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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

 

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the fiscal year ended: December 31, 2023
   
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the transition period from                      to                     

 

Commission file number: 000-27793

 

ELECTRONIC SYSTEMS TECHNOLOGY INC.

(Exact name of registrant as specified in its charter)

 

Washington   91-1238077
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)
     
415 N. Roosevelt St., STE B1, Kennewick, Washington   99336
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (509) 735-9092

 

Securities registered under Section 12(b) of the Exchange Act:

 

Title of each class Trading
Symbol(s)		 Name of each exchange on which registered
     
None N/A N/A

 

Securities registered under Section 12(g) of the Exchange Act:
Common
(Title of Class)

 

Indicate by checkmark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

 

Indicate by checkmark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 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 filing requirements for the past 90 days. Yes x No o

 

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 o

 

 

 
 

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

 

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

 

Large accelerated filer o   Accelerated filer o
Non-accelerated Filer x   Smaller reporting company x
Emerging Growth Company o      

 

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. o

 

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes o No x

 

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. Yes o No x

 

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant period pursuant to §240.10D-1(b). Yes o No x

 

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

 

The aggregate market value of the registrant’s Common Stock held by non-affiliates was $764,151, based on the reported last sale price of Common Stock on June 30, 2023, which was the last business day of the registrant’s most recently completed second fiscal quarter. For purposes of this computation, all executive officers and Directors were deemed affiliates.

 

The number of shares outstanding of the registrant’s Common Stock as of February 6, 2024: 4,946,502 shares.

 

 

 
 

 

 

ELECTRONIC SYSTEMS TECHNOLOGY INC.

FORM 10-K

 

Table of Contents

 

PART I 4
Item 1. Business. 4
Item 1A. Risk Factors. 7
Item 1B. Unresolved Staff Comments.

8

Item 1C. Cybersecurity. 9
Item 2. Properties. 10
Item 3. Legal Proceedings. 10
Item 4. Mine Safety Disclosure. 10
   
PART II 10
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 10
Item 6.[Reserved]. 10
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 10
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 12
Item 8. Financial Statements and Supplementary Data. 12
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure. 29
Item 9A. Controls and Procedures. 29
Item 9B. Other Information. 29
   
PART III 30
Item 10. Directors, Executive Officers and Corporate Governance. 30
Item 11. Executive Compensation. 32
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 33
Item 13. Certain Relationships and Related Transactions, and Director Independence. 35
Item 14. Principal Accounting Fees and Services. 36
   
PART IV 37
Item 15. Exhibits and Financial Statement Schedules. 37
   
SIGNATURES 38

 

 

3 
 

 

PART I

 

FORWARD LOOKING STATEMENTS:

 

This Annual Report on Form 10-K and the exhibits attached hereto contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements concern the Company’s anticipated results and developments in the Company’s operations in future periods, planned exploration and development of its properties, plans related to its business and other matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.

 

Any statement that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always using words or phrases such as “believes”, “expects” or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “estimates”, or “intends”, or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements.

 

The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as required by law. The Company advises readers to carefully review the reports and documents filed from time to time with the Securities and Exchange Commission (the “SEC”), particularly the Company’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

 

Management’s Discussion and Analysis is intended to be read in conjunction with the Company’s financial statements and the integral notes (“Notes”) thereto for the fiscal year ended December 31, 2023. The following statements may be forward-looking in nature and actual results may differ materially. All dollar amounts in this Annual Report are expressed in U.S. dollars, unless otherwise indicated.

 

Item 1. Business.

 

For over 40 years, Electronic Systems Technology, Inc. (“EST”, “us”, “we”, “our” or the “Company”) has specialized in the development and manufacturing of digital data (non-voice) radio transceivers for use in industrial wireless networking applications. With reliance on wireless communication in the modern world, the global modernization of industrial control systems now requires the benefits gained by use of wireless technology. EST designs, manufactures, develops and produces these specialized, hardened products uniquely designed to operate and survive in these difficult environments in which these systems must perform.

 

The Company’s ESTeem® line of products provide innovative communication solutions for harsh environment applications not served or that are underutilized by conventional, commercial grade communication systems. Our products are part of the ESTeem® Industrial Wireless Solutions for commercial, industrial, and government arenas both domestically and internationally. We market through direct sales, sales representatives, resellers, and system integrators.

 

EST was incorporated in the State of Washington in February 1984, and was granted a United States Patent for the “Wireless Computer Modem” in May 1987, and Canadian patent in October 1988. We registered and commenced building brand recognition on the trade name of “ESTeem® Wireless Modems” in 2007. After reviewing for marketability and profitability, our strategy is to provide product improvements and enhancements that incorporate technological developments in response to customer needs and market opportunities arising from changes in FCC regulations or technological developments.

 

Development efforts in 2023 were focused primarily on software enhancements and hardware maintenance for the ESTeem® Horizon Series. These next generation industrial wireless products will improve our networking capability with higher data rates, improved security, improved support features and updates to the latest wireless standards.

 

In an effort to maintain and expand our customer base in the industrial control marketplace, we team with major automation hardware vendors such as Rockwell Automation. Our 30-year relationship with Rockwell Automation’s Technology Partner Program delivers significant benefits via increased exposure to markets that would not otherwise be available to us. Rockwell Automation has the largest market share in the United States and is a major entity in the world-wide automation and controls marketplace.

 

 

4 
 

PRODUCTS AND MARKETS

 

ESTeem® industrial wireless products provide communication links between computer networks, network enabled devices and mobile devices without cables. The widespread use of networked computer systems in business, industry and public service and the adoption of mobile devices in all aspects of modern life has created an environment where the wireless network is no longer a convenience but a necessity. As wireless networking proliferates through the modernization of the industrial sector the need for our products, which are specifically designed for rigors of operation in harsh environments, is increasing dramatically. Wireless networks are the backbone connections to the Internet for cloud-based services such as the Internet of Things (“IoT”) and Industrial Internet of Things (“IIoT”).

 

All of the ESTeem® models come with industry standard Ethernet communication ports and legacy serial ports to provide the broadest range of connections for both new and legacy hardware. The combined features such as AES 128 or AES 256 security encryption, self-healing repeaters, mesh networking, long range operation and outdoor weatherproof cases make the ESTeem® products unique in our market space.

 

PRODUCT APPLICATIONS

 

Major applications and industries in which ESTeem® products are being utilized are as follows:

 

Water/Wastewater Mining
Oil/Gas Industrial Automation

 

PRODUCT LINES

 

We manufacture nine (9) models of the ESTeem® industrial wireless modems that operate in frequency from 150 MHz to 5.8 GHz. A wireless modem is a hardware device for sending and receiving data over a radio carrier and is the foundation of our industrial wireless solution. Each model will fit best in a specific application based upon several factors such as distance, required data rate and Federal Communication Commission (“FCC”) licensing requirements. Each wireless network is discussed in detail with the end customer to determine the best overall solution for their application. No single model or frequency band can solve all applications and having a diverse product selection is critical for expanding our customer base. The following is a summary of our product offering.

 

ESTeem
Model		 Type Frequency
(MHz)		 RF Power
(Watts)		 RF Data Rate LOS Range
(Miles)		 Interface
210M Narrow Band Licensed 150 to 174 2 64.8 Kbps 15 Ethernet/RS-232
195M Narrow Band Licensed 150 to 174 4 12.5 Kbps 15 Ethernet/RS-232/422/485
195C Narrow Band Licensed 450 to 470 4 12.5 Kbps 15 Ethernet/RS-232/422/485
195H Narrow Band Licensed 217 to 220 2 50 Kbps 15 Ethernet/RS-232/422/485
Horizon900 Unlicensed 900 1 72.2 Mbps 10 Ethernet/ RS-232
Horizon2.4MIMO Unlicensed 2400 .5 (Dual Stream) 300 Mbps 5-7 Ethernet/ RS-232
Horizon4.9 Licensed 4900 1 72.2 Mbps 5-7 Ethernet/ RS-232
Horizon5.8 Unlicensed 5800 .250 (Dual Stream) 300 Mbps 5-7 Ethernet/ RS-232
Edge900 Unlicensed 900 .25 1 Mbps 10 Ethernet/ RS-232

 

ADDITIONAL PRODUCTS AND SERVICES

 

Various accessories to support the above products, e.g., antennas, power supplies and cable assemblies, are purchased from other manufacturers and resold by us to support the application of our industrial wireless modems for repairs and upgrades. To assist in the application of ESTeem industrial wireless modems, we also offer professional services, including site survey testing, system start-up, and custom engineering.

 

 

5 
 

RESEARCH AND DEVELOPMENT AND NEW PRODUCTS

 

Our products compete in an environment of rapidly changing technology which results in the necessity for continuous updates and enhancements. Research and development expenditures for new product development and improvements of existing products for 2023 and 2022 were $121,896 and $163,189 respectively. None of our research and development expenses were paid directly by any of our customers. We contract with third parties for software development and hardware design as needed. Development efforts during 2023 were focused primarily on software enhancements for the ESTeem® Horizon Series and the redesign of the Horizon900. Research and development expenditures will continue, in order to meet our customers’ evolving needs.

 

MARKETING, CUSTOMERS AND SUPPORT

 

The majority of our products sold during 2023 were through the reselling efforts of non-exclusive, non-stocking distributors and resellers, and the remainder our sales were direct to end-users. Orders are generally placed on an “as needed basis”. Shipping of products is usually completed 1 to 15 working days after receipt of a customer order, with the exception of ongoing scheduled projects and custom designed equipment for specific applications. Our sales order backlog at year end was $55,636.

 

We advertise in trade publications and attend trade shows specifically targeting industrial automation systems. We provide support personnel and maintain an internet web site to provide access to product and technical information for customers. We provide technical support and service for our products and installations through phone support, field technicians and internet sources. High quality customer support is vital to differentiate ourselves in our marketplace. We intend to maintain this high level of customer support by investing in our customer service programs.

 

COMPETITION

 

All of our markets are highly competitive as there are approximately twenty major automation hardware manufacturers worldwide. Listed below are major competitors in the markets in which we compete:

 

Major Market Major Competitors
Industrial Automation FreeWave Technologies, GE/Microwave Data Systems, Data-Linc and Cal Amp
 
Computer networking, inter and intra building, and remote internet access Cisco, Digital Wireless, D-link, Linksys, P-Com and Proxim

 

 

We believe our products compete favorably based on performance, price, and adaptability of the products to a wide range of applications, as well as world class service and support.

 

PATENTS, TRADEMARKS, AND PROPRIETARY INFORMATION

 

To protect the Company against unauthorized disclosure of proprietary information belonging to the Company, all employees, dealers, distributors, original equipment manufacturers, sales representatives and other persons having access to confidential information regarding Company products or technology are bound by nondisclosure agreements. Rights to the ESTeem® Wireless Modems, trademark were renewed in 2014. The initial patents granted in 1987 and 1988 have expired and we currently have no patents on any of our products.

 

GOVERNMENT REGULATION

 

For operation in the United States, the ESTeem® industrial wireless products require FCC type acceptance which is granted for devices demonstrating operation within mandated and tested performance criteria. All of our products requiring FCC type acceptance have been granted such acceptance, and all except the Horizon4.9 have been granted such acceptance in Canada.

 

The ESTeem® industrial wireless products that operate in the FCC licensed frequency band require licensing under Part 90 of the FCC Rules and Regulations which must be applied for by the end user. We provide information to customers to assist in the application for FCC consumer licenses, although we cannot guarantee FCC licenses in a given frequency spectrum for a particular application will be received.

While there can be no assurance that future FCC regulations will not have material adverse effects on our operations, we are unaware of any such existing or proposed FCC regulations at this time.

 

 

6 
 

SOURCE OF SUPPLY AND MANUFACTURING

 

Components are purchased through a number of distributors and key component suppliers, such as Hitachi, Motorola, and others, some of which have long lead times. Although these components could be replaced or substituted by other products, if necessary, a significant interruption or delay in their availability could have a material adverse effect on our business.

 

Approximately 45% of the Company’s inventory at December 31, 2023, consisted of parts having lead times ranging from 12 to 30 weeks. Some parts are maintained at high levels to assure availability to meet production requirements, thus, accounting for a significant portion of the Company’s inventory value. Based on past experience with component availability, distributor relationships, and inventory levels, we do not foresee shortages of materials. However, developments in the electronic component marketplace, which are also used in cellular phones, personal technology devices and other technology devices, have the potential of creating negative availability and delivery issues for components used by us. Although we have been able to procure parts on a timely basis as of the date of this report, however procurement cannot be guaranteed in the future. If shortages were to occur, material interruption of production and product delivery to customers would result.

 

The Company contracts with multiple companies for manufacturing of sub-assemblies and some engineering assistance services as needed. By contracting with these companies, the Company is able to avoid staff fluctuations associated with operating its own manufacturing and reduced capital investments in specialized manufacturing equipment. We review the costs for the services provided by these companies and regularly submit Requests for Quotes (RFQ) to multiple suppliers of these operations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and “Financial Statements”.

 

ACCESS TO COMPANY INFORMATION

 

The Registrant does not issue annual or quarterly reports to security holders other than the annual Form 10-K and quarterly Forms 10-Q as electronically filed with the Securities and Exchange Commission (“SEC”) and available for viewing at www.sec.gov. Electronically filed reports may be accessed at www.sec.gov or via the Company’s website at www.esteem.com. We make available on our website such reports as soon as reasonably practicable after they are filed with the SEC.

 

EMPLOYEES

 

As of December 31, 2023, we employ 8 persons on a full-time basis (5 in sales/marketing, 2 in engineering/manufacturing, and 1 in finance and administration). The Company’s operations are dependent upon key members of its engineering and management personnel, which, if lost to the Company, could have a material adverse effect on our business.

 

Item 1A. Risk Factors.

 

Our Common Stock value and our business, results of operations, cash flows and financial condition are subject to various risks, including, but not limited to those set forth below. If any of the following risks actually occurs, our Common Stock, business, results of operations, cash flows and financial condition could be materially adversely affected. These risk factors should be carefully considered together with the other information in this Annual Report on Form 10-K, including the risks and uncertainties described under the heading “Forward-Looking Statements.” This list is not exhaustive of the factors that may affect the Company’s forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further under the sections titled “Risk Factors and Uncertainties”, “Description of Business” and “Management’s Discussion and Analysis” of this Annual Report. If any of the events described in the risk factors below actually occur, our business, financial condition or results of operations could suffer significantly. In such case, the value of your investment could decline, and you may lose all or part of the money you paid to buy our Common Stock. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:

 

We cannot predict whether we will be able to sustain revenue growth, profitability or positive cash flow. Our products are sold in highly competitive markets. Our revenues and operating results may be negatively affected by technology changes in our markets, economic conditions in our markets, and the level of competition in our markets.

 

Our marketing efforts may be unsuccessful due to limited marketing and sales capabilities. Our limited national advertising and sales coverage may result in our markets not being fully penetrated. The lack of market penetration may result in an adverse effect on our revenues. We must continue to develop and maintain appropriate marketing, sales, technical, customer service and distribution capabilities, or enter into agreements with third parties to provide these services, to successfully market our products. A failure to develop these capabilities or obtain third-party agreements could adversely affect us.

 

 

7 
 

We may be unable to produce products for sale if we are unable to obtain component materials. Our products require highly specialized components, which are subject to rapid obsolescence, limited availability and design change. Many of the components in our products are also used in cellular phone, pagers and other technology devices. If we cannot obtain material to produce products, our sales revenues will be negatively impacted.

