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**FORM 10-K**

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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, 2000**

**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**(Address of Principal Executive Offices including Zip Code)

**(510) 608-3400**(Registrant's Telephone Number, Including Area Code)

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 registered**Common 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 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,
2001 as reported by the NASDAQ Market System, was approximately $7,971,772
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, 2001 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 2001 Annual
Annual Meeting of Shareholders ("the Proxy Statement") are incorporated by
reference in Part III of this Form 10K.**SCIENTIFIC TECHNOLOGIES INCORPORATED
                        2000 ANNUAL REPORT ON FORM 10-K
                               INDEX**



|Part I.        |                                                                                       | Page
|-------------- | ------------------------------------------------------------------------------------- | ----
|Item 1.        | Business                                                                              | **  
|Item 2.        | Properties                                                                            | **  
|Item 3.        | Legal Proceedings                                                                     | **  
|Item 4.        | Submission of Matters to a Vote of Security Holders                                   | **  
|Part II.       |                                                                                       |     
|Item 5.        | Market for the Registrant's Common Equity and Related Stockholder Matters             | **  
|Item 6.        | Selected Financial Data                                                               | **  
|Item 7.        | Management's Discussion and Analysis of Financial Condition and Results of Operations | **  
|Item 7a.       | Quantitative and Qualitative Disclosures About Market Risks                           | **  
|Item 8.        | Financial Statements and Supplementary Data                                           | **  
|Item 9.        | Changes in and Disagreements with Accountants on Accounting and Financial Disclosures | **  
|Part III.      |                                                                                       |     
|Item 10.       | Directors and Executive Officers of the Registrant                                    | **  
|Item 11.       | Executive Compensation                                                                | **  
|Item 12.       | Security Ownership of Certain Beneficial Owners and Management                        | **  
|Item 13.       | Certain Relationships and Related Transactions                                        | **  
|Part IV.       |                                                                                       |     
|Item 14.       | Exhibits, Consolidated Financial Statement Schedules and Reports on Form 8-K          | **  
|Signatures     |                                                                                       | **  
|Exhibits Index |                                                                                       | **  

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PART I

Item 1. BUSINESS

This Annual Report contains forward-looking
statements that involve risks and uncertainties. The statements contained in
this Annual Report that are not purely historical are forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These statements
are not guarantees of future performance and are subject to certain risks,
uncertainties and assumptions that are difficult to predict. Factors that could
affect our actual results include the level and timing of customer orders, the
mix of products sold, fluctuations in sales of complementary third party
products with which our products are sold, the timing of operating expenditures,
general economic conditions in the U.S. and abroad, particularly in Asia and
Europe, competition, our ability to introduce successful new products and other
factors. You should carefully read the factors discussed in this Annual Report
under the caption "Factors That May Affect Future Results."

These forward-looking statements reflect management's
view only as of the date of this Annual Report. We undertake no obligation to
publicly update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise. You should also carefully consider
review the risk factors described in other documents that we file from time to
time with the Securities and Exchange Commission.

Overview



Scientific Technologies Incorporated designs,
manufactures and distributes electrical and electronic industrial controls. Our
products include safety light curtains, profiling scanners, factory automation
sensors, controls, components, microcomputers, fiber optics, power monitoring,
safety mats, non-contact ultrasonic sensors and controllers, and other
electronic equipment supplied to industrial automation, commercial and defense
customers. We were incorporated in Oregon in 1979.

Eighty-six percent (86%) of our capital stock is
currently held by our parent corporation, Scientific Technology Incorporated, a
California corporation.

We are organized into two product groups, Safety Products
and Automation Products, within one segment, industrial automation. This new
structure was initiated in 2000 to allow us to better target our products based
on each group's area of specialization, customer-focused applications and
products. This organization is intended to facilitate more efficient integration
of new products and acquisitions.

Scientific Technology, Scientific Technologies, Datricon,
STI, the STI logo, OptoSwitch, OptoData, OptoSafe and Fiberlens, are registered
trademarks of our parent company, Scientific Technology Incorporated. Aegis,
MiniSafe, FlexSafe, MicroSafe, BeamSafe, FastScan, SpectraData, PartScan and
ValuScan are trademarks of ours. This Annual Report on Form 10-K also refers to
trademarks and service marks of other companies and entities.

Products

1.Safety Products Group:

a. Safety Light Curtains. Our leading product
group, which accounted for a significant majority of sales in 2000, 1999 and
1998, is a family of safety light guards, also called presence sensing devices
or safety light curtains, used to safeguard personnel in manufacturing
environments against injury caused by robots and moving machinery. We offer
several product variations, providing customers with a complete line of optical
guarding solutions.

Safety light curtains are devices that emit a "curtain"
of harmless infrared light beams in front of the hazard area. When any of the
beams are blocked, the light curtain sends a stop signal to the guarded machine.
Light curtains are extremely versatile and can guard areas that are more than
100 feet wide. By the use of mirrors, the light beams can be diverted around
corners to enclose a machine. Safety light curtains are available with different
light beam spacings, which makes them suitable for many applications.

We manufacture and market a miniaturized light guard
called the MiniSafe, designed for inclusion in systems offered by original
equipment manufacturers, or OEMs, and other applications where space is limited.

Applications for safety light curtains are found in a
variety of manufacturing environments. Our customers use safety light curtains
to guard a wide variety of hazardous applications including automotive assembly
lines, robot work cells, semiconductor production equipment, metal stamping and
forming, food processing, aircraft manufacturing, photographic film production,
tire manufacturing and home appliance production.

The MiniSafe MS4600 series was introduced in
1999 and includes an easy-to-install design which eliminates the need for a
separate control enclosure. All of our most desired options are available in the
MiniSafe MS4600, including DeviceNet Standard interface for communicating
systems status data to the machine control system.

The MS4600 series includes Individual Beam Indicators, an
STI-patented feature, which provide the customer with a visual indicator of the
status of each individual beam in the sensing array. The Individual Beam
Indicators assist in both the installation and operation of the MiniSafe.

The FlexSafe is a segmented safety light curtain that
offers greater flexibility and machine guarding for unusually shaped
applications. Instead of a single transmitter and receiver, the FlexSafe is
offered with two or more segments comprising each transmitter and receiver. The
respective transmitter and receiver segments are connected with flexible cables
to facilitate fitting to the machinery.

We also offer the MicroSafe safety light curtain, which
is more compact than the MiniSafe but has comparable features. Designed for use
in locations in which space is limited, the small size of the MicroSafe allows
it to be integrated with the support framing used on many automated industrial
machines.

The DuoSafe controller allows the customer to configure
two independent safety light curtains to achieve common or discrete outputs. The
DuoSafe provides further application flexibility for customers when selecting
their safeguarding solution.

Selected models of the safety light curtain products are
certified by independent laboratories to comply with safety and electrical
standards, including those standards required in the European Union. Products
which pass the stringent European safety certifications carry the CE test mark.

b. Mechanical Safety Interlocks and Safety Relays. We
have a relationship with EJA Engineering, Ltd., the manufacturer of Guardmaster
mechanical safety interlocks based in the United Kingdom. EJA is a subsidiary of
Rockwell International Guardmaster safety interlock switches are utilized on
hinged, sliding, or lift-off guards and barriers that are often installed with
our safety light curtains. When the guard is opened, the power supply to the
machine is disconnected. Safety relays are electromechanical devices which often
serve as a safety interface between the mechanical safety interlocks and the
machine's control system. The function and design of Guardmaster interlocks are
complementary to our range of safety products. Since 1993, we have been the
exclusive distributor of Guardmaster products in the United States and Canada,
and an affiliate of EJA has been the distributor for our product line in the
United Kingdom.

