UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-K/A

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(MARK ONE)
[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001

OR

[   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ___________ TO  _____________

Commission file number 0-12254

SCIENTIFIC TECHNOLOGIES INCORPORATED(Exact name of Registrant as Specified in its Charter)



|Oregon                                                         | 77-0170363                             
|-------------------------------------------------------------- | ---------------------------------------
|(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number)

6550 Dumbarton CircleFremont, CA     94555

(510) 608-3400

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:Title of Class
Name of each exchange on which registeredCommon Stock, $.001 Par Value
NASDAQ National Market SystemCheck whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12
months,  and (2) has been subject to such filing requirements for the past
90 days.   
 Yes [X]       No  [     ]Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.     [X]The issuer's revenue for the most recent fiscal year was $48,289,000.The aggregate market value of voting stock held by non-affiliates of the
Registrant, based on the closing sales price of Common Stock on March 1,
2002 as reported by the NASDAQ Market System, was approximately $5,151,528.
Such amount excludes shares held by registrant's current directors and officers
and by each person who owns 5% or more of the outstanding Common Stock in that
such persons may be deemed to be "affiliates" as that term is defined pursuant
to the Rules and Regulations of the Securities Exchange Act of 1934.  This
determination of affiliate status is not necessarily a conclusive determination
for other purposes.The number of shares of the Registrant's Common Stock outstanding as of
March 1, 2002 was 9,650,369 shares.DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive Proxy statement to be filed with the
Securities and ExchangeCommission in connection with the Company's 2002 Annual
Annual Meeting of Shareholders ("the Proxy Statement") are incorporated by
reference in Part III of this Form 10K.



EXPLANATORY NOTE

We are amending our Annual Report on
Form 10-K for the year ended December 31, 2001 to replace, in its
entirety, Item 8, "Financial Statements and Supplementary Data."  As
previously filed, Item 8 contained two typographical errors as follows:
(1) in the "Report of Independent Accountants" the words "the
Company's" were improperly replaced with "our" and (2) on the
first page of the "Notes to Consolidated Financial Statements," in the
heading of Note 1, the words "the Company" were improperly replaced
with "we."

We have no further changes to the previously
filed Form 10-K.  All information in this Form 10-K/A is as
of December 31, 2001, and does not reflect, unless otherwise noted,
any subsequent information or events other than the changes mentioned above.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

(a) The following documents are filed as a part of this Report:



|                                                                                                   | Page
|-------------------------------------------------------------------------------------------------- | ----
|Report of Independent Accountants                                                                  | 19  
|Consolidated Balance Sheets - December 31, 2001 and 2000                                           | 20  
|Consolidated Statement of Operations - Years ended
  
    December 31, 2001, 2000 and 1999         | 21  
|Consolidated Statement of Cash Flows - Years ended
  
    December 31, 2001, 2000 and 1999         | 22  
|Consolidated Statement of Stockholders' Equity - Years
  
  ended December 31, 2001, 2000 and 1999 | 23  
|Notes to Consolidated Financial Statements                                                         | 24  



(2) Financial Statement Schedules

Financial Statement Schedules have been omitted
because they are not required or applicable, or the information required to be
set forth therein is included in the Financial Statements or notes
thereto.

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REPORT OF INDEPENDENT ACCOUNTANTS



To the Board of Directors and
   Shareholders of Scientific Technologies Incorporated

In our opinion, the accompanying consolidated balance sheet
and the related consolidated statements of operations, of cash flows and of
shareholders' equity present fairly, in all material respects, the financial
position of Scientific Technologies Incorporated (a subsidiary of Scientific
Technology Incorporated) and its subsidiaries at December 31, 2001 and 2000, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States of America. 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 of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audits 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.



PricewaterhouseCoopers LLP

San Jose, California
   March 13, 2002

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Scientific Technologies Incorporated

                            Consolidated Balance Sheet
(In thousands, except per share data)

`December 31,
                                                           ------------------
                                                             2001      2000
                                                           --------  --------
                         Assets                                              
Current assets:
    Cash and cash equivalents............................ $  1,033  $  4,048
    Short-term investments...............................      --        406
    Accounts receivable, net.............................    6,454     8,776
    Inventories..........................................    9,125     9,283
    Deferred income taxes................................    2,081     1,680
    Other assets.........................................      581       505
                                                           --------  --------
          Total current assets...........................   19,274    24,698

Property and equipment, net..............................    3,537     3,749
Intangible assets, net...................................   11,389     8,581
                                                           --------  --------
          Total assets................................... $ 34,200  $ 37,028
                                                           ========  ========
                                                                             
          Liabilities and Shareholders' Equity                               

Current liabilities
    Trade accounts payable............................... $  1,886  $  2,775
    Accrued expenses.....................................    2,648     2,422
                                                           --------  --------
          Total current liabilities......................    4,534     5,197

Deferred income taxes ...................................      432       240
                                                           --------  --------
          Total liabilities..............................    4,966     5,437

Commitments and contingencies (Note 9)

Shareholders' equity
    Common stock; $.001 par value; 100,000
       shares authorized; shares issued and
       outstanding - 9,676 and 9,650.....................       10        10
    Capital in excess of par value.......................    5,637     5,553
    Retained earnings....................................   23,587    26,028
                                                           --------  --------
          Total Shareholders' equity.....................   29,234    31,591
                                                           --------  --------
          Total liabilities and Shareholders' equity..... $ 34,200  $ 37,028
                                                           ========  ========`

The accompanying notes are an integral part of these financial statements.

