially contributed to the failure to satisfy the conditions on or before the End Date, and (ii) the End Date may be extended by the parties under certain circumstances as described in this proxy statement. See “The Merger Agreement – Termination” beginning on page 51.

You should read “The Merger – Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger” beginning on page 20 for a discussion of the factors that the Special Committee and the Board considered in deciding to recommend and/or approve, as applicable, the Merger Agreement. See also “The Merger – Interests of the Company’s Directors, Officers and Certain Beneficial Owners in the Merger” beginning on page 33.

Following the consummation of the Merger, the registration of the Common Stock and our reporting obligations with respect to the Common Stock under the Exchange Act will be terminated upon application to the SEC. In addition, upon the consummation of the Merger, the Common Stock will no longer be listed on any stock exchange or quotation system, including Nasdaq.

You will be able to attend the Special Meeting via webcast and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/ELSE2026SM. You also will be able to vote your shares online by attending the Special Meeting webcast. You must have your 16 Digit Control Number found on your proxy card or voting instruction form to vote or ask questions at the Special Meeting. If you do not have a 16 Digit Control Number, you can attend the Special Meeting as a guest. However, you will not be able to vote or ask questions.

To participate in the Special Meeting, you will need to review the information included on your proxy card or voting instruction form.

The virtual Special Meeting will begin promptly at 2:00 p.m. Central Time. We encourage you to access the meeting prior to the start time leaving ample time to check in.

Shareholder of Record: If you hold your shares of Common Stock as a record holder, you can vote your shares without attending the Special Meeting in the following ways:

Shares Registered in Street Name: If you hold your shares of common stock in “street name,” which means your shares are held of record by a broker, bank or other nominee, you will receive instructions from your broker, bank

or other nominee on how to vote your shares without attending the Special Meeting. Your broker, bank or other nominee will allow you to deliver your voting instructions over the internet and may also permit you to vote by telephone. In addition, you may submit your voting instructions by completing, dating and signing the voting instruction form that was included with this proxy statement and promptly returning it in the enclosed postage-paid envelope.

Whether or not you plan to attend the virtual Special Meeting, we urge you to vote your shares by completing and returning the proxy card or voting instruction form as promptly as possible, or by voting by telephone or via the internet, prior to the Special Meeting to ensure that your shares will be represented at the Special Meeting if you are unable to attend.

If you hold your shares in “street name,” please comply with the deadlines for voting provided by the broker, bank or other nominee that holds your shares.

Please note that if you hold your shares in “street name” and you have instructed a broker, bank or other nominee to vote your shares, the above-described options for revoking your voting instructions do not apply, and instead you must follow the instructions received from your broker, bank or other nominee to revoke your voting instructions.

The Record Date for shareholders entitled to vote at the Special Meeting is earlier than the date on which the Merger will be consummated. So, if you transfer your shares of Common Stock after the Record Date but before the Special Meeting, you will have transferred your right to receive the Merger Consideration in the Merger, but retained the right to vote at the Special Meeting.

Electro-Sensors, Inc.

Attention: Gloria Grundhoefer

Email: [email protected]

Telephone: (952) 930-0100

You may also review the additional information described in “Where You Can Find Additional Information” below.

This proxy statement, and the documents incorporated by reference in this proxy statement, include “forward-looking statements” that reflect our current views as to the expected completion and timing of the Merger and other information relating to the Merger. These statements can be identified by the fact that they do not relate strictly to historical or current facts. There are forward-looking statements throughout this proxy statement, including under the headings, among others, “Summary,” “Questions and Answers About the Special Meeting and the Merger,” “The Merger,” and “The Special Meeting,” and in statements containing the words “aim,” “anticipate,” “are confident,” “estimate,” “expect,” “will be,” “will continue,” “will likely result,” “project,” “intend,” “plan,” “believe” and other words and terms of similar meaning in conjunction with a discussion of future operating or financial performance or other future events. You should be aware that forward-looking statements involve known and unknown risks and uncertainties. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that the actual results or developments we anticipate will be realized, or even if realized, that they will have the expected effects on the business or operations of the Company. These forward-looking statements speak only as of the date on which the statements were made and we undertake no obligation to update or revise any forward-looking statements made in this proxy statement or elsewhere as a result of new information, future events or otherwise, except as required by law. In addition to other factors and matters referred to or incorporated by reference in this document, we believe the following factors could cause actual results to differ materially from those discussed in the forward-looking statements:

See “Where You Can Find Additional Information” beginning on page 64. Many of the factors that will determine our future results are beyond our ability to control or predict. In light of the significant uncertainties inherent in the forward-looking statements contained herein, readers should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date hereof. We cannot guarantee any future results, levels of activity, performance or achievements.

The terms of the Merger are the result of arm’s length negotiations between the Company and the Parent. The following chronology summarizes key events and contacts that led to the signing of the Merger Agreement. It does not purport to catalogue every conversation among the Board, Special Committee, members of our management, the Parent, our advisors and other parties with respect to the Merger.

Electro-Sensors has been in business since 1968 and its shares have been publicly traded on the Nasdaq stock exchange since 1981. As part of the regular and continuous evaluation of our business operations and plans, our Board and senior management regularly consider a variety of business opportunities and strategic options in a continued effort to improve the business and enhance shareholder value.

Over the past several years, the Board and management regularly evaluated the Company’s strategic direction and opportunities to enhance shareholder value. In light of industry and market conditions, our business and financial performance, our lack of material organic growth, the challenges and costs associated with operating as a public company at our small scale, the relatively limited trading volume and liquidity of our stock, and the concentration of a majority of our common stock being owned by five members of the Peterson family, our Board increasingly focused on evaluating a broad range of strategic and value-maximizing alternatives available to the Company.

As part of this process, the Board formed a business development committee comprised of independent directors and a non-voting member of management to assist in evaluating strategic opportunities and corporate development initiatives. Over an extended period of time, the committee met extensively with management and outside advisors to review and assess a variety of potential alternatives, including organic growth initiatives, strategic partnerships, acquisitions, merger opportunities, and other transactions that could enhance shareholder value.

In connection with this ongoing strategic review process, the Company engaged financial advisors at various times to assist in identifying, evaluating and assessing potential strategic opportunities and transaction structures. The Board and the business development committee also considered unsolicited inquiries received from unrelated third parties expressing interest in strategic relationships or potential transactions involving the Company. In evaluating these opportunities, the Board and the committee considered numerous factors, including strategic fit, potential value to shareholders, execution risk, financing certainty, impacts on customers and employees, and the Company’s prospects as an independent public company.

This strategic process to grow the Company and create shareholder value led to the June 13, 2022 announcement of a proposed merger with Mobile X Global, and upon the inability of the two parties to complete the Mobile X merger, subsequently continued the Company’s strategic initiative journey ultimately arriving at the recently announced proposed merger with the Parent.

On June 13, 2022, the Company issued a press release announcing a proposed merger with Mobile X Global. The proposed merger would have combined the companies into Mobile X Global, Inc., a new wireless brand, and the combined entity would continue to trade on the Nasdaq Capital Market under the ticker symbol “MOBX” upon closing of the merger, which was expected in the third quarter of 2022.

On January 30, 2023, the Company issued a press release announcing termination of the proposed Mobile X Global merger. A condition to closing of the merger transaction was the consummation of equity financing with minimum gross proceeds of $20.0 million, which the parties anticipated would be a PIPE investment (private investment in public equity). The financing necessary to consummate the merger was pursued but was not available due to difficult conditions in the financial markets, including the markets for PIPE investments.

Following the termination of the Mobile X Global Merger, the Board expanded the role of the business development committee, which subsequently functioned as the Special Committee in connection with evaluating strategic alternatives and the proposed transaction. The Special Committee consisted solely of independent directors as voting members, including Board Chairman and Nominating Committee Chair Joseph Marino, and Audit and Compensation Committee Chair Scott Gabbard, with President David Klenk participating solely in a non-voting management advisory capacity at the direction of the Special Committee. The Special Committee was authorized to independently explore and evaluate business development and other strategic alternatives for Electro-Sensors, retain legal and financial advisors, negotiate transaction terms, and determine whether any proposed transaction was advisable and in the best interests of the Company.

Management participated in portions of the strategic review process at the direction of the Special Committee in order to provide operational, financial, industry and transactional information and to assist with due diligence, transaction evaluation and negotiations. Only the independent voting members of the Special Committee participated in determining whether to recommend any proposed transaction to the Board.

On February 2, 2023, the Board held a meeting to discuss the termination of the Mobile X merger agreement, which was effective on January 30, 2023. The Special Committee was tasked with continuing to evaluate strategic alternatives.

On November 1, 2023, the Board engaged Lake Street to provide investment banking and advisory services to the Company in connection with one or more possible transactions being considered by the Company.

Throughout the remainder of 2023 and until August 2024, the Special Committee worked closely with Lake Street to identify and evaluate strategic opportunities, while also responding to incoming inquiries from parties interested in having discussions with the Company. During this process, Lake Street and the Company evaluated more than 19 potential projects. Following extensive review and analysis, the Special Committee and management determined that none of the projects under consideration was sufficiently attractive to warrant further pursuit at that time.

On August 15, 2024, after review by the Special Committee, the agreement with Lake Street was terminated.

On September 16, 2024, the Board engaged a different banker to evaluate certain strategic alternatives for the Company. The process led to the evaluation of one potential project that, upon considerable investigation, was ultimately not pursued. The agreement with such banker subsequently expired.

Throughout the remainder of 2024 and into 2025, the Special Committee continued to actively evaluate strategic alternatives and value-enhancing opportunities available to the Company. During this period, the Company received and evaluated various unsolicited inquiries and indications of interest from third parties regarding potential strategic transactions involving the Company. The process led to the receipt of multiple letters of intent (“LOIs”) and preliminary proposals from various parties, indicating their interests in a potential strategic transaction with the Company.

In connection with this ongoing strategic process, the Special Committee carefully evaluated each opportunity with the assistance of management and outside advisors, considering numerous factors including strategic fit, the potential to create shareholder value, transaction structure, execution and financing risk, regulatory constraints, possible impacts on our customer base, employees and business operations.

As the strategic review process evolved and the number of active discussions increased, in October 2025, the Company reengaged Lake Street to assist the Special Committee and the Board in organizing and managing the process, evaluating strategic alternatives and structures, and facilitating discussions with interested parties. Lake Street assisted the Company in reviewing the relative terms and transaction attributes associated with the various opportunities under consideration and in coordinating communications and negotiations with interested parties.

Over the course of this process, the Special Committee and Lake Street reviewed numerous potential strategic opportunities involving both financial sponsors and strategic counterparties. The Special Committee regularly met with management and advisors to review developments in the process, evaluate competing proposals and alternatives, and assess whether the opportunities under consideration were likely to enhance shareholder value.

Beginning in approximately 2014, representatives of Battery Ventures, a global, technology-focused private equity firm, periodically contacted the Company to discuss developments in the industrial automation sector and Battery Ventures’ interest in investments within the industrial technology and automation industries. These discussions were informal and exploratory in nature and did not involve substantive discussions regarding a potential acquisition transaction involving the Company. Over time, Battery Ventures continued to monitor developments involving the Company and the broader industrial automation market, but the parties maintained only limited intermittent contact until September 2025.

On September 10, 2025, at the request of Battery Ventures, a member of management held a call with representatives of Battery Ventures. During the call, Battery Ventures expressed for the first time a specific interest in exploring a potential transaction involving the Company, including a desire to engage in conversations regarding a potential merger. Battery Ventures discussed its investment strategy within the industrial technology sector and indicated that it believed Electro-Sensors’ business, products and customer relationships could be complementary to Battery Ventures’ broader industrial automation investment platform. Management advised Battery Ventures that any discussions regarding a potential transaction would be subject to further review and consideration by the Board and the Special Committee.

On September 29, 2025, representatives of Lake Street informed management that Battery Ventures had separately contacted Lake Street regarding a potential transaction involving the Company. Battery Ventures noted its awareness of Lake Street’s prior advisory relationship with the Company and expressed interest in discussing a potential for an all-cash, going private acquisition transaction. During these discussions, Battery Ventures explained that it had recently acquired steute Technologies GmbH & Co. KG, a Germany-based industrial automation and sensor technology business, as a part of its strategy to expand its industrial technology platform, and believed that Electro-Sensors could represent a complementary strategic addition within that platform.

On October 7, 2025, management followed up with Lake Street on their previous call regarding Battery Ventures. Management explained the Company’s previous interactions with Battery Ventures, including their newly indicated interest in acquiring the Company. Lake Street expressed their interest in representing the Company in the process, including in a financial advisory role and to provide a fairness opinion should the need arise.

On October 8, 2025, management updated the Special Committee on the recent Battery Ventures’ contact and Lake Street’s interest in representing the Company as a financial advisor for a potential transaction with Battery Ventures. The Special Committee discussed and proposed executing a non-disclosure agreement (“NDA”) with Lake Street.

On October 10, 2025, the Company signed an NDA with Lake Street to continue conversations regarding a potential relationship for financial advisory services.

On October 17, 2025, management communicated to the Special Committee regarding the status of current potential corporate development projects, and the progress on negotiations for entering into an engagement agreement with Lake Street. Further, management invited the Special Committee to forward questions and comments in advance of the full Board meeting that was scheduled to occur on October 22, 2025.

On October 22, 2025, the Board held a meeting with management to discuss recent corporate development activities and review the projects currently being evaluated. The Board discussed engaging Lake Street to evaluate potential projects and assist with the transaction process. The Board discussed specific projects that were currently under evaluation.

On October 23, 2025, management held a meeting with Battery Ventures and Lake Street to discuss Battery Ventures’ interest in the industrial technology market and their strategy to further build upon their recent acquisition of steute Technologies in Germany. Battery Ventures emphasized their desire to preserve and expand Electro-Sensors’ existing product offerings, customer relationships and industrial monitoring platform within steute’s broader automation strategy.

On October 28, 2025, the Board met to further discuss engaging Lake Street as its financial advisor in connection with the proposed transaction. The Board approved an engagement letter between the Company and Lake Street.

On October 31, 2025, management met with Lake Street to coordinate and evaluate the projects currently in process. Lake Street agreed to facilitate and coordinate the transaction process, communicate with active interested parties, and solicit final proposals. Priorities of the Company included maximizing shareholder value, appropriate transaction structure, understanding and minimizing risks, controlling expenses, considering needs of customers and employees, and the probability of closing the transaction.

During the strategic review process, the Company, with the assistance of Lake Street, evaluated multiple potential strategic opportunities involving both strategic and financial counterparties. By November 2025, discussions had narrowed to four active proposals involving differing transaction structures, strategic rationales, economics and execution profiles. The four active opportunities under consideration included:

The Special Committee, together with management and its advisors, evaluated the proposals based upon numerous factors, including potential value to shareholders, transaction structure, execution risk, financing certainty, expected timing, strategic fit, anticipated impact on customers and employees, regulatory considerations, and the likelihood of consummation.

During this period, Lake Street engaged in discussions with the counterparties, coordinated the exchange of information and proposals, and assisted the Company in evaluating the relative risks and benefits associated with each proposal.

