10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x

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

For the quarterly period ended March 31, 2015

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. Quay St. Bldg 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)

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).

YESxNO¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  

Large accelerated filer

¨

Accelerated filer

¨

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

x

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 April 22, 2015, the number of the Company's shares of common stock par value $0.001, outstanding was 5,158,667.

PART I

FINANCIAL INFORMATION

Item 1.  Financial Statements.

ELECTRONIC SYSTEMS TECHNOLOGY, INC.

BALANCE SHEETS

	March 31,	December 31,
	2015	2014
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$       545,767	$       637,086
Certificates of deposit investments	1,402,625	1,402,625
Accounts receivable	109,163	94,864
Inventories	666,478	719,137
Accrued interest receivable	2,944	3,109
Prepaid insurance	5,011	5,505
Prepaid expenses	22,776	8,919
Deferred income tax asset, current	38,700	49,600
Total current assets	2,793,464	2,920,845
Property and equipment, net of depreciation	96,557	91,907
Deferred income tax asset	34,601	31,301
Total assets	$    2,924,622	$   3,044,053
LIABILITIES and STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$         14,716	$         14,573
Accrued liabilities	46,690	43,045
Refundable deposits	80	26,247
Total current liabilities	61,486	83,865
Total liabilities	61,486	83,865
COMMITMENTS and CONTINGENCIES (NOTES 5 & 7)
Stockholders' equity
Common stock,  $0.001 par value 50,000,000 shares    authorized 5,158,667 shares issued and outstanding	5,159	5,159
Additional paid-in capital	1,007,861	1,007,861
Retained earnings	1,850,116	1,947,168
Total stockholders' equity	2,863,136	2,960,188
Total liabilities and stockholders' equity	$    2,924,622	$    3,044,053

See Notes to Financial Statements

ELECTRONIC SYSTEMS TECHNOLOGY, INC. STATEMENTS OF OPERATIONS (Unaudited)
	Three Months Ended
	March 31,	March 31,
	2015	2014
PRODUCT SALES, net	$      428,026	$       448,809
SITE SUPPORT	21,846	51,015
COST OF SALES and SITE SUPPORT	(201,597)	(227,942)
GROSS PROFIT	248,275	271,882
OPERATING EXPENSES
General and administrative	100,700	86,200
Research and development	73,122	58,849
Marketing	138,413	108,240
Customer service	28,248	27,332
Total operating expenses	340,483	280,621
OPERATING LOSS	(92,208)	(8,739)
OTHER INCOME
Interest income	2,757	2,549
Total other income	2,757	2,549
NET LOSS BEFORE INCOME TAX	(89,451)	(6,190)
Benefit (provision) for income tax	(7,600)	240
NET LOSS	$        (97,051)	$          (5,950)
Basic and diluted loss per share	$            (0.02)	$                Nil
Weighted average shares used in computing loss per share      Basic and diluted	5,158,667	5,158,667

See Notes to Financial Statements

1

ELECTRONIC SYSTEMS TECHNOLOGY, INC. STATEMENTS OF CASH FLOWS (Unaudited)
	March 31,	March 31,
	2015	2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$      (97,051)	$         (5,950)
Noncash items included in loss:
Depreciation	8,330	2,531
Deferred income taxes	7,600	500
Share based compensation	-	2,245
Changes in operating assets and liabilities:
Accounts receivable, net	(14,299)	(126,829)
Inventories	52,659	(94,972)
Accrued interest receivable	165	(915)
Prepaid insurance	-	4,506
Prepaid expenses	(13,363)	10,101
Deposits	-	11,408
Accounts payable	143	945
Refundable deposits	(26,167)	(2,970)
Accrued liabilities	3,644	(9,359)
NET CASH USED IN OPERATING ACTIVITIES	(78,339)	(208,759)
CASH FLOWS USED IN INVESTING ACTIVITIES:
Certificates of deposit redeemed	-	5,000
Purchase of equipment	(12,980)	(10,870)
NET CASH USED IN INVESTING ACTIVITIES	(12,980)	(5,870)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(91,319)	(214,629)
Cash and cash equivalents at beginning of period	637,086	896,581
Cash and cash equivalents at end of period	$        545,767	$        681,952
Cash and cash equivalents:
Cash	$        227,890	$          50,158
Cash equivalents	317,877	631,794
Total cash and cash equivalents	$        545,767	$        681,952

See Notes to Financial Statements

2

ELECTRONIC SYSTEMS TECHNOLOGY, INC.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The financial statements of Electronic Systems Technology, Inc. (the "Company") presented in this Form 10Q are unaudited and reflect, in the opinion of Management, a fair presentation of operations for the three month periods ended March 31, 2015 and March 31, 2014.  All adjustments of a normal recurring nature and necessary for a fair presentation of the results for the periods covered have been made. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the applicable rules and regulations of the Securities and Exchange Commission. In preparation of the financial statements, certain amounts and balances have been reformatted from previously filed reports to conform to the format of this quarterly presentation.  These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Form 10K for the year ended December 31, 2014 as filed with Securities and Exchange Commission.

