EXHIBIT 1 - FINANCIAL STATEMENTS

                          INDEX TO FINANCIAL STATEMENTS


    ACCOUNTANTS' REPORT ON THE FINANCIAL STATEMENTS            		1

    BALANCE SHEETS	                                     								2-3

    STATEMENT OF OPERATIONS	                              						4-5

    STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY		              	6

    STATEMENT OF CASH FLOWS		                              					7-6

    NOTES TO FINANCIAL STATEMENTS	                         					9-19










































<PAGE>
          REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Electronic Systems Technology, Inc.
415 N. Quay   Suite 4
Kennewick, WA 99336

We have audited the accompanying balance sheets of ELECTRONIC SYSTEMS 
TECHNOLOGY, INC. as of December 31, 1998 and 1997, and the related 
statements of operations, stockholders' equity and cash flows for each 
of the three years in the period ended December 31, 1998. 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.

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.

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, 1998 and 1997, and the 
results of its operations and its cash flows for each of the three 
years in the period ended December 31, 1998, in conformity with 
generally accepted accounting principles.



                           					ROBERT MOE & ASSOCIATES, P.S.




Spokane, Washington
February 3, 1999


















<PAGE>
<TABLE>
<CAPTION>
                    ELECTRONIC SYSTEMS TECHNOLOGY, INC.

                               BALANCE SHEETS
                        December 31, 1998 and 1997

                                               1998            1997
                                         ------------    --------------   
<S>                                      <C>             <C>
ASSETS
CURRENT ASSETS
  Cash                                   $      6,642    $        6,237 
  Money market investment                     297,122           405,815 
  Certificate of Deposit                      909,506           439,708 
  Commercial paper                            213,111           615,000 
  Account receivable, net of allowance
  for uncollectibles of $1,284 - 1998,
  and $1,284 - 1997                           381,386           268,980 
  Inventory                                   385,365           319,127 
  Accrued interest                              7,888             7,439 
  Prepaid insurance                             4,177             3,098 
  Prepaid expenses                              1,025                75 
  Deferred tax asset                              487                 -   
                                        -------------    -------------- 
    Total Current Assets                    2,206,709         2,065,479 
                                        -------------    -------------
PROPERTY & EQUIPMENT
  Leasehold improvements                       13,544            13,544 
  Laboratory equipment                        307,892           298,027 
  Furniture & fixtures                         16,173            15,017 
  Dies & molds                                 20,827            20,827 
                                        -------------    --------------
                                              358,436           347,415 
  Less accumulated depreciation               246,122           214,491 
                                        -------------    --------------
                                              112,314           132,924 
                                        -------------    --------------
OTHER COSTS
  Patent costs, net of amortization
  of $1,562-1998, and $1,453-1997                 824               933 
  Deposits                                     26,590               340 
  Capitalized software costs of
  $68,895-1998 net of amortization
  of $61,187; $64,852 - 1997, and
  net of amortization of $58,717                7,708             6,135 
                                        -------------    -------------- 
                                               35,122             7,408 
                                        -------------    --------------
TOTAL ASSETS                            $   2,354,145    $    2,205,811 
                                        =============    ==============
</TABLE>

     The accompanying notes are an integral part of this statement





<PAGE>
<TABLE>
<CAPTION>
                      ELECTRONIC SYSTEMS TECHNOLOGY, INC.
          
                                  BALANCE SHEETS
                            December 31, 1998 and 1997

                                               1998               1997
                                         --------------    ----------------
<S>                                      <C>               <C>
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable                       $       52,386    $         29,931 
  Accrued payroll                                 2,720               3,704 
  Accrued payroll taxes                           1,143                 930 
  Accrued excise taxes payable                      681                 959 
  Accrued vacation pay                           15,700              16,896 
  Federal income taxes payable                   14,510              24,793 
                                         --------------    ----------------
      Total current liabilities                  87,140              77,213 
                                         --------------    ----------------

DEFERRED INCOME                                  25,017                   -   
                                         --------------    ----------------
STOCKHOLDERS' EQUITY
  Common stock $.001 par value 
  50,000,000 shares authorized,
  4,953,667-1998, and 4,953,667-1997
  shares issued and outstanding                   4,954               4,954 
Additional paid-in capital                      894,129             894,129 
Retained earnings                             1,342,905           1,229,515 
                                         --------------    ----------------
                                              2,241,988           2,128,598 
                                         --------------    ----------------
TOTAL LIABILITIES AND
 STOCKHOLDERS' EQUITY                    $    2,354,145    $      2,205,811 
                                         ==============    ================ 
</TABLE>
     The accompanying notes are an integral part of this statement.



