Certain proposals involved significant execution uncertainties, including financing contingencies, stock consideration subject to market volatility, substantial integration complexity, or other structural risks. In contrast, the Battery Ventures proposal contemplated an all-cash transaction with no financing contingency and was supported by Battery Ventures’ existing industrial technology investment platform, including its ownership of steute Technologies.

Following additional discussions and refinement of the competing proposals, the Special Committee concluded that the Battery Ventures proposal presented the most favorable combination of shareholder value creation, transaction certainty, strategic alignment and likelihood of consummation reasonably available to the Company and its shareholders.

On December 2, 2025, management held a call with Battery Ventures and Lake Street to discuss the parties’ acceptance of the non-binding Battery Ventures proposal and agreed to proceed with additional due diligence and negotiation of a potential transaction on the basis of the non-binding proposal previously submitted by Battery Ventures. The parties discussed beginning due diligence and establishing a virtual data room to share information. Management shared a working group list of key participants with related contact information.

On December 10, 2025, management held a call with Boulay PLLP, the Company’s auditors, to discuss the accounting treatment of the Battery Ventures proposal.

On December 11, 2025, management held a meeting with Lake Street to discuss the due diligence process.

On December 17, 2025, the Board held a meeting to discuss recent activities following the signing of the non-binding Battery Ventures proposal, including due diligence and the initial drafts of the Merger Agreement.

On January 2, 2026, management held an introductory call with Martin Kunz, the incoming chief executive officer of steute Technologies.

On January 7, 2026, representatives from Battery Ventures, steute Technologies, Lake Street, and the Electro-Sensors leadership team met in Minnetonka, MN for an introductory meeting. The Battery Ventures team toured the Electro-Sensors facility and received technology demonstrations on various Electro-Sensors products. The team then convened for presentations by Battery Ventures and the Electro-Sensors team members.

On January 22, 2026, the Company acknowledged the extension of the Battery Ventures exclusivity period by 15 days until January 31, 2026, per the terms of the letter of intent. The extension was provided for in the Battery Ventures proposal and was automatic so long as the parties were working in good faith on the merger process.

On January 28, 2026, the Board held a meeting. Management provided an update on current activities related to the Battery Ventures project, including highlights from the due diligence process and an overview of the site visit on January 7, 2026. Thereafter, Holland & Hart led a discussion on legal matters associated with the proposed merger.

On January 30, 2026, the Company agreed to extend the Battery Ventures exclusivity period from January 31, 2026 to February 15, 2026 as the parties continued to engage in negotiations and transaction documentation discussions.

On February 11, 2026, management held a meeting with Holland & Hart regarding the ESOP plan. It was recommended the ESOP Trustee retain separate legal counsel to advise the Trustee on ESOP matters.

On February 13, 2026, management held an introductory call with Ms. Wendy Gilligan, candidate for ESOP Trustee counsel. The Trustee subsequently retained Gilligan Benefits Law as separate independent legal counsel to advise the Trustee on ESOP-related matters in connection with the proposed transaction.

On February 20, 2026, management held a call with Martin Kunz, the CEO of steute Technologies to discuss preliminary integration matters, including the steute integration philosophy and business tools used to assist with an effective integration.

On February 25, 2026, management held a meeting with Special Committee member Scott Gabbard to discuss the status of the Merger Agreement. Key remaining items to negotiate included required cash on hand at closing, transaction expenses, the Company’s current outstanding sales tax exposure, and transaction-related termination fees.

On February 27, 2026, management held a meeting with Special Committee member Joseph Marino to discuss the status of the Merger Agreement. Key remaining items to negotiate included the cash at closing, transaction expenses, sales tax exposure, and transaction-related termination fees.

On March 5, 2026, the Board and Special Committee held a meeting with Lake Street and Holland & Hart to discuss the status of negotiations with Battery Ventures and the drafting of the Merger Agreement. Representatives from Lake Street provided a review of the economic terms of the Agreement, and Holland & Hart discussed legal matters provided for in the Agreement. Following the discussion, the Special Committee authorized Lake Street to continue negotiating the matter with Battery Ventures, and reiterated that all remaining key terms would be considered in their entirety before agreeing to any transaction.

During the period between March 9, 2026 and March 19, 2026, management and representatives of Holland & Hart and Lake Street continued discussions and negotiations with Battery Ventures and its advisors regarding the proposed transaction, including closing cash requirements, transaction-related liabilities, allocation of transaction-related risks and other economic and contractual terms reflected in the merger agreement and related transaction documentation.

On March 19, 2026, the Board and the Special Committee met with representatives of Holland & Hart and Lake Street to review the status of negotiations with Battery Ventures. Representatives of Lake Street and Holland & Hart reiterated to the Board and the Special Committee the principal business, financial and legal considerations relating to the ongoing negotiations, including matters relating to required closing cash balances, transaction expenses and potential sales tax exposure.

The Board and the Special Committee discussed the proposed transaction in light of the financial strength of Battery Ventures, transaction certainty, the overall transaction structure, the contractual protections being negotiated and the alternatives reasonably available to the Company. During these discussions, the Board and the Special Committee directed management and its advisors to obtain improvements to the overall economic and contractual terms of the proposed transaction.

On March 31, 2026, management updated the Board and the Special Committee regarding the status of negotiations with Battery Ventures. Management and the Company’s advisors reported that the parties had reached agreement on certain transaction terms, including a minimum cash balance required to be maintained by the Company prior to closing, subject to specified adjustments for permitted transaction expenses, and the termination fee payable by Parent under certain specified circumstances.

After considering the transaction terms and the proposed merger as a whole, the all-cash consideration, the absence of any financing contingency, the certainty of the transaction, the negotiated contractual improvements and the past and current alternatives reasonably available to the Company, the Special Committee determined that the proposed transaction continued to represent the most favorable alternative reasonably available to the Company and its shareholders.

On April 1, 2026, the Special Committee held a call with the Board, Lake Street, and Holland & Hart to discuss the merger negotiations. They discussed that the parties have substantially agreed to the business terms, including the cash and expense matters, and increased termination fee due to the Company under certain circumstances. The Special Committee directed Holland & Hart to work with Battery Ventures’ counsel to finalize the Merger Agreement for review by the Special Committee.

On April 7, 2026, management distributed Voting Agreements to each Peterson shareholder and on April 19, 2026, the Board received fully executed Voting Agreements from all five Peterson shareholders.

On April 20, 2026, the Special Committee held a meeting with the Board and Holland & Hart, following the close of the Nasdaq market, to review and discuss the final draft of the Merger Agreement, including its business and legal terms. Holland & Hart reviewed in detail key elements of the Merger Agreement and answered remaining questions from the Special Committee and Board members. The parties also discussed the execution of Voting Agreements as contemplated by the Merger Agreement and the process required to move forward with executing the Merger Agreement.

On April 20, 2026, the Special Committee held a meeting with the Board, Holland & Hart, and Lake Street to discuss the pending transaction. Lake Street presented a detailed financial analysis of the transaction based upon industry-standard valuation models and answered questions from the Special Committee and the Board. Following the presentation, the Special Committee asked the Lake Street financial advisors to deliver their Fairness Opinion.

Lake Street delivered its oral opinion to the Special Committee, subsequently confirmed in writing by delivery of Lake Street’s written opinion addressed to the Board dated the same day. The Special Committee and the Board discussed the analyses presented by Lake Street, the terms of the proposed transaction, the status of negotiations and the alternatives available to the Company.

On April 20, 2026, following the delivery of the Fairness Opinion, the independent members of the Special Committee unanimously determined the Merger Agreement and transactions contemplated thereby, including the Merger, were advisable and fair to, and in the best interests of, the Company and its shareholders. Additionally, the independent members of the Special Committee recommended that the Board approve the Merger Agreement and recommend that the Company shareholders vote in favor of the Merger Agreement and the transactions contemplated thereby.

On April 20, 2026, the Special Committee and the Board members approved the Minutes of Action of the Board of Directors authorizing, among other things, the execution of the Merger Agreement by David Klenk, president of the Company. Mr. Klenk signed the Merger Agreement and forwarded it to Battery Ventures for countersignature. Countersignatures were received and the Merger Agreement was executed as of April 20, 2026.

Both the Special Committee and our Board believe, based on their consideration of the factors described below, that the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to, and in the best interests of, the Company and its shareholders.

The Special Committee, with the advice and assistance of its legal and financial advisors, evaluated the Merger, the terms and conditions of the Merger Agreement and the transactions contemplated thereby. Over the course of approximately four years, the Special Committee and its advisors engaged in multiple discussions and communications throughout their evaluation of multiple strategic transactions. In addition to formal meetings of the Special Committee, committee members participated in frequent informal discussions, consultations with management and advisors, telephonic conferences, and electronic communications. The Special Committee’s process included both group deliberations and separate discussions between individual committee members and the Company’s President, who participated in a non-voting advisory capacity, as well as with the Company’s legal and financial advisors. Through this ongoing process, the Special Committee evaluated strategic and transaction alternatives, negotiated aspects of the proposed merger, and monitored developments relating to the transaction.

At a meeting held on April 20, 2026, the Special Committee unanimously determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable and in the best interests of the Company and its shareholders. The Special Committee also unanimously recommended that our Board (i) determine that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable and in the best interests of the Company and its shareholders; (ii) approve the Merger Agreement and the transactions contemplated thereby, including the Merger; (iii) resolve to recommend that the shareholders of the Company approve the adoption of the Merger Agreement and the Merger; and (iv) approve the transactions contemplated by the Merger Agreement, including the Merger, for purposes of Section 203 of the MBCA, and any and all similar applicable state statutes.

In evaluating the Merger, the Merger Agreement, and the other transactions and agreements contemplated thereby, the Special Committee consulted with its legal and financial advisors and our management, and considered a number of factors, including, but not limited to, the following material factors (not necessarily in order of relative importance):

The Special Committee also considered a number of factors that are discussed below relating to the procedural safeguards that it believes were and are present to support the fairness of the Merger. The Special Committee believes the following factors support its determinations and recommendations and provide assurance of the fairness of the Merger to the Company’s minority shareholders:

The Special Committee consists of two voting independent directors and a nonvoting member and was authorized to retain advisors and to determine whether to proceed with a transaction and, if a decision was made to proceed, to review and negotiate any such transaction. Moreover, our Board resolved that it would not approve or authorize a potential transaction involving the Company without the prior favorable recommendation of the Special Committee. The Special Committee, management and its advisors engaged in numerous discussions and communications throughout their evaluation of the proposed Merger. In addition to formal meetings of the Special Committee, committee members participated in frequent informal discussions, consultations with management and advisors, telephonic conferences, and electronic communications. The Special Committee’s process included both group deliberations and separate discussions between individual committee members and the Company’s President, who participated in a non-voting advisory capacity, as well as with the Company’s legal and financial advisors. Through this ongoing process, the Special Committee evaluated strategic and transaction alternatives, negotiated aspects of the proposed merger, and monitored developments relating to the transaction.

The receipt by the Board and the Special Committee of the Lake Street opinion, dated April 20, 2026, as to the fairness, from a financial point of view and as of such date, of the Merger Consideration to be received by shareholders of the Company pursuant to the Merger Agreement, which opinion was based upon and subject to the assumptions made, procedures followed, factors considered and limitations on the review undertaken, as further described in the section entitled “The Merger – Opinion of Financial Advisor to the Board” beginning on page 24.

The terms and conditions of the Merger Agreement, including that the Company’s ability to terminate after the End Date if the Merger Agreement has not occurred prior to such date, unless otherwise extended by 30 days under certain circumstances, provided that this termination right is not available to a party whose actions or failure to act materially contributed to the failure to satisfy the conditions on or before the End Date, was viewed by the Special Committee as providing an outside date after which the Company would no longer remain bound by the transaction.

The Special Committee also considered a variety of potentially negative factors in its deliberations concerning the Merger Agreement and the transactions contemplated thereby, including, but not limited to, the following (not necessarily in order of relative importance):

The Special Committee concluded that the potential benefits that it expected the Company shareholders would achieve as a result of the Merger outweighed the risks and potentially negative factors relevant to the Merger. The foregoing discussion of the information and factors considered by the Special Committee is not intended to be exhaustive but includes the material factors considered by the Special Committee. In view of the variety of factors considered in connection with its evaluation of the Merger, the Special Committee did not find it practicable to, and did not, quantify or otherwise assign relative weights to, the specific factors considered in reaching its determination and recommendation. In addition, individual directors may have given different weights to different factors. The Special Committee did not undertake to make any specific determination as to whether any factor or any particular aspect of any factor supported or did not support its ultimate decision. The Special Committee based its recommendation on the totality of the information presented. Accordingly, the Special Committee has decided that it is in the best interest of the Company and the Company’s shareholders to undertake the Merger transaction at this time for the reasons described above.

The foregoing discussion of the information and factors considered by the Special Committee is forward-looking in nature. This information should be read in light of the factors set forth in the section entitled “Cautionary Statement Concerning Forward-Looking Information” beginning on page 13.

The Board consists of four directors. On April 20, 2026, based in part on the unanimous recommendation of the Special Committee, as well as on the basis of the other factors described above, the Board on behalf of the Company:

Our Board believes, based on its considerations of the factors described above, that the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to the Company and its shareholders. In adopting the Special Committee’s recommendations and concluding that the Merger Agreement and the transactions contemplated thereby, including the Merger, are in the best interests of the Company and its shareholders, our Board consulted with outside financial and legal advisors, considered and relied upon the same factors and considerations that the Special Committee relied upon, as described above, and adopted as its own the Special Committee’s analyses and conclusions in their entirety.

Pursuant to an engagement letter dated October 29, 2025, Electro-Sensors retained Lake Street Capital Markets, LLC, or Lake Street, to render an opinion to the Board of Electro-Sensors as to the fairness, from a financial point of view, to Electro-Sensors of the per share consideration to be received by holders of Electro-Sensors’ common stock in the Merger. In selecting Lake Street, Electro-Sensors considered, among other things, Lake Street’s qualifications, expertise, reputation, and knowledge of Electro-Sensors’ business and the industry in which it operates.

On April 20, 2026, at a special meeting of the Board of Electro-Sensors, Lake Street delivered its oral opinion, subsequently confirmed by delivery of Lake Street’s written opinion addressed to the Board of Electro-Sensors dated April 20, 2026, as of such date, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations set forth in the opinion, the Merger Consideration to be paid by Parent to the holders of Electro-Sensors’ common stock (other than the Parent, Merger Sub and their respective affiliates) pursuant to the Agreement and Plan of Merger is fair, from a financial point of view, to such holders of Electro-Sensors’ common stock.

The full text of Lake Street’s written opinion, dated April 20, 2026, is attached to this Proxy Statement as Annex B and is incorporated by reference herein. Shareholders of Electro-Sensors are urged to read the entire opinion carefully and in its entirety to learn about the assumptions made, procedures followed, matters considered and limits on the scope of the review undertaken by Lake Street in rendering its opinion. The analyses performed by Lake Street should be viewed

in its entirety; none of the methods of analysis should be viewed in isolation when reaching a conclusion on whether the consideration was fair. The opinion addresses only the fairness of the Merger Consideration, from a financial point of view, to Electro-Sensors, as of the date of the opinion, and does not address Electro-Sensors’ underlying business decision to proceed with or effect the Merger or the likelihood of consummation of the Merger. Lake Street’s opinion was directed to the Board of Electro-Sensors in connection with its consideration of the Merger and was not intended to be, and does not constitute, a recommendation to any shareholder as to how such shareholder should vote with respect to the Merger or any other matter.