The results of operations for the three-month period ended March 31, 2015 are not necessarily indicative of the results expected for the full fiscal year or for any other fiscal period.

NOTE 2 - INVENTORIES

Inventories are stated at lower of direct cost or market with cost determined using the FIFO (first in, first out) method.  Inventories consist of the following:

	March 31 2015	December 31 2014
Parts	$       232,007	$       283,375
Work in progress	247,158	276,853
Finished goods	187,312	158,909
Total inventory	$       666,478	$       719,137

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 common shares 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 March 31, 2015 the Company had 295,000 outstanding stock options that could have a dilutive effect on future periods’ income.  However, diluted earnings per share are not presented because their effect would be antidilutive due to Company’s losses.

3

NOTE 4 - STOCK OPTIONS

As of March 31, 2015, the Company had outstanding stock options which have been granted periodically to individual employees and directors with no less than three years of continuous tenure with the Company.  The Board of Directors did not issue stock options during the first quarter ended March 31, 2015. The Board of Directors will consider issuing stock options later in 2015.

The fair value of options granted in 2014 is estimated on the date of the grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in:

	2014
Dividend yield	0.00%
Expected volatility	75%
Risk-free interest rate	0.68%
Expected term (in years)	3
Fair Value per Option Granted	$0.20

The Company uses historical data to estimate option exercise rates.  The option exercise rate for option grants in 2014 was 6.00%. All options vested immediately upon issue.

A summary of option activity during the quarter ended March 31, 2015 is as follows:

	Number Outstanding	Weighted-Average Exercise Price Per Share	Weighted-Average Remaining Life (Years)	Approximate Aggregate Intrinsic Value
Outstanding and Exercisable at December 31, 2014	440,000	$0.36
Granted	-	-
Expired	(145,000)	0.37
Outstanding and Exercisable at March 31, 2015	295,000	$0.36	1.67	$14,750

A summary of option activity during the quarter ended March 31, 2014 is as follows:

	Number Outstanding	Weighted-Average Exercise Price Per Share	Weighted-Average Remaining Life (Years)	Approximate Aggregate Intrinsic Value
Outstanding and Exercisable at December 31, 2013	525,000	$         0.38
Granted	175,000	0.44
Expired	(185,000)	0.44
Outstanding and Exercisable at March 31, 2014	515,000	$         0.40	2.33	$      10,300

NOTE 5 - LEASES

The Company leases its facilities from a port authority for $5,251 per month for three years, expiring in September 2017, with annual increases based upon the Consumer Price Index.

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NOTE 6 - RELATED PARTY TRANSACTIONS

For the quarters ended March 31, 2015 and March 31, 2014, services in the amount of $1,674 and $19,156, respectively, were contracted with Manufacturing Services, Inc. (MSI), of which the current owner, Michael S. Brown is a former Director of the Company and son of MSI’s former owner, Melvin H. Brown, who is currently a member of the Company’s Board of Directors. The Company had accounts payable to Manufacturing Services, Inc. at March 31, 2015 and March 31, 2014 of $0 and $180, respectively.

During the quarter ended March 31, 2015 the Company accrued total directors’ fees of $1,200, or $300 per director for board meetings attended.

NOTE 7 - COMMITMENTS and CONTINGENCIES

In 2009, the Company entered into a licensing agreement with Wi-LAN, Inc. (a Canadian Company), to pay royalties for certain licensing rights and liability releases.  Such amounts are not considered significant by the Company.  

NOTE 8 - SEGMENT REPORTING

Segment information is prepared on the same basis that the Company's management reviews financial information for operational decision making purposes.  The Company has two reportable segments, domestic and foreign, based on the geographic location of the customers.  Domestic and foreign segments sell radio modem products, related accessories for radio modem products for industrial automation projects, with the foreign segment selling the Company's products and services outside the United States.  

During the quarters ended March 31, 2015 and 2014, domestic customers represented approximately 68% and 81% of total net revenues, respectively.  In addition during the quarters ended March 31, 2015 and 2014, foreign customers represented 32% and 19% of total net revenues, respectively.  During the quarter ended March 31, 2015, product sales to one customers exceeded more than 10% of the Company's sales revenues.  During the quarter ended March 31, 2014 two customers accounted for more than 10% of the Company’s revenues.

Revenues from foreign countries consisted primarily of revenues from Croatia, Peru, and Canada.   