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Scientific Technologies Incorporated

                      Consolidated Statement of Operations
(In thousands, except per share data)

`Year Ended December 31,
                                                     ----------------------------
                                                       2001      2000      1999
                                                     --------  --------  --------
Sales.............................................. $ 48,289  $ 59,263  $ 49,105
Cost of goods sold.................................   28,565    29,331    24,769
                                                     --------  --------  --------
  Gross profit.....................................   19,724    29,932    24,336
                                                     --------  --------  --------

Operating expenses:
  Selling, general and administrative..............   16,111    15,387    12,633
  Research and development.........................    5,429     5,159     4,780
  Amortization of acquired intangibles.............      658       641        89
                                                     --------  --------  --------
   Total operating expenses........................   22,198    21,187    17,502
                                                     --------  --------  --------
Income (loss) from operations......................   (2,474)    8,745     6,834

Interest and other income, net.....................      176       337       432
                                                     --------  --------  --------

Income (loss) before income taxes..................   (2,298)    9,082     7,266
Provision (benefit) for income taxes...............     (873)    3,451     2,761
                                                     --------  --------  --------

Net income (loss).................................. $ (1,425) $  5,631  $  4,505
                                                     ========  ========  ========

Basic and diluted net income (loss) per share...... $  (0.15) $   0.58  $   0.47
                                                     ========  ========  ========

Shares used to compure net income (loss) per share.    9,659     9,667     9,682
                                                     ========  ========  ========`

The accompanying notes are an integral part of these financial statements.

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Scientific Technologies Incorporated

                   Consolidated Statement of Cash Flows
(In thousands)

`Year Ended December 31,
                                                        -------------------------
                                                          2001    2000     1999
                                                        -------  -------  -------
Cash flows from operating activities:
  Net income (loss)................................... $(1,425) $ 5,631  $ 4,505
  Adjustments to reconcile net income (loss) to
    cash provided by operating activities:
    Depreciation and amortization.....................   2,266    1,766      963
    Changes in assets and liabilities:
       Accounts receivable, net.......................   2,727    1,136   (1,964)
       Inventories....................................     369     (305)  (2,280)
       Other assets...................................    (170)     238     (429)
       Trade accounts payable.........................  (1,020)     (45)     162
       Deferred income taxes..........................    (209)    (588)     280
       Accrued expenses...............................     (25)     301     (140)
                                                        -------  -------  -------
Cash flows provided by operating activities...........   2,513    8,134    1,097
                                                        -------  -------  -------
Cash flows from investing activities:
   Purchases of property  and equipment...............  (1,010)  (1,620)  (1,128)
   Acquisition of Lundahl Instruments.................      --       --   (2,659)
   Acquisition of PSI-Tronix..........................      --   (8,742)      --
   Acquisition of Dunn Sales..........................  (3,992)      --       --
   Sale (purchase) of short-term investments, net.....     406    4,803    5,589
                                                        -------  -------  -------
Cash flows provided by (used in) investing activities.  (4,596)  (5,559)   1,802
                                                        -------  -------  -------

Cash flows from financing activities:
   Issuance (repurchase) of common stock, net.........      84       44     (278)
   Dividends..........................................  (1,016)  (1,933)  (1,836)
                                                        -------  -------  -------
Cash flows used in financing activities...............    (932)  (1,889)  (2,114)
                                                        -------  -------  -------
Change in cash and cash equivalents...................  (3,015)     686      785
Cash and cash equivalents at beginning of year........   4,048    3,362    2,577
                                                        -------  -------  -------
Cash and cash equivalents at end of year.............. $ 1,033  $ 4,048  $ 3,362
                                                        =======  =======  =======

Supplemental disclosure of cash flow information:
   Cash paid to (received from) Parent for
      income taxes.................................... $  (873) $ 3,451  $ 2,761
                                                        =======  =======  =======`

The accompanying notes are an integral part of these financial statements.

