Electronic Systems Technology (ELST) 10-Q 21 Jul 17 2017 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	6 Months Ended
	Jun. 30, 2017shares
Document and Entity Information
Entity Registrant Name	Electronic Systems Technology Inc
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Amendment Flag	false
Entity Central Index Key	752,294
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding	5,006,577
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	2,017
Document Fiscal Period Focus	Q2
Trading Symbol	elst

ELECTRONIC SYSTEMS TECHNOLOGY,

ELECTRONIC SYSTEMS TECHNOLOGY, INC. BALANCE SHEETS (Interim period unaudited) - USD ($)		Jun. 30, 2017	Dec. 31, 2016
Current assets
Cash and cash equivalents		$ 387,115	$ 502,971
Certificates of deposit investments		1,000,000	1,000,000
Accounts receivable		133,711	71,202
Inventories		703,799	703,147
Accrued interest receivable		3,547	6,903
Prepaid expenses		14,534	8,405
Total current assets		2,242,706	2,292,628
Property and equipment, net		41,413	51,383
Deferred income tax asset, net		244,092	244,092
Total assets		2,528,211	2,588,103
Current liabilities
Accounts payable		72,127	15,114
Accrued liabilities		23,599	22,693
Refundable deposits		3,622	4,527
Total current liabilities		99,348	42,334
Total liabilities		99,348	42,334
COMMITMENTS and CONTINGENCIES	[1]	0	0
Stockholders' equity
Common stock, $0.001 par value 50,000,000 shares authorized 5,006,577 and 5,060,903 shares issued and outstanding, respectively		5,007	5,061
Additional paid-in capital		951,969	972,609
Retained earnings		1,471,887	1,568,099
Total stockholders' equity		2,428,863	2,545,769
Total liabilities and stockholders' equity		$ 2,528,211	$ 2,588,103
[1]	Note 6

Statement of Financial Position

Statement of Financial Position - Parenthetical - $ / shares	Jun. 30, 2017	Dec. 31, 2016
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	5,006,577	5,060,903
Common Stock, Shares Outstanding	5,006,577	5,060,903

ELECTRONIC SYSTEMS TECHNOLOGY,4

ELECTRONIC SYSTEMS TECHNOLOGY, INC. STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income statement
SALES, NET	$ 365,468	$ 437,882	$ 726,890	$ 857,594
SITE SUPPORT	15,145	23,237	32,509	71,176
COST OF SALES	(164,895)	(191,463)	(348,210)	(391,600)
GROSS PROFIT	215,718	269,656	411,189	537,170
Operating Expenses
General and administrative	65,302	74,285	153,436	165,955
Research and development	56,310	76,475	136,325	145,610
Marketing and Sales	108,678	125,071	223,177	244,093
TOTAL OPERATING EXPENSE	230,290	275,831	512,938	555,658
OPERATING INCOME (LOSS)	(14,572)	(6,175)	(101,749)	(18,488)
OTHER INCOME
Interest income	2,848	2,984	5,538	5,871
TOTAL OTHER INCOME	2,848	2,984	5,538	5,871
NET INCOME (LOSS) BEFORE INCOME TAX	(11,724)	(3,191)	(96,211)	(12,617)
Benefit (provision) for income tax		400
NET INCOME (LOSS)	$ (11,724)	$ (2,791)	$ (96,211)	$ (12,617)
Basic and diluted earnings per share	$ 0	$ 0	$ (0.02)	$ 0
Weighted average shares used in computing income (loss) per share:Basic and diluted	5,040,803	5,081,108	5,038,043	5,105,123

ELECTRONIC SYSTEMS TECHNOLOGY,5

ELECTRONIC SYSTEMS TECHNOLOGY, INC. STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:
Net loss	$ (96,211)	$ (12,617)
Noncash items included in net loss:
Depreciation	9,969	13,145
Share based compensation		1,841
Changes in operating assets and liabilities:
Accounts receivable	(62,509)	(46,744)
Inventories	(653)	18,255
Accrued interest receivable	3,356	3,633
Prepaid expenses	(6,126)	(9,779)
Accounts payable	57,012	42,854
Accrued liabilities	906	10,878
Refundable deposits	(905)
NET CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES	(95,161)	21,466
CASH FLOWS PROVIDED (USED) IN INVESTING ACTIVITIES:
Certificates of deposit redeemed		202,625
NET CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES		202,625
CASH FLOWS USED IN FINANCING ACTIVITIES:
Repurchase of Shares	(20,695)	(29,472)
NET CASH USED IN FINANCING ACTIVITIES	(20,695)	(29,472)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(115,856)	194,619
Cash and cash equivalents at beginning of period	502,971	618,060
Cash and cash equivalents at end of period	$ 387,115	$ 812,679

