Electronic Systems Technology (ELST) 10-Q 27 Oct 17 2017 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	9 Months Ended
	Sep. 30, 2017shares
Document and Entity Information
Entity Registrant Name	Electronic Systems Technology Inc
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Amendment Flag	false
Entity Central Index Key	752,294
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding	4,986,048
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	Q3
Trading Symbol	elst

ELECTRONIC SYSTEMS TECHNOLOGY,

ELECTRONIC SYSTEMS TECHNOLOGY, INC. BALANCE SHEETS (Interim period unaudited) - USD ($)		Sep. 30, 2017	Dec. 31, 2016
Current assets
Cash and cash equivalents		$ 257,112	$ 502,971
Certificates of deposit investments		1,000,000	1,000,000
Accounts receivable		94,506	71,202
Inventories		813,970	703,147
Accrued interest receivable		5,784	6,903
Prepaid expenses		20,322	8,405
Total current assets		2,191,694	2,292,628
Property and equipment, net		36,428	51,383
Deferred income tax asset, net		244,092	244,092
Total assets		2,472,214	2,588,103
Current liabilities
Accounts payable		54,709	15,114
Accrued liabilities		27,005	22,693
Refundable deposits		7,247	4,527
Total current liabilities		88,961	42,334
Total liabilities		88,961	42,334
COMMITMENTS	[1]	0	0
Stockholders' equity
Common stock, $0.001 par value 50,000,000 shares authorized 4,986,048 and 5,060,903 shares issued and outstanding, respectively		4,986	5,061
Additional paid-in capital		944,160	972,609
Retained earnings		1,434,107	1,568,099
Total stockholders' equity		2,383,253	2,545,769
Total liabilities and stockholders' equity		$ 2,472,214	$ 2,588,103
[1]	Note 6

Statement of Financial Position

Statement of Financial Position - Parenthetical - $ / shares	Sep. 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	4,986,048	5,060,903
Common Stock, Shares Outstanding	4,986,048	5,060,903

ELECTRONIC SYSTEMS TECHNOLOGY,4

ELECTRONIC SYSTEMS TECHNOLOGY, INC. STATEMENTS OF OPERATIONS (Unaudited) - USD ($)		3 Months Ended		9 Months Ended
		Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Income statement
SALES, NET		$ 312,042	$ 302,252	$ 1,038,932	$ 1,159,846
SITE SUPPORT		10,720	19,216	43,229	90,392
COST OF SALES		(133,721)	(126,374)	(481,931)	(517,974)
GROSS PROFIT		189,041	195,094	600,230	732,264
Operating Expenses
General and administrative		59,367	67,792	212,802	233,748
Research and development		55,511	59,624	191,836	205,233
Marketing and sales		114,902	113,221	338,080	357,314
TOTAL OPERATING EXPENSE		229,780	240,637	742,718	796,295
OPERATING INCOME (LOSS)		(40,739)	(45,543)	(142,488)	(64,031)
OTHER INCOME
Interest income		2,958	3,046	8,496	8,917
TOTAL OTHER INCOME		2,958	3,046	8,496	8,917
NET INCOME (LOSS) BEFORE INCOME TAX		(37,781)	(42,497)	(133,992)	(55,114)
Benefit (provision) for income tax	[1]	0	0	0	0
NET INCOME (LOSS)		$ (37,781)	$ (42,497)	$ (133,992)	$ (55,114)
Basic and diluted earnings per share		$ (0.01)	$ (0.01)	$ (0.03)	$ (0.01)
Weighted average shares used in computing income (loss) per share: Basic and diluted		5,019,376	5,081,108	5,032,788	5,097,059
[1]	Note 9

ELECTRONIC SYSTEMS TECHNOLOGY,5

ELECTRONIC SYSTEMS TECHNOLOGY, INC. STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:
Net loss	$ (133,992)	$ (55,114)
Non-cash items included in net loss:
Depreciation	14,954	19,718
Share based compensation		1,841
Changes in operating assets and liabilities:
Accounts receivable	(23,304)	(36,014)
Inventories	(110,823)	(131,528)
Accrued interest receivable	1,119	923
Prepaid expenses	(11,916)	(11,718)
Accounts payable	39,595	29,463
Accrued liabilities	4,313	10,211
Refundable deposits	2,719
NET CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES	(217,335)	(172,218)
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 of common stock	(28,524)	(29,472)
NET CASH USED IN FINANCING ACTIVITIES	(28,524)	(29,472)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(245,859)	935
Cash and cash equivalents at beginning of period	502,971	618,060
Cash and cash equivalents at end of period	$ 257,112	$ 618,995

