Electronic Systems Technology (ELST) 10-Q 25 Oct 23 2023 Q3 Quarterly report Financial data

Cover

Cover - shares	9 Months Ended
	Sep. 30, 2023	Oct. 26, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2023
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2023
Current Fiscal Year End Date	--12-31
Entity File Number	000-27793
Entity Registrant Name	ELECTRONIC SYSTEMS TECHNOLOGY INC
Entity Central Index Key	0000752294
Entity Tax Identification Number	91-1238077
Entity Incorporation, State or Country Code	WA
Entity Address, Address Line One	415 N. Roosevelt St.
Entity Address, Address Line Two	STE B1
Entity Address, City or Town	Kennewick
Entity Address, State or Province	WA
Entity Address, Postal Zip Code	99336
City Area Code	509
Local Phone Number	735-9092
Title of 12(b) Security	Common Stock, $0.001 par value
Trading Symbol	ELST
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		4,946,502

CONDENSED BALANCE SHEETS (Unaud

CONDENSED BALANCE SHEETS (Unaudited) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Current assets
Cash and cash equivalents	$ 421,493	$ 751,118
Certificates of deposit	400,000	251,699
Accounts receivable, net	96,178	141,394
Inventories	809,877	725,478
Prepaid expenses	32,436	42,627
Employee retention tax credit receivable (NOTE 7)		63,000
Accrued interest receivable	2,274	808
Total current assets	1,762,258	1,976,124
Property and equipment, net of depreciation	19,260	914
Right to use – Lease, net of amortization (NOTE 6)	40,821	69,419
Total assets	1,822,339	2,046,457
Current liabilities
Accounts payable	32,582	138,996
Accrued wages and bonus	4,465	24,777
Accrued vacation pay	24,382	16,846
Lease liability, current (NOTE 6)	41,453	39,120
Other accrued liabilities	7,175	8,913
Total current liabilities	110,057	228,652
Long-Term Liabilities
Operating lease liability (NOTE 6)		30,457
Total liabilities	110,057	259,109
Stockholder equity
Common stock, $0.001 par value 50,000,000 shares authorized 4,946,502 and 4,946,502 shares issued and outstanding respectively	4,947	4,947
Additional paid-in capital	933,105	932,412
Retained earnings	774,230	849,989
Total stockholders' equity	1,712,282	1,787,348
Total liabilities and stockholders' equity	$ 1,822,339	$ 2,046,457

CONDENSED BALANCE SHEETS (Una_2

CONDENSED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Common stock par value	$ 0.001	$ 0.001
Common stock shares authorized	50,000,000	50,000,000
Common stock shares issued	4,946,502	4,946,502
Common stock shares outstanding	4,946,502	4,946,502

CONDENSED STATEMENTS OF OPERATI

CONDENSED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement [Abstract]
SALES - NET	$ 342,721	$ 487,160	$ 1,233,016	$ 1,376,195
COST OF SALES	(178,435)	(210,056)	(586,631)	(611,376)
GROSS PROFIT	164,286	277,104	646,385	764,819
Operating Expenses
General and administrative	55,829	60,784	202,086	212,308
Research and development	26,114	40,029	82,798	131,662
Marketing and sales	133,223	104,293	454,819	373,694
TOTAL OPERATING EXPENSE	215,166	205,106	739,703	717,664
OPERATING INCOME (LOSS)	(50,880)	71,998	(93,318)	47,155
OTHER INCOME
Interest income	8,375	1,373	17,559	2,459
TOTAL OTHER INCOME	8,375	1,373	17,559	2,459
NET INCOME (LOSS) BEFORE INCOME TAX	(42,505)	73,371	(75,759)	49,614
Benefit (provision) for income tax
NET INCOME (LOSS)	$ (42,505)	$ 73,371	$ (75,759)	$ 49,614

CONDENSED STATEMENTS OF OPERA_2

CONDENSED STATEMENTS OF OPERATIONS (Unaudited) (Parenthetical) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement [Abstract]
Basic earnings per share	$ (0.01)	$ 0.01	$ (0.02)	$ 0.01
Diluted earnings per share	$ (0.01)	$ 0.01	$ (0.02)	$ 0.01
Basic weighted average shares used in computing income (loss) per share	4,946,502	4,946,502	4,946,502	4,946,502
Diluted weighted average shares used in computing income (loss) per share	4,946,502	4,946,502	4,946,502	4,946,502