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Scientific Technologies Incorporated

              Consolidated Statement of Changes in Shareholders' Equity
(In thousands)

`Common Stock
                                 ---------------------------
                                                    Capital
                                                   in excess
                                            Par     of par    Retained
                                 Shares    value     value    earnings   Total
                                 -------  -------  ---------  --------  --------
Balances December 31, 1998......  9,671  $    10  $   5,787  $ 19,661  $ 25,458
   Issuance of common stock.....     27      --         107       --        107
   Repurchase of common stock...    (65)     --        (385)      --       (385)
   Net income for the year......    --       --         --      4,505     4,505
   Dividends paid...............    --       --         --     (1,836)   (1,836)
                                 -------  -------  ---------  --------  --------
Balances December 31, 1999......  9,633       10      5,509    22,330    27,849
   Issuance of common stock.....     36      --         160       --        160
   Repurchase of common stock...    (19)     --        (116)      --       (116)
   Net income for the year......    --       --         --      5,631     5,631
   Dividends paid...............    --       --         --     (1,933)   (1,933)
                                 -------  -------  ---------  --------  --------
Balances December 31, 2000......  9,650       10      5,553    26,028    31,591
   Issuance of common stock.....     33      --         116       --        116
   Repurchase of common stock...     (7)     --         (32)      --        (32)
   Net income for the year......    --       --         --     (1,425)   (1,425)
   Dividends paid...............    --       --         --     (1,016)   (1,016)
                                 -------  -------  ---------  --------  --------
Balances December 31, 2001......  9,676  $    10  $   5,637  $ 23,587  $ 29,234
                                 =======  =======  =========  ========  ========`

The accompanying notes are an integral part of these financial statements.

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Scientific Technologies Incorporated
                  Notes to Consolidated Financial Statements

NOTE 1-THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

Scientific Technologies Incorporated (the "Company")
develops, manufactures and markets safety light curtains, industrial sensors,
optical profilers, microcomputers and power monitoring devices for factory
automation applications. In addition, the Company provides safeguarding
equipment installation, rebuilding, repair and maintenance of fabricating
machinery. A majority of the Company's outstanding common stock is held by
Scientific Technology Incorporated, a California corporation (the "Parent").

The Company operates in two business segments - the
development, manufacture and marketing of industrial safety products, and the
development, manufacture and marketing of industrial automation products. The
Company operates in an industry characterized by significant competition.

Use of Estimates

The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reported periods. Actual results could differ
from those estimates.

Basis of Presentation

The consolidated financial statements include the
accounts of the Company and its subsidiaries after elimination of all
significant intercompany accounts and transactions.



Cash and Cash Equivalents and Short-Term
Investments

The Company invests primarily in money market accounts
and certificates of deposit held at financial institutions and considers all
highly liquid investments with an original maturity of less than 90 days to be
cash equivalents. Accordingly, these investments are subject to minimal credit
and market risk.



Short-term investments consist of highly liquid
investments, which mature in less than one year and are classified as "held-to-maturity".
Interest income is accrued as earned.



Inventories

Inventories are stated at the lower of cost (first-in,
first-out) or market.



Property and Equipment

Property and equipment are recorded at cost less
accumulated depreciation and amortization. Depreciation is provided using the
straight-line method over the estimated useful lives, which range from three to
ten years. Leasehold improvements are amortized over the shorter of the term of
the lease or the estimated life of the improvements.



Intangible Assets

Intangible assets include tradenames, customer
relationships, product lines, technologies and a covenant not to compete
acquired as part of the acquisitions of Dunn Sales, Inc., PSI-Tronix, Inc. and
Lundahl Instruments, Inc. Intangible assets are generally amortized on a
straight-line basis not exceeding fifteen years.



Long-Lived Assets

The Company periodically evaluates the recoverability of
its long-lived assets based upon the expected undiscounted cash flows
attributable to such assets, and recognizes impairment from the carrying value
of long-lived assets, if any, based on the fair value of such assets. No losses
from impairment have been recognized in the financial statements.



Fair Value of Financial Instruments

The Company measures its financial assets and liabilities
in accordance with generally accepted accounting principles. For certain of the
Company's financial instruments, including cash, cash equivalents, short-term
investments, trade accounts receivable, accounts payable and accrued expenses,
the carrying amounts approximate fair value due to the short maturities.



Revenue Recognition

Revenue from product sales to customers is recognized
upon shipment if a signed purchase order exists, the price is fixed or
determinable, collection of the resulting receivable is considered probable and
product returns can be reasonably estimated. Subsequent to the sale of the
products, the Company has no obligation to provide any modification or
customization, upgrades, enhancements or postcontract customer support. Upon
shipment, the Company provides for the estimated costs that may be incurred for
product warranties.



Installation and engineering service revenue is
recognized when services are rendered, or an identifiable portion of the
contract is completed, no significant post-delivery obligations exist and
collection is probable.



Shipping and Handling

All amounts billed to a customer in a sale transaction
related to shipping and handling, if any, represent revenues earned for the
goods provided and are classified as revenue. Costs incurred for shipping and
handling are included in cost of sales.



