SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

---

FORM 10-Q

---

(MARK ONE)

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

For the quarterly period ended March 31, 2004 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



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

6550 Dumbarton CircleFremont, CA     94555

(510) 608-3400







Check whether the issuer (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file reports), and (2) has been subject to such filing
requirements for the past 90 days.    YES [X] NO [   ].

Indicate by check mark whether the registrant is an accelerated filer
 (as defined in Rule 12b-2 of Act). Yes [  ]    NO [X]

Common stock outstanding as of April 30, 2004 was 9,732,148 shares.









SCIENTIFIC TECHNOLOGIES INCORPORATED

                           Quarter Ended March 31, 2004
                                     INDEX



|PART I.   Financial Information                                                                                       | Page No.
|--------------------------------------------------------------------------------------------------------------------- | --------
|                                                                                                                      |         
|Item 1.   Financial Statements
                  (unaudited):                                                         |         
|                                                                                                                      |         
|Condensed Consolidated Balance Sheets as of
          
     March 31, 2004 and December 31, 2003                      | **      
|                                                                                                                      |         
|Condensed Consolidated Statements of Operations for the
          
    Three Months ended March 31, 2004 and 2003     | **      
|                                                                                                                      |         
|Condensed Consolidated Statements of Cash Flows for the
          
    Three Months ended March 31, 2004 and 2003     | **      
|                                                                                                                      |         
|Notes to Condensed Consolidated Financial Statements                                                                  | **      
|                                                                                                                      |         
|Item 2.   Management's Discussion and Analysis of Financial
                      Condition and Results of Operations | **      
|                                                                                                                      |         
|Item 3.   Quantitative and Qualitative Disclosures About Market Risk                                                  | **      
|                                                                                                                      |         
|Item 4.   Controls and Procedures                                                                                     | **      
|                                                                                                                      |         
|PART II.  Other Information                                                                                           |         
|                                                                                                                      |         
|Item 6.   Exhibits and Reports on Form 8-K                                                                            | **      
|                                                                                                                      |         
|Signatures                                                                                                            | **      

---

PART 1 - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

---





SCIENTIFIC TECHNOLOGIES INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEET                  (Unaudited, in thousands, except for per share data)

|Assets                                                                                                                                 | Mar. 31, 2004 | Dec. 31, 2003
|-------------------------------------------------------------------------------------------------------------------------------------- | ------------- | -------------
|Current assets:                                                                                                                        |               |              
|Cash and cash equivalents                                                                                                              | $ 3,478       | $ 2,312      
|Accounts receivable, net                                                                                                               | 8,932         | 8,139        
|Inventories                                                                                                                            | 10,237        | 9,281        
|Deferred income taxes                                                                                                                  | 2,015         | 2,015        
|Receivable from Parent                                                                                                                 | 479           | 838          
|Prepaid expenses and other assets                                                                                                      | 781           | 1,034        
|Total current assets                                                                                                                   | 25,922        | 23,619       
|                                                                                                                                       |               |              
|Property and equipment, net                                                                                                            | 3,596         | 3,740        
|Goodwill and other intangible assets, net                                                                                              | 10,002        | 10,321       
|Total assets                                                                                                                           | $39,520       | $37,680      
|Liabilities and Shareholders' Equity                                                                                                   |              
|Current liabilities:                                                                                                                   |              
|Accounts payable                                                                                                                       | $ 3,622       | $ 2,758      
|Accrued expenses                                                                                                                       | 3,904         | 3,267        
|Current portion of capital lease with Parent                                                                                           | 68            | 68           
|Total current liabilities                                                                                                              | 7,594         | 6,093        
|                                                                                                                                       |               |              
|Capital lease with Parent                                                                                                              | 147           | 164          
|Deferred income taxes                                                                                                                  | 1,134         | 1,134        
|Total liabilities                                                                                                                      | 8,875         | 7,391        
|Shareholders' equity:
   Common stock, $.001 par value; 100,000 shares
   authorized; 9,727 and 9,711 shares issued and
   outstanding | 10            | 10           
|Capital in excess of par value                                                                                                         | 5,824         | 5,792        
|Retained earnings                                                                                                                      | 24,811        | 24,487       
|Total shareholders' equity                                                                                                             | 30,645        | 30,289       
|Total liabilities and shareholders' equity                                                                                             | $39,520       | $37,680      