<PAGE>
<TABLE>
<CAPTION>
                      ELECTRONIC SYSTEMS TECHNOLOGY, INC.

                             STATEMENT OF OPERATIONS
             For the years ended December 31, 1998, 1997 and 1996

                                        1998           1997         1996 
                                     -----------    ----------   ----------
<S>                                  <C>            <C>          <C>
SALES                                $ 1,485,381    $1,337,303   $1,190,304 
                                     -----------    ----------   ----------
COST OF SALES
 Beginning inventory                     319,127       401,305      297,037 
 Purchases and allocated costs           758,870       492,985      595,119 
                                     -----------    ----------   ----------
                                       1,077,997       894,290      892,156 
 Ending inventory                        385,365       319,127      401,305 
                                     -----------    ----------   ----------
                                         692,632       575,163      490,851 

GROSS PROFIT                             792,749       762,140      699,453 
                                     -----------    ----------    ---------
OPERATING EXPENSES
 Advertising                              37,149        51,935       54,969 
 Amortization                              2,579         2,579        1,837 
 Commissions-sales                        23,046        21,036       22,972 
 Dues & Subscriptions                      4,191         4,180        5,407 
 Depreciation                             31,630        32,599       30,303 
 Insurance                                 7,451         7,568        6,528 
 Materials & supplies                     15,568        22,079       26,060 
 Office & administration                  11,692        11,371       18,517 
 Printing                                  7,082         8,443       10,203 
 Professional services                    66,210        56,215       77,795 
 Rent & utilities                         30,709        32,932       26,001 
 Repair & maintenance                     18,259        10,759       13,080 
 Salaries                                467,118       408,840      413,920 
 Taxes                                    87,494        74,806       73,412 
 Telephone                                10,377        11,463       11,639 
 Trade shows                              14,374        19,755       17,682 
 Travel expenses                          50,487        36,804       54,837 
                                      ----------     ---------     --------
                                         885,416       813,364      865,162 
 Expenses allocated to cost of Sales    (255,950)     (227,389)    (257,035)
                                      ----------     ---------     --------
                                         629,466       585,975      608,127 
                                      ----------     ---------     --------
OPERATING INCOME                         163,283       176,165       91,326 
                                      ----------     ---------     --------
</TABLE>



      The accompanying notes are an integral part of this statement. 





<PAGE>
<TABLE>
<CAPTION>
                     ELECTRONIC SYSTEMS TECHNOLOGY, INC.

                           STATEMENT OF OPERATIONS
            For the years ended December 31, 1998, 1997 and 1996

                                        1998          1997         1996 
                                     ----------    ----------   ---------
<S>                                  <C>           <C>          <C>
OTHER INCOME 
  Interest income                        72,364        63,347      62,206 
  Site support reimbursement
   net of allocated costs                 4,921         6,799      16,192 
  Loss on disposition of assets               -          (184)       (238)
  Realized loss on marketable
   securities                                 -             -      (3,522)
  Uncollectible account recovered             -             -      57,204 
  Recovery from marketable 
   securities litigation                  2,211         1,633      11,288 
                                       --------     ---------    --------
                                         79,496        71,595     143,130 
                                       --------     ---------    --------
INCOME BEFORE PROVISION FOR FEDERAL 
 INCOME TAXES                           242,779       247,760     234,456 

PROVISION FOR FEDERAL INCOME TAXES       79,852        81,559      75,721 
                                       --------     ---------    -------- 
NET INCOME                             $162,927     $ 166,201    $158,735 
                                       ========     =========    ========





BASIC EARNINGS PER SHARE               $   0.03     $    0.03    $   0.03
                                       ========     =========    ======== 
DILUTED EARNINGS PER SHARE             $   0.03     $    0.03    $   0.03 
                                       ========     =========    ========
</TABLE>









     The accompanying notes are an integral part of this statement.









