UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWASHINGTON D.C. 20549**FORM 10-QSB**

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended June 30, 2007 

[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934For the transition period from _________ to _______

| **Commission File Number:**000-27793
 
**ELECTRONIC SYSTEMS TECHNOLOGY, INC.(A Washington Corporation)******I.R.S. Employer Identification no.**91-1238077**415 N. Quay St., Building B1Kennewick WA 99336(509) 735-9092**
Check whether the issuer (1) has filed all reports required to be filed by Section 13or 15(d) of the Exchange Act during the past 12 months (or for such shorter period thatthe registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes [ X ] No [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). Yes [ ] No [ X ]

State the number of shares outstanding of each of the issuer’s classes of commonequity, as of the latest practicable date: As of June 30, 2007: 5,153,667 shares of common$0.001 par value.

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X ].
**PART I - FINANCIAL INFORMATION
**Item 1. FINANCIAL STATEMENTS. 

ELECTRONIC SYSTEMS TECHNOLOGY, INC.(as prepared by Management) (Unaudited) Six Months Ended
June 30, 2007
June 30, 2006Sales
$ 1,348,536
$ 1,128,803Other Revenues
39,376
22,935Gross Profit
792,582
632,285 Net Income (Loss) Before Taxes 
152,304
6,640Net Income (Loss) After Taxes
122,304
5,305 Earnings (Loss) Per Share Before    TaxesBasic
$ 0.03
$ 0.00Diluted
0.03
0.00 Earnings (Loss) Per Share After    TaxesBasic
$ 0.02
$ 0.00Diluted
0.02
0.00 Weighted Average Shares    Outstanding (Basic)Primary
5,153,667
5,152,258Diluted
5,209,121
5,178,098 Total Assets
$ 3,268,647
$ 2,995,813 Long-Term Debt and Capital Lease    Obligations
$ 0
$ 0 Shareholders' Equity
$ 2,980,279
$ 2,729,602 Shareholders' Equity Per Share
$ 0.58
$ 0.53 Working Capital
$ 2,855,263
$ 2,562,555 Current Ratio
12.8:1
12.9:1 Equity To Total Assets
91%
91%
(See "Notes to Financial Statements")

1**ELECTRONIC SYSTEMS TECHNOLOGY, INC. BALANCE SHEETS(as prepared by Management) (Unaudited) **** 
June 30, 2007
Dec. 31, 2006ASSETSCURRENT ASSETS Cash and Cash Equivalents
$ 1,326,766
$ 1,487,848 Short Term Certificates of Deposit    Investments
870,000
630,000Accounts Receivable, net of    allowance for uncollectibles
270,050
401,127Inventory
589,591
582,915 Accrued Interest
9,653
4,650Prepaid Expenses
30,171
28,604Total Current Assets
3,096,231
3,135,144 PROPERTY & EQUIPMENT net of    depreciation
143,176
152,655 OTHER ASSETS
340
5,852DEFERRED INCOME TAX BENEFIT
28,900
26,200TOTAL ASSETS
$ 3,268,647
$ 3,319,851 LIABILITIES & STOCKHOLDERS' EQUITY CURRENT LIABILITIESAccounts Payable
73,861
93,051Refundable Deposits
872
67Federal Income Taxes Payable
17,890
140,090Accrued Liabilities
45,272
77,143Distributions Payable
103,073
--Total Current Liabilities 
240,968
310,351 DEFERRED INCOME TAX LIABILITY
47,400
50,500STOCKHOLDERS' EQUITY    Common Stock, $.001 Par Value    50,000,000 Shares Authorized    5,153,667 Shares Issued And Outstanding 
 

 

5,154
 

 