Summary financial information for the two reportable segments for the first quarter of 2015 and 2014 is as follows:

Quarter ended March 31, 2015	Domestic	Foreign	Total
Total sales	$       306,117	$     143,755	$   449,872
Total other income	2,757	-	2,757
Earnings (loss) before tax	(145,560)	56,109	(89,451)
Depreciation/amortization	8,330	-	8,330
Identifiable assets	2,898,111	26,711	2,924,622
Net capital expenditures	12,980		12,980
Quarter ended March 31, 2014
Total sales	$       405,170	$      94,654	$   499,824
Total other income	2,549	-	2,549
Earnings (loss) before tax	(27,280)	21,090	(6,190)
Depreciation/amortization	2,531	-	2,531
Identifiable assets	3,110,758	6,398	3,117,156
Net capital expenditures	10,870		10,870

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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 March 31, 2015.  The following statements may be forward looking in nature and actual results may differ materially.

A.

RESULTS OF OPERATIONS

REVENUES: Total revenues from sales decreased to $449,872 for the first quarter of 2015 as compared to $499,824 in the first quarter of 2014, reflecting a decrease of 10%.  Gross revenues, including interest income, decreased to $452,630 for the quarter ended March 31, 2015, from $502,373 for the same quarter of 2014.  Management believes the decrease in sales revenues is due to decreased domestic industrial automation sales during first quarter of 2015 when compared with the same quarter of 2014.  

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 EST's market segments of Domestic and Foreign Export sales, for the first quarter of 2015 and 2014 are as follows:

For the first quarter of	2015	2014
Domestic Sales	68%	81%
Export Sales	32%	19%

OPERATING SEGMENTS

Segment information is prepared on the same basis that the Company’s Management reviews financial information for operational decision-making purposes.  The Company’s operating segment information is contained in “Financial Statements, Notes to Financial Statements, Note 8 – Segment Reporting”.

Domestic Revenues

The Company’s domestic operations represented 68% of the Company’s total sales revenues.  Domestic operations sell ESTeem modem products, accessories and service primarily through domestic resellers, as well as directly to end users of the Company’s products.  Domestic sales revenues decreased to $306,117 for the quarter ended March 31, 2015, compared to $405,170 for the quarter ended March 31, 2014, reflecting a decrease of 24%.  During the quarter ended March 31, 2015, product sales no customer, comprised more than 10% of the Company's sales revenues.  Management believes the decrease in domestic sales revenues is the result of decreased demand for the Company’s products for domestic industrial, which may have been caused by the severe winter weather in the eastern part of the country.  

Domestic segment operating loss was $145,560 for the quarter ended March 31, 2015 as compared with a domestic segment operating loss of $27,280 for the same quarter of 2014, due to decreased sales revenues for the segment during the first quarter of 2015.

6

Foreign Revenues

The Company’s foreign operating segment represented 32% of the Company’s total net revenues for the quarter ended March 31, 2015.  The foreign operating segment is based wholly in the United States and maintains no assets outside of the United States.  The foreign operating segment sells ESTeem modem products, accessories and service primarily through foreign resellers, as well as directly to end customers of the Company’s products located outside the United States.  

During the quarter ended March 31, 2015, the Company had $143,755 in foreign export sales, or 32% of total net revenues of the Company for the quarter, compared with foreign export sales of $94,654 or 19% of net revenues for the same quarter of 2014, reflecting an increase of 52%.  The majority of foreign export sales revenues during the first quarter of 2015 were used in industrial automation projects in Croatia, Peru and Canada. Management believes the increase in foreign sales revenues is due to increased product sales for industrial automation sales in Latin America and Europe during the first quarter of 2015.  Management believes the majority of foreign export sales are the results of the Company’s Latin American sales staff, EST foreign reseller activity, and the Company’s internet website presence.

Operating income for the foreign segment increased to $56,109 for the quarter ended March 31, 2015 as compared with $21,090 for the same period of 2014 due to increased sales revenues for the quarter ended March 31, 2014.

BACKLOG:

As of March 31, 2015, the Company had a sales order backlog of $10,426.   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 15 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 first quarters of 2015 and 2014 were 42% and 41% of respective net sales and are calculated excluding site support expenses of $19,879 and $43,208 respectively. The cost of sales percentage increase in the first quarter of 2015 is the result of the product mix of items and services sold during the quarter having decreased profit margins when compared with the product mix sold during the same quarter of 2014.

OPERATING EXPENSES:

Operating expenses for the first quarter of 2015 increased $58,923 from first quarter of 2014 levels.  The following is a delineation of operating expenses:

	March 31, 2015	March 31, 2014	Increase (Decrease)
General and administrative	$       100,700	$       86,200	$        14,500
Research and development	73,122	58,849	14,273
Marketing	138,413	108,240	30,173
Customer service	28,248	27,332	916
Total operating expenses	$     340,483	$     280,621	$        59,862

General and administrative:  For the first quarter of 2015 General and administrative expenses increased $14,500 to $100,700, due to increased wages and benefit expenses when compared with the same quarter of 2014.

