415 N. Quay St., #4

Kennewick WA 99336

(509) 735-9092

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 [ ].

The number of shares outstanding of common stock as of March 31, 2000 was 5,068,667.

ELECTRONIC SYSTEMS TECHNOLOGY, INC.

SELECTED FINANCIAL DATA

(as prepared by Management)

(Unaudited)

ELECTRONIC SYSTEMS TECHNOLOGY, INC.

BALANCE SHEET

(as prepared by Management)

(Unaudited)

(See "Notes To Financial Statements")

ELECTRONIC SYSTEMS TECHNOLOGY, INC.

STATEMENT OF OPERATIONS

(as prepared by Management)

(Unaudited)

(See "Notes To Financial Statements")

ELECTRONIC SYSTEMS TECHNOLOGY, INC.

STATEMENT OF CASH FLOWS

(as prepared by Management)

(Unaudited)

(See "Notes To Financial Statements")

ELECTRONIC SYSTEMS TECHNOLOGY, INC.

NOTES TO FINANCIAL STATEMENTS

(as prepared by Management)

(Unaudited)

The financial statements of Electronic Systems Technology, Inc. (the "Company"), presented in this Form 10Q are unaudited and reflect, in the opinion of Management, a fair presentation of operations for the three month periods ended March 31, 2000 and March 31, 1999. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principals have been condensed or omitted pursuant to the applicable rules and regulations of the Securities and Exchange Commission. In preparation of the financial statements, certain amounts and balances have been restated from previously filed reports to conform with the format of this quarterly presentation. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Form 10K for the year ended December 31, 1999 as filed with Securities and Exchange Commission.

The results of operation for the three-month periods ended March 31, 2000 and March 31, 1999 are not necessarily indicative of the results expected for the full fiscal year or for any other fiscal period.

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

As of March 31, 2000, the Company had outstanding stock options which have been granted periodically to individual employees and directors with no less than three years of continuous tenure with Company. On February 11, 2000, additional stock options to purchase shares of the Company's common stock were granted to individual employees and directors with no less than three years continuous tenure. The options granted on February 11, 2000 totaled 220,000 shares under option and have an exercise price of $2.81 per share. The options granted on February 11, 2000 may be exercised any time during the period from February 11, 2000 through February 10, 2003. The Company's Form 8-K dated February 11, 2000, as filed with the Securities and Exchange Commission is included herein by reference. All outstanding stock options must be exercised within 90 days after termination of employment.

During the 12 month period from March 31, 1999 to March 31, 2000, 160,000 shares under option expired, 115,000 shares under option were exercised, and 220,000 shares under option were granted. At March 31, 2000 there were 600,000 shares under option reserved for future exercises.

The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation." The Company undertakes to make disclosures and calculations pursuant to SFAS 123 on an annual basis coinciding with the issuance of the Company's Annual Financial Statements. Accordingly, no compensation cost has been recognized for the stock option plan.

For the quarter ended March 31, 2000, services in the amount of $22,057 were contracted with Manufacturing Services, Inc., of which the owner/president is a member of the Board of Directors of EST.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATION

REVENUES: Total revenues from the sale of EST products and services increased to $270,535 for the first quarter of 2000 as compared to $220,176 in the first quarter of 1999. Gross revenues increased to $289,119 for the quarter ending March 31, 2000, from $235,153 for the same quarter of 1999. It is Management's belief that the increased revenues are the result of increased Domestic and U.S. Government sales in the first quarter of 2000. This increase in this quarter is highlighted, by comparing sales revenues for the quarter ended March 31, 2000, with sales revenues of the first quarter of 1999, which was a quarter with low sales revenues and did not contain any U.S. Government sales revenues. In Management's opinion the increase in Domestic sales is the result of increased demand for the Company's products for industrial automation control projects, during the first quarter of 2000.

The Company's revenues fall into three major customer categories, Domestic, Export and U.S. Government sales. Domestic commercial sales increased to $242,877 in the first quarter of 2000 as compared to $207,163 for the first quarter of 1999. Foreign export sales for the first quarter of 2000 increased to $16,842 as compared to the $13,013 in foreign sales in the same quarter of 1999. The Company had sales of $10,816 to U.S. Government programs for the first quarter of 2000 as compared with no revenues in the first quarter 1999. The increase in U.S. Government sales is primarily the result of the Company's products being selected for use in a military airfield lighting project in the first quarter of 2000. Engineering services billed in the first quarter of 2000 increased to $42,122 as compared with $40,442 for the same quarter of 1999. The increase is the result of increased engineering services performed by the Company when compared with the first quarter of 1999, primarily due to increased engineering services related with the Company's ongoing projects for mobile data computer systems for public safety entities. During the quarter ended March 31, 2000 sales to Industrial Electronics and Controls, one of the Company's distributors, consisted of 13% of the Company's sales and service revenues. No other sales to a single customer comprised 10% or more of the Company's product sales.

A percentage breakdown of EST's major customer categories of Domestic, Export and U.S. Government Sales, for the first quarter of 2000 and 1999 are as follows:

A percentage breakdown of EST's product sales categories for the first quarter of 2000 and 1999 are as follows:

Sales include foreign export sales as follows:

The geographic distribution of foreign sales for the first quarter of 2000 and 1999 is as follows:

The Company's domestic and foreign sales for the first quarter of 2000 were used primarily in Supervisory Control and Data Acquisition (SCADA) applications. Management believes these applications will continue to provide the largest portion of the Company's domestic sales revenues for the foreseeable future.

