UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒

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

For the quarterly period ended ~~March~~June 3130, 2024

☐

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

From ________________ to ________________

ELECTRONIC SYSTEMS TECHNOLOGY, INC.

(Exact name of registrant as specified in its charter)

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

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

(509) 735-9092

(Registrant's telephone number, including area code)

N/A

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

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

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

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

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

Yes ~~☒ No~~x ☐NO ¨

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

Large Accelerated Filer ☐

Accelerated Filer ☐

Non-Accelerated Filer ☒

Small Reporting Company ☒

Emerging Growth Company ☐

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

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

APPLICABLE ONLY TO CORPORATE ISSUERS:

As of ~~April,~~July 18 23, 2024, the number of the Company's shares of ~~common~~Common ~~stock~~Stock par value $0.001, outstanding was 4,946,502.

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

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

	March 31,		December 31,
	June 30,		December 31,
	2024		2023
ASSETS
Current assets
Cash and cash equivalents	$	~~435~~322,~~181~~634	$	486,252
Certificates of deposit		400,000		400,000
Accounts receivable, net		~~111~~76,~~866~~322		52,592
Inventories		~~629~~748,~~606~~344		722,457
Prepaid expenses		1720,~~354~~961		19,278
Accrued interest receivable		1,~~331~~235		1,906
Total current assets		1,~~595~~569,~~338~~496		1,682,485
Property and equipment, net of depreciation		17,~~249~~502		18,~~225~~255
Right to use – Lease, net of amortization		2010,~~620~~363		30,298
Total assets	$	1,~~633~~597,~~207~~361	$	1,731,038
LIABILITIES and STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	3074,~~778~~117	$	37,355
Accrued wages		59,~~655~~527		4,188
Operating lease liability, current portion		2010,~~937~~521		30,773
Accrued vacation pay		2725,~~004~~631		21,243
Other accrued liabilities		76,~~149~~741		10,221
Total liabilities		91126,~~523~~537		103,780
Stockholders' equity
Common stock, $0.001 par value 50,000,000 shares authorized 4,946,502 and 4,946,502 shares issued and outstanding respectively		4,947		4,947
Common stock, $0.001 par value 50,000,000 shares authorized 4,946,502 and 4,946,502 shares issued and outstanding, respectively		4,947		4,947
Additional paid-in capital		933,105		933,105
Retained earnings		~~603~~532,~~632~~772		689,206
Total stockholders' equity		1,~~541~~470,~~684~~824		1,627,258
Total liabilities and stockholders' equity	$	1,~~633~~597,~~207~~361	$	1,731,038

See Notes to Condensed Financial Statements.

ELECTRONIC SYSTEMS TECHNOLOGY, INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended
	Three Months Ended June 30, 2024			Three Months Ended June 30, 2023			Six Months Ended June 30, 2024			Six Months Ended June 30, 2023
	March 31,			March 31,
SALES - NET	$	333,569		$	585,206		$	689,630		$	890,295
	2024			2023
COST OF SALES		(155,809	)		(268,636	)		(316,524	)		(408,196	)
SALES - NET	$	356,061		$	305,089
GROSS PROFIT		177,760			316,570			373,106			482,099
COST OF SALES		(160,715	)		(139,560	)
Operating Expenses
GROSS PROFIT		195,346			165,529
General and administrative		62,670			61,492			151,448			146,257
OPERATING EXPENSES
Research and development		35,080			28,021			64,027			56,684
General and administrative		88,778			84,765
Marketing and sales		156,462			173,368			325,127			321,595
Research and development		28,947			28,663
TOTAL OPERATING EXPENSE		254,212			262,881			540,602			524,536
Marketing and sales		168,665			148,227
OPERATING INCOME (LOSS)		(76,452	)		53,689			(167,496	)		(42,437	)
Total operating expenses		286,390			261,655
OTHER INCOME
OPERATING LOSS		(91,044	)		(96,126	)
Interest income		5,592			5,181			11,062			9,183
OTHER INCOME
TOTAL OTHER INCOME		5,592			5,181			11,062			9,183
Interest income		5,470			4,002
NET INCOME (LOSS) BEFORE INCOME TAX		(70,860	)		58,870			(156,434	)		(33,254	)
Total other income		5,470			4,002
Benefit (provision) for income tax		—			—			—			—
NET LOSS BEFORE INCOME TAX		(85,574	)		(92,124	)
NET INCOME (LOSS)	$	(70,860	)	$	58,870		$	(156,434	)	$	(33,254	)
Benefit (provision) for income tax		—			—
Basic and diluted earnings per share	$	(0.01	)	$	0.01		$	(0.03	)	$	(0.01	)
NET LOSS	$	(85,574	)	$	(92,124	)
Basic and diluted weighted average shares used in computing income (loss) per share:		4,946,502			4,946,502			4,946,502			4,946,502
Earnings (loss) per share – basic and diluted	$	(0.02	)	$	(0.02
Weighted average shares – basic and diluted		4,946,502			4,946,502