Research and Development

Research and development costs are expensed as
incurred.



Advertising Costs

Advertising costs are recorded as expenses when incurred.
Advertising costs for the years ended December 31, 2001, 2000 and 1999 were
$609,000, $707,000 and $601,000 respectively.



Income Taxes

Deferred income taxes are provided for the temporary
differences between the financial reporting basis and the tax basis of the
Company's assets and liabilities. The Company is included in the consolidated
tax return of the Parent, but provides for income taxes on a separate return
basis pursuant to a tax sharing arrangement, which limits the Company's tax
liability to the amount payable to the Parent. Income taxes payable are recorded
as a reduction to the receivable from Parent account or as an increase to the
payable to Parent account.



Comprehensive Income

Statement of Financial Accounting Standards No. 130
("SFAS No. 130"), 'Reporting Comprehensive Income," establishes standards for
reporting income and its components in financial statements. Comprehensive
income, as defined, includes all changes in Shareholders' equity during a period
from non-owner sources. There were no differences between the Company's net
income (loss) and its total comprehensive income (loss) for any of the periods
presented.



New Accounting Pronouncements



In July 2001, the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting Standards No.
141 "Business Combinations" (SFAS 141) and Statement of Financial Accounting
Standards No. 142 "Goodwill and Other Intangible Assets" (SFAS 142). SFAS 141
requires that all business combinations initiated after June 30, 2001 be
accounted for using the purchase method of accounting, thereby eliminating use
of the pooling of interests method. SFAS 141 also requires that an intangible
asset acquired in a business combination be recognized apart from goodwill  if
(i) the intangible asset arises from contractual or other legal rights or (ii)
the acquired intangible asset is capable of being separated from the acquired
enterprise, as defined in SFAS 141.



SFAS 142, which is effective for fiscal years
beginning after December 15, 2001, requires, among other things, that goodwill
not be amortized but should be subject to impairment testing at the "reporting
unit level" at least annually and more frequently upon the occurrence of certain
events, as defined by SFAS 142. A reporting unit is the same level as or one
level below an operating segment, as defined by Statement of Financial
Accounting Standards No. 131 "Disclosures About Segments of an Enterprise and
Related Information."



Management does not expect the adoption of
either SFAS 141 or SFAS 142 to have a material impact on the Company's financial
position, results of operations, or cash flows.



In August 2001, the FASB issued Statement of
Financial Accounting Standards No. 144 "Accounting for the Impairment or
Disposal of Long-Lived Assets" (SFAS 144). SFAS 144 supersedes SFAS No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of" (SFAS 121), and certain provisions of APB Opinion No. 30
"Reporting the Results of Operations - Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions" (APB 30). SFAS 144 establishes standards for long-lived
assets to be disposed of, and redefines the valuation and presentation of
discontinued operations. SFAS 144 is effective for fiscal years beginning after
December 15, 2001, and interim periods within those fiscal years. Management
does not expect the adoption of SFAS 144 to have a material effect on the
Company's financial position, results of operations, or cash flows.

NOTE 2 - RELATED PARTY TRANSACTIONS

The Parent provides certain management, marketing and
sales services to the Company. The costs are allocated to the Company based on
the percentage of the Company's sales to total sales of the Parent and its
subsidiaries. The amounts allocated to the Company for 2001, 2000 and 1999 were
$1,005,000, $1,071,000 and $977, 000, respectively.

The Company leases approximately 85,000 square feet in a
95,000 square foot facility owned by an affiliate of the Parent. The lease term
is for ten years. Overhead costs are allocated primarily on the basis of square
footage utilized.

The Company utilizes a payable to Parent account to record
activity including cash received, cash disbursed and amounts owed to the Parent
for allocated charges and dividends. The net effect of transactions with the
Parent resulted in a zero balance at December 31, 2001 and 2000.



NOTE 3 - ACQUISITIONS

Dunn Sales, Inc.

On June 8, 2001, the Company acquired all of the
outstanding common stock of Dunn Sales, Inc. ("DSI"), for a cash payment of
$3,992,000. DSI is a leading provider of safeguarding equipment installation,
rebuilding, repair and maintenance of fabricating machinery. The transaction was
accounted for as a purchase and accordingly, the results of DSI operations are
included in the Company's financial statements from the date of acquisition. The
total purchase price was allocated to the tangible and intangible assets
acquired and liabilities assumed based on their respective fair values on the
date of acquisition as follows (in thousands):

`Amortization
                                        Amount      period
                                      ----------  ----------
Working capital..................... $      140
Equipment...........................         96
Technology..........................      1,985     15 years
Customer relationships..............      1,061      7
Tradename...........................        710      5
                                      ----------
                                     $    3,992
                                      ==========`

PSI-Tronix, Inc.

