ELST Electronic Systems Technology Inc (PK)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

 

OR

 

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

From ________________ to ________________

 

 

ELECTRONIC SYSTEMS TECHNOLOGY INC

(Exact name of registrant as specified in its charter)

 

Washington	000-27793	91-1238077
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

 

415 N. Roosevelt St. STE B1 Kennewick WA		99336
(Address of principal executive offices)		(Zip Code)

 

(509) 735-9092

(Registrant's telephone number, including area code)

 

N/A

(Former name, former address & former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(g) of the Act:

 

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $0.001 par value	ELST	OTCQB

 

Indicate by check mark whether the registrant (1) has filed all documents and reports required to be filed by Sections 13 or☐ 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filings for the past 90 days. Yes x No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large Accelerated Filer   ☐	Accelerated Filer  ☐
Non-Accelerated Filer ☒	Small Reporting Company ☒ Emerging Growth Company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

As of July 26, 2023, the number of the Company's shares of Common Stock par value $0.001, outstanding was 4,946,502.

 

 

PART I

FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

ELECTRONIC SYSTEMS TECHNOLOGY, INC.
CONDENSED BALANCE SHEETS
(Unaudited)

 

		June 30,				December 31,
		2023				2022
ASSETS
Current assets
Cash and cash equivalents		$	382,095			$	751,118
Certificates of deposit			400,000				251,699
Accounts receivable, net			177,868				141,394
Inventories			840,573				725,478
Prepaid expenses			19,726				42,627
Employee retention tax credit receivable (NOTE 7)			63,000				63,000
Accrued interest receivable			699				808
Total current assets			1,883,961				1,976,124
Property and equipment, net of depreciation			20,265				914
Right to use – Lease, net of amortization (NOTE 6)			50,452				69,419
Total assets		$	1,954,678			$	2,046,457
LIABILITIES and STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable		$	93,789			$	138,996
Accrued wages and bonus			21,470				24,777
Accrued vacation pay			26,366				16,846
Lease liability, current (NOTE 6)			40,878				39,120
Other accrued liabilities			7,340				8,913
Total current liabilities			189,843				228,652
Long-Term Liabilities
Operating lease liability (NOTE 6)			10,048				30,457
Total liabilities			199,892				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			816,735				849,989
Total stockholders' equity			1,754,787				1,787,348
Total liabilities and stockholders' equity		$	1,954,678			$	2,046,457

 

See Notes to Condensed Financial Statements.

 

 

 

ELECTRONIC SYSTEMS TECHNOLOGY, INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

 

			Three Months Ended June 30, 2023				Three Months Ended June 30, 2022				Six Months Ended June 30, 2023				Six Months Ended June 30, 2022
SALES - NET		$	585,206			$	416,892			$	890,295			$	889,035
COST OF SALES			(268,636	)			(191,437	)			(408,196	)			(401,321	)
GROSS PROFIT			316,570				225,455				482,099				487,714
Operating Expenses
General and administrative			61,492				66,747				146,257				151,522
Research and development			28,021				45,856				56,684				91,633
Marketing and sales			173,368				132,242				321,595				269,401
TOTAL OPERATING EXPENSE			262,881				244,845				524,536				512,556
OPERATING INCOME (LOSS)			53,689				(19,390	)			(42,437	)			(24,842	)
OTHER INCOME
Interest income			5,181				594				9,183				1,085
TOTAL OTHER INCOME			5,181				594				9,183				1,085
NET INCOME (LOSS) BEFORE INCOME TAX			58,870				(18,796	)			(33,254	)			(23,757	)
Benefit (provision) for income tax			—				—				—				—
NET INCOME (LOSS)		$	58,870			$	(18,796	)		$	(33,254	)		$	(23,757	)
Basic and diluted earnings per share		$	0.01			$	(0.00	)		$	(0.01	)		$	(0.00	)
Basic and diluted weighted average shares used in computing income (loss) per share:			4,946,502				4,946,502				4,946,502				4,946,502

 

 

See Notes to Condensed Financial Statements.

 

 

 

ELECTRONIC SYSTEMS TECHNOLOGY, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited) 

 

		Six Months Ended
		June 30,				June 30,
		2023				2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(33,254	)		$	(23,757	)
Noncash items included in net loss:
Depreciation and amortization			418				222
Stock based compensation			693				—
Changes in operating assets and liabilities:
Accounts receivable, net			(36,474	)			6,835
Inventories			(115,095	)			(27,252	)
Accrued interest receivable			109				(641	)
Prepaid expenses			22,901				6,304
Accounts payable			(45,207	)			(31,151	)
Other accrued liabilities			4,956				(1,187	)
NET CASH USED IN OPERATING ACTIVITIES			(200,953	)			(70,627	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets			(19,769	)
Certificates of deposit redeemed			751,699				300,000
Certificates of deposit purchased			(900,000	)			(300,000	)
NET CASH USED IN INVESTING ACTIVITIES			(168,070	)			—
CASH FLOWS USED IN 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			(369,023	)			(76,595	)
Cash and cash equivalents at beginning of period			751,118				655,616
Cash and cash equivalents at end of period		$	382,095			$	579,021

 

See Notes to Condensed Financial Statements.