Under a new agreement, signed in 2000, EJA/Rockwell will
have the non-exclusive right to distribute the Guardmaster product worldwide and
we will have the right to distribute the products on a private label basis under
the STI brand.

c. Safety Mats and Controllers. Our safety mats are
designed for use in industrial environments where safety enhancements or zone
detection is required. The mats are sensitive to foot or vehicular traffic.
Safety mats are used with a mat controller, which is the interface between the
safety mat and the control system of the guarded machine.

During 1998, we commenced limited deliveries of a new
safety mat, the Universal Safety Mat, or UM Series. The UM Series is the first
vinyl mat manufactured by us, and replaces our previous safety mat, the OM
Series, which was manufactured by our suppliers.

In the first quarter of 1999, the UM Series mat and a new
safety mat controller were tested and certified by an independent test agency to
a new international safety mat standard. Theses products carry the European CE
test mark. The UM Series and the associated controller was introduced to our
sales channel during 1999.

During 2000, shipments commenced on two new safety mat
controllers, the MC3 and MC4. These products offer selection of either an
industry standard DIN enclosure (MC3) or a rugged industrial style metal
enclosure (MC4) with auto selection input voltages. Both new controllers are
third party certified and CE marked to international standards for safety mat
systems.

d. Safety Contact Strips. Safety contact strips are
used in edges of guards, doors and gates at possible pinch, crushing or shear
points. The contact strips are pressure sensitive devices and operate similar to
safety mats, and use an appropriate controller. The system, comprising of the
contact strips and controller are also third party certified to international
standards and carry the CE mark.

e. Optical Profiling Scanners. In today's industrial
environment, non-contact, on-the-move sensing is vital to control automated
processes and improve industrial productivity. To meet this need, we have
developed a line of optical profiling scanner products. These scanners provide
non-contact sensing for a variety of customer applications.

We manufacture a family of high speed, microprocessor-
based profiling scanners designed to provide an economical way to measure the
physical size of various objects. The modular design of these scanners enables
the user to select among various output and programming functions, including
infrared beam spacings, size of the scanned area and single or multiple
axes.Software is included for a variety of scanning applications
and can be customized to meet a customer's specific needs.

We also manufacture and sell the Vehicle Scanner Series
of high speed, profiling scanners utilized in automated highway toll collection
systems. These scanners are used for vehicle detection, separation and
classification, providing imaging information to a host computer, which
determines the appropriate toll to be charged in an automatic fare collection
application.

STI Vehicle Scanners have been selected or installed on a
number of bridges and toll roads both in the United States and internationally.
Domestic locations include the Triborough and Verrazano Narrows bridges in New
York, a number of bridges in the San Francisco Bay Area, including the Golden
Gate Bridge and the Oakland-San Francisco Bay Bridge, and toll roads in
Colorado, Florida, Maine, New Jersey and Kansas. International locations include
France, Belgium, Singapore and Brazil.

2. Automation Products Group:

a. Photoelectric and Fiberoptic Sensors. We
manufacture and/or market a variety of photoelectric and fiberoptic sensors used
for detecting the presence or absence of objects in a wide range of factory
automation applications.

Fiberoptic sensors utilize flexible glass or plastic
fiberoptic cable to traverse the light beam from the solid state light source to
the receiving electronics. This cable is very small, and is resistant to high
temperatures, corrosive chemicals or repeated flexing. Fiberoptic sensors are
often used in confined spaces and in environments in which standard
photoelectric sensors typically would not survive.

Typical uses and applications for photoelectric and
fiberoptic sensors include canning and bottling lines, conveyor warehousing,
palletizing, printing, food processing, plastic molding, wood and forest
products manufacturing, automotive manufacturing, material handling and a
variety of other applications in an array of industries.

Companies who use our photoelectric and fiberoptic
sensors include those in the automotive, machine tool, metal forming, robotics,
electronics, material handling, packaging, food processing, pulp and paper,
forest products, personal care products, printing, chemical, defense and textile
industries.

To cover this diversified industrial market, we market
these products primarily to end-users and original equipment manufacturers
through more than 275 US distributors and sales representatives and 33 foreign
distributors. Customers include end-users and original equipment manufacturers.

b. Control components, power monitoring and defense
electronics. We manufacture and market a variety of sensors and relays for
commercial and defense customers. Such products include custom magnetic
components, current sensors, RPM sensors, voltage sensors, current monitors,
time delay relays, flashers, phase sequence relays and indicators, DC to DC
converters, and isolation transformers.

We are qualified as a supplier of a variety of military-
specified sensors and controls. Many of these products are selected for use on
military and general aviation aircraft and ground support systems. Products are
sold to original equipment manufacturers, government agencies and end users.

We market and sell these product directly to aerospace and
and defense customers.

c. Industrial control microcomputers, peripherals and
software. We also design and produce modular, board-level, computer products
under the Datricon label. This product line consists of a series of single
printed circuit board microcomputers and related peripheral boards for
industrial applications and use by original equipment manufacturers, and printed
circuit pre-packaged systems. Most of the Datricon microcomputers are
constructed on a single circuit board and are designed using a set of electrical
and mechanical connections known as an "STD-Bus". An STD-Bus is one of several
electronic bus structures used for microcomputers and peripherals in the
industrial automation control marketplace.

Datricon products can be used in a range of customer
applications, including remote-controlled robots, process control equipment,
measuring instrumentation, plastics manufacturing, lighting controls,
semiconductor processing equipment, photographic processing and automatic test
equipment. We market our Datricon products directly to end-users and original
equipment manufacturers.



d. Level and Flow Sensors. We market a variety
of level and flow sensing products imported from several manufacturers. The
principal provider of these products is Nohken, the largest level control
manufacturer in Japan. We are the exclusive US distributor of the Nohken
products. These products provide point level detection of solids, liquids and
solids/liquids, as well as contiguous measurement of continuous flow of solids
and liquids, in a wide variety of environments.

e. Non-contact Ultrasonic Sensors and Controllers. In
April 1999, we acquired Lundahl Instruments, Inc. of Logan, Utah, a privately-
held manufacturer of non-contact ultrasonic sensors and controllers. We paid
approximately $2.7 million in connection with this acquisition which was
accounted for using the purchase method of accounting. Lundahl produces over 75
types of specialized ultrasonic sensors and controller systems as well as custom
designed products. These products fall into two categories: Sensor/Controller
Systems, which are used for monitoring, displaying or controlling level in tanks
or bins, open channel flow, tank volume, obstacle avoidance and product
dimensioning; self-contained Sensor Systems, in which all electronics are
located within the sensor, requiring no separate controller or transmitting
unit. These products are used for linear position measurements in industrial and
level applications, as well as dimensioning and sorting, measurement of roll
diameter, loop control, monitoring liquids and bulk solids and level gauging.

In January 2000, we created a new business unit, STI
Automation Sensors, by combining our Level and Flow Products with the operations
of Lundahl. This new unit is located in Logan, Utah and offers our customers one
location to obtain level, flow and positioning sensor expertise. Automation
Sensors is a part of the Automation Products Group.

f. Pressure transducers, digital pressure gauges,
displacement and velocity transducers, and pressure comparators. In March
2000, we acquired substantially all of the assets and assumed some liabilities
of PSI-Tronix, Inc., a privately-held company located in Tulare, California. We
paid approximately $8.7 million in cash and accounted for this acquisition using
the purchase method of accounting. PSI-Tronix products are used in a variety of
factory automation, aerospace, medical, semiconductor, oil and gas markets and
applications.PSI-Tronix's engineering, manufacturing, administration and
sales operations are located in a 25,000 square foot facility in Tulare.