<PAGE>
<TABLE>
<CAPTION>
                            ELECTRONIC SYSTEMS TECHNOLOGY, INC.
                        STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                      For December 31, 1995 through December 31, 1998
   
                                             Amount
                           Common Stock      Paid-In     Retained     
                         Shares     Amount   Capital     Earnings       TOTAL
                         -------    ------   -------    ----------  -----------
<S>                      <C>        <C>      <C>        <C>         <C>
BALANCE AT
December 31, 1995        5,006,667  $5,007   $918,057   $  954,116  $ 1,877,180 
REPURCHASE OF
 COMMON STOCK
   May 17, 1996             (7,000)     (7)    (3,143)           -       (3,150)
   June 26, 1996           (13,000)    (13)    (6,658)           -       (6,671)
   July 8, 1996             (3,000)     (3)    (1,527)           -       (1,530)
   September 3, 1996       (30,000)    (30)   (12,600)           -      (12,630)

NET INCOME
 December 31, 1996               -       -          -      158,735      158,735 
                           -------   ------   -------    ---------   -----------
                         4,953,667   4,954    894,129    1,112,851    2,011,934 

CASH DISTRIBUTION
 DECLARED
$0.01 per share                  -       -         -       (49,537)     (49,537)

NET INCOME
 December 31, 1997               -       -         -       166,201      166,201 
                           -------   ------   -------    ----------   ----------
                         4,953,667   4,954    894,129    1,229,515    2,128,598 

CASH DISTRIBUTION
DECLARED
$0.01 per share                  -       -          -      (49,537)      (49,537)

NET  INCOME
 December 31, 1998               -       -          -      162,927       162,927 
                           -------    ------   -------    ----------   ----------
BALANCE AT
 December 31, 1998       4,953,667   $4,954  $ 894,129  $ 1,342,905  $ 2,241,988 
                           =======    ======   =======    ==========   ==========
</TABLE>














        The accompanying notes are an integral part of this statement.
<PAGE>
<TABLE>
<CAPTION>
                       ELECTRONIC SYSTEMS TECHNOLOGY, INC.
                            STATEMENT OF CASH FLOWS
             For the years ended December 31, 1998, 1997 and 1996

                                               1998        1997        1996
                                            ----------  ----------   ----------
<S>                                         <C>         <C>          <C>
CASH FLOWS PROVIDED (USED) IN
  OPERATING ACTIVITIES:
Net income                                  $  162,927  $  166,201   $  158,735 
Noncash expenses included in income:
  Depreciation                                  31,630      32,599       30,303 
  Amortization                                   2,579       2,579        1,836 
  Deferred income taxes                           (487)        411        4,876 
  Loss on disposition of assets                     -          184          238 
  Realized loss/impaired securities                 -           -         3,522 
Decrease (increase) in current assets:
  Accounts receivable, net                    (112,407)   (230,668)     119,609
  Inventory                                   ( 66,238)     82,178     (104,268)
  Other current assets                        (  2,478)     28,481     ( 31,214)
Increase (decrease)in current liabilities:
  Accounts payable, accrued expenses
   and other current liabilities                20,212      21,644     ( 44,152)
  Deferred income                               25,017          -            -  
  Federal Income taxes payable                ( 10,283)     24,793     ( 58,665)
                                           -----------  ----------  -----------
Net cash provided by operating
   Activities                                   50,472     128,402       80,820 
                                           -----------  ----------  -----------
CASH FLOWS PROVIDED (USED) IN 
  INVESTING ACTIVITIES: 
   Deposit                                    ( 26,250)         -      (  2,919)
   Capitalized software                       (  4,043)   (    790)    ( 26,508)
   Additions to property & equipment          ( 11,021)   ( 24,497)     102,000 
   Proceeds from sale of marketable
     Securities                                     -           -       117,595
                                           -----------  ----------  ----------- 
Net cash used in investing activities         ( 41,314)   ( 25,287)     190,168 
                                           -----------  ----------  -----------
CASH FLOWS PROVIDED (USED) IN 
  FINANCING ACTIVITIES:
  Repurchase common stock                           -           -      ( 23,981)
  Distributions paid                          ( 49,537)   ( 49,537)          -  
  Proceeds form note receivable                     -           -         3,449 
                                           -----------  ----------  -----------
Net cash used in financing activities         ( 49,537)   ( 49,537)    ( 20,532)
                                           -----------  ----------  -----------
NET INCREASE (DECREASE) IN CASH AND 
  CASH EQUIVALENTS                            ( 40,379)     53,578      250,456 
CASH AND CASH EQUIVALENTS AT BEGINNING
  OF PERIOD                                  1,466,760   1,413,182    1,162,726 
                                           -----------  ----------  -----------
CASH AND CASH EQUIVALENTS AT 
  ENDING OF PERIOD                         $ 1,426,381  $1,466,760  $ 1,413,182 
                                           ===========  ==========  ===========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
<TABLE>
<CAPTION>
                         ELECTRONIC SYSTEMS TECHNOLOGY, INC.
                              STATEMENT OF CASH FLOWS
              For the years ended December 31, 1998, 1997 and 1996

