<HTML>
</font><font SIZE="6">

<p ALIGN="CENTER">INDEX TO FINANCIAL STATEMENTS</p>
</font><font SIZE="3">

<p ALIGN="CENTER"> </p>
</font>

<table BORDER="1" CELLSPACING="1" CELLPADDING="7" WIDTH="696">
  <tr>
    <td WIDTH="67%" VALIGN="TOP">ACCOUNTANTS’ REPORT ON THE
FINANCIAL STATEMENTS</td>
    <td WIDTH="33%" VALIGN="TOP"><p ALIGN="CENTER">1</td>
  </tr>
  <tr>
    <td WIDTH="67%" VALIGN="TOP">BALANCE SHEETS</td>
    <td WIDTH="33%" VALIGN="TOP"><p ALIGN="CENTER">2-3</td>
  </tr>
  <tr>
    <td WIDTH="67%" VALIGN="TOP">STATEMENT OF OPERATIONS</td>
    <td WIDTH="33%" VALIGN="TOP"><p ALIGN="CENTER">4-5</td>
  </tr>
  <tr>
    <td WIDTH="67%" VALIGN="TOP">STATEMENT OF CHANGES IN
STOCKHOLDERS’ EQUITY </td>
    <td WIDTH="33%" VALIGN="TOP"><p ALIGN="CENTER">6</td>
  </tr>
  <tr>
    <td WIDTH="67%" VALIGN="TOP">STATEMENT OF CASH FLOWS</td>
    <td WIDTH="33%" VALIGN="TOP"><p ALIGN="CENTER">7-6</td>
  </tr>
  <tr>
    <td WIDTH="67%" VALIGN="TOP">NOTES TO FINANCIAL STATEMENTS </td>
    <td WIDTH="33%" VALIGN="TOP"><p ALIGN="CENTER">9-20</td>
  </tr>
</TABLE>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER">REPORT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS</p>

<p>Board of Directors</p>

<p>Electronic Systems Technology, Inc.</p>

<p>415 N. Quay - Suite 4</p>

<p>Kennewick, WA 99336</p>

<p ALIGN="JUSTIFY">We have audited the accompanying balance sheets of
ELECTRONIC SYSTEMS
TECHNOLOGY, INC. as of December 31, 1999 and 1998, and the related
statements of
operations, stockholders’ equity and cash flows for each of the
three years in the
period ended December 31, 1999. These financial statements are the
responsibility of the
Company’s management. Our responsibility is to express an opinion
on these financial
statements based on our audits.</p>

<p ALIGN="JUSTIFY">We conducted our audits in accordance with generally
accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An
audit includes examining, on a test basis, evidence supporting the
amounts and disclosures
in the financial statements. An audit also includes assessing the
accounting principles
used and significant estimates made by management, as well as
evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis
for our opinion.</p>

<p ALIGN="JUSTIFY">In our opinion, the financial statements referred to
above present
fairly, in all material respects, the financial position of ELECTRONIC
SYSTEMS TECHNOLOGY,
INC. as of December 31, 1999 and 1998, and the results of its
operations and its cash
flows for each of the three years in the period ended December 31,
1999, in conformity
with generally accepted accounting principles.</p>

<p ALIGN="JUSTIFY"> </p>

<p ALIGN="JUSTIFY"> </p>

<p ALIGN="JUSTIFY">ROBERT MOE & ASSOCIATES, P.S.</p>

<p ALIGN="JUSTIFY"> </p>

<p ALIGN="JUSTIFY"> </p>

<p ALIGN="JUSTIFY"> </p>

<p ALIGN="JUSTIFY">Spokane, Washington</p>

<p ALIGN="JUSTIFY">February 7, 2000</p>

<p ALIGN="JUSTIFY"> </p>

<p ALIGN="JUSTIFY"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER">-1-</p>

<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="699">
  <tr>
    <td VALIGN="TOP" COLSPAN="9" HEIGHT="20"><p
ALIGN="CENTER">ELECTRONIC SYSTEMS TECHNOLOGY,
    INC.</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="9" HEIGHT="20"></td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="9" HEIGHT="20"><p ALIGN="CENTER">BALANCE
SHEETS</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="9" HEIGHT="20"><p ALIGN="CENTER">December
31, 1999 and 1998</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="9" HEIGHT="20"></td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="9" HEIGHT="20"><p
ALIGN="CENTER">ASSETS</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP" COLSPAN="6" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1999</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1998</td>
  </tr>
  <tr>
    <td WIDTH="21%" VALIGN="TOP" COLSPAN="4" HEIGHT="20">CURRENT
ASSETS</td>
    <td WIDTH="39%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="56%" VALIGN="TOP" COLSPAN="5" HEIGHT="20">Cash</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 6,650
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 6,642
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="56%" VALIGN="TOP" COLSPAN="5" HEIGHT="20">Money market
investment</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">643,642
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">297,122
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="56%" VALIGN="TOP" COLSPAN="5" HEIGHT="20">Certificate of
Deposit</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">974,436
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">909,506
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="56%" VALIGN="TOP" COLSPAN="5" HEIGHT="20">Commercial
paper</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">213,111
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="56%" VALIGN="TOP" COLSPAN="5" HEIGHT="20">Accounts
receivable, net of allowance
    for uncollectibles</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="52%" VALIGN="TOP" COLSPAN="4" HEIGHT="20">of $1,284 -
1999, and $1,284 - 1998</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">154,788
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">381,386
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="56%" VALIGN="TOP" COLSPAN="5" HEIGHT="20">Inventory</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">357,490
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">385,365
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="56%" VALIGN="TOP" COLSPAN="5" HEIGHT="20">Accrued
interest</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">5,415
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">7,888
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="56%" VALIGN="TOP" COLSPAN="5" HEIGHT="20">Prepaid
insurance</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">4,048
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">4,177
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="56%" VALIGN="TOP" COLSPAN="5" HEIGHT="20">Prepaid
expenses</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">1,604
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">1,025
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="56%" VALIGN="TOP" COLSPAN="5" HEIGHT="20">Prepaid
federal income taxes</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">5,045
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="56%" VALIGN="TOP" COLSPAN="5" HEIGHT="20">Deferred tax
asset</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">487 </td>
  </tr>
  <tr>
    <td WIDTH="11%" VALIGN="TOP" COLSPAN="3" HEIGHT="20"></td>
    <td WIDTH="48%" VALIGN="TOP" COLSPAN="3" HEIGHT="20">Total current
assets</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">2,153,118
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">2,206,709
</td>
  </tr>
  <tr>

    <td VALIGN="TOP" COLSPAN="9" HEIGHT="7"></td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="9" HEIGHT="20">PROPERTY &
EQUIPMENT</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="56%" VALIGN="TOP" COLSPAN="5" HEIGHT="20">Leasehold
improvements</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">13,544
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">13,544
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="56%" VALIGN="TOP" COLSPAN="5" HEIGHT="20">Laboratory
equipment</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">316,831
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">307,892
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="56%" VALIGN="TOP" COLSPAN="5" HEIGHT="20">Furniture
& fixtures</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">16,173
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">16,173
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="56%" VALIGN="TOP" COLSPAN="5" HEIGHT="20">Dies &
molds</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">77,396
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">20,827
</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP" COLSPAN="6" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">423,944
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">358,436
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="56%" VALIGN="TOP" COLSPAN="5" HEIGHT="20">Less
accumulated depreciation</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">278,821
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">246,122
</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP" COLSPAN="6" ROWSPAN="2"
HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">145,123
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">112,314
</td>
  </tr>
  <tr>
    <td WIDTH="41%" VALIGN="TOP" COLSPAN="3" HEIGHT="8"></td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="9" HEIGHT="20">OTHER COSTS</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="56%" VALIGN="TOP" COLSPAN="5" HEIGHT="20">Patent costs,
net of amortization of
    $1,562 - 1999, </td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="52%" VALIGN="TOP" COLSPAN="4" HEIGHT="20">and $1,453 -
1998</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">715 </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">824 </td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="56%" VALIGN="TOP" COLSPAN="5" HEIGHT="20">Deposits</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">340 </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">26,590
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="56%" VALIGN="TOP" COLSPAN="5" HEIGHT="20">Capitalized
software costs of $72,620
    - 1999 net of</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="52%" VALIGN="TOP" COLSPAN="4" HEIGHT="20">amortization
of $64,201; $68,895 -
    1998, and net of </td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="24%" VALIGN="TOP" COLSPAN="3" HEIGHT="20">amortization
of $61,187</td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">8,419
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">7,708
</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP" COLSPAN="6" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">9,474
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">35,122
</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP" COLSPAN="6" HEIGHT="21">TOTAL
ASSETS</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$
2,307,715 </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$
2,354,145 </td>
  </tr>
</TABLE>

<p ALIGN="CENTER"> </p>
<font SIZE="3">

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER">The accompanying notes are an integral part of this
statement </p>

