Electronic Systems Technology (ELST) 10-Q 3 Nov 14 2014 Q3 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	9 Months Ended
	Sep. 30, 2014
Document and Entity Information	'
Entity Registrant Name	'Electronic Systems Technology Inc
Document Type	'10-Q
Document Period End Date	30-Sep-14
Amendment Flag	'false
Entity Central Index Key	'0000752294
Current Fiscal Year End Date	'--12-31
Entity Common Stock, Shares Outstanding	5,158,667
Entity Filer Category	'Smaller Reporting Company
Entity Current Reporting Status	'Yes
Entity Voluntary Filers	'No
Entity Well-known Seasoned Issuer	'No
Document Fiscal Year Focus	'2014
Document Fiscal Period Focus	'Q3

ELECTRONIC_SYSTEMS_TECHNOLOGY_

ELECTRONIC SYSTEMS TECHNOLOGY, INC. BALANCE SHEETS (Interim period unaudited) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Current assets	'	'
Cash and cash equivalents	$952,484	$896,580
Short term certificates of deposit investments	1,058,000	1,414,000
Accounts receivable	134,034	72,783
Inventories	715,650	625,692
Accrued interest	6,444	2,947
Prepaid insurance	7,392	11,389
Prepaid expenses	22,145	24,298
Total current assets	2,896,149	3,047,689
Property and equipment, net of depreciation	88,455	31,372
Deposits	'	13,083
Deferred income tax asset	41,100	36,600
Total assets	3,025,704	3,128,744
Current liabilities	'	'
Accounts payable	7,823	8,669
Accrued liabilities	39,069	50,332
Refundable deposits	276	4,910
Total current liabilities	47,168	63,911
Deferred income tax liability	3,400	5,100
Total liabilities	50,568	69,011
Stockholders' equity	'	'
Common stock, 0.001 par value 50,000,000 shares authorized 5,158,667 shares issued and outstanding	5,159	5,159
Additional paid-in capital	1,007,861	1,005,616
Retained earnings	1,962,116	2,048,958
Total stockholders' equity	2,975,136	3,059,733
Total liabilities and stockholders' equity	$3,025,704	$3,128,744

Statement_of_Financial_Positio

Statement of Financial Position - Parenthetical (USD $)	Sep. 30, 2014	Dec. 31, 2013
Statement of financial position	'	'
Common Stock, Par Value	$0.00	$0.00
Common Stock, Shares Authorized	50,000,000	50,000,000
Common Stock, Shares Issued	5,158,667	5,158,667
Common Stock, Shares Outstanding	5,158,667	5,158,667

ELECTRONIC_SYSTEMS_TECHNOLOGY_1

ELECTRONIC SYSTEMS TECHNOLOGY, INC. STATEMENTS OF OPERATIONS (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Income statement	'	'	'	'
SALES, NET	$355,651	$533,573	$1,287,436	$1,394,209
SITE SUPPORT	24,756	40,934	125,057	87,318
COST OF SALES	-190,127	-255,174	-648,055	-665,919
GROSS PROFIT	190,280	319,333	764,438	815,608
OPERATING EXPENSES	'	'	'	'
General and administrative	67,284	55,517	225,073	210,635
Research and development	80,798	64,114	205,440	189,589
Marketing	111,456	114,188	342,381	353,091
Customer service	29,699	26,261	88,404	82,945
TOTAL OPERATING EXPENSES	289,237	260,080	861,298	836,260
OPERATING INCOME (LOSS)	-98,956	59,254	-96,859	-20,652
OTHER INCOME	'	'	'	'
Interest income	2,492	1,941	8,017	5,806
TOTAL OTHER INCOME	2,492	1,941	8,017	5,806
NET INCOME (LOSS) BEFORE INCOME TAX	-96,464	61,195	-88,842	-14,846
Benefit (provision) for income tax	2,660	-9,239	2,000	14,900
NET INCOME (LOSS)	($93,806)	$51,956	($86,842)	$54
Basic and diluted income (loss) per share	($0.02)	$0.01	($0.02)	$0
Weighted average shares used in computing income (loss) per share: Basic and diluted	5,158,667	5,158,667	5,158,667	5,158,667