                                               1998         1997        1996
                                           -----------   ----------  ----------
<S>                                        <C>           <C>         <C>
SUPPPLEMENTAL DISCLOSURES OF CASH
  FLOWS INFORMATION:
Cash paid during the year for:
  Interest                                          -            -           - 
  Income taxes                             $    90,693   $   30,000  $   90,693 
                                           ===========   ==========  ==========

Cash and cash equivalents:
  Cash                                     $     6,642   $    6,237  $    5,717 
  Money market                                 297,122      405,815     482,892 
  Certificate of deposit 
   (maturity = 3 months or less)               909,506      439,708     724,573 
  Commercial  paper
   (maturity = 3 months or less)               213,111      615,000     200,000
                                           -----------   ----------  ---------- 
                                           $ 1,426,381   $1,466,760  $1,413,182 
                                           ===========   ==========  ==========
</TABLE>































             The accompanying notes are an integral part of this statement.
<PAGE>
                          ELECTRONIC SYSTEMS TECHNOLOGY, INC.

                             NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.

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

 ACCOUNTING ESTIMATES: 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 he reporting period.  
 Actual results could differ from those estimates.

 REVENUE RECOGNITION: 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.

 ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS: The Company uses the reserve 
 method for recording allowance for uncollectible accounts.  The amount 
 included in Allowance for Uncollectible Accounts consists of $1,284 as 
 of December 31, 1998, and $1,284 as of December 31, 1997. 

 INVENTORY:  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:

                                 1998       1997       1996
                             -----------  ---------  ----------
            Parts            $  229,903  $ 218,263  $ 260,397 
            Work in Progress          -     26,582     68,555 
            Finished goods      155,462     74,282     72,353 
                             -----------  ---------  ----------
                             $  385,365  $ 319,127  $ 401,305 
                             ===========  =========  ==========

 PROPERTY AND EQUIPMENT:  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.








<PAGE>
                     ELECTRONIC SYSTEMS TECHNOLOGY, INC.

                         NOTES TO FINANCIAL STATEMENTS
1.  ORGANIZATION AND SUMMARY OF SIGNIFIANT ACCOUNTING POLICIES 
    (continued)

 PATENT COSTS:  Expenses incurred in connection with the patent have 
 been capitalized and are being amortized over 17 years.

 RESEARCH AND DEVELOPMENT:  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 
 1998, 1997, and 1996 were $139,675, $128,110, and $135,468 
 respectively.

 EARNINGS (LOSS) PER COMMON SHARE: 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 5,577,694, 5,521,283, 
 and 5,478,558 for the years ended December 31, 1998, 1997, and 1996 
 respectively.
                                         For the Year Ended 1998
                                 ---------------------------------------
                                  Income           Shares      Per-Share
                                (Numerator)     (Denominator)     Amount
                                -----------     -------------  ----------
 BASIC EPS
 Income available to common
   stockholders                $   162,927        5,577,694   $     0.03 
                                ===========     =============  ==========
 DILUTED EPS
 Income available to common
  stockholder + assumed
  conversion                   $   162,927        5,583,667   $     0.03 
                                ===========     =============  ==========

 CAPITALIZED SOFTWARE COSTS:  In August, 1985, the Statements 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.






<PAGE>
                   ELECTRONIC SYSTEMS TECHNOLOGY, INC.

                     NOTES TO FINANCIAL STATEMENTS

1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
   	(continued)
 
 Amortization of capitalized software costs charged to expenses for 
 periods presented is as follows:

                         1986       $3,234 
                         1987        4,865 
                         1988        9,080 
                         1989       10,501 
                         1990        9,527 
                         1991        7,358 
                         1992        6,219 
                         1993        1,719 
                         1994          288 
                         1995        1,728 
                         1996        1,728 
                         1997        2,470 
                         1998        2,470 

 CASH AND CASH EQUIVALENTS:  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.