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

---





SCIENTIFIC TECHNOLOGIES INCORPORATED

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS                  (Unaudited, in thousands, except per share data)

|                                                                 | For the three months ended  
|---------------------------------------------------------------- | ----------------------------
|                                                                 | Mar. 31, 2004               
|                                                                 |                             
|Sales                                                            | $14,634                     
|                                                                 |                             
|Cost of sales                                                    | 8,566                       
|                                                                 |                             
|Gross profit                                                     | 6,068                       
|                                                                 |                             
|Operating expenses:                                              |                             
|Selling, general and administrative                              | 4,407                       
|Research and development                                         | 1,017                       
|Amortization of intangible assets                                | 165                         
|Total operating expenses                                         | 5,589                       
|                                                                 |                             
|Income from operations                                           | 479                         
|                                                                 |                             
|Interest and other income, net                                   | 44                          
|                                                                 |                             
|Income before income taxes                                       | 523                         
|                                                                 |                             
|Provision for income taxes                                       | 199                         
|                                                                 |                             
|Net income                                                       | $324                        
|                                                                 |                             
|Net income per share:                                            |                             
|Basic and diluted                                                | $ 0.03                      
|                                                                 |                             
|Shares used to compute net income per share:
   Basic
   Diluted | 9,723
                 9,793

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

---





SCIENTIFIC TECHNOLOGIES INCORPORATED

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS                  (Unaudited, in thousands)



|                                                      | For the three months ended
|----------------------------------------------------- | --------------------------
|                                                      | Mar. 31, 2004             
|                                                      |                           
|Cash flows from operating activities                  |                           
|Net income                                            | $ 324                     
|Adjustments to reconcile net income to cash           |                           
|provided by operating activities:                     |                           
|Depreciation and amortization                         | 625                       
|Changes in assets and liabilities                     |                           
|Accounts receivable                                   | (793)                     
|Inventories                                           | (956)                     
|Receivable from Parent                                | 359                       
|Prepaid expense and other assets                      | 253                       
|Accounts payable                                      | 864                       
|Accrued expenses                                      | 637                       
|Cash flows provided by operating activities           | 1,313                     
|                                                      |                           
|Cash flows from investing activities                  |                           
|Purchase of property and equipment                    | (162)                     
|Cash flows used in investing activities               | (162)                     
|                                                      |                           
|Cash flows from financing activities                  |                           
|Repayment of capital lease with Parent                | (17)                      
|Issuance of common stock                              | 32                        
|                                                      |                           
|Cash flows provided by (used in) financing activities | 15                        
|                                                      |                           
|Change in cash and cash equivalents                   | 1,166                     
|                                                      |                           
|Cash and cash equivalents at beginning of period      | 2,312                     
|Cash and cash equivalents at end of period            | $3,478                    
|                                                      |                           
|Supplemental disclosure of cash flow information:     |                           
|Cash paid to Parent for income taxes                  | $199                      

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

---





SCIENTIFIC TECHNOLOGIES INCORPORATED
                  NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                  (Unaudited)

1. INTERIM FINANCIAL STATEMENTS

The accompanying condensed consolidated financial
statements for the three months ended March 31, 2004 and 2003 are unaudited and
have been prepared in accordance with generally accepted accounting principles
in the United States of America and in accordance with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles in the United States of America for complete financial statements. In
the opinion of management, the unaudited condensed consolidated financial
statements reflect all adjustments, consisting only of normal recurring
adjustments, considered necessary to present fairly the financial position,
results of operations and cash flows of Scientific Technologies Inc. (the
"Company") and its subsidiaries for all periods presented.

To prepare these condensed consolidated financial
statements in conformity with generally accepted accounting principles,
management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
revenue and expenses during the reporting period. Actual results could differ
from those estimates.

The results of operations are not necessarily indicative
of the results to be expected in the future or for the full fiscal year. It is
recommended that these condensed consolidated financial statements be read in
conjunction with the Company's audited consolidated financial statements and the
notes thereto included in its 2003 Annual Report on Form 10-K.