<p ALIGN="CENTER">-2-</p>
</font>

<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="705">
  <tr>
    <td VALIGN="TOP" COLSPAN="6" HEIGHT="20"><p
ALIGN="CENTER">ELECTRONIC SYSTEMS TECHNOLOGY,
    INC.</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="6" HEIGHT="20"></td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="6" HEIGHT="20"><p ALIGN="CENTER">BALANCE
SHEETS</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="6" HEIGHT="20"><p ALIGN="CENTER">December
31, 1999 and 1998</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="6" HEIGHT="26"></td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="6" HEIGHT="20"><p
ALIGN="CENTER">LIABILITIES AND STOCKHOLDERS'
    EQUITY</td>
  </tr>
  <tr>
    <td WIDTH="60%" VALIGN="TOP" COLSPAN="3" HEIGHT="20"></td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1999</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1998</td>
  </tr>
  <tr>
    <td WIDTH="60%" VALIGN="TOP" COLSPAN="3" HEIGHT="20">CURRENT
LIABILITIES</td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="57%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Accounts
payable</td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 36,607
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 52,386
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="57%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Accrued
payroll</td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">2,622
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">2,720
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="57%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Accrued
payroll taxes</td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">1,330
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">1,143
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="57%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Accrued excise
taxes payable</td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">7,178
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">681 </td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="57%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Accrued
vacation pay</td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">14,410
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">15,700
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="57%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Deferred taxes
payable</td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">816 </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="57%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Federal income
taxes payable</td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">14,510
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="52%" VALIGN="TOP" HEIGHT="20">Total current
liabilities</td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">62,963
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">87,140
</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="6" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="60%" VALIGN="TOP" COLSPAN="3" HEIGHT="20">DEFERRED
INCOME</td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">25,017
</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="6" HEIGHT="23"></td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="6" HEIGHT="20">STOCKHOLDERS' EQUITY</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="97%" VALIGN="TOP" COLSPAN="5" HEIGHT="20">Common stock
$.001 par value
    50,000,000 shares</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="97%" VALIGN="TOP" COLSPAN="5" HEIGHT="20">authorized,
4,953,667 - 1999, and
    4,953,667 - 1998</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="57%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">shares issued
and outstanding</td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">4,954
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">4,954
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="57%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Additional
paid-in capital</td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">894,129
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">894,129
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="57%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Retained
earnings</td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">1,345,669
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">1,342,905
</td>
  </tr>
  <tr>
    <td WIDTH="60%" VALIGN="TOP" COLSPAN="3" HEIGHT="20"></td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">2,244,752
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">2,241,988
</td>
  </tr>
  <tr>
    <td WIDTH="60%" VALIGN="TOP" COLSPAN="3" HEIGHT="28">TOTAL
LIABILITIES AND STOCKHOLDERS'
    EQUITY</td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="28"><p ALIGN="RIGHT">$
2,307,715 </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="28"></td>
    <td WIDTH="19%" VALIGN="TOP" HEIGHT="28"><p ALIGN="RIGHT">$
2,354,145 </td>
  </tr>
</TABLE>

<p ALIGN="CENTER">The accompanying notes are an integral part of this
statement.</p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER">-3-</p>

<p ALIGN="CENTER"> </p>

<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="702">
  <tr>
    <td VALIGN="TOP" COLSPAN="7" HEIGHT="20"><p
ALIGN="CENTER">ELECTRONIC SYSTEMS TECHNOLOGY,
    INC.</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="7" HEIGHT="20"></td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="7" HEIGHT="20"><p
ALIGN="CENTER">STATEMENT OF OPERATIONS</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="7" HEIGHT="20"><p ALIGN="CENTER">For the
years ended December
    31, 1999, 1998 and 1997</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="7" HEIGHT="7"></td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1999</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1998</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1997</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">SALES</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$
1,239,390 </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$
1,485,381 </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$
1,337,303 </td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="7" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">COST OF
SALES</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="36%" VALIGN="TOP" HEIGHT="20">Beginning inventory</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">385,365
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">319,127
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">401,305
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="36%" VALIGN="TOP" HEIGHT="20">Purchases and allocated
costs</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">605,240
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">758,870
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">492,985
</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">990,605
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">1,077,997
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">894,290
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="36%" VALIGN="TOP" HEIGHT="20">Ending inventory</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">357,490
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">385,365
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">319,127
</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">633,115
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">692,632
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">575,163
</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">GROSS
PROFIT</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">606,275
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">792,749
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">762,140
</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="7" HEIGHT="20"></td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="7" HEIGHT="20">OPERATING EXPENSES</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="36%" VALIGN="TOP" HEIGHT="20">Advertising</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">10,970
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">37,149
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">51,935
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="36%" VALIGN="TOP" HEIGHT="20">Amortization</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">3,124
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">2,579
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">2,579
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="36%" VALIGN="TOP" HEIGHT="20">Bad debt</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">1,155
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="36%" VALIGN="TOP" HEIGHT="20">Commissions- sales</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">1,712
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">23,046
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">21,036
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="36%" VALIGN="TOP" HEIGHT="20">Dues &
Subscriptions</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">1,122
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">4,191
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">4,180
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="36%" VALIGN="TOP" HEIGHT="20">Depreciation</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">32,699
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">31,630
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">32,599
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="36%" VALIGN="TOP" HEIGHT="20">Insurance</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">10,582
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">7,451
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">7,568
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="17"></td>
    <td WIDTH="36%" VALIGN="TOP" HEIGHT="17">Materials &
supplies</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="17"><p ALIGN="RIGHT">21,875
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="17"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="17"><p ALIGN="RIGHT">15,568
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="17"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="17"><p ALIGN="RIGHT">22,079
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="36%" VALIGN="TOP" HEIGHT="20">Office &
administration</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">12,734
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">11,692
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">11,371
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="36%" VALIGN="TOP" HEIGHT="20">Printing</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">15,220
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">7,082
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">8,443
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="36%" VALIGN="TOP" HEIGHT="20">Professional services</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">69,785
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">66,210
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">56,215
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="36%" VALIGN="TOP" HEIGHT="20">Rent & utilities</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">32,027
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">30,709
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">32,932
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="36%" VALIGN="TOP" HEIGHT="20">Repair &
maintenance</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">12,826
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">18,259
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">10,759
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="36%" VALIGN="TOP" HEIGHT="20">Salaries</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">503,156
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">467,118
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">408,840
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="36%" VALIGN="TOP" HEIGHT="20">Taxes</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">98,314
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">87,494
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">74,806
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="36%" VALIGN="TOP" HEIGHT="20">Telephone</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">9,976
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">10,377
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">11,463
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="17"></td>
    <td WIDTH="36%" VALIGN="TOP" HEIGHT="17">Trade shows</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="17"><p ALIGN="RIGHT">14,384
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="17"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="17"><p ALIGN="RIGHT">14,374
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="17"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="17"><p ALIGN="RIGHT">19,755
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="36%" VALIGN="TOP" HEIGHT="20">Travel expenses</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">56,292
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">50,487
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">36,804
</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">907,953
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">885,416
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">813,364
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="36%" VALIGN="TOP" HEIGHT="20">Expenses allocated to cost
of sales</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(278,005)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(255,950)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(227,389)</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">629,948
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">629,466
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">585,975
</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">OPERATING
INCOME (LOSS)</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(23,673)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">163,283
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">176,165
</td>
  </tr>
</TABLE>

<p ALIGN="CENTER">The accompanying notes are an integral part of this
statement.</p>

<p ALIGN="CENTER">-4-</p>

<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="684">
  <tr>
    <td VALIGN="TOP" COLSPAN="7" HEIGHT="20"><p
ALIGN="CENTER">ELECTRONIC SYSTEMS TECHNOLOGY,
    INC.</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="7" HEIGHT="20"></td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="7" HEIGHT="20"><p
ALIGN="CENTER">STATEMENT OF OPERATIONS</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="7" HEIGHT="20"><p ALIGN="CENTER">For the
years ended December
    31, 1999, 1998 and 1997</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="7" HEIGHT="7"></td>
  </tr>
  <tr>
    <td WIDTH="54%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1999</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1998</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1997</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="7" HEIGHT="20"></td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="7" HEIGHT="20">OTHER INCOME</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="51%" VALIGN="TOP" HEIGHT="20">Interest income</td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 60,482
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 72,364
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 63,347
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="51%" VALIGN="TOP" HEIGHT="20">Site support reimbursement
net of allocated costs</td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">28,750
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">4,921
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">6,799
</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="51%" VALIGN="TOP" HEIGHT="20">Loss on disposition of
assets</td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(184)</td>
  </tr>
  <tr>
    <td WIDTH="3%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="51%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">Recovery
from marketable
    securities litigation</td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">2,211
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">1,633
</td>
  </tr>
  <tr>
    <td WIDTH="54%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">89,232
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">79,496
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">71,595
</td>
  </tr>
  <tr>
    <td WIDTH="54%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">INCOME BEFORE
PROVISION FOR FEDERAL </td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="54%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">INCOME
TAXES</td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">65,559
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">242,779
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">247,760
</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="7" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="54%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">PROVISION FOR
FEDERAL INCOME TAXES</td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">13,258
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">79,852
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">81,559
</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="7" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="54%" VALIGN="TOP" COLSPAN="2" HEIGHT="21">NET
INCOME</td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$ 52,301
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$ 162,927
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$ 166,201
</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="7" HEIGHT="83"></td>
  </tr>
  <tr>
    <td WIDTH="54%" VALIGN="TOP" COLSPAN="2" HEIGHT="21">BASIC EARNINGS
PER SHARE</td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$ 0.01
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$ 0.03
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$ 0.03
</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="7" HEIGHT="21"></td>
  </tr>
  <tr>
    <td WIDTH="54%" VALIGN="TOP" COLSPAN="2" HEIGHT="21">DILUTED
EARNINGS PER SHARE</td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$ 0.01
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$ 0.03
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$ 0.03
</td>
  </tr>
</TABLE>