 

 

 

ELECTRONIC SYSTEMS TECHNOLOGY, INC.
DBA ESTEEM WIRELESS MODEMS
 
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)  

 

		Common Stock								Additional Paid-In				Retained
		Shares				Amount				Capital				Earnings				Total
Balances, January 1, 2022			4,946,502			$	4,947			$	932,412			$	703,458			$	1,640,817
Net income (loss)			—				—				—				(4,961	)			(4,961	)
Balance at March 31, 2022			4,946,502			$	4,947			$	932,412			$	698,497			$	1,635,856
Net income (loss)			—				—				—				(18,796	)			(18,796	)
Balance at June 30, 2022			4,946,502			$	4,947			$	932,412			$	679,701			$	1,617,060
Balances, January 1, 2023			4,946,502			$	4,947			$	932,412				849,989			$	1,787,348
Net income (loss)			—				—				—				(92,124	)			(92,124	)
Balance at March 31, 2023			4,946,502			$	4,947			$	932,412			$	757,865			$	1,695,224
Net income (loss)			—				—				—				58,870				58,870
Stock based compensation			—				—				693				—				693
Balance at June 30, 2023			4,946,502			$	4,947			$	933,105			$	816,735			$	1,754,787

See Notes to Condensed Financial Statements.

 

ELECTRONIC SYSTEMS TECHNOLOGY, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

 

 

NOTE 1 - BASIS OF PRESENTATION

 

The 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 June 30, 2023, and its results of operations, cash flows, and changes in stockholders’ equity for the six months ended June 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 month and six-month period ended June 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.

 

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
		June 30, 2023				December 31, 2022
Parts		$	124,215			$	172,190
Work in progress			380,562				336,298
Finished goods			335,796				216,990
Total inventories		$	840,573			$	725,478

 

 

6

ELECTRONIC SYSTEMS TECHNOLOGY, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

 

 

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 June 30, 2023 and 2022, the Company had 225,000 and 210,000 outstanding stock options, respectively, that could have a dilutive effect on future periods’ net income. The stock options were not included in the calculation of diluted earnings per share for either period as they were anti-dilutive.

 

NOTE 4 - STOCK OPTIONS

 

On June 9, 2023, the Board of Directors granted 45,000 options to employees. The new options have an exercise price of $0.40, a term of 5 years, and vest immediately. The fair value of the options was determined using the Black-Scholes model using the following variables: stock price of $0.24, volatility of 104.1%, expected term of 5 years with a forfeiture rate of 95%, and a discount factor of 3.92%. Share based compensation of $693 ($534 in marketing and sales and $159 in general and administrative in the condensed statement of operations) was recognized during the three and six-month periods ended June 30, 2023.

 

As of June 30, 2023, there were 225,000 options outstanding with a weighted average exercise price of $0.40 per share, a weighted average remaining life of 2.2 years and had intrinsic value of 0 nil.

 

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 June 30, 2023 and 2022, the Company’s revenue from products sales was $575,306 and $409,392, respectively. Revenue from site support and engineering services was $9,900 and $7,500 respectively, over the same periods.

 

During the six-month periods ended June 30, 2023 and 2022, the Company’s revenue from products sales was $872,895 and $871,235, respectively. Revenue from site support and engineering services was $17,400 and $17,800 respectively, over the same periods.

 

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 June 30, 2023 and June 30, 2022 were $575,683 and $378,959, respectively. Sales to foreign customers for the three-month period ended June 30, 2023 and June 30, 2022 were $9,523 and $37,933, respectively.

 

Domestic sales for the six-month period ended June 30, 2023 and June 30, 2022 were $869,591 and $815,629, respectively. Sales to foreign customers for the six-month period ended June 30, 2023 and June 30, 2022 were $20,704 and $73,406, respectively.

 

For the three-month period ended June 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.

 

 

7

ELECTRONIC SYSTEMS TECHNOLOGY, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

 

 

Schedule of revenue
		2023 Sales				2023 %age of Total Sales				2022 Sales				2022%age of Total Sales
Domestic customer A		$	134,604				23	%		$	54,436				13	%
Domestic customer B			76,993				13	%			53,880				13	%
Domestic customer C			56,861				10	%			49,031				12	%

 

For the six-month period ended June 30, 2023, sales to two customers represented more than 10% of total revenue, three 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		$	204,694				23	%		$	121,715				14	%
Domestic customer B			91,821				10	%			107,505				12	%
Domestic customer C											100,693				11	%

 

As of June 30, 2023 and 2022, the Company had a sales order backlog of $109,844 and $24,857, respectively.

