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 ending June 30, 2009. The following statements may be forward looking in nature and actual results may differ materially.

A. Results of Operations

REVENUES:

Total revenues from the sale of the Company's ESTeem wireless modem products and services increased to $519,899 for the second quarter of 2008, compared to $480,910 for the second quarter of 2008. Gross revenues increased to $526,030 for the quarter ended June 30, 2009, from $497,434 for the same quarter of 2008.
Year to date sales decreased to $972,028 as of June 30, 2009 as compared to $1,061,047 as of June 30, 2008. Year to date gross revenues decreased to $989,013 as of June 30, 2009 compared to $1,096,267 as of June 30, 2008. We believe the increase in quarterly sales revenues is due to orders received for domestic industrial automation projects late in the second quarter of 2009. We feel that this quarterly revenue increase is temporary, and that the year to date decrease in sales revenues is due to the continued widespread economic downturn in the United States and worldwide, that has lead to delays or cancellations in funding of industrial automation projects using the Company's products. We believe that the continued economic downturn may continue to negatively affect the Company's sales revenues during the remainder of 2009.

The Company's revenues have historically fluctuated from quarter to quarter due to timing factors such as customer order placement and product shipments to customers, as well as 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 in regard to the Company's revenues become difficult to predict.

A percentage breakdown of EST's Domestic and Export Sales, for the second quarter of 2009 and 2008 are as follows:

                                    For the second quarter of
                                       2009          2008
                    Domestic Sales      77%           66%
                    Export Sales        23%           34%

OPERATING SEGMENTS

Segment information is prepared on the same basis that the Company's Management reviews financial information for operational decision-making purposes. The Company's operating segment information is contained in "Financial Statements, Notes to Financial Statements, Note 6 - Segment Reporting".

Domestic Revenues

During the quarter ended June 30, 2009, the Company's domestic operations represented 77% of the Company's total sales revenues. Domestic operations sell ESTeem modem products, accessories and service primarily through domestic resellers, as well as directly to end users of the Company's products. Domestic sales revenues increased to $400,795 for the quarter ended June 30, 2009, compared to $315,484 for the quarter ended June 30, 2008. We believe the increase in quarterly sales revenues is due to orders received for domestic industrial automation projects late in the second quarter of 2009. We feel that the quarterly revenue increase is temporary and that the continued economic downturn may continue to negatively affect the Company's domestic sales revenue during the remainder of 2009.

The Company's domestic sales were augmented by sales of the Company's products for MDCS projects to public entities, which accounted for 5% of the Company's domestic sales during the second quarter of 2009. Management believes MDCS sales were weaker than expected during the first quarter of 2009 due to reduced funding for projects involving the Company's products and the extended procurement cycle for public safety entities. We believe that MDCS sales are difficult to predict and cannot be assured due to

Domestic segment operating income was $60,524 for the quarter ended June 30, 2009 as compared with a segment operating loss of $83,517 for the same quarter of 2008, due to decreased operating expenses for the segment during the second quarter of 2009.

For the six-month period ended June 30, 2009, the Company's domestic operations represented 77% of the Company's total sales revenues. Year to date domestic sales revenues increased to $749,170 as of June 30, 2009 compared to $733,624 for the same period of 2008. We believe the increase in quarterly sales revenues is due to orders received for domestic industrial automation projects late in the second quarter of 2009. We feel that the quarterly revenue increase is temporary and that the continued economic downturn may continue to negatively affect the Company's domestic sales revenue during the remainder of 2009. The Company's year to date domestic sales were augmented by sales of the Company's products for MDCS to public entities, which accounted for 5% of the Company's domestic sales during the first six months of 2009.

Year to date domestic segment operating income was $97,895 for the period ended June 30, 2009 as compared with a segment operating loss of $77,059 for the same period of 2008, due to decreased operating expenses for the segment during the first half of 2009.

Foreign Revenues

The Company's foreign operating segment represented 23% of the Company's total net revenues for the quarter ended June 30, 2009. The foreign operating segment is based wholly in the United States and maintains no assets outside of the United States. The foreign operating segment sells ESTeem modem products, accessories and service primarily through foreign resellers, as well as directly to end customers of the Company's products located outside the United States.

During the quarter ended June 30, 2009, the Company had $119,104 in foreign export sales, amounting to 23% of total net revenues of the Company for the quarter, compared with foreign export sales of $165,426 for the same quarter of 2008. We believe the decrease in foreign sales revenues is due to the continued widespread worldwide economic downturn that has led to delays or cancellations in funding of industrial automation projects using the Company's products. We believe that the continued economic downturn may continue to negatively affect the Company's foreign sales revenue during the remainder of 2009. No foreign sales to a single customer comprised 10% or more of the Company's product sales for the quarter ended June 30, 2009. Products purchased by foreign customers were used primarily in industrial automation applications. We believe the majority of foreign export sales are the results of the Company's Latin American sales staff, EST foreign reseller activity, and the Company's internet website presence.

Operating income for the foreign segment increased to $42,947 for the quarter ended June 30, 2009 as compared with a net operating income of $41,315 for the same period of 2008, due to decreased operating expenses for the segment during the second quarter of 2009.

For the six-month period ended June 30, 2009, the Company had $222,858 in foreign export sales, amounting to 23% of total sales revenues of the Company for the period, compared with foreign export sales of $327,423 for the same period of 2008. We believe the decrease in foreign sales revenues is due to the continued widespread worldwide economic downturn that has led to delays or cancellations in funding of industrial automation projects using the Company's products. We believe that the continued economic downturn may continue to negatively affect the Company's foreign sales revenue during the remainder of 2009. Products purchased by foreign customers were used primarily in industrial automation applications.

