Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Jun. 30, 2018 | |
Details | ||
Registrant Name | Electronic Systems Technology Inc | |
Registrant CIK | 752,294 | |
SEC Form | 10-K | |
Period End date | Dec. 31, 2018 | |
Fiscal Year End | --12-31 | |
Trading Symbol | elst | |
Tax Identification Number (TIN) | 911,238,077 | |
Number of common stock shares outstanding | 4,946,502 | |
Public Float | $ 1,266,127 | |
Filer Category | Non-accelerated Filer | |
Current with reporting | Yes | |
Voluntary filer | No | |
Well-known Seasoned Issuer | No | |
Shell Company | false | |
Small Business | true | |
Emerging Growth Company | false | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | FY |
Statement of Financial Position
Statement of Financial Position - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 323,667 | $ 208,100 |
Certificates of deposit | 900,000 | 1,000,000 |
Accounts receivable | 57,156 | 98,941 |
Inventories | 714,995 | 762,517 |
Prepaid expenses | 21,353 | 8,040 |
Accrued interest receivable | 13,300 | 5,137 |
Total Current Assets | 2,030,471 | 2,082,735 |
PROPERTY AND EQUIPMENT - NET | 20,368 | 31,444 |
TOTAL ASSETS | 2,050,839 | 2,114,179 |
CURRENT LIABILITIES | ||
Accounts payable | 71,257 | 18,969 |
Refundable deposits | 10,310 | 3,937 |
Accrued wages and bonus | 2,138 | 1,960 |
Accrued vacation pay | 11,449 | 17,720 |
Other accrued liabilities | 2,514 | 2,202 |
Total Current Liabilities | 97,668 | 44,788 |
TOTAL LIABILITIES | 97,668 | 44,788 |
COMMITMENTS (NOTE 8) | 0 | 0 |
STOCKHOLDERS' EQUITY | ||
Common stock - $.001 par value 50,000,000 shares authorized, 4,985,748 and 4,986,048 shares issued and outstanding, respectively | 4,986 | 4,986 |
Additional paid-in capital | 944,040 | 944,161 |
Retained earnings | 1,004,145 | 1,120,244 |
TOTAL STOCKHOLDERS' EQUITY | 1,953,171 | 2,069,391 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 2,050,839 | $ 2,114,179 |
Statement of Financial Positi_2
Statement of Financial Position - Parenthetical - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Details | ||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 50,000,000 | 50,000,000 |
Common Stock, Shares, Outstanding | 4,985,748 | 4,986,048 |
Income Statement
Income Statement - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Details | ||
SALES - NET | $ 1,395,030 | $ 1,425,128 |
COST OF SALES | 675,598 | 643,414 |
GROSS PROFIT | 719,432 | 781,714 |
OPERATING EXPENSES | 853,628 | 996,888 |
OPERATING LOSS | (134,196) | (215,174) |
OTHER INCOME | ||
Interest income | 18,097 | 11,411 |
TOTAL OTHER INCOME | 18,097 | 11,411 |
NET LOSS BEFORE INCOME TAXES | (116,099) | (203,763) |
FEDERAL INCOME TAX PROVISION | 0 | (244,092) |
NET LOSS AFTER INCOME TAXES | $ (116,099) | $ (447,855) |
BASIC AND DILUTED LOSS PER SHARE | $ (0.02) | $ (0.09) |
BASIC AND DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING | 4,986,005 | 5,022,184 |
STATEMENTS OF CHANGES IN STOCKH
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) | Common Stock | Additional Paid-in Capital | Retained Earnings | Total |
Equity Balance at Dec. 31, 2016 | $ 5,061 | $ 972,609 | $ 1,568,099 | $ 2,545,769 |
Equity Balance, shares at Dec. 31, 2016 | 5,060,903 | |||
Net loss | $ 0 | 0 | (447,855) | $ (447,855) |
Stock repurchased | (74,855) | 74,855 | ||
Stock repurchased | $ (75) | (28,448) | 0 | $ (28,523) |
Equity Balance, shares at Dec. 31, 2017 | 4,986,048 | |||
Equity balance at Dec. 31, 2017 | $ 4,986 | 944,161 | 1,120,244 | 2,069,391 |
Net loss | $ 0 | 0 | (116,099) | $ (116,099) |
Stock repurchased | (300) | 300 | ||
Stock repurchased | $ 0 | (121) | 0 | $ (121) |
Equity Balance, shares at Dec. 31, 2018 | 4,985,748 | |||
Equity balance at Dec. 31, 2018 | $ 4,986 | $ 944,040 | $ 1,004,145 | $ 1,953,171 |
Statement of Cash Flows
Statement of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (116,099) | $ (447,855) |
Noncash expenses included in loss: | ||
Depreciation and amortization | 11,076 | 19,939 |
Deferred income taxes | 0 | 244,092 |
Decrease (increase) in operating assets: | ||
Accounts receivable | 41,785 | (27,739) |
Inventories | 47,522 | (59,370) |
Prepaid expenses | (13,313) | 365 |
Accrued interest receivable | (8,163) | 1,766 |
Increase (decrease) in operating liabilities: | ||
Accounts payable | 52,288 | 3,855 |
Accrued wages, bonus, vacation and other accrued liabilities | (5,781) | (811) |
Refundable deposits | 6,373 | (590) |
Net Cash provided (used) by Operating Activities | 15,688 | (266,348) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of certificates of deposit | (900,000) | (1,000,000) |
Proceeds from maturities of certificates of deposit | 1,000,000 | 1,000,000 |
Net Cash provided by Investing Activities | 100,000 | 0 |
CASH FLOWS USED IN FINANCING ACTIVITIES: | ||
Repurchase of shares | (121) | (28,523) |
Net Cash used by Financing Activities | (121) | (28,523) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 115,567 | (294,871) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 208,100 | 502,971 |
CASH AND CASH EQUIVALENTS AT END OF YEAR | $ 323,667 | $ 208,100 |
1. Organization and Summary of
1. Organization and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Notes | |
