MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL



                       CONDITION AND RESULTS OF OPERATION

Management's discussion and analysis is intended to be read in conjunction with the Company's unaudited financial statements and the integral notes thereto for the quarter ended September 30, 2020. The following statements may be forward looking in nature and actual results may differ materially.





A.RESULTS OF OPERATIONS

As a result of COVID-19, and governmental responses thereto, are experiencing some negative impacts to our business, primarily as a result of reductions in staffing by our customers, and their customers, which is lengthening our normal sales cycles. Many of our customers are also restricting visits from vendors. All of our planned trade shows and sales presentations have been canceled or postponed as a result of the risks associated with face to face meetings. We have utilized various platforms to provide current customers and potential customers with presentations about our products and services. We have also experienced some delays in our supply chain but none of these COVID-19 related disruptions, to the supply chain, has been significant at this point.

REVENUES: Total revenues from sales decreased to $202,869 for the third quarter of 2020 as compared to $371,915 in the third quarter of 2019, reflecting a decrease of 45.5%. Management believes the decrease in sales revenues is due to the impact of the COVID-19 stay at home orders when compared with the same quarter of 2019. Year to date total revenues from sales decreased to $722,333 in 2020 as compared to $1,141,343 in 2019, reflecting a decrease of 36.7%.

Management believes the decrease in sales revenues is due to the impact of the COVID-19 stay at home orders when compared with the same period of 2019.

The Company's revenues have historically fluctuated from quarter to quarter due to timing factors such as product shipments to customers, customer order placement, customer buying trends, and changes in the general economic environment. The procurement process regarding plant and project automation, or project development, which usually surrounds the decision to purchase ESTeem products, can be lengthy. This procurement process may involve bid activities unrelated to the ESTeem products, such as additional systems and subcontract work, as well as capital budget considerations on the part of the customer.

Because of the complexity of this procurement process, forecasts with regard to the Company's revenues are difficult to predict.

Although the COVID-19 situation represents a significant disruption to operations in 2020, we have taken steps intended to keep our staff safe. Staff, whose jobs allow, are telecommuting. Those whose jobs require specialized equipment continue to work on site and are keeping safe distances to minimize the potential to contract or spread the virus. We are observing social distancing for those employees that remain on-site. Masks have been provided to all employees to minimize the risk of exposure. Daily monitoring of temperatures as well as adding sanitizers have also been instituted.





A percentage breakdown of the Company's market segments of Domestic and Foreign
Export sales for the three and nine month periods ended September 30, 2020 and
2019 are as follows:



              Three Months      Three Months    Nine Months ended Nine Months ended
             ended September   ended September    September 30,     September 30,
                30, 2020          30, 2019            2020              2019

Domestic           95%               94%               90%               86%
Sales
Export             5%                6%                10%               14%
Sales

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BACKLOG:

As of September 30, 2020, the Company had a sales order backlog of $3,400. The Company's customers generally place orders on an "as needed basis". Shipment for most of the Company's products is generally made within 1 to 5 working days after receipt of customer orders, with the exception of ongoing, scheduled projects, and custom designed equipment.





COST OF SALES:

Cost of sales percentages for the third quarter of 2020 and 2019 were 52% and 44% of respective net sales. The cost of sales percentage increase in the third quarter of 2020 is the result of the product mix sold during the same quarter of 2019. Cost of sales percentages for the nine month periods ended September 30, 2020 and 2019 were 54% and 46%. The cost of sales percentage increase in the third quarter of 2020 is the result of the product mix sold during the same period of 2019.