Note 1 - Basis of Presentation

Note 1 - Basis of Presentation	9 Months Ended
	Sep. 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 nine month periods ended September 30, 2017 and September 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 nine months ended September 30, 2017 and September 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 lower 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”). This update was adopted and did not materially impact the financial statements. 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	9 Months Ended
	Sep. 30, 2017
Notes
Note 2 - Inventories	NOTE 2 - INVENTORIES Inventories are stated at lower of cost or net realizable value with cost determined using the FIFO (first in, first out) method. Inventories consist of the following: September 30, 2017 December 31, 2016 Parts $ 147,379 $ 185,911 Work in progress 240,557 216,859 Finished goods 426,034 300,377 $ 813,970 $ 703,147

Note 3 - Income (Loss) Per Shar

Note 3 - Income (Loss) Per Share	9 Months Ended
	Sep. 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 September 30, 2017, the Company had 150,000 outstanding stock options that could have a dilutive effect on future periods. However, at September 30, 2017 there was no dilutive effect of stock options on earnings per share or weighted average shares outstanding.

Disclosure of Compensation Rela

Disclosure of Compensation Related Costs, Share-based Payments	9 Months Ended
	Sep. 30, 2017
Notes
Disclosure of Compensation Related Costs, Share-based Payments	NOTE 4 - STOCK OPTIONS As of September 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 nine months ended September 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 recognized an expense of $ 1,841 for the quarter ending September 30, 2016 in which the options were approved by the Shareholders and were fully vested at that time. 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 nine months ended September 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 September 30, 2017 150,000 $ 0.40 2.9 $ 28,500

Note 5 - Related Party Transact

Note 5 - Related Party Transactions	9 Months Ended
	Sep. 30, 2017
Notes
Note 5 - Related Party Transactions	NOTE 5 - RELATED PARTY TRANSACTIONS During the quarter ended September 30, 2017, the Company accrued total directors’ fees of $ 1,200, or $300 per director for board meetings attended. For the nine-month period ending September 30, 2017, the Company paid or accrued a total of $ 3,600 for directors’ fees.

Note 6 - Commitments and Contin

Note 6 - Commitments and Contingencies	9 Months Ended
	Sep. 30, 2017
Notes
Note 6 - Commitments and Contingencies	NOTE 6 - COMMITMENTS The Company leases its facilities from a port authority for $ 5,445 per month for three years, expiring in September 2020, with annual increases based upon the Consumer Price Index.

Note 7 - Segment Reporting

Note 7 - Segment Reporting	9 Months Ended
	Sep. 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 September 30, 2017, Domestic customers represented approximately 88% of total net revenues. Domestic sales revenues increased to $ 283,239 for the quarter ended September 30, 2017 compared to $ 275,709 for the quarter ended September 30, 2016. Year to date domestic sales revenues decreased to $ 893,277 as of September 30, 2017 compared to $ 1,020,831 for the same period of 2016. Foreign customers represented approximately 12% of total net revenues. Foreign sales revenues decreased to $ 39,523 for the quarter ended September 30, 2017 compared to $ 45,759 for the quarter ended September 30, 2016. Year to date foreign sales revenues decreased to $ 188,884 as of September 30, 2017 compared to $ 229,407 for the same period of 2016. During the quarter ended September 30, 2017, sales to one customer comprised more than 10% of the Company’s sales revenues. Revenues from foreign countries during the third quarter of 2017 consist primarily of revenues from product sales to Mexico, Peru, India.

Note 8 - Stock Repurchase

Note 8 - Stock Repurchase	9 Months Ended
	Sep. 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, 2016, the Company’s Board of Directors approved a resolution authorizing the repurchase of up to an additional $150,000 of the Company’s common stock at the price of $0.38 per share. As of September 30, 2017, $184,405 remains of $250,000 approved by the board. 97,764 shares were repurchased for $ 37,191 in 2016, bringing the total number of shares repurchased to 172,619 through September 30, 2017. 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 nine-month period ending September 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 July 2017 July 31, 2017 8,500 $0.38 $ 3,237 August 2017 August 31, 2017 12,029 $0.38 $ 4,592 Total 74,855 $ 0.38 $ 28,524 (1) The trading price of the Company’s shares as of September 30, 2017, was $0.59.

Note 9 - Income Taxes

Note 9 - Income Taxes	9 Months Ended
	Sep. 30, 2017
Notes
Note 9 - Income Taxes	NOTE 9 – Income Taxes No Income Tax has been recognized due to the net operating loss. The current year’s net operating loss tax impact has been reserved, as the estimated effective tax rate for 2017 will be zero. The Deferred Tax asset that is recognized on the Balance Sheets consists primarily of prior years’ net operating loss and R&D credits. We believe that the Company will be generate net operating income and utilize the asset in future periods.