1. Organization and Summary of Significant Accounting Policies | 1. Organization and Summary of Significant Accounting Policies Business Organization The Company was incorporated under the laws of the State of Washington on February 10, 1984, primarily to develop, produce, sell and distribute wireless modems that will allow communication between peripherals via radio frequency waves. Effective September 13, 2007, the Company announced their establishment of a doing business as or dba structure, based on the Companys registered trade name of ESTeem® Wireless Modems. Accounting Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Estimates used in the accompanying financial statements include the allowance for doubtful accounts receivable, inventory obsolescence, useful lives of depreciable assets, share-based compensation, and deferred income taxes. Actual results could differ from those estimates. Concentrations and Credit Risks The Company places its cash with three major financial institutions. During the period, the Company had cash balances that were in excess of federally insured limits. The Company purchases certain key components necessary for the production of its products from a limited number of suppliers. The components provided by the suppliers could be replaced or substituted by other products. It is possible that if this action became necessary, an interruption of production and/or material cost expenditures could take place. Revenue Recognition The Company accounts for revenue in accordance with Accounting Standards Codification (ASC) Topic 606: Revenue from Contracts with Customers. Under Topic 606, a performance obligation is a promise in a contract with a customer to transfer a distinct good or service to the customer. Our contracts with customers contain a single performance obligation, A contract's transaction price is recognized as revenue when, or as, the performance obligation is satisfied. The Company considers the contractual consideration payable by the customer when determining the transaction price of each contract. Revenue is recorded net of charges for certain sales incentives and discounts, and applicable state and local sales taxes, which represent components of the transaction price. Charges are estimated by us upon shipment of the product based on contractual terms, and actual charges typically do not vary materially from our estimates. Shipping estimates are determined by utilizing shipping costs provided by the various service providers websites based on number of packages, weight and destination. Shipping costs are included in the cost of goods sold as the revenue is captured in total sales. The Company receives payments from customers based on the terms established in our contracts. When amounts are billed and collected before the services are performed, they are included in deferred revenues. The Company does not generally sell its products with the right of return. Therefore, returns are accounted for when they occur and are accepted. Products sold to foreign customers are shipped after payment is received in U.S. funds, unless an established distributor relationship exists, or the customer is a foreign branch of a U.S. company. Performance obligations for product sales are satisfied as of a point in time. Revenue is recognized when control of the product transfers to the customer, generally upon product shipment. Performance obligations for site support and engineering services are satisfied over-time if the customer receives the benefits as we perform work and we have a contractual right to payment. Revenue recognized on an over-time basis is based on costs incurred to date relative to milestones and total estimated costs at completion to measure progress. The Company warrants its products as free of manufacturing defects and provides a refund of the purchase price, repair or replacement of the product for a period of one year from the date of installation by the first user/customer. No allowance for estimated warranty repairs or product returns has been recorded. Warranty expenses are immaterial Financial Instruments The Companys financial instruments are cash, money market funds, and certificates of deposit. The recorded values of cash, money market funds and certificates of deposit approximate their fair values based on their short-term nature. Cash and Cash Equivalents Cash and cash equivalents consist primarily of cash and money market funds purchased with original maturities of three months or less. Allowance for Uncollectible Accounts The Company uses the allowance method to account for estimated uncollectible accounts receivable. Accounts receivable are presented net of an allowance for doubtful accounts. As of December 31, 2018 and 2017, the Companys estimate of doubtful accounts was zero. The Companys policy for writing off past due accounts receivable is based on the amount, time past due, and response received from the subject customer. Inventories Inventories are stated at lower of direct cost or market. Cost is determined on an average cost basis that approximates the first-in, first-out (FIFO) method. Market is determined based on net realizable value and consideration is given to obsolescence. Reclassifications Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported statement of operations. Property and Equipment Property and equipment is carried at cost. Major betterments are capitalized and de minimis purchases are expensed. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The useful life of property and equipment for purposes of computing depreciation is three to seven years. When the Company sells or otherwise disposes of property and equipment a gain or loss is recorded in the statement of operations. The cost of improvements that extend the life of property and equipment is capitalized. The Company periodically reviews its long-lived assets for impairment and, upon indication that the carrying value of such assets may not be recoverable, recognizes an impairment loss by a charge against current operations. Certificates of Deposit Certificates of deposit with original maturities ranging from one month to twelve months were $900,000 and $1,000,000 at December 31, 2018 and 2017, respectively. Software Costs Software purchased and used by the Company is capitalized as property and equipment based on its cost, and amortized over its useful life, usually not exceeding five years. The Company capitalizes the costs of creating a software product to be sold, leased or otherwise marketed, for which technological feasibility has been established. Amortization of the software product, on a product-by-product basis, begins on the date the product is available for distribution to customers and continues over the estimated revenue-producing life, not to exceed five years. Income Taxes The provision (benefit) for income taxes is computed on the pretax income (loss) based on the current tax law. Deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates. The