CONDENSED STATEMENTS OF CASH FL

CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ (75,759)	$ 49,614
Noncash items included in net loss:
Depreciation and amortization	1,423	333
Stock based compensation	693
Changes in operating assets and liabilities:
Accounts receivable, net	45,216	3,644
Inventories	(84,399)	(56,601)
Accrued interest receivable	(1,466)	(794)
Prepaid expenses	10,191	(53,377)
Employee retention tax credit receivable	63,000
Accounts payable	(106,414)	(44,803)
Other accrued liabilities	(14,040)	14,525
NET CASH USED IN OPERATING ACTIVITIES	(161,555)	(87,459)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets	(19,769)
Certificates of deposit redeemed	1,001,699	850,000
Certificates of deposit purchased	(1,150,000)	(850,584)
NET CASH USED IN INVESTING ACTIVITIES	(168,070)	(584)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on CARES Act loan payable (round 1)		(5,968)
NET CASH USED IN FINANCING ACTIVITIES		(5,968)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(329,625)	(94,011)
Cash and cash equivalents at beginning of period	751,118	655,616
Cash and cash equivalents at end of period	$ 421,493	$ 561,605

CONDENSED STATEMENTS OF CHANGES

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Beginning balance, value at Dec. 31, 2021	$ 4,947	$ 932,412	$ 703,458	$ 1,640,817
Beginning balance, shares at Dec. 31, 2021	4,946,502
Net income (loss)			(4,961)	(4,961)
Ending balance, value at Mar. 31, 2022	$ 4,947	932,412	698,497	1,635,856
Ending balance, shares at Mar. 31, 2022	4,946,502
Beginning balance, value at Dec. 31, 2021	$ 4,947	932,412	703,458	1,640,817
Beginning balance, shares at Dec. 31, 2021	4,946,502
Net income (loss)				49,614
Ending balance, value at Sep. 30, 2022	$ 4,947	932,412	753,072	1,690,431
Ending balance, shares at Sep. 30, 2022	4,946,502
Beginning balance, value at Mar. 31, 2022	$ 4,947	932,412	698,497	1,635,856
Beginning balance, shares at Mar. 31, 2022	4,946,502
Net income (loss)			(18,796)	(18,796)
Ending balance, value at Jun. 30, 2022	$ 4,947	932,412	679,701	1,617,060
Ending balance, shares at Jun. 30, 2022	4,946,502
Net income (loss)			73,371	73,371
Ending balance, value at Sep. 30, 2022	$ 4,947	932,412	753,072	1,690,431
Ending balance, shares at Sep. 30, 2022	4,946,502
Beginning balance, value at Dec. 31, 2022	$ 4,947	932,412	849,989	1,787,348
Beginning balance, shares at Dec. 31, 2022	4,946,502
Net income (loss)			(92,124)	(92,124)
Ending balance, value at Mar. 31, 2023	$ 4,947	932,412	757,865	1,695,224
Ending balance, shares at Mar. 31, 2023	4,946,502
Beginning balance, value at Dec. 31, 2022	$ 4,947	932,412	849,989	1,787,348
Beginning balance, shares at Dec. 31, 2022	4,946,502
Net income (loss)				(75,759)
Ending balance, value at Sep. 30, 2023	$ 4,947	933,105	774,230	1,712,282
Ending balance, shares at Sep. 30, 2023	4,946,502
Beginning balance, value at Mar. 31, 2023	$ 4,947	932,412	757,865	1,695,224
Beginning balance, shares at Mar. 31, 2023	4,946,502
Net income (loss)			58,870	58,870
Stock based compensation		693		693
Ending balance, value at Jun. 30, 2023	$ 4,947	933,105	816,735	1,754,787
Ending balance, shares at Jun. 30, 2023	4,946,502
Net income (loss)			(42,505)	(42,505)
Ending balance, value at Sep. 30, 2023	$ 4,947	$ 933,105	$ 774,230	$ 1,712,282
Ending balance, shares at Sep. 30, 2023	4,946,502