Our mission to provide tailored solutions for measurement
applications is reflected in the structure, operations, and channels to market
of our Automation Products Group. Rather than utilizing a traditional geography-
based sales channel, for this product group we define sales territories by
vertical markets in order to develop intimate application, market, and product
knowledge within these markets. The current market focus includes semiconductor
manufacturing, textiles, aerospace industries, hydraulic equipment OEMs, petro-
chemical, and water/waste-water management. In order to satisfy another
important step in maximizing resource utilization in our Automation Products
Group, we focus our product development efforts in custom and modified products
for specific volume OEM customers. This is in sharp contrast to a more
traditional, capital intensive effort to cover every possible product range.

Sources and availability of components

We maintain an inventory of components and parts
for our manufacturing activities. Although there are many sources for most of
the components needed, we purchase some products, components and sub-assemblies
from sole sources, which may be the only available supplier or may enable us to
obtain pricing or supply efficiencies. In the event of supply interruptions from
these vendors, we believe that we could obtain most sole source components from
alternate suppliers; however, this would require us to transfer tooling or
designs, or to redesign our products to facilitate use of alternate source
components. We could incur delays by switching to an alternate source, which
could have an adverse effect on our business, financial condition and results of
operations.

We also derive revenue from the distribution of products from
third party manufacturers, including revenues pursuant to our relationship with
EJA (See "Business - Products - Safety Automation Products - Mechanical Safety
Interlocks and Safety Relays"). In the event such arrangements are terminated or
third party products otherwise become unavailable, our results of operations
could be adversely affected.

Research and development

In order to meet the changing needs of our
customers, we engage in research and development both to introduce new products
and to improve existing products. In addition, we modify products as necessary
to meet original equipment manufacturers' requirements. At December 31, 2000,
there were approximately 30 employees engaged in research and development
activities. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Business Factors - Rapid Technological Change and New
Product Development."

In 2000, 1999, and 1998, the Company spent $5,159,000,
$4,780,000 and $3,314,000, respectively, on engineering, research and
development. In addition to new products such and enhancements to existing
products, our research and development efforts are directed towards
qualifying our light curtains, scanners and sensors for sale in foreign
countries and qualifying products that we import for sale in the U.S. We
anticipate that the level of research and development expenditures may be higher
in 2001.

Patents and trademarks

We hold ten US patents, five foreign patents and
nine US registered trademarks. Of these, we have been licensed by our parent company
to use two patents for its products and six US registered trademarks, including the
use of its logo "STI". Products are marketed under the following US registered
trademarks: "DUOSAFE," "OPTOFENCE," "MINISAFE," "OPTOSAFE," "FIBERLENS,"
"BEAMSAFE," "SPECTRADATA," "FLEXSAFE" and "MICROSAFE". We have filed for
additional patent protection on certain of our technologies.

We cannot assure you that these patents or trademarks or
other steps taken by us to protect our intellectual property will prove
sufficient to prevent misappropriation of our technology. Because of the rapid
rate of technology change in the electronics industry, we believe our success in
the future depends on the quality of our products and services and the technical
skills of our personnel to adapt to technological developments, rather than
solely on our patents.

Backlog

Because many customers place large orders for
delivery throughout the year and because of the possibility of customer changes
and cancellation of orders, our backlog as of any particular date may not be
representative of our sales for any succeeding fiscal period. At February 28,
2001, our backlog was $649,000 compared to $4,171,000 at February 28, 2000. The
2000 total included $1.8 million remaining of a contract for vehicle scanner
systems in New Jersey and Delaware.

Competition

The industry in which we operate is competitive
and subject to rapid technological change. Many of our competitors are
significantly larger and possess greater financial and other resources.

Our competitors include, among others, Honeywell,
Rockwell Automation, Eaton Corporation, Banner Engineering, Sick Optic-
Electronic, Inc., Cutler Hammer, Danaher Controls, Data Instruments, Link
Controls and Omron. Competitors of the Automation Products Group include several
several of the above-mentioned firms and also SCI Systems, Inc., Technitrol,
Logitek, Hi-G and Xentek. Certain of our suppliers, including Rockwell/EJA,
also compete with us. The Datricon line's competitors
include Mizar, Pro-Log, and Ziatech. In addition, we face indirect competition
from present and potential end users who from time to time evaluate the "make or
buy" decision of whether to manufacture their own components or purchase them
from outside sources.

Competition is based primarily upon product quality,
performance and price. We believe that we generally compete favorably with
respect to these factors. To maintain our competitive position, we will continue
to devote substantial resources to the development of new products and
improvements to current products. See "Business - Research and Development."

Foreign operations

We have no foreign manufacturing operations. STI
Scientific Technologies GmbH, a wholly owned German subsidiary, was established
in 1995 as our European sales office. Our products are also sold in foreign
countries by distributors and independent sales representatives. Foreign sales
represented less than 10% of sales in each of 2000, 1999 and 1998.

Customers

NCC Electronics, an independent distributor,
represented 9% of sales in 2000 and 14% of sales in 1999 and 1998. No other
customer represented more than 10% of sales in such periods. Aggregate sales to
both government agencies and government contractors represented less than 5% of
sales in 2000, 1999 and 1998.

Costs and effects of compliance with environmental
laws

Compliance with environmental protection laws or
similar ordinances is not expected to have any material affect on our business.

Employees

At December 31, 2000, we employed approximately
422 full time employees. Included in this total were the common manufacturing,
support and administrative staff that we share with our parent and its other
subsidiaries at the Dumbarton Circle facility in Fremont, California.

None of the employees are represented by unions, and there has never been
a disruption of operations due to a labor dispute.

Many of our employees are skilled in technical and
engineering disciplines and our future success will depend, in part, upon our
ability to attract and retain such employees. We believe that relations with our
employees are good.

Item 2. PROPERTIES

We own no real estate. Our manufacturing
operations, corporate headquarters, administrative, engineering and sales
offices are located in a 95,000 square foot facility located at 6550 Dumbarton
Circle, Fremont, California. The facility is owned by an affiliate of our parent
and we lease approximately 85,000 square feet, 89% of the total. Lundahl
Instruments is located in a 4,480 square foot facility at 429 S. Main Street,
Logan, Utah. PSI-Tronix is located in a 25,000 square foot facility at 3950
South K Street, Tulare, California. With the exception of the Logan facility
which, as noted below, we believe will have to be expanded in 2001, we believe
our current facilities will be adequate for the foreseeable future. See Note 9
of Notes to Consolidated Financial Statements for information regarding lease
commitments. We anticipate that additional space will be needed during 2001 for
the Automation Sensors operations



Item 3. LEGAL PROCEEDINGS

From time to time, we are subject to various legal
proceedings that arise in the ordinary course of our business. Although we cannot
predict the outcomes of these proceedings with certainty, our management does not
believe that the disposition of these matters will have a material adverse effect
on our financial position, results of operations or cash flows.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS

None.

PART II

Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

Market Information

Our Common Stock is traded on the Nasdaq National
Market under the symbol STIZ. The stock tables in most daily newspapers list the
Common Stock of the Company under "SciTech".

Price of Common Stock

`2000               High     Low    1999               High     Low
---------------  -------  -------  ---------------  -------  -------
1st Quarter     $  8.63  $  5.20   1st Quarter     $  6.50  $  5.19
2nd Quarter        7.58     4.93   2nd Quarter        6.75     4.53
3rd Quarter        8.82     5.22   3rd Quarter        7.38     4.44
4th Quarter        8.45     7.02   4th Quarter        6.88     4.00`

The closing sales price of our Common Stock on March 1, 2001 was $6.13 per
share.

Holders

There were 822 stockholders of record on March 1, 2001.

Dividends

In 2000, regular quarterly dividends of $.05 per
share were paid on April 3, July 5, September 1, and December 8. In 1999,
regular quarterly dividends of $.0475 per share were paid on April 1, July 1,
September 1, and December 8. On March 7, 2001, we declared a regular quarterly
dividend of $.0525 per share, payable on April 2, 2001 to stockholders of record
on March 23, 2001.