See Notes to Condensed Financial Statements.

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

CONDENSED STATEMENTS OF CASH FLOWS



	Six Months Ended
	June 30,			June 30,
	2024			2023

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss	$	(156,434	)	$	(33,254	)

Noncash items included in net loss:
Depreciation and amortization		2,057			418
Stock based compensation		—			693
Changes in operating assets and liabilities:
Accounts receivable, net		(23,730	)		(36,474	)
Inventories		(25,887	)		(115,095	)
Accrued interest receivable		671			109
Prepaid expenses		(1,683	)		22,901
Accounts payable		36,762			(45,207	)
Other accrued liabilities		5,930			4,956
NET CASH USED IN OPERATING ACTIVITIES		(162,314	)		(200,953	)


CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets		(1,304	)		(19,769	)
Certificates of deposit redeemed		700,000			751,699
Certificates of deposit purchased		(700,000	)		(900,000	)
NET CASH USED IN INVESTING ACTIVITIES		(1,304	)		(168,070	)

NET DECREASE IN CASH AND CASH EQUIVALENTS		(163,618	)		(369,023	)
Cash and cash equivalents at beginning of period		486,252			751,118
Cash and cash equivalents at end of period	$	322,634		$	382,095

~~(Unaudited)~~See Notes to Condensed Financial Statements.

	Three Months Ended
	March 31,			March 31,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(85,574	)	$	(92,124	)
Noncash items included in net loss:
Depreciation		93			38
Amortization		913			—
Changes in operating assets and liabilities:
Accounts receivable, net		(59,274	)		33,624
Inventories		92,851			(3,830
Accrued interest receivable		575			126
Prepaid expenses		1,924			5,731
Accounts payable		(6,577	)		(74,912	)
Other accrued liabilities, accrued wages and accrued vacation pay		3,998			(18,354	)
NET CASH USED IN OPERATING ACTIVITIES		(51,071	)		(149,701	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Certificates of deposit redeemed		300,000			300,000
Certificates of deposit purchases		(300,000	)		(300,000
Purchase of equipment		—			(9,000	)
NET CASH USED FROM INVESTING ACTIVITIES		—			(9,000	)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(51,071	)		(158,701	)
Cash and cash equivalents at beginning of period		486,252			751,118
Cash and cash equivalents at end of period	$	435,181		$	592,417

~~See~~ELECTRONIC ~~Notes~~SYSTEMS toTECHNOLOGY, ~~Financial Statements~~INC. DBA ESTEEM WIRELESS MODEMS CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)



	Common Stock				Additional Paid-In		Retained
	Shares		Amount		Capital		Earnings			Total

Balances, January 1, 2023		4,946,502	$	4,947	$	932,412		849,989		$	1,787,348

Net income (loss)		—		—		—		(92,124	)		(92,124	)

Balance at March 31, 2023		4,946,502	$	4,947	$	932,412	$	757,865		$	1,695,224

Net income (loss)		—		—		—		58,870			58,870

Stock based compensation		—		—		693		—			693

Balance at June 30, 2023		4,946,502	$	4,947	$	933,105	$	816,735		$	1,754,787

Balances, January 1, 2024		4,946,502	$	4,947	$	933,105	$	689,206		$	1,627,258

Net income (loss)		—		—		—		(85,574	)		(85,574	)

Balance at March 31, 2024		4,946,502	$	4,947	$	933,105	$	603,632		$	1,541,684

Net income (loss)		—		—		—		(70,860	)		(70,860	)

Balance at June 30, 2024		4,946,502	$	4,947	$	933,105	$	532,772		$	1,470,824

~~ELECTRONIC SYSTEMS~~See ~~TECHNOLOGY,~~Notes ~~INC~~to Condensed Financial Statements.

