Electronic Systems Technology (ELST) 10-Q 29 Jul 16 2016 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	6 Months Ended
	Jun. 30, 2016shares
Document and Entity Information
Entity Registrant Name	Electronic Systems Technology Inc
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Amendment Flag	false
Entity Central Index Key	752,294
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding	5,081,108
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	2,016
Document Fiscal Period Focus	Q2
Trading Symbol	elst

ELECTRONIC SYSTEMS TECHNOLOGY,

ELECTRONIC SYSTEMS TECHNOLOGY, INC. BALANCE SHEETS (Interim period unaudited) - USD ($)		Jun. 30, 2016	Dec. 31, 2015
Current assets
Cash and cash equivalents		$ 812,679	$ 618,060
Certificates of deposit investments		1,000,000	1,202,625
Accounts receivable		113,020	66,276
Inventories		585,036	603,291
Accrued interest receivable		4,228	7,861
Prepaid insurance		1,813	2,672
Prepaid expenses		21,111	10,474
Deferred income tax asset, current		25,072	24,517
Total current assets		2,562,959	2,535,776
Property and equipment, net		64,528	77,673
Deferred income tax asset, net		143,320	143,875
Total assets		2,770,807	2,757,324
Current liabilities
Accounts payable		51,404	8,550
Accrued liabilities		34,257	23,379
Refundable deposits		3,580	3,580
Total current liabilities		89,241	35,509
Total liabilities		89,241	35,509
COMMITMENTS AND CONTINGENCIES	[1]	0	0
Stockholders' equity
Common stock, $0.001 par value 50,000,000 shares authorized 5,081,108 and 5,158,667 shares issued and outstanding, respectively		5,081	5,159
Additional paid-in capital		980,307	1,007,861
Retained earnings		1,696,178	1,708,795
Total stockholders' equity		2,681,566	2,721,815
Total liabilities and stockholders' equity		$ 2,770,807	$ 2,757,324
[1]	Note 6

Statement of Financial Position

Statement of Financial Position - Parenthetical - $ / shares	Jun. 30, 2016	Dec. 31, 2015
Statement of financial position
Common Stock, Par Value	$ 0.001	$ 0.001
Common Stock, Shares Authorized	50,000,000	50,000,000
Common Stock, Shares Issued	5,081,108	5,158,667
Common Stock, Shares Outstanding	5,081,108	5,158,667

ELECTRONIC SYSTEMS TECHNOLOGY,4

ELECTRONIC SYSTEMS TECHNOLOGY, INC. STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income statement
SALES, NET	$ 437,882	$ 330,753	$ 857,594	$ 758,779
SITE SUPPORT	23,237	22,271	71,176	44,597
COST OF SALES	(191,463)	(173,842)	(391,600)	(375,439)
GROSS PROFIT	269,656	179,632	537,170	427,907
Operating Expenses
General and administrative	74,285	83,664	165,955	184,364
Research and development	76,475	74,107	145,610	147,229
Marketing and Sales	125,071	159,072	244,093	325,733
TOTAL OPERATING EXPENSE	275,831	316,843	555,658	657,326
OPERATING INCOME (LOSS)	(6,175)	(137,211)	(18,488)	(229,419)
OTHER INCOME
Interest income	2,984	3,041	5,871	5,798
TOTAL OTHER INCOME	2,984	3,041	5,871	5,798
NET INCOME (LOSS) BEFORE INCOME TAX	(3,191)	(134,170)	(12,617)	(223,621)
Benefit (provision) for income tax	400	7,600
NET INCOME (LOSS)	$ (2,791)	$ (126,570)	$ (12,617)	$ (223,621)
Basic and diluted earnings per share	$ 0	$ (0.02)	$ 0	$ (0.04)
Weighted average shares used in computing income (loss) per share: Basic and diluted	5,081,108	5,158,667	5,105,123	5,158,667