Item 6. SELECTED FINANCIAL DATA

i) FIVE YEARS CONSOLIDATED FINANCIAL DATA

December 31,						 (In thousands except per share data)

|Statement of operations data    | 2000    | 1999    | 1998    | 1997    | 1996   
|------------------------------- | ------- | ------- | ------- | ------- | -------
|Net sales                       | $59,263 | $49,105 | $43,465 | $44,859 | $38,294
|Income from operations          | 8,745   | 6,834   | 6,340   | 9,266   | 7,798  
|Net income                      | 5,631   | 4,505   | 4,422   | 6,070   | 5,168  
|Basic income per common share   | $ .58   | $ .47   | $ .46   | $ .63   | $ .54  
|Diluted income per common share | $ .58   | $ .47   | $ .46   | $ .62   | $ .53  
|                                |         |         |         |         |        
|Balance sheet data              |         |         |         |         |        
|Total assets                    | $37,028 | $32,536 | $29,821 | $26,119 | $21,713
|Long-term obligations           | -       | -       | -       | -       | -      
|Stockholders' equity            | 31,591  | 27,849  | 25,458  | 22,518  | 17,871 
|                                |         |         |         |         |        
|Dividends declared per share    | $ .20   | $ .19   | $ .18   | $ .17   | $ .16  

ii) QUARTERLY CONSOLIDATED FINANCIAL DATA

(In thousands, except per share data)



|2000                                | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | 
|----------------------------------- | ------------- | -------------- | ------------- | -------------- | 
|Sales                               | $13,490       | $15,209        | $14,492       | $15,572        | 
|Gross profit                        | 7,070         | 7,992          | 7,498         | 7,484          | 
|Net income                          | 1,154         | 1,652          | 1,604         | 1,222          | 
|Basic net income per common share   | $ .12         | $ .17          | $ .17         | $ .13          | 
|Diluted net income per common share | $ .12         | $ .17          | $ .17         | $ .13          | 
|                                    |               |                |               |                | 
|1999                                | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | 
|Sales                               | $11,560       | $12,014        | $12,804       | $12,727        | 
|Gross profit                        | 5,751         | 6,064          | 6,394         | 6,127          | 
|Net income                          | 1,024         | 1,119          | 1,305         | 1,058          | 
|Basic net income per common share   | $ .11         | $ .12          | $ .14         | $ .11          | 
|Diluted net income per common share | $ .11         | $ .12          | $ .14         | $ .11          | 

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The discussion and analysis below contains trend analysis and
other forward-looking statements including statements regarding anticipated
future sales, margin and expense levels, future tax rates, future cash flow and
working capital requirements. Actual results could differ materially from those
projected in the forward looking statements as a result of the risk factors set
forth under "Factors that May Affect Future Results" and elsewhere in this
report. The following discussion should be read in conjunction with our
consolidated financial statements and notes thereto. All references to years are
to fiscal years unless otherwise noted.

Results of Operations

Sales

Sales in 2000 increased 21% to $59.3 million from
$49.1 million in 1999. This was primarily due to sales by our subsidiary, PSI-
Tronix Technologies, which we acquired in March 2000. 2000 sales were positively
impacted to a lesser extent by increased shipments of our safety products. In
addition, we experienced slight increases in sales as a result of our
acquisition of Lundahl Instruments. Sales in 1999 grew 13% from $43.5 million in
1998 due to increased shipments of our existing products, the introduction of
new safety products, such as the MS 4600, in 1999 and by sales related to the
acquisition of Lundahl Instruments Inc. in April 1999. The table below
summarizes operating costs and expenses as a percent of sales for the most
recent three years.



|                                    | 2000 | 1999 | 1998
|----------------------------------- | ---- | ---- | ----
|Sales                               | 100% | 100% | 100%
|Gross margin                        | 51   | 50   | 51  
|Operating expenses:                 |      |      |     
|Selling, general and administrative | 26   | 26   | 29  
|Research and development            | 9    | 10   | 8   
|Amortization of intangibles         | 1    | -    | -   
|Total operating expenses            | 36   | 36   | 37  
|Income from operations              | 15   | 14   | 14  
|Interest and other income, net      | -    | 1    | 2   
|Income before taxes                 | 15   | 15   | 16  
|Provision for income taxes          | 6    | 6    | 6   
|Net income                          | 9%   | 9%   | 10% 

Gross profit

2000 = $29.9 million
                  1999 = $24.3 million
                  1998 = $22.0 million
                  Increase in 2000 = 23%
                  Increase in 1999 = 11%

Our gross margin was 51% of sales in 2000, 50% in 1999 and
51% in 1998. As a result of the higher level of shipments, gross profit
increased 23% over 1999. Gross margin in 2000 was positively influenced by the
addition of PSI-Tronix's products, which carry a relative lower cost of sales.
Gross margin in 1999 was slightly adversely impacted by higher sales of products
manufactured by other companies and distributed by us, which generally carry a
higher cost of sales compared to internally-developed products.

Selling, general and administrative expenses

2000 = $15.4 million
                  1999 = $12.7 million
                  1998 = $12.4 million
                  Increase in 2000 = 22%
                  Increase in 1999 = 3%

Selling, general and administrative expenses remained
relatively constant at 26% of sales during 2000 and 1999. During 1999, selling,
general and administrative expenses declined to 26% of sales compared to 29% in
1998 as a result of economies of scale associated with our expanded sales
revenue. Total expenditures increased 22% from 1999 to 2000, consistent with our
sales growth, and grew 3% from 1998 to 1999, primarily as the result of higher
expenditures relating to sales volume, partially offset by non-recurring legal
expenses in 1998. We anticipate that selling, general and administrative
expenses will increase in the foreseeable future but may fluctuate as a percent
of sales.

Amortization of acquired intangibles

2000 = $.6 million
                  1999 = $.1 million

As a result of the acquisition of PSI-Tronix in 2000, the amortization of
acquired intangibles increased to $641,000 from $89,000 in 1999.

Research and development expenses

2000 = $5.2 million
                  1999 = $4.8 million
                  1998 = $3.3 million
                  Increase in 2000 = 8%
                  Increase in 1999 = 44%

Product creation, development and enhancement have always
been and continue to be an important factor in our long-term success.
Investments in this area enable us to serve the factory automation market with
increasingly sophisticated sensors and manufacturing control products. During
2000, we increased our development efforts with the acquisition of PSI-Tronix.
During 1999, we undertook a significant expansion of research and development
efforts, particularly in the use of outside consultants. In 2000 and 1999, we
introduced a number of new products and product enhancements. Consistent with
our dedication to the development of new products, we anticipate that the level
of research and development expenses will increase in the future, although such
expenses may fluctuate as a percentage of sales. To date, all product
development costs have been expensed as incurred.

Income Tax

Our effective income tax rate was 38% in 2000, 1999
and 1998. We expect that our effective tax rate for 2001 will be reasonably
consistent with 2000. For more information regarding our taxes, see Notes 1 and
5 of Notes to Consolidated Financial Statements.

Liquidity and Capital Resources

Our working capital needs have been met through funds
generated from operating activities. During 2000, operating funds were provided
by net income adjusted for depreciation and amortization, the sale of short-term
investments and decreases in accounts receivable and increased accrued expenses.
These operating funds were used to finance lower accounts payable, inventories
and deferred taxes, for the acquisition of PSI-Tronix, to purchase fixed assets
and to pay dividends. Working capital amounted to $19.5 million at December 31,
2000. The bank line of credit, consisting of a one year revolving line and term
loan commitment of $6.1 million, was renewed in 2000 and extended to June 30,
2001. Secured by qualified receivables, fixed assets and inventories, borrowing
under this credit line bears interest at the bank's prime rate. At December 31,
2000, none of the revolving line of credit had been utilized. We have the option
to convert up to $1,000,000 of the credit line into a five-year term note. See
Note 4 of Notes to Consolidated Financial Statements.

