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 Companys 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 Companys Board of Directors approved a resolution authorizing the repurchase of up to $100,000 of the Companys common stock at the price of $0.38 per share. On March 2, 2016, the Companys Board of Directors approved a resolution authorizing the repurchase of up to an additional $150,000 of the Companys 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 Companys share repurchase program does not obligate it to acquire any specific number of shares. The following table shows the Companys 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 Companys 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 years 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) |