ELECTRONIC SYSTEMS TECHNOLOGY,5

ELECTRONIC SYSTEMS TECHNOLOGY, INC. STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:
Net loss	$ (12,617)	$ (223,621)
Noncash items included in net loss:
Depreciation	13,145	15,113
Share based compensation	1,841
Changes in operating assets and liabilities:
Accounts receivable	(46,744)	(8,421)
Inventories	18,255	56,808
Accrued interest receivable	3,633	(2,660)
Prepaid insurance	859	1,927
Prepaid expenses	(10,638)	(8,359)
Accounts payable	42,854	307
Accrued liabilities	10,878	10,690
Refundable deposits		(17,664)
NET CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES	21,466	(175,880)
CASH FLOWS PROVIDED (USED) IN INVESTING ACTIVITIES:
Certificates of deposit redeemed	202,625
Purchases of equipment		(14,480)
NET CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES	202,625	(14,480)
CASH FLOWS USED IN FINANCING ACTIVITIES:
Repurchase of Shares	(29,472)
NET CASH USED IN FINANCING ACTIVITIES	(29,472)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	194,619	(190,360)
Cash and cash equivalents at beginning of period	618,060	637,086
Cash and cash equivalents at end of period	$ 812,679	$ 476,726

Note 1 - Basis of Presentation

Note 1 - Basis of Presentation	6 Months Ended
	Jun. 30, 2016
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 and six month periods ended June 30, 2016 and June 30, 2015. 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. 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, 2015 as filed with Securities and Exchange Commission. The results of operations for the three and six months ended June 30, 2016 and June 30, 2015, are not necessarily indicative of the results expected for the full fiscal year or for any other fiscal period. New Accounting Pronouncements In July of 2015 the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2015-11 “Simplifying the Measurement of Inventory” an update to Inventory Topic 330. The ASU simplifies the concept of lower of cost or market to the low of cost and net realizable value and more closely align the measurement of inventory in Generally Accepted Accounting Principles (“GAAP”) with the measurement of inventory in International Financial Reporting Standards (“IFRS”). The amendments in the Update are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years.

Note 2 - Inventories

Note 2 - Inventories	6 Months Ended
	Jun. 30, 2016
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: June 30, 2016 December 31, 2015 Parts $ 148,620 $181,798 Work in progress 244,315 233,055 Finished goods 192,101 188,438 Total inventory $ 585,036 $603,291

Note 3 - Income (Loss) Per Shar

Note 3 - Income (Loss) Per Share	6 Months Ended
	Jun. 30, 2016
Notes
Note 3 - Income (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 June 30, 2016 the Company had 245,000 outstanding stock options that could have a dilutive effect on future periods. However, at June 30, 2016 there was no dilutive effect of stock options on earnings per share or weighted average shares outstanding.

Note 4 - Stock Options

Note 4 - Stock Options	6 Months Ended
	Jun. 30, 2016
Notes
Note 4 - Stock Options	NOTE 4 - STOCK OPTIONS As of June 30, 2016, 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 has not awarded stock options during the six months ended June 30, 2016. The Board of Directors may consider issuing stock options later in 2016. Shareholders approved the 2015 Stock Incentive Plan on June 3, 2016, for 250,000 stock options. 150,000 of the approved amount were granted to certain management employees as part of the 2015 Stock Incentive Plan. The options were dated effective August 7, 2015 and have a five year exercise period. The company booked an expense of $ 1,841 for the quarter in which the options were approved by the Shareholders. The fair value of each option award 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 2015 and approved by the Shareholders in 2016. 2015 Dividend yield 0.00% Expected volatility 68 % Risk-free interest rate 1.08 % Expected term (in years) 5 Estimated Fair Value per Option Granted $ 0.23 The Company uses historical data to estimate option exercise rates. The option exercise rate for option grants in 2005 through 2015 was 5.42 %. A summary of option activity during the six months ended June 30, 2016, is as follows: Number Outstanding Weighted-Average Exercise Price Per Share Weighted-Average Remaining Life (Years) Approximate Aggregate Intrinsic Value Outstanding and Exercisable at December 31, 2015 185,000 $ 0.36 Granted (Approved) 150,000 $ 0.40 Expired (90,000) 0.31 Outstanding and Exercisable at June 30, 2016 245,000 $ 0.40 2.8 $ 0

Note 5 - Related Party Transact

Note 5 - Related Party Transactions	6 Months Ended
	Jun. 30, 2016
Notes
Note 5 - Related Party Transactions	NOTE 5 - RELATED PARTY TRANSACTIONS During the quarter ended June 30, 2016 the Company accrued total directors’ fees of $1,500, or $300 per director for board meetings attended. For the six-month period ending June 30, 2016, the Company paid or accrued a total of $3,000 for directors’ fees.