We made certain capital expenditures during 2000, primarily
for production, quality assurance, research and development equipment,
information systems and software. Consistent with our operations historically
and our current plans for growth, we plan to make certain capital expenditures
during 2001, primarily for production, quality assurance and research and
development equipment. While we had no formal commitments at December 31, 2000,
it is anticipated that capital expenditures in 2001 will be approximately
$1,500,000.

We believe that cash flow from operations and available bank
borrowings will be sufficient to meet anticipated working capital requirements
through at least 2001. While we continue to evaluate financing alternatives from
time to time, we have no current plans to raise additional outside capital.

Relationship with Parent

Intercompany transactions between our Parent and us
include charges by our Parent for management services provided to us, dividend
payments to our Parent and other cash transfers. Our Parent files a consolidated
tax return including our accounts. Our tax provision Company is calculated on a
stand-alone basis. Our income taxes payable calculated on that basis are paid to
our Parent.

Factors that May Affect Future Results

Because of the variety of factors and uncertainties
affecting our operating results, past financial performance and historic trends
may not be a reliable indicator of future performance. These factors, as well as
other factors affecting our operating performance, may result in significant
volatility in our common stock price. Among the factors which could affect our
future business, financial condition or operating results are the following:

Our operating results may fluctuate.

We have experienced fluctuations in annual and quarterly operating
results and anticipate that these fluctuations will continue. These fluctuations
are caused by a number of factors, including the level and timing of customer
orders, fluctuations in complementary third party products with which our
products are sold, the mix of products sold and the timing of operating
expenditures. Our operating results could also be negatively impacted by
generally adverse economic conditions throughout the high technology sector. In
particular, our PSI-Tronix subsidiary may experience decreases in sales due to
the current market conditions in the semiconductor industry.

The seasonality inherent in our business could cause our operating
results to fluctuate.

The industrial manufacturing equipment industry in
which we compete has historically been subject to seasonality. This is also true
with respect to European markets in which we compete where business activity
declines due to vacations taken in the summer months. This seasonality, combined
with other factors such as the variability in our operating results described
above, renders quarter-to-quarter comparisons of our results of operations
unreliable as indicia of our overall performance.

The market for our products is highly competitive.

The market for industrial sensors is highly
competitive. Many competitors have substantially greater name recognition and
technical, marketing and financial resources than we have. Competitive pressures
could reduce market acceptance of our products and result in price reductions,
decreased revenues and increases in expenses.

Our business could suffer if we do not respond to rapid technological
change and new product development demands of our customers.

The market for our products is characterized by
rapidly changing technology, evolving industry standards, changes in customer
needs and frequent new product introductions. Our future success will depend on
our ability to enhance current products, develop new products and respond to
emerging industry standards, all on a timely and cost-effective basis. The
introduction of new products also requires that we manage the transition from
older products in order to minimize disruption of customer orders, avoid
excessive levels of older product inventories and ensure that adequate supplies
of new products can be delivered to meet customer demands.

Our sales are dependent on indirect distribution channels.

A majority of our sales are through third party
distributors, system integrators and original equipment manufacturers. These
resellers are not required to offer our products exclusively. We cannot assure
you that a reseller will continue to offer our products. In addition many of our
resellers are privately owned firms which may not be well capitalized. If our
ability to sell products through these third parties is impaired, our results of
operations would likely suffer.

Our international sales are subject to risks.

Our international sales may be disrupted by currency
fluctuations or other events beyond our control, including political or
regulatory changes. If our international sales were disrupted for any reason,
our revenue levels would decline.

Our business could suffer if we are unable to protect and enforce our
intellectual property rights.

We rely on a combination of patent, trademark and
trade secret laws and contractual restrictions to establish and protect
proprietary rights in our products and services. There can be no assurance that
our patents, trademarks, or contractual arrangements or other steps taken by us
to protect our intellectual property will prove sufficient to prevent
misappropriation of our technology or defer independent third party development
of similar technologies. Moreover, there can be no assurance that the technology
licenses granted to us from our parent company will continue to be available.
The loss of any of our proprietary technology could require us to obtain
technology of lower quality or performance standards or at greater cost, which
could materially adversely affect our business, results of operations and
financial condition. Furthermore, the laws of certain foreign countries may not
protect our products, services or intellectual property rights to the same
extent as do the laws of the United States.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.

The market risk inherent in our investments
represents the potential loss arising from adverse changes in interest rates. We
are exposed to market risk in the area of interest rate changes impacting the
fair value of our investment securities. Our policy is to invest primarily in
money market accounts and short-term investments held at financial institutions.
We do not have any derivative instruments in our investment portfolio. Due to
their highly liquid nature, our investments are subject to minimal credit and
market risk.

**Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.**

(1) Financial Statements



|                                                                                                   | Page
|-------------------------------------------------------------------------------------------------- | ----
|Report of Independent Accountants                                                                  | **  
|Consolidated Balance Sheets - December 31, 2000 and 1999                                           | **  
|Consolidated Statement of Operations - Years ended
  
    December 31, 2000, 1999 and 1998         | **  
|Consolidated Statement of Cash Flows - Years ended
  
    December 31, 2000, 1999 and 1998         | **  
|Consolidated Statement of Stockholders' Equity - Years
  
  ended December 31, 2000, 1999 and 1998 | **  
|Notes to Consolidated Financial Statements                                                         | **  

(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.

---

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
changes in stockholders' 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, 2000
and 1999, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 2000, in conformity with
accounting principles generally accepted in the United States. 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, which 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, 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
February 26, 2001

---

**Scientific Technologies Incorporated

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

`December 31,
                                                          ------------------
                                                            2000      1999
                                                          --------  --------
                     Assets
Current assets:
    Cash and cash equivalents........................... $  4,048  $  3,362
    Short-term investments..............................      406     5,209
    Accounts receivable, net............................    8,776     8,822
    Inventories.........................................    9,283     8,414
    Deferred income taxes...............................    1,680       852
Other assets............................................      505       740
                                                          --------  --------
          Total current assets..........................   24,698    27,399

Intangible assets, net..................................    8,581     2,271
Property and equipment, net.............................    3,749     2,866
                                                          --------  --------
          Total assets.................................. $ 37,028  $ 32,536
                                                          ========  ========

      Liabilities and Stockholders' Equity

Current liabilities
    Trade accounts payable.............................. $  2,775  $  2,695
    Accrued expenses....................................    2,422     1,992
                                                          --------  --------
          Total current liabilities.....................    5,197     4,687

Deferred income taxes ..................................      240        --
                                                          --------  --------
          Total liabilities.............................    5,437     4,687

Commitments and contingencies (Note 11)

Stockholders' equity
    Common stock; $.001 par value; 100,000
       shares authorized; shares issued and
       outstanding - 9,650 and 9,633....................       10        10
    Capital in excess of par value......................    5,553     5,509
    Retained earnings...................................   26,028    22,330
                                                          --------  --------
          Total stockholders' equity....................   31,591    27,849
                                                          --------  --------
          Total liabilities and stockholders' equity.... $ 37,028  $ 32,536
                                                          ========  ========`

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

---

**Scientific Technologies Incorporated

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

`Year Ended December 31,
                                                   ----------------------------
                                                     2000      1999      1998
                                                   --------  --------  --------
Sales............................................ $ 59,263  $ 49,105  $ 43,465
Cost of goods sold...............................   29,331    24,769    21,444
                                                   --------  --------  --------
  Gross profit...................................   29,932    24,336    22,021
                                                   --------  --------  --------

Operating expenses:
  Selling, general and administrative............   15,387    12,633    12,367
  Research and development.......................    5,159     4,780     3,314
  Amortization of acquired intangibles...........      641        89          --
                                                   --------  --------  --------
   Total operating expenses......................   21,187    17,502    15,681
                                                   --------  --------  --------
Income from operations...........................    8,745     6,834     6,340

