Electronic Systems Technology (ELST) 10-Q 29 Apr 15 2015 Q1 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	3 Months Ended
	Mar. 31, 2015	Apr. 22, 2015
Document and Entity Information
Entity Registrant Name	Electronic Systems Technology Inc
Document Type	10-Q
Document Period End Date	31-Mar-15
Amendment Flag	FALSE
Entity Central Index Key	752294
Current Fiscal Year End Date	-19
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	2015
Document Fiscal Period Focus	Q1

ELECTRONIC_SYSTEMS_TECHNOLOGY_

ELECTRONIC SYSTEMS TECHNOLOGY, INC. BALANCE SHEETS (Interim period unaudited) (USD $)	Mar. 31, 2015		Dec. 31, 2014
Current assets
Cash and cash equivalents	$545,767		$637,086
Certificates of deposit investments	1,402,625		1,402,625
Accounts receivable	109,163		94,864
Inventories	666,478		719,137
Accrued interest receivable	2,944		3,109
Prepaid insurance	5,011		5,505
Prepaid expenses	22,776		8,919
Deferred income tax asset, current	38,700		49,600
Total current assets	2,793,464		2,920,845
Property and equipment, net of depreciation	96,557		91,907
Deferred income tax asset	34,601		31,301
Total assets	2,924,622		3,044,053
Current liabilities
Accounts payable	14,716		14,573
Accrued liabilities	46,690		43,045
Refundable deposits	80		26,247
Total current liabilities	61,486		83,865
Total liabilities	61,486		83,865
COMMITMENTS and CONTINGENCIES	0	[1]	0	[1]
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		1,007,861
Retained earnings	1,850,116		1,947,168
Total stockholders' equity	2,863,136		2,960,188
Total liabilities and stockholders' equity	$2,924,622		$3,044,053
[1]	Notes 5 and 7

Statement_of_Financial_Positio

Statement of Financial Position - Parenthetical (USD $)	Mar. 31, 2015	Dec. 31, 2014
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
	Mar. 31, 2015	Mar. 31, 2014
Income statement
PRODUCT SALES, net	$428,026	$448,809
SITE SUPPORT	21,846	51,015
COST OF SALES and SITE SUPPORT	-201,597	-227,942
GROSS PROFIT	248,275	271,882
OPERATING EXPENSES
General and administrative	100,700	86,200
Research and development	73,122	58,849
Marketing	138,413	108,240
Customer service	28,248	27,332
Total operating expenses	340,483	280,621
OPERATING LOSS	-92,208	-8,739
OTHER INCOME
Interest income	2,757	2,549
Total other income	2,757	2,549
NET LOSS BEFORE INCOME TAX	-89,451	-6,190
Benefit (provision) for income tax	-7,600	240
NET LOSS	($97,051)	($5,950)
Basic and diluted loss per share	($0.02)	$0
Weighted average shares used in computing loss per share Basic and diluted	5,158,667	5,158,667

ELECTRONIC_SYSTEMS_TECHNOLOGY_2

ELECTRONIC SYSTEMS TECHNOLOGY, INC. STATEMENTS OF CASH FLOWS (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	($97,051)	($5,950)
Noncash items included in loss:
Depreciation	8,330	2,531
Deferred income taxes	7,600	500
Share based compensation		2,245
Changes in operating assets and liabilities:
Accounts receivable, net	-14,299	-126,829
Inventories	52,659	-94,972
Accrued interest receivable	165	-915
Prepaid insurance		4,506
Prepaid expenses	-13,363	10,101
Deposits		11,408
Accounts payable	143	945
Refundable deposits	-26,167	-2,970
Accrued liabilities	3,644	-9,359
NET CASH USED IN OPERATING ACTIVITIES	-78,339	-208,759
CASH FLOWS USED IN INVESTING ACTIVITIES:
Certificates of deposit redeemed		5,000
Purchase of equipment	-12,980	-10,870
NET CASH USED IN INVESTING ACTIVITIES	-12,980	-5,870
NET DECREASE IN CASH AND CASH EQUIVALENTS	-91,319	-214,629
Cash and cash equivalents at beginning of period	637,086	896,581
Cash and cash equivalents at end of period	545,767	681,952
Cash and cash equivalents:
Cash	227,890	50,158
Cash equivalents	317,877	631,794
Total cash and cash equivalents	$545,767	$681,952