ELECTRONIC_SYSTEMS_TECHNOLOGY_2

ELECTRONIC SYSTEMS TECHNOLOGY, INC. STATEMENTS OF CASH FLOWS(Unaudited) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:	'	'
Net income (loss)	($86,842)	$54
Noncash items included in net income (loss):	'	'
Depreciation	11,476	10,096
Deferred income taxes	-6,200	-14,900
Share based compensation	2,245	1,713
Changes in operating assets and liabilities:	'	'
Account receivable	-61,251	-14,272
Inventories	-89,958	-102,198
Accrued interest	-3,496	-1,027
Prepaid insurance	3,997	-4,900
Prepaid expenses	2,153	-9,636
Deposits	13,083	'
Accounts payable	-846	5,694
Accrued liabilities	-11,263	926
Refundable deposits	-4,635	-2,035
NET CASH FLOWS USED BY OPERATING ACTIVITIES	-231,537	-130,485
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES	'	'
Short term certificates of deposit investments redeemed	356,000	-138,000
Purchases of property and equipment	-68,560	-1,640
NET CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES	287,440	-139,640
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	55,904	-270,125
Cash and cash equivalents at beginning of period	896,580	818,497
Cash and cash equivalents at ending of period	$952,484	$548,372

Note_1_Basis_of_Presentation

Note 1 - Basis of Presentation	9 Months Ended
	Sep. 30, 2014
Notes	'
Note 1 - Basis of Presentation	'
	NOTE 1 - BASIS OF PRESENTATION
	The financial statements of Electronic Systems Technology, Inc. (the "Company"), presented in this Form 10Q are unaudited and reflect, in the opinion of Management, a fair presentation of operations for the three month and nine month periods ended September 30, 2014 and September 30, 2013.  All adjustments of a normal recurring nature and necessary for a fair presentation of the results for the periods covered have been made. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the applicable rules and regulations of the Securities and Exchange Commission. In preparation of the financial statements, certain amounts and balances have been reformatted from previously filed reports to conform to the format of this quarterly presentation.  These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Form 10K for the year ended December 31, 2013 as filed with Securities and Exchange Commission.
	The results of operations for the three and nine months ended September 30, 2014 and September 30, 2013, are not necessarily indicative of the results expected for the full fiscal year or for any other fiscal period.

Note_2_Inventories

Note 2 - Inventories	9 Months Ended
	Sep. 30, 2014
Notes	'
Note 2 - Inventories	'
	NOTE 2 - INVENTORIES
	Inventories are stated at lower of direct cost or market with cost determined using the FIFO (first in, first out) method.  Inventories consist of the following:
		September 30,	December 31,
		2014	2013
	Parts	$281,679	$217,567
	Work in progress	261,633	83,620
	Finished goods	172,338	324,505
	Total	$715,650	$625,692

Note_3_Earnings_loss_Per_Share

Note 3 - Earnings (loss) Per Share	9 Months Ended
	Sep. 30, 2014
Notes	'
Note 3 - Earnings (loss) Per Share	'
	NOTE 3 – INCOME (LOSS) PER SHARE
	Basic income (loss) per share excludes dilution and is computed by dividing income (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period.  Diluted income (loss) per share reflects potential dilution occurring if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company.  At September 30, 2014 the Company had 440,000 outstanding stock options that could have a dilutive effect on future periods.  However, at September 30, 2014 the effect of stock options on diluted earnings per share would be anti-dilutive.

Note_4_Stock_Options

Note 4 - Stock Options	9 Months Ended
	Sep. 30, 2014
Notes	'
Note 4 - Stock Options:	'
	NOTE 4 - STOCK OPTIONS:
	As of September 30, 2014, the Company had 440,000 outstanding stock options, which have been granted periodically to individual employees and directors with no less than three years of continuous tenure with the Company.  On February 28, 2014, additional stock options to purchase shares of the Company's common stock were granted to individual employees and directors.  The options granted on February 28, 2014 totaled 175,000 shares under option and have an exercise price of $0.41 per share.

Note_5_Related_Party_Transacti

Note 5 - Related Party Transactions	9 Months Ended
	Sep. 30, 2014
Notes	'
Note 5 - Related Party Transactions	'
	NOTE 5 - RELATED PARTY TRANSACTIONS
	For the three and nine-month periods ended September 30, 2014, services in the amounts of $26,074 and $53,780, respectively, were contracted with Manufacturing Services, Inc.  (“MSI”), a company of which Melvin H. Brown is a former owner and is currently a member of the Board of Directors of Electronic Systems Technology Inc.  For the three and nine-month periods ended September 30, 2013 the contracted services with MSI were $28,685 and $82,527, respectively.  The Company owed accounts payable to MSI at September 30, 2014 and December 31, 2013 of $5,261 and $10, respectively.