 

Our success depends on our ability to retain key management personnel. The success of our Company depends in large part on our ability to attract and retain highly qualified management, administrative, manufacturing, sales, and research and development personnel. Due to the specialized nature of our business, it may be difficult to locate and hire qualified personnel. Our success is significantly dependent on the performance and continued service of key members of Management, such as Chief Executive Officer, Dan Tolley and Chief Financial Officer Michael Eller, and certain other key employees. If the services of any members of Management become unavailable for any reason, our business and prospects could be adversely affected. Although we have been successful in retaining highly capable and qualified management in the past, there can be no assurance that we will be able to do so in the future.

 

We may be adversely affected by government regulation. The Federal Communication Commission (FCC) governs use of the products we sell. If the FCC were to implement rules detrimental to our products and the markets in which they are offered, our operations would be negatively impacted.

 

Rapid technological changes in our industry may adversely affect us if we do not keep pace with advancing technology. The wireless communication market is characterized by rapidly advancing technology. Our success depends on our ability to keep pace with advancing technology, processes and standards, such as cellular telephone based technology. We intend to continue to develop and enhance our products to meet perceived market opportunities. However, our development efforts may be rendered obsolete by research efforts and technological advances made by others, and devices other than those we currently produce may prove more advantageous.

 

 

The market for our Common Stock is limited and our shareholders may have difficulty reselling their shares when desired or at attractive market prices. Our stock price and our listing may make it more difficult for our shareholders to resell shares when desired or at attractive prices. Our Company stock trades on the “over-the-counter” market and is listed on OTCQB tier of the OTC Markets. Our 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 1B. Unresolved Staff Comments.

 

None.

 

8 
 

 

Item 1C. Cybersecurity.

 

The Company employs several strategies for assessing, identifying, and managing material risks from cybersecurity threats. Components of this strategy include the use of industry standard traffic monitoring tools, training users to detect, report, and prevent unusual behavior.

We employ continuous monitoring mechanisms to detect and respond to cybersecurity threats promptly. Regular reports are generated as needed for management and the board, providing insights into our cybersecurity posture, incidents, and remediation efforts. We conduct regular assessments and testing to ensure the effectiveness of these controls, especially those related to the protection of financial information. The implementation and management of these processes are integrated with the Company’s overall operational risk management processes that seeks to limit our exposure to unnecessary risks across our operations.

Our cybersecurity program is overseen by the Chief Financial Officer (CFO), who reports directly to the Chief Executive Officer (CEO) and updates the Board of Directors (BOD) on cyber security matters.

Our employees receive regular training on cybersecurity best practices, emphasizing the protection of financial information. We foster a culture of cybersecurity awareness and responsibility throughout the organization. 

We maintain a comprehensive incident response plan that outlines the steps to be taken in the event of a cybersecurity incident. This plan includes procedures for promptly reporting material incidents to the SEC, as required, and for communicating with affected stakeholders. Upon discovery of a cybersecurity incident, the identifying party immediately notifies the Company's CFO. The CFO activates the incident response plan to include the following:

•Gather preliminary information about the cybersecurity incident.
•CFO notifies the CEO and the Board of Directors of the cybersecurity threat.
•The CFO allocates resources for disclosure if determined to be a material cybersecurity event.
•The CFO consults with cybersecurity consultants and other involved parties to identify the undesirable effects of the cybersecurity incident.
•The CFO develops a recommendation for determination of materiality.
•If disclosure is required, the material incident disclosure plan is executed by the CFO.

 

 

9 
 

 

Item 2. Properties.

 

We do not own any real property, plants, mines, or any other materially important physical properties. The Company’s administrative offices, inventory and laboratories are located in leased facilities at 415 N. Roosevelt Street, STE B1, Kennewick, Washington. The Company leases approximately 5,270 square feet of office and laboratory space by a lease agreement with the Port of Kennewick in Kennewick, Washington. As of December 31, 2023, the total monthly lease cost, including tax, is $3,925. The lease initially covered a period of two years, expiring September 2024.

 

We also own miscellaneous assets, such as computer equipment, laboratory equipment, and furnishings. We maintain insurance in such amounts and covering such losses, contingencies and occurrences deemed adequate to protect our property. Insurance coverage includes a comprehensive liability policy covering legal liability for bodily injury or death of persons, and for property owned by, or under our control, as well as damage to the property of others. We also maintain fidelity insurance which provides coverage to the Company in the event of employee dishonesty.

 

Item 3. Legal Proceedings.

 

EST is not a party to any material legal proceedings, and, to management’s knowledge, no such proceedings are threatened or contemplated.

 

Item 4. Mine Safety Disclosure.

 

Not Applicable

PART II
 

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 

The closing price for our Common Stock (ELST) on the OTCQB was $0.28 on February 27 2024.

 

There were 329 holders of record of our Common Stock as of February 6, 2024.

 

Our stock transfer agent is EQ Shareowner Services, 320 Cherry Creek Drive South, Suite 435, Denver CO 80209.

 

The Company does not maintain any form of Equity Compensation Plan.

 

Item 6. [Reserved]

 

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Management’s discussion and analysis is provided as supplement to, and is intended to be read in conjunction with, the Company’s audited financial statements and the accompanying integral notes (“Notes”) thereto. The following statements may be forward-looking in nature and actual results may differ materially.

 

RESULTS OF OPERATIONS

 

GENERAL: We specialize in the manufacturing and development of data radio products. The Company offers product lines which provide innovative communication solutions for applications not served by existing conventional communication systems. We offer product lines in markets for process automation in commercial, industrial and government arenas domestically as well as internationally. We market our products through direct sales, sales representatives, and domestic, as well as foreign, resellers. Operations are sustained solely from revenues received through sales of its products and services.

 

 

10 
 

 

FISCAL YEAR 2023 vs. FISCAL YEAR 2022

 

GROSS REVENUES: Total revenues for the fiscal year 2023 were $1,544 821 reflecting a decrease of 19.1% from $1,910,061 in gross revenues for fiscal year 2022. During the year ended December 31, 2023, one customer’s sales accounted for more than 10% of the total sales revenues. The decrease in total revenues is the result of decreased product sales during 2023. Domestic Sales for the fiscal year were $1,488,685 compared to $1,697,261 in 2022. Sales to Foreign Customers for the fiscal year were $56,137 compared to $212,800 in 2022. Product sales decreased to $1,517,921 in 2023, as compared to 2022 sales of $1,881,661, reflecting a decrease of 19.3%.

 

Interest revenues during 2023 increased to $23,151 from 2022 level of $5,217 due to the increased interest rates for the certificates of deposit held by the Company held during 2023. Other income was $0 for the current year compared to $63,000 in 2022 for the employee retention tax credit.

 

As of December 31, 2023, the Company had sales backlog of $55,636. The Company’s customers generally place orders on an “as needed basis”. Shipment of the Company’s products is generally completed within 1 to 15 working days after receipt of customer orders, with the exception of ongoing, scheduled projects, and custom designed equipment for specific customer applications.

 

COST OF SALES: Cost of Sales, as a percentage of net sales, was 48.5% and 46.1% respectively, for 2023 and 2022. Cost of Sales variances are the result of differences in the product mix sold and occurrences of obsolete inventory expense, as well as differences in the price discounting structure for the mix of products sold during the period.

 

INVENTORY: The Company’s year-end inventory values for 2023 and 2022 were as follows:

 

   2023  2022
Parts  $118,472   $172,190 
Work in progress   313,597    336,298 
Finished goods   290,388    216,990 
TOTAL  $722,457   $725,478 

 

The Company’s objective is to maintain inventory levels as low as possible to provide maximum cash liquidity, while at the same time meet production and delivery requirements. Inventory levels were increased during the year due to concerns with regards to supply chain issues with long-lead time items.

 

OPERATING EXPENSES: Operating expenses increased to $979,648 in 2023 from 2022 levels of $950,338. Significant changes in expenses are comprised of the following components: increases in salaries and benefits $30,236, travel $13,116, and professional services $10,827, offset by decrease in services purchased ($45,875).

 

LIQUIDITY AND CAPITAL RESOURCES

 

The Company’s revenues and expenses resulted in a net loss of $160,783 for 2023, a decrease from net income of $146,531 for 2022. At December 31, 2023, the Company’s working capital was $1,578,705 compared with $1,747,472 at December 31, 2022. The Company’s operations rely solely on the income generated from sales. The Company’s major capital resource requirements are payment of employee salaries and benefits and maintaining inventory levels adequate for production. Extended availability for components critical for production of the Company’s products, ranging from 12 to 52 weeks, require the Company to maintain high inventory levels. It is management’s opinion that the Company’s working capital as of December 31, 2023, is adequate for expected resource requirements for the next twelve months. During the twelve-month period ending December 31, 2023, the Company had negative cash flow of ($264,866).

 

The Company’s current asset to current liability ratio at December 31, 2023, was 16.2:1 compared to 8.6:1 at December 31, 2022. The increase in current asset ratio is the result of the Company having decreased accounts payable for year-end 2023 when compared with year-end 2022. The Company’s liquid resources at December 31, 2023, including cash and cash equivalent and certificates of deposits, were $886,252, compared to $1,002,817 at December 31, 2022. The net loss in 2023 resulted in a decrease of liquid resources. . The Company’s accounts receivable at December 31, 2023, was $52,592, compared to $141,394 at December 31, 2022. Management believes that all Company accounts receivable as of December 31, 2023, are collectible and does not have a reserve for uncollectable accounts.

 

 

11 
 

The Company believes the level of risk associated with customer receipts on export sales is minimal. Foreign shipments are made only after payment has been received or on Net 30 day credit terms to established foreign companies with which the Company has distributor relationships. Foreign orders are generally filled as soon as they are received therefore; foreign exchange rate fluctuations do not impact the Company.

 

Inventories at December 31, 2023, were $722,457, reflecting a slight decrease from December 31, 2022, balance of $725,478.

 

We had capital expenditures of $19,768 during 2023, $18,245 of this amount was used to develop an eCommerce website. The Company intends on investing in additional capital equipment as deemed necessary to support development and manufacture of current and future products.

 

As of December 31, 2023, our current liabilities decreased to $103,780 from $228,652 at December 31, 2022. The decrease in current liabilities was impacted by an decrease in accounts payable to $37,355 from $138,996.

 

We had no off-balance sheet arrangements for the year ended December 31, 2023.

 

Inflation had minimal adverse effect on the Company’s operations during 2023. Minimal adverse effect is anticipated during 2024.

 

FORWARD LOOKING STATEMENTS: The above discussion may contain forward-looking statements that involve a number of risks and uncertainties. These factors are more fully described in the “Risk Factors” section of Item 1A of this Annual Report on Form 10-K. 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, rapid advances in competing technologies and risk factors that are listed in the Company’s reports filed with the Securities and Exchange Commission.

 

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

 

Smaller reporting companies are not required to provide the information required by this Item.

 

Item 8. Financial Statements and Supplementary Data.

 

 

12 
 

 

ELECTRONIC SYSTEMS TECHNOLOGY, INC.
DBA ESTEEM WIRELESS MODEMS

 

FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
AND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

TABLE OF CONTENTS

 

  Page
Report of Independent Registered Public Accounting Firm 14
   
Financial Statements:  
   
Balance Sheets 15
   
Statements of Operations 17
   
Statements of Changes in Stockholders’ Equity 17
   
Statements of Cash Flows 19
   
Notes to Financial Statements 19-27
   
Supplemental Schedule 28

 

 

13 
 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Stockholders
Electronic Systems Technology, Inc.

 

Opinion on the Financial Statements

 

We have audited the accompanying balance sheets of Electronic Systems Technology, Inc. (“the Company”) as of December 31, 2023 and 2022, and the related statements of operations, changes in stockholders’ equity and cash flows for the years then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

Critical Audit Matters

 

Critical audit matters are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

 

Supplemental Information

 

The supplemental schedule of operating expenses for the years ended December 31, 2023 and 2022 (“the supplemental information”) has been subjected to audit procedures performed in conjunction with the audit of the Company’s financial statements. The supplemental information is the responsibility of the Company’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with accounting principles generally accepted in the United States of America. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole.

  

/s/ Assure CPA, LLC.

 

We have served as the Company’s auditor since 2012.

 

Spokane, Washington

Firm ID is 444

March 8, 2024

 

14 
 


ELECTRONIC SYSTEMS TECHNOLOGY, INC. 

DBA ESTEEM WIRELESS MODEMS 

 

BALANCE SHEETS 

DECEMBER 31, 2023 AND 2022 

 

           
   2023  2022
ASSETS          
CURRENT ASSETS          
Cash and cash equivalents  $486,252   $751,118 
Certificates of deposit   400,000    251,699 
Accounts receivable - net   52,592    141,394 
Inventories - net   722,457    725,478 
Prepaid expenses   19,278    42,627 
Employee retention tax credit receivable (Note 10)   —      63,000 
Accrued interest receivable   1,906    808 
           
Total Current Assets   1,682,485    1,976,124 
           
PROPERTY AND EQUIPMENT – NET   18,255    914 
           
Right of use – asset, net of amortization (NOTE 8)   30,298    69,419 
           
TOTAL ASSETS  $1,731,038   $2,046,457 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
CURRENT LIABILITIES          
Accounts payable  $37,355   $138,996 
Accrued wages   4,188    24,777 
Operating lease liability – current (NOTE 8)   30,773    39,120 
Accrued vacation payable   21,243    16,846 
Other accrued liabilities   10,221    8,913 
           
Total Current Liabilities   103,780    228,652 
           
Operating lease liability (NOTE 8)   —      30,457 
           
TOTAL LIABILITIES   103,780    259,109 
           
STOCKHOLDERS’ EQUITY          
Common stock - $.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   689,206    849,989 
TOTAL STOCKHOLDERS’ EQUITY   1,627,258    1,787,348 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $1,731,038   $2,046,457 

 

See accompanying notes to the financial statements.

 

 

15 
 

 

ELECTRONIC SYSTEMS TECHNOLOGY, INC. 

DBA ESTEEM WIRELESS MODEMS

 

STATEMENTS OF OPERATIONS 

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

 

 

       
   2023  2022
       
SALES – NET  $1,544,821   $1,910,061 
           
COST OF SALES   749,107    881,409 
           
GROSS PROFIT   795,714    1,028,652 
           
OPERATING EXPENSES   979,648    950,338 
           
OPERATING INCOME/(LOSS)   (183,934)   78,314 
           
OTHER INCOME:          
Interest income   23,151    5,217 
Gain on Employee Retention Credit (Note 10)   —      63,000 
TOTAL OTHER INCOME   23,151    68,217 
           
NET INCOME/(LOSS) BEFORE INCOME TAXES   (160,783)   146,531 
           
INCOME TAX PROVISION (BENEFIT)   —      —   
           
NET INCOME/(LOSS) AFTER INCOME TAXES  $(160,783)  $146,531 
           
NET INCOME/(LOSS) PER SHARE, BASIC AND DILUTED  $(0.03)  $0.03 
           
WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC AND DILUTED   4,946,502    4,946,502 

 

See accompanying notes to the financial statements.

 

 

16 
 

 

ELECTRONIC SYSTEMS TECHNOLOGY, INC. 