~~DBA ESTEEM WIRELESS MODEMS~~4

~~CONDENSED~~ELECTRONIC ~~STATEMENTS OF~~SYSTEMS ~~CHANGES~~TECHNOLOGY, ~~IN STOCKHOLDERS’ EQUITY~~INC.

~~(Unaudited)~~NOTES TO CONDENSED FINANCIAL STATEMENTS

	Shares		Amount		Additional Paid-In Capital		Retained Earnings			Total
Balances, January 1, 2023		4,946,502	$	4,947	$	932,412	$	849,989		$	1,787,348
Net income (loss)		—		—		—		(92,124	)		(92,124	)
BALANCES AT March 31, 2023		4,946,502	$	4,947	$	932,412	$	757,865		$	1,695,224
Balances, January 1, 2024		4,946,502	$	4,947	$	933,105	$	689,206		$	1,627,258
Net income (loss)		—		—		—		(85,574	)		(85,574	)
BALANCES AT MARCH 31, 2024		4,946,502	$	4,947	$	933,105	$	603,632		$	1,541,684

(Unaudited)

~~See~~NOTE ~~Notes~~1 to- ~~Financial~~BASIS ~~Statements.~~OF PRESENTATION

4The condensed financial statements, including notes, of Electronic Systems Technology, Inc. (the "Company") are representations of the Company’s management, which is responsible for their integrity and objectivity. The accompanying unaudited condensed financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, as well as the instructions to Form 10-Q. Accordingly, the financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of June 30, 2024, and its results of operations, cash flows, and changes in stockholders’ equity for the three and six months ended June 30, 2024 and 2023. The balance sheet at December 31, 2023 was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. All amounts presented are in U.S. dollars. For further information, refer to the financial statements and footnotes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

~~ELECTRONIC~~The ~~SYSTEMS~~results ~~TECHNOLOGY~~of operations for the three and six-month periods ended June 30, ~~INC~~2024 are not necessarily indicative of the results expected for the full fiscal year or for any other fiscal period. The Company estimates that for 2024 the anticipated effective annual federal income tax rate will be 0%.

~~NOTES~~New TOAccounting ~~CONDENSED FINANCIAL STATEMENTS~~Pronouncements

~~(Unaudited)~~Accounting standards that have been issued by the Financial Accounting Standards Board that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption.

NOTE 12 - ~~BASIS OF PRESENTATION~~ INVENTORIES

~~The~~Inventories ~~condensed~~are ~~financial~~stated ~~statements,~~at ~~including~~lower ~~notes,~~ of ~~Electronic~~direct ~~Systems~~cost ~~Technology, Inc. (the "Company") are representations of the Company’s management, which is responsible~~or ~~for~~net ~~their~~realizable ~~integrity~~value ~~and objectivity. The accompanying unaudited condensed financial statements have been prepared by the Company in accordance~~ with ~~accounting~~cost ~~principles~~determined ~~generally~~using ~~accepted in~~ the ~~United~~FIFO ~~States of America~~ (~~“U.S.~~first GAAP”) for interim financial information, as well as the instructions to Form 10-Q. Accordingly, the financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of March 31, 2024, and its results of operations, cash flows, and changes in ~~stockholders’ equity for the three months ended March 31~~, ~~2024~~first ~~and~~out) ~~2023~~method. ~~The~~Inventories ~~balance~~consist ~~sheet at December 31, 2023 was derived from audited annual financial statements but does not contain all~~ of the footnote disclosures from the annual financial statements. All amounts presented are in U.S. dollars. For further information, refer to the financial statements and footnotes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.following:

The results of operations for the three-month period ended March 31, 2024 are not necessarily indicative of the results expected for the full fiscal year or for any other fiscal period. The Company estimates that for 2024 the anticipated effective annual federal income tax rate will be 0%.