STOCK-BASED COMPENSATION

Statement of Financial Accounting Standards ("SFAS")
No. 148, issued in December 2002, amends SFAS No. 123 to require that
disclosures of the pro forma effect of using the fair value method of accounting
for stock-based employee compensation be presented on a quarterly basis and
displayed more prominently and in a tabular format. The following table sets
forth the effect on the Company's net income and net income per share as if the
Company had recorded compensation costs based on the estimated grant date fair
value as defined by SFAS No. 123 for all granted stock-based awards (in
thousands, except per share amounts).



|                                                                                                                            | Three Months Ended March 31,
|--------------------------------------------------------------------------------------------------------------------------- | ----------------------------
|                                                                                                                            | 2004                        
|Net income, as reported                                                                                                     | $ 324                       
|Deduct: Stock-based employee compensation expense
   determined under fair value based method for all
   awards, net of tax | 23                          
|Pro forma net income                                                                                                        | $ 301                       
|                                                                                                                            |                             
|Net income per share - basic and diluted:                                                                                   |                             
|As reported                                                                                                                 | $ 0.03                      
|Pro forma                                                                                                                   | $ 0.03                      

2. INVENTORIES

Inventories consist of the following (in thousands):



|                | Mar. 31, 2004 | Dec. 31, 2003
|--------------- | ------------- | -------------
|Raw materials   | $ 3,616       | $4,692       
|Subassemblies   | 1,072         | 911          
|Work in process | 2,771         | 1,225        
|Finished goods  | 2,778         | 2,453        
|                | $10,237       | $9,281       

3. NET INCOME PER SHARE

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



|                                                  | (In thousands) |       
|------------------------------------------------- | -------------- | ------
|                                                  | Income         | Shares
|Three months ended March 31, 2004                 |                |       
|Basic earnings per share calculation              | $ 324          | 9,723 
|Effect of dilutive securities
      Stock options |                | 70    
|Diluted earnings per share calculation            | $ 324          | 9,793 
|Three months ended March 31, 2003                 |                |       
|Basic earnings per share calculation              | $ 90           | 9,685 
|Effect of dilutive securities
      Stock options |                | 35    
|Diluted earnings per share calculation            | $ 90           | 9,720 

4. COMPREHENSIVE INCOME

For the three months ended March 31, 2004
and 2003, there is no difference between net income and comprehensive
income.

5. SEGMENT REPORTING AND OTHER INFORMATION

Financial information for each product group is as
follows: (in thousands)



|                       | Three months ended
|---------------------- | ------------------
|                       | March 31,         
|Safety Products        | 2004              
|Sales                  | $12,356           
|Group operating profit | 805               
|                       |                   
|Automation Products    |                   
|Sales                  | $ 2,278           
|Group operating loss   | (326)             
|                       |                   
|                       | At                
|                       | Mar. 31           
|Total Assets           | 2004              
|Safety Products        | $33,924           
|Automation Products    | 5,596             
|Total                  | $39,520           

The Company operates principally in the United States.
The Company's operations in Germany are less than 10% of total operations. Sales
to foreign customers represented less than 12% of total sales in the three
months ended March 31, 2004 and 2003.

6. COMMITMENTS AND CONTINGENCIES

The Company offers warranties on certain products and records
a liability for the estimated future costs associated with warranty claims,
which is based upon historical experience and the Company's estimate of the
level of future costs. A reconciliation of the changes in the Company's warranty
liability follows (in thousands):

|                                        | Three months ended March 31,
|--------------------------------------- | ----------------------------
|                                        | 2004                        
|Warranty accrual at beginning of period | $221                        
|Accruals for warranties issued          | 42                          
|Expenses incurred                       | (42)                        
|Warranty accrual at end of period       | $221                        

As permitted under Oregon law the Company has agreements
whereby the Company indemnifies its officers and directors for certain events or
occurrences while the officer or director is, or was serving at the Company's
request in such capacity. The indemnification term is for the period that the
officer or director is serving in such capacity or is subject to any possible
claim or action by reason of the fact that the Indemnitee was serving in that
capacity. The maximum potential amount of future payments by the Company could
be unlimited; however the Company has a director and officer insurance policy
that limits the Company's exposure and enables the Company to recover a portion
of any future amounts paid. As a result of the insurance policy coverage, the
Company believes that the estimated fair value of these agreements is
minimal.



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

This interim report on Form 10-Q contains trend analysis
and other forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Act of 1934. Such
statements include expectations, beliefs, intentions or strategies regarding
future operating results, future expenditures, future cash requirements and
future industry conditions that involve risks and uncertainties. The Company's
actual results could differ materially from those projected in such
forward-looking statements as a result of many factors, including, without limitation,
those set forth under this section, the section entitled "Business Factors"
below and elsewhere in this report on Form 10-Q.

Results of Operations

(Amounts in thousands, except percentages)

Scientific Technologies Incorporated designs,
manufactures and distributes automation safeguarding and specialty sensor
products for the industrial control market. The Company's products include
safety light guards, profiling scanners, factory automation sensors, machine
safeguarding installation services, safety interlock switches, safety relays,
safety edges, safety mats, ultrasonic sensors, level and flow controllers,
pressure, displacement and velocity transducers, digital pressure gauges and
comparators and other electronic equipment supplied to industrial automation,
commercial and defense customers.