DBA ESTEEM WIRELESS MODEMS

 

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY 

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 

 

                
         Additional      
   Common Stock  Paid-In  Retained   
   Shares  Amount  Capital  Earnings  Total
                
BALANCE AT DECEMBER 31, 2021   4,946,502   $4,947   $931,412   $703,458   $1,640,817 
                          
Net income   —      —      —      146,531    146,531 
                          
BALANCE AT DECEMBER 31, 2022   4,946,502   $4,947   $932,412   $849,989   $1,787,348 
                          
Net loss   —      —      —      (160,783)   (160,783)
                          
Share based compensation   —      —      693    —      693 
                          
BALANCE AT DECEMBER 31, 2023   4,946,502   $4,947   $933,105   $689,206   $1,627,258 

 

See accompanying notes to the financial statements.

 

 

17 
 

``

ELECTRONIC SYSTEMS TECHNOLOGY, INC. 

DBA ESTEEM WIRELESS MODEMS

 

STATEMENTS OF CASH FLOWS 

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 

 

       
   2023  2022
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net income/(loss)  $(160,783)  $146,531 
Noncash expenses included in net income:          
Depreciation and amortization   2,427    444 
Share based compensation   693    —   
Changes in operating assets and liabilities:          
Accounts receivable   88,802    24,909 
Inventories - net   3,021    (223,645)
Prepaid expenses   23,349    (18,241)
Employee retention tax credit receivable   63,000    —   
Accrued interest receivable   (1,098)   (773)
Accounts payable   (101,641)   67,351 
Other accrued liabilities and wages   (14,567)   21,581 
Net Cash used by Operating Activities   (96,797)   (44,843)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Certificates of deposits purchased   (1,550,000)   (1,002,283)
Certificates of deposits redeemed   1,401,699    1,150,584 
Purchase of equipment   (19,768)   —   
Net Cash provided (used) by Investing Activities   (168,069)   148,301 
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Principal payments on CARES Act loan payable (round 1)   —      (7,956)
Net Cash used by Financing Activities   —      (7,956)
           
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS   (264,866)   95,502 
           
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR   751,118    655,616 
           
CASH AND CASH EQUIVALENTS AT END OF YEAR  $486,252   $751,118 
           
Noncash investing and financing activities:          
Recognition of operating lease liability and right of use asset  $—     $78,757 

 

See accompanying notes to the financial statements.

 

 

18 
 

 

ELECTRONIC SYSTEMS TECHNOLOGY, INC.

NOTES TO FINANCIAL STATEMENTS

 

  1. Organization and Summary of Significant Accounting Policies

 

Business Organization

 

The Company was incorporated under the laws of the State of Washington on February 10, 1984, primarily to develop, produce, sell and distribute wireless modems that will allow communication between peripherals via radio frequency waves.

 

Effective September 13, 2007, the Company announced their establishment of a “doing business as” or dba structure, based on the Company’s registered trade name of ESTeem® Wireless Modems.

 

Basis of Presentation and Accounting Estimates

 

The preparation of financial statements are prepared in conformity with generally accepted accounting principles in the United States which requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Estimates used in the accompanying financial statements include the allowance for doubtful accounts receivable, inventory obsolescence, useful lives of depreciable assets, share-based compensation, and deferred income taxes. Actual results could differ from those estimates.

 

Concentrations and Credit Risks

 

The Company places its cash with three major financial institutions. During the period, the Company had cash balances that were in excess of federally insured limits.

 

The Company purchases certain key components necessary for the production of its products from a limited number of suppliers. The components provided by the suppliers could be replaced or substituted by other products. It is possible that if this action became necessary, an interruption of production and/or material cost expenditures could take place.

 

Revenue Recognition

 

The Company recognizes revenue when it has satisfied the performance obligation required under a contract with the customer. A performance obligation is a promise in a contract with a customer to transfer a distinct good or service to the customer. Our contracts with customers contain a single performance obligation. A contract’s transaction price is recognized as revenue when, or as, the performance obligation is satisfied.

 

Performance obligations for product sales are satisfied as of a point in time. Revenue is recognized when control of the product transfers to the customer, generally upon product shipment.  Performance obligations for site support and engineering services are satisfied over-time if the customer receives the benefits as we perform work and we have a contractual right to payment. Revenue recognized on an over-time basis is based on costs incurred to date relative to milestones and total estimated costs at completion to measure progress.

 

The Company considers the contractual consideration payable by the customer when determining the transaction price of each contract. Revenue is recorded net of charges for certain sales incentives and discounts, and applicable state and local sales taxes, which represent components of the transaction price. Charges are estimated by us upon shipment of the product based on contractual terms, and actual charges typically do not vary materially from our estimates. Shipping estimates are determined by utilizing shipping costs provided by the various service providers websites based on number of packages, weight and destination. Shipping costs are included in the cost of goods sold as the revenue is captured in total sales.

 

 
19 
 

 

ELECTRONIC SYSTEMS TECHNOLOGY, INC.

NOTES TO FINANCIAL STATEMENTS

 

The Company receives payments from customers based on the terms established in our contracts. When amounts are billed and collected before the services are performed, they are included in deferred revenues. The Company does not generally sell its products with the right of return. Therefore, returns are accounted for when they occur and are accepted. Products sold to foreign customers are shipped after payment is received in U.S. funds, unless an established distributor relationship exists, or the customer is a foreign branch of a U.S. company.

 

The Company warrants its products as free of manufacturing defects and provides a refund of the purchase price, repair or replacement of the product for a period of one year from the date of installation by the first user/customer.  No allowance for estimated warranty repairs or product returns has been recorded due to the Company’s historical experience of repairs and product returns.

 

Financial Instruments

 

The Company’s financial instruments are cash, cash equivalents, and certificates of deposit. The recorded values of cash, and certificates of deposit approximate their fair values based on their short-term nature.

 

Cash and Cash Equivalents

 

Cash and cash equivalents are cash purchased with original maturities of three months or less.

 

Allowance for Uncollectible Accounts

 

The Company uses the allowance method to account for estimated uncollectible accounts receivable. Accounts receivable are presented net of an allowance for doubtful accounts. As of December 31, 2023 and 2022, the Company’s estimate of doubtful accounts was zero . The Company’s policy for writing off past due accounts receivable is based on the time past due and responses received from the subject customer.

 

Inventories

 

Inventories are stated at lower of direct cost or market. Cost is determined on an average cost basis that approximates the first-in, first-out (FIFO) method. Market is determined based on net realizable value and consideration is given to obsolescence.

 

Property and Equipment

 

Property and equipment are carried at cost. Major betterments are capitalized and de minimis purchases are expensed. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The useful life of property and equipment for purposes of computing depreciation is three to seven years. When the Company sells or otherwise disposes of property and equipment, a gain or loss is recorded in the statement of operations. The cost of improvements that extend the life of property and equipment is capitalized. The Company periodically reviews its long-lived assets for impairment and, upon indication that the carrying value of such assets may not be recoverable, recognizes an impairment loss by a charge against current operations.

 

 
20 
 

 

ELECTRONIC SYSTEMS TECHNOLOGY, INC.

NOTES TO FINANCIAL STATEMENTS

 

Certificates of Deposit

 

Certificates of deposit with original maturities ranging from one month to twelve months were $400,000 and $251,699 at December 31, 2023 and 2022, respectively.

 

Leases

 

Contracts that meet the definition of a lease are classified as operating or financing leases and are recorded on the balance sheet as both a right-of-use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right-of-use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right-of-use asset result in straight-line rent expense over the lease term. Variable lease expenses are recorded when incurred.

 

Income Taxes

 

The provision (benefit) for income taxes is computed on the pretax income (loss) based on the current tax law. Deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates. The Company evaluates positive and negative information when estimating the valuation allowance for deferred tax assets. For tax positions that meet the more likely than not recognition threshold a deferred tax asset is recognized.

 

Research and Development

 

Research and development costs are recognized as operating expenses when incurred. Research and development expenditures for new product development and improvements of existing products by the Company for 2023 and 2022 were $121,896 and $163,189, respectively.

 

Advertising Costs

 

Costs incurred for producing and communicating advertising are recognized as operating expenses when incurred. Advertising costs for the years ended December 31, 2023 and 2022 were $10,038 and $8,895, respectively.

 

Earnings Per Share

 

The Company is required to have dual presentation of basic earnings per share (“EPS”) and diluted EPS.  Basic EPS is computed as net income (loss) divided by the weighted average number of common shares outstanding for the period. Diluted EPS is calculated based on the weighted average number of common shares outstanding during the period plus the effect of potentially dilutive common stock equivalents.

 

Potentially dilutive common stock equivalents consist of 225,000 and 180,000 stock options outstanding as of December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, the potentially dilutive stock options were not included in the calculation of the diluted weighted average number of shares outstanding or diluted EPS as their effect would have been anti-dilutive.

 

 
21 
 

 

ELECTRONIC SYSTEMS TECHNOLOGY, INC.

NOTES TO FINANCIAL STATEMENTS

 

Share-Based Compensation

 

Share-based payments to employees, including grants of employee stock options, are measured at fair value and expensed in the statement of operations over the vesting period. In addition to the recognition of expense in the financial statements, any excess tax benefits received upon exercise of options will be presented as a financing activity inflow rather than an adjustment of operating activity in the statement of cash flows. The fair value of stock options is determined using a Black-Scholes valuation model. Option pricing models require the input of subjective assumptions including the length of time employees will retain their vested stock options before exercising them, expected share price volatility, and interest rate. Changes in the input assumptions can materially affect the fair value estimate and the Company's net loss. 

 

Fair Value Measurements

 

When required to measure assets or liabilities at fair value, the Company uses a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used. The Company determines the level within the fair value hierarchy in which the fair value measurements in their entirety fall. The categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Level 1 uses quoted prices in active markets for identical assets or liabilities, Level 2 uses significant other observable inputs, and Level 3 uses significant unobservable inputs. The amount of the total gains or losses for the period are included in earnings that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date. At December 31, 2023 and 2022, the Company has no assets or liabilities subject to fair value measurements on a recurring basis.

 

New Accounting Pronouncements

 

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2023-07 (“ASU 2023-07”), Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, amending reportable segment disclosure requirements to include disclosure of incremental segment information on an annual and interim basis. Among the disclosure enhancements are new disclosures regarding significant segment expenses that are regularly provided to the chief operating decision-maker and included within each reported measure of segment profit or loss, as well as other segment items bridging segment revenue to each reported measure of segment profit or loss. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, and are applied retrospectively. Early adoption is permitted. We are currently evaluating the impact of this update on our financial statements and disclosures.

 

In December 2023, the FASB issued Accounting Standards Update 2023-09 (“ASU 2023-09”), Income Taxes (Topic 740): Improvement to Income Tax Disclosures, amending income tax disclosure requirements for the effective tax rate reconciliation and income taxes paid. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024 and are applied prospectively. Early adoption and retrospective application of the amendments are permitted. We are currently evaluating the impact of this update on our financial statements and disclosures.

 

Other accounting standards 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.

 

 

22 
 

 

 

ELECTRONIC SYSTEMS TECHNOLOGY, INC.

NOTES TO FINANCIAL STATEMENTS

 

  2. Inventories

 

Inventories consist of the following:

 

      
   2023  2022
Parts  $118,472   $172,190 
Work in progress   313,597    336,298 
Finished goods   290,388    216,990 
Total inventories  $722,457   $725,478 

 

Included in the above amounts are reserves for obsolete inventories of $8,935 and $8,716 at December 31, 2023 and 2022, respectively.

 

  3. Property and Equipment

 

Property and equipment consist of the following at December 31, 2023 and 2022:

 

      
   2023  2022
Laboratory equipment  $554,740   $522,575 
Software   18,245    35,028 
Furniture and fixtures   15,262    16,344 
Dies and molds   73,607    73,607 
Property plant and equipment, gross   661,854    647,554 
Accumulated depreciation and amortization   (643,599)   (646,640)
Total property plant and equipment, net  $18,255   $914 

 

  
23 
 

ELECTRONIC SYSTEMS TECHNOLOGY, INC.

NOTES TO FINANCIAL STATEMENTS

 

  4. Income Taxes

 

For the years ended December 31, 2023 and 2022, the Company did not have an income tax benefit nor provision because of continuing losses.

 

The components of net deferred tax assets are as follows:

 

      
   December 31,
   2023  2022
Deferred tax assets:          
Net operating loss carryforwards  $314,500   $280,300 
Accrued liabilities   4,300    3,500 
Inventories   11,600    10,500 
Other   1,100    1,200 
Federal income tax credits   67,000    67,000 
Total deferred tax assets   398,500    362,500 
Less valuation allowance   (396,000)   (362,500)
Total deferred tax assets, net   2,500    —   
Deferred tax liabilities:          
Property and equipment   (2,500)   —   
Total deferred tax liabilities   (2,500)   —   
           
Total deferred tax assets, net  $—     $—   

 

Realization of the deferred tax asset is dependent on generating sufficient taxable income prior to expiration of the loss carryforwards and the income tax carryforwards. Management determined that it does not believe it is more likely than not that all of the net deferred tax assets will be realized. Therefore, a valuation allowance has been recorded for the full net deferred tax asset at December 31, 2023 and 2022.

 

At December 31, 2023, the Company had approximately $67,000 of research and development income tax credits available to reduce federal income taxes in future periods. The credits expire from 2036-2041. In addition, at December 31, 2023, the Company had approximately $1,498,000 of net operating loss carryforwards, $585,000 of which will expire between 2035 and 2038. The remaining balance of $913,000 will never expire but whose utilization is limited to 80% of taxable income in any future year.

 

The differences between the provision (benefit) for federal income taxes and federal income taxes computed using the U.S. statutory federal income tax rate of 21% were as follows:

 

      
   2023  2022
Amount computed using the statutory rate  $(33,800)  $30,800 
Non-deductible (taxable) items, net   400    (12,900)
Change in estimates   (100)   200)
Change in valuation allowance   33,500    18,000 
Provision (benefit) for federal income taxes  $—     $—   

 

Should the Company have future accrued interest expense and penalties related to uncertain income tax positions, they will recognize those expenses in income tax expense.

 

The Company files federal income tax returns in the United States only. The Company is no longer subject to federal income tax examination by tax authorities for years before 2020. The Company has evaluated all tax positions for open years and has concluded that they have no material unrecognized tax benefits or penalties.

 
24 
 

        

ELECTRONIC SYSTEMS TECHNOLOGY, INC.

NOTES TO FINANCIAL STATEMENTS

 

  5. Profit Sharing Salary Deferral 401-K Plan

 

The Company sponsors a Profit-Sharing Plan and Salary Deferral 401-K Plan and Trust. All employees over the age of twenty-one are eligible. On January 1, 2006, the Company adopted a four percent salary matching provision. The Company contributed $20,675 and $20,886 to the plan for the years ended December 31, 2023 and 2022, respectively.

 

  6. Employee Bonus Program

 

The Board of Directors establishes sales and net income thresholds at the start of each year that are used in calculating the amount of bonuses that may be awarded. If these thresholds are not achieved, there will be no bonus issued. Bonus expenses of nil 0 and $17,719 were recognized during the years ended December 31, 2023 and 2022, respectively. At December 31, 2023 and 2022, accrued wages on the balance sheet includes nil 0 and $17,719, respectively, for accrued bonus payable.

 

  7. Share-Based Compensation

 

The Company grants stock options to individual employees and directors. After termination of employment, stock options may be exercised within ninety days, after which they are subject to forfeiture. 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 vested 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%.

 

In the years ended December 31, 2023 and 2022, the Company recognized $693 and nil 0 respectively, in share-based compensation expense. No non-vested share-based compensation arrangements existed as of December 31, 2023 and 2022.