Research and development:  Research and Development expenses increased $14,273 to $73,122 during the first quarter of 2015 due to increased wages when compared with the same quarter of 2014.

7

Marketing: During the first quarter of 2015, marketing expenses increased $30,173 to $138,413 when compared with the same period of 2014, due to increased wages, travel and consulting service expenses during the first quarter of 2015.

Customer service: Customer service expenses increased $916 to $28,248 during the first quarter of 2015, due to increased benefits and depreciation when compared with the same quarter of 2014.         

INTEREST AND DIVIDEND INCOME:

The Corporation earned $2,757 in interest and dividend income during the quarter ended March 31, 2015.  Sources of this income were money market accounts and certificates of deposit.

NET LOSS:

The Company had a net loss of $97,051 for the first quarter of 2015 compared to a net loss of $5,950 for the same quarter of 2014.  The increase in net loss during 2015 is the result of decreased sales revenues, product mix and increased expenses.

Included in the net loss is the tax impact of a $7600 provision that relates to changes in temporary differences in tax versus book inventory. Additionally, at March 31, 2015, the Company has $43,600 of research and development tax credits available to reduce any Federal Income taxes that may be incurred in future periods.

B.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

The Corporation's current asset to current liabilities ratio at March 31, 2015 was 45.4:1 compared to 34.8:1 at December 31, 2014.  The increase in current ratio is due to increased accounts receivable and prepaid expenses at March 31, 2015 when compared with December 31, 2014.

For the quarter ended March 31, 2015, the Company had cash and cash equivalents of $545,767 as compared to cash and cash equivalent holdings of $637,086 at December 31, 2014, primarily reflecting changes in inventory and Accounts Receivable when compared with year-end 2014.    

Accounts receivable increased to $109,163 as of March 31, 2015, from December 31, 2014 levels of $94,864 due to sales and collection timing differences when compared with year-end 2014.  Inventory decreased to $666,478 at March 31, 2015 from December 31, 2014 levels of $719,137.  The Company's fixed assets, net of depreciation, increased to $96,557 as of March 31, 2015 from December 31, 2014 levels of $91,907, due to purchase of equipment during the first quarter of 2015 of $12,980.  Deferred tax asset as of March 31, 2015 decreased to $73,301 due to the income tax expense recognized during the first quarter of 2015 and the impact of temporary differences relating to inventory.  Prepaid insurance and expenses increased to $27,787 as of March 31, 2015 as compared with $14,424 for December 31, 2014 due to increased prepaid trade show expenses and insurance expenses when compared with year-end 2014.     

As of March 31, 2015, the trade accounts payable balance was $14,716 compared with $14,573 at December 31, 2014, and reflect amounts owed for purchases of inventory items and contracted services.  Accrued liabilities as of March 31, 2015 were $46,690, compared with $43,045 at December 31, 2014, and reflect items such as payroll and state tax liabilities and accrued vacation benefits.  At March 31, 2015 the Company had refundable customer deposit liabilities of $80 compared with $26,247 at December 31, 2014.

In Management's opinion, the Company's cash and cash equivalent reserves, and working capital at March 31, 2015 is sufficient to satisfy requirements for operations, capital expenditures, and other expenditures as may arise during 2015.

8

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.  

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

There is no established market for trading the common stock of the Company. The market for the Company’s common stock is limited, and as such shareholders may have difficulty reselling their shares when desired or at attractive market prices.  The Common Stock is not regularly quoted in the automated quotation system of a registered securities system or association.  Our common stock, par value $0.001 per share, is quoted on the OTC Markets Group QB (OTCQB) under the symbol “ELST”.  The OTCQB is a network of security dealers who buy and sell stock. The dealers are connected by a computer network which provides information on current “bids” and “asks” as well as volume information. The OTCQB is not considered a “national exchange”.  The “over-the-counter” quotations do not reflect inter-dealer prices, retail mark-ups commissions or actual transactions.  The Company’s common stock has continued to trade in low volumes and at low prices. Some investors view low-priced stocks as unduly speculative and therefore not appropriate candidates for investment. Many institutional investors have internal policies prohibiting the purchase or maintenance of positions in low-priced stocks.

Item 4.  Controls and Procedures.

The Company’s Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. The Company’s internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures of Company assets are made in accordance with Management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of Company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected.

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 March 31, 2015.  Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have determined that there was a material weakness affecting our internal control over financial reporting and, as a result of that weakness, our disclosure controls and procedures were not effective as of March 31, 2015.  

The material weakness is as follows:

We did not maintain effective controls to ensure appropriate segregation of duties as the same officer and employee was responsible for the initiating and recording of transactions, thereby creating segregation of duties weaknesses. Due to the (1) significance of segregation of duties to the preparation of reliable financial statements; (2) the significance of potential misstatement that could have resulted due to the deficient controls; and, (3) the absence of sufficient other mitigating controls; we determined that this control deficiency resulted in more than a remote likelihood that a material misstatement or lack of disclosure within the annual or interim financial statements will not be prevented or detected.