Sales for the three months ended March 31, 2004 increased
13% to $14,634 from $12,959 in the comparable period in 2003. During the first
quarter of 2004, we experienced an increase in shipments by the Safety Products
Group ("SPG") of 12% and the Automation Products Group ("APG") of 21%. The
increased sales growth by SPG was primarily related to an increase in project
revenue from the Machine Services Division ("MSD") and an increase in the number
of safety products sold. APG sales growth was fueled by increased sales of level
sensor products and, to a lesser extent, increased volume of pressure
products.

Gross margin for the first quarter of 2004 declined to
41% for the first quarter of 2004 from 43% in the first quarter of 2003. This
resulted from an increase in the proportion of MSD sales, which carry a higher
cost, to total sales in the first quarter of 2004. Gross profit grew $522 or 9%
to $6,068 from $5,546 recorded in the first quarter of 2003.

Selling, general and administrative expenses for the
three months ended March 31, 2004 increased 8% to $4,407 from $4,084 in the same
period of 2003. This was a result of increased printing, insurance, publicity
and legal expenses of approximately $131, plus a $59 accounts receivable
write-off relating to a single distributor. We were able to keep our selling, general
and administrative expense percentage increases in the first quarter of 2004 to
approximately 60% of the rate of sales increase. As a percentage of sales for
the three months ended March 31, 2004, selling, general and administrative
expenses improved to 30% compared to 32% for the same period in 2003.

Research and development expenses for the first quarter
of 2004 declined 13% to $1,017 from the $1,173 recorded in the first three
months of 2003. This was primarily the result of lower staffing levels, and
reduced consulting and material expenses in the first quarter of 2004 compared
to the comparable 2003 period. As a percentage of sales for the three months
ended March 31, 2004, research and development expenses were 7% compared to 9%
for the same period of 2003. We expect research and development expenses to rise
as a percentage of sales in subsequent quarters.

Our effective income tax rate for the three months ended
March 31, 2004 was 38%. Income taxes payable or receivable are calculated on a
stand alone basis and are recorded as a payable to or receivable from our
parent, which files a consolidated tax return including our accounts.

Liquidity and Capital Resources

At March 31, 2004, our working capital increased 5%
to $18,328 compared to $17,526 reported at December 31, 2003. This resulted
primarily from increased cash, accounts receivable and inventories partially
offset by higher accounts payable and accrued expenses.

Available bank borrowings were $6,100, all of which were
unused at March 31, 2004. We believe that cash from operations, together with
cash resources and available bank borrowings, will be sufficient to fund working
capital requirements for the next twelve months.

Critical Accounting Policies

A discussion of our critical accounting policies is set
forth in our 2003 Annual Report on Form 10-K, which was filed with the
Securities and Exchange Commission on March 3l, 2004. There were no material
changes in any of our critical accounting estimates or judgments during the
first quarter of 2004.

Business Factors

Because of the variety of factors and uncertainties
affecting our operating results, past financial performance and historical
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 are also negatively impacted by
generally adverse economic conditions throughout the high technology sector. In
particular, our pressure products continue to experience low sales volume due to
the recent 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 technological change and
new product development demands of our customers.

The market for our products is characterized by changing
technology, evolving industry standards, changes in customer needs and new
product introductions. Our future success will depend on our ability to respond
to emerging industry standards, enhance current products, develop new products,
and achieve market acceptance of those products, 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 independent distributors.

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, as was
demonstrated by the failure of two of our distributors during 2001. 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,
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. Also, competitors may develop their own intellectual
property or technologies, obtain their own patents, or challenge the validity
of, or be able to design around, our patents. 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.

We may initiate claims or litigation against other third
parties for infringement of proprietary rights or to establish the validity of
proprietary rights. Similarly, our competitors may initiate claims or litigation
against us alleging infringement of their proprietary rights or improper use of
their intellectual property. Litigation relating to intellectual property to
which we may become a party is subject to numerous risks and uncertainties,
including the risk of counterclaims or other litigation against us, and we may
not be successful in any such litigation.