 

 

A summary of option activity follows:

 

         
   Number
Outstanding		  Weighted
Average
Exercise Price
Per Option		  Weighted
Average
Remaining
Contractual
Term (Years)
Balance at December 31, 2021   240,000    0.40    3.6 
   Canceled   (60,000)   0.40      
Balance at December 31, 2022   180,000   $0.40    2.5 
   Granted   45,000    0.40      
Balance at December 31, 2023   225,000   $0.40    1.7 
                
Outstanding and Exercisable at December 31, 2023   225,000   $0.40    1.7 

 

The aggregate intrinsic value of the options outstanding and exercisable at December 31, 2023 was nil.

 

 
25 
 

ELECTRONIC SYSTEMS TECHNOLOGY, INC.

NOTES TO FINANCIAL STATEMENTS

 

  8. Leases

 

On September 19, 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 a 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 December 31, 2023, the remaining lease term is nine months.

 

Prior to the new lease in September 19, 2022, the Company’s lease for its facilities was for $3,806 per month.

 

As of December 31, 2023, total future lease payments are as follows:

 

   
For the 12 months ended   
December 31, 2024   31,304 
Less imputed interest   (531)
Net lease liability   30,773 

 

For the years ended December 31, 2023 and 2022, costs relating to the operating lease were recognized in the statement of operations as follows:

 

                              
   2023   2022 
   Cost of
sales		   Operating
expenses		   Total   Cost of
sales		   Operating
expenses		   Total 
Base rent pursuant to lease agreement  $  23,002   $18,104   $  41,106   $  23,002   $18,104   $  41,106 
Variable lease costs   2,931    2,306    5,237    2,976    2,342    5,319 
Total lease costs  $25,933   $20,410   $46,343   $25,978   $20,446   $46,425 

 

  9. Revenue

 

The Company derives revenues from the sales of 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. The Company’s customers, to which trade credit terms are extended, consist of United States and local governments and foreign and domestic companies.

 

                              
   For the years ending December 31, 
   2023   2022 
    Domestic Sales    Foreign Sales    Total Sales    Domestic Sales    Foreign Sales    Total Sales 
Product Sales   1,461,785    56,136    1,517,921    1,668,861    212,800    1,881,661 
Site Support Sales   26,900    —      26,900    28,400    —      28,400 
Total Sales   1,488,685    56,136    1,544,821    1,697,261    212,800    1,910,061 

 

For the year ended December 31, 2023 and 2022, sales to customers that are more than 10% of total revenue are as follows:

 

                
   2023 Sales   2023 % age of
Total Sales		   2022 Sales   2022 % age of
Total Sales		 
Domestic customer A  $307,048    19.9%  $397,671    20.8%
Domestic customer B  $—      —      201,459    10.5%

 

 
26 
 

 

ELECTRONIC SYSTEMS TECHNOLOGY, INC.

NOTES TO FINANCIAL STATEMENTS

 

Revenue continued

 

As of December 31, 2023 and 2022, accounts receivable from customers that are more than 10% of the total accounts receivable balance are as follows:

 

        
  

Accounts

Receivable

Balance

  

% age of
Total Accounts

Receivable

  

Accounts

Receivable

Balance

  

% age of
Total Accounts

Receivable

 
Domestic customer A  $14,087    26.8%  $95,724    67.7%
Domestic customer B   10,806    20.5    16,037    11.3 
Domestic customer C   6,478    12.3    —      —   
Domestic customer D   5,956    11.3    —      —   
Domestic customer E   5,265    10.0    —      —   

 

As of December 31, 2023 and 2022, the Company had a sales order backlog of $55,636 and $49,173, respectively.

  

  10. Employee Retention Credit

 

 The Company received $63,000 in 2023 that was a receivable at December 31, 2022, for the retention tax credit. The Company recognized the $63,000 as income for the year ended December 31, 2022.

 

 

27 
 

 

Supplemental Information

 

 
ELECTRONIC SYSTEMS TECHNOLOGY, INC.
DBA ESTEEM WIRELESS MODEMS
 

Supplemental Information


SUPPLEMENTAL SCHEDULE OF OPERATING EXPENSES
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

 

          
   2023   2022 
         
Advertising  $10,038   $8,895 
Dues and subscriptions   3,772    3,547 
Depreciation and  amortization   2,427    444 
Insurance   14,632    13,485 
Materials and supplies   9,341    10,370 
Office and administration   7,008    4,890 
Printing   2,306    2,658 
Professional services   101,923    91,096 
Services purchased in lieu of payroll   —      45,875 
Rent and utilities   52,085    50,308 
Repair and maintenance   423    4,259 
Salaries and benefits   715,863    696,665 
Taxes, licenses & health insurance   203,124    194,839 
Telephone   4,778    5,372 
Warranty expense   2,353    2,897 
Trade shows   15,505    12,199 
Travel expenses   29,100    15,984 
           
 Expenses before allocated to cost of sales   1,174,678    1,163,783 
           
Expenses allocated to cost of sales   (195,030)   (213,445)
           
Total Operating Expenses  $979,648   $950,338 

 

 

28 
 

 

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.

 

None

 

Item 9A. Controls and Procedures.

 

Disclosure Controls and Procedures.

 

Under the supervision and with the participation of our Management, including the Chief Executive Officer and Principal Accounting Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as such terms are defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation our principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures were effective at December 31, 2023.

 

Management’s Annual Report on Internal Control over Financial Reporting.

 

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.

 

As of December 31, 2023, management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in “Internal Control — Integrated Framework,” (2013) issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Management, under the supervision and with the participation of the Company’s Chief Executive Officer and Principal Accounting Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023 and concluded that we have maintained effective internal control over financial reporting at December 31, 2023, based on the COSO criteria.

 

There have been no changes in the company’s internal control over financial reporting during the most recently completed quarter that have materially affected or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

Item 9B. Other Information.

 

None

 

29 
 

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

 

IDENTIFICATION OF DIRECTORS:

 

The following table sets forth the names and ages of all Directors of the Company as of December 31, 2023, as well as the term in office and principal occupation of each Director.

 

Name of  Director Term in Office Age Principal Occupation
Daniel Tolley 06/02/23 – 06/02/26 55 President of Electronic Systems Technology
Vern Kornelsen 06/02/23 – 06/02/26 91 General Partner of EDCO
Thomas Schaefer 06/01/21– 06/01/24 63 Vice President of Online Development Inc.
Donald Siecke 06/01/21 – 06/01/24 83 President of Kelmore Development Corp.
Michael W. Eller 06/03/22 - 06/03/25 63 Principle Accounting Officer of Electronic Systems Technology, Inc.

 

Management believes that there are no agreements or understanding between the Directors and suppliers or contractors of the Company.

 

Audit Committee

 

The Audit Committee of the Board of Directors as of December 31, 2023, is comprised of Don Siecke (Chairman) and Tom Schaefer. The Audit Committee met on one occasion in 2023. The Board of Directors has determined that Mr. Siecke is an “audit committee financial expert” as defined in Item 407(d)(5) of Regulation S-K promulgated by the SEC. The Board’s conclusions regarding the qualifications of Mr. Siecke as an audit committee financial expert were based on his experience as a certified public accountant and his degree in accounting. 

 

The Board has also adopted a charter for the Audit Committee. The charter for the audit committee is available on our website at www.esteem.com . The audit committee charter is also available in print to any shareholder who requests it.

 

Compensation Committee

 

There is no Compensation Committee of the Board of Directors. The Board of Directors did establish an Employee/Director Stock Option Committee consisting of all Directors. The committee existed for the sole purpose of recommending the recipients and amounts of the Company awarded stock options during 2023. There is no charter for the Employee/Director Stock Option Committee.

 

Code of Ethics

 

On September 22, 2020, the Company’s Board of Directors adopted a Code of Ethics for the Company. The Codes of Ethics, and any subsequent amendments thereto, (other than technical, administrative, or non-substantive amendments), and any waivers of a provision of the Code of Ethics for Directors or executive officers, are available on our website at www.esteem.com.

 

30 
 

 

IDENTIFICATION OF EXECUTIVE OFFICERS

 

The following table sets forth the names and ages of all executive officers of the Company as of December 31, 2023; all positions by such persons; term of office and the period during which he has served as such; and any arrangement or understanding between him and any other person(s) pursuant to which he was elected as an officer:

 

Name of  Officer Age Position Term of Office Period of Service
Daniel Tolley 55 President and CEO Employed at will 3/3/2003-Present
Michael Eller 63 CFO/Principal Accounting Officer Employed at will 9/7/12- Present

 

The following is a brief description of the business experience during the last five years of each Director and/or executive officer of the Company.

 

DANIEL M. TOLLEY. Mr. Tolley has been employed by the Company for more than 20 years. Mr. Tolley’s duties and responsibilities have increased over that time. Most recently he was the Director of Business Development.

 

VERN D. KORNELSEN. Mr. Kornelsen is the General Partner of EDCO Partners LLLP. Mr. Kornelsen formerly practiced as a certified public accountant in Denver, CO for many years and is a financial consultant to several early stage companies.  He was a Director of Valleylab for 10 years and led an investor group that provided a portion of its initial funding.  Mr. Kornelsen has been a Director and participated in the capitalizing of a number of early-stage companies, and is currently a Director and audit-committee member of a publicly-held company, Encision Inc. of Boulder, CO.  He is also the Chairman, Secretary, Director, and CFO of Lifeloc Technologies, Inc., a publicly-held company located in Wheat Ridge, CO.

 

THOMAS J. SCHAEFER: Mr. Schaefer is Vice President of Online Development Inc. a division of Softing AG based in Munich, Germany. He is responsible for business development activities and the integration of new business acquisitions. Prior to his current position Tom was President of Phoenix Digital Corporation a privately held company based in Scottsdale, AZ that provides redundant mission critical networking technology for industrial automation systems. Mr. Schaefer also spent 30 years at Rockwell Automation. His last assignment, at Rockwell, was the Global Industry Manager for Rockwell’s Water Industry focus. During Mr. Schaefer’s tenure at Rockwell, he held various positions that included P&L responsibility for the Service business unit, Sales and Marketing for Software/MES, and Sales and Application responsibility for the Drive Systems/Power Products group.

 

DONALD E. SIECKE. Mr. Siecke practiced as a certified public accountant in the state of Colorado from 1963 to 1976. He has been president of Kelmore Development Corp., a real estate development company, since 1981, and serves as the chairman of Redstone Bank, a Colorado bank of which he was a founding Director. He is a Director of several privately held companies, metropolitan districts, and charitable organizations. He received a BS degree in business administration from the University of Denver in 1961, having majored in accounting.

 

MICHAEL W. ELLER. Mr. Eller is the CFO and Principal Accounting Officer. During the last five years Mr. Eller has been a full-time employee of the Company. Until July 1, 2022 Mr. Eller served as President and CEO. Prior to joining EST Mr. Eller was employed at Macys Logistics and Operations where he was employed as the Vice President of Operations and Director of Finances. Mr. Eller does not serve as a Director for any other company registered under the Securities Exchange Act.

 

Family Relationships

 

None.

 

Section 16(A) Beneficial Ownership Reporting Compliance

 

During the year ended December 31, 2023, to the knowledge of Management, there was no Director, officer, or beneficial owner of more than 10% any class of equity securities of the registrant who failed to file on a timely basis the required disclosure form as required by Section 16(a) of the Securities and Exchange Act of 1934.

 

 

31 
 

Indemnification

 

The Company’s Bylaws address indemnification of Directors and Officers. Washington Law provides that Washington corporations may include within their Articles of Incorporation provisions eliminating or limiting the personal liability of their Directors and officers in shareholder actions brought to obtain damages for alleged breaches of fiduciary duties, as long as the alleged acts or omissions did not involve intentional misconduct, fraud, a knowing violation of law or payment of dividends in violation of the Washington statutes. Washington law also allows Washington corporations to include in their Articles of Incorporation or Bylaws provisions to the effect that expenses of officers and Directors incurred in defending a civil or criminal action must be paid by the corporation as they are incurred, subject to an undertaking on behalf of the officer or Director that he or she will repay such expenses if it is ultimately determined by a court of competent jurisdiction that such officer or Director is not entitled to be indemnified by the corporation because such officer or Director did not act in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation. The Company’s Articles of Incorporation provide that a Director or officer is not personally liable to the Company or its shareholders for damages for any breach of fiduciary duty as a Director or officer, except for liability for (i) acts or omissions which involve intentional misconduct, fraud or a knowing violation of law, or (ii) the payment of distribution in violation of Washington Business Corporation Act.

 

Related Person Transactions Policy and Procedures

 

As set forth in the written charter of the Audit Committee, any related person transaction involving a Company Director or executive officer must be reviewed and approved by the Audit Committee. Any member of the Audit Committee who is a related person with respect to a transaction under review may not participate in the deliberations or vote on the approval or ratification of the transaction. Related persons include any Director or executive officer, certain shareholders and any of their “immediate family members” (as defined by SEC regulations).

 

Item 11. Executive Compensation.

 

The Company’s principal executive officer is Daniel M. Tolley, and principal accounting officer is Michael W. Eller.

 

Information concerning the compensation of the Company’s principal executive officer and principal accounting officer, as well as any other compensated employees of the Registrant’s whose total compensation exceeded $100,000 during 2023 and 2022 is provided in the following Summary Compensation Table (collectively, the “Named Executive Officers” or “NEOs”):

 

SUMMARY COMPENSATION TABLE
 

Name and

Principal

Position

(a)

Year

(b)

Salary
($)

I

Bonus

($)(1)

(d)

Stock

Awards

($)

(e)

Option

Awards

($)(2)

(f)

Non-Equity

Incentive Plan

Compensation ($)

(g)

Change in

Pension
Value

and Non-

qualified

Deferred

Compensation

Earnings ($)
(h)

All Other

Compen-

sation
($)(3)

(i)

Total

($)

(j)

Daniel Tolley

President CEO

 

 2023 $140,500 - - 308 - - $18,535 $159,343
2022 $117,851 $4,430 - - - - $17,186 $139,467

Michael W. Eller

CFO/Principal Accounting Officer

 2023 $71,100 - - - - - $23,861 $94,961
2022 $99,650 $4,405 - - - - $18,827 $122,882

 

 

 

 

  (1) Includes amounts paid under the Non-qualified Employee Profit Sharing Bonus.

 

  (2) Amount represents the dollar amount recognized for financial statement reporting purposes.

 

  (3) All Other Compensation consists of Group Health Insurance, Accrued Vacation Pay and Company paid 401(k) matching amounts.

 

The information specified concerning the stock options of the named executive officers during the fiscal years ended December 31, 2023 and 2022, is provided in the following Option/SAR Grants in the Last Fiscal Year Table:

 

OPTION/SAR GRANTS IN 2023
Individual Grants (5)
(a) (b) (c) (d) (e)

 

 

 

Name

Number of Securities

Underlying

Options/SARs

Granted # (5)

% of Total

Options/SARs Granted

to Employees in Fiscal

Year

 

 

Exercise or base price

($/Share)

 

 

 

Expiration Date

Daniel Tolley 20,000 44% $0.40 6/9/28
Michael W. Eller -0- 0% $0.00 n/a

 

  (5) This table does not include Stock Options granted previously.

