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
A.RESULTS OF OPERATIONS
REVENUES: Total revenues from sales increased to
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.
The COVID-19 situation represented a significant disruption to operations in
most of 2020. During the nine-month period ending
A percentage breakdown of the Company's market segments of Domestic and Foreign
Export sales for the three- and nine-month periods ended
Three Months Three Months Nine Months ended Nine Months ended ended September ended September September 30, September 30, 30, 2021 30, 2020 2021 2020 Domestic 89% 95% 90% 90% Sales Export 11% 5% 10% 10% Sales BACKLOG:
As of
COST OF SALES:
Cost of sales percentages for the third quarters of 2021 and 2020 were 60% and
52% of respective net sales. The cost of sales percentage increased in the third
quarter of 2021 is the result of the product mix sold during the same quarter of
2020. Cost of sales percentages for the nine-month periods ended
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COST OF SALES (Cont.):
54%. The cost of sales percentage increase in the first nine-months of 2021 is the result of the product mix sold during the same period of 2020.
OPERATING EXPENSES:
The following is a delineation of operating expenses:
Three Months Ended Nine Month Ended Sept.30, Sept. 30, Increase Sept. 30, Sept. 30, Increase 2021 2020 (Decrease) 2021 2020 (Decrease) General and$ 55,574 $ 55,761 $ (187) $ 215,528 $ 221,431 $ (5,903) administrative Research and 46,534 49,739 (3,205) 153,483 154,850 (1,367) development Marketing and 122,960 90,229 32,731 344,594 264,420 80,174 sales Total operating$ 225,068 $ 195,729 $ 29,339 $ 713,605 $ 640,701 $ 72,904 expenses
General and administrative: For the third quarter of 2021, general and
administrative expenses decreased
Research and development: Research and development expenses decreased
Marketing and sales: During the third quarter of 2021, marketing and sales
expenses increased
OTHER INCOME:
The Company earned
NET LOSS:
The Company had net income of
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B.FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The Corporation's current asset to current liabilities ratio at
At
Cash provided from operating activities increased by
Net cash provided from investing was
In management's opinion, the Company's cash and cash equivalents and other
working capital at
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
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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