 

NOTE 6 - LEASES

 

On September 23, 2022, the Company signed a new two-year lease for its facilities. The base lease is $3,373 and $3,478 per month for years one and two, respectively. There is a leasehold tax applied to the base lease at 12.84%. The Company has the right to terminate the lease with 90 days’ notice. There is no renewal clause contained in the current lease. Upon signing the lease, the Company recognized a lease liability and right of use asset of $78,757 based on the two-year payment stream discounted using an estimated incremental borrowing rate of 4.125%. At June 30, 2023, the remaining lease term is 15 months. As of June 30, 2023, future payments on this lease of $19,679 and $30,772 will be paid in 2023 and 2024 respectively.

 

 

8

 

For the three month and six-month periods ended June 30, 2023 and 2022, lease expenses of $11,576 and $10,903 and $23,151 and $21,805, respectively, are included in the following expense classifications on the statement of operations:

 

 

Schedule of lease expense
		For the three-month period ended June 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			$	5,397			$	4,248			$	9,645
Variable lease costs			727				572				1,299				704				554				1,258
Total lease costs		$	6,478			$	5,098			$	11,576			$	6,101			$	4,802			$	10,903

 

		For the six-month period ended June 30,
		2023												2022
		Cost of sales				Operating expenses				Total				Cost of sales				Operating expenses				Total
Base rent pursuant to lease agreement		$	11,501			$	9,052			$	20,553			$	10,793			$	8,495			$	19,288
Variable lease costs			1,454				1,144				2,598				1,408				1,109				2,517
Total lease costs		$	12,955			$	10,196			$	23,151			$	12,201			$	9,604			$	21,805

 

NOTE 7 - CARES ACT RETENTION CREDIT

 

As at December 31, 2022 and June 30, 2023, the Company has an employee retention tax credit due of $63,000. The amount to be received is a refund of qualified payroll taxes the Company paid in connection with employee payroll during the COVID 19 pandemic. The credit was received in July 2023.

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATION

 

Management's discussion and analysis is intended to be read in conjunction with the Company's unaudited financial statements and the integral notes thereto for the quarter ended June 30, 2023. The following statements may be forward looking in nature and actual results may differ materially.

 

A.

RESULTS OF OPERATIONS

 

REVENUES: Total revenues from sales increased to $585,206 for the first six-months of 2023 as compared to $416,892 in the second quarter of 2022, reflecting an increase of 40.4%. Management believes the increase in sales revenues is due to the increase in customer demand. Year to date total revenues from sales increased to $890,295 in 2023 as compared to $889,035 in 2022, reflecting an increase of 0.1%. Management believes the increase in sales revenues is due to the Company’s increased inventory level and the ability to ship orders in a timely manner.

 

The Company's revenues have historically fluctuated from quarter to quarter due to timing factors such as product shipments to customers, customer order placement, customer buying trends, and changes in the general economic environment. The procurement process regarding plant and project automation, or project development, which usually surrounds the decision to purchase ESTeem products, can be lengthy. This procurement process may involve bid activities unrelated to the ESTeem products, such as additional systems and subcontract work, as well as capital budget considerations on the part of the customer. Because of the complexity of this procurement process, forecasts with regard to the Company's revenues are difficult to predict.

 

A percentage breakdown of the Company’s market segments of Domestic and Foreign Export sales for the three- and six-month periods ended June 30, 2023 and 2022 are as follows:

 

		Three Months ended June 30, 2023				Three Months ended June 30, 2022				Six Months ended June 30, 2023				Six Months ended June 30, 2022
Domestic Sales			98	%			91	%			98	%			92	%
Export Sales			2	%			9	%			2	%			8	%

 

BACKLOG:

 

As of June 30, 2023, the Company had a sales order backlog of $109,844. The Company’s customers generally place orders on an "as needed basis". Shipment for most of the Company’s products is generally made within 1 to 5 working days after receipt of customer orders, with the exception of ongoing, scheduled projects, and custom designed equipment.

 

COST OF SALES:

 

Cost of sales percentages for the second quarters of 2023 and 2022 were 45.9% and 45.9% of respective net sales. Cost of sales percentages for the six-month periods ended June 30, 2023 and 2022 were 45.8% and 45.1%, respectively. The cost of sales percentage increase for the six month period ended June 3, 2023 is the result of the product mix sold during the same period of 2022.