The information specified concerning the stock options of the named executive officers during the fiscal year ended December 31, 2023, is provided in the following Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End Options/SAR Values Table:

 

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
Option Awards Stock Awards
Name

Number of

Securities

Underlying

Unexercised

Options (#)

Exercisable

Number of

Securities

Underlying

Unexercised

Options (#)

Unexercisable

Equity

Incentive Plan

Awards:

Number of

Securities

Underlying

Unexercised

Unearned

Options (#)

Option

Exercise

Price ($)

Option

Expiration

Date

Number

of Shares

or Units

of Stock

That

Have Not

Vested

(#)

Market

Value of

Shares or

Units of

Stock

That

Have Not

Vested

($)

Equity

Incentive

Plan

Awards:

Number of

Unearned

Shares,

Units or

Other

Rights

That Have

Not Vested

(#)

Equity

Incentive

Plan

Awards:

Market or

Payout

Value of

Unearned

Shares,

Units or

Other

Rights That

Have Not

Vested ($)

(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
Daniel Tolley

30,000

20,000

 0 0 $0.40

3/13/25

6/9/28

 0 0 0 0

Michael W.

Eller

 40,000 0 0 $0.40 3/13/25 0 0 0 0

 

The Company does not currently have a Long-Term Incentive Plan (“LTIP”).

 

32 
 

 

Compensation to outside Directors is limited to reimbursement of out-of-pocket expenses that are incurred in connection with the Directors’ duties associated with the Company’s business. The Board of Directors approved a stipend for members that are not employed by the Company in the amount of $375 per quarter of service on the Board of Directors. There is currently no other compensation arrangements for the Company’s Directors. (See “Security Ownership of Certain Beneficial Owners and Management” for Stock Options granted in previous years.) The information specified concerning items of Director Compensation for the fiscal year ended December 31, 2023 is provided in the following Director Compensation Table:

 

DIRECTOR COMPENSATION
Name
(1)

Fees

Earned

or Paid

in Cash

($)(2)

Stock

Awards

($)

Option

Awards

($)(3)

Non-Equity

Incentive Plan

Compensation

($)

Nonqualified

Deferred

Compensation

($)

All Other

Compensation

($)(4)

 Total ($)
(a) (b) (c) (d) (e) (f) (g) (h)
Vern Kornelsen $1,500 $0 $0 $0 $0 $0 $1,500
Thomas Schaefer $1,500 $0 $0 $0 $0 $0 $1,500
Donald Siecke $1,500 $0 $0 $0 $0 $0 $1,500
Michael W. Eller $0 $0 $0 $0 $0 $0 $0
Daniel M. Tolley $0 $0 $0 $0 $0 $0 $0

 

  (1) Compensation information for Dan Tolley, President and CEO and Michael Eller, CFO and Principal Accounting Officer is contained in the Executive Compensation Summary Compensation Table.

 

  (2) Amount represents the Director Stipend paid in 2023.

 

  (3) Amount represents the dollar amount recognized for financial statement reporting purposes. Assumptions made in the valuation of stock option awards are disclosed in Note 7 of the Notes to the Financial Statements in this Form 10-K.

 

  (4) Amounts represent reimbursement of out-of-pocket expenses related to Directors’ duties associated with the Company’s business (ie. travel expenses for attending Company Director’s Meetings).

 

The Company currently does not hold any Employment Contracts or Change of Control Arrangements with any parties.

 

Option Exercises

 

During our fiscal year ended December 31, 2023, there were no options exercised by our executive officer or Directors.

 

Summary of Executive Employment Agreements

 

There are no executive employment agreements with any officer.

 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

 

The following table sets forth, as of December 31, 2023, the amount and percentage of the Common Stock of the Company, which according to information supplied by the Company, is beneficially owned by each person who, to the best knowledge of the Company, is the beneficial owner (as defined below) of more than five (5%) of the outstanding Common Stock.

 

Title of Class

Name & Address of

Beneficial Owner (1)

Amount & Nature of

Beneficial Ownership

 Percent of Class
Common

EDCO Partners LLLP

4605 Denice Drive

Englewood CO 80111

 1,797,700 36.3%

 

 

 

  (1) Under Rule 13d-3, issued by the Securities and Exchange Commission, a person is, in general, deemed to “Beneficially own” any shares if such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares (a) voting power, which includes the power to vote or to direct the voting of those shares and/or (b) investment power, which included the power to dispose, or to direct the disposition of those securities. The foregoing table gives effect to shares deemed beneficially owned under Rule 13d-3 based on the information supplied to the Company. To the knowledge of the Company, the persons named in the table have sole voting power and investment power with respect to all shares of Common Stock beneficially owned by them.

 

 

 

33 
 

SECURITY OWNERSHIP OF MANAGEMENT

 

The following table sets forth, as of February 13, 2023, amount and percentage of the Common Stock of the Company, which according to information supplied by the Company, is beneficially owned by Management, including officers and Directors of the Company.

 

Name/Address of

Beneficial Owner (1)

 

Title of

Class

  

Amount & Nature of

Beneficial Ownership

  

Percent of

Class

 
Daniel Tolley (Officer)/415 N. Roosevelt St., STE B1 Kennewick, WA   Common    52,200(3)   1.1%
Vern Kornelsen (Director)/415 N. Roosevelt St., STE B1 Kennewick, WA   Common    1,797,700    36.3%
Thomas Schaefer (Director)/415 N. Roosevelt St., STE B1 Kennewick, WA   Common    —      —  
Donald Siecke (Director)/415 N. Roosevelt St., STE B1 Kennewick, WA   Common    —  (2)   —  
Michael W.  Eller (Officer)/415 N. Roosevelt St., STE B1 Kennewick, WA   Common    40,000 (1)    0.8%
All Officers and Directors as a group   Common    1,889,900    38.2%

 

  (1) Includes 40,000 stock options issued 3/15/2020.

 

  (2)

Mr. Siecke does not own any shares directly. However, EDCO Partners LLLC, of which Mr. Siecke is a limited partner, holds 498,916 shares on his behalf.

 

  (3)  Includes 30,000 stock options issued 3/15/2020 and 20,000 stock options issued 6/9/23.

       

On various dates, the Company’s Board of Directors has approved Stock Option Bonuses for Directors and Employees. The following is a summary of the Stock Option bonuses currently outstanding: Options are exercisable at fixed prices. Options may not be exercised in blocks of less than 5,000 shares. Options not exercised expire five years after approval date or 30 days following termination of employment/board membership, whichever occurs first. In the event of acquisition, merger, recapitalization or similar events of the Company, the optionee will receive equivalent shares if one of the foregoing events occurs or will have a 10-day window in which to exercise the options. Option grants are not transferable or assignable except to the optionee’s estate in the event of the optionee’s death.

 

34 
 

Recipients of Stock Options currently unexpired as of December 31, 2023, were as follows:

 

Name Option Shares Exercise
Price
Per Share ($)
Grant Date: 3-15-2020
Alan B. Cook 25,000 0.40
Neil Helfeldt 25,000 0.40
Eric P. Marske 30,000 0.40
Dan Tolley 30,000 0.40
Michael Eller 40,000 0.40
Total 150,000 0.40

 


Name		 Option
Shares		 Exercise
Price
Per Share ($)
Grant Date: 9-1-2021
Peri M. Olson 30,000 0.40
Total 30,000 0.40

 `


Name		 Option
Shares		 Exercise
Price
Per Share ($)
Grant Date: 6-9-2023
Dan Tolley 20,000 0.40
Jay Chambers 25,000 0.40
Total 45,000 0.40

 

Stock options must be exercised within 90 days after termination of employment/board membership. 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 vested immediately.

 

Changes in Control:

 

The Board of Directors is aware of no circumstances which may result in a change of control of the Company.

 

Certain Business Relationships:

 

There have been no unusual business relationships during the last fiscal year of the Registrant between the Company and affiliates as described in Item 404 (b) (1-6) of Regulation S-K.

 

Indebtedness of Management:

 

No Director or executive officer or nominee for Director, or any member of the immediate family of such has been indebted to the Company during the past year.

 

Item 13. Certain Relationships and Related Transactions, and Director Independence.

 

TRANSACTIONS WITH MANAGEMENT AND OTHERS

 

None.

 

35 
 

 

Item 14. Principal Accounting Fees and Services.

 

AUDIT AND NON-AUDIT FEES

 

The following table presents fees billed to us during December 31, 2023 and 2022, for professional services provided by Assure CPA.

 

Year Ended  December 31, 2023   December 31, 2022 
Audit fees (1)  $41,100   $43,100 
Audit-related fees (2)   —      —   
Tax fees (3)   7,398    3,000 
All other fees (4)   549    —   
Total Fees  $49,047   $46,100 

 

  (1) Audit fees consist of fees billed for professional services provided in connection with the audit of the Company’s financial statements and reviews of our quarterly financial statements.

 

  (2) Audit-related fees consist of assurance and related services that include, but are not limited to, internal control reviews, attest services not required by statute or regulation and consultation concerning financial accounting and reporting standards.

 

  (3) Tax fees consist of the aggregate fees billed for professional services for tax compliance, tax advice, and tax planning. These services include preparation of federal income tax returns.

 

  (4) All other fees consist of fees billed for products and services other than the services reported above.

 

Our Audit Committee reviewed the audit and tax services rendered by Assure CPA and concluded that such services were compatible with maintaining the auditors’ independence. All audit, non-audit, tax services, and other services performed by our independent accountants are pre-approved by our Audit Committee to assure that such services do not impair the auditors’ independence from us. We do not use Assure CPA for financial information system design and implementation. These services, which include designing or implementing a system that aggregates source data underlying the financial statements or generates information that is significant to our financial statements, are provided internally. We do not engage Assure CPA to provide compliance outsourcing services.

 

 

36 
 

PART IV

 

Item 15. Exhibits and Financial Statement Schedules.

 

Documents filed as part of this report on Form 10-K or incorporated by reference:

 

  (1) Our financial statements can be found in Item 8 of this report.

 

  (2) Financial Statement Schedules (omitted because they are either not required, are not applicable, or the required information is disclosed in the notes to the financial statements or related notes).

 

The following exhibits are filed with this Annual Report on Form 10-K. Certain exhibits have been previously filed with the Securities and Exchange Commission and are incorporated by reference.

 

EXHIBIT
NUMBER

 

DESCRIPTION

3.1 Articles of Incorporation filed as Exhibit 2.1 to Form S-18, Registration Statement No. 2-92949-S, filed November 5, 1984 **
3.2 Amended Articles of Incorporation of the Registrant, filed as Exhibit (c) to Form 8-K, filed March 15, 1985 **
3.3 Bylaws filed as Exhibit 2.1 to Form S-18, Registration Statement No. 2-92949-S, filed November 5, 1984 **
3.4 Amendments to Bylaws filed as Exhibit (c) to Form 8-K, filed March 15, 1985 **
4

Instrument defining the rights of security holders including indentures.

Exhibit II Form S-18 Registration Statement No. 2-92949-S is incorporated herein by reference. Form 8A Registration Statement, 000-27793, dated October 25, 1999 **

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 Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

  ** Incorporated by reference

 

 

37 
 

SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

ELECTRONIC SYSTEMS TECHNOLOGY, INC.

 

By:   /s/ Daniel M. Tolley  
  Daniel M. Tolley, President
  (Principal Executive Officer, Director)

 

Date: March 8, 2024

 

By:   /s/ Michael W. Eller  
  Michael W. Eller, President
  (Principal Accounting Officer)

 

Date: March 8, 2024

 

In accordance with the Exchange Act, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

Signature Title Date
     
/s/ VERN KORNELSEN Director March 8, 2024
Vern D. Kornelsen    
     
/s/ THOMAS SCHAEFER Director March 8, 2024
Thomas Schaefer    
     
/s/ DONALD SIECKE Director March 8, 2024
Don Siecke    

 

 

38

 
 

 

Exhibit 31.1

 

Certification

I, Daniel M. Tolley, certify that:

 

1.I have reviewed this annual report on Form 10-K 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.

 

By: /s/ Daniel M. Tolley

Daniel M. Tolley, President

(Principal Executive Officer)

 

Date: March 8, 2024

 

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 annual report on Form 10-K 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.

 

By: /s/ Michael W. Eller

Michael W. Eller, CFO

(Principal Accounting Officer)

 

Date: March 8, 2024

 

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 Annual Report of Electronic Systems Technology Inc. (the "Company") on Form 10-K for the year ended December 31, 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.

By: /s/ Daniel M. Tolley

Daniel M. Tolley, President

(Principal Executive Officer)

 

Date: March 8, 2024

This certification is being furnished to the Securities and Exchange Commission as an exhibit to the Annual 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 Annual Report of Electronic Systems Technology Inc. (the "Company") on Form 10-K for the year ended December 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael W. 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.

By: /s/ Michael W. Eller

Michael W. Eller, CFO

(Principal Accounting Officer)

 

Date: March 8, 2024

This certification is being furnished to the Securities and Exchange Commission as an exhibit to the Annual 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.

 

 

 

 