9

Management has evaluated and continues to evaluate, avenues for mitigating our internal controls weaknesses, but mitigating controls have been deemed to be impractical and prohibitively costly due to the size of our organization at the current time.  Management does not foresee implementing a cost effective method of mitigating our internal control weaknesses in the near term.   Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.  These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake.  The design of any system of controls is based in part on 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. Projections of any evaluation of controls effectiveness to future periods are subject to risks.

Changes in internal control over financial reporting.

There have been no changes during the quarter ended March 31, 2015 in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, internal controls over financial reporting.

PART II—OTHER INFORMATION

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

10

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/ T. L. KIRCHNER
Date:  April 28, 2015	Name:  T.L. Kirchner
	Title:  Director/President
	(Principal Executive Officer)

	By:  /s/ Michael W. Eller
Date:  April 28, 2015	Name:  Michael W. Eller
	Title:  Vice President
	(Principal Accounting Officer)

11

EX-31

Exhibit 31.1

CERTIFICATION

I, T.L. Kirchner, 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.

Date: April 28, 2015

By:   /s/ T. L. Kirchner                            

T.L. Kirchner, President and

Chief Executive Officer

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.

EX-31

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.

Date: April 28, 2015

By:   /s/     Michael Eller                                  

Vice President

Principal Accounting  Officer

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.

EX-32

Exhibit 32.1 – CEO Certification

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 March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Tom L. Kirchner, 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/ T. L. KIRCHNER                       

Tom L. Kirchner

Chief Executive Officer

Date: April 28, 2015

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.

EX-32

Exhibit 32.2 – CFO Certification

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 March 31, 2015 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

Principal Accounting Officer

Date: April 28, 2015

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.

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Note 8 - Segment Reporting (Details)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Details
Domestic percent of revenue	68.00%	81.00%
Foreign percent of revenue	32.00%	19.00%
Entity-Wide Revenue, Major Customer, Percentage	10.00%	10.00%

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Note 4 - Stock Options

3 Months Ended

Mar. 31, 2015

Notes

Note 4 - Stock Options

NOTE 4 - STOCK OPTIONS

As of March 31, 2015, the Company had outstanding stock options which have been granted periodically to individual employees and directors with no less than three years of continuous tenure with the Company.  The Board of Directors did not issue stock options during the first quarter ended March 31, 2015. The Board of Directors will consider issuing stock options later in 2015.

The fair value of options granted in 2014 is estimated on the date of the grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in:

	2014
Dividend yield	0.00%
Expected volatility	75%
Risk-free interest rate	0.68%
Expected term (in years)	3
Fair Value per Option Granted	$0.20

The Company uses historical data to estimate option exercise rates.  The option exercise rate for option grants in 2014 was 6.00%. All options vested immediately upon issue.

A summary of option activity during the quarter ended March 31, 2015 is as follows:

	Number Outstanding	Weighted-Average Exercise Price Per Share	Weighted-Average Remaining Life (Years)	Approximate Aggregate Intrinsic Value
Outstanding and Exercisable at December 31, 2014	440,000	$0.36
Granted	-	-
Expired	(145,000)	0.37
Outstanding and Exercisable at March 31, 2015	295,000	$0.36	1.67	$14,750

A summary of option activity during the quarter ended March 31, 2014 is as follows:

	Number Outstanding	Weighted-Average Exercise Price Per Share	Weighted-Average Remaining Life (Years)	Approximate Aggregate Intrinsic Value
Outstanding and Exercisable at December 31, 2013	525,000	$         0.38
Granted	175,000	0.44
Expired	(185,000)	0.44
Outstanding and Exercisable at March 31, 2014	515,000	$         0.40	2.33	$      10,300

XML

Note 3 - Income (loss) Per Share

3 Months Ended

Mar. 31, 2015

Notes

Note 3 - Income (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 common shares 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 March 31, 2015 the Company had 295,000 outstanding stock options that could have a dilutive effect on future periods’ income.  However, diluted earnings per share are not presented because their effect would be antidilutive due to Company’s losses.

