Note 6 - Segment Reporting

6 Months Ended

Jun. 30, 2012

Note 6 - Segment Reporting:

Note 6 - Segment Reporting

NOTE 6 - SEGMENT REPORTING

Segment information is prepared on the same basis that the Company's management reviews financial information for operational decision making purposes.  The Company has two reportable segments, domestic and foreign, based on the geographic location of the customers.Both segments sell radio modem products (requiring an FCC license or license free Ethernet products), related accessories for radio modem products for industrial automation projects, and mobile data computer products.  The foreign segment sells the Company's products and services outside the United States.

During the quarter ended June 30, 2012, Domestic customers represented approximately 88% of total net revenues.  Foreign customers represented approximately 12% of total net revenues.  During the quarter ended June 30, 2012, sales to Industrial Networking Solutions, a national reseller of the Company’s products, comprised 26% of the Company’s sales revenues.  No other sales to a single customer comprised more than 10% of sales revenues for the quarter.  Revenues from foreign countries during the second quarter of 2012 consist primarily of revenues from product sales to Hungary and Canada.

During the first six months of 2012, Domestic customers represented approximately 77% of total net revenues.  Foreign customers represented approximately 23% of total net revenues.  During the first half of June 30, 2012, sales to Industrial Networking Solutions, a national reseller of the Company’s products, comprised 18% of the Company’s sales revenues.  No other sales to a single customer comprised more than 10% of sales revenues for the first six months of 2012.  Revenues from foreign countries during the first half of 2012 consist primarily of revenues from product sales to Mexico and Hungary.

Management evaluates performance based on net revenues and operating expenses.  Administrative functions such as finance and information systems are centralized.  Where applicable, portions of the administrative function expenses are allocated between the operating segments.  The operating segments share the same manufacturing and distributing facilities.  Costs of operating the manufacturing plant, equipment, inventory, and accounts receivable are allocated directly to each segment.

Summary financial information for the three reportable segments for the second quarter and first six months of 2012 and 2011 is as follows:

ELECTRONIC SYSTEMS TECHNOLOGY, INC.
Segment Reporting
	Domestic	Foreign	Unallocated Corporate	Total
Three months ended June 30, 2012
Total sales	365,692	51,239	-	416,931
Total other income	1,743	-	-	1,743
Earnings (loss) before tax	2,569	(17,559)	(65,301)	(80,291)
Depreciation/amortization	3,469	-	356	3,825
Identifiable assets	694,902	13,473	2,248,935	2,957,310
Net capital expenditures	-	-	-	-
Three months ended June 30, 2011
Total sales	244,841	67,543	-	312,384
Total other income	2,644	-	-	2,644
Earnings (loss) before tax	(79,400)	(6,188)	(66,166)	(151,754)
Depreciation/amortization	5,032	-	596	5,628
Identifiable assets	514,957	-	2,552,582	3,067,539
Net capital expenditures	29,900	-	-	29,900
Six months ended June 30, 2012
Total sales	699,581	210,157	-	909,738
Total other income	3,472	-	-	3,472
Earnings (loss) before tax	(8,341)	45,854	(153,728)	(116,215)
Depreciation/amortization	6,941	-	712	7,653
Identifiable assets	694,902	13,473	2,248,935	2,957,310
Net capital expenditures	-	-	-	-
Six Months ended June 30, 2011
Total sales	485,937	359,667	-	845,604
Total other income	5,359	-	4,166	9,525
Earnings (loss) before tax	(138,545)	150,744	(155,664)	(143,465)
Depreciation/amortization	9,373	-	1,173	10,546
Identifiable assets	514,957	-	2,552,582	3,067,539
Net capital expenditures	29,900	-	-	29,900