Note 6 - Commitments and Contin

Note 6 - Commitments and Contingencies	6 Months Ended
	Jun. 30, 2016
Notes
Note 6 - Commitments and Contingencies	NOTE 6 - COMMITMENTS and CONTINGENCIES The Company leases its facilities from a port authority for $5,348 per month for three years, expiring in September 2017, with annual increases based upon the Consumer Price Index

Note 7 - Segment Reporting

Note 7 - Segment Reporting	6 Months Ended
	Jun. 30, 2016
Notes
Note 7 - Segment Reporting	NOTE 7 - SEGMENT REPORTING Segment information is prepared on the same basis that the Company's management reviews financial information for operational decision making purposes. During the quarter ended June 30, 2016, Domestic customers represented approximately 84% of total net revenues. Domestic sales revenues increased to $388,415 for the quarter ended June 30, 2016 compared to $299,131 for the quarter ended June 30, 2015. Year to date domestic sales revenues increased to $745,122 as of June 30, 2016 compared to $605,248 for the same period of 2015. Foreign customers represented approximately 16% of total net revenues. Foreign sales revenues increased to $72,704 for the quarter ended June 30, 2016 compared to $54,343 for the quarter ended June 30, 2015. Year to date foreign sales revenues decreased to $183,648 as of June 30, 2016 compared to $198,098 for the same period of 2015. During the quarter ended June 30, 2016, sales to one customer, comprised more than 10% of the Company’s sales revenues. Revenues from foreign countries during the second quarter of 2016 consist primarily of revenues from product sales to Peru, Croatia and Canada.

Note 8 - Stock Repurchase

Note 8 - Stock Repurchase	6 Months Ended
	Jun. 30, 2016
Notes
Note 8 - Stock Repurchase	NOTE 8 – Stock Repurchase On January 13, 2016, the Company’s Board of Directors approved a resolution authorizing the repurchase of up to $100,000 of the Company’s common stock at the price of $0.38 per share. The Company’s share repurchase program does not obligate it to acquire any specific number of shares. Under the program, shares may be repurchased in open market transactions, complying with Rule 10b5-1 and Rule 10b-18 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Shares repurchased are retired. The following table shows the Company’s activity and related information for the six-month period ended June 30, 2016: Purchase Period End Date Number of Shares Average Repurchase Price Per Share Amount January 2016 January 31, 2016 9,618 $0.38 $ 3,655 February 2016 February 29, 2016 40,382 $0.38 $15,345 March 2016 March 31, 2016 27,559 $0.38 $10,472 Total 77,559 $0.38 $29,472

Note 9 - Reclassification

Note 9 - Reclassification	6 Months Ended
	Jun. 30, 2016
Notes
Note 9 - Reclassification	NOTE 9 – Reclassification Certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations, cash flows or financial position of prior period amounts.

Note 2 - Inventories_ Schedule

Note 2 - Inventories: Schedule of Inventory, Current (Tables)	6 Months Ended
	Jun. 30, 2016
Tables/Schedules
Schedule of Inventory, Current	June 30, 2016 December 31, 2015 Parts $ 148,620 $181,798 Work in progress 244,315 233,055 Finished goods 192,101 188,438 Total inventory $ 585,036 $603,291

Note 4 - Stock Options_ Schedul

Note 4 - Stock Options: Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Tables)	6 Months Ended
	Jun. 30, 2016
Tables/Schedules
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions	2015 Dividend yield 0.00% Expected volatility 68 % Risk-free interest rate 1.08 % Expected term (in years) 5 Estimated Fair Value per Option Granted $ 0.23

Note 4 - Stock Options_ Sched17

Note 4 - Stock Options: Schedule of Share-based Compensation, Stock Options, Activity (Tables)	6 Months Ended
	Jun. 30, 2016
Tables/Schedules
Schedule of Share-based Compensation, Stock Options, Activity	Number Outstanding Weighted-Average Exercise Price Per Share Weighted-Average Remaining Life (Years) Approximate Aggregate Intrinsic Value Outstanding and Exercisable at December 31, 2015 185,000 $ 0.36 Granted (Approved) 150,000 $ 0.40 Expired (90,000) 0.31 Outstanding and Exercisable at June 30, 2016 245,000 $ 0.40 2.8 $ 0