In arriving at its opinion, Lake Street conducted such analyses, examinations, and inquiries and considered such other financial, economic and market criteria as it deemed necessary. Lake Street, among other things:

Lake Street relied upon and assumed, without independent verification, upon the accuracy and completeness of all information that was publicly available or was furnished, or otherwise made available, to Lake Street or discussed with or reviewed by or for Lake Street by Electro-Sensors. Lake Street further assumed that management of Electro-Sensors was not aware of any information or facts that would make any information provided to Lake Street incomplete or misleading. Without limiting the generality of the foregoing, for the purpose of Lake Street’s Opinion, Lake Street assumed that with respect to financial forecasts, estimates and other forward-looking information (including, without limitation, the Projections) discussed with and reviewed by Lake Street, that such information was reasonably prepared based on assumptions reflecting the best currently available estimates and judgments of the management of Electro-Sensors as to the expected future results of operations and financial condition of Electro-Sensors and did not evaluate or otherwise test such financial forecasts, estimates and other forward-looking information or the underlying assumptions. Lake Street expressed no opinion as to any such financial forecasts, estimates or forward-looking information or the assumptions on which they were based.

The internal management projections provided by Electro-Sensors to Lake Street in connection with Lake Street’s analysis of the Merger were not prepared with a view toward public disclosure. These internal management projections were prepared by management of Electro Sensors and were based on numerous variables and assumptions that are inherently uncertain and may be beyond the control of management, including, without limitation, factors related to general economic and competitive conditions. Accordingly, actual results could vary significantly from those set forth in such internal management projections.

In connection with its opinion, Lake Street assumed and relied upon, without independent verification, the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by Lake Street. Lake Street’s opinion did not address any legal, regulatory, tax or accounting issues.

In arriving at its opinion, Lake Street also assumed that the final executed form of the Merger Agreement would be in all material respects identical to the latest draft reviewed by it. Lake Street relied upon and assumed, without independent verification, (i) the representations and warranties of each Party set forth in the Merger Agreement and all related documents and instruments that are referred to therein were true and correct, (ii) all of the covenants and agreements required to be performed pursuant to the Merger Agreement would be fully and timely performed, (iii) the Merger will be consummated pursuant to the terms of the Merger Agreement without amendment of any term or condition thereof the effect of which would be in any way meaningful to Lake Street’s analysis, and (iv) all conditions to the consummation of the Merger would be satisfied without waiver of any conditions or obligations thereunder the effect of which would be in any way meaningful to Lake Street’s analysis. Additionally, Lake Street assumed, without independent verification, that (a) the Merger will be consummated in a manner that complies within respects with all applicable international, federal and state statutes, rules and regulations, and (b) all the necessary regulatory approvals and third-party consents required for the consummation of the Merger will be obtained in a manner that will not adversely affect Electro-Sensors or the contemplated benefits of the Merger to Electro-Sensors.

In arriving at its opinion, Lake Street did not perform any appraisals or valuations of the assets or liabilities (fixed, contingent, or other) of Electro-Sensors, and was not furnished or provided with any such appraisals or valuations, nor did Lake Street evaluate the solvency of Electro-Sensors under any state or federal law relating to bankruptcy, insolvency, or similar matters. Without limiting the generality of the foregoing, Lake Street undertook no independent analysis of any pending or threatened litigation, regulatory action, possible unasserted claims or other contingent liabilities, to which Electro-Sensors is a party or may be subject, and at Electro-Sensors’ direction and with its consent, Lake Street’s opinion made no assumption concerning, and therefore did not consider, the possible assertion of claims, outcomes or damages arising out of any such matters.

Lake Street’s opinion was necessarily based upon information available and facts and circumstances existing as of the date of the opinion, and events occurring after such date could materially affect the assumptions used in preparing the opinion. Lake Street did not express any opinion as to any change in the price at which shares of Electro-Sensors’ common stock may trade following announcement of the Merger or at any time thereafter. Lake Street did not undertake to reaffirm or revise its opinion or otherwise comment on any events occurring after the date of the opinion and has no obligation to update, revise or reaffirm its opinion.

Lake Street’s opinion addressed only the fairness, from a financial point of view, of the Merger Consideration to be received by the holders of Electro-Sensors’ common stock (other than the Parent, Merger Sub and their respective affiliates) in connection with the Agreement and Lake Street expressed no opinions as to the fairness of any consideration paid in connection with the Merger Agreement to creditors or other constituencies of Electro-Sensors or otherwise, including, without limitation, the fairness of the amount or nature of, or any other aspect relating to, any compensation or consideration to be received by or otherwise payable to any officers, directors or employees of any party to the Merger, or class of such persons, relative to the Merger Consideration or otherwise. Lake Street’s opinion did not constitute a recommendation that Electro-Sensors should complete the Merger. Lake Street was not requested to opine as to, and Lake Street’s opinion did not in any manner address, the relative merits of the Merger in comparison to any alternatives to the Merger, Electro-Sensors’ underlying decision to proceed with the Merger, or any other aspect of the Merger, or alternatives to the Merger available to Electro-Sensors.

Consistent with applicable legal and regulatory requirements, Lake Street has adopted policies and procedures designed to establish and maintain the independence of its research departments and personnel. As a result, Lake Street’s research analysts may hold views, make statements or investment recommendations, and/or publish research reports with respect to Electro-Sensors and the Merger that differ from the views of its investment banking personnel.

Lake Street, as a customary part of its investment banking business, is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, underwriting and secondary distributions of securities, private placements and other valuation assignments for corporate and other purposes. Lake Street will receive a fee from Electro-Sensors for rendering its opinion, which is not contingent upon the consummation of the Merger. In addition, Electro-Sensors has agreed to reimburse Lake Street for certain expenses and to indemnify Lake Street against certain liabilities that may arise in connection with its engagement. In the ordinary course of its business, Lake Street and its affiliates may actively trade the securities of Electro-Sensors for their own account or for the accounts of

customers and, accordingly, may at any time hold long or short positions in such securities. Except as described above, Lake Street has not had any material relationship with, or received any payments from, Electro-Sensors or its affiliates during the two years preceding the date of the opinion. In the future, Lake Street may seek to provide financial advisory and other investment banking services to Electro-Sensors for which Lake Street would expect to receive compensation.

Lake Street’s opinion was furnished pursuant to an engagement letter dated October 29, 2025. The opinion was addressed to the Board of Electro-Sensors for its use in connection with its consideration of the Merger and was not intended to be, and does not constitute, a recommendation to the shareholders of Electro-Sensors. The opinion was approved for issuance by the Lake Street Capital Markets, LLC Fairness Opinion Committee.

The following is a summary of the material financial analyses performed by Lake Street and reviewed by the Board of Electro-Sensors in connection with Lake Street’s opinion relating to the Merger and does not purport to be a complete description of the financial analyses performed by Lake Street. The rendering of an opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. Accordingly, this summary does not purport to be a complete description of the analyses performed by Lake Street or of its presentation to the Board of Electro-Sensors on April 20, 2026. The order of the analyses described below does not represent the relative importance or weight assigned to those analyses by Lake Street. Certain of the summaries of the financial analyses include information presented in tabular format; such tables must be read together with the accompanying text and do not, by themselves, constitute a complete description of the financial analyses. Considering the data set forth below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying such analyses, could create a misleading or incomplete view of Lake Street’s financial analyses.

In performing its analyses, Lake Street made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of Electro-Sensors or any other parties to the Merger Agreement. Lake Street does not assume any responsibility if future results differ materially from those discussed. Any estimates contained in these analyses are not necessarily indicative of actual values or predictive of future results, which may be significantly more or less favorable than those set forth below. The analyses performed by Lake Street are not necessarily indicative of actual values or future trading prices, and the analyses do not purport to be appraisals or necessarily reflect the prices at which businesses or securities may be sold.

To assess how the public market values shares of publicly traded companies similar to Electro-Sensors, Lake Street reviewed and compared certain financial information relating to Electro-Sensors with selected companies that, in the exercise of its professional judgment and based on its knowledge of the industry, Lake Street deemed relevant. Although none of the selected companies is identical to Electro-Sensors, Lake Street selected these companies because they have publicly traded equity securities and were deemed to be similar in one or more respects, including the nature of their business, size and financial performance. The selected comparable companies were:

Lake Street obtained financial metrics and projections for the selected companies from publicly available sources, including the SEC EDGAR database and S&P Capital IQ (“Capital IQ”). In its analysis, Lake Street derived and compared multiples for Electro-Sensors and the selected companies, calculated as follows:

TEV refers to market capitalization plus total debt, preferred stock and any minority interest, less cash and short-term equivalents (as calculated by Capital IQ). EBITDA refers to earnings before interest, taxes, depreciation and amortization. This analysis indicated the following:

No company used in the comparable company analysis is identical to Electro-Sensors. In reviewing this analysis, Lake Street also considered, among other things, the relative comparability of the selected companies to Electro-Sensors. Based upon the foregoing and applying its professional judgment, Lake Street selected representative ranges based on the 25th to 75th percentiles for each metric. Lake Street then applied the respective representative ranges to estimated EBITDA for calendar years 2026 through 2028 for Electro-Sensors to derive ranges of implied enterprise value. The resulting enterprise value ranges were then converted to implied equity values and corresponding implied share price ranges. A summary of these implied share price ranges is shown in the table below:

In evaluating the financial multiples of the selected companies, Lake Street made judgments and assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters. Accordingly, Lake Street’s comparison of the selected companies to Electro-Sensors and its analysis of the results of such comparisons were not purely quantitative, but instead necessarily involved qualitative considerations and professional judgment regarding differences in financial and operating characteristics and other factors that could affect the relative value of Electro-Sensors.

Lake Street performed a selected precedent transactions analysis, which is designed to estimate the value of a company based on the publicly available financial terms of selected transactions that share certain characteristics with the Merger. Lake Street reviewed and selected precedent transactions that, in the exercise of its professional judgment, were deemed relevant to its analysis based on the following criteria: (i) the target company operated in the industrial sensing, measurement and instrumentation sectors, (ii) the transaction had an implied enterprise value of less than $1.0 billion, (iii) the transaction closed since January 1, 2020 and had publicly available financial terms, and (iv) the acquisition did not involve a minority interest. In its analyses, Lake Street did not intentionally exclude any transactions that met the foregoing criteria, and the selected transactions reflect available data and its professional judgment.

In its analysis, Lake Street compared implied purchase price multiples observed in the selected transactions. Where applicable, implied valuations were discounted to present value based on Lake Street’s estimated cost of capital. Lake Street reviewed the following precedent transactions:

For each precedent transaction listed above, using publicly available company filings, S&P Capital IQ and press releases, Lake Street calculated TEV multiples based on the target company’s last twelve months (“LTM”) EBITDA as of the closing date. From this analysis, Lake Street derived the 25th and 75th percentile multiple ranges for the selected precedent transactions. These multiples were then applied to Electro-Sensors’ estimated EBITDA for calendar years 2026 through 2028 to derive ranges of implied enterprise value. The resulting enterprise value ranges were then discounted to present value using a discount rate based on Electro-Sensors’ estimated weighted average cost of capital, derived from an analysis of comparable company data. The resulting present value ranges were then converted to implied equity values and corresponding implied share price ranges. The resulting multiple ranges and respective implied share price ranges are set forth in the following table:

Lake Street noted that, although the selected transactions were used for comparison purposes, no target company in the selected transactions was identical or directly comparable to Electro-Sensors’ business. Accordingly, Lake Street’s comparison of the selected transactions to Electro-Sensors and its analysis of the results of such comparisons were not purely quantitative, but instead necessarily involved complex considerations and professional judgment regarding differences in financial and operating characteristics and other factors that could affect the relative value of Electro-Sensors.

Lake Street conducted an illustrative discounted cash flow analysis for Electro-Sensors on a stand-alone basis, which is designed to estimate the implied value of a company by calculating the present value of the estimated future unlevered free cash flows and terminal value of Electro-Sensors. Lake Street calculated a range of implied enterprise values for Electro-Sensors based on forecasts of future unlevered free cash flows for the period from January 1, 2026 through calendar year 2028 provided by management of Electro-Sensors. Lake Street calculated unlevered free cash flows (calculated as earnings before interest and taxes, less taxes, plus depreciation and amortization and stock-based compensation expense, less the amount of any increase or plus the amount of any decrease in net working capital and less capital expenditures) for Electro-Sensors for such period.

For purposes of its discounted cash flow analysis, Lake Street calculated a terminal value for Electro-Sensors as of the end of calendar year 2028 by applying a range of terminal LTM EBITDA multiples of 4.8x to 18.7x, selected based on Lake Street’s experience and professional judgment after consideration of the precedent M&A transaction multiples, to Electro-Sensors’ projected EBITDA for calendar year 2028. In addition, Lake Street considered a terminal value based

on a perpetuity growth method by applying a range of perpetual growth rates of 2.0% to 4.0%, selected based on Lake Street’s experience and professional judgment and consistent with long-term nominal U.S. GDP growth, to the terminal year unlevered free cash flows.

These unlevered free cash flows and terminal values were then discounted to their respective present values as of April 20, 2026 using a range of discount rates of 16.3% to 22.3% (selected based on Lake Street’s professional judgment and derived from an analysis of Electro-Sensors’ estimated weighted average cost of capital using comparable company data) to calculate a range of implied enterprise values for Electro-Sensors. The implied enterprise values were then converted to implied equity values by adding net cash and dividing by fully diluted shares outstanding to derive implied share price ranges. From this analysis, Lake Street derived the 25th and 75th percentiles for the values produced from the discounted cash flow analysis set forth in the following table:

Lake Street noted that the median value of the median implied share prices for each of the valuation methodologies described above was $5.03 per share (the “Median of LSCM Valuation Methodologies for Electro-Sensors”).

Lake Street noted that the closing price of Electro-Sensors’ common stock on April 20, 2026 was $4.43 per share. Lake Street also noted that the consideration to be received by Electro-Sensors’ shareholders in the Merger of $7.75 per share represented a seventy-five percent (75%) premium to such trading price. Finally, Lake Street observed that the $7.75 per share consideration was above all the ranges of implied share prices derived from the valuation methodologies described above, including the median of all Lake Street valuation methodologies of $5.03 per share.

The summary of material financial analyses set forth above does not purport to be a complete description of the analyses performed by Lake Street, but summarizes the material analyses performed by Lake Street in rendering its opinion. The preparation of a fairness opinion is a complex analytical process and is not necessarily susceptible to partial analysis or summary description. Lake Street believes that its foregoing analyses and the summary set forth above must be considered as a whole and that selecting portions of its analyses or of the summary, without considering the analyses as a whole or all of the factors considered by Lake Street, could create an incomplete view of the processes underlying its analyses and opinion. In arriving at its opinion, Lake Street considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis. Rather, Lake Street made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. The fact that any specific analysis has been referred to in the summary above is not intended to indicate that such analysis was given greater weight than any other analysis. In addition, the ranges of valuations resulting from any particular analysis described above should not be taken to be Lake Street’s view of the actual value of Electro-Sensors.