On March 16, 2000, the Company acquired substantially all
of the assets of PSI-Tronix, Inc. for a cash payment of $8,742,000. PSI-Tronix
designs, develops and manufactures pressure transducers, digital pressure
gauges, displacement and velocity transducers and pressure comparators for use
in a variety of factory, aerospace, medical, semiconductor and oil and gas
market applications. The acquisition was accounted for by the Company using the
purchase method and, accordingly, the results of operations of PSI-Tronix are
included in the Company's financial statements from the date of acquisition. The
total purchase price was allocated to the tangible and intangible assets
acquired and liabilities assumed based on their respective fair values on the
date of acquisition as follows (in thousands):

`Amortization
                                        Amount      period
                                      ----------  ----------
Working capital..................... $    1,402
Equipment...........................        478
Technology..........................      3,631     15 years
Customer relationships..............      1,953      7
Product lines.......................      1,278     12
                                      ----------
                                     $    8,742
                                      ==========`

The following unaudited pro-forma consolidated amounts give effect to the
acquisitions of DSI and PSI-Tronix as if the acquisitions had occurred on
January 1, 2000 (in thousands):

`2001        2000
                                                  ----------  ----------
Sales........................................... $   50,322  $   64,805
Net income...................................... $   (1,025) $    5,485
Basic and diluted net income per share.......... $    (0.11) $     0.62
Shares used to compute net income per share..... $    9,659  $    9,667`

Lundahl Instruments, Inc.

On April 1, 1999, the Company acquired all of the
outstanding capital stock of Lundahl Instruments, Inc. for a cash payment of
$2,659,000. Lundahl Instruments designs and manufactures non-contact ultrasonic
sensors and controllers for use in the automation of industrial processes for
applications involving level and flow control, environmental monitoring,
automated vehicle collision avoidance and material positioning. The acquisition
was accounted for by the Company using the purchase method and, accordingly, the
results of operations of Lundahl are included in the Company's financial
statements from the date of acquisition. The total purchase price was allocated
to the tangible and intangible assets acquired and liabilities assumed based on
their respective fair values on the date of acquisition as follows (in
thousands):

`Amortization
                                        Amount      period
                                      ----------  ----------
Working capital..................... $      299
Technology..........................      1,530     15 years
Customer relationships..............        462      7
Covenant not to compete.............         50      2
Product lines.......................        318     12
                                      ----------
                                     $    2,659
                                      ==========`

NOTE 4 - BALANCE SHEET DATA

`December 31,
                                                  ----------------------
                                                     2001        2000
                                                  ----------  ----------
                                                     (In thousands)`

Accounts receivable:

`Accounts receivable........................ $    7,115  $    9,321
     Less: Allowance for doubtful accounts
        and sales returns.......................       (661)       (545)
                                                  ----------  ----------
                                                 $    6,454  $    8,776
                                                  ==========  ==========`

Inventories:

`Finished goods............................. $    1,943  $    5,310
     Work in process............................        475         659
     Subassemblies..............................      1,042       1,105
     Raw materials..............................      5,665       2,209
                                                  ----------  ----------
                                                 $    9,125  $    9,283
                                                  ==========  ==========`

Property and equipment:

`Equipment.................................. $    9,045  $    8,147
     Furniture and fixtures.....................      1,234       1,189
     Leasehold improvements.....................        402         238
                                                  ----------  ----------
                                                     10,681       9,574
     Less: accumulated depreciation.............     (7,144)     (5,825)
                                                  ----------  ----------
                                                 $    3,537  $    3,749
                                                  ==========  ==========`

Intangible assets:

`Technology................................. $    7,146  $    5,161
     Customer relationships.....................      3,476       2,415
     Tradename..................................        710         --
     Product lines..............................      1,596       1,596
     Covenant not to compete....................         50          50
                                                  ----------  ----------
                                                     12,978       9,222
     Less: accumulated amortization.............     (1,589)       (641)
                                                  ----------  ----------
                                                 $   11,389  $    8,581
                                                  ==========  ==========`

Accrued expenses:

`Accrued compensation....................... $    1,345  $    1,707
     Accrued commissions........................        146         139
     Warranty reserve...........................        278         338
     Accrued income tax.........................        270           1
     Accrued marketing expenses.................        284         122
     Other......................................        325         115
                                                  ----------  ----------
                                                 $    2,648  $    2,422
                                                  ==========  ==========`

Debt:

The Company has a $6,100,000 line of credit with a bank, of
which no amount was outstanding at December 31, 2001. The line bears interest at
the bank's prime rate (4.75% at December 31, 2001), is secured by accounts
receivable, inventories and fixed assets, and expires on May 31, 2002. The line
is subject to certain financial covenants, and the Company has requested a
waiver.