Note 8 - Stock Repurchase_ Sche

Note 8 - Stock Repurchase: Schedule of Repurchase Agreements (Tables)	6 Months Ended
	Jun. 30, 2016
Tables/Schedules
Schedule of Repurchase Agreements	Purchase Period End Date Number of Shares Average Repurchase Price Per Share Amount January 2016 January 31, 2016 9,618 $0.38 $ 3,655 February 2016 February 29, 2016 40,382 $0.38 $15,345 March 2016 March 31, 2016 27,559 $0.38 $10,472 Total 77,559 $0.38 $29,472

Note 1 - Basis of Presentation

Note 1 - Basis of Presentation (Details)	6 Months Ended
	Jun. 30, 2016
Details
New Accounting Pronouncement, Early Adoption	New Accounting Pronouncements In July of 2015 the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2015-11 “Simplifying the Measurement of Inventory” an update to Inventory Topic 330. The ASU simplifies the concept of lower of cost or market to the low of cost and net realizable value and more closely align the measurement of inventory in Generally Accepted Accounting Principles (“GAAP”) with the measurement of inventory in International Financial Reporting Standards (“IFRS”). The amendments in the Update are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years.

Note 2 - Inventories_ Schedul20

Note 2 - Inventories: Schedule of Inventory, Current (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Details
Inventory, Parts and Components, Net of Reserves	$ 148,620	$ 181,798
Inventory, Work in Process, Gross	244,315	233,055
Inventory, Finished Goods, Gross	192,101	188,438
Inventories	$ 585,036	$ 603,291

Note 3 - Income (Loss) Per Sh21

Note 3 - Income (Loss) Per Share (Details)	6 Months Ended
	Jun. 30, 2016shares
Details
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	245,000

Note 4 - Stock Options (Details

Note 4 - Stock Options (Details) - USD ($)	Aug. 07, 2015	Dec. 31, 2015
Details
Stock or Unit Option Plan Expense	$ 1,841
Option exercise rate for option grants		5.42%

Note 4 - Stock Options_ Sched23

Note 4 - Stock Options: Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Details)	Aug. 07, 2015$ / shares
Details
Fair Value Assumptions, Expected Volatility Rate	68.00%
Fair Value Assumptions, Risk Free Interest Rate	1.08%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term	5 years
Investment Options, Exercise Price	$ 0.23

Note 4 - Stock Options_ Sched24

Note 4 - Stock Options: Schedule of Share-based Compensation, Stock Options, Activity (Details)	6 Months Ended
	Jun. 30, 2016USD ($)$ / sharesshares	Dec. 31, 2015$ / sharesshares
Details
Outstanding | shares	245,000	185,000
Weighted Average Exercise Price | $ / shares	$ 0.40	$ 0.36
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures | shares	150,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ / shares	$ 0.40
Expired | shares	(90,000)
Weighted Average Exercise Price Per Option | $ / shares	$ 0.31
Weighted Average Remaining Life Years	2.8
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | $	$ 0

Note 5 - Related Party Transa25

Note 5 - Related Party Transactions (Details) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2016
Details
Noninterest Expense Directors Fees	$ 1,500	$ 3,000
Director fees per director		$ 300

Note 6 - Commitments and Cont26

Note 6 - Commitments and Contingencies (Details)	6 Months Ended
	Jun. 30, 2016USD ($)
Details
Operating Leases, Rent Expense, Net	$ 5,348

Note 7 - Segment Reporting (Det

Note 7 - Segment Reporting (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Details
Domestic sales	$ 388,415	$ 299,131	$ 745,122	$ 605,248
Foreign sales	$ 72,704	$ 54,343	$ 183,648	$ 198,098

Note 8 - Stock Repurchase_ Sc28

Note 8 - Stock Repurchase: Schedule of Repurchase Agreements (Details) - USD ($)	1 Months Ended			6 Months Ended
	Mar. 31, 2016	Feb. 29, 2016	Jan. 31, 2016	Jun. 30, 2016
Number of shares
Stock Repurchased During Period, Shares	27,559	40,382	9,618	77,559
Average Repurchase Price Per Share
Average Repurchase Price Per Share	$ 0.38	$ 0.38	$ 0.38	$ 0.38
Repurchase amount
Payments for Repurchase of Common Stock	$ 10,472	$ 15,345	$ 3,655	$ 29,472