As described above, Lake Street’s opinion was only one of many factors considered by the Board in its determination to approve the Merger.

Lake Street is a full-service securities firm engaged in securities trading and brokerage activities, as well as providing investment banking and other financial services. In the ordinary course of its business, Lake Street and its affiliates may acquire, hold or sell, for their own accounts and for the accounts of customers, equity, debt and other securities and financial instruments (including bank loans and other obligations) of Electro-Sensors and other parties to the Merger and, accordingly, may at any time hold long or short positions in such securities. Lake Street and its affiliates may in the future provide investment banking and other financial services to the parties to the Merger for which Lake Street would expect to receive compensation.

Lake Street is acting as financial advisor to the Special Committee and the Board of Electro-Sensors in connection with the Merger. Pursuant to its engagement letter with Lake Street, Electro-Sensors has agreed to pay Lake Street a fixed fee in the amount of $175,000 upon the delivery of its fairness opinion to the Board of Electro-Sensors. The fairness opinion fee is not contingent upon the consummation of the Merger. Such fee was determined by Lake Street and proposed to Electro-Sensors. In addition, Electro-Sensors has agreed to indemnify Lake Street against certain liabilities that may arise out of its engagement and the rendering of its opinion.

If the Merger Agreement is approved by the required vote of the Company’s shareholders and the other conditions to the closing of the Merger are either satisfied or waived, Merger Sub will be merged with and into the Company, the separate corporate existence of Merger Sub will cease and the Company will continue its corporate existence under Minnesota law as the surviving corporation in the Merger, with all of its rights, privileges, immunities, powers and franchises continuing unaffected by the Merger.

Upon consummation of the Merger:

Following the Merger, the entire equity in the surviving corporation will ultimately be owned by the Parent. If the Merger is completed, the Parent will be the sole beneficiary of the Company’s future earnings and growth, if any, and will be entitled to vote on corporate matters affecting the Company following the Merger. Similarly, the Parent will also bear the risks of ongoing operations, including the risks of any decrease in the Company’s value after the Merger.

A primary benefit of the Merger to the Company’s shareholders will be the right of such shareholders to receive the Merger Consideration as described above, representing a premium of approximately 75% over the trading price for Common Stock on April 20, 2026, the last trading day prior to the announcement of the Merger. Additionally, such shareholders will avoid the risk of any possible decrease in the Company’s future earnings, growth or value.

The primary detriments of the Merger to such shareholders include the lack of interest of such shareholders in the Company’s potential future earnings, growth or value. Additionally, the receipt of cash in exchange for shares of Common Stock pursuant to the Merger will generally be a taxable sale transaction for U.S. federal income tax purposes to our shareholders who surrender shares of the Common Stock in the Merger. See “Material U.S. Federal Income Tax Consequences of the Merger” below.

Following the Merger, the Company will be a private company, and as such will be relieved of the burdens imposed on companies with publicly traded equity, including the requirements and restrictions on trading that the Company’s directors, officers and beneficial owners of more than 10% of the outstanding shares of Common Stock face as a result of the provisions of Section 16 of the Exchange Act. It is estimated that the Company will save approximately $700,000 per year as a result of no longer being a public company.

The primary detriments of the Merger to the Parent include the fact that all of the risk of any possible decrease in the Company’s earnings, growth or value following the Merger will be borne by Parent. Additionally, the investment by the Parent in the Company will not be liquid, with no public trading market for such securities.

The shares of Common Stock are currently registered under the Exchange Act and are quoted on the Nasdaq Capital Market under the symbol “ELSE.” As a result of the Merger, the Company will be a privately held corporation and there will be no public market for its shares. After the Merger, the shares of Common Stock will cease to be quoted on the Nasdaq Capital Market and price quotations with respect to sales of shares of Common Stock in the public market will no longer be available. In addition, registration of the Common Stock under the Exchange Act will be terminated.

Financial projections prepared by management were made available to the Board, the Special Committee, and the Special Committee’s advisors. The Special Committee directed the Special Committee’s financial advisor to use and

rely on the financial projections and other financial and business information summarized below for purposes of its financial analyses and opinion summarized under “Opinion of Financial Advisor to the Board.” Summaries of these financial projections and forecasts are being included in this proxy statement not to influence your decision whether to vote for or against the proposal to adopt the Merger Agreement, but because these financial projections and forecasts were made available to the Board, the Special Committee and the Special Committee’s advisors. No person has made or makes any representation to any shareholder regarding the information included in these financial projections or forecasts.

These financial projections and forecasts are based upon a variety of estimates and numerous assumptions made by the Company’s management with respect to, among other matters, industry performance, general business, economic, market and financial conditions and other matters, including the factors described under “Cautionary Statement Concerning Forward-Looking Information” beginning on page 13, many of which are difficult to predict, are subject to economic and competitive uncertainties, and are beyond the Company’s control. In addition, since the financial projections and forecasts cover multiple years, such information by its nature becomes less reliable with each successive year. As a result, there can be no assurance that the projected results will be realized or that actual results will not be higher or lower than projected.

The financial projections and forecasts do not take into account any circumstances or events occurring after the date they were prepared, and, except as may be required in order to comply with applicable securities laws, the Company does not intend to update, or otherwise revise, the financial projections or forecasts, or the specific portions presented, to reflect circumstances existing after the date when they were made or to reflect the occurrence of future events, even in the event that any or all of the assumptions are shown to be in error.

The financial projections and forecasts were not prepared with a view toward public disclosure, soliciting proxies, the published guidelines of the SEC regarding financial projections and forecasts, or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial projections and forecasts. Neither Boulay PLLP, the Company’s independent registered public accounting firm, nor any other independent registered public accounting firm has examined, compiled or performed any procedures with respect to the accompanying financial projections and forecasts, and, accordingly, neither Boulay PLLP nor any other public accounting firm expresses an opinion or any other form of assurance with respect to such projections and forecasts.

For the foregoing reasons, as well as the bases and assumptions on which the financial projections and forecasts were compiled, the inclusion of specific portions of the financial projections and forecasts in this proxy statement should not be regarded as an indication that the Company considers such financial projections or forecasts to be necessarily predictive of actual future events, and the projections and forecasts should not be relied on as such an indication. No one has made any representation to any shareholder of the Company regarding the information included in the financial projections and forecasts discussed below.

In preparing the foregoing financial projections, the Company made a number of assumptions including, among other things, growth in net sales driven by organic demand in the Company’s core industrial monitoring and process control markets, expansion of international sales and distribution channels, gross profit margins remaining generally consistent with recent historical levels, but dramatically different than past performance, and operating expenses growing at a rate consistent with the Company’s estimated investments in sales and marketing, research and development, and administrative infrastructure to support anticipated revenue growth.

This proxy statement includes references to EBITDA and Pro Forma EBITDA, which are non-GAAP financial measures. These non-GAAP financial measures are not calculated in accordance with, or a substitute for, financial measures calculated in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. Furthermore, there are limitations inherent in non-GAAP financial measures, in that they exclude a variety of items that are required to be included in a GAAP presentation. Accordingly, these non-GAAP financial measures should be considered with, and not as an alternative to, GAAP basis financial measures.

As required by the SEC in accordance with Regulation G, we are providing in the table below a reconciliation of the most closely comparable GAAP financial measure, Net Income, to each of EBITDA and Pro Forma EBITDA. EBITDA is defined as earnings before interest, taxes, depreciation, and amortization. Pro Forma EBITDA is defined as earnings before interest, taxes, depreciation, amortization, and Public Company Costs.

A reconciliation of EBITDA and Pro Forma EBITDA to the corresponding GAAP financial measure is not available on a forward-looking basis without unreasonable effort as we are currently unable to predict with a reasonable degree of certainty certain expense items that are excluded in calculating adjusted EBITDA, although it is important to note that these factors could be material to our results computed in accordance with GAAP.

Because of the forward-looking nature of the projections, actual quantification of the amounts needed to reconcile the non-GAAP financial measures to the associated GAAP financial measures involved substantial hypothetical and unverifiable assumptions. The reconciliation above was not provided to, reviewed by or relied on by the Company, the Special Committee, the Peterson Family or any of their representatives or advisors and is only being provided in this proxy statement to comply with SEC disclosure requirements.

The consummation of the Merger is not subject to any financing conditions, and Parent intends to pay the Merger Consideration from available funds. Parent has represented to the Company in the Merger Agreement that it has, and through the closing of the Merger will have, adequate financial resources to consummate the Merger, including the payment of the Merger Consideration and any related fees and expenses.

In considering the recommendation of the Board that you vote to adopt the Merger Agreement, you should be aware that aside from their interests as shareholders of the Company, certain of the Company’s directors, officers and certain beneficial owners have interests in the Merger that are different from, or in addition to, those of other shareholders of the Company generally. The members of the Special Committee were aware of and considered these interests, among other matters, in evaluating and negotiating the Merger Agreement and the Merger, and in making its recommendations to the Board, which was also aware of and took into account these interests, among other matters, when making its recommendation to the shareholders of the Company that the Merger Agreement be adopted. See “The Merger – Background of the Merger” beginning on page 15, and “The Merger – Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger” beginning on page 20.

All such interests are described below to the extent material, and except as described below, such persons have, to our knowledge, no material interest in the Merger apart from those of shareholders generally. These interests include:

The Company’s shareholders should take these interests into account in deciding whether to vote “FOR” the adoption of the Merger Agreement. These interests are described in more detail below.

In connection with the execution of the Merger Agreement, certain shareholders of the Company entered into voting agreements with Parent, dated as of April 20, 2026 (the “Voting Agreement” and collectively, the “Voting Agreements”), pursuant to which each such shareholder agreed, subject to the terms and conditions of the applicable voting agreement (including any limitations that may be applicable under Minnesota law), to vote the shares of Common Stock beneficially owned by them in favor of the adoption of the Merger Agreement. See “Agreements Involving Common Stock – Voting Agreement” beginning on page 53.

The Merger Agreement includes as a transaction expense potential transaction retention and service compensation payments in an aggregate amount not to exceed $195,000. This compensation pool may be paid to certain employees of the Company, which may include executive officers, and the independent directors of the Special Committee.

The Company’s bylaws provide for indemnification of directors and executive officers against certain liabilities that may arise by reason of their status or service as directors or officers in accordance with Minnesota Statutes, Section 302A.521. In addition, pursuant to the Merger Agreement, the Company’s directors and executive officers will be entitled to certain ongoing indemnification from Parent and the surviving corporation and coverage under directors’ and officers’ liability insurance policies. The indemnification and insurance provisions in the Merger Agreement are further described in the section entitled “The Merger Agreement – Other Covenants and Agreements – Indemnification; Directors’ and Officers’ Insurance” on page 49.

The Special Committee consists of two independent members of the Board, Scott Gabbard and Joseph A. Marino, as well as David Klenk, a member of management serving as a nonvoting member. Only the non-employee directors received compensation for their service on the Special Committee.

The Board periodically reviews and approves compensation arrangements for non-employee directors for committee service. During 2025 and 2026, non-employee directors received cash compensation for Board service and additional amounts for service on Board committees. For 2025 and 2026, the Board approved quarterly cash compensation for committee service. Non-employee members of the Business Development Committee, which functioned as the Special Committee, received quarterly retainers of $3,000.

The Business Development Committee, which functioned as the Special Committee in connection with the Company’s evaluation of strategic alternatives, was actively engaged over an extended period of time in reviewing and evaluating a variety of opportunities intended to maximize shareholder value, including potential strategic transactions, financing and business combination opportunities, and the negotiation and evaluation of the Merger. Members of the Business Development Committee participated in numerous meetings, discussions and communications with management and the Company’s legal and financial advisors in connection with these activities. See “The Merger – Process of the Special Committee.”

In connection with the increased time commitments and responsibilities associated with strategic initiatives and committee activities during 2025, the Board approved a special payment of $14,000 to Scott Gabbard pursuant to a written action effective January 1, 2025, which payment was made in April 2025. For participation in the Business Development Committee, Scott Gabbard and Joseph Marino received a total of $26,000 (which includes the special payment) and $12,000, respectively, for 2025, and each of Scott Gabbard and Joseph Marino received $3,000 for the first quarter of 2026.

In connection with the Company’s Merger, the Compensation Committee also awarded one-time cash bonuses of $25,000 to two independent directors, Joseph Marino and Scott Gabbard, in recognition of their extraordinary efforts and time commitment relating to the transaction. The Committee believed that the awards were reasonable and appropriate in light of the directors’ significant involvement in the transaction process and their service to the Company. These awards were made on a discretionary, one-time basis and were not made pursuant to the Company’s ordinary Special Committee director and committee compensation arrangements.

In reviewing and approving the compensation structure for committee service, the Board, including the independent directors, considered the anticipated and actual time commitments, responsibilities and workload associated with committee service and strategic review activities, including the activities of the Business Development Committee acting in its capacity as the Special Committee. The Board also considered alternative compensation structures, including retainers and per-meeting fees, and determined that the compensation arrangements approved were appropriate in light of the nature and scope of the responsibilities undertaken.

None of the compensation paid to directors or committee members was contingent upon, or payable solely in connection with, the approval or consummation of the Merger or any other transaction. The Board believes that the compensation arrangements for non-employee directors on the Business Development Committee were reasonable and appropriate in light of the time commitments, responsibilities and oversight duties associated with such committee service.

The following is a general discussion of the material U.S. federal income tax consequences of the Merger to U.S. holders (as defined below) of Common Stock whose shares are exchanged for cash pursuant to the Merger. This discussion does not address U.S. federal income tax consequences with respect to holders of Common Stock that are not U.S. holders (as defined below). This discussion is based on the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), applicable U.S. Treasury regulations, judicial opinions, and administrative rulings and published positions of the Internal Revenue Service, each as in effect as of the date hereof. These authorities are subject to change, possibly on a retroactive basis, and any such change could affect the accuracy of the statements and conclusions set forth in this discussion. This discussion does not address any tax considerations under state, local or

non-U.S. laws, U.S. federal estate, gift or alternative minimum tax, or Medicare tax on net investment income. This discussion is not binding on the Internal Revenue Service or the courts and therefore could be subject to challenge, which could be sustained. We do not intend to seek any ruling from the Internal Revenue Service with respect to the Merger.

For purposes of this discussion, the term “U.S. holder” means a beneficial owner of Common Stock that is:

This discussion applies only to U.S. holders of Common Stock who hold such shares as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment). Further, this discussion does not purport to consider all aspects of U.S. federal income taxation that may be relevant to a U.S. holder in light of its particular circumstances, or that may apply to a U.S. holder that is subject to special treatment under the U.S. federal income tax laws, including, for example, financial institutions, tax-exempt organizations, S corporations, partnerships and any other entity or arrangement treated as a partnership or pass-through entity for U.S. federal income tax purposes, insurance companies, mutual funds, brokers or dealers in stocks and securities, traders in securities that elect to use the mark-to-market method of accounting for their securities, regulated investment companies, real estate investment trusts, controlled foreign corporations, passive foreign investment companies, corporations that accumulate earnings to avoid U.S. income tax, entities subject to the U.S. anti-inversion rules, holders who hold their Common Stock (i) as “qualified small business stock” for purposes of Sections 1045 or 1202 of the Code, (ii) as “Section 1244 stock” within the meaning of Section 1244 of the Code, or (iii) through individual retirement or other tax-deferred accounts, certain former citizens or long-term residents of the United States, U.S. holders holding the shares as part of a hedging, constructive sale or conversion, straddle or other risk reduction transaction, U.S. holders who received their Common Stock in a compensatory transaction or pursuant to the exercise of options or warrants, U.S. holders whose functional currency is not the U.S. dollar, U.S. holders who hold their Common Stock through a bank, financial institution or other entity, or a branch thereof, located, organized or resident outside the United States, U.S. holders subject to special tax accounting rules as a result of any item of gross income with respect to their Common Stock being taken into account in an “applicable financial statement” (as defined in the Code), and U.S. holders who own an equity interest, actually or constructively, in Parent or entities upstream of Parent following the Merger.