NOTE 5 - INCOME TAXES

The provision (benefit) for income taxes was as follows:

`Year Ended December 31,
                                      ----------------------------------
                                          2001       2000        1999
                                      ----------  ----------  ----------
                                                 (In thousands)
  Current tax expense (benefit)
   Federal.......................... $     (637) $    3,237  $    1,941
   State, net of federal benefit....        (27)        802         540
                                      ----------  ----------  ----------
                                           (664)      4,039       2,481
  Deferred tax benefit..............       (209)       (588)        280
                                      ----------  ----------  ----------
   Total                             $     (873) $    3,451  $    2,761
                                      ==========  ==========  ==========`

Deferred income taxes are provided for the temporary
differences between the financial reporting basis and the tax basis of the
Company's assets and liabilities. Net deferred tax assets of $1,649,000 and
$1,440,000 were comprised of $846,000 and $791,000 of inventory reserves and of
$803,000 and $649,000 of other accruals and reserves not currently deductible at
December 31, 2001 and 2000, respectively.

The provision (benefit) for income taxes differs from the
amount of tax determined by applying the applicable federal statutory income tax
rate to pretax income as a result of the following differences:

`Year Ended December 31,
                                      ----------------------------------
                                          2001       2000        1999
                                      ----------  ----------  ----------
   Statutory U.S. tax rate..........        (34)%        34 %        34 %
   State income taxes, net of
     federal benefit................         (1)          6           6
   Research and development
     and other credits..............         (7)         (2)         (2)
   Nondeductible expenses...........          4         --          --
                                      ----------  ----------  ----------
   Effective tax rate...............        (38)%        38 %        38 %
                                      ==========  ==========  ==========`

NOTE 6 - INCOME (LOSS) PER SHARE

A reconciliation of the numerators and denominators of the basic and
diluted income (loss) per common share computations is provided below.

`(In thousands)     (Per
                                            ------------------   Share)
                                             Income    Shares    Amount
                                            --------  --------  --------
2001:
Basic earnings per share calculation...... $ (1,425)    9,659  $  (0.15)
Effect of dilutive securities:
  Stock options...........................      --        --        --
                                            --------  --------  --------
Diluted earnings per share calculation.... $ (1,425)    9,659  $  (0.15)
                                            ========  ========  ========

2000:
Basic earnings per share calculation...... $  5,631     9,640  $   0.58
Effect of dilutive securities:
  Stock options...........................      --         27       --
                                            --------  --------  --------
Diluted earnings per share calculation.... $  5,631     9,667  $   0.58
                                            ========  ========  ========

1999:
Basic earnings per share calculation...... $  4,505     9,658  $   0.47
Effect of dilutive securities:
  Stock options...........................      --         24       --
                                            --------  --------  --------
Diluted earnings per share calculation.... $  4,505     9,682  $   0.47
                                            ========  ========  ========`

NOTE 7 - DIVIDENDS

During 2001, the Company paid quarterly dividends of
$.0525 per share for the first two quarters of the year on April 3 and July 5.
During 2000, the Company paid quarterly dividends of $.05 per share. During
1999, the Company paid quarterly dividends of $.0475 per share.

NOTE 8 - STOCK OPTION PLAN AND EMPLOYEE STOCK PURCHASE PLAN

Stock Option Plan

The 1997 Stock Option Plan (the "Plan") provides for the
granting of stock options to employees and consultants of the Company. Options
granted under the Plan may be either incentive stock options or nonqualified
stock options. Incentive stock options ("ISO") may be granted only to Company
employees (including officers and directors who are also employees).
Nonqualified stock options ("NSO") and stock purchase rights may be granted to
Company employees and consultants. The Company has reserved 1,000,000 shares of
common stock for issuance under the Plan. No person will be eligible to receive
more than 250,000 shares in any fiscal year.

Options under the Plan may be granted for periods of up to
ten years and at prices no less than 85% of the estimated fair market value of
the shares on the date of grant, provided, however, that (i) the exercise price
of an ISO shall not be less than 100% of the estimated fair market value of the
shares on the date of grant, and (ii) the exercise price of an ISO granted to a
10% or more Shareholder shall not be less than 110% of the estimated fair value
of the shares on the date of grant. Most options granted under the Plan through
December 31, 2001 vest over a five-year period.

Activity under the Plan is set forth below:

`Weighted
                                                               Average
                                     Available                Exercise
                                        for       Options       Price
                                       Grant    Outstanding   Per Share
                                     ---------- ------------  ---------
  Balance, December 31, 1998........   644,426      227,948  $    6.64
    Granted ........................   (15,000)      15,000       4.93
    Canceled .......................    12,050      (12,050)      8.55
                                     ---------- ------------
  Balance, December 31, 1999........   641,476      230,898       6.43
    Granted ........................  (345,600)     345,600       6.07
    Exercised ......................       --         -1334       4.36
    Canceled .......................    88,732      (88,732)      5.42
                                     ---------- ------------
  Balance, December 31, 2000........   384,608      486,432       6.36
    Granted ........................   (67,566)      67,566       4.73
    Exercised ......................       --        (6,200)      1.21
    Canceled .......................    24,800      (24,800)      6.20
                                     ---------- ------------
  Balance, December 31, 2001........   341,842      522,998  $    6.17
                                     ========== ============`