Company evaluates positive and negative information when estimating the valuation allowance for deferred tax assets. For tax positions that meet the more likely than not recognition threshold a deferred tax asset is recognized. Research and Development Research and development costs are expensed as operating expenses when incurred. Research and development expenditures for new product development and improvements of existing products by the Company for 2018 and 2017 were $179,413 and $252,411, respectively. Advertising Costs Costs incurred for producing and communicating advertising are expensed as operating expenses when incurred. Advertising costs for the years ended December 31, 2018 and 2017 were $9,403 and $9,832, respectively. Earnings Per Share The Company is required to have dual presentation of basic earnings per share (EPS) and diluted EPS. Basic EPS is computed as net income (loss) divided by the weighted average number of common shares outstanding for the period. Diluted EPS is calculated based on the weighted average number of common shares outstanding during the period plus the effect of potentially dilutive common stock equivalents. Potentially dilutive common stock equivalents consist of 120,000 and 150,000 stock options outstanding as of December 31, 2018 and 2017, respectively. As of December 31, 2018 and 2017, the potentially dilutive stock options were not included in the calculation of the diluted weighted average number of shares outstanding or diluted EPS as their effect would have been anti-dilutive. Share-Based Compensation Share-based payments to employees, including grants of employee stock options, are measured at fair value and expensed in the statement of operations over the vesting period. See Note 7 for additional information. In addition to the recognition of expense in the financial statements, any excess tax benefits received upon exercise of options will be presented as a financing activity inflow rather than an adjustment of operating activity in the statement of cash flows. Fair Value Measurements For fair value measurements, the Company maximizes the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company follows a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Inputs are prioritized into three levels that may be used to measure fair value: Level 1: Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2: Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quote prices for similar assets or liabilities in active markets; quoted prices for identical assets in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3: Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. At December 31, 2018 and 2017, the Company has no assets or liabilities subject to fair value measurements on a recurring basis. New Accounting Pronouncements Accounting Standards Updates Adopted In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update ("ASU") No. 2014-09 Revenue Recognition, replacing guidance currently codified in Subtopic 605-10 Revenue Recognition-Overall. The new ASU establishes a new five step principles-based framework in an effort to significantly enhance comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets. In August 2015, the FASB issued ASU No. 2015-14 Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. ASU No. 2015-14 deferred the effective date of ASU No. 2014-09 until annual and interim reporting periods beginning after December 15, 2017. We adopted ASU No. 2014-09 as of January 1, 2018 using the modified-retrospective transition approach. The adoption of the update did not impact our existing method of recognizing revenue and had no impact on 2018 or previously issued financial statements. Additional disclosures required by the update have been included in Note 9. In August 2016, the FASB issued ASU No. 2016-15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The update provides guidance on classification for cash receipts and payments related to eight specific issues. The update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The adoption of this update on January 1, 2018 had minimal impact on the Companys financial statements. Accounting Standards Updates to Become Effective in Future Periods In February 2016, the issued ASU No. 2016-02 Leases (Topic 842). The update modifies the classification criteria and requires lessees to recognize the assets and liabilities on the balance sheet for most leases. The update is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the potential impact of implementing this update on the financial statements. In August 2018, the FASB issued ASU No. 2018-13 Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The update removes, modifies and makes additions to the disclosure requirements on fair value measurements. The update is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the impact of this update on our fair value measurement disclosures. |
2. Inventories
2. Inventories | 12 Months Ended |
Dec. 31, 2018 | |
Notes | |
2. Inventories | 2. Inventories Inventories consist of the following: 2018 2017 Parts $ 133,809 $ 143,452 Work in progress 243,081 201,526 Finished goods 338,105 417,539 $ 714,995 $ 762,517 |
3. Property and Equipment
3. Property and Equipment | 12 Months Ended |
Dec. 31, 2018 | |
Notes | |
3. Property and Equipment | 3. Property and Equipment Property and equipment consist of the following: 2018 2017 Laboratory equipment $ 580,452 $ 580,452 Software purchased 35,028 35,028 Furniture and fixtures 16,310 16,561 Dies and molds 130,176 130,176 761,966 762,217 Accumulated depreciation and amortization (741,598) (730,773) $ 20,368 $ 31,444 |
4. Income Taxes
4. Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Notes | |