BASIS OF PRESENTATION

BASIS OF PRESENTATION	9 Months Ended
	Sep. 30, 2023
Accounting Policies [Abstract]
BASIS OF PRESENTATION	NOTE 1 - BASIS OF PRESENTATION The unaudited condensed financial statements, including notes, of Electronic Systems Technology, Inc. (the "Company") are representations of the Company’s management, which is responsible for their integrity and objectivity. The accompanying unaudited condensed financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, as well as the instructions to Form 10-Q. Accordingly, the financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of September 30, 2023 and its results of operations, cash flows, and changes in stockholders’ equity for the three and nine months ended September 30, 2023, and 2022. The balance sheet at December 31, 2022 was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. All amounts presented are in U.S. dollars. For further information, refer to the financial statements and footnotes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The results of operations for the three and nine-month period ended September 30, 2023 are not necessarily indicative of the results expected for the full fiscal year or for any other fiscal period. The Company estimates that for 2023 the anticipated effective annual federal income tax rate will be 0%. New Accounting Pronouncements Accounting standards that have been issued by the Financial Accounting Standards Board that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption.

INVENTORIES

INVENTORIES	9 Months Ended
	Sep. 30, 2023
Inventory Disclosure [Abstract]
INVENTORIES	NOTE 2 - INVENTORIES Inventories are stated at lower of direct cost or net realizable value with cost determined using the FIFO (first in, first out) method. Inventories consist of the following: Schedule of inventories September 30, 2023 December 31, 2022 Parts $ 125,555 $ 172,190 Work in progress 366,887 336,298 Finished goods 317,435 216,990 Total inventories $ 809,877 $ 725,478

EARNINGS (LOSS) PER SHARE

EARNINGS (LOSS) PER SHARE	9 Months Ended
	Sep. 30, 2023
Earnings Per Share [Abstract]
EARNINGS (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 shares of common stock 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 September 30, 2023 and 2022, the Company had 225,000 210,000

STOCK OPTIONS

STOCK OPTIONS	9 Months Ended
	Sep. 30, 2023
Share-Based Payment Arrangement [Abstract]
STOCK OPTIONS	NOTE 4 - STOCK OPTIONS On June 9, 2023, the Board of Directors granted 45,000 0.40 5 0.24 104.1 5 95 3.92 693 534 159 As of September 30, 2023, there were 225,000 0.40 2.0

REVENUE

REVENUE	9 Months Ended
	Sep. 30, 2023
Revenue from Contract with Customer [Abstract]
REVENUE	NOTE 5 – REVENUE The Company product revenue includes industrial wireless products and accessories such as antennas, power supplies and cable assemblies. The Company also provides direct site support and engineering services to customers, such as repair and upgrade of its products. During the three-month periods ended September 30, 2023 and 2022, the Company’s revenue from products sales was $ 336,621 480,260 6,100 6,900 During the nine-month periods ended September 30, 2023 and 2022, the Company’s revenue from products sales was $ 1,209,516 1,351,495 23,500 24,700 The Company’s customers, to which trade credit terms are extended, consist of United States and local governments and foreign and domestic companies. Domestic sales for the three-month period ended September 30, 2023 and September 30, 2022 were $ 338,948 419,164 3,773 67,996 Domestic sales for the nine-month period ended September 30, 2023 and September 30, 2022 were $ 1,208,539 1,234,793 24,477 141,402 For the three-month period ended September 30, 2023, sales to three customers represented more than 10% of total revenue, three customers represented more than 10% of total revenue for the same period in 2022. Schedule of revenue 2023 Sales 2023 %age of Total Sales 2022 Sales 2022%age of Total Sales Domestic customer A $ 64,698 19 % $ 60,130 12 % Domestic customer B 57,456 17 % 58,167 12 % Domestic customer C 33,119 10 % 46,703 10 % For the nine-month period ended September 30, 2023, sales to one customer represented more than 10% of total revenue, two customers represented more than 10% of total revenue for the same period in 2022. 2023 Sales 2023 %age of Total Sales 2022 Sales 2022 %age of Total Sales Domestic customer A $ 262,149 21 % $ 165,621 12 % Domestic customer B — — 137,346 10 % Domestic customer C — — — — As of September 30, 2023 and 2022, the Company had a sales order backlog of $ 124,125 141,066