<p ALIGN="CENTER">The accompanying notes are an integral part of this
statement.</p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER">-5-</p>

<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="655">
  <tr>
    <td VALIGN="TOP" COLSPAN="10" HEIGHT="20"><p
ALIGN="CENTER">ELECTRONIC SYSTEMS TECHNOLOGY,
    INC.</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="10" HEIGHT="7"></td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="10" HEIGHT="20"><p
ALIGN="CENTER">STATEMENT OF CHANGES IN
    STOCKHOLDERS' EQUITY</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="10" HEIGHT="20"><p ALIGN="CENTER">For
December 31,1996 through
    December 31, 1999</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="10" HEIGHT="7"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="27%" VALIGN="TOP" COLSPAN="3" HEIGHT="20"><p
ALIGN="CENTER">Common Stock</td>
    <td WIDTH="46%" VALIGN="TOP" COLSPAN="5" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER"> </p>
    <p ALIGN="CENTER">Shares</td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"><p
ALIGN="CENTER"> </p>
    <p ALIGN="CENTER">Amount</td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">Amount</p>
    <p ALIGN="CENTER">Paid-In</p>
    <p ALIGN="CENTER">Capital</td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">Retained
Earnings</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER"> </p>
    <p ALIGN="CENTER">TOTAL</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="6"></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="6"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="6"></td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="6"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="6"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="6"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="6"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="6"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">BALANCE AT</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">December 31, 1995</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">5,006,667
</td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"><p
ALIGN="RIGHT">$ 5,007 </td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 918,057
</td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 954,116
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$
1,877,180 </td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">REPURCHASE OF</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">COMMON STOCK</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">May 17, 1996</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(7,000)</td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"><p
ALIGN="RIGHT">(7)</td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(3,143)</td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(3,150)</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">June 26, 1996</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(13,000)</td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"><p
ALIGN="RIGHT">(13)</td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(6,658)</td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(6,671)</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">July 8, 1996</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(3,000)</td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"><p
ALIGN="RIGHT">(3)</td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(1,527)</td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(1,530)</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">September 3, 1996</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(30,000)</td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"><p
ALIGN="RIGHT">(30)</td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(12,600)</td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(12,630)</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">NET INCOME</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">December 31, 1996</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"><p
ALIGN="RIGHT">- </td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">158,735
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">158,735
</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">4,953,667
</td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"><p
ALIGN="RIGHT">4,954 </td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">894,129
</td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">1,112,851
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">2,011,934
</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">CASH DISTRIBUTION</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">DECLARED</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">$0.01 per share</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"><p
ALIGN="RIGHT">- </td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(49,537)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(49,537)</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">NET INCOME</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">December 31, 1997</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"><p
ALIGN="RIGHT">- </td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">166,201
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">166,201
</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="5"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="5"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="5"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">4,953,667
</td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"><p
ALIGN="RIGHT">4,954 </td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">894,129
</td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">1,229,515
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">2,128,598
</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">CASH DISTRIBUTION</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">DECLARED</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">$0.01 per share</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"><p
ALIGN="RIGHT">- </td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(49,537)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(49,537)</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">NET INCOME</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">December 31, 1998</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"><p
ALIGN="RIGHT">- </td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">162,927
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">162,927
</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">4,953,667
</td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"><p
ALIGN="RIGHT">4,954 </td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">894,129
</td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">1,342,905
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">2,241,988
</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">CASH DISTRIBUTION</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">DECLARED</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">$0.01 per share</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"><p
ALIGN="RIGHT">- </td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(49,537)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(49,537)</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">NET INCOME</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">December 31, 1999</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"><p
ALIGN="RIGHT">- </td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">52,301
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">52,301
</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="8"></td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="8"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="8"></td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="8"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="8"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="8"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="8"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="8"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">BALANCE AT</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="21">December 31, 1999</td>
    <td WIDTH="1%" VALIGN="TOP" COLSPAN="2" HEIGHT="21"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">4,953,667
</td>
    <td WIDTH="12%" VALIGN="TOP" COLSPAN="2" HEIGHT="21"><p
ALIGN="RIGHT">$ 4,954 </td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$ 894,129
</td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$
1,345,669 </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$
2,244,752 </td>
  </tr>
</TABLE>

<p ALIGN="CENTER">The accompanying notes are an integral part of this
statement.</p>

<p ALIGN="CENTER">-6-</p>

<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="732">
  <tr>
    <td VALIGN="TOP" COLSPAN="10" HEIGHT="20"><p
ALIGN="CENTER">ELECTRONIC SYSTEMS TECHNOLOGY,
    INC.</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="10" HEIGHT="7"></td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="10" HEIGHT="20"><p
ALIGN="CENTER">STATEMENT OF CASH FLOWS</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="10" HEIGHT="20"><p ALIGN="CENTER">For the
years ended December
    31, 1999, 1998 and 1997</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="10" HEIGHT="7"></td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP" COLSPAN="5" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1999</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1998</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1997</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="10" HEIGHT="5"></td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="10" HEIGHT="20">CASH FLOWS PROVIDED
(USED) IN</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="10" HEIGHT="20">OPERATING
ACTIVITIES:</td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="45%" VALIGN="TOP" COLSPAN="3" HEIGHT="20">Net
income</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 52,301
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 162,927
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 166,201
</td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="43%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Noncash
expenses included in income:</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="42%" VALIGN="TOP" HEIGHT="20">Depreciation</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">32,699
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">31,630
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">32,599
</td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="42%" VALIGN="TOP" HEIGHT="20">Amortization</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">3,123
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">2,579
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">2,579
</td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="42%" VALIGN="TOP" HEIGHT="20">Deferred income taxes</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">1,303
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(487)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">411 </td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="42%" VALIGN="TOP" HEIGHT="20">Loss on disposition of
assets</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">184 </td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="45%" VALIGN="TOP" COLSPAN="3" HEIGHT="20">Decrease
(increase) in current
    assets:</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="43%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Accounts
receivable, net</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">226,598
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(112,407)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(230,668)</td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="43%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Inventory</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">27,875
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(66,238)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">82,178
</td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="43%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Other current
assets</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(3,022)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(2,478)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">28,481
</td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="45%" VALIGN="TOP" COLSPAN="3" HEIGHT="20">Increase
(decrease) in current
    liabilities:</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="43%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Accounts
payable, accrued expenses</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="43%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">and other
current liabilities</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(10,483)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">20,212
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">21,644
</td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="43%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Deferred
income</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(25,017)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">25,017
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="43%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Federal Income
taxes payable</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(14,510)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(10,283)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">24,793
</td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="42%" VALIGN="TOP" HEIGHT="20">Net cash provided by
operating activities</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">290,867
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">50,472
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">128,402
</td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="42%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="7"></td>
  </tr>
  <tr>
    <td WIDTH="47%" VALIGN="TOP" COLSPAN="4" HEIGHT="20">CASH FLOWS
PROVIDED (USED) IN </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="47%" VALIGN="TOP" COLSPAN="4" HEIGHT="20">INVESTING
ACTIVITIES:</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="43%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Deposit</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">26,250
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(26,250)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="43%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Capitalized
software</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(3,725)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(4,043)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(790)</td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="43%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Additions to
property & equipment</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(65,508)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(11,021)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(24,497)</td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="42%" VALIGN="TOP" HEIGHT="20">Net cash used in investing
activities</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(42,983)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(41,314)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(25,287)</td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="42%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="7"></td>
  </tr>
  <tr>
    <td WIDTH="47%" VALIGN="TOP" COLSPAN="4" HEIGHT="20">CASH FLOWS
PROVIDED (USED) IN </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="47%" VALIGN="TOP" COLSPAN="4" HEIGHT="20">FINANCING
ACTIVITIES:</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="43%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Distributions
paid</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(49,537)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(49,537)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(49,537)</td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="42%" VALIGN="TOP" HEIGHT="20">Net cash used in financing
activities</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(49,537)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(49,537)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(49,537)</td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="42%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="5"></td>
  </tr>
  <tr>
    <td WIDTH="47%" VALIGN="TOP" COLSPAN="4" HEIGHT="20">NET INCREASE
(DECREASE) IN CASH AND </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="47%" VALIGN="TOP" COLSPAN="4" HEIGHT="20">CASH
EQUIVALENTS</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">198,347
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(40,379)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">53,578
</td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="42%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="7"></td>
  </tr>
  <tr>
    <td WIDTH="47%" VALIGN="TOP" COLSPAN="4" HEIGHT="20">CASH AND CASH
EQUIVALENTS AT </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="47%" VALIGN="TOP" COLSPAN="4" HEIGHT="20">BEGINNING OF
PERIOD</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">1,426,381
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">1,466,760
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">1,413,182
</td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="42%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="7"></td>
  </tr>
  <tr>
    <td WIDTH="47%" VALIGN="TOP" COLSPAN="4" HEIGHT="20">CASH AND CASH
EQUIVALENTS AT </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="47%" VALIGN="TOP" COLSPAN="4" HEIGHT="21">ENDING OF
PERIOD</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$
1,624,728 </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$
1,426,381 </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$
1,466,760 </td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="42%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="21"></td>
  </tr>
</TABLE>