Information relating to stock options outstanding and exercisable at December
31, 2001 is as follows:

`Options Outstanding
                   ----------------------------------    Options Vested and
                                Weighted                     Exercisable
                                 Average               -------------------------
                                Remaining   Weighted                  Weighted
                               Contractual   Average                   Average
     Range of        Number       Life      Exercise      Number      Exercise
   Exercise Prices outstanding   (Years)      Price    outstanding      Price
 ----------------- ----------- -----------  ---------  ------------  -----------
$  1.20                 4,000         1.0  $    1.28         4,000  $      1.28
   2.75 - $  4.00      20,500         5.2       3.45        12,500         3.25
   4.25 -    5.74      76,500         6.1       4.72        48,150         4.56
   6.00      6.80     272,500         8.4       6.04        68,150         6.11
   7.01      7.87     134,498         6.3       7.44       109,573         7.51
$  8.61 - $ 11.48      15,000         4.6  $    9.76        14,400  $      9.80
                   -----------                         ------------
                      522,998                              256,773
                   ===========                         ============`

Employee Stock Purchase Plan

The Company has reserved 600,000 shares of Common Stock
for issuance under the 1997 Employee Stock Purchase Plan (the "Purchase Plan").
Employees generally will be eligible to participate in the Purchase Plan if they
are customarily employed by the Company for more than 20 hours per week and more
than five months in a calendar year and are not (and would not become as a
result of being granted an option under the Purchase Plan) 5% Shareholders of
the Company. Under the Purchase Plan, eligible employees may choose each year to
have up to 15% of their eligible annual compensation withheld to purchase our
common stock. Each offering period commences on first trading day of each
calendar quarter, or on such other date as the Board shall determine. The price
at which the common stock is purchased under the Purchase Plan is 85% of the
lesser of the closing price of the Company's common stock on the first day of
the applicable offering period or on the last day of that purchase period. The
Purchase Plan will terminate after a period of ten years unless terminated
earlier as permitted by the Purchase Plan. During the years ended December 31,
2001, 2000 and 1999, 22,958, 23,082 and 33,782 shares of common stock were
purchased under this plan at a weighted-average price of $5.77, $5.03 and $4.07,
respectively.

Fair Value Disclosures

This information is required to be determined as if the
Company had accounted for its employee stock options (including shares issued
under the Employee Stock Purchase Plan, collectively called options) as defined
by SFAS No. 123. The fair value of options reported below has been estimated at
the date of grant using the Black-Scholes option-pricing model for 2001, 2000
and 1999 using the following assumptions:

|                                | Stock Options | Stock Purchase Plan
|------------------------------- | ------------- | -------------------
|                                | 2001          | 2000               
|                                |               |                    
|Risk-free interest rates        | 4.03 - 4.93%  | 6.49 - 6.62%       
|Expected lives (in years)       | 5             | 5                  
|Dividend yield                  | 0.90%         | 2.96%              
|Expected stock price volatility | 47.75%        | 33.40%             

The weighted-average estimated fair value of options granted
during the year 2001, 2000 and 1999 were $1.78, $2.29 and $2.27, respectively.
The weighted-average estimated fair value of employee stock purchase rights
granted under the Employee Stock Purchase Plan were $1.10, $1.31 and $1.10 in
2001, 2000 and 1999, respectively.



Had compensation costs for the Company's stock-based
compensation plan been determined based on the fair value at the grant dates for
the awards under a method prescribed by SFAS No. 123, the Company's net income
(loss) and net income (loss) per share would have been decreased to the pro
forma amounts indicated below:

`Years Ended December 31,
                                              -------------------------------
                                                2001       2000       1999
                                              ---------  ---------  ---------
                                          (In thousands, except per share data) 
Pro Forma net income (loss)                  $  (1,630) $   5,520  $   4,278

Pro Forma net income (loss) per share        $   (0.17) $    0.57  $    0.44`

NOTE 9 - RETIREMENT SAVINGS PLAN

The Company adopted a defined contribution retirement
savings plan under Section 401(k) of the Internal Revenue Code. This plan covers
substantially all employees who meet minimum age and service requirements and
allows participants to defer a portion of their annual compensation on a pre-tax
basis. The plan allows employer's matching contributions equal to 50% of
employees' contributions subject to a maximum of 6% of employees' compensation.
Contributions to the plan may be made at the discretion of the Board of
Directors. The Company contributed $219,000, $313,000 and $262,000 to the plan
in 2001, 2000 and 1999, respectively.