Schedule of inventories
	June 30, 2024		December 31, 2023
Parts	$	102,952	$	118,472
Work in progress		386,694		313,597
Finished goods		258,698		290,388
Total inventories	$	748,344	$	722,457

~~New Accounting Pronouncements~~5

~~Accounting~~ELECTRONIC ~~standards~~SYSTEMS ~~that~~TECHNOLOGY, ~~have been issued by the Financial Accounting Standards Board that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption~~INC.

~~NOTE~~NOTES 2TO -CONDENSED ~~INVENTORIES~~FINANCIAL STATEMENTS

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

Schedule of inventories
	March 31, 2024		December 31, 2023
Parts	$	108,085	$	118,472
Work in progress		227,871		313,597
Finished goods		293,650		290,388
Total inventory	$	629,606	$	722,457

NOTE 3 - EARNINGS (LOSS) PER SHARE

~~NOTE~~Basic 3earnings (loss) per share excludes dilution and is computed by dividing income (loss) available to common stockholders by the weighted-average ~~EARNINGS~~number of shares of common stock outstanding for the period. Diluted earnings (~~LOSS~~loss) ~~PER~~per ~~SHARE~~share reflects potential dilution occurring if securities or other contracts to issue common stock were exercised or converted into Common Stock or resulted in the issuance of common stock that then shared in the earnings of the Company. At June 30, 2024 and 2023, the Company had 225,000 and 225,000 outstanding stock options, respectively, that could have a dilutive effect on future periods’ net income. The stock options were not included in the calculation of diluted earnings per share for either period as they were anti-dilutive.

~~Basic~~NOTE ~~earnings~~4 ~~(loss) per share excludes dilution and is computed by dividing income (loss) available to common stockholders by the weighted~~-~~average~~ ~~number~~STOCK of common shares outstanding for the period. Diluted earnings (loss) per share reflects potential dilution occurring if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. At March 31, 2024 and 2023, the Company had 225,000 and 180,000 outstanding stock options, respectively, that could have a dilutive effect on future periods’ net income. The stock options were not included in the calculation of diluted earnings per share for either period as they were anti-dilutive.OPTIONS

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

~~NOTE~~As 4of -June ~~STOCK~~30, ~~OPTIONS~~2024, there were 225,000 options outstanding with a weighted average exercise price of $0.40 per share, a weighted average remaining life of 1.3 years and had intrinsic value of $11,250.

~~The~~NOTE ~~Company~~5 ~~has~~– outstanding stock options, which have been granted periodically to individual employees and directors. No shared based compensation was recognized during the three-month periods ended March 31, 2024 and 2023.REVENUE

AsThe ofCompany ~~March~~product ~~31,~~revenue ~~2024~~includes industrial wireless products and ~~December~~accessories ~~31,~~such ~~2023~~as antennas, ~~there were~~power ~~225,000~~supplies and ~~180,000~~cable ~~options~~assemblies. ~~outstanding~~The ~~respectively~~Company ~~with~~also aprovides ~~weighted~~direct ~~average~~site ~~exercise~~support ~~price~~and engineering services to customers, such as repair and upgrade of $0its products.40 ~~per~~During ~~share~~the three-month periods ended June 30, a2024 ~~weighted~~and ~~average~~2023, the Company’s ~~remaining~~revenue ~~life~~from ofproducts 1sales was $326,469 and $575,306, respectively.5 Revenue from site support and noengineering ~~intrinsic~~services ~~value~~was $7,100 and $9,900 respectively, over the same periods.

~~NOTE~~During 5the –six-month ~~REVENUE~~periods ended June 30, 2024 and 2023, the Company’s revenue from products sales was $671,630 and $872,895, respectively. Revenue from site support and engineering services was $18,000 and $17,400 respectively, over the same periods.