Note_1_Basis_of_Presentation

Note 1 - Basis of Presentation	3 Months Ended
	Mar. 31, 2015
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 periods ended March 31, 2015 and March 31, 2014.  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, 2014 as filed with Securities and Exchange Commission.
	The results of operations for the three-month period ended March 31, 2015 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	3 Months Ended
	Mar. 31, 2015
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:
		31-Mar	31-Dec
		2015	2014
	Parts	$       232,007	$       283,375
	Work in progress	247,158	276,853
	Finished goods	187,312	158,909
	Total inventory	$       666,478	$       719,137

Note_3_Income_loss_Per_Share

Note 3 - Income (loss) Per Share	3 Months Ended
	Mar. 31, 2015
Notes
Note 3 - Income (loss) Per Share	NOTE 3 - EARNINGS (LOSS) PER SHARE
	Basic earnings (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 earnings (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 March 31, 2015 the Company had 295,000 outstanding stock options that could have a dilutive effect on future periods’ income.  However, diluted earnings per share are not presented because their effect would be antidilutive due to Company’s losses.

Note_4_Stock_Options

Note 4 - Stock Options	3 Months Ended
	Mar. 31, 2015
Notes
Note 4 - Stock Options	NOTE 4 - STOCK OPTIONS
	As of March 31, 2015, the Company had 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.  The Board of Directors did not issue stock options during the first quarter ended March 31, 2015. The Board of Directors will consider issuing stock options later in 2015.
	The fair value of options granted in 2014 is estimated on the date of the grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in:
	2014
	Dividend yield	0.00%
	Expected volatility	75%
	Risk-free interest rate	0.68%
	Expected term (in years)	3
	Fair Value per Option Granted	$0.20
	The Company uses historical data to estimate option exercise rates.  The option exercise rate for option grants in 2014 was 6.00%. All options vested immediately upon issue.
	A summary of option activity during the quarter ended March 31, 2015 is as follows:
		Number Outstanding	Weighted-Average Exercise Price Per Share	Weighted-Average Remaining Life	Approximate Aggregate Intrinsic Value
				(Years)
	Outstanding and Exercisable at December 31, 2014	440,000	$0.36
	Granted	-	-
	Expired	-145,000	0.37
	Outstanding and Exercisable at March 31, 2015	295,000	$0.36	1.67	$14,750
	A summary of option activity during the quarter ended March 31, 2014 is as follows:
		Number Outstanding	Weighted-Average Exercise Price Per Share	Weighted-Average Remaining Life	Approximate
				(Years)	Aggregate Intrinsic Value
	Outstanding and Exercisable at December 31, 2013	525,000	$         0.38
	Granted	175,000	0.44
	Expired	-185,000	0.44
	Outstanding and Exercisable at March 31, 2014	515,000	$         0.40	2.33	$      10,300

Note_5_Leases

Note 5 - Leases	3 Months Ended
	Mar. 31, 2015
Notes
Note 5 - Leases	NOTE 5 - LEASES
	The Company leases its facilities from a port authority for $5,251 per month for three years, expiring in September 2017, with annual increases based upon the Consumer Price Index.

Note_6_Related_Party_Transacti

Note 6 - Related Party Transactions	3 Months Ended
	Mar. 31, 2015
Notes
Note 6 - Related Party Transactions	NOTE 6 - RELATED PARTY TRANSACTIONS
	For the quarters ended March 31, 2015 and March 31, 2014, services in the amount of $1,674 and $19,156, respectively, were contracted with Manufacturing Services, Inc. (MSI), of which the current owner, Michael S. Brown is a former Director of the Company and son of MSI’s former owner, Melvin H. Brown, who is currently a member of the Company’s Board of Directors. The Company had accounts payable to Manufacturing Services, Inc. at March 31, 2015 and March 31, 2014 of $0 and $180, respectively.
	During the quarter ended March 31, 2015 the Company accrued total directors’ fees of $1,200, or $300 per director for board meetings attended.