If a partnership (including for this purpose any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds Common Stock, the tax treatment of a partner in that partnership will generally depend on the status of the partners and the activities of the partnership. If you are a partner of a partnership holding Common Stock, you should consult your tax advisor.

THIS DISCUSSION IS PROVIDED FOR GENERAL INFORMATION ONLY AND DOES NOT CONSTITUTE LEGAL ADVICE TO ANY HOLDER OF COMMON STOCK. A HOLDER OF COMMON STOCK SHOULD CONSULT ITS OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE MERGER IN LIGHT OF ITS PARTICULAR CIRCUMSTANCES AND ANY CONSEQUENCES ARISING UNDER FEDERAL NON-INCOME TAX LAWS OR THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION.

The receipt of cash by U.S. holders in exchange for Common Stock pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes. In general, a U.S. holder that receives cash in exchange for Common Stock pursuant to the Merger will recognize gain or loss in an amount equal to the difference, if any, between (1) the amount of cash received and (2) the U.S. holder’s adjusted tax basis in that Common Stock. A U.S. holder’s adjusted tax basis will generally equal the amount that such U.S. holder paid for such Common Stock. 

If a U.S. holder’s holding period in the Common Stock surrendered in the Merger is greater than one year as of the effective date of the Merger, the gain or loss will be long-term capital gain or loss. Long-term capital gains of certain non-corporate holders, including individuals, are generally subject to U.S. federal income tax at preferential rates. The deductibility of a capital loss recognized on the exchange is subject to limitations. A U.S. holder that acquired different blocks of Common Stock at different times and different prices must determine its adjusted tax basis and holding period separately with respect to each block of Common Stock.

Payments made to U.S. holders in exchange for Common Stock pursuant to the Merger will generally be subject to information reporting and may be subject, under certain circumstances, to backup withholding (currently at a rate of 24%). To avoid backup withholding, a U.S. holder that does not otherwise establish an exemption to the satisfaction of the paying agent should complete and return Internal Revenue Service Form W-9 to the paying agent, certifying the holder is a U.S. person, the taxpayer identification number provided is correct and the holder is not subject to backup withholding.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or credited against a U.S. holder’s U.S. federal income tax liability, if any, if that holder furnishes the required information to the Internal Revenue Service in a timely manner.

Except as described under “The Merger Agreement – Fees and Expenses – Expense Reimbursement Provisions,” if the Merger is not completed, all fees and expenses incurred in connection with the Merger will be paid by the party incurring those fees and expenses, except that the Company will pay the costs of proxy solicitation and printing and mailing this proxy statement and all SEC filing fees with respect to the transaction. Total fees and expenses incurred or to be incurred by the Company in connection with the Merger are estimated at this time to be as follows:

The Company will continue to value its assets and liabilities at historical values and the Merger will have no effect on the asset and liability values of the Company.

We are a leading manufacturer and seller of industrial production monitoring and process control systems. We manufacture a complete line of monitoring and control systems for a wide range of industrial machine applications. These systems measure machine production and operation rates, as well as regulate the speed of related machines in production processes. Our products include speed monitoring systems, temperature application products, position application products, vibration monitoring products, tilt switches, and hazard monitoring systems. We market our HazardPRO™ wireless hazard technology monitoring system, an integrated hazard monitoring system that captures and displays key information in an intuitive format allowing the user to quickly and comprehensively understand the status and history of the user’s processes. Our customers operate in a wide range of industries, including grain/feed/milling, bulk materials, manufacturing, food products, ethanol, power generation, and other processing industries. We sell our products primarily through both an internal sales team and a number of distributors, both nationally and internationally. In 2025, we shipped products to 21 countries.

We were founded in 1968 in St. Louis Park, Minnesota and were incorporated in Minnesota in July 1968. Our principal executive offices are located at 6111 Blue Circle Drive, Minnetonka, Minnesota 55343-9108, and our telephone number is (952) 930-0100. We own and occupy a 25,400 square foot facility at our principal executive offices, and all of our operations are conducted within this facility.

Additional information about us is contained in certain of our public filings that are incorporated by reference herein. See “Where You Can Find Additional Information” beginning on page 64 of this proxy statement.

steute Industrial Controls, Inc. (or “Parent”) is a Connecticut corporation and a U.S. subsidiary of steute Technologies GmbH & Co. KG. The Parent was formed in the State of Connecticut on January 27, 2012 by the filing of its Certificate of Incorporation with Connecticut’s Secretary of State. Parent’s business consists primarily of supplying industrial switching and sensing solutions, including, among others, position switches, interlocks, safety sensors, and wireless controls, that integrate into machinery, fabrication processes, and production lines, supported by local inventory, technical support, and distribution for North American customers. Parent’s principal executive offices and mailing address are 901 Ethan Allen Highway, Suite 102, Ridgefield, Connecticut 06877, and its telephone number is (203) 244-6300. Parent’s Chief Executive Officer is Jeffrey Cull.

Parent is an affiliate of Battery Ventures, a global, technology-focused investment firm.

Steute Burwell, Inc. (or “Merger Sub”) is a newly formed Minnesota corporation. Merger Sub is a wholly-owned subsidiary of Parent and was formed solely for the purpose of engaging in the Merger and other related transactions. Merger Sub has not engaged in any business other than in connection with the Merger and other related transactions.

Merger Sub’s Chief Executive Officer and Chief Financial Officer is Martin Kunz. Its mailing address is 1010 Dale St. N, Saint Paul, Minnesota 55117, and its telephone number is (203) 244-6300.

Merger Sub is an affiliate of Battery Ventures, a global, technology-focused investment firm.

This proxy statement is being furnished to our shareholders as part of the solicitation of proxies by the Board for use at the Special Meeting to be held on July 21, 2026 starting at 2:00 p.m. Central Time, at www.virtualshareholdermeeting.com/ELSE2026SM, or at any adjournment or postponement thereof.

The purpose of the Special Meeting is for our shareholders to vote on (i) a proposal to adopt the Merger Agreement (the “Merger Proposal”); (ii) a proposal to approve, by non-binding, advisory vote, compensation that will or may become payable to our named executive officer in connection with the Merger Agreement (the “Compensation Proposal”); and (iii) a proposal to adjourn the Special Meeting from time to time, to a later date or dates, if necessary or appropriate, under certain circumstances, including for the purpose of soliciting additional proxies in favor of the foregoing proposals, in the event we do not receive the requisite shareholder vote to approve such proposals or establish a quorum (the “Adjournment Proposal”).

Company Shareholder Approval must be obtained for the Merger to occur. A copy of the Merger Agreement is attached to this proxy statement as Annex A. This proxy statement and the enclosed form of proxy are first being mailed to our shareholders on or about June 25, 2026.

In addition, in accordance with Section 14A of the Exchange Act, we are providing our shareholders with the opportunity to cast a non-binding, advisory vote on the Compensation Proposal, which relates to compensation that may be payable to our named executive officer in connection with the Merger. The vote on executive compensation payable in connection with the Merger is a vote separate and apart from the vote to adopt the Merger Agreement. Accordingly, a shareholder may vote to approve the executive compensation and vote against adoption of the Merger Agreement, or vice versa. Because the vote on executive compensation is advisory in nature only, it will not be binding on either us or Parent.

The holders of record of Common Stock as of the close of business on June 10, 2026, the Record Date for the determination of shareholders entitled to notice of and to vote at the Special Meeting, are entitled to receive notice of and to vote at the Special Meeting. On the Record Date, 3,532,423 shares of Common Stock were issued and outstanding.

The holders of a majority of all shares outstanding and entitled to vote, represented either in person or by proxy, will constitute a quorum for the transaction of business at the Special Meeting. Proxies received but marked as abstentions will be included in the calculation of the number of shares considered to be present at the Special Meeting. Broker non-votes, as described below under “The Special Meeting – Required Vote – Broker Non-Votes,” will be considered present for purposes of determining whether a quorum exists.

A majority vote of all the shares of Common Stock entitled to vote at any duly constituted meeting of the shareholders (which we refer to as the Company Shareholder Approval) is required to approve the Merger Agreement and consummate the transactions contemplated thereby, including the Merger. If you fail to vote on the Merger Agreement, the effect will be the same as a vote against the adoption of the Merger Agreement.

The Compensation Proposal and the Adjournment Proposal each require a majority vote of the number of shares of Common Stock entitled to vote and represented at any meeting at which there is a quorum. 

A broker “non-vote” generally occurs when a broker or other nominee holding shares for a beneficial owner does not vote on a proposal because the broker or other nominee has not received instructions as to such proposal from the beneficial owner and does not have discretionary power to vote on such proposal. Broker non-votes for the Compensation Proposal and Adjournment Proposal will not effect voting on such proposal.

If you are a beneficial owner and you do not give instructions to your broker, bank, or other holder of record, such holder of record will be entitled to vote the shares with respect to “routine” items but will not be permitted to vote the shares with respect to “non-routine” items. We believe that all of the proposals are non-routine matters under applicable rules.

Accordingly, we believe your broker, bank, or other holder of record will not have discretion to vote your shares on any proposal, in which case, if you do not instruct your broker how to vote with respect to such proposals, your broker may not vote with respect to such proposals. However, whether a proposal is “routine” or “non-routine” remains subject to the final determination of the New York Stock Exchange, which regulates broker-dealers and their discretion to vote on shareholder proposals. In the event that it is determined that a different voting standard applies to a particular proposal or that the status of a matter as either “routine” or “non-routine” should be changed, we will file supplemental proxy materials with the SEC to notify you regarding such matters.

As a result, if you hold your Common Stock in “street name” and you do not provide voting instructions, your Common Stock will be counted for purposes of determining whether a quorum is present at the Special Meeting but will have the same effect as a vote “AGAINST” the Merger Proposal. Assuming a quorum is present, however, “broker non-votes” will have no effect on the Compensation Proposal or Adjournment Proposal.

Proxies received but marked as abstentions will be included in the calculation of the number of shares of Common Stock represented at the Special Meeting for purposes of determining whether a quorum is present. Such proxies will have the same effect as a vote “AGAINST” the Merger Proposal, Compensation Proposal and Adjournment Proposal.

All holders of Common Stock as of the close of business on the Record Date, including shareholders of record and beneficial owners of Common Stock registered in the “street name” of a bank, broker or other nominee, are invited to attend the Special Meeting.

Shareholders will be able to vote in person at the virtual Special Meeting. Each shareholder must have his or her 16-digit control number that is printed on his or her proxy card in order to be able to vote in person at the virtual Special Meeting.

To ensure that your shares are represented at the Special Meeting, we recommend that you provide voting instructions promptly by proxy, even if you plan to attend the Special Meeting in person.

If you are a shareholder of record, you may provide voting instructions by proxy using one of the methods described below.

Submit a Proxy by Telephone or via the Internet. This proxy statement is accompanied by a proxy card with instructions for submitting voting instructions. You may vote by telephone by calling the toll-free number or via the Internet by accessing the Internet address as specified on the enclosed proxy card by the deadlines set forth on the card. Your shares will be voted as you direct in the same manner as if you had completed, signed, dated and returned your proxy card, as described below.

Submit a Proxy Card. If you complete, sign, date and return the enclosed proxy card by mail so that it is received before the Special Meeting, your shares will be voted in the manner directed by you on your proxy card.

If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted in favor of the Merger Proposal, the Compensation Proposal and the Adjournment Proposal. If you fail to return your proxy card, the effect will be that your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting (unless you are a record holder as of the Record Date and attend the Special Meeting in person) and will have the same effect as a vote against the Merger Proposal, but will not affect the vote regarding the Compensation Proposal and the Adjournment Proposal.

If your shares are held by a bank, broker or other nominee on your behalf in “street name,” your bank, broker or other nominee will send you instructions as to how to provide voting instructions for your shares by proxy. Banks and brokerage firms generally have a process for their customers to provide voting instructions by telephone or via the Internet, in addition to providing voting instructions by proxy card.

Your proxy is revocable. If you are a shareholder of record, you may revoke your proxy at any time before the vote is taken at the Special Meeting by:

Attending the Special Meeting without taking one of the actions described above will not revoke your proxy. Please note that if you want to revoke your proxy by mailing a new proxy card to the Company or by sending a written notice of revocation to the Company, you should ensure that you send your new proxy card or written notice of revocation in sufficient time for it to be received by the Company before the day of the Special Meeting.

If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by it in order to revoke your proxy or submit new voting instructions.

The Special Meeting may be adjourned or postponed from time to time, including for the purpose of soliciting additional proxies if there are insufficient votes at the time of the Special Meeting to obtain the Company Shareholder Approval, although this is not currently expected. If there is present, in person or by proxy, sufficient favorable voting power to secure the vote of the shareholders of the Company necessary to adopt the Merger Agreement, the Company does not anticipate that it will adjourn or postpone the Special Meeting. Any signed proxies received by the Company in which no voting instructions are provided on the Adjournment Proposal will be voted in favor of adjournment, if the proposal is introduced.

We will bear the cost of our solicitation of proxies. This includes the charges and expenses of brokerage firms and others for forwarding solicitation material to beneficial owners of our outstanding Common Stock. We may solicit proxies by mail, personal interview, email, telephone, or via the Internet. Brokerage houses, nominees, fiduciaries and other custodians will be requested to forward soliciting materials to beneficial owners and will be reimbursed for their reasonable out-of-pocket expenses incurred in sending proxy materials to beneficial owners.

The following is a summary of the material provisions of the Merger Agreement, a copy of which is attached to this proxy statement as Annex A, and which we incorporate by reference into this proxy statement. The provisions of the Merger Agreement are extensive and not easily summarized. We encourage you to read carefully the Merger Agreement in its entirety, as the rights and obligations of the parties to the Merger Agreement are governed by the express terms of the Merger Agreement and not by this summary or any other information contained in this proxy statement. In addition, you should read “Agreements Involving Common Stock – Voting Agreements”, which summarizes the Voting Agreements, as certain provisions of these agreements relate to certain provisions of the Merger Agreement.