The Company’s ~~product~~customers, ~~revenue~~to ~~includes~~which ~~industrial~~trade credit ~~wireless~~terms ~~products~~are ~~and~~extended, ~~accessories~~consist ~~such~~of asUnited ~~antennas,~~States ~~power supplies~~ and ~~cable~~local ~~assemblies.~~governments ~~The Company also provides direct site support~~ and ~~engineering~~foreign ~~services to customers, such as repair~~ and ~~upgrade~~domestic ofcompanies. ~~its~~Domestic ~~products.~~sales ~~During~~for the three-month period ended ~~March~~June 3130, 2024 and ~~2023~~June 30, ~~the~~2023 ~~Company’s~~were ~~revenue from products sales was~~ $~~345~~269,~~161~~355 and $~~297~~575,~~589~~683, respectively. ~~Revenue~~Sales ~~from~~to ~~site~~foreign ~~support~~customers ~~and~~for ~~engineering~~the three-month ~~services~~period ~~was~~ended ~~$10~~June 30,~~900~~ 2024 and ~~$7,500~~June ~~respectively~~30, ~~over~~2023 ~~the~~were ~~same~~$64,214 ~~periods~~and $9,523, respectively.

~~The Company’s customers, to which trade credit terms are extended, consist of United States and local governments and foreign and domestic companies.~~ Domestic sales for the ~~three~~six-month period ended ~~March 31~~June 30, 2024 and ~~March~~June 3130, 2023 were $~~313~~582,~~240~~595 and $~~293~~869,~~908~~591, respectively. Sales to foreign customers for the ~~three~~six-month period ended ~~March~~June 3130, 2024 and ~~March~~June 3130, 2023 were $42107,~~821~~035 and $1120,~~181~~704, respectively.

For the three-month period ended ~~March~~June 3130, 2024 ~~and 2023~~, sales to ~~individual~~two customers ~~representing~~represented more than 10% of total revenue, ~~were~~three ascustomers ~~follows:~~represented more than 10% of total revenue for the same period in 2023.

Schedule of revenue
	For the three-month period ended March 31,
	2024 Sales		2024 %age of Total Sales			2023 Sales		2023 %age of Total Sales
	2024					2023
Customer A	$	36,342		11	%	$	134,604		23	%
	Sales		%age of Total Sales			Sales		%age of Total Sales
Customer B		32,996		10	%		76,993		13	%
Domestic customer A	$	53,487		15	%	$	70,090		23	%
Customer C							56,861		10	%
Domestic customer B		43,419		12	%		—		—
Domestic customer C		36,791		10	%		—		—
Foreign customer D		36,376		10	%		—		—

AsFor ofthe ~~March~~six-month 31period ended June 30, 2024, ~~the~~sales to ~~amounts~~two ~~outstanding~~customers represented more than 10% of total revenue, two customers represented more than 10% of total revenue for ~~these customer~~the ~~are~~same ~~listed~~period in ~~below~~2023.

Schedule of amounts outstanding
	2024 Sales		2024 %age of Total Sales			2023 Sales		2023 %age of Total Sales
	AR Balance At March 31, 2024
Customer A	$	73,534		11	%	$	204,694		23	%
Domestic customer A	$	3,586
Customer B		72,717		11	%		91,821		10	%
Domestic customer B		19,501
Domestic customer C		31,741
Foreign customer D		—

~~As of March 31, 2024 and 2023, the Company had a sales order backlog of $10,346 and $162,396, respectively.~~6

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

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATION

Management's discussion and analysis is intended to be read in conjunction with the Company's unaudited financial statements and the integral notes thereto for the ~~quarter~~three-month period ended ~~March 31~~June 30, 2024. The following statements may be forward looking in nature and actual results may differ materially.

A. RESULTS OF OPERATIONS

REVENUES: Total revenues from sales ~~increased~~decreased to $~~356~~333,~~061~~569 for the ~~first~~three-month ~~quarter~~period ofending June 30, 2024 as compared to $~~305~~585,~~089~~206 in the ~~first~~second quarter of 2023, reflecting ana ~~increase~~decrease of 1622.75%. Management believes the ~~increase~~decrease in sales revenues is due to ~~increased~~the ~~product~~decrease in customer demand. Year to date total revenues from ~~foreign~~sales ~~customers~~decreased to ~~and~~$689,630 ain ~~reduction~~2024 as compared to $890,295 in 2023, reflecting a decrease of 22.5%. Management believes the decrease in sales ~~order~~revenues is ~~backlog~~due to customer demand slowing to higher interest rates.