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ELECTRONIC SYSTEMS TECHNOLOGY, INC. BALANCE SHEETS (Interim period unaudited) (USD $)	Mar. 31, 2015		Dec. 31, 2014
Current assets
Cash and cash equivalents	$ 545,767		$ 637,086
Certificates of deposit investments	1,402,625		1,402,625
Accounts receivable	109,163		94,864
Inventories	666,478		719,137
Accrued interest receivable	2,944		3,109
Prepaid insurance	5,011		5,505
Prepaid expenses	22,776		8,919
Deferred income tax asset, current	38,700		49,600
Total current assets	2,793,464		2,920,845
Property and equipment, net of depreciation	96,557		91,907
Deferred income tax asset	34,601		31,301
Total assets	2,924,622		3,044,053
Current liabilities
Accounts payable	14,716		14,573
Accrued liabilities	46,690		43,045
Refundable deposits	80		26,247
Total current liabilities	61,486		83,865
Total liabilities	61,486		83,865
COMMITMENTS and CONTINGENCIES	0	[1]	0	[1]
Stockholders' equity
Common stock, $0.001 par value 50,000,000 shares authorized 5,158,667 shares issued and outstanding	5,159		5,159
Additional paid-in capital	1,007,861		1,007,861
Retained earnings	1,850,116		1,947,168
Total stockholders' equity	2,863,136		2,960,188
Total liabilities and stockholders' equity	$ 2,924,622		$ 3,044,053

[1] Notes 5 and 7

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Note 1 - Basis of Presentation

3 Months Ended

Mar. 31, 2015

Notes

Note 1 - Basis of Presentation

NOTE 1 - BASIS OF PRESENTATION

The financial statements of Electronic Systems Technology, Inc. (the "Company") presented in this Form 10Q are unaudited and reflect, in the opinion of Management, a fair presentation of operations for the three month periods ended March 31, 2015 and March 31, 2014.  All adjustments of a normal recurring nature and necessary for a fair presentation of the results for the periods covered have been made. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the applicable rules and regulations of the Securities and Exchange Commission. In preparation of the financial statements, certain amounts and balances have been reformatted from previously filed reports to conform to the format of this quarterly presentation.  These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Form 10K for the year ended December 31, 2014 as filed with Securities and Exchange Commission.

The results of operations for the three-month period ended March 31, 2015 are not necessarily indicative of the results expected for the full fiscal year or for any other fiscal period.

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Note 4 - Stock Options: Schedule of Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Grant Date Intrinsic Value (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014	Dec. 31, 2013
Details
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	295,000	515,000	440,000	525,000
Weighted Average Exercise Price, Outstanding	$ 0.36	$ 0.40	$ 0.36	$ 0.38
Share-based Compensation Arrangement by Share-based Payment Award, Options, Expirations in Period	(145,000)	(185,000)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period, Weighted Average Exercise Price	$ 0.37	$ 0.44
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term	1 year 8 months 1 day	2 years 3 months 29 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Aggregate Intrinsic Value	$ 14,750	$ 10,300
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures		175,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value		$ 0.44

XML

Note 6 - Related Party Transactions (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Details
Related Party Transaction, Amounts of Transaction	$ 1,674	$ 19,156
Accounts Payable, Related Parties, Current	0	180
Noninterest Expense Directors Fees	1,200
Fees per director	$ 300

XML

Note 2 - Inventories

3 Months Ended

Mar. 31, 2015

Notes

Note 2 - Inventories

NOTE 2 - INVENTORIES

Inventories are stated at lower of direct cost or market with cost determined using the FIFO (first in, first out) method.  Inventories consist of the following:

	March 31 2015	December 31 2014
Parts	$       232,007	$       283,375
Work in progress	247,158	276,853
Finished goods	187,312	158,909
Total inventory	$       666,478	$       719,137

XML

Statement of Financial Position - Parenthetical (USD $)	Mar. 31, 2015	Dec. 31, 2014
Statement of financial position
Common Stock, Par Value	$ 0.001	$ 0.001
Common Stock, Shares Authorized	50,000,000	50,000,000
Common Stock, Shares Issued	5,158,667	5,158,667
Common Stock, Shares Outstanding	5,158,667	5,158,667

XML

Note 8 - Segment Reporting: Schedule of Segment Reporting Information, by Segment (Tables)

3 Months Ended

Mar. 31, 2015

Tables/Schedules

Schedule of Segment Reporting Information, by Segment

Quarter ended March 31, 2015	Domestic	Foreign	Total
Total sales	$       306,117	$     143,755	$   449,872
Total other income	2,757	-	2,757
Earnings (loss) before tax	(145,560)	56,109	(89,451)
Depreciation/amortization	8,330	-	8,330
Identifiable assets	2,898,111	26,711	2,924,622
Net capital expenditures	12,980		12,980
Quarter ended March 31, 2014
Total sales	$       405,170	$      94,654	$   499,824
Total other income	2,549	-	2,549
Earnings (loss) before tax	(27,280)	21,090	(6,190)
Depreciation/amortization	2,531	-	2,531
Identifiable assets	3,110,758	6,398	3,117,156
Net capital expenditures	10,870		10,870