Our operations have been and may continue to be negatively impacted by
uncertain global economic and political conditions

Our business may suffer as a result of general economic
and political conditions in the U.S. and abroad. In 2002 and 2001, there was a
rapid and severe downturn in the U.S. market and global economy. Whether that
trend will continue is uncertain. This uncertainty has been compounded by recent
terrorist activity, such as the attacks in the U.S. on September 11, 2001, and
the recent military activity in Afghanistan, Iraq and the Middle East.
Additional terrorist acts or acts of war could cause damage or disruption to us
or to our suppliers and our customers. Fears of global recession, war, and
terrorism may continue to have seriously detrimental effects on the U.S. and
global economies. Such conditions could further dampen consumer confidence and
cause our customers to slow or cease spending on our products. If these events
continue, our operations may be negatively impacted.

We are dependent upon suppliers
and outsourced manufacturing, several of which are located outside of the U.S.
Disruption of our access to these supplies and services, or problems with the
quality of supplies or services, could prevent us from filling customer orders
and harm our business.

The principal components of our
products are purchased from outside vendors. We generally buy components under
purchase orders, do not have long-term agreements with our suppliers, and we
generally do not maintain large inventories of components. Any termination of,
or significant disruption of, our relationships with the suppliers of our
product components may prevent us from filling customer orders in a timely
manner which could result in customer dissatisfaction and lost sales.

We rely
on third party manufacturers for subassembly of products and for final assembly,
quality assurance, and testing of some of our products. These outsourcing
arrangements and any future outsourcing arrangements involve numerous risks,
including reduced control over product quality, delivery schedules,
manufacturing yields, and costs.

Our ability to develop and market our products is dependent
upon our retention of certain executive officers and other key personnel.

We are greatly dependent on
the ability to retain key management and technical personnel, and our future
success is highly dependent upon the personal efforts of our management and
technical personnel. The loss of services of any one of them could have a
material adverse effect on our business, financial condition, and results of
operations. Our success will also be dependent in part upon our ability to
attract, retain, and motivate highly skilled employees. We may need to offer
additional compensation or incentives to attract and retain these and other
employees.

If we are unable to
successfully develop our international sales efforts, our results of operations
may suffer.

We have to develop, integrate, and
expand our international distribution networks in an effort to increase
international sales of our products. We may not be successful in developing or
expanding the international distribution network or in marketing and selling
products in foreign markets. If the revenues generated by our international
sales are not adequate to recover the expense of establishing, expanding, and
maintaining an international distribution network, our business, financial
condition, and results of operations could be materially adversely affected. If
international sales become a more significant component of net sales, our
business could become more vulnerable to the risks inherent in doing business
internationally, including:

- Difficulties in managing foreign resellers;
- Longer payment cycles and
problems in collecting accounts receivable;
- The effects of seasonal customer
demand;
- Changes in regulatory
requirements;
- Difficulties in meeting the
requirements of different international product regulations;
- Risks relating to intellectual
property rights;
- Increased expenses due to efforts
to localize our product offerings;
- Export restrictions, tariffs and
other trade barriers;
- Fluctuations in currency exchange
rates; and
- Potentially adverse tax
consequences and political instability.

The existence or occurrence
of any one of these factors could have a material adverse effect on our
business, financial condition, and results of operations.



Item 3. 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 4. CONTROLS AND PROCEDURES.

(a) 	As of the end of the period covered by this
report, our Chief Executive Officer and Chief Financial Officer have concluded
that our disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934) are effective to ensure
that information required to be disclosed by us in reports that we file or
submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules
and forms.

(b) 	There have been no significant changes in our
internal control over financial reporting or in other factors that could
significantly affect internal control over financial reporting subsequent to the
date we carried out our evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.

PART II - OTHER INFORMATION

Items 1 - 5 are not applicable for this
reporting period.



Item 6. EXHIBITS AND REPORTS ON FORM 8-K.

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



|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 24.1 - | Power of Attorney is incorporated by reference to the Registrant's Form 10-K
for the year ended December 31, 2003, Exhibit 24.1.                     
|Exhibit 31     | Section 302 Certification of Chief Executive and Chief Financial Officers                                                                            
|Exhibit 32     | Section 906 Certification of Chief Executive and Chief Financial Officers                                                                            

(b)    A Report on Form 8-K was filed on March 17, 2004 furnishing the Fourth
Quarter Earnings Release of Scientific Technologies Incorporated to the
Securities and Exchange Commission.

---



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

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

|Date: May 14, 2004 |  | /s/Joseph J. Lazzara  
                  Joseph J. Lazzara
                  President and Chief Executive Officer
                  (Principal Executive Officer)
|------------------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Date: May 14, 2004 |  | /s/ Richard O. Faria  
                  Richard O. Faria
                  Vice-President and Chief Financial Officer
                  (Principal Financial Officer)
|------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

---