4. Income Taxes | 4. Income Taxes For the year ended December 31, 2018, the Company did not have an income tax benefit nor provision because of continuing losses. The Company recognized a deferred income tax provision for the year ended December 31, 2017 of $244,092 when it established a full valuation allowance against deferred tax assets. The components of net deferred tax assets at December 31, were as follows: 2018 2017 Accrued liabilities $ 2,400 3,700 Inventories 16,400 9,600 Other 1,400 800 Federal income tax credits 66,000 66,000 Net operating loss carryforwards 175,000 160,700 Less valuation allowance (261,200) (240,800) Total deferred tax assets, net $ 0 $ 0 Realization of the deferred tax asset is dependent on generating sufficient taxable income prior to expiration of the loss carryforwards and the income tax carryforwards. Management determined that it does not believe it is more likely than not that all of the net deferred tax assets will be realized. Therefore, a valuation allowance has been recorded for the full net deferred tax asset at December 31, 2018 and 2017. At December 31, 2018, the Company had approximately $66,000 of research and development income tax credits available to reduce federal income taxes in future periods. The credits expire from 2033-2036. In addition, at December 31, 2018, the Company had approximately $835,000 of net operating loss carryforwards, $750,000 of which will expire between 2033 and 2036. The remaining balance of $85,000 will never expire but whose utilization is limited to 80% of taxable income in any future year. The differences between the provision (benefit) for federal income taxes and federal income taxes computed using the U.S. statutory federal income tax rate (21% for 2018 and 35% for 2017) were as follows: 2018 2017 Amount computed using the statutory rate $ (24,381) $ (69,900) Other 3,981 3,394 Research and development credits - (3,062) Impact of change in federal tax rate - 102,439 Change in valuation allowance 20,400 211,221 Provision (benefit) for federal income taxes $ - $ 244,092 On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the Act) resulting in significant modifications to existing law. We have completed the accounting for the effects of the Act during the quarter ended December 31, 2017. Our financial statements for the year ended December 31, 2017 reflect certain effects of the Act which includes a reduction in the corporate tax rate from 35% to 21% as well as other changes. As a result of the changes to tax laws and tax rates under the Act, we incurred incremental income tax expense of $102,439 during the year ended December 31, 2017, which consisted primarily of the remeasurement of deferred tax assets and liabilities from 35% to 21% and application of a full valuation allowance. Should the Company have future accrued interest expense and penalties related to uncertain income tax positions, they will recognize those expenses in income tax expense. The Company files federal income tax returns in the United States only. The Company is no longer subject to federal income tax examination by tax authorities for years before 2015. The Company has evaluated all tax positions for open years and has concluded that they have no material unrecognized tax benefits or penalties. |
5. Profit Sharing Salary Deferr
5. Profit Sharing Salary Deferral 401-k Plan | 12 Months Ended |
Dec. 31, 2018 | |
Notes | |
5. Profit Sharing Salary Deferral 401-k Plan | 5. Profit Sharing Salary Deferral 401-K Plan The Company sponsors a Profit Sharing Plan and Salary Deferral 401-K Plan and Trust. All employees over the age of twenty-one are eligible. On January 1, 2006, the Company adopted a four percent salary matching provision. The Company contributed $15,742 and $15,149 to the plan for the years ended December 31, 2018 and 2017 respectively. |
6. Employee Bonus Program
6. Employee Bonus Program | 12 Months Ended |
Dec. 31, 2018 | |
Notes | |
6. Employee Bonus Program | 6. Employee Bonus Program The Board of Directors establishes Sales and Net Income thresholds at the start of each year that are used in calculating the amount of Bonuses that may be awarded. If these thresholds are not achieved, there will be no bonus issued. There was no accrual or expense recorded for 2018 or 2017. |
7. Share-based Compensation
7. Share-based Compensation | 12 Months Ended |
Dec. 31, 2018 | |
Notes | |
7. Share-based Compensation | 7. Share-Based Compensation The Company grants stock options to individual employees and directors with three years continuous tenure. After termination of employment, stock options may be exercised within ninety days, after which they are subject to forfeiture. There were no option grants during 2018 and 2017. In the years ended December 31, 2018 and 2017, the Company recognized $0 and $0 respectively, in share-based compensation expense. No non-vested share-based compensation arrangements existed as of December 31, 2018 and 2017. A summary of option activity follows: Number Outstanding Weighted Average Exercise Price Per Option Weighted Average Remaining Contractual Term (Years) Balance at December 31, 2016 220,000 0.40 2.8 Granted -0- -0- Expired/Forfeited (70,000) 0.38 Balance at December 31, 2017 150,000 0.40 2.6 Granted -0- -0- Expired/Forfeited (30,000) 0.40 Balance at December 31, 2018 120,000 0.40 1.6 Outstanding and Exercisable at December 31, 2018 120,000 $ 0.40 1.6 The aggregate intrinsic value of the options outstanding and exercisable at December 31, 2018, was $0. |
8. Leases
8. Leases | 12 Months Ended |
Dec. 31, 2018 | |
Notes | |
8. Leases | 8. Leases The Company leases its facilities from a port authority for three years, expiring in September 2020, with annual increases based upon the Consumer Price Index. The lease expense for the years ended December 31, 2018 and 2017 was $65,633 and $65,341 respectively. The lease expense commitment through the year ended December 31, 2020 is expected to be approximately $66,800 per year. |
9. Revenue
9. Revenue | 12 Months Ended |
Dec. 31, 2018 | |
Notes | |