The Merger Agreement and this summary of its terms have been included to provide you with information regarding the terms of the Merger Agreement. Factual disclosures about the Company contained in this Proxy Statement or in the Company’s public reports filed with the SEC may supplement, update or modify the factual disclosures about the Company contained in the Merger Agreement and described in this summary. The representations, warranties and covenants made in the Merger Agreement by the Company, Parent and Merger Sub to the other parties to the Merger Agreement were qualified and subject to important limitations agreed to by the Company, Parent and Merger Sub in connection with negotiating the terms of the Merger Agreement. In particular, in your review of the representations and warranties contained in the Merger Agreement and described in this summary, it is important to bear in mind that the representations and warranties were negotiated with the principal purposes of establishing the circumstances in which a party to the Merger Agreement may have the right not to close the Merger if the representations and warranties of the other party prove to be untrue, due to a change in circumstance or otherwise, and allocating risk between the parties to the Merger Agreement, rather than establishing matters as facts. The representations and warranties may also be subject to a contractual standard of materiality different from those generally applicable to shareholders and reports and documents filed with the SEC, and in some cases were qualified by disclosures that were made by each party to the Merger Agreement to the other, which disclosures are not reflected in the Merger Agreement. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this Proxy Statement, may have changed since the date of the Merger Agreement, April 20, 2026. Additional information about the Company may be found elsewhere in this proxy statement and in the Company’s other public filings. See “Where You Can Find Additional Information” beginning on page 64.

The representations, warranties and covenants contained in the Merger Agreement were made only for purposes of the Merger Agreement and as of specific dates, were solely for the benefit of the parties to the Merger Agreement, may be subject to limitations agreed upon by contracting parties, including being qualified by confidential disclosures exchanged between the parties in connection with the execution of the Merger Agreement, and may be subject to standards of materiality applicable to contracting parties that differ from those applicable to investors. Shareholders and other investors should not rely on the representations, warranties and covenants, or any descriptions thereof, as characterizations of the actual state of facts or condition of the Company, Parent, Merger Sub or any of their respective subsidiaries or affiliates.

At the Effective Time of the Merger, Merger Sub will merge with and into the Company and the separate corporate existence of Merger Sub will cease. The Company will be the surviving corporation in the Merger and will continue to be a Minnesota corporation after the Merger as a wholly owned subsidiary of Parent. At the closing of the Merger, the articles of incorporation and bylaws of Merger Sub (but amended so that the name of the surviving corporation will be “Electro-Sensors, Inc.”) will be the articles of incorporation and bylaws of the surviving corporation.

The directors of Merger Sub immediately prior to the Effective Time of the Merger will be the initial directors of the surviving corporation and will hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal in accordance with the articles of incorporation and the bylaws of the surviving corporation. The officers of the Company immediately prior to the Effective Time will be the initial officers of the surviving corporation and will hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal in accordance with the articles of incorporation and bylaws of the surviving corporation.

The closing of the Merger will take place via the electronic exchange of documents and signature pages on the tenth (10th) Business Day after the satisfaction or waiver of the last to be satisfied conditions set forth in Section 2.2 of

the Merger Agreement (other than those conditions that by their nature are to be satisfied at the Closing), or at such other place, time and date as the Company and Parent may otherwise agree in writing. The Merger will become effective at the time (which we refer to as the “Effective Time”) when the parties file articles of merger with the Secretary of State of the State of Minnesota, to be executed, acknowledged and filed in accordance with Section 302A.615 of the MBCA, or at such later date or time as may be agreed by Parent and the Company in writing and specified in the articles of merger in accordance with Minnesota law.

At the Effective Time, each outstanding share of Common Stock (other than cancelled shares (as described below) and dissenting shares) will be converted automatically into and will represent the right to receive $7.75 in cash per share, without interest.

Each share of Common Stock that is directly owned by (i) the Company immediately prior to the Effective Time (including as treasury stock or otherwise, in each case, not held on behalf of third parties) or (ii) Parent, Merger Sub or any other wholly owned subsidiary of Parent immediately prior to the Effective Time (which we refer to as “cancelled shares”) will be cancelled automatically and will cease to exist, and no consideration will be delivered in exchange therefor.

Each share of Common Stock that is issued and outstanding immediately prior to the Effective Time that is held by any shareholder who has not voted in favor of the approval of the Merger Agreement and who is entitled to and has properly and timely exercised dissenters’ rights with respect thereto in accordance with Sections 302A.471 and 302A.473 of the MBCA (which we refer to as “dissenting shares”) will not be converted into the right to receive the Merger Consideration, unless and until the shareholder loses its rights as a dissenting shareholder. If, after the Effective Time, any such holder fails to perfect or effectively withdraws or loses such rights, such dissenting shares will be treated as if they had been converted into, at the Effective Time, the right to receive the Merger Consideration.

At the Effective Time, each common share of Merger Sub issued and outstanding immediately prior to the Effective Time will be converted into one validly issued, fully paid and nonassessable share of common stock of the surviving corporation.

At the Effective Time, each outstanding Company Option will be fully vested and will automatically be cancelled and converted into the right to receive an amount in cash, without interest, equal to $7.75 per share less the exercise price applicable to such Company Option, subject to any required withholding of taxes.

At the Effective Time, each outstanding Company RSU will be fully vested and will automatically be cancelled and converted into the right to receive an amount in cash, without interest, equal to the product obtained by multiplying (A) the total number of shares of Common Stock underlying such Company RSU by (B) $7.75, the Merger Consideration, subject to any required withholding of taxes.

The Company will take all actions necessary to terminate the Company Equity Plan as of the Effective Time. Payment to holders of Company Options and Company RSUs who are employees will be made no later than the end of the first full regularly scheduled payroll cycle following the Effective Time, and payment to holders who are non-employee directors will be made promptly following the Effective Time.

At or promptly following the Effective Time, Parent will deposit, or will cause to be deposited (including from the Company’s cash), with Equiniti Trust Company (or another U.S. bank or trust company mutually agreed by Parent and the Company in writing) as the paying agent, for the benefit of holders of shares of Common Stock, cash in U.S. dollars sufficient to pay the aggregate Merger Consideration payable at the Closing.

Promptly after the Effective Time (and in any event within three business days thereafter), the surviving corporation will cause the paying agent to mail or otherwise provide to each former holder of record of Common Stock whose shares

were converted into the right to receive Merger Consideration transmittal materials, including a letter of transmittal in customary form, specifying that delivery will be effected, and risk of loss and title to the certificates will pass, only upon proper delivery of the certificates (or affidavits of loss in lieu thereof) to the paying agent or an “agent’s message” regarding the book-entry transfer of book-entry shares.

Any portion of the payment fund that remains undistributed to the former holders of shares of Common Stock on the one-year anniversary of the Effective Time will thereafter be delivered to the surviving corporation on demand, and any former holders who have not surrendered their shares will thereafter look only to the surviving corporation (as general unsecured creditors) for payment of their claim for the Merger Consideration.

The Merger Agreement contains representations and warranties of the Company as to, among other things:

The Merger Agreement also contains representations and warranties of Parent and Merger Sub as to, among other things:

Many of the representations and warranties in the Merger Agreement are qualified by knowledge or materiality qualifications or a “material adverse effect” clause.

For purposes of the Merger Agreement, a “Company Material Adverse Effect” means any fact, circumstance, event, change, occurrence, effect or development that has or would reasonably be expected to have a material adverse effect on the business. However, the following will not constitute a Company Material Adverse Effect:

For purposes of the Merger Agreement, a “Parent Material Adverse Effect” means any effect that, considered together with all other effects, would reasonably be expected to, individually or in the aggregate, prevent or materially delay the Closing or prevent or materially delay or materially impair the ability of Parent or Merger Sub to satisfy the conditions precedent to the Merger, to obtain financing for the Merger or to consummate the Merger and the other transactions contemplated by the Merger Agreement.

The Merger Agreement provides that, subject to certain exceptions or Parent’s consent, during the period from the signing of the Merger Agreement to the Effective Time, the Company must use reasonable best efforts to (A) conduct its business in all material respects in the ordinary course of business consistent with past practices, (B) preserve intact in all material respects its existing business organization and business relationships, and (C) preserve and maintain a consolidated amount of unrestricted cash and cash equivalents of the Company of at least $10,250,000, less certain permitted transaction expenses, at all times during the ten (10) business day period immediately prior to Closing. In addition, subject to certain exceptions or Parent’s written consent, the Company must not:

During normal business hours throughout the period prior to the Effective Time, the Company must provide Parent and Parent’s representatives reasonable access to the Company’s officers, employees and other personnel, properties, contracts, commitments, and books and records, and such other information as Parent reasonably requests in connection with the consummation of the Merger and related integration and transition planning.

Pursuant to the Merger Agreement, the Company has agreed not to, and to instruct its representatives not to, directly or indirectly:

An “Alternative Acquisition Proposal” is any offer, proposal or indication of interest made by any person or group of persons (other than Parent or Merger Sub or their respective affiliates) relating to or concerning (i) a merger, reorganization, share exchange, consolidation, tender offer, business combination, recapitalization, liquidation,

dissolution or similar transaction involving the Company, in each case, as a result of which the shareholders of the Company immediately prior to such transaction would cease to own at least eighty percent (80%) of the total voting power of the Company or the surviving entity, as applicable, immediately following such transaction, (ii) the direct or indirect acquisition by any person of assets constituting or accounting for more than twenty percent (20%) of the consolidated assets, revenue or net income of the Company, or (iii) the direct or indirect acquisition by any person of more than twenty percent (20%) of the outstanding shares of Common Stock or securities representing more than twenty percent (20%) of the total voting power of the Company.

If, prior to the receipt of the Company Shareholder Approval, (i) the Company receives an unsolicited Alternative Acquisition Proposal that the Board has determined in good faith (after consultation with its financial advisor and outside legal counsel) either constitutes a Superior Proposal (as defined below) or could reasonably be expected to lead to or result in a Superior Proposal and (ii) after consultation with its counsel, the Board determines in good faith that failure to take action concerning the unsolicited Alternative Acquisition Proposal would be inconsistent with the directors’ fiduciary duties under applicable law, then the Company may:

For purposes of this proxy statement, a “Superior Proposal” is a bona fide written Alternative Acquisition Proposal substituting “80%” for “20%” in each place each such phrase appears in the definition thereof, made by a third party that (a) did not result from a breach of the non-solicitation provisions of the Merger Agreement and (b) the Board determines in good faith, after consultation with the Company’s outside legal and financial advisors, and considering such factors as the Board considers to be appropriate, to be more favorable from a financial point of view to the Company and its shareholders (in their capacity as such) than the transactions contemplated by the Merger Agreement.

The Company must promptly (and in any event within 24 hours) advise Parent in writing of any unsolicited Alternative Acquisition Proposal, including the identity of the party making such alternative proposal and the terms thereof, and must keep Parent reasonably informed on a prompt basis of any material developments regarding any Alternative Acquisition Proposals and any material discussions or negotiations thereof.

Except as described below, neither the Board nor any committee thereof is permitted to:

At any time prior to obtaining the required vote of the Company shareholders, the Board may:

In either case, the Board may only make a Recommendation Change if it (i) provides Parent with at least four business days’ prior written notice of its intent to take such action, (ii) negotiates with Parent and any representative of Parent (if Parent desires to negotiate) to permit Parent to propose amendments to the Merger Agreement, (iii) at the end of the applicable notice period, and taking into account any further Parent proposals regarding the Merger Agreement, the Board determines that the Superior Proposal would continue to constitute a Superior Proposal or, in the case of an Intervening Event, the failure to make a Recommendation Change would continue to be inconsistent with its fiduciary duties under applicable law, and (iv) in the case of a Superior Proposal, such Superior Proposal did not result from a breach of the non-solicitation provisions of the Merger Agreement.

The Company will take all action reasonably necessary in accordance with applicable law to set a record date for, duly give notice of, convene and hold a meeting of its shareholders following the mailing of this proxy statement for the purpose of obtaining the Company Shareholder Approval as soon as reasonably practicable following the clearance date with respect to SEC review of the proxy statement and, in any event no later than 45 days following the date on which the definitive proxy statement is first mailed to the Company’s shareholders. Unless the Company will have made a Recommendation Change, the Company will include the Company Recommendation in the proxy statement and will solicit, and use its reasonable best efforts to obtain, the Company Shareholder Approval.

Subject to the terms and conditions of the Merger Agreement, each of the parties to the Merger Agreement will use its reasonable best efforts to take all actions, and promptly do all things, that are necessary, proper or advisable under applicable laws to consummate and make effective the Merger and the other transactions contemplated by the Merger Agreement as promptly as practicable, including:

Pursuant to the Merger Agreement, Parent and the surviving corporation have agreed to indemnify and hold harmless each current and former (as of the Effective Time) director and officer of the Company (each, an “Indemnified Party”) against any costs or expenses (including advancing reasonable attorneys’ fees and expenses in advance of the final disposition of any proceeding), judgments, fines, losses, claims, damages, obligations, costs, liabilities and amounts paid in settlement in connection with any actual or threatened claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of, relating to or in connection with any action or omission occurring or alleged to have occurred at or prior to the Effective Time (including acts or omissions in connection with such persons serving as an officer, director, employee or other fiduciary of any entity if such service was at the request or for the benefit of the Company), to the fullest extent provided in the governing and organizational documents of the Company as in effect on the date of the Merger Agreement.

For a period of six years from the Effective Time, the surviving corporation shall cause the organizational documents of the surviving corporation to contain provisions with respect to indemnification, advancement of expenses, and exculpation that are at least as favorable to the Indemnified Parties as the indemnification, advancement of expenses, and exculpation provisions set forth in the organizational documents of the Company as of the date of the Merger Agreement.

Additionally, at or prior to the Effective Time, the Company is required to purchase a six-year prepaid “tail” policy on the Company’s current policies of directors’ and officers’ liability insurance on terms and conditions that are not less

advantageous to the Indemnified Parties as the current policies of directors’ and officers’ liability insurance maintained by the Company with respect to matters arising at or before the Effective Time, covering without limitation the transactions contemplated by the Merger Agreement, provided that the aggregate cost of such “tail” policy will not exceed 200% of the last annual premium paid by the Company prior to the date of the Merger Agreement. The indemnification provisions the Merger Agreement will survive the consummation of the Merger for a period of six years and expressly are intended to benefit, and are enforceable by, each of the Indemnified Parties.

The Merger Agreement contains provisions relating to the Company’s ESOP. The Company’s Board will take all requisite action to amend and terminate the ESOP, subject to the Closing and effective as of and concurrent with the Closing, to: (i) provide that the ESOP no longer is an “employee stock ownership plan” within the meaning of Section 4975 of the Code; (ii) prohibit distributions to any participant or beneficiary prior to the Company’s receipt of the IRS Determination in excess of 75% of fully vested account balances; (iii) permit distributions only in cash and no longer in Common Stock; (iv) provide that the ESOP will be frozen for purposes of eligibility and participation as of the Closing Date; (v) fully vest all participant account balances as of the Closing Date; and (vi) provide for the termination of the ESOP effective immediately following the Closing.

The Company will promptly submit an application on Form 5310 to obtain from the Internal Revenue Service a written determination that the ESOP and its related trust is qualified under Sections 401(a) and 501(a) of the Internal Revenue Code as of the termination date of the ESOP.

Prior to the Effective Time, the Company will keep Parent reasonably informed of the status of, and cooperate reasonably with Parent in connection with, any shareholder demand, action or other proceeding (including class action or derivative claims) asserted, commenced or threatened against the Company or its directors or officers relating to the Merger Agreement or the transactions contemplated thereby. Without limiting the foregoing, the Company will (a) give Parent a reasonable opportunity to participate in the defense or settlement of any such litigation or claim, (b) consult in good faith with Parent with respect to the defense, settlement and prosecution of any such litigation, and (c) not compromise or settle any such litigation without the prior written consent of Parent (which will not be unreasonably withheld, conditioned or delayed).