Note 1 - Basis of Presentation_

Note 1 - Basis of Presentation: New Accounting Pronouncements (Policies)	9 Months Ended
	Sep. 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 lower 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”). This update was adopted and did not materially impact the financial statements. 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)	9 Months Ended
	Sep. 30, 2017
Tables/Schedules
Schedule of Inventory, Current	September 30, 2017 December 31, 2016 Parts $ 147,379 $ 185,911 Work in progress 240,557 216,859 Finished goods 426,034 300,377 $ 813,970 $ 703,147

Disclosure of Compensation Re17

Disclosure of Compensation Related Costs, Share-based Payments: Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Tables)	9 Months Ended
	Sep. 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

Disclosure of Compensation Re18

Disclosure of Compensation Related Costs, Share-based Payments: Schedule of Share-based Compensation, Stock Options, Activity (Tables)	9 Months Ended
	Sep. 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 September 30, 2017 150,000 $ 0.40 2.9 $ 28,500

Note 8 - Stock Repurchase_ Sche

Note 8 - Stock Repurchase: Schedule of Repurchase Agreements (Tables)	9 Months Ended
	Sep. 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 July 2017 July 31, 2017 8,500 $0.38 $ 3,237 August 2017 August 31, 2017 12,029 $0.38 $ 4,592 Total 74,855 $ 0.38 $ 28,524

Note 2 - Inventories_ Schedul20

Note 2 - Inventories: Schedule of Inventory, Current (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Details
Inventory, Parts and Components, Net of Reserves	$ 147,379	$ 185,911
Inventory, Work in Process, Gross	240,557	216,859
Inventory, Finished Goods, Gross	426,034	300,377
Inventories	$ 813,970	$ 703,147

Disclosure of Compensation Re21

Disclosure of Compensation Related Costs, Share-based Payments (Details) - USD ($)	Aug. 07, 2015	Sep. 30, 2017
Details
Employee Stock Ownership Plan (ESOP), Plan Description		Shareholders approved the 2015 Stock Incentive Plan on June 3, 2016 for 250,000 stock options.
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures	150,000
Stock or Unit Option Plan Expense		$ 1,841
Estimated option exercise rate		5.20%

Disclosure of Compensation Re22

Disclosure of Compensation Related Costs, Share-based Payments: Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Details)	Aug. 07, 2015USD ($)$ / shares
Details
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Payments | $	$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate	68.00%
Share-based Compensation Arrangement by Share-based Payment Award, 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 | $ / shares	$ 0.23

Disclosure of Compensation Re23

Disclosure of Compensation Related Costs, Share-based Payments: Schedule of Share-based Compensation, Stock Options, Activity (Details)	9 Months Ended
	Sep. 30, 2017USD ($)$ / sharesshares	Dec. 31, 2016$ / sharesshares
Details
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | shares	150,000	220,000
Weighted Average Exercise Price | $ / shares	$ 0.40	$ 0.40
Expired | shares	(70,000)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period, Weighted Average Exercise Price | $ / shares	$ 0.41
Weighted Average Remaining Life Years	2.9
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | $	$ 28,500

Note 5 - Related Party Transa24

Note 5 - Related Party Transactions (Details) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2017
Details
Noninterest Expense Directors Fees	$ 1,200	$ 3,600

Note 6 - Commitments and Cont25

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

Note 7 - Segment Reporting (Det

Note 7 - Segment Reporting (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Details
Domestic sales percentage total net revenue	88.00%
Domestic sales revenues	$ 283,239	$ 275,709	$ 893,277	$ 1,020,831
Foreign sales percentage total net revenue	12.00%
Foreign sales	$ 39,523	$ 45,759	$ 188,884	$ 229,407

Note 8 - Stock Repurchase (Deta

Note 8 - Stock Repurchase (Details) - USD ($)	9 Months Ended	12 Months Ended	21 Months Ended
	Sep. 30, 2017	Dec. 31, 2016	Sep. 30, 2017
Details
Employee Stock Ownership Plan (ESOP), Terms of Repurchase Obligation	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, 2016, the Company’s Board of Directors approved a resolution authorizing the repurchase of up to an additional $150,000 of the Company’s common stock at the price of $0.38 per share. As of September 30, 2017, $184,405 remains of $250,000 approved by the board.
Stock Repurchased During Period, Shares	74,855	97,764	172,619
Stock Repurchased During Period, Value		$ 37,191

Note 8 - Stock Repurchase_ Sc28

Note 8 - Stock Repurchase: Schedule of Repurchase Agreements (Details) - USD ($)	9 Months Ended		12 Months Ended	21 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016	Sep. 30, 2017
Details
Stock Repurchased During Period, Shares	74,855		97,764	172,619
Average Repurchase Price Per Share	$ 0.38
Repurchase of shares of common stock	$ (28,524)	$ (29,472)