9. Revenue | 9. 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 years ended December 31, 2018 and 2017, the Companys revenue from products sales was $1,374,810 and $1,358,203, respectively. Revenue from site support and engineering services was $20,220 and $66,925 respectively, over the same periods. The Companys customers, to which trade credit terms are extended, consist of United States and local governments and foreign and domestic companies. Domestic sales for the fiscal year were $1,298,447 compared to $1,198,674 in 2017. Sales to foreign customers for the fiscal year were $96,583 compared to $226,454 in 2017. During 2018, sales to one customer represented more than 10% of total revenue. Sales to this domestic customer totaled $260,944 and were for products only. No such customer had sale greater than 10% of total revenue in 2017. As of December 31, 2018 and 2017, the Company had a sales order backlog of $3,780 and $6,677, respectively. |
10. Stock Repurchase
10. Stock Repurchase | 12 Months Ended |
Dec. 31, 2018 | |
Notes | |
10. Stock Repurchase | 10. 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. The Companys share repurchase program does not obligate it to acquire any specific number of shares. On March 2, 2016, the Companys Board of Director approved a resolution authorizing the repurchase of an additional $150,000 of the Companys common stock at the price of $0.38 per share. Under the program (the Stock Repurchase Plan), 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. As of December 30, 2018, $184,291 remains of $250,000 approved by the board. The Company repurchased 97,764, 74,855 and 300 shares in 2016, 2017 and 2018 respectively, bringing the total number of shares repurchased to 172,919. On January 15, 2019 an additional 39,246 shares were repurchased. |
1. Organization and Summary o_2
1. Organization and Summary of Significant Accounting Policies: Nature of Operations (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Nature of Operations | Business Organization The Company was incorporated under the laws of the State of Washington on February 10, 1984, primarily to develop, produce, sell and distribute wireless modems that will allow communication between peripherals via radio frequency waves. |
1. Organization and Summary o_3
1. Organization and Summary of Significant Accounting Policies: Accounting Estimates (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Accounting Estimates | Accounting Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Estimates used in the accompanying financial statements include the allowance for doubtful accounts receivable, inventory obsolescence, useful lives of depreciable assets, share-based compensation, and deferred income taxes. Actual results could differ from those estimates. |
1. Organization and Summary o_4
1. Organization and Summary of Significant Accounting Policies: Concentrations of Credit Risks (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Concentrations of Credit Risks | Concentrations and Credit Risks The Company places its cash with three major financial institutions. During the period, the Company had cash balances that were in excess of federally insured limits. The Company purchases certain key components necessary for the production of its products from a limited number of suppliers. The components provided by the suppliers could be replaced or substituted by other products. It is possible that if this action became necessary, an interruption of production and/or material cost expenditures could take place. |
1. Organization and Summary o_5
1. Organization and Summary of Significant Accounting Policies: Revenue Recognition (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Revenue Recognition | Revenue Recognition The Company accounts for revenue in accordance with Accounting Standards Codification (ASC) Topic 606: Revenue from Contracts with Customers. Under Topic 606, a performance obligation is a promise in a contract with a customer to transfer a distinct good or service to the customer. Our contracts with customers contain a single performance obligation, A contract's transaction price is recognized as revenue when, or as, the performance obligation is satisfied. The Company considers the contractual consideration payable by the customer when determining the transaction price of each contract. Revenue is recorded net of charges for certain sales incentives and discounts, and applicable state and local sales taxes, which represent components of the transaction price. Charges are estimated by us upon shipment of the product based on contractual terms, and actual charges typically do not vary materially from our estimates. Shipping estimates are determined by utilizing shipping costs provided by the various service providers websites based on number of packages, weight and destination. Shipping costs are included in the cost of goods sold as the revenue is captured in total sales. The Company receives payments from customers based on the terms established in our contracts. When amounts are billed and collected before the services are performed, they are included in deferred revenues. The Company does not generally sell its products with the right of return. Therefore, returns are accounted for when they occur and are accepted. Products sold to foreign customers are shipped after payment is received in U.S. funds, unless an established distributor relationship exists, or the customer is a foreign branch of a U.S. company. Performance obligations for product sales are satisfied as of a point in time. Revenue is recognized when control of the product transfers to the customer, generally upon product shipment. Performance obligations for site support and engineering services are satisfied over-time if the customer receives the benefits as we perform work and we have a contractual right to payment. Revenue recognized on an over-time basis is based on costs incurred to date relative to milestones and total estimated costs at completion to measure progress. The Company warrants its products as free of manufacturing defects and provides a refund of the purchase price, repair or replacement of the product for a period of one year from the date of installation by the first user/customer. No allowance for estimated warranty repairs or product returns has been recorded. Warranty expenses are immaterial |
1. Organization and Summary o_6
