Management's discussion and analysis is provided as supplement to, and is intended to be read in conjunction with, the Company's audited financial statements and the accompanying integral notes ("Notes") thereto. The following statements may be forward-looking in nature and actual results may differ materially.





RESULTS OF OPERATIONS

GENERAL: We specialize in the manufacturing and development of data radio products. The Company offers product lines which provide innovative communication solutions for applications not served by existing conventional communication systems. We offer product lines in markets for process automation in commercial, industrial and government arenas domestically as well as internationally. We market our products through direct sales, sales representatives, and domestic, as well as foreign, resellers. Operations are sustained solely from revenues received through sales of its products and services.

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.

FISCAL YEAR 2020 vs. FISCAL YEAR 2019

GROSS REVENUES: Total revenues for the fiscal year 2020 were $1,225,372 reflecting a decrease of 13.0% from $1,408,548 in gross revenues for fiscal year 2019. During the year ended December 31, 2020, two customers sales accounted for more than 10% of the total sales revenues. The decrease in total revenues is the result of decreased product sales during 2020. Domestic Sales for the fiscal year were $927,494 compared to $1,179,146 in 2019. Sales to Foreign Customers for the fiscal year were $297,878 compared to $229,402 in 2019. Product sales decreased to $1,181,022 in 2020, as compared to 2019 sales of $1,367,171 reflecting a decrease of 13.6%.

Interest revenues during 2020 decreased to $10,736 from 2019 level of $22,198 due to the decreased interest rates for the certificates of deposit held by the Company and the reduction of the value of the certificates held during 2020.

As of December 31, 2020, the Company had sales backlog of $0. The Company's customers generally place orders on an "as needed basis". Shipment of the Company's products is generally completed within 1 to 15 working days after receipt of customer orders, with the exception of ongoing, scheduled projects, and custom designed equipment for specific customer applications.

COST OF SALES: Cost of Sales, as a percentage of net sales, was 49% and 47% respectively, for 2020 and 2019. Cost of Sales variances are the result of differences in the product mix sold and occurrences of obsolete inventory expense, as well as differences in the price discounting structure for the mix of products sold during the period.





INVENTORY:  The Company's year-end inventory values for 2020 and 2019 were as
follows:



                                           2020     2019
                        Parts             $99,303 $116,843
                        Work in progress  275,230  379,987
                        Finished goods    257,174  325,989
                        TOTAL            $631,707 $822,819

The Company's objective is to maintain inventory levels as low as possible to provide maximum cash liquidity, while at the same time meet production and delivery requirements.

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OPERATING EXPENSES: Operating expenses decreased to $839,173 in 2020 from 2019 levels of $957,438. Significant changes in expenses are comprised of the following components: Travel $28,663 decrease, Trade show $13,710 decrease, Professional services $7,989 decrease, Rent $5,003 decrease, and Write off of uncollectible account $75,035 decrease. Depreciation expense decreased during 2020 to $6,953 from 2019 levels of $7,970 due to the Company's decreased capital purchases.

LIQUIDITY AND CAPITAL RESOURCES

The Company's revenues and expenses resulted in a net loss of $202,719 for 2020, an increase from a net loss of $190,957 for 2019. At December 31, 2020, the Company's working capital was $1,676,530 compared with $1,695,255 at December 31, 2019. The Company's operations rely solely on the income generated from sales. The Company's major capital resource requirements are payment of employee salaries and benefits and maintaining inventory levels adequate for production. Extended availability for components critical for production of the Company's products, ranging from 12 to 30 weeks, require the Company to maintain high inventory levels. It is management's opinion that the Company's working capital as of December 31, 2020 is adequate for expected resource requirements for the next twelve months.

The Company's current asset to current liability ratio at December 31, 2020 was 20.7:1 compared to 11.8:1 at December 31, 2019. The increase in current asset ratio is the result of the Company having increased accounts receivable and decreased accounts payable for year-end 2020 when compared with year-end 2019.

The Company's liquid resources at December 31, 2020, including cash and cash equivalent and certificates of deposits, were $808,109, compared to $924,936 at December 31, 2019. The decrease in liquid resources is the result of the 2020 operating loss. The Company's accounts receivable at December 31, 2020 were $288,884, compared to $76,959 at December 31, 2019. Management believes that all Company accounts receivable as of December 31, 2020 are collectible and does not have a reserve for uncollectable accounts.

The Company believes the level of risk associated with customer receipts on export sales is minimal. Foreign shipments are made only after payment has been received or on Net 30 day credit terms to established foreign companies with which the Company has distributor relationships. Foreign orders are generally filled as soon as they are received therefore; foreign exchange rate fluctuations do not impact the Company.

Inventories at December 31, 2020 were $631,707, reflecting a decrease from December 31, 2019 of $822,819. The decrease in inventory between December 31, 2020 and December 31, 2019, is due to the reduction of sales and not purchasing to pre-COVID levels of inventory.

We had no capital expenditures during 2020. The Company intends on investing in additional capital equipment as deemed necessary to support development and manufacture of current and future products.

As of December 31, 2020, our current liabilities decreased to $84,916, from $156,909 at December 31, 2019. The decrease in current liabilities was impacted by a decrease in accounts payable to $21,113 from $101,548.

We had no off-balance sheet arrangements for the year ended December 31, 2020.

Inflation had minimal adverse effect on the Company's operations during 2020.

Minimal adverse effect is anticipated during 2021.

FORWARD LOOKING STATEMENTS: The above discussion may contain forward-looking statements that involve a number of risks and uncertainties. These factors are more fully described in the "Risk Factors" section of Item 1A of this Annual Report on Form 10-K. 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, rapid advances in competing technologies and risk factors that are listed in the Company's reports filed with the Securities and Exchange Commission.

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