 

 

 

OPERATING EXPENSES:

 

The following is a delineation of operating expenses:

 

		Three Months Ended												Six Month Ended
		June 30, 2023				June 30, 2022				Increase (Decrease)				June 30, 2023				June 30, 2022				Increase (Decrease)
General and administrative		$	61,492			$	66,747			$	(5,255	)		$	146,257			$	151,522			$	(5,265	)
Research and development			28,021				45,856				(17,835	)			56,684				91,633				(34,949	)
Marketing and sales			173,368				132,242				41,126				321,595				269,401				52,194
Total operating expenses		$	262,881			$	244,845			$	18,036			$	524,536			$	512,556			$	11,980

 

General and administrative: For the second quarter of 2023, general and administrative expenses decreased $5,255 to $61,492, due to decreased wages when compared with the same quarter of 2022. For the six-month period ended June 30, 2023, general and administrative expenses decreased by $5,265, to $146,257, due to decreased payroll and increased services purchased. General and administrative expenses were 10.5% compared to 16.0% of sales revenue for the second quarter of 2023 and 16.4% compared to 17.0% of sales revenue for six-month period ended June 30, 2023.

 

Research and development: Research and development expenses decreased $17,835 to $28,021 during the second quarter of 2023 due to decreased services purchased expenses when compared with the same quarter of 2022. For the six-month period, research and development expenses decreased by $34,949 to $56,684, due to decreased services purchased. Research and development expense was 4.8% compared to 11.0% of sales revenue for the second quarter of 2023 and 6.4% compared to 10.3% of sales revenue for six-month period ended June 30, 2023.

 

Marketing and sales: During the second quarter of 2023, marketing and sales expenses increased $41,126 to $173,368 when compared with the same period of 2022, due to increased payroll, benefits expense, and travel. For the six-month period, marketing and sales expenses increased by $52,194 to $321,595, due to increased payroll, benefits, and travel expenses. Marketing and sales expenses were 29.6% compared to 31.7% of sales revenue for the second quarter of 2023 and 36.1% compared to 30.3% of sales revenue for the six-month period ended June 30, 2023.

 

OTHER INCOME:

 

The Company earned $5,181 in interest income during the quarter ended June 30, 2023 and $9,183 for the six-month period. Sources of this income were money market accounts and certificates of deposit.

 

NET LOSS:

 

The Company had net income of $58,870 for the second quarter of 2023 compared to a net loss of $18,976 for the same quarter of 2022. For the six-month period ended June 30, 2023, the Company recorded a net loss of $33,254 compared with a net loss of $23,757 for the same period of 2022. The decrease in net income during 2023 is the result of increased operating expenses.

 

 

 

B.       FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

 

The Corporation's current asset to current liabilities ratio at June 30, 2023 was 9.9 compared to 8.6 at December 31, 2022. The increase in current ratio is due to the decrease of accounts payable and increase in inventory at June 30, 2023 as compared to December 31, 2022.

 

At June 30, 2023, the Company had cash and cash equivalents of $782,095 as compared to cash and cash equivalent of $1,002,817 at December 31, 2022.

 

Cash used from operating activities decreased by $130,326 for the six-month period ended June 30, 2023 when compared to the same period in 2022. The decrease is attributable to a decrease in net income for the period being $9,497 less than the same period in 2022. The increase in the change in accounts receivable and inventory balances contributed $43,309 and $87,843 respectively.

 

In management's opinion, the Company's cash and cash equivalents and other working capital at June 30, 2023 is sufficient to satisfy requirements for operations, capital expenditures, and other expenditures as may arise during 2023 and into the first half of 2024.

 

FORWARD LOOKING STATEMENTS: The above discussion may contain forward looking statements that involve a number of risks and uncertainties. In addition to the factors discussed above, among other factors that could cause actual results to differ materially are the following: competitive factors such as rival wireless architectures and price pressures; availability of third party component products at reasonable prices; inventory risks due to shifts in market demand and/or price erosion of purchased components; change in product mix, and risk factors that are listed in the Company's reports and registration statements filed with the Securities and Exchange Commission.

 

OFF-BALANCE SHEET ARRANGEMENTS

 

The Company has no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to its stockholders.

 

Item 1. Controls and Procedures

 

An evaluation has been performed under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Accounting Officer, of the effectiveness of the design and the operation of our "disclosure controls and procedures" (as such term is defined in Rules 13a-15(e) under the Securities Exchange Act of 1934) as of June 30, 2023. Based on that evaluation, our principal executive officer and our principal financial officer concluded that the design and operation of our disclosure controls and procedures were effective as of June 30, 2023.

 

The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. However, management believes that our system of disclosure controls and procedures are designed to provide a reasonable level of assurance that the objectives of the system will be met.