1. Organization and Summary of Significant Accounting Policies: Financial Instruments (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Financial Instruments | Financial Instruments The Companys financial instruments are cash, money market funds, and certificates of deposit. The recorded values of cash, money market funds and certificates of deposit approximate their fair values based on their short-term nature. |
1. Organization and Summary o_7
1. Organization and Summary of Significant Accounting Policies: Cash and Cash Equivalents (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist primarily of cash and money market funds purchased with original maturities of three months or less. |
1. Organization and Summary o_8
1. Organization and Summary of Significant Accounting Policies: Allowance For Uncollectible Accounts (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Allowance For Uncollectible Accounts | Allowance for Uncollectible Accounts The Company uses the allowance method to account for estimated uncollectible accounts receivable. Accounts receivable are presented net of an allowance for doubtful accounts. As of December 31, 2018 and 2017, the Companys estimate of doubtful accounts was zero. The Companys policy for writing off past due accounts receivable is based on the amount, time past due, and response received from the subject customer. |
1. Organization and Summary o_9
1. Organization and Summary of Significant Accounting Policies: Inventories (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Inventories | Inventories Inventories are stated at lower of direct cost or market. Cost is determined on an average cost basis that approximates the first-in, first-out (FIFO) method. Market is determined based on net realizable value and consideration is given to obsolescence. |
1. Organization and Summary _10
1. Organization and Summary of Significant Accounting Policies: Reclassifications (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported statement of operations. |
1. Organization and Summary _11
1. Organization and Summary of Significant Accounting Policies: Property and Equipment (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Property and Equipment | Property and Equipment Property and equipment is carried at cost. Major betterments are capitalized and de minimis purchases are expensed. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The useful life of property and equipment for purposes of computing depreciation is three to seven years. When the Company sells or otherwise disposes of property and equipment a gain or loss is recorded in the statement of operations. The cost of improvements that extend the life of property and equipment is capitalized. The Company periodically reviews its long-lived assets for impairment and, upon indication that the carrying value of such assets may not be recoverable, recognizes an impairment loss by a charge against current operations. |
1. Organization and Summary _12
1. Organization and Summary of Significant Accounting Policies: Certificates of Deposit (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Certificates of Deposit | Certificates of Deposit Certificates of deposit with original maturities ranging from one month to twelve months were $900,000 and $1,000,000 at December 31, 2018 and 2017, respectively. |
1. Organization and Summary _13
1. Organization and Summary of Significant Accounting Policies: Software Costs (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Software Costs | Software Costs Software purchased and used by the Company is capitalized as property and equipment based on its cost, and amortized over its useful life, usually not exceeding five years. The Company capitalizes the costs of creating a software product to be sold, leased or otherwise marketed, for which technological feasibility has been established. Amortization of the software product, on a product-by-product basis, begins on the date the product is available for distribution to customers and continues over the estimated revenue-producing life, not to exceed five years. |
1. Organization and Summary _14
1. Organization and Summary of Significant Accounting Policies: Income Taxes (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Income Taxes | Income Taxes The provision (benefit) for income taxes is computed on the pretax income (loss) based on the current tax law. Deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates. The Company evaluates positive and negative information when estimating the valuation allowance for deferred tax assets. For tax positions that meet the more likely than not recognition threshold a deferred tax asset is recognized. |
1. Organization and Summary _15
1. Organization and Summary of Significant Accounting Policies: Research and Development (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Research and Development | Research and Development Research and development costs are expensed as operating expenses when incurred. Research and development expenditures for new product development and improvements of existing products by the Company for 2018 and 2017 were $179,413 and $252,411, respectively. |
1. Organization and Summary _16
1. Organization and Summary of Significant Accounting Policies: Advertising Costs (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Advertising Costs | Advertising Costs Costs incurred for producing and communicating advertising are expensed as operating expenses when incurred. Advertising costs for the years ended December 31, 2018 and 2017 were $9,403 and $9,832, respectively. |
1. Organization and Summary _17