Note 1 - Basis of Presentation

Note 1 - Basis of Presentation	6 Months Ended
	Jun. 30, 2017
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, 2017 and June 30, 2016. 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, 2016 as filed with Securities and Exchange Commission. The results of operations for the three and six months ended June 30, 2017 and June 30, 2016, 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”). 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

Note 2 - Inventories	6 Months Ended
	Jun. 30, 2017
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, 2017 December 31, 2016 Parts $ 115,046 $ 185,911 Work in progress 255,658 216,859 Finished goods 333,095 300,377 $ 703,799 703,147

Note 3 - Income (Loss) Per Shar

Note 3 - Income (Loss) Per Share	6 Months Ended
	Jun. 30, 2017
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, 2017, the Company had 150,000 outstanding stock options that could have a dilutive effect on future periods. However, at June 30, 2017 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, 2017
Notes
Note 4 - Stock Options	NOTE 4 - STOCK OPTIONS As of June 30, 2017, 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, 2017. The Board of Directors may consider issuing stock options later in 2017. 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 ending June 30, 2016 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 2016 was 5.2%. A summary of option activity during the six months ended June 30, 2017 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, 2016 220,000 $ 0.40 Granted (Approved) -0- Expired (70,000) 0.41 Outstanding and Exercisable at June 30, 2017 150,000 $ 0.40 3.4 $ 0

Note 5 - Related Party Transact

Note 5 - Related Party Transactions	6 Months Ended
	Jun. 30, 2017
Notes
Note 5 - Related Party Transactions	NOTE 5 - RELATED PARTY TRANSACTIONS During the quarter ended June 30, 2017, the Company accrued total directors’ fees of $1,200, or $300 per director for board meetings attended. For the six-month period ending June 30, 2017, the Company paid or accrued a total of $2,400 for directors’ fees.

Note 6 - Commitments and Contin

Note 6 - Commitments and Contingencies	6 Months Ended
	Jun. 30, 2017
Notes
Note 6 - Commitments and Contingencies	NOTE 6 - COMMITMENTS and CONTINGENCIES The Company leases its facilities from a port authority for $5,445 per month for three years, expiring in September 2017, with annual increases based upon the Consumer Price Index. The Company has a three year option to extend the lease which it intends to exercise at the end of the current lease.

Note 7 - Segment Reporting

Note 7 - Segment Reporting	6 Months Ended
	Jun. 30, 2017
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, 2017, Domestic customers represented approximately 81% of total net revenues. Domestic sales revenues decreased to $309,556 for the quarter ended June 30, 2017 compared to $388,415 for the quarter ended June 30, 2016. Year to date domestic sales revenues decreased to $610,038 as of June 30, 2017 compared to $745,122 for the same period of 2016. Foreign customers represented approximately 19% of total net revenues. Foreign sales revenues decreased to $71,057 for the quarter ended June 30, 2017 compared to $72,704 for the quarter ended June 30, 2016. Year to date foreign sales revenues decreased to $149,361 as of June 30, 2017 compared to $183,648 for the same period of 2016. During the quarter ended June 30, 2017, sales to one customer comprised more than 10% of the Company’s sales revenues. Revenues from foreign countries during the second quarter of 2017 consist primarily of revenues from product sales to Mexico, Peru, Hungary and Columbia.