 

Changes in Internal Control Over Financial Reporting

 

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

  

Changes in Internal Control Over Financial Reporting

 

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

 

PART II—OTHER INFORMATION

 

Item 1. Legal Proceedings

 

None.

 

Item 2. Unregistered Sales of Securities

 

None.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not Applicable

 

Item 5. Other Information

 

None.

 

 

 

Item 6. Exhibits

 

EXHIBIT  NUMBER	DESCRIPTION
31.1	Section 302 Certification, CEO
31.2	Section 302 Certification, CFO
32.1	Section 906 Certification, CEO
32.2	Section 906 Certification, CFO
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

 

 

 

SIGNATURES

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

ELECTRONIC SYSTEMS TECHNOLOGY, INC.

 

 

	By: /s/ Daniel M. Tolley
Date:  July 27, 2023	Name:  Daniel M. Tolley
	Title:  President
	(Principal Executive Officer)

 

 

 

	By: /s/ Michael W. Eller
Date:  July 27, 2023	Name:  Michael W. Eller
	Title:  Vice President Administration
	(Principal Accounting Officer)

 

 

 

 

Exhibit 31.1

CERTIFICATION

 

I, Daniel M. Tolley, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Electronic Systems Technology, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Daniel M. Tolley

Daniel M. Tolley

President

(Chief Executive Officer)

Date: July 27, 2023

 

A signed original of this written statement has been provided to the registrant and will be retained by the registrant to be furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 31.2

CERTIFICATION

 

I, Michael Eller, certify that:

 

1.

I have reviewed this quarterly report on Form 10-Q of Electronic Systems Technology, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

/s/ Michael Eller

Michael Eller

CFO

Principal Accounting Officer

Date: July 27, 2023

 

A signed original of this written statement has been provided to the registrant and will be retained by the registrant to be furnished to the Securities and Exchange Commission or its staff upon request.

 

Exhibit 32.1

CERTIFICATION

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. 1350)

In connection with the quarterly report of Electronic Systems Technology Inc. (the "Company") on Form 10-Q for the quarter ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Daniel M. Tolley, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

/s/ Daniel M. Tolley

Daniel M. Tolley

President

(Chief Executive Officer)

Date: July 27, 2023

This certification is being furnished to the Securities and Exchange Commission as an exhibit to the Quarterly Report and shall not be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended; and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

 

A signed original of this written statement has been provided to the Registrant and will be retained by the Registrant to be furnished to the Securities and Exchange Commission or its staff upon request.

 

 

 

Exhibit 32.2

CERTIFICATION

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. 1350)

In connection with the quarterly report of Electronic Systems Technology Inc. (the "Company") on Form 10-Q for the quarter ended June 30, 2023,1 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael Eller, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

/s/ Michael Eller

Michael Eller

Vice President Administration/CFO

(Principal Accounting Officer)

Date: July 27, 2023

This certification is being furnished to the Securities and Exchange Commission as an exhibit to the Quarterly Report and shall not be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended.; and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

 

A signed original of this written statement has been provided to the Registrant and will be retained by the Registrant to be furnished to the Securities and Exchange Commission or its staff upon request.

 

 

 

 

v3.23.2

Cover - shares	6 Months Ended
	Jun. 30, 2023	Jul. 26, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2023
Document Fiscal Period Focus	Q2
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

v3.23.2

CONDENSED BALANCE SHEETS (Unaudited) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Current assets
Cash and cash equivalents	$ 382,095	$ 751,118
Certificates of deposit	400,000	251,699
Accounts receivable, net	177,868	141,394
Inventories	840,573	725,478
Prepaid expenses	19,726	42,627
Employee retention tax credit receivable (NOTE 7)	63,000	63,000
Accrued interest receivable	699	808
Total current assets	1,883,961	1,976,124
Property and equipment, net of depreciation	20,265	914
Right to use – Lease, net of amortization (NOTE 6)	50,452	69,419
Total assets	1,954,678	2,046,457
Current liabilities
Accounts payable	93,789	138,996
Accrued wages and bonus	21,470	24,777
Accrued vacation pay	26,366	16,846
Lease liability, current (NOTE 6)	40,878	39,120
Other accrued liabilities	7,340	8,913
Total current liabilities	189,843	228,652
Long-Term Liabilities
Operating lease liability (NOTE 6)	10,048	30,457
Total liabilities	199,892	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	816,735	849,989
Total stockholders' equity	1,754,787	1,787,348
Total liabilities and stockholders' equity	$ 1,954,678	$ 2,046,457

v3.23.2

CONDENSED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
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, Issued	4,946,502	4,946,502
Common Stock, Shares, Outstanding	4,946,502	4,946,502