LEASES

LEASES	9 Months Ended
	Sep. 30, 2023
Leases
LEASES	NOTE 6 - LEASES On September 23, 2022, the Company signed a new two-year lease for its facilities. The base lease is $ 3,373 3,478 12.84 78,757 4.125 12 10,435 31,304 For the three and nine-month periods ended September 30, 2023 and 2022, lease expenses of $ 11,576 11,616 34,727 34,849 Schedule of lease expense For the three-month period ended September 30, 2023 2022 Cost of sales Operating expenses Total Cost of sales Operating expenses Total Base rent pursuant to lease agreement $ 5,751 $ 4,526 $ 10,277 $ 5,751 $ 4,526 $ 10,277 Variable lease costs 727 572 1,299 749 590 1,339 Total lease costs $ 6,478 $ 5,098 $ 11,576 $ 6,500 $ 5,116 $ 11,616 For the nine-month period ended September 30, 2023 2022 Cost of sales Operating expenses Total Cost of sales Operating expenses Total Base rent pursuant to lease agreement $ 17,252 $ 13,578 $ 30,830 $ 17,252 $ 13,578 $ 30,830 Variable lease costs 2,181 1,716 3,897 2,249 1,770 4,019 Total lease costs $ 19,433 $ 15,294 $ 34,727 $ 19,501 $ 15,348 $ 34,849

CARES ACT RETENTION CREDIT

CARES ACT RETENTION CREDIT	9 Months Ended
	Sep. 30, 2023
Debt Disclosure [Abstract]
CARES ACT RETENTION CREDIT	NOTE 7 - CARES ACT RETENTION CREDIT As of December 31, 2022, the Company has an employee retention tax credit due of $ 63,000

INVENTORIES (Tables)

INVENTORIES (Tables)	9 Months Ended
	Sep. 30, 2023
Inventory Disclosure [Abstract]
Schedule of inventories	Schedule of inventories September 30, 2023 December 31, 2022 Parts $ 125,555 $ 172,190 Work in progress 366,887 336,298 Finished goods 317,435 216,990 Total inventories $ 809,877 $ 725,478

REVENUE (Tables)

REVENUE (Tables)	9 Months Ended
	Sep. 30, 2023
Revenue from Contract with Customer [Abstract]
Schedule of revenue	Schedule of revenue 2023 Sales 2023 %age of Total Sales 2022 Sales 2022%age of Total Sales Domestic customer A $ 64,698 19 % $ 60,130 12 % Domestic customer B 57,456 17 % 58,167 12 % Domestic customer C 33,119 10 % 46,703 10 % For the nine-month period ended September 30, 2023, sales to one customer represented more than 10% of total revenue, two customers represented more than 10% of total revenue for the same period in 2022. 2023 Sales 2023 %age of Total Sales 2022 Sales 2022 %age of Total Sales Domestic customer A $ 262,149 21 % $ 165,621 12 % Domestic customer B — — 137,346 10 % Domestic customer C — — — —

LEASES (Tables)

LEASES (Tables)	9 Months Ended
	Sep. 30, 2023
Leases
Schedule of lease expense	Schedule of lease expense For the three-month period ended September 30, 2023 2022 Cost of sales Operating expenses Total Cost of sales Operating expenses Total Base rent pursuant to lease agreement $ 5,751 $ 4,526 $ 10,277 $ 5,751 $ 4,526 $ 10,277 Variable lease costs 727 572 1,299 749 590 1,339 Total lease costs $ 6,478 $ 5,098 $ 11,576 $ 6,500 $ 5,116 $ 11,616 For the nine-month period ended September 30, 2023 2022 Cost of sales Operating expenses Total Cost of sales Operating expenses Total Base rent pursuant to lease agreement $ 17,252 $ 13,578 $ 30,830 $ 17,252 $ 13,578 $ 30,830 Variable lease costs 2,181 1,716 3,897 2,249 1,770 4,019 Total lease costs $ 19,433 $ 15,294 $ 34,727 $ 19,501 $ 15,348 $ 34,849

INVENTORIES (Details)

INVENTORIES (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Inventory Disclosure [Abstract]
Parts	$ 125,555	$ 172,190
Work in progress	366,887	336,298
Finished goods	317,435	216,990
Total inventories	$ 809,877	$ 725,478