Note_6_Segment_Reporting

Note 6 - Segment Reporting	9 Months Ended
	Sep. 30, 2014
Notes	'
Note 6 - Segment Reporting	'
	NOTE 6 - SEGMENT REPORTING
	Segment information is prepared on the same basis that the Company's management reviews financial information for operational decision making purposes.  The Company has two reportable segments, domestic and foreign, based on the geographic location of the customers.  Both segments sell radio modem products (requiring an FCC license or license free Ethernet products), related accessories for radio modem products for industrial automation projects, and mobile data computer products.  The foreign segment sells the Company's products and services outside the United States.
	During the quarter ended September 30, 2014, Domestic customers represented approximately 97% of total net revenues.  Foreign customers represented approximately 3% of total net revenues.  During the quarter ended September 30, 2014, sales to two customers that comprised more than 10% of the Company’s sales revenues Customer A and Customer B sales were 15.5% and 11.5% respectively.  Revenues from foreign countries during the third quarter of 2014 consist primarily of revenues from product sales to Mexico and Peru.
	During the first nine months of 2014, Domestic customers represented approximately 86% of total net revenues.  Foreign customers represented approximately 14% of total net revenues.  During the nine month period ended September 30, 2014, sales to one customer was greater than 10%, Customer A, of the Company’s sales revenues.  Revenues from foreign countries during the nine month period ended 2014 consist primarily of revenues from product sales to Peru and Hungary.
	Management evaluates performance based on net revenues and operating expenses. Where applicable, portions of the administrative function expenses are allocated between the operating segments.  The operating segments share the same manufacturing and distributing facilities.  Costs of operating the manufacturing plant, equipment, inventory, and accounts receivable are allocated directly to each segment.
	Summary financial information for the two reportable segments for the third quarter and first nine months of 2014 and 2013 is as follows:
		Domestic	Foreign	Total
	Three months ended September 30, 2014
	Total sales	$      367,657	$        12,750	$      380,407
	Total other income	2,492	-	2,492
	Income (loss) before tax	-78,833	-17,631	-96,464
	Depreciation/amortization	5,989	-	5,989
	Identifiable assets	3,025,567	137	3,025,704
	Net capital expenditures	27,547	-	27,547
	Three months ended September 30, 2013
	Total sales	$      479,644	$       94,863	$      574,507
	Total other income	1,941	-	1,941
	Income (loss) before tax	43,412	17,783	61,195
	Depreciation/amortization	3,411	-	3,411
	Identifiable assets	2,995,733	3,242	2,998,975
	Net capital expenditures	-	-	-
	Nine months ended September 30, 2014
	Total sales	$    1,207,925	$     204,568	$      1,412,493
	Total other income	8,017	-	8,017
	Income (loss) before tax	-141,725	52,883	-88,842
	Depreciation/amortization	11,476	-	11,476
	Identifiable assets	3,025,567	137	3,025,704
	Net capital expenditures	68,560	-	68,560
	Nine Months ended September 30, 2013
	Total sales	$   1,129,268	$     352,259	$      1,481,527
	Total other income	5,806	-	5,806
	Income (loss) before tax	-91,248	76,402	-14,846
	Depreciation/amortization	10,096	-	10,096
	Identifiable assets	2,995,733	3,242	2,998,975
	Net capital expenditures	1,640	-	1,640

Note_2_Inventories_Schedule_of

Note 2 - Inventories: Schedule of Inventory, Current (Tables)	9 Months Ended
	Sep. 30, 2014
Tables/Schedules	'
Schedule of Inventory, Current	'
		September 30,	December 31,
		2014	2013
	Parts	$281,679	$217,567
	Work in progress	261,633	83,620
	Finished goods	172,338	324,505
	Total	$715,650	$625,692

Note_6_Segment_Reporting_Sched

Note 6 - Segment Reporting: Schedule of Segment Reporting Information, by Segment (Tables)	9 Months Ended
	Sep. 30, 2014
Tables/Schedules	'
Schedule of Segment Reporting Information, by Segment	'
		Domestic	Foreign	Total
	Three months ended September 30, 2014
	Total sales	$      367,657	$        12,750	$      380,407
	Total other income	2,492	-	2,492
	Income (loss) before tax	-78,833	-17,631	-96,464
	Depreciation/amortization	5,989	-	5,989
	Identifiable assets	3,025,567	137	3,025,704
	Net capital expenditures	27,547	-	27,547
	Three months ended September 30, 2013
	Total sales	$      479,644	$       94,863	$      574,507
	Total other income	1,941	-	1,941
	Income (loss) before tax	43,412	17,783	61,195
	Depreciation/amortization	3,411	-	3,411
	Identifiable assets	2,995,733	3,242	2,998,975
	Net capital expenditures	-	-	-
	Nine months ended September 30, 2014
	Total sales	$    1,207,925	$     204,568	$      1,412,493
	Total other income	8,017	-	8,017
	Income (loss) before tax	-141,725	52,883	-88,842
	Depreciation/amortization	11,476	-	11,476
	Identifiable assets	3,025,567	137	3,025,704
	Net capital expenditures	68,560	-	68,560
	Nine Months ended September 30, 2013
	Total sales	$   1,129,268	$     352,259	$      1,481,527
	Total other income	5,806	-	5,806
	Income (loss) before tax	-91,248	76,402	-14,846
	Depreciation/amortization	10,096	-	10,096
	Identifiable assets	2,995,733	3,242	2,998,975
	Net capital expenditures	1,640	-	1,640