v3.23.2

CONDENSED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Statement [Abstract]
SALES - NET	$ 585,206	$ 416,892	$ 890,295	$ 889,035
COST OF SALES	(268,636)	(191,437)	(408,196)	(401,321)
GROSS PROFIT	316,570	225,455	482,099	487,714
Operating Expenses
General and administrative	61,492	66,747	146,257	151,522
Research and development	28,021	45,856	56,684	91,633
Marketing and sales	173,368	132,242	321,595	269,401
TOTAL OPERATING EXPENSE	262,881	244,845	524,536	512,556
OPERATING INCOME (LOSS)	53,689	(19,390)	(42,437)	(24,842)
OTHER INCOME
Interest income	5,181	594	9,183	1,085
TOTAL OTHER INCOME	5,181	594	9,183	1,085
NET INCOME (LOSS) BEFORE INCOME TAX	58,870	(18,796)	(33,254)	(23,757)
Benefit (provision) for income tax
NET INCOME (LOSS)	$ 58,870	$ (18,796)	$ (33,254)	$ (23,757)

v3.23.2

CONDENSED STATEMENTS OF OPERATIONS (Unaudited) (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Statement [Abstract]
Earnings (loss) per share - basic	$ 0.01	$ (0.00)	$ (0.01)	$ (0.00)
Earnings (loss) per share - diluted	$ 0.01	$ (0.00)	$ (0.01)	$ (0.00)
Weighted average shares - basic	4,946,502	4,946,502	4,946,502	4,946,502
Weighted average shares - diluted	4,946,502	4,946,502	4,946,502	4,946,502

v3.23.2

CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (33,254)	$ (23,757)
Noncash items included in net loss:
Depreciation and amortization	418	222
Stock based compensation	693
Changes in operating assets and liabilities:
Accounts receivable, net	(36,474)	6,835
Inventories	(115,095)	(27,252)
Accrued interest receivable	109	(641)
Prepaid expenses	22,901	6,304
Accounts payable	(45,207)	(31,151)
Other accrued liabilities	4,956	(1,187)
NET CASH USED IN OPERATING ACTIVITIES	(200,953)	(70,627)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets	(19,769)
Certificates of deposit redeemed	751,699	300,000
Certificates of deposit purchased	(900,000)	(300,000)
NET CASH USED IN INVESTING ACTIVITIES	(168,070)
CASH FLOWS USED IN 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	(369,023)	(76,595)
Cash and cash equivalents at beginning of period	751,118	655,616
Cash and cash equivalents at end of period	$ 382,095	$ 579,021

v3.23.2

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)				(23,757)
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
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
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)				(33,254)
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
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

v3.23.2

BASIS OF PRESENTATION	6 Months Ended
	Jun. 30, 2023
Accounting Policies [Abstract]
BASIS OF PRESENTATION	NOTE 1 - BASIS OF PRESENTATION   The 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 June 30, 2023, and its results of operations, cash flows, and changes in stockholders’ equity for the six months ended June 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 month and six-month period ended June 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.

v3.23.2

INVENTORIES	6 Months Ended
	Jun. 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                     June 30, 2023     December 31, 2022   Parts   $ 124,215     $ 172,190   Work in progress     380,562       336,298   Finished goods     335,796       216,990   Total inventories   $ 840,573     $ 725,478

v3.23.2

EARNINGS (LOSS) PER SHARE	6 Months Ended
	Jun. 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 June 30, 2023 and 2022, the Company had 225,000 and 210,000 outstanding stock options, respectively, that could have a dilutive effect on future periods’ net income. The stock options were not included in the calculation of diluted earnings per share for either period as they were anti-dilutive.

v3.23.2

STOCK OPTIONS	6 Months Ended
	Jun. 30, 2023
Share-Based Payment Arrangement [Abstract]
STOCK OPTIONS	NOTE 4 - STOCK OPTIONS   On June 9, 2023, the Board of Directors granted 45,000 options to employees. The new options have an exercise price of $0.40, a term of 5 years, and vest immediately. The fair value of the options was determined using the Black-Scholes model using the following variables: stock price of $0.24, volatility of 104.1%, expected term of 5 years with a forfeiture rate of 95%, and a discount factor of 3.92%. Share based compensation of $693 ($534 in marketing and sales and $159 in general and administrative in the condensed statement of operations) was recognized during the three and six-month periods ended June 30, 2023.   As of June 30, 2023, there were 225,000 options outstanding with a weighted average exercise price of $0.40 per share, a weighted average remaining life of 2.2 years and had intrinsic value of 0 nil.