5,154Additional Paid-in Capital
976,514
974,466 Retained Earnings
1,998,611
1,979,380  
2,980,279
2,959,000TOTAL LIABILITIES AND    STOCKHOLDERS' EQUITY
$ 3,268,647
$ 3,319,851 
(See "Notes to Financial Statements")2**ELECTRONIC SYSTEMS TECHNOLOGY, INC. STATEMENTS OF OPERATIONS (as prepared by Management) (Unaudited) **** 
Three Months    Ended
Six Months Ended
June 30, 2007
June 30, 2006
June 30, 2007
June 30, 2006 SALES
$ 673,979
$ 640,970
$ 1,348,536
$ 1,128,803COST OF SALES
276,498
255,581
555,954
496,518Gross Profit
397,481
385,389
792,582
632,285 OPERATING EXPENSESFinance/Administration
67,371
66,959
158,691
144,477Research & Development
124,774
91,409
237,191
176,530Marketing
128,820
142,662
233,609
250,848Customer Service
29,485
31,757
50,163
63,355Total Operating Expenses
350,450
332,787
679,654
635,210OPERATING INCOME (LOSS)
47,031
52,602
112,928
(2,925) Other Income (expenses)Interest/Investment Income
19,865
11,504
38,437
19,778Uncollectible amount recovered
939
--
939
3,157Realized Loss on Marketable Securities
--
--
--
(8,942)Management Fee, Marketable Securities
--
(2,320)
--
(4,428)Net Other Income (Expense)
20,804
9,184
39,376
9,565 NET INCOME (LOSS) BEFORE TAX
67,835
61,786
152,304
6,640Provision For Income Tax
(12,100)
(26,482)
(30,000)
(1,335) NET INCOME (LOSS)
$ 55,735
$ 35,304
$ 122,304
$ 5,305 Basic Earnings (Loss) Per Share    Before Tax
$ 0.01
$ 0.01
$ 0.03
$ 0.00Basic Earnings (Loss) Per Share    After Tax
$ 0.01
$ 0.01
$ 0.02
$ 0.00Diluted Earnings (Loss) Per Share    Before Tax
$ 0.01
$ 0.01
$ 0.03
$ 0.00Diluted Earnings (Loss) Per Share    After Tax
$ 0.01
$ 0.01
$ 0.02
$ 0.00
(See "Notes to Financial Statements")3 **STATEMENTS OF COMPREHENSIVE INCOME (LOSS)(as prepared by Management)(Unaudited)**** 
Three Months    Ended
Six Months    Ended
June 30, 2007
June 30, 2006
June 30, 2007
June 30, 2006NET INCOME (LOSS)
$ 55,735
$ 35,304
$ 122,304
$ 5,305 OTHER COMPREHENSIVE GAIN (LOSS):Unrealized gain (loss) on securities arising    during period (net of tax effect)
--
1,862
--
3,950COMPREHENSIVE INCOME (LOSS)
$ 55,735
$ 37,166
$ 122,304
$ 9,255
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
** 

 

 

 

 

 **
(See "Notes To Financial Statements")

4**ELECTRONIC SYSTEMS TECHNOLOGY, INC. STATEMENTS OF CASH FLOWS(as prepared by Management) (Unaudited) ****Six Months Ended
June 30, 2007
June 30, 2006CASH FLOWS PROVIDED (USED) IN OPERATING    ACTIVITIES:Net Income (Loss)
$ 122,304
$ 5,305Noncash items included in income:  Depreciation
25,364
29,028Amortization
--
748Loss on Marketable Securities
--
8,942Provision for Federal Income Taxes
--
( 5,510)Accrued Interest
( 5,003)
1,392Deferred Income Tax 
( 5,800)
( 11,200)Share Based Compensation
2,048
3,994 DECREASE (INCREASE) IN CURRENT ASSETS:Accounts Receivable Net
131,077
63,869Certificates of Deposit Redeemed (Purchased)
( 240,000)
90,000Marketable Securities Investments Purchased
--
( 402,000)Marketable Securities Investments Sold
--
292,042Inventory
( 6,676)
( 90,155)Prepaid Software and Network Services
5,512
8,215Prepaid Expenses
( 1,567)
( 12,993) INCREASE (DECREASE) IN CURRENT LIABILITIES:Accounts Payable and Accrued Expenses 
( 51,061)
50,316Refundable Deposits
805
55Accrued Federal Income Taxes 
( 122,200)
( 62,534) 
( 145,197)
( 30,486)CASH FLOWS PROVIDED (USED) IN INVESTING    ACTIVITIES:Additions To Property And Equipment
( 15,885)
( 23,446) 
( 15,885)
( 23,446)CASH FLOWS PROVIDED (USED) IN FINANCING    ACTIVITIES:Stock option exercise
--
2,000 NET INCREASE (DECREASE) IN CASH    AND    CASH EQUIVALENTS
(161,082)
(51,932)Cash And Cash Equivalents At    Beginning Of Period
1,487,848
651,265Cash And Cash Equivalents At Ending of Period 
$ 1,326,766
$ 599,333 SUPPLEMENTAL DISCLOSURES OF CASH FLOWS    INFORMATION:Cash Paid Year To Date:Interest
$ 0
$ 0Federal Income Taxes
$ 158,000 
$ 80,579  Cash allocated for Cash Distribution
$ 103,073
$ 51,537 Cash And Cash Equivalents:Cash
$ 38,822
$ 4,702Money Market Accounts********************** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|