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 decreased 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.
Although the COVID-19 situation represents a significant disruption to operations in at least the first half of 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 spread or contract the virus. We are experiencing some disruptions in the supply chain, but at this point do not see it having a material impact on sales.
A percentage breakdown of the Company's market segments of Domestic and Foreign Export sales, for the first quarter of 2020 and 2019 are as follows:
For the first quarter 2020 2019 Domestic Sales 88% 78% Export Sales 12% 22% BACKLOG:
As of
COST OF SALES:
Cost of sales percentages for the first quarters of 2020 and 2019 were 53% and
47% of respective net sales and are calculated excluding site support expenses
of
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OPERATING EXPENSES:
Operating expenses for the first quarter of 2020 decreased$20,458 from first quarter of 2019 levels. The following is a delineation of operating expenses: March 31, March 31, Increase 2020 2019 (Decrease) General and administrative$ 95,713 $ 93,506 $ 2,207 Research and development 54,897 65,474 (10,577) Marketing and sales 87,896 99,984 (12,088) Total operating expenses$ 238,506 $ 258,964 $ (20,458)
General and administrative: For the first quarter of 2020, general and
administrative expenses increased
Research and development: Research and development expenses decreased
Marketing and sales: During the first quarter of 2020, marketing and sales
expenses decreased
INTEREST INCOME:
The Company earned
NET LOSS:
The Company had a net loss of
B.FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The Corporation's current asset to current liabilities ratio at
At
Cash used in operating activities decreased by
Cash provided from investing was
In management's opinion, the Company's cash and cash equivalents and other
working capital at
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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
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