v3.23.2

REVENUE	6 Months Ended
	Jun. 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 June 30, 2023 and 2022, the Company’s revenue from products sales was $575,306 and $409,392, respectively. Revenue from site support and engineering services was $9,900 and $7,500 respectively, over the same periods.   During the six-month periods ended June 30, 2023 and 2022, the Company’s revenue from products sales was $872,895 and $871,235, respectively. Revenue from site support and engineering services was $17,400 and $17,800 respectively, over the same periods.   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 June 30, 2023 and June 30, 2022 were $575,683 and $378,959, respectively. Sales to foreign customers for the three-month period ended June 30, 2023 and June 30, 2022 were $9,523 and $37,933, respectively.   Domestic sales for the six-month period ended June 30, 2023 and June 30, 2022 were $869,591 and $815,629, respectively. Sales to foreign customers for the six-month period ended June 30, 2023 and June 30, 2022 were $20,704 and $73,406, respectively.   For the three-month period ended June 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   $ 134,604       23 %   $ 54,436       13 % Domestic customer B     76,993       13 %     53,880       13 % Domestic customer C     56,861       10 %     49,031       12 %   For the six-month period ended June 30, 2023, sales to two customers represented more than 10% of total revenue, three 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   $ 204,694       23 %   $ 121,715       14 % Domestic customer B     91,821       10 %     107,505       12 % Domestic customer C                     100,693       11 %   As of June 30, 2023 and 2022, the Company had a sales order backlog of $109,844 and $24,857, respectively.

v3.23.2

LEASES	6 Months Ended
	Jun. 30, 2023
Leases [Abstract]
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 and $3,478 per month for years one and two, respectively. There is a leasehold tax applied to the base lease at 12.84%. The Company has the right to terminate the lease with 90 days’ notice. There is no renewal clause contained in the current lease. Upon signing the lease, the Company recognized a lease liability and right of use asset of $78,757 based on the two-year payment stream discounted using an estimated incremental borrowing rate of 4.125%. At June 30, 2023, the remaining lease term is 15 months. As of June 30, 2023, future payments on this lease of $19,679 and $30,772 will be paid in 2023 and 2024 respectively.   For the three month and six-month periods ended June 30, 2023 and 2022, lease expenses of $11,576 and $10,903 and $23,151 and $21,805, respectively, are included in the following expense classifications on the statement of operations:     Schedule of lease expense                                                     For the three-month period ended June 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     $ 5,397     $ 4,248     $ 9,645   Variable lease costs     727       572       1,299       704       554       1,258   Total lease costs   $ 6,478     $ 5,098     $ 11,576     $ 6,101     $ 4,802     $ 10,903         For the six-month period ended June 30,       2023     2022       Cost of sales     Operating expenses     Total     Cost of sales     Operating expenses     Total   Base rent pursuant to lease agreement   $ 11,501     $ 9,052     $ 20,553     $ 10,793     $ 8,495     $ 19,288   Variable lease costs     1,454       1,144       2,598       1,408       1,109       2,517   Total lease costs   $ 12,955     $ 10,196     $ 23,151     $ 12,201     $ 9,604     $ 21,805

v3.23.2

CARES ACT RETENTION CREDIT	6 Months Ended
	Jun. 30, 2023
Debt Disclosure [Abstract]
CARES ACT RETENTION CREDIT	NOTE 7 - CARES ACT RETENTION CREDIT   As at December 31, 2022 and June 30, 2023, the Company has an employee retention tax credit due of $63,000. The amount to be received is a refund of qualified payroll taxes the Company paid in connection with employee payroll during the COVID 19 pandemic. The credit was received in July 2023.

v3.23.2

INVENTORIES (Tables)	6 Months Ended
	Jun. 30, 2023
Inventory Disclosure [Abstract]
Schedule of inventories	Schedule of inventories                     June 30, 2023     December 31, 2022   Parts   $ 124,215     $ 172,190   Work in progress     380,562       336,298   Finished goods     335,796       216,990   Total inventories   $ 840,573     $ 725,478

v3.23.2

REVENUE (Tables)	6 Months Ended
	Jun. 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   $ 134,604       23 %   $ 54,436       13 % Domestic customer B     76,993       13 %     53,880       13 % Domestic customer C     56,861       10 %     49,031       12 %   For the six-month period ended June 30, 2023, sales to two customers represented more than 10% of total revenue, three 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   $ 204,694       23 %   $ 121,715       14 % Domestic customer B     91,821       10 %     107,505       12 % Domestic customer C                     100,693       11 %

v3.23.2

LEASES (Tables)	6 Months Ended
	Jun. 30, 2023
Leases [Abstract]
Schedule of lease expense	Schedule of lease expense                                                     For the three-month period ended June 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     $ 5,397     $ 4,248     $ 9,645   Variable lease costs     727       572       1,299       704       554       1,258   Total lease costs   $ 6,478     $ 5,098     $ 11,576     $ 6,101     $ 4,802     $ 10,903         For the six-month period ended June 30,       2023     2022       Cost of sales     Operating expenses     Total     Cost of sales     Operating expenses     Total   Base rent pursuant to lease agreement   $ 11,501     $ 9,052     $ 20,553     $ 10,793     $ 8,495     $ 19,288   Variable lease costs     1,454       1,144       2,598       1,408       1,109       2,517   Total lease costs   $ 12,955     $ 10,196     $ 23,151     $ 12,201     $ 9,604     $ 21,805