<p ALIGN="CENTER">The accompanying notes are an integral part of this
statement.</p>

<p ALIGN="CENTER">-7-</p>

<p ALIGN="JUSTIFY"> </p>

<p> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>
<font SIZE="5">

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>
</font>

<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="705">
  <tr>
    <td VALIGN="TOP" COLSPAN="10" HEIGHT="20"><p
ALIGN="CENTER">ELECTRONIC SYSTEMS TECHNOLOGY,
    INC.</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="10" HEIGHT="7"></td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="10" HEIGHT="20"><p
ALIGN="CENTER">STATEMENT OF CASH FLOWS</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="10" HEIGHT="20"><p ALIGN="CENTER">For the
years ended December
    31, 1999, 1998 and 1997</td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="10" HEIGHT="7"></td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP" COLSPAN="4" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1999</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1998</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1997</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP" COLSPAN="4" ROWSPAN="2"
HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="5"></td>
  </tr>
  <tr>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP" COLSPAN="4" HEIGHT="20">SUPPPLEMENTAL
DISCLOSURES OF CASH</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP" COLSPAN="4" HEIGHT="20">FLOWS
INFORMATION:</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="47%" VALIGN="TOP" COLSPAN="3" HEIGHT="20">Cash paid
during the year for:</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="45%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Interest</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="45%" VALIGN="TOP" COLSPAN="2" HEIGHT="21">Income
taxes</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$ 30,510
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$ 90,693
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$ 30,000
</td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="43%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="21"></td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="47%" VALIGN="TOP" COLSPAN="3" HEIGHT="20">Cash and cash
equivalents:</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="45%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Cash </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 6,650
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 6,642
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 6,237
</td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="45%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Money
market</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">643,642
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">297,122
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">405,815
</td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="45%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Certificate of
deposit </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="43%" VALIGN="TOP" HEIGHT="20">(maturity = 3 months or
less)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">974,436
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">909,506
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">439,708
</td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="45%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Commercial
paper</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="43%" VALIGN="TOP" HEIGHT="20">(maturity = 3 months or
less)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">213,111
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">615,000
</td>
  </tr>
  <tr>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="43%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$
1,624,728 </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$
1,426,381 </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$
1,466,760 </td>
  </tr>
</TABLE>

<p ALIGN="CENTER">The accompanying notes are an integral part of this
statement.</p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER">-8-</p>
<font SIZE="5">

<p ALIGN="CENTER">ELECTRONIC SYSTEMS TECHNOLOGY, INC</font>.</p>

<p ALIGN="CENTER">NOTES TO FINANCIAL STATEMENTS</p>

<p ALIGN="JUSTIFY">1. <b>ORGANIZATIONS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES</b>.</p>
<u>

<p ALIGN="JUSTIFY">Business Organization</u>: 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.</p>

<p ALIGN="JUSTIFY"> </p>
<u>

<p ALIGN="JUSTIFY">Accounting Estimates</u>: The preparation of
financial statements in
conformity with generally accepted accounting principles requires
management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements
and the reported amount of revenues and expenses during the reporting
period. Actual
results could differ from those estimates.</p>
<u>

<p ALIGN="JUSTIFY">Revenue Recognition</u>: The Company recognizes
revenue from product
sales upon shipment to the customer. Revenues from site support are
recognized as the
Company performs the services in accordance with agreement terms.</p>
<u>

<p ALIGN="JUSTIFY">Allowance for Uncollectible Accounts</u>: The
Company uses their
reserve method for recording allowance for uncollectible accounts. The
amount included in
Allowance for Uncollectible Accounts consists of $1,284 as of December
31, 1999, and
$1,284 as of December 31, 1998.</p>
<u>

<p ALIGN="JUSTIFY">Inventory</u>: Inventories are stated at lower of
cost or market with
cost determined using the FIFO (first in, first out) method.
Inventories consisted of the
following:</p>

<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="466">
  <tr>
    <td WIDTH="31%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="21%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="22%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="31%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="21%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1999</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1998</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="22%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1997</td>
  </tr>
  <tr>
    <td WIDTH="31%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="21%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="22%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="31%" VALIGN="TOP" HEIGHT="20">Parts</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="21%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$
256,334</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$
229,903</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="22%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$
218,263</td>
  </tr>
  <tr>
    <td WIDTH="31%" VALIGN="TOP" HEIGHT="20">Work in Progress</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="21%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">52,279</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">-</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="22%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">26,582</td>
  </tr>
  <tr>
    <td WIDTH="31%" VALIGN="TOP" HEIGHT="20">Finished goods</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="21%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">48,877</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">155,462</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="22%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">74,282</td>
  </tr>
  <tr>
    <td WIDTH="31%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="21%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$
357,490</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$
385,365</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="22%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$
319,127</td>
  </tr>
</TABLE>
<u>

<p ALIGN="JUSTIFY">Property and Equipment</u>: Property and equipment
are carried at cost.
Deprecation 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 five to seven years. The useful life for leasehold
improvements is
thirty-one and one-half years. 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.</p>

<p ALIGN="CENTER">-9-</p>
<font SIZE="5">

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER">ELECTRONIC SYSTEMS TECHNOLOGY, INC</font>.</p>

<p ALIGN="CENTER">NOTES TO FINANCIAL STATEMENTS</p>

<ol>
  <b>
  <li>ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES </li>
</ol>

<p ALIGN="JUSTIFY">(Continued)</p>
</b>

<dir>
  <u><p ALIGN="JUSTIFY">Patent Costs</u>: Expenses incurred in
connection with the patent
  have been capitalized and are being amortized over 17 years.</p>
  <u><p ALIGN="JUSTIFY">Research and Development</u>: Research and
development costs are
  expensed as incurred. Research and development expenditures for new
product development
  and improvements of existing products by the Company for 1999, 1998,
and 1997 were
  $171,658, $139,675, and $128,110 respectively.</p>
  <u><p ALIGN="JUSTIFY">Earnings (Loss) Per Common Share</u>: Basic EPS
excludes dilution
  and is computed by dividing income available to common stockholders
by the
  weighted-average number of common shares outstanding for the period.
Diluted EPS reflects
  the potential dilution that could occur 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 entity. The primary
weighted average number
  of common shares outstanding was 5,539,749, 5,577,694, and 5,521,283
for the years ended
  December 31, 1999, 1998, and 1997 respectively.</p>
</dir>
<div align="center"><center>

<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="593">
  <tr>
    <td WIDTH="11%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="11%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="27%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="49%" VALIGN="TOP" COLSPAN="5" HEIGHT="20"><p
ALIGN="CENTER">For the Year Ended
    1999</td>
  </tr>
  <tr>
    <td WIDTH="11%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="11%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="27%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="16%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">Income</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="16%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">Shares</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">Per-
Share</td>
  </tr>
  <tr>
    <td WIDTH="11%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="11%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="27%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="16%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">(Numerator)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="16%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">(Denominator)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">Amount</td>
  </tr>
  <tr>
    <td WIDTH="11%" VALIGN="TOP" HEIGHT="20"><b>Basic EPS</b></td>
    <td WIDTH="11%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="27%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="16%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="16%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="49%" VALIGN="TOP" COLSPAN="3" HEIGHT="21">Income
available to common
    stockholders</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="16%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$ 52,301
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="16%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">5,539,749
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$ 0.01
</td>
  </tr>
  <tr>
    <td WIDTH="11%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="11%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="27%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="16%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="16%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="21"></td>
  </tr>
  <tr>
    <td WIDTH="11%" VALIGN="TOP" HEIGHT="20"><b>Diluted EPS</b></td>
    <td WIDTH="11%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="27%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="16%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="16%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="49%" VALIGN="TOP" COLSPAN="3" HEIGHT="20">Income
available to common</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="16%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="16%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="49%" VALIGN="TOP" COLSPAN="3" HEIGHT="21">stockholder +
assumed conversion</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="16%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$ 52,301
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="16%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">5,593,667
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="15%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$ 0.01
</td>
  </tr>
</TABLE>
</center></div>