 ADVERTISING COSTS:  Costs incurred for producing and communicating 
 advertising are expensed when incurred.  

 OTHER COMPREHENSIVE INCOME:  The Company does not have other revenues, 
 expenses, gains, and losses that require disclosure under SFAS No. 130 
 as other comprehensive income.

 YEAR 2000 ISSUES:  The Company has undertaken the process to identify 
 anticipated costs, and implementation issues associated with transition 
 of the Company's products and internal systems to operations during and 
 after the year 2000.  Management believes that the products supplied by 
 the Company are Year 2000 compliant.  The Company expects to resolve 
 any Year 2000 issues associated with internal and operations systems 
 through planned replacement or upgrades of software applications, which 
 are not currently deemed to have significant cost potential.  
 Management does not expect Year 2000 transition issues to have a 
 material impact on its operation, but there can be no assurance that 
 there will not be interruptions or disturbance of operations should 
 negative transition issues arise.







<PAGE>
                     ELECTRONIC SYSTEMS TECHNOLOGY, INC.

                       NOTES TO FINANCIAL STATEMENTS

2.  FEDERAL INCOME TAXES

 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. 

 The provision for Federal Income Taxes consisted of:

                                    1998        1997         1996
                                -----------  -----------  ------------
 Currently payable              $    80,339  $   81,148    $   70,845 
 Deferred                              (487)        411         4,876 
                                -----------  -----------  ------------
 Provision for Federal
    Income taxes                $    79,852  $   81,559    $   75,721 
                                ===========  ===========  ============

 The components of the net deferred tax (assets) liability at December 
 31, were as follows:
                                    1998        1997         1996
                                -----------  -----------  ------------
 Depreciation                   $   18,324   $    19,969   $   18,523 
 Accrued vacation payable           (5,338)       (5,744)      (4,154)
 Allowance for uncollectable
   accounts receivable                (437)         (437)        (437)
 Unused capital loss carry
   forward                         (13,036)      (13,788)     (14,343)
                                -----------  -----------  ------------
                                $     (487)  $         -   $     (411)
                                ===========  ============  ===========

 The differences between the provision for  income taxes and income 
 taxes computed using the U.S. Federal Income tax rate were as follows:

                                     1998        1997         1996
                                -----------   ------------ -----------
 Amount computed using the 
 statutory rates                $    80,339   $    81,148   $   70,845 
 Increase (reduction):
 Deferred tax (asset) liability        (487)          411        4,876 
                                -----------   ------------ -----------
 Provision for Federal Income
   Taxes                        $    79,852   $    81,559   $   75,721 
                                ===========   ============ ===========

3. PUBLIC OFFERING OF COMMON STOCK
	
 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.
<PAGE>
                      ELECTRONIC SYSTEMS TECHNOLOGY, INC.

                         NOTES TO FINANCIAL STATEMENTS

4.  COMPENSATED ABSENCES

 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 $15,700 and $16,896 have been accrued as 
 of December 31, 1998 and 1997, respectively.

5.  LEASES

 The Company has no obligation under capital lease arrangements.

 The Company rents its facility under a three (3) year operating lease 
 commencing on the 1st day of December 1996.  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 $24,096.00 per year, payable monthly in 
 advance at the rate of $2,008.00 per month.  A leasehold tax of 
 $257.83 per month is due in addition to the $2008.00 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 1998, 1997, and 1996 were as follows: 1998 = $25,993; 1997 
 = $27,670; 1996 = $21,428.

 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:

                   Year ending December 31          Amount
                   -----------------------          ------
                              1999                $ 25,348 
                              2000                      -   
                              2001                      -   
                              2002                      -   
                              2003                      -   

6. FOREIGN SALES

 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 1998 and 1997, are 
 as follows:

                               1998              1997
                          ------------        -----------
      Domestic sales            59%               58%
      Export sales              14%               24%
      U.S. Government sales     27%               18%




<PAGE>
                     ELECTRONIC SYSTEMS TECHNOLOGY, INC.
 