NOTE 10 - SEGMENT INFORMATION

In 2000, with the acquisition of PSI-Tronix, the Company
organized itself into two business segments: Safety Products Group, whose
products include safety light curtains, safety interlocks and relays, safety
mats and controllers, safety contact strips, and optical profiling scanners, and
installation services, and Automation Products Group, whose products include
photoelectric and fiberoptic sensors, control components, power monitoring
electronics, defense electronics, industrial control microcomputers, peripherals
and software, level and flow sensors, non-contact ultrasonic sensors and
controllers, pressure transducers, digital pressure gauges, displacement and
velocity transducers and pressure comparators.

Financial information for each product group for the years
ended December 31, 2001, 2000 and 1999 follows:

`2001                                   Safety Products   Automation Products
-------------------------------------  ----------------  -------------------
Sales................................ $         39,321  $             8,968
Group operating profit............... $           (846) $            (1,628)
Total assets......................... $         25,526  $             8,674
Capital expenditures................. $            859  $               151
Depreciation and amortization........ $          1,920  $               346

2000
-------------------------------------
Sales................................ $         48,686  $            10,577
Group operating profit............... $          6,311  $             2,434
Total assets......................... $         17,459  $            19,569
Capital expenditures................. $          1,436  $               184
Depreciation and amortization........ $          1,063  $               703

1999
-------------------------------------
Sales................................ $         45,475  $             3,630
Group operating profit............... $          5,652  $             1,182
Total assets......................... $         24,238  $             8,298
Capital expenditures................. $          1,128  $               --
Depreciation and amortization........ $            892  $                71`

NOTE 11 - CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the
Company to significant concentrations of credit risk consist principally of
cash, cash equivalents, short-term investments and trade accounts receivable.
The Company places its cash and cash equivalents in a variety of money market
accounts. The Company further limits its exposure to these investments by
placing such investments with various high quality financial institutions. The
Company routinely performs evaluations of these financial institutions. The
Company offers credit terms on the sale of its products to its customers in the
normal course of business. The Company performs ongoing credit evaluations of
its customers' financial condition and, generally, requires no collateral from
its customers. The Company maintains an allowance for uncollectible accounts
receivable based upon the expected collectibility of all accounts receivable.
One customer accounted for 14% of sales in 1999. No customer accounted for more
than 10% of sales in 2001 or 2000.

The Company operates principally in the United States. The
Company's operations in Germany are insignificant to the Company as a whole.
Sales to foreign customers represented less than 10% of total sales in 2001,
2000 and 1999.

NOTE 12 - COMMITMENTS AND CONTINGENCIES

The Company leases certain office and manufacturing space
and other equipment under noncancellable operating leases. At December 31, 2001,
future minimum payments under these leases due in the years 2002 through 2006
were approximately $1,163,000, $1,138,000 $1,141,000, $1,031,000 and $946,000,
respectively.

Rent expense under operating lease agreements was
approximately $1,007,000 in 2001, $997,000 in 2000 and $859,000 in 1999. Of
these amounts, $900,000, $853,000 and $844,000 were related to lease agreements
with an affiliate of the Parent.

From time to time, the Company is involved in litigation in
the normal course of business. Management believes that the outcome of matters
to date will not have a material adverse effect on the Company's consolidated
financial position, results of operations or cash flows.

---

SIGNATURES

Pursuant to the requirements of Section 13 or
15(d) of the Exchange Act, the registrant has caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated:  May 6, 2002



| |                                     
| | ------------------------------------
| | SCIENTIFIC TECHNOLOGIES INCORPORATED



| |     |                       
| | --- | ----------------------
| | By: | /s/ Anthony R. Lazzara

| |                      
| | ---------------------
| |                      
| | Anthony R. Lazzara   
| | Chairman of the Board



|Signature                                 | Title                                                                                                         | Date       
|----------------------------------------- | ------------------------------------------------------------------------------------------------------------- | -----------
|/s/ Anthony R. Lazzara
Anthony R. Lazzara | Chairman of the Board and Director                                                                            | May 6, 2002
|/s/ Joseph J. Lazzara
Joseph J. Lazzara   | President, Chief Executive Officer,
     Treasurer, Director (Principal
     Executive and Financial Officer) | May 6, 2002
|/s/ *
James A. Lazzara                    | Vice President, Secretary and
     Director                                                                   | May 6, 2002
|/s/ *
James A. Ashford                    | Vice President and Director                                                                                   | May 6, 2002
|/s/ *
Richard S. Baldwinson               | Director                                                                                                      | May 6, 2002
|/s/ *
Carl H. Frei                        | Director                                                                                                      | May 6, 2002
|/s/ *
Bernard J. Ploshay                  | Director                                                                                                      | May 6, 2002
|/s/ Richard O. Faria
Richard O. Faria     | Vice President, Finance and Administration
     (Principal Accounting Officer)                                | May 6, 2002

---