<p ALIGN="JUSTIFY"> </p>

<dir>
  <u><p ALIGN="JUSTIFY">Capitalized Software Costs</u>: In August,
1985, the Statement of
  Financial Accounting Standards No. 86, was issued by the Financial
Accounting Standards
  Board (FASB), directing that the costs of creating a computer
software product to be sold,
  leased, or otherwise marketed, and which are incurred after the
product’s
  technological feasibility has been established, be capitalized.
During 1986 the Company
  adopted this statement as permitted by the FASB No. 86 and,
accordingly, capitalized all
  costs subsequent to 1985. Costs incurred prior to 1986 are not
permitted to be capitalized
  by FASB No. 86 and the Company has not capitalized such costs. All
costs capitalized under
  FASB No. 86 are required to be amortized over their estimated
revenue-producing lives, not
  to exceed five years, beginning on the date the product is available
for distribution to
  customers.</p>
  <p ALIGN="JUSTIFY"> </p>
  <p ALIGN="JUSTIFY"> </p>
</dir>

<p ALIGN="CENTER">-10-</p>
<font SIZE="5">

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER">ELECTRONIC SYSTEMS TECHNOLOGY, INC</font>.</p>

<p ALIGN="CENTER">NOTES TO FINANCIAL STATEMENTS</p>

<p ALIGN="JUSTIFY"> </p>

<ol>
  <b>
  <li>ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES(continued)</li>
</ol>
</b>

<p>Amortization of capitalized software costs charged to expenses for
periods presented is
as follows:</p>

<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="251">
  <tr>
    <td WIDTH="53%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="CENTER">1986</font></td>
    <td WIDTH="6%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="41%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="RIGHT">$ 3,234 </font></td>
  </tr>
  <tr>
    <td WIDTH="53%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="CENTER">1987</font></td>
    <td WIDTH="6%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="41%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="RIGHT">4,865 </font></td>
  </tr>
  <tr>
    <td WIDTH="53%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="CENTER">1988</font></td>
    <td WIDTH="6%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="41%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="RIGHT">9,080 </font></td>
  </tr>
  <tr>
    <td WIDTH="53%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="CENTER">1989</font></td>
    <td WIDTH="6%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="41%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="RIGHT">10,501 </font></td>
  </tr>
  <tr>
    <td WIDTH="53%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="CENTER">1990</font></td>
    <td WIDTH="6%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="41%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="RIGHT">9,527 </font></td>
  </tr>
  <tr>
    <td WIDTH="53%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="CENTER">1991</font></td>
    <td WIDTH="6%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="41%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="RIGHT">7,358 </font></td>
  </tr>
  <tr>
    <td WIDTH="53%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="CENTER">1992</font></td>
    <td WIDTH="6%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="41%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="RIGHT">6,219 </font></td>
  </tr>
  <tr>
    <td WIDTH="53%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="CENTER">1993</font></td>
    <td WIDTH="6%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="41%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="RIGHT">1,719 </font></td>
  </tr>
  <tr>
    <td WIDTH="53%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="CENTER">1994</font></td>
    <td WIDTH="6%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="41%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="RIGHT">288 </font></td>
  </tr>
  <tr>
    <td WIDTH="53%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="CENTER">1995</font></td>
    <td WIDTH="6%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="41%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="RIGHT">1,728 </font></td>
  </tr>
  <tr>
    <td WIDTH="53%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="CENTER">1996</font></td>
    <td WIDTH="6%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="41%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="RIGHT">1,728 </font></td>
  </tr>
  <tr>
    <td WIDTH="53%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="CENTER">1997</font></td>
    <td WIDTH="6%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="41%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="RIGHT">2,470 </font></td>
  </tr>
  <tr>
    <td WIDTH="53%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="CENTER">1998</font></td>
    <td WIDTH="6%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="41%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="RIGHT">2,470 </font></td>
  </tr>
  <tr>
    <td WIDTH="53%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="CENTER">1999</font></td>
    <td WIDTH="6%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="41%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial"><p
ALIGN="RIGHT">3,014 </font></td>
  </tr>
  <tr>
    <td WIDTH="53%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="6%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="41%" VALIGN="TOP" HEIGHT="20"><font FACE="Arial"><p
ALIGN="RIGHT">$ 64,201 </font></td>
  </tr>
</TABLE>
<u>

<p ALIGN="JUSTIFY">Cash and Cash Equivalents</u>: Cash and cash
equivalents consist of
cash, certificates of deposit, time deposits, commercial paper and
other money market
instruments. The Company invests its excess cash in deposits with major
banks, and
commercial paper of investment grade companies and, therefore bears
minimal risk. These
securities have original maturity dates not exceeding three months.
Such investments are
stated at cost, which approximates fair value, and are considered cash
equivalents for
purposes of reporting cash flows.</p>
<u>

<p ALIGN="JUSTIFY">Advertising Costs</u>: Costs incurred for producing
and communicating
advertising are expensed when incurred. </p>
<u>

<p ALIGN="JUSTIFY">Other Comprehensive Income</u>: The Company does not
have other
revenues, expenses, gains, and losses that require disclosure under
SFAS No. 130 as other
comprehensive income.</p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER">-11-</p>
<font SIZE="5">

<p ALIGN="CENTER">ELECTRONIC SYSTEMS TECHNOLOGY, INC</font>.</p>

<p ALIGN="CENTER">NOTES TO FINANCIAL STATEMENTS</p>

<p ALIGN="JUSTIFY"> </p>

<ol START="2">
  <b>
  <li>FEDERAL INCOME TAXES</li>
</ol>
</b>

<dir>
  <p ALIGN="JUSTIFY">Effective as of January 1, 1992 the Company
adopted Statement of
  Financial Accounting Standards (SFAS) No. 109 Accounting for Income
taxes which
  establishes generally accepted accounting principles for the
financial accounting
  measurement and disclosure principles for income taxes that are
payable or refundable for
  the current year and for the future tax consequences of events that
have been recognized
  in the financial statements of the Company and past and current tax
returns. The change
  had no effect on prior years results. </p>
</dir>

<p ALIGN="JUSTIFY">The provision for Federal Income Taxes consisted
of:</p>

<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="566">
  <tr>
    <td WIDTH="44%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1999</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1998</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1997</td>
  </tr>
  <tr>
    <td WIDTH="44%" VALIGN="TOP" HEIGHT="20">Currently payable</td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 11,955
</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 80,339
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 81,148
</td>
  </tr>
  <tr>
    <td WIDTH="44%" VALIGN="TOP" HEIGHT="20">Deferred </td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">1,303
</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(487)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">411 </td>
  </tr>
  <tr>
    <td WIDTH="44%" VALIGN="TOP" HEIGHT="21">Provision for Federal
Income taxes</td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$ 13,258
</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$ 79,852
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$ 81,559
</td>
  </tr>
</TABLE>

<p ALIGN="JUSTIFY"> </p>

<p>The components of the net deferred tax (assets) liability at
December 31, were as
follows:</p>
<div align="center"><center>

<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="602">
  <tr>
    <td WIDTH="47%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1999</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1998</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1997</td>
  </tr>
  <tr>
    <td WIDTH="47%" VALIGN="TOP" HEIGHT="20">Depreciation</td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 19,189
</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 18,324
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 19,969
</td>
  </tr>
  <tr>
    <td WIDTH="47%" VALIGN="TOP" HEIGHT="20">Accrued vacation
payable</td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(4,900)</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(5,338)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(5,744)</td>
  </tr>
  <tr>
    <td WIDTH="47%" VALIGN="TOP" HEIGHT="20">Allowance for
uncollectable accounts receivable</td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(437)</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(437)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(437)</td>
  </tr>
  <tr>
    <td WIDTH="47%" VALIGN="TOP" HEIGHT="20">Unused capital loss carry
forward</td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(13,036)</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(13,036)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(13,788)</td>
  </tr>
  <tr>
    <td WIDTH="47%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$ 816
</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$
(487)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$ - </td>
  </tr>
</TABLE>
</center></div>

<p ALIGN="CENTER"> </p>

<p>The differences between the provision for income taxes and income
taxes computed using
the U.S. Federal Income tax rate were as follows:</p>
<div align="center"><center>