Note_7_Commitments_and_Conting

Note 7 - Commitments and Contingencies	3 Months Ended
	Mar. 31, 2015
Notes
Note 7 - Commitments and Contingencies	NOTE 7 - COMMITMENTS and CONTINGENCIES
	In 2009, the Company entered into a licensing agreement with Wi-LAN, Inc. (a Canadian Company), to pay royalties for certain licensing rights and liability releases.  Such amounts are not considered significant by the Company.

Note_8_Segment_Reporting

Note 8 - Segment Reporting	3 Months Ended
	Mar. 31, 2015
Notes
Note 8 - Segment Reporting	NOTE 8 - 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.  Domestic and foreign segments sell radio modem products, related accessories for radio modem products for industrial automation projects, with the foreign segment selling the Company's products and services outside the United States.
	During the quarters ended March 31, 2015 and 2014, domestic customers represented approximately 68% and 81% of total net revenues, respectively.  In addition during the quarters ended March 31, 2015 and 2014, foreign customers represented 32% and 19% of total net revenues, respectively.  During the quarter ended March 31, 2015, product sales to one customers exceeded more than 10% of the Company's sales revenues.  During the quarter ended March 31, 2014 two customers accounted for more than 10% of the Company’s revenues.
	Revenues from foreign countries consisted primarily of revenues from Croatia, Peru, and Canada.
	Summary financial information for the two reportable segments for the first quarter of 2015 and 2014 is as follows:
	Quarter ended March 31, 2015	Domestic	Foreign	Total
	Total sales	$       306,117	$     143,755	$   449,872
	Total other income	2,757	-	2,757
	Earnings (loss) before tax	-145,560	56,109	-89,451
	Depreciation/amortization	8,330	-	8,330
	Identifiable assets	2,898,111	26,711	2,924,622
	Net capital expenditures	12,980		12,980
	Quarter ended March 31, 2014
	Total sales	$       405,170	$      94,654	$   499,824
	Total other income	2,549	-	2,549
	Earnings (loss) before tax	-27,280	21,090	-6,190
	Depreciation/amortization	2,531	-	2,531
	Identifiable assets	3,110,758	6,398	3,117,156
	Net capital expenditures	10,870		10,870

Note_2_Inventories_Schedule_of

Note 2 - Inventories: Schedule of Inventory, Current (Tables)	3 Months Ended
	Mar. 31, 2015
Tables/Schedules
Schedule of Inventory, Current
		31-Mar	31-Dec
		2015	2014
	Parts	$       232,007	$       283,375
	Work in progress	247,158	276,853
	Finished goods	187,312	158,909
	Total inventory	$       666,478	$       719,137

Note_4_Stock_Options_Sharebase

Note 4 - Stock Options: Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value (Tables)	3 Months Ended
	Mar. 31, 2015
Tables/Schedules
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value
	2014
	Dividend yield	0.00%
	Expected volatility	75%
	Risk-free interest rate	0.68%
	Expected term (in years)	3
	Fair Value per Option Granted	$0.20

Note_4_Stock_Options_Schedule_

Note 4 - Stock Options: Schedule of Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Grant Date Intrinsic Value (Tables)	3 Months Ended
	Mar. 31, 2015					Mar. 31, 2014
Tables/Schedules
Schedule of Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Grant Date Intrinsic Value
		Number Outstanding	Weighted-Average Exercise Price Per Share	Weighted-Average Remaining Life	Approximate Aggregate Intrinsic Value		Number Outstanding	Weighted-Average Exercise Price Per Share	Weighted-Average Remaining Life	Approximate
				(Years)					(Years)	Aggregate Intrinsic Value
	Outstanding and Exercisable at December 31, 2014	440,000	$0.36			Outstanding and Exercisable at December 31, 2013	525,000	$         0.38
	Granted	-	-			Granted	175,000	0.44
	Expired	-145,000	0.37			Expired	-185,000	0.44
	Outstanding and Exercisable at March 31, 2015	295,000	$0.36	1.67	$14,750	Outstanding and Exercisable at March 31, 2014	515,000	$         0.40	2.33	$      10,300