Other income, net................................      337       432       794
                                                   --------  --------  --------

Income before income taxes.......................    9,082     7,266     7,134
Provision for income taxes.......................    3,451     2,761     2,712
                                                   --------  --------  --------

Net income....................................... $  5,631  $  4,505  $  4,422
                                                   ========  ========  ========

Basic and diluted net income per share........... $   0.58  $   0.47  $   0.46
                                                   ========  ========  ========

Shares used to compure net income per share......    9,667     9,682     9,721
                                                   ========  ========  ========`

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

---

**Scientific Technologies Incorporated

                   Consolidated Statement of Cash Flows**
(In thousands)

`Year Ended December 31,
                                                      -------------------------
                                                       2000     1999     1998
                                                      -------  -------  -------
Cash flows from operating activities:
  Net income........................................ $ 5,631  $ 4,505  $ 4,422
  Adjustments to reconcile net income to
    cash provided by operating activities:
    Depreciation and amortization...................   1,766      963      921
    Changes in assets and liabilities:
       Accounts receivable, net.....................   1,136   (1,964)     862
       Inventories..................................    (305)  (2,280)    (699)
       Other assets.................................     238     (429)    (163)
       Trade accounts payable.......................     (45)     162      457
       Deferred income taxes........................    (588)     280       --
       Accrued expenses.............................     301     (140)     305
                                                      -------  -------  -------
Cash flows provided by operating activities.........   8,134    1,097    6,105
                                                      -------  -------  -------
Cash flows from investing activities:
   Purchases of property  and equipment.............  (1,620)  (1,128)    (780)
   Acquisition of Lundahl Instruments, net of cash..      --   (2,659)      --
   Acquisition of PSI-Tronix, net of cash...........  (8,742)      --       --
   Sale (purchase) of short-term investments, net...   4,803    5,589   (5,825)
                                                      -------  -------  -------
Cash flows provided by (used in) investing activities (5,559)   1,802   (6,605)
                                                      -------  -------  -------

Cash flows from financing activities:
   Issuance (repurchase) of common stock, net.......      44     (278)     255
   Dividends........................................  (1,933)  (1,836)  (1,737)
                                                      -------  -------  -------
Cash flows used in financing activities.............  (1,889)  (2,114)  (1,482)
                                                      -------  -------  -------
Change in cash and cash equivalents.................     686      785   (1,982)
Cash and cash equivalents at beginning of year......   3,362    2,577    4,559
                                                      -------  -------  -------
Cash and cash equivalents at end of year............ $ 4,048  $ 3,362  $ 2,577
                                                      =======  =======  =======

Supplemental disclosure of cash flow information:
   Cash paid to Parent for income taxes............. $ 3,451  $ 2,761  $ 2,712
                                                      =======  =======  =======`

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

---

**Scientific Technologies Incorporated

              Consolidated Statement of Changes in Stockholders' Equity**
(In thousands)

`Common Stock
                                 --------------------------
                                                   Capital
                                                  in excess
                                           Par     of par    Retained
                                 Shares   value     value    earnings   Total
                                 -------  ------  ---------  --------  --------
Balances December 31, 1997......  9,635  $   10  $   5,532  $ 16,976  $ 22,518
   Issuance of common stock.....     36       --       255        --       255
   Net income for the year......       --     --         --    4,422     4,422
   Dividends paid...............       --     --         --   (1,737)   (1,737)
                                 -------  ------  ---------  --------  --------
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
                                 =======  ======  =========  ========  ========`

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

---

**Scientific Technologies Incorporated

              Notes to Consolidated Financial Statements**

NOTE 1-OPERATIONS AND SUMMARY OF 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. A majority of the Company's outstanding common stock is
held by Scientific Technology Incorporated, a California corporation (the
"Parent").

The Company operates in one business segment - the
development, manufacture and marketing of industrial automation products.

Use of 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 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.

Revenues

The company recognizes revenue upon shipment of its
products to the customer, provided that the Company has received a signed
purchase order, the price is fixed and collection of the resulting receivable is
probable. Subsequent to the sale of the products, the Company has no obligation
to provide any modification or customization upgrades, enhancements or
postcontract customer support. Provisions for returns, allowances and warranties
are recorded at the time revenue is recognized based on the Company's historical
experience.

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.

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 generally mature in less than one year and are classified as "held-to-
maturity" which have been recorded at amortized cost that approximates fair
market value. 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, including furniture and fixtures,
are recorded at cost. 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 improvement.

Intangible Assets

Intangible assets include technology, customer lists, a
covenant not to compete and goodwill acquired as part of the acquisitions of
PSI-Tronix, Inc. and Lundahl Instruments, Inc. Goodwill represents the excess of
the acquisition costs over the fair market value of the assets acquired.
Intangible assets are generally amortized on a straight-line basis not exceeding
twenty years.

Long-Lived Assets

The Company periodically evaluates the recoverability of
its long-lived assets based upon the expected undiscounted cash flow, and
recognizes impairment from the carrying value of long-lived assets if, any,
based on the fair value of such assets.

Research and Development

Research and development costs are expensed as
incurred.

Advertising Costs

Advertising costs are recorded as expense when incurred. Advertising
costs for the years ended December 31, 2000, 1999 and 1998 were $707,000,
$601,000 and $422,000, 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.

Foreign Currency

The Company's German subsidiary transacts its business in
German Marks. Translation and transaction gains and losses to date have been
immaterial.

Comprehensive Income

For the periods presented, there is no significant
difference between net income and comprehensive income.

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.

New Accounting Pronouncements

The Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133
establishes new standards of accounting and reporting for derivative instruments
and hedging activities. SFAS No. 133 requires that all derivatives be recognized
at fair value in the statement of financial position, and that the corresponding
gains or losses be reported either in the statement of operations or as a
component of comprehensive income, depending on the type of hedging relationship
that exists. The Company does not currently hold derivative instruments or
engage in hedging activities. Our adoption of SFAS No. 133, which became
effective January 1, 2001, will not have a material effect on our financial
statements.

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 2000, 1999 and 1998 were
$1,071,000, $977, 000 and $908,000, 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, 2000, 1999 and 1998. The
Company charges interest on the receivable from the Parent and pays interest on
payables to Parent at the Company's average interest rate on bank borrowings.
Interest expense amounted to $0 in 2000 and 1999 and $20,000 in 1998.

NOTE 3 - ACQUISITIONS

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..........................      1,500     10 years
Customer list.......................      1,101           5
Goodwill............................      4,261          20
                                      ----------
                                     $    8,742
                                      ==========`

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..........................      1,000     10 years
Customer list.......................        250           5
Covenant not to compete.............         50           2
Goodwill............................      1,060          20
                                      ----------
                                     $    2,659
                                      ==========`

The following unaudited pro-forma consolidated amounts give
effect to the acquisitions of PSI-Tronix and Lundahl Instruments as if both
acquisitions had occurred on January 1, 1999 (in thousands):

|                                            | 2000    |  | 1999   
|------------------------------------------- | ------- |  | -------
|Sales                                       | $60,803 |  | $56,829
|Net income                                  | $5,949  |  | $5,855 
|Basic and diluted net income per share      | $0.62   |  | $0.60  
|Shares used to compute net income per share | 9,667   |  | 9,682  

NOTE 4 - BALANCE SHEET DATA

`December 31,
                                                  ----------------------
                                                     2000        1999
                                                  ----------  ----------
                                                     (In thousands)`

**Accounts receivable:**

`Accounts receivable........................ $    9,321  $    9,152
     Less: Allowance for doubtful accounts
        and sales returns.......................       (545)       (330)
                                                  ----------  ----------
                                                 $    8,776  $    8,822
                                                  ==========  ==========`