XML

Document and Entity Information	3 Months Ended
	Mar. 31, 2015	Apr. 22, 2015
Document and Entity Information
Entity Registrant Name	Electronic Systems Technology Inc
Document Type	10-Q
Document Period End Date	Mar. 31, 2015
Amendment Flag	false
Entity Central Index Key	0000752294
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		5,158,667
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1

XML

Note 2 - Inventories: Schedule of Inventory, Current (Details) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Details
Inventory, Parts and Components, Net of Reserves	$ 232,007	$ 283,375
Inventory, Work in Process, Gross	247,158	276,853
Inventory, Finished Goods, Gross	187,312	158,909
Inventories	$ 666,478	$ 719,137

XML

ELECTRONIC SYSTEMS TECHNOLOGY, INC. STATEMENTS OF OPERATIONS (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Income statement
PRODUCT SALES, net	$ 428,026	$ 448,809
SITE SUPPORT	21,846	51,015
COST OF SALES and SITE SUPPORT	(201,597)	(227,942)
GROSS PROFIT	248,275	271,882
OPERATING EXPENSES
General and administrative	100,700	86,200
Research and development	73,122	58,849
Marketing	138,413	108,240
Customer service	28,248	27,332
Total operating expenses	340,483	280,621
OPERATING LOSS	(92,208)	(8,739)
OTHER INCOME
Interest income	2,757	2,549
Total other income	2,757	2,549
NET LOSS BEFORE INCOME TAX	(89,451)	(6,190)
Benefit (provision) for income tax	(7,600)	240
NET LOSS	$ (97,051)	$ (5,950)
Basic and diluted loss per share	$ (0.02)	$ 0
Weighted average shares used in computing loss per share Basic and diluted	5,158,667	5,158,667

XML

Note 7 - Commitments and Contingencies

3 Months Ended

Mar. 31, 2015

Notes

Note 7 - Commitments and Contingencies

NOTE 7 - COMMITMENTS and CONTINGENCIES

In 2009, the Company entered into a licensing agreement with Wi-LAN, Inc. (a Canadian Company), to pay royalties for certain licensing rights and liability releases.  Such amounts are not considered significant by the Company. 

XML

Note 6 - Related Party Transactions

3 Months Ended

Mar. 31, 2015

Notes

Note 6 - Related Party Transactions

NOTE 6 - RELATED PARTY TRANSACTIONS

For the quarters ended March 31, 2015 and March 31, 2014, services in the amount of $1,674 and $19,156, respectively, were contracted with Manufacturing Services, Inc. (MSI), of which the current owner, Michael S. Brown is a former Director of the Company and son of MSI’s former owner, Melvin H. Brown, who is currently a member of the Company’s Board of Directors. The Company had accounts payable to Manufacturing Services, Inc. at March 31, 2015 and March 31, 2014 of $0 and $180, respectively.  

During the quarter ended March 31, 2015 the Company accrued total directors’ fees of $1,200, or $300 per director for board meetings attended.

XML

Note 5 - Leases (Details) (USD $)	3 Months Ended
	Mar. 31, 2015
Details
Monthy lease expense	$ 5,251

XML

Note 3 - Income (loss) Per Share (Details)	3 Months Ended
	Mar. 31, 2015
Details
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	295,000

XML

Note 4 - Stock Options: Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value (Tables)

3 Months Ended

Mar. 31, 2015

Tables/Schedules

Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value

	2014
Dividend yield	0.00%
Expected volatility	75%
Risk-free interest rate	0.68%
Expected term (in years)	3
Fair Value per Option Granted	$0.20

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Note 8 - Segment Reporting

3 Months Ended

Mar. 31, 2015

Notes

Note 8 - Segment Reporting

NOTE 8 - SEGMENT REPORTING

Segment information is prepared on the same basis that the Company's management reviews financial information for operational decision making purposes.  The Company has two reportable segments, domestic and foreign, based on the geographic location of the customers.  Domestic and foreign segments sell radio modem products, related accessories for radio modem products for industrial automation projects, with the foreign segment selling the Company's products and services outside the United States. 

During the quarters ended March 31, 2015 and 2014, domestic customers represented approximately 68% and 81% of total net revenues, respectively.  In addition during the quarters ended March 31, 2015 and 2014, foreign customers represented 32% and 19% of total net revenues, respectively.  During the quarter ended March 31, 2015, product sales to one customers exceeded more than 10% of the Company's sales revenues.  During the quarter ended March 31, 2014 two customers accounted for more than 10% of the Company’s revenues.

Revenues from foreign countries consisted primarily of revenues from Croatia, Peru, and Canada.  