EARNINGS (LOSS) PER SHARE (Deta

EARNINGS (LOSS) PER SHARE (Details Narrative) - shares	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Earnings Per Share [Abstract]
Outstanding stock options	225,000	210,000

STOCK OPTIONS (Details Narrativ

STOCK OPTIONS (Details Narrative) - USD ($)		9 Months Ended
	Jun. 09, 2023	Sep. 30, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share based compensation		$ 693
Marketing and Sales [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share based compensation		534
General and Administrative Expense [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share based compensation		$ 159
Share-Based Payment Arrangement, Option [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Granted	45,000
Exercise price	$ 0.40	$ 0.40
Vesting term	5 years
Stock price	$ 0.24
Volatility rate	104.10%
Expected term	5 years
Forfeiture rate	95%
Discount factor	3.92%
Outstanding value		225,000
Weighted average remaining life		2 years

REVENUE (Details)

REVENUE (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of Revenue [Line Items]
Revenues	$ 342,721	$ 487,160	$ 1,233,016	$ 1,376,195
Geographic Distribution, Domestic [Member]
Disaggregation of Revenue [Line Items]
Revenues	338,948	419,164	1,208,539	1,234,793
Customer A [Member] | Geographic Distribution, Domestic [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Revenues	$ 64,698	$ 60,130	$ 262,149	$ 165,621
% age of total sales	19%	12%	21%	12%
Customer B [Member] | Geographic Distribution, Domestic [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Revenues	$ 57,456	$ 58,167		$ 137,346
% age of total sales	17%	12%		10%
Customer C [Member] | Geographic Distribution, Domestic [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Revenues	$ 33,119	$ 46,703
% age of total sales	10%	10%

REVENUE (Details Narrative)

REVENUE (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of Revenue [Line Items]
Revenues	$ 342,721	$ 487,160	$ 1,233,016	$ 1,376,195
Sales order backlog			124,125	141,066
Geographic Distribution, Domestic [Member]
Disaggregation of Revenue [Line Items]
Revenues	338,948	419,164	1,208,539	1,234,793
Geographic Distribution, Foreign [Member]
Disaggregation of Revenue [Line Items]
Revenues	3,773	67,996	24,477	141,402
Product [Member]
Disaggregation of Revenue [Line Items]
Revenues	336,621	480,260	1,209,516	1,351,495
Maintenance [Member]
Disaggregation of Revenue [Line Items]
Revenues	$ 6,100	$ 6,900	$ 23,500	$ 24,700

LEASES (Details)

LEASES (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Base rent pursuant to lease agreement	$ 10,277	$ 10,277	$ 30,830	$ 30,830
Variable lease costs	1,299	1,339	3,897	4,019
Total lease costs	11,576	11,616	34,727	34,849
Cost of Sales [Member]
Base rent pursuant to lease agreement	5,751	5,751	17,252	17,252
Variable lease costs	727	749	2,181	2,249
Total lease costs	6,478	6,500	19,433	19,501
Operating Expense [Member]
Base rent pursuant to lease agreement	4,526	4,526	13,578	13,578
Variable lease costs	572	590	1,716	1,770
Total lease costs	$ 5,098	$ 5,116	$ 15,294	$ 15,348

LEASES (Details Narrative)

LEASES (Details Narrative) - USD ($)		3 Months Ended		9 Months Ended
	Sep. 23, 2022	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Operating lease cost		$ 10,277	$ 10,277	$ 30,830	$ 30,830
Leasehold tax percentage	12.84%
Lease liability	$ 78,757
Incremental borrowing rate	4.125%
Remaining lease term		12 months		12 months
Future payments - 2023		$ 10,435		$ 10,435
Future payments - 2024		31,304		31,304
Lease expense		$ 11,576	$ 11,616	$ 34,727	$ 34,849
Monthly Rate Year One [Member]
Operating lease cost	$ 3,373
Monthly Rate Year Two [Member]
Operating lease cost	$ 3,478

CARES ACT RETENTION CREDIT (Det

CARES ACT RETENTION CREDIT (Details Narrative) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Debt Disclosure [Abstract]
Employee retention tax credit		$ 63,000