<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="602">
  <tr>
    <td WIDTH="47%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1999</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1998</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1997</td>
  </tr>
  <tr>
    <td WIDTH="47%" VALIGN="TOP" HEIGHT="20">Amount computed using the
statutory rates</td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 11,955
</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 80,339
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 81,148
</td>
  </tr>
  <tr>
    <td WIDTH="47%" VALIGN="TOP" HEIGHT="20">Increase (reduction):</td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="47%" VALIGN="TOP" HEIGHT="20">Deferred tax (asset)
liability</td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">1,303
</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(487)</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">411 </td>
  </tr>
  <tr>
    <td WIDTH="47%" VALIGN="TOP" HEIGHT="21">Provision for Federal
Income Taxes</td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$ 13,258
</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$ 79,852
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="21"></td>
    <td WIDTH="17%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">$ 81,559
</td>
  </tr>
</TABLE>
</center></div><b>

<p ALIGN="JUSTIFY"> </p>

<p ALIGN="JUSTIFY">PUBLIC OFFERING OF COMMON STOCK</p>

<dir>
  </b><p ALIGN="JUSTIFY">The Company sold 3,000,000 shares of its
unissued common stock to
  the public on November 12, 1984. An offering price of $.30 per share
was arbitrarily
  determined by the underwriter.</p>
  <b>
</dir>
</b>

<p ALIGN="CENTER">-12-</p>
<font SIZE="5">

<p ALIGN="CENTER">ELECTRONIC SYSTEMS TECHNOLOGY, INC</font>.</p>

<p ALIGN="CENTER">NOTES TO FINANCIAL STATEMENTS</p>

<ol START="4">
  <b>
  <li>COMPENSATED ABSENCES</li>
</ol>

<dir>
  <p ALIGN="JUSTIFY"></b>FASB Statement No. 43 requires employers to
accrue a liability for
  employees’ compensation for certain future absences. Liabilities
for vacation pay in
  the amounts of $14,410 and $15,700 have been accrued as of December
31, 1999 and 1998,
  respectively.</p>
</dir>

<ol START="5">
  <b>
  <li>LEASES</li>
</ol>
</b>

<p
ALIGN="JUSTIFY">         
The Company has
no obligation under capital lease arrangements.</p>

<dir>
  <p ALIGN="JUSTIFY">The Company rents its facility under a three (3)
year operating lease
  commencing on the 1<sup>st</sup> day of December 1999. The Company
leases the facility
  from the Port of Kennewick, with the assistance of federal economic
development funds
  (EDA), has constructed a building for the purpose of leasing space to
new or expanding
  high tech. and electronic industries. The Company will pay as rental
for 6,275 square feet
  of building space the sum of $28,784 per year, payable monthly in
advance at the rate of
  $2,133.50 per month. A leasehold tax of $273.94 per month is due in
addition to the
  $2,133.50 monthly rent. For the second and any following years of the
renewed term, the
  parties agree that any rental amounts be increased by the Consumer
Price Index - Pacific
  Cities and U.S. City Average-All Items Indexes using the U.S. City
Average for the 12
  month period preceding. The rental expenses for 1999, 1998, and 1997
were as follows: 1999
  = $27,332; 1998 = $25,993; 1997 = $27,670.</p>
  <p ALIGN="JUSTIFY">The following is a schedule of estimated future
minimum rental payments
  required under the above operating leases over the next five (5)
succeeding fiscal years:</p>
</dir>

<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="503">
  <tr>
    <td WIDTH="134" VALIGN="TOP" COLSPAN="2" HEIGHT="20"><p
ALIGN="CENTER">Year ending
    December 31</td>
    <td WIDTH="6" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="339" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">Amount</td>
  </tr>
  <tr>
    <td WIDTH="128" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">2000</td>
    <td WIDTH="6" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="345" VALIGN="TOP" COLSPAN="2" HEIGHT="20"><p
ALIGN="RIGHT">$ 28,784 </td>
  </tr>
  <tr>
    <td WIDTH="128" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">2001</td>
    <td WIDTH="6" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="345" VALIGN="TOP" COLSPAN="2" HEIGHT="20"><p
ALIGN="RIGHT">29,830 </td>
  </tr>
  <tr>
    <td WIDTH="128" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">2002</td>
    <td WIDTH="6" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="345" VALIGN="TOP" COLSPAN="2" HEIGHT="20"><p
ALIGN="RIGHT">3,197 </td>
  </tr>
  <tr>
    <td WIDTH="128" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">2003</td>
    <td WIDTH="6" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="345" VALIGN="TOP" COLSPAN="2" HEIGHT="20"><p
ALIGN="RIGHT">- </td>
  </tr>
  <tr>
    <td WIDTH="128" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">2004</td>
    <td WIDTH="6" VALIGN="TOP" COLSPAN="2" HEIGHT="20"></td>
    <td WIDTH="345" VALIGN="TOP" COLSPAN="2" HEIGHT="20"><p
ALIGN="RIGHT">- </td>
  </tr>
</TABLE>

<p ALIGN="JUSTIFY">6. <b>FOREIGN SALES</p>

<dir>
  </b><p ALIGN="JUSTIFY">The Company’s revenues fall into three
major customer
  categories, Domestic, Export, and U.S. Government sales. A percentage
breakdown of
  E.S.T.’s major customer categories for the years of 1999 and
1998, are as follows:</p>
</dir>

<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="384">
  <tr>
    <td WIDTH="47%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="24%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1999</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="27%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1998</td>
  </tr>
  <tr>
    <td WIDTH="47%" VALIGN="TOP" HEIGHT="20">Domestic sales</td>
    <td WIDTH="24%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">87%</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="27%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">59%</td>
  </tr>
  <tr>
    <td WIDTH="47%" VALIGN="TOP" HEIGHT="20">Export sales</td>
    <td WIDTH="24%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">10%</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="27%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">14%</td>
  </tr>
  <tr>
    <td WIDTH="47%" VALIGN="TOP" HEIGHT="20">U.S. Government sales</td>
    <td WIDTH="24%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">3%</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="27%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">27%</td>
  </tr>
</TABLE>

<dir>
  <p ALIGN="CENTER">-13-</p>
  <font SIZE="5">
</dir>

<p ALIGN="CENTER">ELECTRONIC SYSTEMS TECHNOLOGY, INC</font>.</p>

<p ALIGN="CENTER">NOTES TO FINANCIAL STATEMENTS</p>

<ol START="6">
  <b>
  <li>FOREIGN SALES (continued)</li>
</ol>

<dir>
  </b><p ALIGN="JUSTIFY">The geographic distribution of foreign sales
for 1999 and 1998 are
  as follows:</p>
</dir>

<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="270">
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1999</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1998</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">%</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">%</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20">Brazil</td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">24</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">5</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20">Mexico</td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">21</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">3</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20">South Korea</td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">10</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">23</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20">Croatia</td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">10</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">4</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20">Indonesia</td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">8</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">0</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20">Canada</td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">7</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">9</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20">Taiwan</td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">6</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">6</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20">Ecuador</td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">5</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">0</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20">Thailand</td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">4</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">0</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20">Israel</td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">3</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">5</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20">Kuwait</td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">2</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">0</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20">Venezuela</td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">0</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">2</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20">Uruguay</td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">0</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">5</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20">Peru</td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">0</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">3</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20">New Zealand</td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">0</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">3</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20">Malaysia</td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">0</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">2</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20">Italy</td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">0</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">2</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20">Ireland</td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">0</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">3</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20">Germany</td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">0</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">11</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20">Columbia</td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">0</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">5</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20">Chile</td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">0</td>
    <td WIDTH="4%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">9</td>
  </tr>
</TABLE>

<ol START="7">
  <b>
  <li>PROFIT SHARING SALARY DEFERRAL 401-K PLAN</li>
</ol>
</b>

<dir>
  <p ALIGN="JUSTIFY">The Company sponsors a Profit Sharing Plan and
Salary Deferral 401-K
  plan and trust. All employees over the age of 21 are eligible. The
Company is not making
  contributions under the current plan agreement.</p>
  <p ALIGN="CENTER"> </p>
  <p ALIGN="CENTER"> </p>
  <p ALIGN="CENTER"> </p>
  <p ALIGN="CENTER"> </p>
  <p ALIGN="CENTER"> </p>
  <p ALIGN="CENTER"> </p>
  <p ALIGN="CENTER"> </p>
  <p ALIGN="CENTER"> </p>
</dir>

<p ALIGN="CENTER">-14-</p>

<p ALIGN="CENTER"> </p>

<dir>
  <font SIZE="5"><p ALIGN="CENTER">ELECTRONIC SYSTEMS TECHNOLOGY,
INC</font>.</p>
</dir>

<p ALIGN="CENTER">NOTES TO FINANCIAL STATEMENTS</p>

<p ALIGN="JUSTIFY">8.<b> STOCK OPTIONS </p>
</b>

<dir>
  <p ALIGN="JUSTIFY">On February 9, 1996 stock options to purchase
shares of the
  Company’s commons stock were granted to individual employees and
directors with no
  less that three years continuous tenure. The options have an exercise
price of $.42 per
  share. Options may be exercised any time during the period from
February 9, 1996 though
  February 9, 1999. Following is a summary of transactions:</p>
</dir>