                        NOTES TO FINANCIAL STATEMENTS

6.  FOREIGN SALES (continued)

 The geographic distribution of foreign sales for 1998 and 1997 are as 
 follows:
  
                                1998           1997
                            ----------      -----------
           South Korea            23                6
           Germany                11                0
           Canada                  9                5
           Chile                   9               10
           Taiwan                  6                0
           Uruguay                 5                0
           Israel                  5                3
           Columbia                5                0
           Brazil                  5               21
           Croatia                 4               12
           Peru                    3                0
           Mexico                  3                6
           Ireland                 3                0
           New Zealand             3                0
           Malaysia                2               14
           Italy                   2                0
           Venezuela               2      less than 1
           Philippines             0               12
           Ecuador                 0                5
           Ghana                   0                2
           Cyprus                  0                2
           Slovenia                0                1
           Thailand                0      less than 1

7. PROFIT SHARING SALARY DEFERRAL 401-K PLAN
	
 The Company sponsors a Profit Sharing Plan and Salary Deferral 401-K 
 plan and trust.  All employees over the age of 21 are eligible.  The 
 Company is not making contributions under the current plan agreement.

8. STOCK OPTIONS

 On February 3, 1995, 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 $0.31 per share.  Options may be exercised any 
 time during the period from February 3, 1995 through February 2, 1998. 
 Following is a summary of transactions: 










<PAGE>
                  ELECTRONIC SYSTEMS TECHNOLOGY, INC.

                     NOTES TO FINANCIAL STATEMENTS

8. STOCK OPTIONS (continued)
                                      Shares under Option
                                      -------------------
     Outstanding, beginning of year             175,000 
     Granted during year                             -   
     Canceled during year                      (175,000)
     Exercised during year                           -   
                                      -------------------
     Outstanding, end of year                        -   
                                      ===================

 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:

                                      Shares under Option
                                      -------------------
     Outstanding, beginning of year             200,000 
     Granted during year                             -   
     Canceled during year                            -   
     Exercised during year                           -   
                                      -------------------
     Outstanding, end of year                   200,000 
                                      ===================       

 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:
                                      Shares under Option
                                      -------------------
     Outstanding, beginning of year             215,000 
     Granted during year                             -   
     Canceled during year                            -   
     Exercised during year                           -   
                                      -------------------
     Outstanding, end of year                   215,000 
                                      ===================
                                      











<PAGE>
                    ELECTRONIC SYSTEMS TECHNOLOGY, INC.

                       NOTES TO FINANCIAL STATEMENTS 

8.  STOCK OPTIONS (continued)

 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:
                                      Shares under Option
                                      -------------------
     Outstanding, beginning of year                  -   
     Granted during year                        215,000 
     Canceled during year                            -   
     Exercised during year                           -   
                                      -------------------
     Outstanding, end of year                   215,000 
                                      ===================

                                  1998          1997          1996
                                -------       --------      --------
 Option price range
  at end of year            $ .28 to $.41  $ .28 to $.42  $.31 to .42
 Option range for exercised
  Shares                    None exercised None exercised None exercised
 Weighted average fair
  value of options granted
  during the year                 $0.41         $0.28         $0.42 

 The following table summarizes information about fixed-price stock 
 options outstanding at December 31, 1998:	

 Range of exercise  Number exerciseable   Weighted average   Weighted average 
      prices         and outstanding   remaining contractual      exercise
 ----------------- ------------------  --------------------- ---------------- 
 $        0.42          200,000            1 year              $   0.42 
 $        0.28          215,000            2 years             $   0.28 
 $        0.41          215,000            3 years             $   0.41 

 After termination of employment, stock options may be exercised within 
 90 days.  During the 12 month ended December 31, 1998; 175,000 shares 
 under option expired and no shares under option were exercised.  At 
 December 31, 1998 there are 630,000 shares reserved for future 
 exercises.

 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 








<PAGE>
                    ELECTRONIC SYSTEMS TECHNOLOGY, INC.

                       NOTES TO FINANCIAL STATEMENTS

8.  STOCK OPTIONS (continued)

 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 in 1997 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:

                                      1998       1997        1996
                                  ----------   ---------   ----------
 Net earnings - as reported        $ 162,927   $ 166,201   $  158,735 
 Net earnings - pro forma            129,711     141,925      124,850 
 Earnings per share - as reported       0.03        0.03         0.03 
 Earnings per share - pro forma         0.03        0.03         0.02 

 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 1998; dividend yield 
 equaled 0; expected volatility of 47.71% risk-free interest rate of 5%; 
 and expected lives of 3 years.