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

A percentage breakdown of the Company’s market segments of Domestic and Foreign Export sales for the ~~first~~three- ~~quarter~~and ofsix-month periods ended June 30, 2024 and 2023 are as follows:

	2024			2023
	Three Months ended June 30, 2024			Three Months ended June 30, 2023			Six Months ended June 30, 2024			Six Months ended June 30, 2023
Domestic Sales		~~88%~~81	%		~~96%~~98	%		84	%		98	%
Export Sales		~~12%~~19	%		4%2	%		16	%		2	%

BACKLOG:

As of ~~March~~June 3130, 2024, the Company had a sales order backlog of ~~$10,346~~nil. The Company’s customers generally place orders on an "as needed basis". Shipment for most of the Company’s products is generally made within 1 to 5 working days after receipt of customer orders, with the exception of ongoing, scheduled projects, and custom designed equipment.

COST OF SALES:

Cost of sales percentages for the ~~first~~second quarters of of 2024 and 2023 were 4346.3 7% and 4445.39% of respective net sales. ~~and~~Cost ~~are~~of ~~calculated~~sales ~~excluding~~percentages ~~site~~for ~~support~~the ~~expenses~~six-month ofperiods $6ended June 30,~~677~~ 2024 and $42023 were 45.9% and 45.8%,~~541~~ respectively. The cost of sales percentage ~~decrease~~increase infor the ~~first~~six ~~quarter~~month ofperiod ended June 3, 2024 is the result of the product mix sold during the same ~~quarter~~period of 2023.

OPERATING EXPENSES:

~~Operating expenses for the first quarter of 2024 increased $24,736 from the first quarter of 2023 levels.~~ The following is a delineation of operating expenses:

	March 31, 2024		March 31, 2023		Increase (Decrease)
	Three Months Ended						Six Month Ended
General and administrative	$	88,778	$	84,765	$	4,013
	June 30, 2024		June 30, 2023		Increase (Decrease)		June 30, 2024		June 30, 2023		Increase (Decrease)
Research and development		28,947		28,663		284
General and administrative	$	62,670	$	61,492	$	1,178	$	151,448	$	146,257	$	5,191
Marketing and sales		168,665		148,227		20,438
Research and development		35,080		28,021		7,059		64,027		56,684		7,343
Total operating expenses	$	286,390	$	261,655	$	24,735
Marketing and sales		156,462		173,368		(16,906)		325,127		321,595		3,532
Total operating expenses	$	254,212	$	262,881	$	(8,669)	$	540,602	$	524,536	$	16,066

General and administrative: For the ~~first quarter~~second quarter of 2024, general and administrative expenses increased $41,~~013~~178 to $8862,~~778~~670, due to increased ~~payroll~~wages ~~related~~when compared with the same quarter of 2023. For the six-month period ended June 30, 2024, general and administrative expenses increased by $5,191, to $151,448, due to increased payroll and ~~purchased~~increased services ~~when~~ purchased. General and administrative expenses were 18.8% compared ~~with~~to ~~the~~10.5% ~~same~~of sales revenue for the second quarter of ~~2023~~2024 and 22.0% compared to 16.4% of sales revenue for six-month period ended June 30, 2024.

Research and development: Research and development expenses increased $~~284~~7,059 to $2835,~~947~~080 during the ~~first~~second quarter of 2024 due to increased ~~payroll~~prototype expenses when compared with the same quarter of 2023. For the six-month period, research and development expenses increased by $7,343 to $64,027, due to increased prototype expenses. Research and development expenses were 10.5% compared to 4.8% of sales revenue for the second quarter of 2024 and 9.3% compared to 6.4% of ~~2023~~sales revenue for six-month period ended June 30, 2024.

Marketing and sales: During the ~~first~~second quarter of 2024, marketing and sales expenses ~~increased~~decreased $2016,~~438~~906 to $~~168~~156,~~665~~462 when compared with the same period of 2023, due to ~~increased~~decreased payroll, ~~taxes~~benefits expense, ~~benefits~~and travel. For the six-month period, ~~advertising~~marketing and sales expenses increased by $3,532 to $325,127, due to increased advertising. Marketing and ~~trade~~sales ~~shows~~expenses ~~during~~were 46.9% compared to 29.6% of sales revenue for the ~~first~~second quarter of 2024 and 47.1% compared to 36.1% of sales revenue for the six-month period ended June 30, 2024.