OPERATING EXPENSES:

The following is a delineation of operating expenses:





                       Three Months Ended                Nine Months Ended
                    Sept. 30,  Sept. 30,    Increase Sept. 30,  Sept. 30,    Increase
                       2020       2019    (Decrease)    2020       2019    (Decrease)
 General and        $   55,761 $   64,756 $  (8,995) $  221,431 $  227,450 $  (6,019)
 administrative
 Research and           49,739     48,445      1,294    154,850    165,397   (10,547)
 development
 Marketing and          90,229     89,414        815    264,420    286,621   (22,201)
 sales
 Total operating    $  195,729 $  202,615 $  (6,886) $  640,701 $  679 468 $ (38,767)
 expenses

General and administrative: For the third quarter of 2020, general and administrative expenses decreased $8,995 to $55,761, due to decreased wages when compared with the same quarter of 2019. For the nine-month period, general and administrative expenses decreased by $6,019 to $221,431, due to decreased wages and professional services.

Research and development: Research and development expenses increased $1,294 to $49,739 during the third quarter of 2020 due to increased wages when compared with the same quarter of 2019. For the nine-month period, research and development expenses decreased by $10,547 to $154,850, due to decreased prototype build costs.

Marketing and sales: During the third quarter of 2020, marketing and sales expenses increased $815 to $90,229 when compared with the same period of 2019, due to increased wages. For the nine-month period, marketing and sales expenses decreased by $22,201 to $264,420, due to decreased travel and trade shows.





OTHER INCOME:

The Company earned $2,444 in interest income during the quarter ended September 30, 2020 and $8,396 for the nine-month period. Sources of this income were money market accounts and certificates of deposit. The Company received a government grant under the CARES Act in the amount of $9,000 for COVID relief.

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NET LOSS:

The Company had a net loss of $95,826 for the third quarter of 2020 compared to a net income of $11,769 for the same quarter of 2019. For the nine-month period ended September 30, 2020, the Company recorded a net loss of $288,007 compared with a net loss of $49,275 for the same period of 2019. The increase in net loss during 2020 is the result of decreased sales revenues and gross income.

B.FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

The Corporation's current asset to current liabilities ratio at September 30, 2020 was 19.9 compared to 11.8 at December 31, 2019. The increase in current ratio is due to the reduction in accounts payable at September 30, 2020 as compared to December 31, 2019.

At September 30, 2020, the Company had cash and cash equivalents of $143,340 as compared to cash and cash equivalent of $274,936 at December 31, 2019, primarily reflecting cash provided in investing and financing activities.

Cash used in operating activities increased by $144,177 for the nine-month period ended September 30, 2020 when compared to the same period in 2019. The increase is attributable to an increase in net loss for the period being $238,732 greater than the same period in 2019.

Net cash provided from investing was $50,001 due to the redemption of certificates of deposits maturing during the nine months of 2020. Cash provided from financing activities was $171,712, which were the proceeds of the CARES Act loan received during the nine-month period ended September 30, 2020. We believe that the entire loan will be forgiven based on recent amendments to the CARES Act for forgiveness.

In management's opinion, the Company's cash and cash equivalents and other working capital at September 30, 2020 is sufficient to satisfy requirements for operations, capital expenditures, and other expenditures as may arise during 2020.

As a result of COVID-19, and governmental responses thereto, we are experiencing some negative impacts to our business, primarily as a result of reductions in staffing by our customers, and their customers, which is lengthening our normal sales cycles. Many of our customers are also restricting visits from vendors. All of our planned trade shows and sales presentations have been canceled or postponed as a result of the risks associated with face to face meetings. We have utilized various platforms to provide current customers and potential customers with presentations about our products and services. We have also experienced some delays in our supply chain but none of these COVID-19 related disruptions has been significant at this point.

FORWARD LOOKING STATEMENTS: The above discussion may contain forward looking statements that involve a number of risks and uncertainties. In addition to the factors discussed above, among other factors that could cause actual results to differ materially are the following: competitive factors such as rival wireless architectures and price pressures; availability of third party component products at reasonable prices; inventory risks due to shifts in market demand and/or price erosion of purchased components; change in product mix, and risk factors that are listed in the Company's reports and registration statements filed with the Securities and Exchange Commission.

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OFF-BALANCE SHEET ARRANGEMENTS

The Company has no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to its stockholders.

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