The Merger Agreement contains additional agreements between the Company, Parent and Merger Sub relating to, among other matters:

The obligations of the Company, Parent and Merger Sub to effect the Merger are subject to the fulfillment or waiver, at or before the Effective Time, of the following conditions:

The obligation of Parent and Merger Sub to effect the Merger is subject to the fulfillment or waiver, at or before the Effective Time, of the following additional conditions:

The obligation of the Company to effect the Merger is subject to the fulfillment or waiver, at or before the Effective Time, of the following additional conditions:

The Company and Parent may terminate the Merger Agreement by mutual written consent at any time before the completion of the Merger. In addition, either the Company or Parent may terminate the Merger Agreement if:

The Company may terminate the Merger Agreement:

Parent may terminate the Merger Agreement:

Except as otherwise provided in the Merger Agreement, as described in this “The Merger Agreement – Fees and Expenses” section, whether or not the Merger is consummated, all costs and expenses incurred in connection with the Merger will be paid by the party incurring or required to incur them.

If the Merger Agreement is terminated (i) by Parent pursuant to Section 7.1(d)(ii) following a Recommendation Change by the Board, or (ii) pursuant to Section 7.1(b)(iii) (failure to obtain Company Shareholder Approval) or Section 7.1(d)(i) (Company breach), then the Company will pay to Parent an amount equal to Parent’s expenses actually incurred as of the date of such termination, which in no event shall exceed $300,000.

At any time prior to the Effective Time, whether before or after receipt of the Company Shareholder Approval, any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the Company, Parent and Merger Sub, or in the case of a waiver, by the Party against whom the waiver is to be effective. Following receipt of the Company Shareholder Approval, if any such amendment or waiver will be by applicable law or in accordance with the rules and regulations of the Nasdaq Capital Market require further approval of the shareholders of the Company, the effectiveness of such amendment or waiver will be subject to the approval of the shareholders of the Company.

The parties acknowledge and agree that, unless and until the Merger Agreement is validly terminated, the parties will be entitled to an injunction, specific performance and other equitable relief to prevent breaches or threatened breaches of the Merger Agreement and to enforce specifically the terms and provisions thereof, without proof of actual damages and without any requirement for the posting of security. Notwithstanding the foregoing, specific performance shall not be available to Parent if Parent has failed to fund the Merger Consideration or is otherwise unable to consummate the Closing due to a financing failure. Parent acknowledges and agrees that its obligation to consummate the Closing is not conditioned on the availability of financing.

The Merger Agreement is governed by and construed in accordance with the laws of the State of Delaware without giving effect to the principles of conflicts of law thereof or of any other jurisdiction, except that matters relating to the fiduciary duties of the Company Board and matters that are specifically required by the MBCA in connection with the Merger shall be governed by the laws of the State of Minnesota.

This section describes the material terms of the Voting Agreements, the form of which is filed as Exhibit 10.1 to Amendment No. 1 to our Current Report on Form 8-K/A filed with the SEC on April 27, 2026. The rights and obligations of the parties to the Voting Agreements are governed by the express terms and conditions of the Voting Agreements and not by this discussion, which is a summary. This discussion is qualified in its entirety by reference to the complete text of the Voting Agreement. You are encouraged to read the Voting Agreement carefully and in its entirety, as well as this proxy statement and any documents incorporated by reference herein, before making any decisions regarding the Merger. Additional information can be found elsewhere in this proxy statement and in the public filings we make with the SEC, as described in “Where You Can Find Additional Information,” beginning on page 64 of this proxy statement.

In connection with the execution of the Merger Agreement, certain shareholders of the Company entered into Voting Agreements with Parent, dated as of April 20, 2026, pursuant to which each such shareholder agreed, subject to the terms and conditions of the applicable Voting Agreement (including any limitations that may be applicable under Minnesota law), to vote all shares of Common Stock beneficially owned by such shareholder in favor of the approval and adoption of the Merger Agreement and the Merger and against any Alternative Acquisition Proposal or any other proposal that could reasonably be expected to impede, interfere with, delay, discourage, adversely affect, or inhibit the timely consummation of the Merger.

The following individuals entered into Voting Agreements with Parent: David L. Klenk, Jeffrey D. Peterson, Joseph A. Marino, John E. Peterson, Lynne E. Peterson, Patricia N. Peterson, Paul R. Peterson, and Scott A. Gabbard (collectively, the “Support Shareholders”). Certain of the foregoing are directors, executive officers, or beneficial owners of the Company.

Under the Voting Agreements, the Support Shareholders have agreed, subject to the terms and conditions set forth therein, to, among other things, vote all of the Support Shareholders’ Shares (i) in favor of the adoption of the Merger Agreement and the Merger and the other actions contemplated thereby; (ii) in favor of any other proposals presented by the Company in connection with the transactions contemplated by the Merger Agreement; (iii) in favor of any adjournment or postponement if there are not sufficient votes to adopt the Merger Agreement or there are not sufficient shares of capital stock of the Company represented to constitute a quorum; (iv) against any Alternative Acquisition Proposal or the transactions contemplated thereby; (v) against any action, proposal, transaction, or agreement submitted to shareholders for approval that could reasonably be expected to result in a breach of the Merger Agreement or a Voting Agreement; and (vi) against any action, proposal, transaction, or agreement submitted to shareholders for approval that could reasonably be expected to impede, interfere with, delay, discourage, adversely affect, or inhibit the timely consummation of the transactions or the fulfillment of the Company’s conditions under the Merger Agreement or change in any manner the voting rights of any class of shares of the Company except as required by the Merger Agreement.

Each Support Shareholder has agreed not to, and to cause its subsidiaries and its and its subsidiaries’ directors and officers not to, and to use its reasonable best efforts to cause its affiliates and representatives not to, directly or indirectly: (i) solicit, initiate, propose or induce the making, submission or announcement of, or encourage, facilitate or assist, any proposal or inquiry that constitutes, or would reasonably be expected to lead to, an Alternative Acquisition Proposal; (ii) furnish to any person (other than to Parent or any designees of Parent) any non-public information relating to the Company or its subsidiaries or afford to any person access to the business, properties, assets, books, records or other non-public information, or to any personnel, of the Company or its subsidiaries (other than Parent or any designees of Parent), in any such case with the intent to induce the making, submission or announcement of, or to encourage, facilitate or assist, any proposal or inquiry that constitutes, or would reasonably be expected to lead to, an Alternative Acquisition Proposal or any inquiries or the making of any proposal that constitutes, or would reasonably be expected to lead to, an Alternative Acquisition Proposal; (iii) participate or engage in discussions or negotiations with any person with respect to any inquiry or proposal that constitutes, or would reasonably be expected to lead to, an Alternative Acquisition Proposal; (iv) approve, endorse or recommend any proposal that constitutes, or would reasonably be expected to lead to, an Alternative Acquisition Proposal; (v) negotiate or enter into any letter of intent, memorandum of understanding, merger agreement, acquisition agreement or other contract relating to an Alternative Acquisition Proposal; or (vi) authorize or commit to do any of the foregoing; provided, however, that nothing in the Voting Agreement will prevent a Support Shareholder, in his or her capacity as a director or executive officer of the Company, from engaging in any activity permitted pursuant to Section 6.1 of the Merger Agreement.

The Voting Agreements shall terminate upon the date of the earliest to occur of: (i) the closing of the Merger, (ii) such date and time as the Merger Agreement shall be validly terminated in accordance with its terms; provided, however, that if the Merger Agreement has been validly terminated under specified sections of the Merger Agreement, and if Parent or Merger Sub thereafter continues actively pursuing the Company at a value equal to or greater than the Merger Consideration (as evidenced by a tender offer to Company shareholders or a public bid for the Company), then the Support Shareholder’s obligation to vote against any Alternative Acquisition Proposal shall survive any termination of the Voting Agreements until September 30, 2026; (iii) by written agreement of Parent and the Support Shareholder party thereto; and (iv) with respect to a Support Shareholder, the delivery by such Support Shareholder of written notice to Parent of such Support Shareholder’s election, in its sole discretion, to terminate his or her Voting Agreement following any amendment or modification to the Merger Agreement as in effect on April 20, 2026, that reduces the amount of the Merger Consideration, changes the form of any of the Merger Consideration or otherwise modifies the terms of the Merger Agreement in a manner that is materially adverse to the Company’s shareholders as a whole.

Nothing in the Voting Agreement (i) limits or affects any actions or omissions taken by the Support Shareholder in the capacity as a director or officer, including in exercising rights under the Merger Agreement, or (ii) will be construed to prohibit, limit, or restrict the Support Shareholder from exercising his or her fiduciary duties as a director or officer of the Company.

We are asking you to approve a proposal to adopt the Merger Agreement, which we refer to as the “Merger Proposal.” For a detailed discussion of the terms and conditions of the Merger Agreement, see “The Merger Agreement” beginning on page 42 of this proxy statement. A copy of the Merger Agreement is attached to this proxy statement as Annex A. See also “The Merger” beginning on page 15 of this proxy statement.

As described under “The Merger – Recommendation of the Board” beginning on page 24 of this proxy statement, after considering various factors described in such section, the Board has determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to, and in the best interests of, the Company and our shareholders. The Board has approved and declared advisable the execution and delivery by the Company of the Merger Agreement and the other transactions contemplated thereby upon the terms and subject to the conditions contained therein, and the Board recommends that you vote “FOR” the Merger Proposal.

Each share of Common Stock issued and outstanding as of the close of business on the Record Date is entitled to one vote at the Special Meeting. A majority vote of all the shares of Common Stock entitled to vote at the Special Meeting (which we refer to as the Company Shareholder Approval) is required to approve the Merger Agreement and consummate the transactions contemplated thereby, including the Merger. If you fail to vote on the Merger Agreement, the effect will be the same as a vote against the adoption of the Merger Agreement.

Abstentions and broker non-votes, if any, will have the same effect as a vote “AGAINST” the Merger Proposal.

THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE MERGER PROPOSAL.

As required by Section 14A of the Exchange Act and the applicable SEC rules issued thereunder, we are required to submit a proposal to our shareholders for a non-binding, advisory vote to approve certain compensation that may be paid or become payable to the named executive officer of the Company that is based on or otherwise relates to the Merger, as determined in accordance with Item 402(t) of Regulation S-K. This compensation is summarized in the table set forth below, including the footnotes to the table. This proposal is commonly known as a “say-on-golden parachute proposal,” and we refer to it as the “Compensation Proposal.”

The information set forth in the table below is intended to comply with Item 402(t) of Regulation S-K, which requires disclosure of information about compensation that may be paid or become payable to our named executive officer that is based on or otherwise relates to the Merger, assuming the Merger is consummated on the latest practicable date prior to the filing of this proxy statement, June 10, 2026.

Please note that the amounts indicated below are estimates based on the material assumptions described in the assumptions and notes to the table below, which may or may not actually occur. Some of these assumptions are based on information currently available and, as a result, the actual amounts, if any, that may become payable to a named executive officer may differ in material respects from the amounts set forth below. For purposes of this disclosure, “single-trigger” refers to payments and benefits that arise solely as a result of the completion of the Merger.

Furthermore, for purposes of calculating such amounts, we have assumed:

Given that the vesting of Company Options and Company RSUs will accelerate at the Effective Time of the Merger pursuant to the Merger Agreement without regard to any termination of employment, they are considered “single-trigger” benefits. The following table quantifies each separate form of compensation included in the aggregate total reported in this column:

The Board recommends that the shareholders of the Company approve the following resolution:

“RESOLVED, that the compensation that may be paid or become payable to the Company’s named executive officer in connection with the Merger, as disclosed pursuant to Item 402(t) of Regulation S-K under the section entitled “Proposal No. 2: Advisory Vote on the Compensation Proposal” beginning on page 56 of the proxy statement, including the associated narrative discussion, is hereby approved on a non-binding, advisory basis.”

The approval of the Compensation Proposal requires a majority vote of the number of shares of Common Stock entitled to vote and represented at the Special Meeting at which there is a quorum.

Each share of Common Stock issued and outstanding as of the close of business on the Record Date is entitled to one vote at the Special Meeting. If a shareholder abstains from voting, it will have the same effect as a vote “AGAINST” the Compensation Proposal. Broker non-votes, if any, will have no effect on the Compensation Proposal.

The vote on the Compensation Proposal is a vote separate and apart from the vote on the Merger Proposal. Accordingly, you may vote to approve the Merger Proposal and vote against or abstain with respect to the Compensation Proposal and vice versa. Because the vote on the Compensation Proposal is advisory only, it will not be binding on either us or Parent. Accordingly, if the Merger Proposal is approved and the Merger is completed, the compensation will be payable, subject only to the conditions applicable thereto, regardless of the outcome of the non-binding, advisory vote of our shareholders on the Compensation Proposal.

THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE COMPENSATION PROPOSAL.

We are asking you to approve a proposal to approve the adjournment of the Special Meeting to a later date or dates if necessary to solicit additional proxies if there are insufficient votes to approve the Merger Proposal at the time of the Special Meeting, which we refer to as the “Adjournment Proposal.” If our shareholders approve the Adjournment Proposal, we could adjourn the Special Meeting to solicit additional proxies, including the solicitation of proxies from shareholders that have previously returned properly executed proxies voting against the Merger Proposal. Among other things, approval of the Adjournment Proposal could mean that, even if we had received proxies representing a sufficient number of votes against the Merger Proposal such that the Merger Proposal would be defeated, we could adjourn the Special Meeting without a vote on the Merger Proposal and seek to convince the holders of those shares of Common Stock to change their votes to vote in favor of the Merger Proposal. In addition, the Special Meeting could be adjourned if a quorum is not present for the meeting.

If the Special Meeting is adjourned or postponed to solicit additional proxies, shareholders who have already submitted their proxies will be able to revoke them at any time prior to their use at the Special Meeting as adjourned or postponed. We do not intend to call a vote on the Adjournment Proposal if the Merger Proposal is approved at the Special Meeting.

The Board believes that it is in the best interests of the Company and our shareholders to be able to adjourn the Special Meeting if necessary for the purpose of soliciting additional proxies in respect of the Merger Proposal if there are insufficient votes to approve the Merger Proposal at the time of the Special Meeting.

The approval of the Adjournment Proposal requires a majority vote of the number of shares of Common Stock entitled to vote and represented at the Special Meeting at which there is a quorum.

Each share of Common Stock issued and outstanding as of the close of business on the Record Date is entitled to one vote at the Special Meeting. If a shareholder abstains from voting, it will have the same effect as a vote “AGAINST” the Adjournment Proposal. Broker non-votes, if any, will have no effect on the Adjournment Proposal.

The vote on the Adjournment Proposal is a vote separate and apart from the vote on the Merger Proposal. Accordingly, you may vote to approve the Merger Proposal and vote against or abstain with respect to the Adjournment Proposal and vice versa.

THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE ADJOURNMENT PROPOSAL.