~~INTEREST~~OTHER INCOME:

The Company earned $5,~~470~~592 in interest income during the quarter ended ~~March~~June 3130, 2024 ~~compared~~and to $411,~~002~~062 ~~during~~for the ~~same~~six-month period ~~in 2023~~. Sources of this income were money market accounts and certificates of deposit.

NET ~~INCOME (~~LOSS):

The Company had a net loss of $8570,~~574~~860 for the ~~first~~second quarter of 2024 compared to a net ~~loss~~income of $9258,~~124~~870 for the same quarter of 2023. For the six-month period ended June 30, 2024, the Company recorded a net loss of $156,434 compared with a net loss of $33,254 for the same period of 2023. The ~~decrease~~increase in the net loss during 2024 is the result of ~~increased~~ ~~sales~~decreased ~~and operating expenses~~sales.

B. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

The ~~Company~~Corporation's current asset to current liabilities ratio at ~~March~~June 3130, 2024 was 1712.4:1 compared to 16.2:1 at December 31, 2023. The ~~increase~~decrease in current ratio is due to the ~~decrease~~increase inof accounts ~~payable~~receivable, ~~liability~~inventory, and accounts payable at ~~March~~June 3130, 2024 as compared to December 31, 2023.

At ~~March~~June 3130, 2024, the Company had cash and cash equivalents of $~~435~~722,~~181~~634 as compared to cash and cash equivalent of $~~486~~886,252 at December 31, 2023~~, primarily reflecting a decrease in accounts payable and the decrease in net loss~~.

~~For~~Cash ~~the~~used ~~three-month~~from ~~period~~operating ~~ended~~activities ~~March~~decreased ~~31,~~by ~~2024~~$38, ~~cash~~639 ~~used~~for bythe ~~operating~~six-month ~~activities~~period ~~was~~ended ~~$51~~June 30,~~071~~ 2024 when compared to ~~$149,701 for~~ the same period in 2023. ~~This~~Although ~~change~~the ~~was driven by a~~ net loss ofincreased ~~$85,574~~when compared to ~~during~~last ~~the~~year ~~three~~there ~~months~~was ~~ended~~an ~~March~~improvement ~~31,~~in ~~2024~~cash ~~compared~~flow.. toA adecreased ~~net~~change ~~loss~~to inventory of $9289,~~124~~208 inand ~~the~~an ~~three~~increased ~~months~~change ~~ended~~to ~~March~~accounts 31payable of $81,969, ~~2023~~had ~~and~~a ~~the~~positive ~~decrease in~~impact ~~inventory~~to ofcash ~~$92,851~~flows.

In management's opinion, the Company's cash and cash equivalents and other working capital at ~~March~~June 3130, 2024 is sufficient to satisfy requirements for operations, capital expenditures, and other expenditures as may arise during 2024 and into the first half of 2025.

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

8OFF-BALANCE SHEET ARRANGEMENTS

~~Item~~The 3.Company ~~Quantitative~~has ~~and~~no ~~Qualitative~~significant ~~Disclosures~~off-balance ~~About~~sheet ~~Market~~arrangements that ~~Risk~~have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to its stockholders.

~~There~~Item ~~is no established market for trading the common stock of the Company~~1. ~~The~~Controls ~~market for the Company’s common stock is limited,~~ and as such shareholders may have difficulty reselling their shares when desired or at attractive market prices. The Common Stock is not regularly quoted in the automated quotation system of a registered securities system or association. Our common stock, par value $0.001 per share, is quoted on the OTC Markets Group QB (OTCQB) under the symbol “ELST”. The OTCQB is a network of security dealers who buy and sell stock. The dealers are connected by a computer network which provides information on current “bids” and “asks” as well as volume information. The OTCQB is not considered a “national exchange”. The “over-the-counter” quotations do not reflect inter-dealer prices, retail mark-ups commissions or actual transactions. The Company’s common stock has continued to trade in low volumes and at low prices. Some investors view low-priced stocks as unduly speculative and therefore not appropriate candidates for investment. Many institutional investors have internal policies prohibiting the purchase or maintenance of positions in low-priced stocks.Procedures

~~Item~~An 4evaluation has been performed under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Accounting Officer, of the effectiveness of the design and the operation of our "disclosure controls and procedures" (as such term is defined in Rules 13a-15(e) under the Securities Exchange Act of 1934) as of June 30, 2024. ~~Controls~~Based on that evaluation, our principal executive officer and ~~Procedures~~our principal financial officer concluded that the design and operation of our disclosure controls and procedures were effective as of June 30, 2024.