Based on previous year's activity, the majority of all U.S. Government purchases are under the Company's General Services Administration (GSA) contract. Historically, U.S. Government sales average approximately 18% of annual sales, but this level cannot be guaranteed, and during 1999 the Company experienced a reduction in U.S. Government sales to 3% of annual sales revenues. Due to the uncertain nature of U.S. Government purchasing, the level of U.S. Government sales cannot be guaranteed to return to levels experienced in the past by the Company, which in turn may result in reduced sales revenues and profitability for the Company. Due to the uncertain nature of U.S. Government purchasing, Management does not base profitability or liquidity projections on expected U.S. Government sales.

The Company's revenues have historically fluctuated from quarter to quarter due to timing factors such as customer order placement and product shipments to customers, as well as 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 in regard to the Company's revenues become difficult to predict.

The Corporation had backlog of $229,000 as of March 31, 2000, which includes Mobile Data Computers for Public Safety entity projects, expected to be completed within the next 90 days. Customers generally place orders on an "as needed basis". With the exception of extended delivery times for Mobile Data Computers for Public Safety entity projects, for which delivery involves extended time periods for engineering services and third party service and material providers, shipment is generally made within 5 to 10 working days after receipt of an order from a customer.

Cost of sales percentages of gross sales for the first quarters of 2000 and 1999 were 54% and 52% of gross sales respectively. Cost of Sales variations are attributable to the type of product sold, order size, and pricing structure, for discounts granted. The increase in cost of sales in the first quarter of 2000 is due to a combination of product mix, changes in pricing structure and discounts granted to resellers.

Operating expenses for the first quarter of 2000 increased $966 from first quarter of 1999 levels. The following is a delineation of operating expenses:

Finance and Administration: During the first quarter of 2000, Finance and Administration expenses decreased $21,757 when compared with the first quarter of 1999. The decrease is the result of decreased salaries and wages paid during the first quarter of 2000, due to the Company not paying a profit sharing bonus caused by reduced profitability during 1999.

Research and Development: Research and Development expenses increased $6,324 during the first quarter of 2000, over the same period in 1999. The increase in Research and Development costs is due to increased subcontracted Research and Development expertise, associated with development activity of the Company's product lines.

Marketing: During the first quarter of 2000, marketing expenses increased $11,624 when compared with the same period of 1999. The increase is due to timing differences in advertising by the Company, as well as increase tradeshow and travel expenses during the first quarter of 2000 when compared with the first quarter of 1999.

Customer Service: Customer service expenses increased $4,775 during the first quarter of 2000 when compared with expenses for the same quarter of 1999. The increase in costs is primarily due to increased customer service salaries and wages cost that were not directly billed to customers during the first quarter of 2000, when compared with the first quarter of 1999.

The Corporation earned $18,584 in interest and dividend income during the quarter ending March 31, 2000. Sources of this income were savings and money market accounts and short term investments.

Engineering support costs increased to $35,468 as of March 31, 2000, as compared to $35,350 for the same period of 1999. The engineering support costs for the first quarter of 2000, are directly resultant of the size and scope of engineering services billed by the Company during the first quarter of 2000, specifically projects for the Company's Mobile Data Computer products.

The Company had a net loss of $30,357 for the first quarter of 2000 compared to net loss of $45,020 for the same quarter of 1999. The net loss is attributable to relative effect sales revenues, cost of goods sold, and operating expenses for the first quarter of 2000.

The Corporation's current asset to current liabilities ratio at March 31, 2000 was 12:1 compared to 34.2:1 at December 31, 1999. The decrease in current ratio is due to increases in refundable customer deposits and accounts payable amounts when compared with December 31, 1999 amounts.

For the quarter ending March 31, 2000, the Company had cash and cash equivalent short-term investment holdings of $1,638,973 as compared to cash and cash equivalent holdings of $1,624,728 at December 31, 1999. The increase is attributable primarily to receipt of refundable customer deposits for future delivery of Mobile Data Computer for Public Safety projects when compared with December 31, 1999 levels, and was offset by the Company's net loss, and increased inventory levels.

Accounts receivable decreased slightly to $151,865 as of March 31, 2000, from December 31, 1999 levels of $154,788. Management believes all of the Company's accounts receivable as of March 31, 2000 are collectible. Inventory increased to $470,842 at March 31, 2000, from December 31, 1999 levels of $357,490, due to increased procurement for production of products primarily for Mobile Data Computer projects. Provision for Federal Income Taxes increased to $20,684 at March 31, 2000 as the provision for potential tax credit for the Company increased for the period ended March 31, 2000, as this provision was calculated from the Company's first quarter 2000 net loss amount.

The Company's fixed assets, net of depreciation, decreased to $136,250 as of March 31, 2000, decreased from December 31, 1999 levels of $145,123, solely due to depreciation of the Company's fixed assets. The Company did not have any capital expenditures of fixed assets in the first quarter of 2000, however, Management foresees capital expenditures may be necessary in 2000 to support the production and sale of the Company's products.

In Management's opinion, the Company's cash and cash equivalent reserves, and working capital at March 31, 2000 is sufficient to satisfy requirements for operations, capital expenditures, and other expenditures as may arise during 2000.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

Exhibit 27. Financial Data Schedule

2. Reports on Form 8-K

Form 8-K dated February 11, 2000 is incorporated herein by reference.

Exhibit Index Reference Form 10-QSB

Exhibit Number Notes to Financial Statements

4. Instruments defining the Rights of Security Holders including indentures.

Form 8-K dated February 7, 1997 is incorporated herein by reference.

Form 8-K dated February 6, 1998 is incorporated herein by reference.

Form 8-K dated February 12, 1999 is incorporated herein by reference.

Form 8-K dated February 11, 2000 is incorporated herein by reference.

11. Statement Re: computation of per share earnings. Note 3 to Financial Statements.

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.