Note_8_Segment_Reporting_Sched

Note 8 - Segment Reporting: Schedule of Segment Reporting Information, by Segment (Tables)	3 Months Ended
	Mar. 31, 2015
Tables/Schedules
Schedule of Segment Reporting Information, by Segment
	Quarter ended March 31, 2015	Domestic	Foreign	Total
	Total sales	$       306,117	$     143,755	$   449,872
	Total other income	2,757	-	2,757
	Earnings (loss) before tax	-145,560	56,109	-89,451
	Depreciation/amortization	8,330	-	8,330
	Identifiable assets	2,898,111	26,711	2,924,622
	Net capital expenditures	12,980		12,980
	Quarter ended March 31, 2014
	Total sales	$       405,170	$      94,654	$   499,824
	Total other income	2,549	-	2,549
	Earnings (loss) before tax	-27,280	21,090	-6,190
	Depreciation/amortization	2,531	-	2,531
	Identifiable assets	3,110,758	6,398	3,117,156
	Net capital expenditures	10,870		10,870

Note_2_Inventories_Schedule_of1

Note 2 - Inventories: Schedule of Inventory, Current (Details) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Details
Inventory, Parts and Components, Net of Reserves	$232,007	$283,375
Inventory, Work in Process, Gross	247,158	276,853
Inventory, Finished Goods, Gross	187,312	158,909
Inventories	$666,478	$719,137

Note_3_Income_loss_Per_Share_D

Note 3 - Income (loss) Per Share (Details)	3 Months Ended
	Mar. 31, 2015
Details
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	295,000

Note_4_Stock_Options_Sharebase1

Note 4 - Stock Options: Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value (Details) (USD $)	12 Months Ended
	Dec. 31, 2014
Details
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate	0.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate	75.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate	0.68%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term	3 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Grant Date Intrinsic Value	$0.20

Note_4_Stock_Options_Details

Note 4 - Stock Options (Details)	3 Months Ended
	Mar. 31, 2015
Details
Option exercise rate	6

Note_4_Stock_Options_Schedule_1

Note 4 - Stock Options: Schedule of Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Grant Date Intrinsic Value (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014	Dec. 31, 2013
Details
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	295,000	515,000	440,000	525,000
Weighted Average Exercise Price, Outstanding	$0.36	$0.40	$0.36	$0.38
Share-based Compensation Arrangement by Share-based Payment Award, Options, Expirations in Period	-145,000	-185,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period, Weighted Average Exercise Price	$0.37	$0.44
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term	1 year 8 months 1 day	2 years 3 months 29 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Aggregate Intrinsic Value	$14,750	$10,300
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures		175,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value		$0.44

Note_5_Leases_Details

Note 5 - Leases (Details) (USD $)	3 Months Ended
	Mar. 31, 2015
Details
Monthy lease expense	$5,251

Note_6_Related_Party_Transacti1

Note 6 - Related Party Transactions (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Details
Related Party Transaction, Amounts of Transaction	$1,674	$19,156
Accounts Payable, Related Parties, Current	0	180
Noninterest Expense Directors Fees	1,200
Fees per director	$300

Note_8_Segment_Reporting_Detai

Note 8 - Segment Reporting (Details)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Details
Domestic percent of revenue	68.00%	81.00%
Foreign percent of revenue	32.00%	19.00%
Entity-Wide Revenue, Major Customer, Percentage	10.00%	10.00%

Note_8_Segment_Reporting_Sched1

Note 8 - Segment Reporting: Schedule of Segment Reporting Information, by Segment (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Segment reporting total sales net	$449,872	$499,824
Segment reporting other income	2,757	2,549
Segment reporting income loss before tax	-89,451	-6,190
Segment reporting depreciation	8,330	2,531
Segment reporting identifiable assets	2,924,622	3,117,156
Segment reporting net capital expenditures	12,980	10,870
Operating Segments
Segment reporting total sales net	306,117	405,170
Segment reporting other income	2,757	2,549
Segment reporting income loss before tax	-145,560	-27,280
Segment reporting depreciation	8,330	2,531
Segment reporting identifiable assets	2,898,111	3,110,758
Segment reporting net capital expenditures	12,980	10,870
Other Segments
Segment reporting total sales net	143,755	94,654
Segment reporting income loss before tax	56,109	21,090
Segment reporting identifiable assets	$26,711	$6,398