v3.24.0.1
Cover - USD ($)
 12 Months Ended
Dec. 31, 2023
Feb. 06, 2024
Jun. 30, 2023
Cover [Abstract]      
Document Type 10-K    
Amendment Flag false    
Document Annual Report true    
Document Transition Report false    
Document Period End Date Dec. 31, 2023    
Document Fiscal Period Focus FY    
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    
Entity Well-known Seasoned Issuer No    
Entity Voluntary Filers No    
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 Public Float     $ 764,151
Entity Common Stock, Shares Outstanding   4,946,502  
ICFR Auditor Attestation Flag false    
Document Financial Statement Error Correction Flag false    
Auditor Name Assure CPA, LLC.    
Auditor Location Spokane, Washington    
Auditor Firm ID 444    
v3.24.0.1
BALANCE SHEETS - USD ($)
Dec. 31, 2023
Dec. 31, 2022
CURRENT ASSETS    
Cash and cash equivalents $ 486,252 $ 751,118
Certificates of deposit 400,000 251,699
Accounts receivable - net 52,592 141,394
Inventories - net 722,457 725,478
Prepaid expenses 19,278 42,627
Employee retention tax credit receivable (Note 10) 63,000
Accrued interest receivable 1,906 808
Total Current Assets 1,682,485 1,976,124
PROPERTY AND EQUIPMENT – NET 18,255 914
Right of use – asset, net of amortization (NOTE 8) 30,298 69,419
TOTAL ASSETS 1,731,038 2,046,457
CURRENT LIABILITIES    
Accounts payable 37,355 138,996
Accrued wages 4,188 24,777
Operating lease liability – current (NOTE 8) 30,773 39,120
Accrued vacation payable 21,243 16,846
Other accrued liabilities 10,221 8,913
Total Current Liabilities 103,780 228,652
Operating lease liability (NOTE 8) 30,457
TOTAL LIABILITIES 103,780 259,109
STOCKHOLDERS’ EQUITY    
Common stock - $.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 689,206 849,989
TOTAL STOCKHOLDERS’ EQUITY 1,627,258 1,787,348
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,731,038 $ 2,046,457
v3.24.0.1
BALANCE SHEETS (Parenthetical) - $ / shares
Dec. 31, 2023
Dec. 31, 2022
Statement of Financial Position [Abstract]    
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 50,000,000 50,000,000
Common stock, shares issued 4,946,502 4,946,502
Common stock, shares outstanding 4,946,502 4,946,502
v3.24.0.1
STATEMENTS OF OPERATIONS - USD ($)
 12 Months Ended
Dec. 31, 2023
Dec. 31, 2022
Income Statement [Abstract]    
SALES – NET $ 1,544,821 $ 1,910,061
COST OF SALES 749,107 881,409
GROSS PROFIT 795,714 1,028,652
OPERATING EXPENSES 979,648 950,338
OPERATING INCOME/(LOSS) (183,934) 78,314
OTHER INCOME:    
Interest income 23,151 5,217
Gain on Employee Retention Credit (Note 10) 63,000
TOTAL OTHER INCOME 23,151 68,217
NET INCOME/(LOSS) BEFORE INCOME TAXES (160,783) 146,531
INCOME TAX PROVISION (BENEFIT)
NET INCOME/(LOSS) AFTER INCOME TAXES $ (160,783) $ 146,531
v3.24.0.1
STATEMENTS OF OPERATIONS (Parenthetical) - $ / shares
 12 Months Ended
Dec. 31, 2023
Dec. 31, 2022
Income Statement [Abstract]    
NET INCOME/(LOSS) PER SHARE, BASIC $ (0.03) $ 0.03
NET INCOME/(LOSS) PER SHARE, DILUTED $ (0.03) $ 0.03
WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC 4,946,502 4,946,502
WEIGHTED AVERAGE SHARES OUTSTANDING, DILUTED 4,946,502 4,946,502
v3.24.0.1
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($)
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Total
Beginning balance, value at Dec. 31, 2021 $ 4,947 $ 931,412 $ 703,458 $ 1,640,817
Beginning balance, shares at Dec. 31, 2021 4,946,502      
Net loss 146,531 146,531
Ending balance, value at Dec. 31, 2022 $ 4,947 932,412 849,989 1,787,348
Ending balance, shares at Dec. 31, 2022 4,946,502      
Net loss (160,783) (160,783)
Share based compensation 693 693
Ending balance, value at Dec. 31, 2023 $ 4,947 $ 933,105 $ 689,206 $ 1,627,258
Ending balance, shares at Dec. 31, 2023 4,946,502      
v3.24.0.1
STATEMENTS OF CASH FLOWS - USD ($)
 12 Months Ended
Dec. 31, 2023
Dec. 31, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income/(loss) $ (160,783) $ 146,531
Noncash expenses included in net income:    
Depreciation and amortization 2,427 444
Share based compensation 693
Changes in operating assets and liabilities:    
Accounts receivable 88,802 24,909
Inventories - net 3,021 (223,645)
Prepaid expenses 23,349 (18,241)
Employee retention tax credit receivable 63,000
Accrued interest receivable (1,098) (773)
Accounts payable (101,641) 67,351
Other accrued liabilities and wages (14,567) 21,581
Net Cash used by Operating Activities (96,797) (44,843)
CASH FLOWS FROM INVESTING ACTIVITIES:    
Certificates of deposits purchased (1,550,000) (1,002,283)
Certificates of deposits redeemed 1,401,699 1,150,584
Purchase of equipment (19,768)
Net Cash provided (used) by Investing Activities (168,069) 148,301
CASH FLOWS FROM FINANCING ACTIVITIES:    
Principal payments on CARES Act loan payable (round 1) (7,956)
Net Cash used by Financing Activities (7,956)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (264,866) 95,502
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 751,118 655,616
CASH AND CASH EQUIVALENTS AT END OF YEAR 486,252 751,118
Noncash investing and financing activities:    
Recognition of operating lease liability and right of use asset $ 78,757
v3.24.0.1
Organization and Summary of Significant Accounting Policies
 12 Months Ended
Dec. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and Summary of Significant Accounting Policies

 

  1. Organization and Summary of Significant Accounting Policies

 

Business Organization

 

The Company was incorporated under the laws of the State of Washington on February 10, 1984, primarily to develop, produce, sell and distribute wireless modems that will allow communication between peripherals via radio frequency waves.

 

Effective September 13, 2007, the Company announced their establishment of a “doing business as” or dba structure, based on the Company’s registered trade name of ESTeem® Wireless Modems.

 

Basis of Presentation and Accounting Estimates

 

The preparation of financial statements are prepared in conformity with generally accepted accounting principles in the United States which requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Estimates used in the accompanying financial statements include the allowance for doubtful accounts receivable, inventory obsolescence, useful lives of depreciable assets, share-based compensation, and deferred income taxes. Actual results could differ from those estimates.

 

Concentrations and Credit Risks

 

The Company places its cash with three major financial institutions. During the period, the Company had cash balances that were in excess of federally insured limits.

 

The Company purchases certain key components necessary for the production of its products from a limited number of suppliers. The components provided by the suppliers could be replaced or substituted by other products. It is possible that if this action became necessary, an interruption of production and/or material cost expenditures could take place.

 

Revenue Recognition

 

The Company recognizes revenue when it has satisfied the performance obligation required under a contract with the customer. A performance obligation is a promise in a contract with a customer to transfer a distinct good or service to the customer. Our contracts with customers contain a single performance obligation. A contract’s transaction price is recognized as revenue when, or as, the performance obligation is satisfied.

 

Performance obligations for product sales are satisfied as of a point in time. Revenue is recognized when control of the product transfers to the customer, generally upon product shipment.  Performance obligations for site support and engineering services are satisfied over-time if the customer receives the benefits as we perform work and we have a contractual right to payment. Revenue recognized on an over-time basis is based on costs incurred to date relative to milestones and total estimated costs at completion to measure progress.

 

The Company considers the contractual consideration payable by the customer when determining the transaction price of each contract. Revenue is recorded net of charges for certain sales incentives and discounts, and applicable state and local sales taxes, which represent components of the transaction price. Charges are estimated by us upon shipment of the product based on contractual terms, and actual charges typically do not vary materially from our estimates. Shipping estimates are determined by utilizing shipping costs provided by the various service providers websites based on number of packages, weight and destination. Shipping costs are included in the cost of goods sold as the revenue is captured in total sales.

 

The Company receives payments from customers based on the terms established in our contracts. When amounts are billed and collected before the services are performed, they are included in deferred revenues. The Company does not generally sell its products with the right of return. Therefore, returns are accounted for when they occur and are accepted. Products sold to foreign customers are shipped after payment is received in U.S. funds, unless an established distributor relationship exists, or the customer is a foreign branch of a U.S. company.

 

The Company warrants its products as free of manufacturing defects and provides a refund of the purchase price, repair or replacement of the product for a period of one year from the date of installation by the first user/customer.  No allowance for estimated warranty repairs or product returns has been recorded due to the Company’s historical experience of repairs and product returns.

 

Financial Instruments

 

The Company’s financial instruments are cash, cash equivalents, and certificates of deposit. The recorded values of cash, and certificates of deposit approximate their fair values based on their short-term nature.

 

Cash and Cash Equivalents

 

Cash and cash equivalents are cash purchased with original maturities of three months or less.

 

Allowance for Uncollectible Accounts

 

The Company uses the allowance method to account for estimated uncollectible accounts receivable. Accounts receivable are presented net of an allowance for doubtful accounts. As of December 31, 2023 and 2022, the Company’s estimate of doubtful accounts was zero . The Company’s policy for writing off past due accounts receivable is based on the time past due and responses received from the subject customer.

 

Inventories

 

Inventories are stated at lower of direct cost or market. Cost is determined on an average cost basis that approximates the first-in, first-out (FIFO) method. Market is determined based on net realizable value and consideration is given to obsolescence.

 

Property and Equipment

 

Property and equipment are carried at cost. Major betterments are capitalized and de minimis purchases are expensed. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The useful life of property and equipment for purposes of computing depreciation is three to seven years. When the Company sells or otherwise disposes of property and equipment, a gain or loss is recorded in the statement of operations. The cost of improvements that extend the life of property and equipment is capitalized. The Company periodically reviews its long-lived assets for impairment and, upon indication that the carrying value of such assets may not be recoverable, recognizes an impairment loss by a charge against current operations.

 

Certificates of Deposit

 

Certificates of deposit with original maturities ranging from one month to twelve months were $400,000 and $251,699 at December 31, 2023 and 2022, respectively.

 

Leases

 

Contracts that meet the definition of a lease are classified as operating or financing leases and are recorded on the balance sheet as both a right-of-use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right-of-use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right-of-use asset result in straight-line rent expense over the lease term. Variable lease expenses are recorded when incurred.

 

Income Taxes

 

The provision (benefit) for income taxes is computed on the pretax income (loss) based on the current tax law. Deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates. The Company evaluates positive and negative information when estimating the valuation allowance for deferred tax assets. For tax positions that meet the more likely than not recognition threshold a deferred tax asset is recognized.

 

Research and Development

 

Research and development costs are recognized as operating expenses when incurred. Research and development expenditures for new product development and improvements of existing products by the Company for 2023 and 2022 were $121,896 and $163,189, respectively.

 

Advertising Costs

 

Costs incurred for producing and communicating advertising are recognized as operating expenses when incurred. Advertising costs for the years ended December 31, 2023 and 2022 were $10,038 and $8,895, respectively.

 

Earnings Per Share

 

The Company is required to have dual presentation of basic earnings per share (“EPS”) and diluted EPS.  Basic EPS is computed as net income (loss) divided by the weighted average number of common shares outstanding for the period. Diluted EPS is calculated based on the weighted average number of common shares outstanding during the period plus the effect of potentially dilutive common stock equivalents.

 

Potentially dilutive common stock equivalents consist of 225,000 and 180,000 stock options outstanding as of December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, the potentially dilutive stock options were not included in the calculation of the diluted weighted average number of shares outstanding or diluted EPS as their effect would have been anti-dilutive.

 

Share-Based Compensation

 

Share-based payments to employees, including grants of employee stock options, are measured at fair value and expensed in the statement of operations over the vesting period. In addition to the recognition of expense in the financial statements, any excess tax benefits received upon exercise of options will be presented as a financing activity inflow rather than an adjustment of operating activity in the statement of cash flows. The fair value of stock options is determined using a Black-Scholes valuation model. Option pricing models require the input of subjective assumptions including the length of time employees will retain their vested stock options before exercising them, expected share price volatility, and interest rate. Changes in the input assumptions can materially affect the fair value estimate and the Company's net loss. 

 

Fair Value Measurements

 

When required to measure assets or liabilities at fair value, the Company uses a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used. The Company determines the level within the fair value hierarchy in which the fair value measurements in their entirety fall. The categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Level 1 uses quoted prices in active markets for identical assets or liabilities, Level 2 uses significant other observable inputs, and Level 3 uses significant unobservable inputs. The amount of the total gains or losses for the period are included in earnings that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date. At December 31, 2023 and 2022, the Company has no assets or liabilities subject to fair value measurements on a recurring basis.

 

New Accounting Pronouncements

 

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2023-07 (“ASU 2023-07”), Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, amending reportable segment disclosure requirements to include disclosure of incremental segment information on an annual and interim basis. Among the disclosure enhancements are new disclosures regarding significant segment expenses that are regularly provided to the chief operating decision-maker and included within each reported measure of segment profit or loss, as well as other segment items bridging segment revenue to each reported measure of segment profit or loss. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, and are applied retrospectively. Early adoption is permitted. We are currently evaluating the impact of this update on our financial statements and disclosures.

 

In December 2023, the FASB issued Accounting Standards Update 2023-09 (“ASU 2023-09”), Income Taxes (Topic 740): Improvement to Income Tax Disclosures, amending income tax disclosure requirements for the effective tax rate reconciliation and income taxes paid. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024 and are applied prospectively. Early adoption and retrospective application of the amendments are permitted. We are currently evaluating the impact of this update on our financial statements and disclosures.

 

Other accounting standards 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.

 
v3.24.0.1
Inventories
 12 Months Ended
Dec. 31, 2023
Inventory Disclosure [Abstract]  
Inventories

 

  2. Inventories

 

Inventories consist of the following:

 

      
   2023  2022
Parts  $118,472   $172,190 
Work in progress   313,597    336,298 
Finished goods   290,388    216,990 
Total inventories  $722,457   $725,478 

 

Included in the above amounts are reserves for obsolete inventories of $8,935 and $8,716 at December 31, 2023 and 2022, respectively.
v3.24.0.1
Property and Equipment
 12 Months Ended
Dec. 31, 2023
Property, Plant and Equipment [Abstract]  
Property and Equipment

 

  3. Property and Equipment

 

Property and equipment consist of the following at December 31, 2023 and 2022:

 

      
   2023  2022
Laboratory equipment  $554,740   $522,575 
Software   18,245    35,028 
Furniture and fixtures   15,262    16,344 
Dies and molds   73,607    73,607 
Property plant and equipment, gross   661,854    647,554 
Accumulated depreciation and amortization   (643,599)   (646,640)
Total property plant and equipment, net  $18,255   $914 

 
v3.24.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes

 

  4. Income Taxes

 

For the years ended December 31, 2023 and 2022, the Company did not have an income tax benefit nor provision because of continuing losses.

 

The components of net deferred tax assets are as follows:

 

      
   December 31,
   2023  2022
Deferred tax assets:          
Net operating loss carryforwards  $314,500   $280,300 
Accrued liabilities   4,300    3,500 
Inventories   11,600    10,500 
Other   1,100    1,200 
Federal income tax credits   67,000    67,000 
Total deferred tax assets   398,500    362,500 
Less valuation allowance   (396,000)   (362,500)
Total deferred tax assets, net   2,500    —   
Deferred tax liabilities:          
Property and equipment   (2,500)   —   
Total deferred tax liabilities   (2,500)   —   
           
Total deferred tax assets, net  $—     $—   

 

Realization of the deferred tax asset is dependent on generating sufficient taxable income prior to expiration of the loss carryforwards and the income tax carryforwards. Management determined that it does not believe it is more likely than not that all of the net deferred tax assets will be realized. Therefore, a valuation allowance has been recorded for the full net deferred tax asset at December 31, 2023 and 2022.

 

At December 31, 2023, the Company had approximately $67,000 of research and development income tax credits available to reduce federal income taxes in future periods. The credits expire from 2036-2041. In addition, at December 31, 2023, the Company had approximately $1,498,000 of net operating loss carryforwards, $585,000 of which will expire between 2035 and 2038. The remaining balance of $913,000 will never expire but whose utilization is limited to 80% of taxable income in any future year.

 

The differences between the provision (benefit) for federal income taxes and federal income taxes computed using the U.S. statutory federal income tax rate of 21% were as follows:

 

      
   2023  2022
Amount computed using the statutory rate  $(33,800)  $30,800 
Non-deductible (taxable) items, net   400    (12,900)
Change in estimates   (100)   200)
Change in valuation allowance   33,500    18,000 
Provision (benefit) for federal income taxes  $—     $—   

 

Should the Company have future accrued interest expense and penalties related to uncertain income tax positions, they will recognize those expenses in income tax expense.

 

The Company files federal income tax returns in the United States only. The Company is no longer subject to federal income tax examination by tax authorities for years before 2020. The Company has evaluated all tax positions for open years and has concluded that they have no material unrecognized tax benefits or penalties.

 
v3.24.0.1
Profit Sharing Salary Deferral 401-K Plan
 12 Months Ended
Dec. 31, 2023
Retirement Benefits [Abstract]  
Profit Sharing Salary Deferral 401-K Plan

 

  5. Profit Sharing Salary Deferral 401-K Plan

 

The Company sponsors a Profit-Sharing Plan and Salary Deferral 401-K Plan and Trust. All employees over the age of twenty-one are eligible. On January 1, 2006, the Company adopted a four percent salary matching provision. The Company contributed $20,675 and $20,886 to the plan for the years ended December 31, 2023 and 2022, respectively.
v3.24.0.1
Employee Bonus Program
 12 Months Ended
Dec. 31, 2023
Employee Bonus Program  
Employee Bonus Program

 

  6. Employee Bonus Program

 

The Board of Directors establishes sales and net income thresholds at the start of each year that are used in calculating the amount of bonuses that may be awarded. If these thresholds are not achieved, there will be no bonus issued. Bonus expenses of nil 0 and $17,719 were recognized during the years ended December 31, 2023 and 2022, respectively. At December 31, 2023 and 2022, accrued wages on the balance sheet includes nil 0 and $17,719, respectively, for accrued bonus payable.
v3.24.0.1
Share-Based Compensation
 12 Months Ended
Dec. 31, 2023
Share-Based Payment Arrangement [Abstract]  
Share-Based Compensation

 

  7. Share-Based Compensation

 

The Company grants stock options to individual employees and directors. After termination of employment, stock options may be exercised within ninety days, after which they are subject to forfeiture. 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 vested 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%.