1. Organization and Summary of Significant Accounting Policies: Earnings Per Share (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Earnings Per Share | Earnings Per Share The Company is required to have dual presentation of basic earnings per share (EPS) and diluted EPS. Basic EPS is computed as net income (loss) divided by the weighted average number of common shares outstanding for the period. Diluted EPS is calculated based on the weighted average number of common shares outstanding during the period plus the effect of potentially dilutive common stock equivalents. Potentially dilutive common stock equivalents consist of 120,000 and 150,000 stock options outstanding as of December 31, 2018 and 2017, respectively. As of December 31, 2018 and 2017, the potentially dilutive stock options were not included in the calculation of the diluted weighted average number of shares outstanding or diluted EPS as their effect would have been anti-dilutive. |
1. Organization and Summary _18
1. Organization and Summary of Significant Accounting Policies: Share-based Compensation (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Share-based Compensation | Share-Based Compensation Share-based payments to employees, including grants of employee stock options, are measured at fair value and expensed in the statement of operations over the vesting period. See Note 7 for additional information. In addition to the recognition of expense in the financial statements, any excess tax benefits received upon exercise of options will be presented as a financing activity inflow rather than an adjustment of operating activity in the statement of cash flows. |
1. Organization and Summary _19
1. Organization and Summary of Significant Accounting Policies: Fair Value Measures (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Fair Value Measures | Fair Value Measurements For fair value measurements, the Company maximizes the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company follows a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Inputs are prioritized into three levels that may be used to measure fair value: Level 1: Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2: Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quote prices for similar assets or liabilities in active markets; quoted prices for identical assets in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3: Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. |
1. Organization and Summary _20
1. Organization and Summary of Significant Accounting Policies: New Accounting Pronouncements (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
New Accounting Pronouncements | New Accounting Pronouncements Accounting Standards Updates Adopted In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update ("ASU") No. 2014-09 Revenue Recognition, replacing guidance currently codified in Subtopic 605-10 Revenue Recognition-Overall. The new ASU establishes a new five step principles-based framework in an effort to significantly enhance comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets. In August 2015, the FASB issued ASU No. 2015-14 Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. ASU No. 2015-14 deferred the effective date of ASU No. 2014-09 until annual and interim reporting periods beginning after December 15, 2017. We adopted ASU No. 2014-09 as of January 1, 2018 using the modified-retrospective transition approach. The adoption of the update did not impact our existing method of recognizing revenue and had no impact on 2018 or previously issued financial statements. Additional disclosures required by the update have been included in Note 9. In August 2016, the FASB issued ASU No. 2016-15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The update provides guidance on classification for cash receipts and payments related to eight specific issues. The update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The adoption of this update on January 1, 2018 had minimal impact on the Companys financial statements. Accounting Standards Updates to Become Effective in Future Periods In February 2016, the issued ASU No. 2016-02 Leases (Topic 842). The update modifies the classification criteria and requires lessees to recognize the assets and liabilities on the balance sheet for most leases. The update is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the potential impact of implementing this update on the financial statements. In August 2018, the FASB issued ASU No. 2018-13 Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The update removes, modifies and makes additions to the disclosure requirements on fair value measurements. The update is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the impact of this update on our fair value measurement disclosures. |
2. Inventories_ Schedule of Inv
2. Inventories: Schedule of Inventory, Current (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Tables/Schedules | |
Schedule of Inventory, Current | 2018 2017 Parts $ 133,809 $ 143,452 Work in progress 243,081 201,526 Finished goods 338,105 417,539 $ 714,995 $ 762,517 |
3. Property and Equipment_ Prop
3. Property and Equipment: Property, Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Tables/Schedules | |
Property, Plant and Equipment | 2018 2017 Laboratory equipment $ 580,452 $ 580,452 Software purchased 35,028 35,028 Furniture and fixtures 16,310 16,561 Dies and molds 130,176 130,176 761,966 762,217 Accumulated depreciation and amortization (741,598) (730,773) $ 20,368 $ 31,444 |
4. Income Taxes_ Schedule of De
4. Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Tables/Schedules | |
Schedule of Deferred Tax Assets and Liabilities | 2018 2017 Accrued liabilities $ 2,400 3,700 Inventories 16,400 9,600 Other 1,400 800 Federal income tax credits 66,000 66,000 Net operating loss carryforwards 175,000 160,700 Less valuation allowance (261,200) (240,800) Total deferred tax assets, net $ 0 $ 0 |
4. Income Taxes_ Schedule of Ef
4. Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Tables/Schedules | |
Schedule of Effective Income Tax Rate Reconciliation | 2018 2017 Amount computed using the statutory rate $ (24,381) $ (69,900) Other 3,981 3,394 Research and development credits - (3,062) Impact of change in federal tax rate - 102,439 Change in valuation allowance 20,400 211,221 Provision (benefit) for federal income taxes $ - $ 244,092 |
7. Share-based Compensation_ Su
7. Share-based Compensation: Summary of Option Activity (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Tables/Schedules | |