Note 8 - Stock Repurchase

Note 8 - Stock Repurchase	6 Months Ended
	Jun. 30, 2017
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. On March 2 nd 152,090 . The Company’s share repurchase program does not obligate it to acquire any specific number of shares. The following table shows the Company’s activity and related information for the six-month period ending June 30, 2017: The following table shows the Company’s activity and related information for the six-month period ended June 30, 2017: Purchase Period End Date Number of Shares Average Repurchase Price Per Share Amount (1) January 2017 January 31, 2017 1,000 $0.38 $ 390 March 2017 March 31, 2017 7,725 $0.38 $ 2,962 April 2017 April 30, 2017 45,601 $0.38 $ 17,343 Total 54,326 $0.38 $ 20,695 (1) The trading price of the Company’s shares as of June 30,

Note 1 - Basis of Presentation_

Note 1 - Basis of Presentation: New Accounting Pronouncements (Policies)	6 Months Ended
	Jun. 30, 2017
Policies
New Accounting Pronouncements	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”). 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, 2017
Tables/Schedules
Schedule of Inventory, Current	June 30, 2017 December 31, 2016 Parts $ 115,046 $ 185,911 Work in progress 255,658 216,859 Finished goods 333,095 300,377 $ 703,799 703,147

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, 2017
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, 2017
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, 2016 220,000 $ 0.40 Granted (Approved) -0- Expired (70,000) 0.41 Outstanding and Exercisable at June 30, 2017 150,000 $ 0.40 3.4 $ 0

Note 8 - Stock Repurchase_ Sche

Note 8 - Stock Repurchase: Schedule of Repurchase Agreements (Tables)	6 Months Ended
	Jun. 30, 2017
Tables/Schedules
Schedule of Repurchase Agreements	Purchase Period End Date Number of Shares Average Repurchase Price Per Share Amount (1) January 2017 January 31, 2017 1,000 $0.38 $ 390 March 2017 March 31, 2017 7,725 $0.38 $ 2,962 April 2017 April 30, 2017 45,601 $0.38 $ 17,343 Total 54,326 $0.38 $ 20,695

Note 4 - Stock Options_ Sched19

Note 4 - Stock Options: Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Details)	6 Months Ended
	Jun. 30, 2017$ / shares
Details
Fair Value Assumptions, Expected Dividend Rate	0.00%
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
Estimated fair value per option granted	$ 0.23

Note 4 - Stock Options_ Sched20

Note 4 - Stock Options: Schedule of Share-based Compensation, Stock Options, Activity (Details)	6 Months Ended
	Jun. 30, 2017USD ($)$ / sharesshares	Dec. 31, 2016$ / sharesshares
Details
Number Outstanding | shares	150,000	220,000
Weighted Average Exercise Price | $ / shares	$ 0.40	$ 0.40
Expired | shares	(70,000)
Weighted Average Exercise Price Per Option | $ / shares	$ 0.41
Weighted Average Remaining Life Years	3.4
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | $	$ 0

Note 5 - Related Party Transa21

Note 5 - Related Party Transactions (Details) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2017
Details
Noninterest Expense Directors Fees	$ 1,200	$ 2,400

Note 6 - Commitments and Cont22

Note 6 - Commitments and Contingencies (Details)	Jun. 30, 2017USD ($)
Details
Operating Leases, Rent Expense	$ 5,445

Note 7 - Segment Reporting (Det

Note 7 - Segment Reporting (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Details
Domestic sales percentage total net revenue	81.00%
Domestic sales	$ 309,556	$ 388,415	$ 610,038	$ 745,122
Foreign sales percentage total net revenue	19.00%
Foreign sales	$ 71,057	$ 72,704	$ 149,361	$ 183,648

Note 8 - Stock Repurchase (Deta

Note 8 - Stock Repurchase (Details)	6 Months Ended	18 Months Ended
	Jun. 30, 2017$ / sharesshares	Jun. 30, 2017$ / sharesshares
Details
Stock repurchased, stock | shares	54,326	152,090
Trading price per share | $ / shares	$ 0.38	$ 0.38

Note 8 - Stock Repurchase_ Sc25

Note 8 - Stock Repurchase: Schedule of Repurchase Agreements (Details) - USD ($)	6 Months Ended	18 Months Ended
	Jun. 30, 2017	Jun. 30, 2017
Details
Stock repurchased, stock	54,326	152,090
Average Repurchase Price Per Share	$ 0.38
Payments for Repurchase of Common Stock	$ 20,695