Note_2_Inventories_Schedule_of1

Note 2 - Inventories: Schedule of Inventory, Current (Details) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Details	'	'
Inventory, Parts and Components, Net of Reserves	$281,679	$217,567
Inventory, Work in Process, Gross	261,633	83,620
Inventory, Finished Goods, Gross	172,338	324,505
Inventories	$715,650	$625,692

Note_3_Earnings_loss_Per_Share1

Note 3 - Earnings (loss) Per Share (Details)	9 Months Ended
	Sep. 30, 2014
Details	'
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	440,000

Note_4_Stock_Options_Details

Note 4 - Stock Options (Details) (USD $)	Sep. 30, 2014	Feb. 28, 2014
Details	'	'
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	440,000	'
Share based compensation options granted	'	175,000
Share based compensation options granted, fair value	'	$0.41

Note_5_Related_Party_Transacti1

Note 5 - Related Party Transactions (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Details	'	'	'	'	'
Related Party Transaction, Amounts of Transaction	$26,074	$28,685	$53,780	$82,527	'
Accounts Payable, Related Parties, Current	$5,261	'	$5,261	'	$10

Note_6_Segment_Reporting_Detai

Note 6 - Segment Reporting (Details)	3 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2014
Details	'	'
Segment Reporting, Disclosure of Major Customers	'	'During the quarter ended September 30, 2014, Domestic customers represented approximately 97% of total net revenues. Foreign customers represented approximately 3% of total net revenues. During the quarter ended September 30, 2014, sales to two customers that comprised more than 10% of the Company’s sales revenues Customer A and Customer B sales were 15.5% and 11.5% respectively. Revenues from foreign countries during the third quarter of 2014 consist primarily of revenues from product sales to Mexico and Peru. During the first nine months of 2014, Domestic customers represented approximately 86% of total net revenues. Foreign customers represented approximately 14% of total net revenues. During the nine month period ended September 30, 2014, sales to one customer was greater than 10%, Customer A, of the Company’s sales revenues. Revenues from foreign countries during the nine month period ended 2014 consist primarily of revenues from product sales to Peru and Hungary.
Domestic sales	97.00%	86.00%
Foreign sales	3.00%	14.00%
Customer A	15.50%	'
Customer B	11.50%	'

Note_6_Segment_Reporting_Sched1

Note 6 - Segment Reporting: Schedule of Segment Reporting Information, by Segment (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Revenues	$380,407	$574,507	$1,412,493	$1,481,527
Interest Revenue (Expense), Net	2,492	1,941	8,017	5,806
Income (Loss) from Continuing Operations before Income Taxes, Extraordinary Items, Noncontrolling Interest	-96,464	61,195	-88,842	-14,846
Depreciation, Depletion and Amortization	5,989	3,411	11,476	10,096
Identifiable assets	3,025,704	2,998,975	3,025,704	2,998,975
Net capital expenditures	27,547	'	68,560	1,640
Operating Segments	'	'	'	'
Revenues	367,657	479,644	1,207,925	1,129,268
Interest Revenue (Expense), Net	2,492	1,941	8,017	5,806
Income (Loss) from Continuing Operations before Income Taxes, Extraordinary Items, Noncontrolling Interest	-78,833	43,412	-141,725	-91,248
Depreciation, Depletion and Amortization	5,989	3,411	11,476	10,096
Identifiable assets	3,025,567	2,995,733	3,025,567	2,995,733
Net capital expenditures	27,547	'	68,560	1,640
Other Segments	'	'	'	'
Revenues	12,750	94,863	204,568	352,259
Income (Loss) from Continuing Operations before Income Taxes, Extraordinary Items, Noncontrolling Interest	-17,631	17,783	52,883	76,402
Identifiable assets	$137	$3,242	$137	$3,242