9. EMPLOYEE PROFIT SHARING BONUS PROGRAM (NON-QUALIFIED)

 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.
 
               NET PROFIT                 COMPENSATION TO FUND
            ----------------             ---------------------
                $100,000                  $10,000 + 8% OF AMOUNT OVER 
                                          $100,000 NET PROFIT 

10. CONCENTRATIONS OF CREDIT RISK

 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, 1998; 
 the Company had cash and cash equivalents with Seattle First National 
 Banks with a combined balance of $723,641 which is $623,641 in excess 
 of the FDIC insured amount.  At December 31, 1998 the Company held 
 commercial paper in the amount of $213,111 which was not FDIC insured. 
 At December 31, 1998 the Company had cash deposits with Pioneer Bank 
 with a balance of $118,280 which is $18,280 in excess of the FDIC 
 insured amount.  At December 31, 1998 the Company had cash deposits 
 with First Savings Bank of Washington with a balance of $116,156 which 
 is $16,156 in excess of the FDIC insured amount.  Additionally, at 
 December 31, 1998 the Company had cash deposits with Pacific One Bank 
 with a combined balance of $122,948 which is $22,948 in excess of the 
 FDIC insured amount.  At December 31, 1998 the Company had cash 
 deposits with Piper Jaffray with a balance of $127,046 which is not 
 FDIC insured. 

<PAGE>
                    ELECTRONIC SYSTEMS TECHNOLOGY, INC.

                      NOTES TO FINANCIAL STATEMENTS

10. CONCENTRATIONS OF CREDIT RISK (continued)

 Concentrations of credit risk with respect of trade accounts receivable 
 are generally diversified due to the geographic dispersion of the 
 Company's customer base.

11. RELATED PARTY TRANSACTONS

 For the years ended December 31, 1998, 1997, and 1996; services in the 
 amount of $106,166, $82,490 and $52,199 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.

 The Company purchases certain key components necessary for the 
 production of its products from sole suppliers.  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 an/or 
 material cost expenditures could take place.

12. MARKETABLE SECURITIES

 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.  

13.  STOCK REPURCHASE PLAN

 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.

14. NOTE - CASH DISTRIBUTION

 On June 4, 1998 the Company declared a one-time, non-cumulative, cash 
 distribution to shareholders of record as of June 19, 1998 of $0.01 per 
 share of common stock, with payable date of July 11, 1998.  The payment 
 of the cash distribution was completed by July 9, 1998 for a total 
 dollar value of $49,537.


<PAGE>
<TABLE>
<CAPTION>
                          ELECTRONIC SYSTEMS TECHNOLOGY, INC.
                                SELECTED FINANCIAL DATA
                         For the five years ended December 31, 

                            1998       1997      1996       1995        1994
                            ----       ----      ----       ----        ----
<S>                     <C>        <C>        <C>        <C>        <C>
Sales                   $1,485,381 $1,337,303 $1,190,304 $1,535,071 $1,197,720 
Gross Profit               792,749    762,140    699,453    932,485    732,340
Income (Loss) before  
 provision for
 income taxes              242,779    247,760    234,456    404,137    290,839 
Provision for income
 taxes                      79,852     81,559     75,721    136,428    104,899 
Net income                 162,927    166,201    158,735    267,709    185,940 
Net income per share          0.03       0.03       0.03       0.05       0.04

Weighted average number 
  of shares outstanding  5,577,694  5,521,283  5,478,558  5,433,174  5,360,982 
Total assets             2,354,145  2,205,811  2,042,709  2,010,772  1,597,612

Long-term debt and
  Capital lease
  obligations                   -          -          -          -          - 
  
Stockholders' equity     2,241,988  2,128,598  2,011,934  1,877,180  1,555,558 

Stockholders' equity
 per share                    0.45       0.43       0.41       0.37       0.31 

Working capital          2,119,569  1,988,266  1,861,527  1,723,823  1,449,848 

Current ratio               25.3:1     26.7:1     61.5:1     13.9:1     44.9:1 

Equity to total assets         95%        96%        98%        93%        97%























</TABLE>