Year to date foreign segment operating income decreased to $84,316 for the period ended June 30, 2009 as compared with a segment operating income of $89,981 for the same period of 2008, due to decreased sales revenues for the segment during the first half of 2009.

Unallocated Corporate

Unallocated corporate expenses relate to functions, such as accounting, corporate management and administration that support but are not attributable to the Company's domestic or foreign operating segments, including salaries, wages and other expenses related to the performance of these support functions.
Unallocated corporate expenses decreased during the quarter ended June 30, 2009 to $59,191 as compared with $70,075 for the same quarter of 2008, and represented expense to total net revenues percentages of 11% and 14% for the first quarters of 2009 and 2008, respectively.

Year to date unallocated corporate expenses decreased for the period ended June 30, 2009 to $142,594 as compared with $171,839 for the same period of 2008, due to decreased professional services, general equipment maintenance and department related wages, and represented expense to total net revenues percentages of 14% and 16% for the first six months of 2009 and 2008, respectively.

The Corporation had an order backlog of $21,000 as of June 30, 2009. 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 15 working days after receipt of customer orders, with the exception of ongoing, scheduled projects, and custom designed equipment.

COST OF SALES:

Cost of sales percentage for the second quarter of 2009 and 2008 was 41% and 46%, respectively. The cost of sales decrease for the second quarter of 2009 is the result the product mix for items sold during the quarter having a more favorable profit margin when compared with the same period of 2008.

OPERATING EXPENSES:


Operating expenses for the second quarter of 2009 decreased $121,699 from the
second quarter of 2008.  The following is an outline of operating expenses:


     For the quarter ended:   June 30, 2009 June 30, 2008 Increase (Decrease)
     Finance/Administration      $   59,191    $   70,075       $  (  10,884)
     Research/Development            67,189       132,171          (  64,982)
     Marketing                      116,607       149,912          (  33,305)
     Customer Service                25,058        37,586          (  12,528)
     Total Operating Expenses    $  268,045    $  389,744       $  ( 121,699)

FINANCE AND ADMINISTRATION:

During the second quarter of 2009, Finance and Administration expenses decreased to $59,191 from the same quarter of 2008 due to decreased wages and professional service expenses during the second quarter of 2009.

RESEARCH AND DEVELOPMENT:

Research and Development expenses decreased $64,982 during the second quarter of 2009, when compared with the same period in 2008. The decrease is due to reduced subcontracted engineering expertise, research and development related supplies and wages when compared with the same quarter of 2008.

MARKETING:

During the second quarter of 2009, marketing expenses decreased $33,305 from the same period in 2008, due to decreased wages, advertising and trade show expenses.

CUSTOMER SERVICE:

Customer service expenses decreased $12,528 during the second quarter of 2009 due to a decreased amount of wages and travel expenses when compared with the same quarter of 2008.

INTEREST AND DIVIDEND INCOME:

The Corporation earned $6,131 in interest and dividend income during the quarter ended June 30, 2009. Sources of this income were money market accounts and certificates of deposit.

NET INCOME (LOSS):

The Company had net income of $37,680 for the second quarter of 2009, compared to a net loss of $97,277 for the same quarter of 2008. For the six-month period ended June 30, 2009, the Company recorded a net income of $36,117 compared with a net loss of $133,517 for the same period of 2008. The improvement in the Company's profitability is due to decreased operating expenses resulting from Management's aggressive cost reduction and control during 2009.

The Corporation's current asset to current liabilities ratio at June 30, 2009 was 30:1 compared to 31.2:1 at December 31, 2008. For the quarter ending June 30, 2009, the Company had cash and cash equivalents of $862,329, compared to cash and cash equivalent holdings of $512,800 at December 31, 2008. The Company had certificates of deposit investments in the amount of $1,292,000 as of June 30, 2009 as compared to $1,432,000 as of December 31, 2008.

Accounts receivable increased slightly to $197,064 as of June 30, 2009, from December 31, 2008 levels of $195,429, due to strong sales late in the second quarter of 2009. Inventory decreased to $552,093 at June 30, 2009, from December 31, 2008 levels of $639,779, due to decreased material purchases by the Company that more closely matched reduced sales revenues during the first six months of 2009. The Company's fixed assets, net of depreciation, decreased to $90,651 as of June 30, 2009, from December 31, 2008 levels of $110,722, due to depreciation of $20,071.

Since January 1, 2005, the Company has contracted with Netsuite Inc. to provide the Company's customer relationship management and accounting software and related network infrastructure services. The prepaid Netsuite Inc. services as of June 30, 2009 are reflected in "prepaid expenses" on the Company's balance sheet in the amount of $29,964.

As of June 30, 2009, the Company's accounts payable balance was $50,277 as compared with $50,013 at December 31, 2008, and reflects amounts owed for inventory items, contracted services, and state tax liabilities. Accrued liabilities as of June 30, 2009 were $48,720, compared with $43,535 at December 31, 2008, and reflect items such as accrued vacation benefits. The Company's prepaid federal income tax asset decreased to $25,600 at June 30, 2009 from $37,600 at December 31, 2008, as a result of improved Company profitability during the first six months of 2009. The Company's Federal Income Taxes Receivable asset of $63,842 at December 31, 2008 was eliminated by the Company receiving a tax refund from the Internal Revenue Service.

In Management's opinion, the Company's cash and cash equivalent reserves, and working capital at June 30, 2009 is sufficient to satisfy requirements for operations, capital expenditures, and other expenditures as may arise during the remainder of 2009.

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.