v3.23.2

INVENTORIES (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Inventory Disclosure [Abstract]
Parts	$ 124,215	$ 172,190
Work in progress	380,562	336,298
Finished goods	335,796	216,990
Total inventories	$ 840,573	$ 725,478

v3.23.2

EARNINGS (LOSS) PER SHARE (Details Narrative) - shares	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Earnings Per Share [Abstract]
Anti-dilutive shares	225,000	210,000

v3.23.2

STOCK OPTIONS (Details Narrative) - USD ($)		3 Months Ended	6 Months Ended
	Jun. 09, 2023	Jun. 30, 2023	Jun. 30, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share based compensation		$ 693	$ 693
Marketing And Sales [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share based compensation		534	$ 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	$ 0.40
Vesting term	5 years
Stock price	$ 0.24
Volatility rate	104.10%
Expected term	5 years
Forfeiture rate	95.00%
Discount factor	3.92%
Outstanding value		225,000	225,000
Weighted average remaining life			2 years 2 months 12 days
Intrinsic value		$ 0	$ 0

v3.23.2

REVENUE (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Disaggregation of Revenue [Line Items]
Revenues	$ 585,206	$ 416,892	$ 890,295	$ 889,035
Geographic Distribution, Domestic [Member]
Disaggregation of Revenue [Line Items]
Revenues	575,683	378,959	869,591	815,629
Customer A [Member] | Geographic Distribution, Domestic [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Revenues	$ 134,604	$ 54,436	$ 204,694	$ 121,715
% age of total sales	23.00%	13.00%	23.00%	14.00%
Customer B [Member] | Geographic Distribution, Domestic [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Revenues	$ 76,993	$ 53,880	$ 91,821	$ 107,505
% age of total sales	13.00%	13.00%	10.00%	12.00%
Customer C [Member] | Geographic Distribution, Domestic [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Revenues	$ 56,861	$ 49,031		$ 100,693
% age of total sales	10.00%	12.00%		11.00%

v3.23.2

REVENUE (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Disaggregation of Revenue [Line Items]
Revenues	$ 585,206	$ 416,892	$ 890,295	$ 889,035
Sales order backlog			109,844	24,857
Geographic Distribution, Domestic [Member]
Disaggregation of Revenue [Line Items]
Revenues	575,683	378,959	869,591	815,629
Geographic Distribution, Foreign [Member]
Disaggregation of Revenue [Line Items]
Revenues	9,523	37,933	20,704	73,406
Product [Member]
Disaggregation of Revenue [Line Items]
Revenues	575,306	409,392	872,895	871,235
Maintenance [Member]
Disaggregation of Revenue [Line Items]
Revenues	$ 9,900	$ 7,500	$ 17,400	$ 17,800

v3.23.2

LEASES (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Base rent pursuant to lease agreement	$ 10,277	$ 9,645	$ 20,553	$ 19,288
Variable lease costs	1,299	1,258	2,598	2,517
Total lease costs	11,576	10,903	23,151	21,805
Cost of Sales [Member]
Base rent pursuant to lease agreement	5,751	5,397	11,501	10,793
Variable lease costs	727	704	1,454	1,408
Total lease costs	6,478	6,101	12,955	12,201
Operating Expense [Member]
Base rent pursuant to lease agreement	4,526	4,248	9,052	8,495
Variable lease costs	572	554	1,144	1,109
Total lease costs	$ 5,098	$ 4,802	$ 10,196	$ 9,604

v3.23.2

LEASES (Details Narrative) - USD ($)		3 Months Ended		6 Months Ended
	Sep. 23, 2022	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Operating Lease, Cost		$ 10,277	$ 9,645	$ 20,553	$ 19,288
Leasehold tax percentage	12.84%
Right of use asset	$ 78,757	$ 50,452		$ 50,452		$ 69,419
Lease liability	$ 78,757
Incremental borrowing rate	4.125%
Remaining lease term		15 months		15 months
Future payments - 2023		$ 19,679		$ 19,679
Future payments - 2024		30,772		30,772
Lease expense		$ 11,576	$ 10,903	$ 23,151	$ 21,805
Monthly Rate Year One [Member]
Operating Lease, Cost	$ 3,373
Monthly Rate Year Two [Member]
Operating Lease, Cost	$ 3,478

v3.23.2

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

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