<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="350">
  <tr>
    <td WIDTH="62%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="38%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">Shares
under Option</td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" HEIGHT="20">Outstanding, beginning of
year</td>
    <td WIDTH="38%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">200,000
</td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" HEIGHT="20">Granted during year</td>
    <td WIDTH="38%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" HEIGHT="20">Canceled during year</td>
    <td WIDTH="38%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(200,000)</td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" HEIGHT="20">Exercised during year</td>
    <td WIDTH="38%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
  </tr>
  <tr>
    <td WIDTH="62%" VALIGN="TOP" HEIGHT="21">Outstanding, end of
year</td>
    <td WIDTH="38%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">- </td>
  </tr>
</TABLE>

<dir>
  <p ALIGN="JUSTIFY">On February 7, 1997 stock options to purchase
shares of the
  Company’s common stock were granted to individual employees and
directors with no
  less than three years continuos tenure. The options have an exercise
price of $.28 per
  share. Options may be exercised any time during the period from
February 7, 1997 through
  February 7, 2000. Following is a summary of transactions:</p>
</dir>

<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="344">
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">Shares
under Option</td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="20">Outstanding, beginning of
year</td>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">215,000
</td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="20">Granted during year</td>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="20">Canceled during year</td>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(5,000)</td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="20">Exercised during year</td>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="21">Outstanding, end of
year</td>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">210,000
</td>
  </tr>
</TABLE>

<p ALIGN="JUSTIFY"> </p>

<p ALIGN="JUSTIFY"> </p>

<p ALIGN="JUSTIFY"> </p>

<p ALIGN="JUSTIFY"> </p>

<p ALIGN="JUSTIFY"> </p>

<p ALIGN="JUSTIFY"> </p>

<p ALIGN="JUSTIFY"> </p>

<p ALIGN="JUSTIFY"> </p>

<p ALIGN="JUSTIFY"> </p>

<p ALIGN="CENTER">-15-</p>

<p ALIGN="JUSTIFY"> </p>

<dir>
  <font SIZE="5"><p ALIGN="CENTER">ELECTRONIC SYSTEMS TECHNOLOGY,
INC</font>.</p>
</dir>

<p ALIGN="CENTER">NOTES TO FINANCIAL STATEMENTS</p>

<p ALIGN="JUSTIFY">8.<b> STOCK OPTIONS (continued)</p>
</b>

<p ALIGN="JUSTIFY">On February 6, 1998 stock options to purchase shares
of the
Company’s common stock were granted to individual employees and
directors with no
less that three years continuous tenure. The options have an exercise
price of $0.41 per
share. Options may be exercised any time during the period from
February 6, 1998 through
February 5, 2001. Following is a summary of transactions:</p>

<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="344">
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">Shares
under Option</td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="20">Outstanding, beginning of
year</td>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">215,000
</td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="20">Granted during year</td>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="20">Canceled during year</td>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(5,000)</td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="20">Exercised during year</td>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="21">Outstanding, end of
year</td>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">210,000
</td>
  </tr>
</TABLE>

<dir>
  <p ALIGN="JUSTIFY">On February 12, 1999, stock options to purchase
shares of the
  Company’s common stock were granted to individual employees and
directors which no
  less than three years continuous tenure. The options have an exercise
price of $0.44 per
  share. Options may be exercised any time during the period from
February 12, 1999 through
  February 11, 2002. Following is a summary of transactions: </p>
  <font SIZE="5">
</dir>
</font>

<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="344">
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">Shares
under Option</td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="20">Outstanding, beginning of
year</td>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">225,000
</td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="20">Granted during year</td>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="20">Canceled during year</td>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">(5,000)</td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="20">Exercised during year</td>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="21">Outstanding, end of
year</td>
    <td WIDTH="39%" VALIGN="TOP" HEIGHT="21"><p ALIGN="RIGHT">220,000
</td>
  </tr>
</TABLE>
<font SIZE="5">

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>
</font>

<p ALIGN="CENTER">-16-</p>
<font SIZE="5">

<p ALIGN="CENTER">ELECTRONIC SYSTEMS TECHNOLOGY, INC</font>.</p>

<p ALIGN="CENTER">NOTES TO FINANCIAL STATEMENTS</p>
<b>

<p ALIGN="JUSTIFY"> </p>
</b>

<p> 

<ol START="8">
  <b>
  <li>STOCK OPTIONS (continued</b>)</li>
</ol>
<div align="center"><center>

<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="636">
  <tr>
    <td WIDTH="36%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="21%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1999</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1998</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="21%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1997</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP" HEIGHT="20">Option price range at end
of year</td>
    <td WIDTH="21%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ .28 to
$.44</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ .28 to
$.41</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="21%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ .28 to
$.42</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP" HEIGHT="20">Option range for exercised
shares</td>
    <td WIDTH="21%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">None
exercised</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">None
exercised</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="21%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">None
exercised</td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP" HEIGHT="20">Weighted average fair
value of</td>
    <td WIDTH="21%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="21%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="36%" VALIGN="TOP" HEIGHT="20">options granted during the
year</td>
    <td WIDTH="21%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$0.44
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$0.41
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="21%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$0.28
</td>
  </tr>
</TABLE>
</center></div>

<dir>
  <p>The following table summarizes information about fixed-price stock
options outstanding
  at December 31, 1999: </p>
</dir>

<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="536">
  <tr>
    <td WIDTH="24%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">Range of
exercise</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="21%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">Number
exerciseable</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">Weighted
average</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="23%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">Weighted
average</td>
  </tr>
  <tr>
    <td WIDTH="24%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">prices</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="21%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">and
outstanding</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">remaining contractual</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="23%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">exercise</td>
  </tr>
  <tr>
    <td WIDTH="24%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="21%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="23%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="24%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 0.28
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="21%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">210,000
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">2
years</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="23%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 0.28
</td>
  </tr>
  <tr>
    <td WIDTH="24%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 0.41
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="21%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">210,000
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">3
years</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="23%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 0.41
</td>
  </tr>
  <tr>
    <td WIDTH="24%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 0.44
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="21%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">210,000
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">3
years</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="23%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 0.44
</td>
  </tr>
</TABLE>

<p> 

<dir>
  <p ALIGN="JUSTIFY">After termination of employment, stock options may
be exercised within
  90 days. During the 12 month ended December 31, 1999; 215,000 shares
under option expired
  and no shares under option were exercised. At December 31, 1999 there
are 640,000 shares
  reserved for future exercises.</p>
  <p ALIGN="JUSTIFY">The Company has adopted the disclosure-only
provisions of Statement of
  Financial Accounting Standards No. 123, ‘Accounting for Stock-
Based
  Compensation." Accordingly, no compensation cost has been
recognized for the stock
  option plan. Had compensation cost for the Company’s stock
option plan been
  determined based on the fair value at the grant date for awards
consistent with the
  provisions of SFAS No. 123, the Company’s net earnings and
earnings per share would
  have been reduced to the pro forma amounts indicated below:</p>
</dir>
<div align="center"><center>

<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="630">
  <tr>
    <td WIDTH="12%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="23%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1999</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1998</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="22%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1997</td>
  </tr>
  <tr>
    <td WIDTH="35%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Net earnings -
as reported</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 52,301
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 162,927
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="22%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 166,201
</td>
  </tr>
  <tr>
    <td WIDTH="35%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Net earnings -
pro forma</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">7,401
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">129,711
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="22%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">141,925
</td>
  </tr>
  <tr>
    <td WIDTH="35%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Earnings per
share - as reported</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">0.01
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">0.03
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="22%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">0.03
</td>
  </tr>
  <tr>
    <td WIDTH="35%" VALIGN="TOP" COLSPAN="2" HEIGHT="20">Earnings per
share - pro forma</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">0.01
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">0.03
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="22%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">0.03
</td>
  </tr>
</TABLE>
</center></div>

<p> 

<dir>
  <p ALIGN="JUSTIFY">The fair value of each option grant is estimated
on the date of grant
  using the Black-Scholes option-pricing model with the following
weighted-average
  assumptions used for grants in 1999; dividend yield equaled 0;
expected volatility of
  56.24% risk-free interest rate of 5%; and expected lives of 3
years.</p>
  <p ALIGN="CENTER">-17-</p>
  <p ALIGN="CENTER"> </p>
</dir>
<font SIZE="5">