 

In the years ended December 31, 2023 and 2022, the Company recognized $693 and nil 0 respectively, in share-based compensation expense. No non-vested share-based compensation arrangements existed as of December 31, 2023 and 2022.

 

 

A summary of option activity follows:

 

         
   Number
Outstanding		  Weighted
Average
Exercise Price
Per Option		  Weighted
Average
Remaining
Contractual
Term (Years)
Balance at December 31, 2021   240,000    0.40    3.6 
   Canceled   (60,000)   0.40      
Balance at December 31, 2022   180,000   $0.40    2.5 
   Granted   45,000    0.40      
Balance at December 31, 2023   225,000   $0.40    1.7 
                
Outstanding and Exercisable at December 31, 2023   225,000   $0.40    1.7 

 

The aggregate intrinsic value of the options outstanding and exercisable at December 31, 2023 was nil.

 
v3.24.0.1
Leases
 12 Months Ended
Dec. 31, 2023
Leases  
Leases

 

  8. Leases

 

On September 19, 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 a 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 December 31, 2023, the remaining lease term is nine months.

 

Prior to the new lease in September 19, 2022, the Company’s lease for its facilities was for $3,806 per month.

 

As of December 31, 2023, total future lease payments are as follows:

 

   
For the 12 months ended   
December 31, 2024   31,304 
Less imputed interest   (531)
Net lease liability   30,773 

 

For the years ended December 31, 2023 and 2022, costs relating to the operating lease were recognized in the statement of operations as follows:

 

                              
   2023   2022 
   Cost of
sales		   Operating
expenses		   Total   Cost of
sales		   Operating
expenses		   Total 
Base rent pursuant to lease agreement  $  23,002   $18,104   $  41,106   $  23,002   $18,104   $  41,106 
Variable lease costs   2,931    2,306    5,237    2,976    2,342    5,319 
Total lease costs  $25,933   $20,410   $46,343   $25,978   $20,446   $46,425 
v3.24.0.1
Revenue
 12 Months Ended
Dec. 31, 2023
Revenue from Contract with Customer [Abstract]  
Revenue

 

  9. Revenue

 

The Company derives revenues from the sales of 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. The Company’s customers, to which trade credit terms are extended, consist of United States and local governments and foreign and domestic companies.

 

                              
   For the years ending December 31, 
   2023   2022 
    Domestic Sales    Foreign Sales    Total Sales    Domestic Sales    Foreign Sales    Total Sales 
Product Sales   1,461,785    56,136    1,517,921    1,668,861    212,800    1,881,661 
Site Support Sales   26,900    —      26,900    28,400    —      28,400 
Total Sales   1,488,685    56,136    1,544,821    1,697,261    212,800    1,910,061 

 

For the year ended December 31, 2023 and 2022, sales to customers that are more than 10% of total revenue are as follows:

 

                
   2023 Sales   2023 % age of
Total Sales		   2022 Sales   2022 % age of
Total Sales		 
Domestic customer A  $307,048    19.9%  $397,671    20.8%
Domestic customer B  $—      —      201,459    10.5%

 

Revenue continued

 

As of December 31, 2023 and 2022, accounts receivable from customers that are more than 10% of the total accounts receivable balance are as follows:

 

        
  

Accounts

Receivable

Balance

  

% age of
Total Accounts

Receivable

  

Accounts

Receivable

Balance

  

% age of
Total Accounts

Receivable

 
Domestic customer A  $14,087    26.8%  $95,724    67.7%
Domestic customer B   10,806    20.5    16,037    11.3 
Domestic customer C   6,478    12.3    —      —   
Domestic customer D   5,956    11.3    —      —   
Domestic customer E   5,265    10.0    —      —   

 

As of December 31, 2023 and 2022, the Company had a sales order backlog of $55,636 and $49,173, respectively.
v3.24.0.1
Employee Retention Credit
 12 Months Ended
Dec. 31, 2023
Employee Retention Credit  
Employee Retention Credit

  

  10. Employee Retention Credit

 

 The Company received $63,000 in 2023 that was a receivable at December 31, 2022, for the retention tax credit. The Company recognized the $63,000 as income for the year ended December 31, 2022.

 

 
v3.24.0.1
Supplemental Information
 12 Months Ended
Dec. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Supplemental Information

Supplemental Information


SUPPLEMENTAL SCHEDULE OF OPERATING EXPENSES
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

 

          
   2023   2022 
         
Advertising  $10,038   $8,895 
Dues and subscriptions   3,772    3,547 
Depreciation and  amortization   2,427    444 
Insurance   14,632    13,485 
Materials and supplies   9,341    10,370 
Office and administration   7,008    4,890 
Printing   2,306    2,658 
Professional services   101,923    91,096 
Services purchased in lieu of payroll   —      45,875 
Rent and utilities   52,085    50,308 
Repair and maintenance   423    4,259 
Salaries and benefits   715,863    696,665 
Taxes, licenses & health insurance   203,124    194,839 
Telephone   4,778    5,372 
Warranty expense   2,353    2,897 
Trade shows   15,505    12,199 
Travel expenses   29,100    15,984 
           
 Expenses before allocated to cost of sales   1,174,678    1,163,783 
           
Expenses allocated to cost of sales   (195,030)   (213,445)
           
Total Operating Expenses  $979,648   $950,338 

 
v3.24.0.1
Organization and Summary of Significant Accounting Policies (Policies)
 12 Months Ended
Dec. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Business Organization

Business Organization

 

The Company was incorporated under the laws of the State of Washington on February 10, 1984, primarily to develop, produce, sell and distribute wireless modems that will allow communication between peripherals via radio frequency waves.

 

Effective September 13, 2007, the Company announced their establishment of a “doing business as” or dba structure, based on the Company’s registered trade name of ESTeem® Wireless Modems.

 
Basis of Presentation and Accounting Estimates

Basis of Presentation and Accounting Estimates

 

The preparation of financial statements are prepared in conformity with generally accepted accounting principles in the United States which requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Estimates used in the accompanying financial statements include the allowance for doubtful accounts receivable, inventory obsolescence, useful lives of depreciable assets, share-based compensation, and deferred income taxes. Actual results could differ from those estimates.

 
Concentrations and Credit Risks

Concentrations and Credit Risks

 

The Company places its cash with three major financial institutions. During the period, the Company had cash balances that were in excess of federally insured limits.

 

The Company purchases certain key components necessary for the production of its products from a limited number of suppliers. The components provided by the suppliers could be replaced or substituted by other products. It is possible that if this action became necessary, an interruption of production and/or material cost expenditures could take place.

 
Revenue Recognition

Revenue Recognition

 

The Company recognizes revenue when it has satisfied the performance obligation required under a contract with the customer. A performance obligation is a promise in a contract with a customer to transfer a distinct good or service to the customer. Our contracts with customers contain a single performance obligation. A contract’s transaction price is recognized as revenue when, or as, the performance obligation is satisfied.

 

Performance obligations for product sales are satisfied as of a point in time. Revenue is recognized when control of the product transfers to the customer, generally upon product shipment.  Performance obligations for site support and engineering services are satisfied over-time if the customer receives the benefits as we perform work and we have a contractual right to payment. Revenue recognized on an over-time basis is based on costs incurred to date relative to milestones and total estimated costs at completion to measure progress.

 

The Company considers the contractual consideration payable by the customer when determining the transaction price of each contract. Revenue is recorded net of charges for certain sales incentives and discounts, and applicable state and local sales taxes, which represent components of the transaction price. Charges are estimated by us upon shipment of the product based on contractual terms, and actual charges typically do not vary materially from our estimates. Shipping estimates are determined by utilizing shipping costs provided by the various service providers websites based on number of packages, weight and destination. Shipping costs are included in the cost of goods sold as the revenue is captured in total sales.

 

The Company receives payments from customers based on the terms established in our contracts. When amounts are billed and collected before the services are performed, they are included in deferred revenues. The Company does not generally sell its products with the right of return. Therefore, returns are accounted for when they occur and are accepted. Products sold to foreign customers are shipped after payment is received in U.S. funds, unless an established distributor relationship exists, or the customer is a foreign branch of a U.S. company.

 

The Company warrants its products as free of manufacturing defects and provides a refund of the purchase price, repair or replacement of the product for a period of one year from the date of installation by the first user/customer.  No allowance for estimated warranty repairs or product returns has been recorded due to the Company’s historical experience of repairs and product returns.

 
Financial Instruments

Financial Instruments

 

The Company’s financial instruments are cash, cash equivalents, and certificates of deposit. The recorded values of cash, and certificates of deposit approximate their fair values based on their short-term nature.

 
Cash and Cash Equivalents

Cash and Cash Equivalents

 

Cash and cash equivalents are cash purchased with original maturities of three months or less.

 
Allowance for Uncollectible Accounts

Allowance for Uncollectible Accounts

 

The Company uses the allowance method to account for estimated uncollectible accounts receivable. Accounts receivable are presented net of an allowance for doubtful accounts. As of December 31, 2023 and 2022, the Company’s estimate of doubtful accounts was zero . The Company’s policy for writing off past due accounts receivable is based on the time past due and responses received from the subject customer.

 
Inventories

Inventories

 

Inventories are stated at lower of direct cost or market. Cost is determined on an average cost basis that approximates the first-in, first-out (FIFO) method. Market is determined based on net realizable value and consideration is given to obsolescence.

 
Property and Equipment

Property and Equipment

 

Property and equipment are carried at cost. Major betterments are capitalized and de minimis purchases are expensed. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The useful life of property and equipment for purposes of computing depreciation is three to seven years. When the Company sells or otherwise disposes of property and equipment, a gain or loss is recorded in the statement of operations. The cost of improvements that extend the life of property and equipment is capitalized. The Company periodically reviews its long-lived assets for impairment and, upon indication that the carrying value of such assets may not be recoverable, recognizes an impairment loss by a charge against current operations.

 
Certificates of Deposit

Certificates of Deposit

 

Certificates of deposit with original maturities ranging from one month to twelve months were $400,000 and $251,699 at December 31, 2023 and 2022, respectively.

 
Leases

Leases

 

Contracts that meet the definition of a lease are classified as operating or financing leases and are recorded on the balance sheet as both a right-of-use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right-of-use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right-of-use asset result in straight-line rent expense over the lease term. Variable lease expenses are recorded when incurred.

 
Income Taxes

Income Taxes

 

The provision (benefit) for income taxes is computed on the pretax income (loss) based on the current tax law. Deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates. The Company evaluates positive and negative information when estimating the valuation allowance for deferred tax assets. For tax positions that meet the more likely than not recognition threshold a deferred tax asset is recognized.

 
Research and Development

Research and Development

 

Research and development costs are recognized as operating expenses when incurred. Research and development expenditures for new product development and improvements of existing products by the Company for 2023 and 2022 were $121,896 and $163,189, respectively.

 
Advertising Costs

Advertising Costs

 

Costs incurred for producing and communicating advertising are recognized as operating expenses when incurred. Advertising costs for the years ended December 31, 2023 and 2022 were $10,038 and $8,895, respectively.

 
Earnings Per Share

Earnings Per Share

 

The Company is required to have dual presentation of basic earnings per share (“EPS”) and diluted EPS.  Basic EPS is computed as net income (loss) divided by the weighted average number of common shares outstanding for the period. Diluted EPS is calculated based on the weighted average number of common shares outstanding during the period plus the effect of potentially dilutive common stock equivalents.

 

Potentially dilutive common stock equivalents consist of 225,000 and 180,000 stock options outstanding as of December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, the potentially dilutive stock options were not included in the calculation of the diluted weighted average number of shares outstanding or diluted EPS as their effect would have been anti-dilutive.

 
Share-Based Compensation

Share-Based Compensation

 

Share-based payments to employees, including grants of employee stock options, are measured at fair value and expensed in the statement of operations over the vesting period. In addition to the recognition of expense in the financial statements, any excess tax benefits received upon exercise of options will be presented as a financing activity inflow rather than an adjustment of operating activity in the statement of cash flows. The fair value of stock options is determined using a Black-Scholes valuation model. Option pricing models require the input of subjective assumptions including the length of time employees will retain their vested stock options before exercising them, expected share price volatility, and interest rate. Changes in the input assumptions can materially affect the fair value estimate and the Company's net loss. 

 
Fair Value Measurements

Fair Value Measurements

 

When required to measure assets or liabilities at fair value, the Company uses a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used. The Company determines the level within the fair value hierarchy in which the fair value measurements in their entirety fall. The categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Level 1 uses quoted prices in active markets for identical assets or liabilities, Level 2 uses significant other observable inputs, and Level 3 uses significant unobservable inputs. The amount of the total gains or losses for the period are included in earnings that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date. At December 31, 2023 and 2022, the Company has no assets or liabilities subject to fair value measurements on a recurring basis.

 
New Accounting Pronouncements

New Accounting Pronouncements

 

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2023-07 (“ASU 2023-07”), Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, amending reportable segment disclosure requirements to include disclosure of incremental segment information on an annual and interim basis. Among the disclosure enhancements are new disclosures regarding significant segment expenses that are regularly provided to the chief operating decision-maker and included within each reported measure of segment profit or loss, as well as other segment items bridging segment revenue to each reported measure of segment profit or loss. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, and are applied retrospectively. Early adoption is permitted. We are currently evaluating the impact of this update on our financial statements and disclosures.

 

In December 2023, the FASB issued Accounting Standards Update 2023-09 (“ASU 2023-09”), Income Taxes (Topic 740): Improvement to Income Tax Disclosures, amending income tax disclosure requirements for the effective tax rate reconciliation and income taxes paid. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024 and are applied prospectively. Early adoption and retrospective application of the amendments are permitted. We are currently evaluating the impact of this update on our financial statements and disclosures.