Summary of Option Activity | Number Outstanding Weighted Average Exercise Price Per Option Weighted Average Remaining Contractual Term (Years) Balance at December 31, 2016 220,000 0.40 2.8 Granted -0- -0- Expired/Forfeited (70,000) 0.38 Balance at December 31, 2017 150,000 0.40 2.6 Granted -0- -0- Expired/Forfeited (30,000) 0.40 Balance at December 31, 2018 120,000 0.40 1.6 Outstanding and Exercisable at December 31, 2018 120,000 $ 0.40 1.6 |
1. Organization and Summary _21
1. Organization and Summary of Significant Accounting Policies: Nature of Operations (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Details | |
Entity Incorporation, State Country Name | Washington |
Entity Incorporation, Date of Incorporation | Feb. 10, 1984 |
1. Organization and Summary _22
1. Organization and Summary of Significant Accounting Policies: Certificates of Deposit (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Details | ||
Certificates of deposit | $ 900,000 | $ 1,000,000 |
1. Organization and Summary _23
1. Organization and Summary of Significant Accounting Policies: Research and Development (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Details | ||
Research and Development Expense | $ 179,413 | $ 252,411 |
1. Organization and Summary _24
1. Organization and Summary of Significant Accounting Policies: Advertising Costs (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Details | ||
Advertising Expense | $ 9,403 | $ 9,832 |
1. Organization and Summary _25
1. Organization and Summary of Significant Accounting Policies: Earnings Per Share (Details) - shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Details | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 120,000 | 150,000 |
2. Inventories_ Schedule of I_2
2. Inventories: Schedule of Inventory, Current (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Details | ||
Inventory, Parts and Components, Net of Reserves | $ 133,809 | $ 143,452 |
Inventory, Work in Process, Gross | 243,081 | 201,526 |
Inventory, Finished Goods, Gross | 338,105 | 417,539 |
Inventories | $ 714,995 | $ 762,517 |
3. Property and Equipment_ Pr_2
3. Property and Equipment: Property, Plant and Equipment (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Details | ||
Laboratory equipment | $ 580,452 | $ 580,452 |
Capitalized Computer Software, Gross | 35,028 | 35,028 |
Furniture and Fixtures, Gross | 16,310 | 16,561 |
Dies and molds | 130,176 | 130,176 |
Property, Plant and Equipment, Gross | 761,966 | 762,217 |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment, Excluding Capital Leased Assets | (741,598) | (730,773) |
PROPERTY AND EQUIPMENT - NET | $ 20,368 | $ 31,444 |
4. Income Taxes_ Schedule of _2
4. Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Details | ||
Deferred Tax Liabilities, Net | $ 2,400 | $ 3,700 |
Deferred Tax Assets, Inventory | 16,400 | 9,600 |
Deferred Tax Assets, Other | 1,400 | 800 |
Tax Credit Carryforward, Amount | 66,000 | 66,000 |
Deferred Tax Assets, Operating Loss Carryforwards | 175,000 | 160,700 |
Deferred Tax Assets, Valuation Allowance | (261,200) | (240,800) |
Deferred Tax Assets, Net of Valuation Allowance, Current | $ 0 | $ 0 |
4. Income Taxes (Details)
4. Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Details | ||
Effective Income Tax Rate Reconciliation, Tax Credit, Amount | $ 66,000 | |
Operating Loss Carryforwards | 835,000 | |
Impact of change in federal tax rate | $ 0 | $ 102,439 |
4. Income Taxes_ Schedule of _3
4. Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Details | ||
Amount computed using the statutory rate | $ (24,381) | $ (69,900) |
Other | 3,981 | 3,394 |
Research and development credits | 0 | (3,062) |
Impact of change in federal tax rate | 0 | 102,439 |
Change in valuation allowance | 20,400 | 211,221 |
Provision (benefit) for federal income taxes | $ 0 | $ 244,092 |
5. Profit Sharing Salary Defe_2
5. Profit Sharing Salary Deferral 401-k Plan (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Details | ||
Defined Benefit Plan, Plan Assets, Contributions by Employer | $ 15,742 | $ 15,149 |
7. Share-based Compensation (De
7. Share-based Compensation (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Details | ||
Share-based Compensation | $ 0 | $ 0 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Aggregate Intrinsic Value | $ 0 |
7. Share-based Compensation_ _2
7. Share-based Compensation: Summary of Option Activity (Details) | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Details | |
120,000 | shares | 120,000 |
0.40 | $ / shares | $ 0.40 |
1.6 | 1 year 7 months 6 days |
120,000 | shares | 120,000 |
0.40 | $ / shares | $ 0.40 |
1.6 | 1 year 7 months 6 days |
8. Leases (Details)
8. Leases (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Details | ||
Operating Leases, Rent Expense, Net | $ 65,633 | $ 65,341 |
9. Revenue (Details)
9. Revenue (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Details | ||
Revenue Recognition, Sales of Goods | 1,374,810 | 1,358,203 |
Revenue Recognition, Sales of Services | 20,220 | 66,925 |
Domestic sales revenues | $ 1,298,447 | $ 1,198,674 |
Foreign sales | 96,583 | 226,454 |
Sales to customers in excess of 10 % of total sales | 260,944 | |
Sales order backlog | $ 3,780 | $ 6,677 |
10. Stock Repurchase (Details)
10. Stock Repurchase (Details) - shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
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. The Company’s share repurchase program does not obligate it to acquire any specific number of shares. On March 2, 2016, the Company’s Board of Director approved a resolution authorizing the repurchase of an additional $150,000 of the Company’s common stock at the price of $0.38 per share. Under the program (the “Stock Repurchase Plan”), 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. As of December 30, 2018, $184,291 remains of $250,000 approved by the board. | ||
Stock repurchased | 300 | 74,855 | 97,764 |
Total number shares repurchased | 172,919 | ||
Subsequent Event, Description | On January 15, 2019 an additional 39,246 shares were repurchased |