<p ALIGN="CENTER">ELECTRONIC SYSTEMS TECHNOLOGY, INC</font>.</p>

<p ALIGN="CENTER">NOTES TO FINANCIAL STATEMENTS</p>

<ol START="9">
  <b>
  <li>EMPLOYEE PROFIT SHARING BONUS PROGRAM (NON-QUALIFIED</b>)</li>
</ol>

<dir>
  <p ALIGN="JUSTIFY">On December 11, 1992 the Board of Directors
revised the Employee Profit
  Sharing bonus Program as follows. The Company makes contributions to
the Program in
  accordance with the following formula: After the Company’s
"net profit before
  tax" reaches $100,000; the Company sets aside $10,000 for the
Program. Thereafter,
  the Company adds 8% of the "net profit before tax" to the
Program.</p>
</dir>

<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="368">
  <tr>
    <td WIDTH="26%" VALIGN="TOP" HEIGHT="20"><p ALIGN="CENTER">NET
PROFIT</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="70%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">COMPENSATION TO FUND</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="26%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="70%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="26%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$ 100,000
</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="70%" VALIGN="TOP" HEIGHT="20">$10,000 + 8% OF AMOUNT
OVER </td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="26%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="70%" VALIGN="TOP" HEIGHT="20">$100,000 NET PROFIT </td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
</TABLE>

<ol START="10">
  <b>
  <li>CONCENTRATIONS OF CREDIT RISK</li>
</ol>
</b>

<dir>
  <p ALIGN="JUSTIFY">Financial instruments that potentially subject the
Company to
  significant concentrations of credit risk consist principally of cash
investments and
  trade accounts receivable. As of December 31, 1999; the Company had
cash and cash
  equivalents with Bank of America with a combined balance of
$1,070,660 which is $970,660
  in excess of the FDIC insured amount. At December 31, 1999 the
Company had cash deposits
  with Pioneer Bank with a balance of $124,168, which is $24,168 in
excess of the FDIC
  insured amount. At December 31, 1999 the Company had cash deposits
with First Savings Bank
  of Washington with a balance of $121,808, which is $21,808 in excess
of the FDIC insured
  amount. Additionally, at December 31, 1999 the Company had cash
deposits with Community
  First Bank with a balance of $150,000, which is $50,000 in excess of
the FDIC insured
  amount. At December 31, 1999 the Company had cash deposits with Piper
Jaffray with a
  balance of $132,703 which is not FDIC insured.</p>
  <p ALIGN="JUSTIFY">Concentrations of credit risk with respect of
trade accounts receivable
  are generally diversified due to the geographic dispersion of the
Company’s customer
  base.</p>
</dir>

<ol START="11">
  <b>
  <li>RELATED PARTY TRANSACTONS</li>
</ol>
</b>

<dir>
  <p ALIGN="JUSTIFY">For the years ended December 31, 1999, 1998, and
1997; services in the
  amount of $51,563, $106,166 and $82,490 respectively were contracted
with a manufacturing
  process company of which the owner/president is a member of the Board
of Directors of
  Electronic Systems Technology, Inc.</p>
  <p ALIGN="JUSTIFY">The Company purchases certain key components
necessary for the
  production of its products from a sole supplier. The components
provided by the suppliers
  could be replaced or substituted by other products, if it became
necessary to do so. It is
  possible that if this action became necessary, a material
interruption of production
  and/or material cost expenditures could take place. </p>
  <p ALIGN="CENTER">-18-</p>
  <font SIZE="5"><p ALIGN="CENTER"> </p>
  <p ALIGN="CENTER"> </p>
</dir>

<p ALIGN="CENTER">ELECTRONIC SYSTEMS TECHNOLOGY, INC</font>.</p>

<dir>
  <p ALIGN="CENTER">NOTES TO FINANCIAL STATEMENTS</p>
</dir>

<ol START="12">
  <b>
  <li>MARKETABLE SECURITIES</li>
</ol>
</b>

<dir>
  <p ALIGN="JUSTIFY">The Company was included in the class action suit
settlement against
  the manager of the Company’s marketable securities investments,
Piper Jaffray. The
  Company received settlement payments of $11,288 during 1996 and
$1,633 during 1997, and
  $2,211 during 1998. </p>
</dir>

<ol START="13">
  <b>
  <li>STOCK REPURCHASE PLAN</li>
</ol>
</b>

<dir>
  <p ALIGN="JUSTIFY">On March 26, 1996 the Company’s Board of
Directors authorized the
  establishment of a plan for the repurchase of the Company’s
common stock. Pursuant to
  the Plan, the Company could repurchase shares of its common stock in
open market
  transactions through broker and dealers, up to the amount allocated
by the Plan of
  $100,000. Repurchase transactions could continue through June 30,
1996. On June 6, 1996,
  the Company’s Board of Directors authorized the establishment of
a plan for the
  repurchase of the Company’s common stock with terms and
conditions identical to the
  Plan expiring June 30, 1996. The plan approved June 6, 1996 would be
in effect from July
  1, 1996 through September 30, 1996. At the conclusion of the
established repurchase Plan
  on September 30, 1996, $23,981 of the funds allocated by the Plan had
been expended by the
  Company to repurchase a total of 53,000 shares. The transactions for
shares repurchased
  under the Plan were completed by September 30, 1996. The subject
shares were canceled from
  the Company’s outstanding shares and were therefore removed from
the Company’s
  outstanding common shares.</p>
  <p ALIGN="JUSTIFY">14. <b>NOTE - CASH DISTRIBUTION</p>
  </b><p ALIGN="JUSTIFY">On June 11, 1999 the Company declared a one-
time, non-cumulative,
  cash distribution to shareholders of record as of June 25, 1999 of
$0.01 per share of
  common stock, with payable date of July 9, 1999. The payment of the
cash distribution was
  completed by July 9, 1999 for a total dollar value of $49,537.</p>
  <p ALIGN="JUSTIFY"> </p>
  <p> </p>
  <p> </p>
  <p> </p>
  <p> </p>
  <p> </p>
  <p> </p>
  <p> </p>
  <p> </p>
  <p> </p>
  <p> </p>
  <p> </p>
  <p> </p>
  <p> </p>
  <p ALIGN="CENTER">-19-</p>
  <font SIZE="5"><p ALIGN="CENTER"> </p>
  <p ALIGN="CENTER"> </p>
</dir>

<p ALIGN="CENTER">ELECTRONIC SYSTEMS TECHNOLOGY, INC</font>.</p>

<dir>
  <p ALIGN="CENTER">SELECTED FINANCIAL DATA</p>
</dir>

<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="730">
  <tr>
    <td VALIGN="TOP" COLSPAN="11" HEIGHT="20"><p ALIGN="CENTER">For the
five years ended
    Decemeber 31, </td>
  </tr>
  <tr>
    <td VALIGN="TOP" COLSPAN="11" HEIGHT="40"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1999</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1998</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1997</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1996</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="CENTER">1995</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">Sales</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$
1,239,390 </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$
1,485,381 </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p
ALIGN="RIGHT">$1,337,303 </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$
1,190,304 </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">$
1,535,071 </td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="3"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="3"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="3"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="3"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="3"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="3"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="3"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="3"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="3"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="3"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="3"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">Gross Profit</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">606,275
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">792,749
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">762,140
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">699,453
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">932,485
</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="4"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="19">Income (Loss) before </td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="19"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">provision for income
taxes</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">65,559
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">242,779
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">247,760
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">234,456
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">404,137
</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="5"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">Provision for income
taxes</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">13,258
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">79,852
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">81,559
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">75,721
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">136,428
</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="7"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">Net income</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">52,301
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">162,927
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">166,201
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">158,735
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">267,709
</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="5"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">Net income per share </td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">0.01
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">0.03
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">0.03
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">0.03
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">0.05
</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="5"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">Weighted average number
</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">of shares outstanding</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">5,539,749
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">5,577,694
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">5,521,283
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">5,478,558
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">5,433,174
</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="4"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">Total assets</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">2,307,715
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">2,354,145
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">2,205,811
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">2,042,709
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">2,010,772
</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="5"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">Long-term debt and
capital</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">lease obligations</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">- </td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="4"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">Stockholders' equity</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">2,244,752
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">2,241,988
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">2,128,598
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">2,011,934
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">1,877,180
</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="4"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="4"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">Stockholders' equity per
share</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">0.45
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">0.45
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">0.43
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">0.41
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">0.37
</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="3"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="3"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="3"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="3"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="3"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="3"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="3"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="3"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="3"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="3"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="3"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">Working capital</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">2,090,155
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">2,119,569
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">1,988,266
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">1,861,527
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">1,723,823
</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="5"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="5"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">Current ratio</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">34.2:1
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">25.3:1
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">26.7:1
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">61.5:1
</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">13.9:1
</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="7"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="7"></td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20">Equity to total
assets</td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">97%</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">95%</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">96%</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">98%</td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"><p ALIGN="RIGHT">93%</td>
  </tr>
  <tr>
    <td WIDTH="28%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="2%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="14%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="1%" VALIGN="TOP" HEIGHT="20"></td>
    <td WIDTH="13%" VALIGN="TOP" HEIGHT="20"></td>
  </tr>
</TABLE>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>

<p> 

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