 

Other accounting standards 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.

 
v3.24.0.1
Inventories (Tables)
 12 Months Ended
Dec. 31, 2023
Inventory Disclosure [Abstract]  
Schedule of inventories
      
   2023  2022
Parts  $118,472   $172,190 
Work in progress   313,597    336,298 
Finished goods   290,388    216,990 
Total inventories  $722,457   $725,478 
v3.24.0.1
Property and Equipment (Tables)
 12 Months Ended
Dec. 31, 2023
Property, Plant and Equipment [Abstract]  
Schedule of property and equipment
      
   2023  2022
Laboratory equipment  $554,740   $522,575 
Software   18,245    35,028 
Furniture and fixtures   15,262    16,344 
Dies and molds   73,607    73,607 
Property plant and equipment, gross   661,854    647,554 
Accumulated depreciation and amortization   (643,599)   (646,640)
Total property plant and equipment, net  $18,255   $914 
v3.24.0.1
Income Taxes (Tables)
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Schedule of deferred tax assets and liabilities
      
   December 31,
   2023  2022
Deferred tax assets:          
Net operating loss carryforwards  $314,500   $280,300 
Accrued liabilities   4,300    3,500 
Inventories   11,600    10,500 
Other   1,100    1,200 
Federal income tax credits   67,000    67,000 
Total deferred tax assets   398,500    362,500 
Less valuation allowance   (396,000)   (362,500)
Total deferred tax assets, net   2,500    —   
Deferred tax liabilities:          
Property and equipment   (2,500)   —   
Total deferred tax liabilities   (2,500)   —   
           
Total deferred tax assets, net  $—     $—   
Schedule of provision for federal income taxes
      
   2023  2022
Amount computed using the statutory rate  $(33,800)  $30,800 
Non-deductible (taxable) items, net   400    (12,900)
Change in estimates   (100)   200)
Change in valuation allowance   33,500    18,000 
Provision (benefit) for federal income taxes  $—     $—   
v3.24.0.1
Share-Based Compensation (Tables)
 12 Months Ended
Dec. 31, 2023
Share-Based Payment Arrangement [Abstract]  
Schedule of stock option activity
         
   Number
Outstanding		  Weighted
Average
Exercise Price
Per Option		  Weighted
Average
Remaining
Contractual
Term (Years)
Balance at December 31, 2021   240,000    0.40    3.6 
   Canceled   (60,000)   0.40      
Balance at December 31, 2022   180,000   $0.40    2.5 
   Granted   45,000    0.40      
Balance at December 31, 2023   225,000   $0.40    1.7 
                
Outstanding and Exercisable at December 31, 2023   225,000   $0.40    1.7 
v3.24.0.1
Leases (Tables)
 12 Months Ended
Dec. 31, 2023
Leases  
Schedule of future minimum lease payment
   
For the 12 months ended   
December 31, 2024   31,304 
Less imputed interest   (531)
Net lease liability   30,773 
Schedule of cost related to operating lease
                              
   2023   2022 
   Cost of
sales		   Operating
expenses		   Total   Cost of
sales		   Operating
expenses		   Total 
Base rent pursuant to lease agreement  $  23,002   $18,104   $  41,106   $  23,002   $18,104   $  41,106 
Variable lease costs   2,931    2,306    5,237    2,976    2,342    5,319 
Total lease costs  $25,933   $20,410   $46,343   $25,978   $20,446   $46,425 
v3.24.0.1
Revenue (Tables)
 12 Months Ended
Dec. 31, 2023
Revenue from Contract with Customer [Abstract]  
Schedule of revenue by products
                              
   For the years ending December 31, 
   2023   2022 
    Domestic Sales    Foreign Sales    Total Sales    Domestic Sales    Foreign Sales    Total Sales 
Product Sales   1,461,785    56,136    1,517,921    1,668,861    212,800    1,881,661 
Site Support Sales   26,900    —      26,900    28,400    —      28,400 
Total Sales   1,488,685    56,136    1,544,821    1,697,261    212,800    1,910,061 
Schedule of revenue by customers
                
   2023 Sales   2023 % age of
Total Sales		   2022 Sales   2022 % age of
Total Sales		 
Domestic customer A  $307,048    19.9%  $397,671    20.8%
Domestic customer B  $—      —      201,459    10.5%
Schedule of accounts receivable from customers
        
  

Accounts

Receivable

Balance

  

% age of
Total Accounts

Receivable

  

Accounts

Receivable

Balance

  

% age of
Total Accounts

Receivable

 
Domestic customer A  $14,087    26.8%  $95,724    67.7%
Domestic customer B   10,806    20.5    16,037    11.3 
Domestic customer C   6,478    12.3    —      —   
Domestic customer D   5,956    11.3    —      —   
Domestic customer E   5,265    10.0    —      —   
v3.24.0.1
Supplemental Information (Tables)
 12 Months Ended
Dec. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Supplemental schedule of operating expenses
          
   2023   2022 
         
Advertising  $10,038   $8,895 
Dues and subscriptions   3,772    3,547 
Depreciation and  amortization   2,427    444 
Insurance   14,632    13,485 
Materials and supplies   9,341    10,370 
Office and administration   7,008    4,890 
Printing   2,306    2,658 
Professional services   101,923    91,096 
Services purchased in lieu of payroll   —      45,875 
Rent and utilities   52,085    50,308 
Repair and maintenance   423    4,259 
Salaries and benefits   715,863    696,665 
Taxes, licenses & health insurance   203,124    194,839 
Telephone   4,778    5,372 
Warranty expense   2,353    2,897 
Trade shows   15,505    12,199 
Travel expenses   29,100    15,984 
           
 Expenses before allocated to cost of sales   1,174,678    1,163,783 
           
Expenses allocated to cost of sales   (195,030)   (213,445)
           
Total Operating Expenses  $979,648   $950,338 
v3.24.0.1
Organization and Summary of Significant Accounting Policies (Details Narrative) - USD ($)
 12 Months Ended
Dec. 31, 2023
Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Entity incorporation, date of incorporation Feb. 10, 1984  
Allowance for doubtful accounts $ 0 $ 0
Certificates of deposits 400,000 251,699
Research and development expenditures 121,896 163,189
Advertising costs $ 10,038 $ 8,895
Anti-dilutive 225,000 180,000
v3.24.0.1
Inventories (Details) - USD ($)
Dec. 31, 2023
Dec. 31, 2022
Inventory Disclosure [Abstract]    
Parts $ 118,472 $ 172,190
Work in progress 313,597 336,298
Finished goods 290,388 216,990
Total inventories $ 722,457 $ 725,478
v3.24.0.1
Inventories (Details Narrative) - USD ($)
 12 Months Ended
Dec. 31, 2023
Dec. 31, 2022
Inventory Disclosure [Abstract]    
Reserves for obsolete inventories $ 8,935 $ 8,716
v3.24.0.1
Property and Equipment (Details) - USD ($)
Dec. 31, 2023
Dec. 31, 2022
Property, Plant and Equipment [Abstract]    
Laboratory equipment $ 554,740 $ 522,575
Software 18,245 35,028
Furniture and fixtures 15,262 16,344
Dies and molds 73,607 73,607
Property plant and equipment, gross 661,854 647,554
Accumulated depreciation and amortization (643,599) (646,640)
Total property plant and equipment, net $ 18,255 $ 914
v3.24.0.1
Income Taxes (Details) - USD ($)
Dec. 31, 2023
Dec. 31, 2022
Deferred tax assets:    
Net operating loss carryforwards $ 314,500 $ 280,300
Accrued liabilities 4,300 3,500
Inventories 11,600 10,500
Other 1,100 1,200
Federal income tax credits 67,000 67,000
Total deferred tax assets 398,500 362,500
Less valuation allowance (396,000) (362,500)
Total deferred tax assets, net 2,500
Deferred tax liabilities:    
Property and equipment (2,500)
Total deferred tax liabilities (2,500)
Total deferred tax assets, net
v3.24.0.1
Income Taxes (Details 1) - USD ($)
 12 Months Ended
Dec. 31, 2023
Dec. 31, 2022
Income Tax Disclosure [Abstract]    
Amount computed using the statutory rate $ (33,800) $ 30,800
Non-deductible (taxable) items, net 400 (12,900)
Change in estimates (100) 200
Change in valuation allowance 33,500 18,000
Provision (benefit) for federal income taxes
v3.24.0.1
Income Taxes (Details Narrative)
 12 Months Ended
Dec. 31, 2023
USD ($)
Income Tax Disclosure [Abstract]  
Research and development income tax $ 67,000
Operating loss carryforwards $ 1,498,000
v3.24.0.1
Profit Sharing Salary Deferral 401-K Plan (Details Narrative) - USD ($)
 12 Months Ended
Dec. 31, 2023
Dec. 31, 2022
Retirement Benefits [Abstract]    
Profit-sharing plan and salary $ 20,675 $ 20,886
v3.24.0.1
Employee Bonus Program (Details Narrative) - USD ($)
Dec. 31, 2023
Dec. 31, 2022
Employee Bonus Program    
Bonus expenses $ 0 $ 17,719
Accrued wages $ 0 $ 17,719
v3.24.0.1
Share-Based Compensation (Details) - Equity Option [Member] - $ / shares
 12 Months Ended
Dec. 31, 2023
Dec. 31, 2022
Dec. 31, 2021
Offsetting Assets [Line Items]      
Number of outstanding, Beginning balance 180,000 240,000  
Weighted average exercise price per option, Beginning balance $ 0.40 $ 0.40  
Weighted average remaining contractual term (years) 1 year 8 months 12 days 2 years 6 months 3 years 7 months 6 days
Number of outstanding, Canceled   (60,000)  
Weighted average exercise price per option, Canceled   $ 0.40  
Number of outstanding, Granted 45,000    
Weighted average exercise price per option, Granted $ 0.40    
Number of outstanding, Ending balance 225,000 180,000 240,000
Weighted average exercise price per option, Ending balance $ 0.40 $ 0.40 $ 0.40
Outstanding and Exercisable 225,000    
Weighted average exercise price per option, Outstanding and exercisable $ 0.40    
Weighted average remaining contractual term (years), Outstanding and exercisable 1 year 8 months 12 days    
v3.24.0.1
Share-Based Compensation (Details Narrative) - USD ($)
 12 Months Ended
Jun. 09, 2023
Dec. 31, 2023
Dec. 31, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Share based compensation   $ 693 $ 0
Share-Based Payment Arrangement, Option [Member]      
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Granted 45,000    
Options exercise price $ 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%    
v3.24.0.1
Leases (Details) - USD ($)
Dec. 31, 2023
Sep. 19, 2022
For the 12 months ended    
December 31, 2024 $ 31,304  
Less imputed interest (531)  
Net lease liability $ 30,773 $ 78,757
v3.24.0.1
Leases (Details 2) - USD ($)
 12 Months Ended
Dec. 31, 2023
Dec. 31, 2022
Base rent pursuant to lease agreement $ 41,106 $ 41,106
Variable lease costs 5,237 5,319
Total lease costs 46,343 46,425
Cost of Sales [Member]    
Base rent pursuant to lease agreement 23,002 23,002
Variable lease costs 2,931 2,976
Total lease costs 25,933 25,978
Operating Expense [Member]    
Base rent pursuant to lease agreement 18,104 18,104
Variable lease costs 2,306 2,342
Total lease costs $ 20,410 $ 20,446
v3.24.0.1
Leases (Details Narrative) - USD ($)
 12 Months Ended
Sep. 19, 2022
Dec. 31, 2023
Dec. 31, 2022
Base lease   $ 41,106 $ 41,106
Leasehold tax percentage 12.84%    
Lease liability $ 78,757 30,773  
Right of use assets $ 78,757 $ 30,298 $ 69,419
Incremental borrowing rate 4.125%    
Operating lease expense $ 3,806    
Monthly Rate Year One [Member]      
Base lease 3,373    
Monthly Rate Year Two [Member]      
Base lease $ 3,478    
v3.24.0.1
Revenue (Details) - USD ($)
 12 Months Ended
Dec. 31, 2023
Dec. 31, 2022
Disaggregation of Revenue [Line Items]    
Total Sales $ 1,544,821 $ 1,910,061
Product [Member]    
Disaggregation of Revenue [Line Items]    
Total Sales 1,517,921 1,881,661
Site Support Sales [Member]    
Disaggregation of Revenue [Line Items]    
Total Sales 26,900 28,400
Geographic Distribution, Domestic [Member]    
Disaggregation of Revenue [Line Items]    
Total Sales 1,488,685 1,697,261
Geographic Distribution, Domestic [Member] | Product [Member]    
Disaggregation of Revenue [Line Items]    
Total Sales 1,461,785 1,668,861
Geographic Distribution, Domestic [Member] | Site Support Sales [Member]    
Disaggregation of Revenue [Line Items]    
Total Sales 26,900 28,400
Geographic Distribution, Foreign [Member]    
Disaggregation of Revenue [Line Items]    
Total Sales 56,136 212,800
Geographic Distribution, Foreign [Member] | Product [Member]    
Disaggregation of Revenue [Line Items]    
Total Sales 56,136 212,800
Geographic Distribution, Foreign [Member] | Site Support Sales [Member]    
Disaggregation of Revenue [Line Items]    
Total Sales
v3.24.0.1
Revenue (Details 1) - USD ($)
 12 Months Ended
Dec. 31, 2023
Dec. 31, 2022
Disaggregation of Revenue [Line Items]    
Revenues $ 1,544,821 $ 1,910,061
Geographic Distribution, Domestic [Member]    
Disaggregation of Revenue [Line Items]    
Revenues 1,488,685 1,697,261
Customer Concentration Risk [Member] | Geographic Distribution, Domestic [Member] | Revenue Benchmark [Member] | Customer A [Member]    
Disaggregation of Revenue [Line Items]    
Revenues $ 307,048 $ 397,671
Concentration risk, percentage 19.90% 20.80%
Customer Concentration Risk [Member] | Geographic Distribution, Domestic [Member] | Revenue Benchmark [Member] | Customer B [Member]    
Disaggregation of Revenue [Line Items]    
Revenues $ 201,459
Concentration risk, percentage 10.50%
v3.24.0.1
Revenue (Details 2) - Customer Concentration Risk [Member] - Geographic Distribution, Domestic [Member] - Accounts Receivable [Member] - USD ($)
 12 Months Ended
Dec. 31, 2023
Dec. 31, 2022
Customer A [Member]    
Disaggregation of Revenue [Line Items]    
Account receivable $ 14,087 $ 95,724
Concentration risk, percentage 26.80% 67.70%
Customer B [Member]    
Disaggregation of Revenue [Line Items]    
Account receivable $ 10,806 $ 16,037
Concentration risk, percentage 20.50% 11.30%
Customer C [Member]    
Disaggregation of Revenue [Line Items]    
Account receivable $ 6,478
Concentration risk, percentage 12.30%
Customer D [Member]    
Disaggregation of Revenue [Line Items]    
Account receivable $ 5,956
Concentration risk, percentage 11.30%
Customer E [Member]    
Disaggregation of Revenue [Line Items]    
Account receivable $ 5,265
Concentration risk, percentage 10.00%
v3.24.0.1
Revenue (Details Narrative) - USD ($)
 12 Months Ended
Dec. 31, 2023
Dec. 31, 2022
Revenue from Contract with Customer [Abstract]    
Sales order backlog $ 55,636 $ 49,173
v3.24.0.1
Employee Retention Credit (Details Narrative) - USD ($)
 12 Months Ended
Dec. 31, 2023
Dec. 31, 2022
Employee Retention Credit    
Employee retention tax credit received amount $ 63,000  
Income on employee retention credit $ 63,000
v3.24.0.1
Supplemental Information (Details) - USD ($)
 12 Months Ended
Dec. 31, 2023
Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Advertising $ 10,038 $ 8,895
Dues and subscriptions 3,772 3,547
Depreciation and  amortization 2,427 444
Insurance 14,632 13,485
Materials and supplies 9,341 10,370
Office and administration 7,008 4,890
Printing 2,306 2,658
Professional services 101,923 91,096
Services purchased in lieu of payroll 45,875
Rent and utilities 52,085 50,308
Repair and maintenance 423 4,259
Salaries and benefits 715,863 696,665
Taxes, licenses & health insurance 203,124 194,839
Telephone 4,778 5,372
Warranty expense 2,353 2,897
Trade shows 15,505 12,199
Travel expenses 29,100 15,984
 Expenses before allocated to cost of sales 1,174,678 1,163,783
Expenses allocated to cost of sales (195,030) (213,445)
Total Operating Expenses $ 979,648 $ 950,338
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