The following table sets forth information, as of June 10, 2026, regarding the beneficial ownership of the outstanding shares of Common Stock by persons known by the Company to beneficially own more than 5% of the outstanding shares of Common Stock, directors, the executive officer, and the Company’s directors and executive officer as a group. If an individual’s address is not provided, the individual’s address is 6111 Blue Circle Drive Minnetonka MN 55343.

The following is a summary of certain material terms of Sections 302A.471 and 302A.473 of the MBCA. The summary is not complete and must be read together with the actual statutory provisions, which sections are reproduced in their entirety as Annex C to this proxy statement. The Company encourages you to read Sections 302A.471 and 302A.473 of the MBCA carefully and in their respective entirety because the rights and obligations of the Company and its shareholders are governed by the express terms of these statutory provisions and other applicable law, and not by this summary or any other information contained in this proxy statement. This summary may not contain all the information about these statutory provisions that is important to you.

As a Minnesota corporation, the Company is governed by the MBCA. The MBCA provides a shareholder with the right to dissent from the Merger and instead obtain payment for the “fair value” of such shareholder’s shares of Company Common Stock, which value could be more than, less than or equal to the Merger Consideration. Accordingly, a shareholder exercising dissenters’ rights could receive less than the Merger Consideration. Dissenter’s rights are set forth in Sections 302A.471 and 302A.473 of the MBCA.

This proxy statement constitutes the Company’s notice to its shareholders of the availability of dissenters’ rights in connection with the Merger in compliance with the requirements of Section 302A.473, subdivision 2 of the MBCA.

Any Company shareholder contemplating an attempt to assert and exercise dissenters’ rights in connection with the Merger should review carefully the provisions of Sections 302A.471 and 302A.473 of the MBCA (which sections are reproduced in their entirety as Annex C to this proxy statement), particularly the specific procedural steps required to perfect such rights. Dissenters’ rights are lost if the procedural requirements of Section 302A.473 of the MBCA are not fully and precisely satisfied. Each shareholder who entered into a Voting Agreement agreed to waive dissenters’ rights solely with respect to the shares subject to such Voting Agreement.

In view of the complexity of these statutory provisions, any shareholders who may wish to pursue dissenters’ rights should consult their legal advisors.

Under Section 302A.473, subdivision 3 of the MBCA, a Dissenter must file with the Company, before the vote on the Merger, a written notice of intent to demand the “fair value” of shares of Company Common Stock owned by such shareholder.

The written notice of intent should be sent to the attention of the Corporate Secretary of the Company at 6111 Blue Circle Drive, Minnetonka, Minnesota 55343.

To be effective, the notice must be filed with the Company before the vote on the Merger. In addition, the shareholder must not vote their shares in favor of the Merger Proposal. A vote against the Merger does not in itself constitute a notice of a shareholder’s intent to demand fair value and a failure to vote does not affect the validity of a timely written notice. However, the submission of a properly signed blank proxy will constitute a vote in favor of the Merger Proposal and a waiver of statutory dissenters’ rights.

Under Section 302A.471, subdivision 2 of the MBCA, beneficial owners of shares of Company Common Stock who desire to exercise statutory dissenters’ rights must obtain and submit the registered owner’s written consent at or before the time the notice of intent to demand fair value is due. If you are a beneficial owner of shares of Company Common Stock held through a broker, bank or other nominee and you wish to exercise dissenters’ rights, you should timely consult with your broker, bank or other nominee to determine the appropriate procedures for obtaining such written consent or otherwise complying with these provisions.

Under Section 302A.471, subdivision 2 of the MBCA, a shareholder may not assert dissenters’ rights as to less than all of the shares of Company Common Stock registered in the name of such shareholder, unless the shareholder dissents with respect to all the shares of Company Common Stock that are beneficially owned by another person but registered in the name of such shareholder and discloses the name and address of each beneficial owner on whose behalf the shareholder dissents. In that event, the rights of the dissenting shareholder will be determined as if the shares of Company Common Stock as to which the shareholder has dissented and the other shares of Company Common Stock were registered in the names of different shareholders.

If the Merger is approved by the Company’s shareholders, the Company will send to all Dissenters a notice (a “Notice of Procedure”) containing certain information required by Section 302A.473, subdivision 4 of the MBCA, including the address to which a Dissenter must send a demand for payment and certificates representing Dissenting Shares in order to obtain payment for Dissenting Shares and the date by which they must be received, any restrictions on transfer of uncertificated Dissenting Shares that will apply and a form to be used to certify the date on which the Dissenter (or the beneficial owner on whose behalf the Dissenter dissents) acquired such Dissenting Shares (or an interest in them) and to demand payment.

In order to receive the fair value of the shares under Section 302A.473 of the MBCA, a Dissenter must demand payment and deposit certificates representing certificated shares or comply with any restrictions on transfer of uncertificated shares within 30 days after the Notice of Procedure is given. Under Minnesota law, notice by the Company is generally deemed given when dispatched in accordance with applicable law, including, where applicable, upon deposit in the U.S. mail. A Dissenter who fails to timely make demand for payment and deposit certificates (or comply with any restrictions on transfer of uncertificated shares) as required by Section 302A.473, subdivision 4 of the MBCA, loses the right to receive the fair value of such Dissenting Shares even if such Dissenter timely filed a notice of intent to demand payment under Section 302A.473, subdivision 3 of the MBCA and such Dissenting Shares will be deemed to be converted as of the Effective Time into, and to have become exchangeable solely for the right to receive, the Merger Consideration.

Except as provided below, if a valid demand for payment by a Dissenter is made, then after the Company’s receipt of such demand or the Effective Time, whichever is later, the Company must pay the Dissenter an amount which the Company estimates to be the fair value of the Dissenting Shares, plus interest. The Company will include a brief description of the method used to reach our estimate of fair value. For the purpose of a Dissenter’s rights under Sections 302A.471 and 302A.473 of the MBCA, “fair value” means the value of the shares of stock immediately before the Effective Time. It is possible that the fair value of shares of Company Common Stock as determined pursuant to the dissenters’ rights procedures may be determined to be less than the Merger Consideration. Accordingly, a shareholder exercising dissenter’s rights could receive less than the Merger Consideration. Additionally, “interest” means interest commencing five days after the effective date of such merger until the date of payment, calculated at the rate provided in Minnesota Statutes Section 549.09, subdivision 1, paragraph (c), clause (1), as in effect from time to time and which is currently 4% simple interest per annum for 2026.

If a Dissenter believes this payment by the Company is less than the fair value of the Dissenting Shares, plus interest, such Dissenter must give written notice to the Company of the Dissenter’s own estimate of the fair value of the Dissenting Shares, plus interest, within 30 days after the date the Company mails the payment, and must demand payment of the difference between the Dissenter’s own estimate and the Company’s payment. If such Dissenter fails to give written notice of such estimate to the Company or fails to demand payment of the difference, within the 30-day time period, such Dissenter is entitled only to the amount of the Company’s payment.

The Company may withhold such payment with respect to Dissenting Shares for which a Dissenter demanding payment (or persons on whose behalf such Dissenter acts) was not the beneficial owner as of the first public announcement date of the Merger Agreement, which is April 21, 2026. As to each such Dissenter who has validly demanded payment, following the Effective Time or the receipt of demand, whichever is later, the Company must mail its estimate of the fair value of such Dissenter’s Dissenting Shares and a statement of the reason for withholding the payment, and offer to pay this amount, plus interest, to the Dissenter upon receipt of such Dissenter’s agreement to accept this amount in full satisfaction. The Dissenter may decline the Company’s offer and give written notice to the Company of such Dissenter’s own estimate of the fair value of the shares of stock, plus interest, and demand payment of this amount. This demand must be mailed to the Company within 30 days after the mailing of the Company’s offer. If the Dissenter fails to make this demand within the 30-day time period, such Dissenter is entitled only to the amount the Company offered.

If the Company receives a demand from a Dissenter (including a Dissenter who held shares of Company Common Stock on the first public announcement date of the Merger Agreement, and a Dissenter who purchased shares of Company Common Stock after that date who has complied with the applicable demand requirements) for a supplemental payment, the Company must, within 60 days after receiving the demand, either pay to the Dissenter the amount demanded or agreed to by the Dissenter after discussion with the Company or file in court a petition requesting that the

court determine the fair value of the Dissenting Shares, plus interest. The petition must be filed in the county in which our registered office is located, which is Hennepin County. Our registered office is subject to change at any time. All Dissenters whose demands are not resolved within the applicable 60-day period must be made parties to this proceeding.

The court will then determine whether each Dissenter in question has fully complied with the provisions of Sections 302A.471 and 302A.473 of the MBCA, and for all Dissenters who have fully complied and not forfeited statutory dissenters’ rights, will determine the fair value of the Dissenting Shares, taking into account any and all factors the court finds relevant (including, without limitation, the recommendation of any appraisers that may have been appointed by the court), computed by any method that the court, in its discretion, sees fit to use, whether or not used by the Company or a Dissenter. The fair value of the Dissenting Shares as determined by the court is binding on all Dissenters. However, by statute, Dissenters are not liable to the Company for the amount, if any, by which payments remitted to the Dissenters exceed the fair value of such Dissenting Shares determined by a court, plus interest. The costs and expenses of such a court proceeding are assessed against the Company, except that the court may assess part or all of those costs and expenses against a Dissenter whose action in demanding payment is found to be arbitrary, vexatious or not in good faith.

Under Section 302A.471, subdivision 4 of the MBCA, a shareholder has no right at law or in equity to have the Merger set aside or rescinded, except if the Merger is fraudulent with respect to such shareholder or the Company.

If the Merger is completed, the Company’s shares of Common Stock will be delisted from Nasdaq and deregistered under the Exchange Act. As a result, we would no longer file periodic reports with the SEC on account of the shares of Common Stock.

If the Merger is completed, we will not hold a 2026 annual meeting of shareholders (“2026 Annual Meeting”) prior to its completion. If the Merger is not completed, you will continue to be entitled to attend and participate in our annual meetings of shareholders, and we may hold a 2026 Annual Meeting, in which case we will provide notice of or otherwise publicly disclose the date on which such 2026 Annual Meeting will be held.

For a shareholder proposal to be considered for inclusion in the Proxy Statement for the 2026 Annual Meeting, the written proposal must have been received no later than November 20, 2025 at the Company’s principal executive offices, 6111 Blue Circle Drive, Minnetonka, Minnesota 55343, directed to the attention of the Chairman of the Audit Committee, or the Chairman of the Nominating Committee if the proposal relates to the nomination of a director, in order to be considered by the Board for inclusion in the 2026 Annual Meeting proxy materials under the SEC’s proxy rules; provided, that if the 2026 Annual Meeting is held after May 23, 2026, the Company will set a deadline for shareholders to submit a proposal under SEC Rule 14a-8 that is a reasonable time before the Company begins to print and send its proxy materials for the 2026 Annual Meeting.

Also, if the 2026 Annual Meeting has changed more than 30 days from the first anniversary of the 2025 annual meeting, if a shareholder proposal intended to be presented at the 2026 Annual Meeting but not included in the Company’s proxy statement and proxy is received by the Company after a reasonable time before the Company sends its proxy materials for the 2026 Annual Meeting, then management named in the Company’s proxy form for the next annual meeting will have discretionary authority to vote shares represented by such proxies on the shareholder proposal, if presented at the meeting, without including information about the proposal in the Company’s proxy material.

Any shareholder who intends to solicit proxies in support of director nominees other than the Company’s nominees at the 2026 Annual Meeting in accordance with Rule 14a-19 of the Exchange Act must provide the required notice of intent to solicit proxies at the Company’s principal executive offices, 6111 Blue Circle Drive, Minnetonka, Minnesota 55343, directed to the attention of the Nominating Committee, no later than 60 calendar days prior to the first anniversary of the date of the 2025 annual meeting; provided, that if the date of the 2026 Annual Meeting has changed by more than 30 calendar days from the first anniversary of the 2025 annual meeting, then notice must be provided by the later of 60 calendar days prior to the date of the 2026 Annual Meeting or the 10th calendar day following the day on which public announcement of the date of the 2026 Annual Meeting is first made by the Company.

The SEC allows us to “incorporate by reference” information into this proxy statement, which means that we can disclose important information to you by referring you to other documents filed separately with the SEC. The information incorporated by reference is deemed to be part of this proxy statement, except for any information superseded by information in this proxy statement or incorporated by reference subsequent to the date of this proxy statement. This proxy statement incorporates by reference the documents set forth below that we have previously filed with the SEC. These documents contain important information about us and our financial condition and are incorporated by reference into this proxy statement. Statements contained in this proxy statement, or in any document incorporated by reference in this proxy statement, regarding the contents of any contract or other document, are not necessarily complete and each such statement is qualified in its entirety by reference to that contract or other document filed as an exhibit with the SEC.

The following Company filings with the SEC are incorporated by reference:

We also incorporate by reference into this proxy statement any documents filed by us with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act between the date of this proxy statement and the earlier of the date of the Special Meeting or the termination of the Merger Agreement. The information provided on our website is not part of this proxy statement and therefore is not incorporated by reference herein.

Information furnished under Item 2.02 or Item 7.01 of any Current Report on Form 8-K, including related exhibits, is not and will not be incorporated by reference into this proxy statement.

Shareholders may obtain free copies of the documents filed with the SEC by us through the SEC’s website, www.sec.gov, or through the Investor Information section of our website, www.electro-sensors.com/about/investor-info, and the “SEC Filings” section therein.

You may obtain any of the documents incorporated by reference into this proxy statement, excluding any exhibits to those documents unless the exhibit is specifically incorporated by reference into those documents, without charge, by requesting them in writing or by telephone from us at the following address:

Electro-Sensors, Inc.

Attention: Gloria Grundhoefer

Email: [email protected]

Telephone: (952) 930-0100

If you would like to request documents from us, please do so by July 14, 2026, to receive them before the Special Meeting. If you request any documents from us, we will mail them to you within one (1) business day after we receive your request. Please note that all of our documents that we file with the SEC are also promptly available through the Investor Information section of our website, www.electro-sensors.com/about/investor-info, and the “SEC Filings” section therein. The information included on our website is not incorporated by reference into this proxy statement.

If you have any questions about this proxy statement, the Special Meeting or the Merger or need assistance with voting procedures, you should contact us at:

Electro-Sensors, Inc.

Attention: Gloria Grundhoefer

Email: [email protected]

Telephone: (952) 930-0100

We have supplied all information relating to the Company, and Parent has supplied, and we have not independently verified, all of the information relating to Parent and Merger Sub contained in “Summary – The Parties to the Merger” beginning on page 1 of this proxy statement and “The Parties to the Merger” beginning on page 38 of this proxy statement.

If you hold any certificates representing shares of Common Stock, you should not send in such certificates until you receive transmittal materials after the Merger is consummated.

You should rely only on the information contained in this proxy statement, the annexes to this proxy statement and the documents incorporated by reference into this proxy statement to vote on the Merger. We have not authorized anyone to provide you with information that is different from what is contained in this proxy statement. This proxy statement is dated June 25, 2026. You should not assume that the information contained in this proxy statement is accurate as of any date other than that date (or as of an earlier date if so indicated in this proxy statement) and the mailing of this proxy statement to shareholders does not create any implication to the contrary. This proxy statement does not constitute a solicitation of a proxy in any jurisdiction where, or to or from any person to whom, it is unlawful to make a proxy solicitation.