**Inventories:**

`Finished goods............................. $    5,310  $    3,108
     Subassemblies..............................      1,105         948
     Work in process............................        659         263
     Raw materials..............................      2,209       4,095
                                                  ----------  ----------
                                                 $    9,283  $    8,414
                                                  ==========  ==========`

**Property and equipment:**

`Equipment.................................. $    8,147  $    6,305
     Furniture and fixtures.....................      1,189       1,076
     Leasehold improvements.....................        238          96
                                                  ----------  ----------
                                                      9,574       7,477
     Less: accumulated depreciation.............     (5,825)     (4,611)
                                                  ----------  ----------
                                                 $    3,749  $    2,866
                                                  ==========  ==========`

**Intangible assets:**

`Goodwill................................... $    5,321  $    1,060
     Technology.................................      2,500       1,000
     Customer list..............................      1,351         250
     Covenant not to compete....................         50          50
                                                  ----------  ----------
                                                      9,222       2,360
     Less: accumulated amortization.............       (641)        (89)
                                                  ----------  ----------
                                                 $    8,581  $    2,271
                                                  ==========  ==========`

**Accrued expenses:**

`Accrued compensation and benefits.......... $    1,707  $    1,111
     Accrued commissions........................        139         210
     Warranty reserve...........................        338         321
     Other......................................        238         350
                                                  ----------  ----------
                                                 $    2,422  $    1,992
                                                  ==========  ==========`



Debt:

The Company has a $6,100,000 line of credit with a bank, of
which no amount was outstanding at December 31, 2000 or December 31, 1999. The
line, which is subject to certain financial statement covenants, bears interest
at the bank's prime rate (9.5% at December 31, 2000), is secured by accounts
receivable, inventories and fixed assets, and expires on May 31, 2001.

NOTE 5 - INCOME TAXES

The provision for income taxes was as follows:

`Year Ended December 31,
                                      ----------------------------------
                                         2000        1999        1998
                                      ----------  ----------  ----------
                                                 (In thousands)
  Current tax expense:
   Federal.......................... $    3,237  $    1,941  $    2,224
   State, net of federal benefit....        802         540         600
                                      ----------  ----------  ----------
                                          4,039       2,481       2,824
  Deferred tax benefit..............       (588)        280        (112)
                                      ----------  ----------  ----------
   Total                             $    3,451  $    2,761  $    2,712
                                      ==========  ==========  ==========`

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. Deferred tax assets of $1,440,000 and $852,000
were comprised of $791,000 and $460,000 of inventory reserves and of $649,000
and $392,000 of other accruals and reserves not currently deductible at December
31, 2000 and 1999, respectively.

The provision 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,
                                      ----------------------------------
                                         2000        1999        1998
                                      ----------  ----------  ----------
   Statutory U.S. tax rate..........         34 %        34 %        34 %
   State income taxes, net of
     federal benefit................          6           6           6
   Research and development
     and other credits..............         (2)         (2)         (2)
                                      ----------  ----------  ----------
   Effective tax rate...............         38 %        38 %        38 %
                                      ==========  ==========  ==========`



NOTE 6 - INCOME PER SHARE

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

`(In thousands)     (Per
                                            ------------------   Share)
                                             Income    Shares    Amount
                                            --------  --------  --------
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
                                            ========  ========  ========

1998:
Basic earnings per share calculation...... $  4,422     9,650  $   0.46
Effect of dilutive securities:
  Stock options...........................      --         71       --
                                            --------  --------  --------
Diluted earnings per share calculation.... $  4,422     9,721  $   0.46
                                            ========  ========  ========`

NOTE 7 - DIVIDENDS

During 2000, the Company paid quarterly dividends of $.05
per share. During 1999, the Company paid quarterly dividends of $.0475 per
share. During 1998, the Company paid quarterly dividends of $.045 per share. On
March 8, 2001, the Company declared a quarterly dividend of $.0525 per share,
payable on April 2, 2001 to shareholders of record on March 23, 2001.

NOTE 8 - SEGMENT REPORTING AND OTHER INFORMATION

In 2000, with the acquisition of PSI-Tronix, the Company
organized itself into two product groups, 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
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, 2000, 1999 and 1998 follows:

`2000                                   Safety Products   Automation Products
-------------------------------------  ----------------  -------------------
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

1998
-------------------------------------
Sales................................ $         41,524  $             1,941
Group operating profit............... $          5,426  $               914
Total assets......................... $         23,064  $             6,757
Capital expenditures................. $            780  $                --
Depreciation and amortization........ $            921  $                --`

The market for the Company's products is characterized by
rapidly changing technology, evolving industry standards, changes in customer
needs and frequent new product introductions. 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 2000, 1999 and 1998. One customer, a distributor, accounted for
9% of total sales in 2000 and 14% in 1999 and 1998.

Financial instruments that potentially subject the Company to
significant concentrations of credit risk consist principally of cash, cash
equivalents, short-term investments and 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's short-term
investments are primarily composed of highly rated mutual funds and Treasury
bonds. 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 reserves for potential
credit reserves and such reserves have been within management's expectations.



NOTE 9 - 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 pursuant to Awards under the 1997
Plan other than a new employee of the Company who will be eligible to receive no
more than 250,000 shares in the fiscal year in which such employee commences
employment.

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% stockholder 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, 2000 vest either immediately or over a five-year period for
employees.

Activity under the Plan is set forth below:

`Weighted
                                                               Average
                                     Available                Exercise
                                        for       Options       Price
                                       Grant    Outstanding   Per Share
                                     ---------- ------------  ---------
  Balance, December 31, 1997........   680,758      207,501  $    6.39
    Granted ........................   (37,000)      37,000       7.47
    Exercised ......................       --       (15,885)      5.25
    Canceled .......................       668         (668)      8.13
                                     ---------- ------------
  Balance, December 31, 1998........   644,426      227,948       6.64
    Granted ........................   (15,000)      15,000       4.93
    Exercised ......................       --         --           --
    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 ......................       --        (1,334)      4.36
    Canceled .......................    88,732      (88,732)      5.42
                                     ---------- ------------
  Balance, December 31, 2000........   384,608      486,432  $    6.36
                                     ========== ============`

Information relating to stock options outstanding at December 31, 2000 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
 ----------------- ----------- -----------  ---------  ------------  -----------
$  1.12                 6,000         1.0  $    1.12         6,000  $      1.12
   2.75 - $  3.90      13,500         2.9       3.29        12,700         3.26
   4.25 -    5.74      25,600         8.8       4.91         5,400         5.52
   6.00      6.80     285,500         9.3       6.04        15,250         6.38
   7.01      7.87     140,832         6.7       7.44        95,332         7.61
$  8.61 - $ 11.48      15,000         4.0  $    9.76        13,800  $      9.86
                   -----------                         ------------
                      486,432                              148,482
                   ===========                         ============`

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% stockholders of
the Company. Under the Purchase Plan, eligible employees may select a rate of
payroll deduction not to exceed 15% of their W-2 cash compensation. 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 fair
market value 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, 2000, 1999
and 1998, 23,082, 33,782 and 25,257 shares of common stock were purchased under
this plan at a weighted-average price of $5.03, $4.07, and $6.16 per share,
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) under
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
2000, 1999 and 1998 using the following assumptions:

|                          |  | Employee Stock Options | Employee Stock Purchase Plan
|------------------------- |  | ---------------------- | ----------------------------
|                          |  | 2000                   |                             
|                          |  |                        |                             
|Risk-free interest rates  |  | 6.49 - 6.62%           |                             
|Expected lives (in years) |  | 5                      |                             
|Dividend yield            |  | 2.96%                  |                             
|Expected volatility       |  | 33.40%                 |                             

The weighted-average estimated fair value of options granted
during the year 2000, 1999 and 1998 were $6.07, $4.93 and $7.47 respectively.
The weighted-average estimated fair value of employee stock purchase rights
granted under the Employee Stock Purchase Plan were $1.31, $1.10, and $2.13 in
2000, 1999 and 1998 respectively.