Summary financial information for the two reportable segments for the first quarter of 2015 and 2014 is as follows:

Quarter ended March 31, 2015	Domestic	Foreign	Total
Total sales	$       306,117	$     143,755	$   449,872
Total other income	2,757	-	2,757
Earnings (loss) before tax	(145,560)	56,109	(89,451)
Depreciation/amortization	8,330	-	8,330
Identifiable assets	2,898,111	26,711	2,924,622
Net capital expenditures	12,980		12,980
Quarter ended March 31, 2014
Total sales	$       405,170	$      94,654	$   499,824
Total other income	2,549	-	2,549
Earnings (loss) before tax	(27,280)	21,090	(6,190)
Depreciation/amortization	2,531	-	2,531
Identifiable assets	3,110,758	6,398	3,117,156
Net capital expenditures	10,870		10,870

XML

Note 2 - Inventories: Schedule of Inventory, Current (Tables)

3 Months Ended

Mar. 31, 2015

Tables/Schedules

Schedule of Inventory, Current

	March 31 2015	December 31 2014
Parts	$       232,007	$       283,375
Work in progress	247,158	276,853
Finished goods	187,312	158,909
Total inventory	$       666,478	$       719,137

XML

Note 4 - Stock Options: Schedule of Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Grant Date Intrinsic Value (Tables)

3 Months Ended

Mar. 31, 2015

Mar. 31, 2014

Tables/Schedules

Schedule of Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Grant Date Intrinsic Value

	Number Outstanding	Weighted-Average Exercise Price Per Share	Weighted-Average Remaining Life (Years)	Approximate Aggregate Intrinsic Value
Outstanding and Exercisable at December 31, 2014	440,000	$0.36
Granted	-	-
Expired	(145,000)	0.37
Outstanding and Exercisable at March 31, 2015	295,000	$0.36	1.67	$14,750

	Number Outstanding	Weighted-Average Exercise Price Per Share	Weighted-Average Remaining Life (Years)	Approximate Aggregate Intrinsic Value
Outstanding and Exercisable at December 31, 2013	525,000	$         0.38
Granted	175,000	0.44
Expired	(185,000)	0.44
Outstanding and Exercisable at March 31, 2014	515,000	$         0.40	2.33	$      10,300

XML

Note 4 - Stock Options (Details)	3 Months Ended
	Mar. 31, 2015
Details
Option exercise rate	6.00

XML

Note 8 - Segment Reporting: Schedule of Segment Reporting Information, by Segment (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Segment reporting total sales net	$ 449,872	$ 499,824
Segment reporting other income	2,757	2,549
Segment reporting income loss before tax	(89,451)	(6,190)
Segment reporting depreciation	8,330	2,531
Segment reporting identifiable assets	2,924,622	3,117,156
Segment reporting net capital expenditures	12,980	10,870
Operating Segments
Segment reporting total sales net	306,117	405,170
Segment reporting other income	2,757	2,549
Segment reporting income loss before tax	(145,560)	(27,280)
Segment reporting depreciation	8,330	2,531
Segment reporting identifiable assets	2,898,111	3,110,758
Segment reporting net capital expenditures	12,980	10,870
Other Segments
Segment reporting total sales net	143,755	94,654
Segment reporting income loss before tax	56,109	21,090
Segment reporting identifiable assets	$ 26,711	$ 6,398

XML

ELECTRONIC SYSTEMS TECHNOLOGY, INC. STATEMENTS OF CASH FLOWS (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (97,051)	$ (5,950)
Noncash items included in loss:
Depreciation	8,330	2,531
Deferred income taxes	7,600	500
Share based compensation		2,245
Changes in operating assets and liabilities:
Accounts receivable, net	(14,299)	(126,829)
Inventories	52,659	(94,972)
Accrued interest receivable	165	(915)
Prepaid insurance		4,506
Prepaid expenses	(13,363)	10,101
Deposits		11,408
Accounts payable	143	945
Refundable deposits	(26,167)	(2,970)
Accrued liabilities	3,644	(9,359)
NET CASH USED IN OPERATING ACTIVITIES	(78,339)	(208,759)
CASH FLOWS USED IN INVESTING ACTIVITIES:
Certificates of deposit redeemed		5,000
Purchase of equipment	(12,980)	(10,870)
NET CASH USED IN INVESTING ACTIVITIES	(12,980)	(5,870)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(91,319)	(214,629)
Cash and cash equivalents at beginning of period	637,086	896,581
Cash and cash equivalents at end of period	545,767	681,952
Cash and cash equivalents:
Cash	227,890	50,158
Cash equivalents	317,877	631,794
Total cash and cash equivalents	$ 545,767	$ 681,952

XML

Note 5 - Leases

3 Months Ended

Mar. 31, 2015

Notes

Note 5 - Leases

NOTE 5 - LEASES

The Company leases its facilities from a port authority for $5,251 per month for three years, expiring in September 2017, with annual increases based upon the Consumer Price Index.

XML

Note 4 - Stock Options: Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value (Details) (USD $)	12 Months Ended
	Dec. 31, 2014
Details
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate	0.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate	75.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate	0.68%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term	3 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Grant Date Intrinsic Value	$ 0.20