AnThe ~~evaluation~~design ~~has~~of ~~been~~any ~~performed~~system ~~under the supervision and with the participation~~ of ~~our~~controls ~~management,~~is ~~including~~based ~~our~~in ~~Chief~~part ~~Executive~~upon ~~Officer~~certain ~~and~~assumptions about ~~Principal~~the ~~Accounting~~likelihood ~~Officer,~~ of ~~the~~future ~~effectiveness of~~events, ~~the design~~ and ~~the~~there ~~operation~~can ofbe ~~our~~no ~~"disclosure~~assurance ~~controls~~that ~~and~~any ~~procedures"~~design ~~(as~~will ~~such~~succeed ~~term~~in isachieving ~~defined~~its instated ~~Rules~~goals ~~13a-15(e)~~ under ~~the~~all ~~Securities~~potential ~~Exchange~~future ~~Act~~conditions, ofregardless ~~1934) as~~ of ~~March~~how ~~31, 2024~~remote. ~~Based~~However, onmanagement believes that ~~evaluation,~~ our ~~principal~~system ~~executive~~of ~~officer~~disclosure controls and ~~our principal~~procedures ~~financial~~are ~~officer~~designed ~~concluded~~to ~~that~~provide ~~the~~a ~~design~~reasonable ~~and~~level ~~operation~~ of ~~our~~assurance ~~disclosure~~that ~~controls~~the ~~and~~objectives ~~procedures~~of ~~were~~the ~~effective~~system aswill ofbe ~~March 31, 2024~~met.

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

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

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.9

9PART II—OTHER INFORMATION

~~PART~~Item ~~II—OTHER~~1. ~~INFORMATION~~Legal Proceedings

None.

Item 2. Unregistered Sales of Securities

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable

Item 5. Other Information

During the three months ended ~~December~~June 3130, ~~2023~~2024, no director or officer of the Company adopted, modified, or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or any “non-Rule 10b5-1 arrangement” as defined in Item 408(c) of Regulation S-K.

Item 6. Exhibits

			Incorporation by Reference
EXHIBIT NUMBER	DESCRIPTION
Exhibit Number		Description	Form	Exhibit	Filing Date	Filed/Furnished Herewith
31.1	Section 302 Certification, CEO
31.1*		Certification of Principal Executive Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
31.2	Section 302 Certification, CFO
31.2*		Certification of Principal Financial Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
32.1	Section 906 Certification, CEO
32.1+		Certification of Principal Executive Officer pursuant to 18 U.S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002				XX
32.2	Section 906 Certification, CFO
32.2+		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002				XX
101.INS	XBRL Instance Document
101.INS*		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)				X
101.SCH	XBRL Taxonomy Extension Schema Document
101.SCH*		XBRL Taxonomy Extension Schema Document.				X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document				X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document				X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.LAB*		XBRL Taxonomy Extension Label Linkbase Document				X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document				X
104*		Cover Page Interactive Date File (embedded with the Inline XBRL document)				X
X		Filed herewith
XX		Furnished herewith

1011

SIGNATURES

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

	ELECTRONIC SYSTEMS TECHNOLOGY, INC.
	By: /s/ Daniel M. Tolley
Date: April 22, 2024	Name: Daniel M. Tolley
Date: July 23, 2024	Name: Daniel M. Tolley
	Title: President
	(Principal Executive Officer)

	By: /s/ Michael W. Eller
Date: April 22, 2024	Name: Michael W. Eller
Date: July 23, 2024	Name: Michael W. Eller
	Title: President
	Title: Vice President Administration
	(Principal Accounting Officer)

1112

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