Had compensation cost 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
would have been decreased to the pro forma amounts indicated below:

|            |               | (In Thousands)          
|----------- | ------------- | ------------------------
|            |               | Years Ended December 31,
|            |               | 2000                    
|Net Income: |               |                         
|            | Pro Forma     | $ 5,520                 
|            | Pro Forma EPS | $ 0.57                  



NOTE 10 - 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 $313,000, $262,000 and $232,000 to the plan
in 2000, 1999 and 1998 respectively.

In addition to this pending patent litigation, 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.



NOTE 11 - COMMITMENTS AND CONTINGENCIES

The Company leases certain office and manufacturing space
and other equipment under noncancellable operating leases. At December 31, 2000,
future minimum payments under these leases due in the years 2001 through 2005
were approximately $977,000 per year.

Rent expense under operating lease agreements was
approximately $997,000 in 2000, $685,000 in 1999 and $630,000 in 1998,
respectively.

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.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

Certain information required by Part III is omitted from
this Report in that the registrant will file a definitive Proxy Statement for
its 2001 Annual Meeting of Stockholders pursuant to Regulation 14A (the "Proxy
Statement") no later than 120 days after the end of the fiscal year covered by
this Report, and certain information included therein is incorporated herein by
reference.

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this Item concerning the Company's
directors and the Company's executive officers is incorporated by reference to
the sections entitled "Nominees" and "Management", respectively, appearing in
the Company's Proxy Statement for its 2001 Annual Meeting of Stockholders.

Item 11. EXECUTIVE COMPENSATION

The information required by this Item is incorporated
by reference to the sections entitled "Executive Compensation" and "Report of
the Compensation Committee" appearing in the Proxy Statement for its 2001 Annual
Meeting of Stockholders.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

The information required by this Item is incorporated
by reference to the sections entitled "Security Ownership of Certain Beneficial
Owners and Management" appearing in the Proxy Statement for its 2001 Annual
Meeting of Stockholders.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item is incorporated
by reference to the sections entitled "Certain Relationships and Related
Transactions" appearing in the Proxy Statement for its 2001 Annual Meeting of
Stockholders.

**PART IV**

**Item 14. EXHIBITS LIST AND REPORTS ON FORM 8-K**

> **1.   FINANCIAL STATEMENTS**
> Reference is made to the index appearing in Item 8(a) of this report.
> **2. EXHIBITS AND EXHIBIT INDEX:**



|Exhibit Number | Description                                                                                                                                                                                                                                                                                                                                  
|-------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 2.1 -  | Asset Purchase Agreement by and among PSI-Tronix Technologies, Inc., Scientific
Technologies Incorporated, PSI-Tronix, Inc. and Melvin R. Heier and Donna Mae
Heier, Trustees of the Heier Family Trust Dated 6/27/89 dated as of March 16,
2000 is incorporated by reference to the Registrant's Form 8-K/A dated May 30,
2000, Exhibit 2.1.
|Exhibit 3.1 -  | Articles of Incorporation, as amended, are incorporated by reference to the
Registrant's Form 10-K for the year ended December 31, 1988, Exhibit 3.1.                                                                                                                                                                                        
|Exhibit 3.3 -  | By-Laws are incorporated by reference to the Registrant's Form 10-K for the
year ended December 31, 1985, Exhibit 3.                                                                                                                                                                                                                         
|Exhibit 4.1 -  | 1997 Employee Stock Purchase Plan is incorporated by reference to the  Registrant's
Registration Statement on Form S-8 dated October 2, 1998.                                                                                                                                                                                                
|Exhibit 4.2 -  | 1997 Stock Plan is incorporated by reference to the Registrant's
Registration Statement on Form S-8 dated October 2, 1998.                                                                                                                                                                                                                   
|Exhibit 10.1 - | Lease agreement dated February 21, 1995 for 6550 Dumbarton Circle, Fremont,
California 94555, is incorporated by reference to the Registrant's Form 10-KSB for
the year ended December 31, 1994, Exhibit 10.4.                                                                                                                               
|Exhibit 10.2 - | Bank agreement dated November 29, 1994 with Bank of The West is incorporated
by reference to the Registrant's Form 10-KSB for the year ended December 31,
1994, Exhibit 10.3.                                                                                                                                                                
|Exhibit 10.3 - | Amendment dated June 30, 2000 to Bank Agreement dated November 29, 1994
with Bank of The West.                                                                                                                                                                                                                                               
|Exhibit 10.4 - | Amendment dated October 6, 2000 to Bank Agreement dated November 29, 1994
with Bank of The West.                                                                                                                                                                                                                                             
|Exhibit 21.1 - | Subsidiaries of the Registrant                                                                                                                                                                                                                                                                                                               
|Exhibit 23.1 - | Consent of PricewaterhouseCoopers LLP, Independent Accountants.                                                                                                                                                                                                                                                                              
|Exhibit 24.1 - | Power of Attorney (included on page 34)                                                                                                                                                                                                                                                                                                      

> All other exhibits for which provision is made in
> Regulation S-K of the Securities and Exchange Commission are not required under the
> related instructions or are inapplicable, and therefore have  been omitted.

(b)  No Reports on Form 8-K were filed during the last quarter of 2000.

---

**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:  March 29, 2001



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



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

| |                   
| | ------------------
| |                   
| | Anthony R. Lazzara
| | Chairman          

**POWER OF ATTORNEY**

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Anthony R. Lazzara and Joseph J. Lazzara, jointly and severally, his
attorney-in-fact, each with the power of substitution, for him in any and all capacities, to
sign any amendments to this Report on Form 10-K and to file the same, with exhibits thereto and
other documents in connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said said attorneys-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.

In accordance with the Exchange Act, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates indicated.



|Signature                                 | Title                                                                                                         | Date          
|----------------------------------------- | ------------------------------------------------------------------------------------------------------------- | --------------
|/s/ Anthony R. Lazzara
Anthony R. Lazzara | Chairman of the Board and Director                                                                            | March 29, 2001
|/s/ Joseph J. Lazzara
Joseph J. Lazzara   | President, Chief Executive Officer,
     Treasurer, Director (Principal
     Executive and Financial Officer) | March 29, 2001
|/s/ James A. Lazzara
James A. Lazzara     | Vice President, Secretary and
     Director                                                                   | March 29, 2001
|/s/ James A. Ashford
James A. Ashford     | Vice President and Director                                                                                   | March 29, 2001
|/s/ Carl H. Frei
Carl H. Frei             | Director                                                                                                      | March 29, 2001
|/s/ Bernard J. Ploshay
Bernard J. Ploshay | Director                                                                                                      | March 29, 2001
|/s/ Richard O. Faria
Richard O. Faria     | Vice President, Finance and Administration
     (Principal Accounting Officer)                                | March 29, 2001

---

**SCIENTIFIC TECHNOLOGIES INCORPORATED
                                           EXHIBITS

                                               TO


                                     Annual Report on Form 10-K

                                       Year ended December 31, 2000

                             EXHIBITS - TABLE OF CONTENTS**

|Exhibit Number | Description                                                                                     
|-------------- | ------------------------------------------------------------------------------------------------
|Exhibit 10.3 - | Amendment dated June 30, 2000 to Bank Agreement dated November 29, 1994
with Bank of The West.  
|Exhibit 10.4 - | Amendment dated October 6, 2000 to Bank Agreement dated November 29, 1994
with Bank of The West.
|Exhibit 21.1 - | Subsidiaries of the Registrant                                                                  
|Exhibit 23.1 - | Consent of PricewaterhouseCoopers LLP, Independent Accountants.                                 
|Exhibit 24.1 - | Power of Attorney (included on page 36)                                                         

---