SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-Q

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(MARK ONE)

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

For the quarterly period ended September 30, 2003 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 October 31, 2003 was 9,705,664 shares.









SCIENTIFIC TECHNOLOGIES INCORPORATED

                           Quarter Ended September 30, 2003
                                     INDEX



|PART I.   Financial Information                                                                                                | Page No.
|------------------------------------------------------------------------------------------------------------------------------ | --------
|                                                                                                                               |         
|Item 1.   Financial Statements
                  (unaudited):                                                                  |         
|                                                                                                                               |         
|Condensed Consolidated Balance Sheets as of
          
     September 30, 2003 and December 31, 2002                           | **      
|                                                                                                                               |         
|Condensed Consolidated Statements of Operations for the
          
    Three and Nine Months ended September 30, 2003 and 2002 | **      
|                                                                                                                               |         
|Condensed Consolidated Statements of Cash Flows for the
          
    Nine Months ended September 30, 2003 and 2002           | **      
|                                                                                                                               |         
|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                                                                                                                     | **      

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PART 1 - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

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SCIENTIFIC TECHNOLOGIES INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited, in thousands, except for per share data)

|                               |               |               | 
|------------------------------ | ------------- | ------------- | 
|Assets                         | Sep. 30, 2003 | Dec. 31, 2002
|Current assets:                |               |              
|Cash and cash equivalents      | $ 1,857       | $ 2,620      
|Accounts receivable, net       | 8,201         | 7,636        
|Inventories                    | 8,807         | 8,719        
|Deferred income taxes          | 2,380         | 2,380        
|Receivable from Parent         | 1,524         | 384          
|Other current assets           | 353           | 527          
|Total current assets           | 23,122        | 22,266       
|                               |               |              
|Property and equipment, net    | 3,942         | 3,725        
|Goodwill and intangible assets | 10,640        | 11,593       
|Other assets                   | 309           | 308          
|Total assets                   | $38,013       | $37,892      

Liabilities and Shareholders' Equity

|Current liabilities:                         |        
|-------------------------------------------- | -------
|Accounts payable                             | $ 2,676
|Accrued expenses                             | 3,127  
|Current portion of capital lease with Parent | 68     
|Total current liabilities                    | 5,871  
|                                             |        
|Capital lease with Parent                    | 181    
|Deferred income taxes                        | 2,064  
|Total liabilities                            | 8,116  

Shareholders' equity:

|Common stock; $.001 par value; 100,000 shares
authorized; 9,706 and 9,687 shares issued and |        
|------------------------------------------------------------------------------------------- | -------
|outstanding                                                                                 | 10     
|Additional paid-in capital                                                                  | 5,776  
|Retained earnings                                                                           | 24,111 
|Total shareholders' equity                                                                  | 29,897 
|Total liabilities and shareholders' equity                                                  | $38,013
|                                                                                            |        
|                                                                                            |        

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

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SCIENTIFIC TECHNOLOGIES INCORPORATED

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited, in thousands, except per share data)



|                                                                  | For the three months ended
|----------------------------------------------------------------- | --------------------------
|                                                                  | Sep. 30, 2003             
|                                                                  |                           
|Sales                                                             | $14,001                   
|                                                                  |                           
|Cost of sales                                                     | 8,719                     
|                                                                  |                           
|Gross profit                                                      | 5,282                     
|                                                                  |                           
|Operating expenses:                                               |                           
|Selling, general and administrative                               | 4,454                     
|Research and development                                          | 1,066                     
|Amortization of intangible assets                                 | 170                       
|Total operating expenses                                          | 5,690                     
|                                                                  |                           
|Income (loss) from operations                                     | (408)                     
|                                                                  |                           
|Interest and other income, net                                    | 11                        
|                                                                  |                           
|Income (loss) before income taxes                                 | (397)                     
|                                                                  |                           
|Provision for (benefit from) income taxes                         | (151)                     
|                                                                  |                           
|Net income (loss)                                                 | $(246)                    
|                                                                  |                           
|Net income (loss) per share:                                      |                           
|Basic and diluted                                                 | $ (0.03)                  
|                                                                  |                           
|Shares used to compute net income (loss) per share:
Basic
Diluted | 9,705
9,705               
|                                                                  |                           

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

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SCIENTIFIC TECHNOLOGIES INCORPORATED

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited, in thousands, except per share data)

|                                                           | For the nine months ended
|---------------------------------------------------------- | -------------------------
|                                                           | Sep. 30, 2003            
|                                                           |                          
|Sales                                                      | $41,233                  
|                                                           |                          
|Cost of sales                                              | 24,260                   
|                                                           |                          
|Gross profit                                               | 16,973                   
|                                                           |                          
|Operating expenses:                                        |                          
|Selling, general and administrative                        | 13,041                   
|Research and development                                   | 3,394                    
|Amortization of intangible assets                          | 505                      
|Total operating expenses                                   | 16,940                   
|                                                           |                          
|Income from operations                                     | 33                       
|                                                           |                          
|Interest and other income, net                             | 50                       
|                                                           |                          
|Income before income taxes                                 | 83                       
|                                                           |                          
|Provision for income taxes                                 | 31                       
|                                                           |                          
|Net income                                                 | $52                      
|                                                           |                          
|Net income per share:                                      |                          
|Basic and diluted                                          | $ 0.01                   
|                                                           |                          
|Shares used to compute net income per share:
Basic
Diluted | 9,699
9,766              
|                                                           |                          

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

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SCIENTIFIC TECHNOLOGIES INCORPORATED

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited, in thousands)



|                                                 | For the nine months ended
|------------------------------------------------ | -------------------------
|                                                 | Sep. 30, 2003            
|                                                 |                          
|Cash flows from operating activities             |                          
|Net income                                       | $ 52                     
|Adjustments to reconcile net income to cash      |                          
|Provided by operating activities:                |                          
|Depreciation and amortization                    | 2,010                    
|Changes in assets and liabilities:               |                          
|Accounts receivable                              | (565)                    
|Inventories                                      | (88)                     
|Receivable from Parent                           | (1,140)                  
|Other assets, current and non-current            | 173                      
|Accounts payable                                 | (266)                    
|Accrued expenses                                 | 291                      
|Cash flows provided by operating activities      | 467                      
|                                                 |                          
|Cash flows from investing activities             |                          
|Purchase of property and equipment               | (1,274)                  
|Cash flows used in investing activities          | (1,274)                  
|                                                 |                          
|Cash flows from financing activities             |                          
|Repayment of capital lease with Parent           | (51)                     
|Issuance (repurchase) of common stock            | 95                       
|Cash flows provided by financing activities      | 44                       
|                                                 |                          
|Change in cash and cash equivalents              | (763)                    
|                                                 |                          
|Cash and cash equivalents at beginning of period | 2,620                    
|Cash and cash equivalents at end of period       | $1,857                   



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

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SCIENTIFIC TECHNOLOGIES INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. INTERIM FINANCIAL STATEMENTS

The accompanying condensed consolidated financial
statements as of September 30, 2003 and for the three and nine months ended
September 30, 2003 and 2002 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 2002 Annual Report on Form 10-K.

Recent Accounting Pronouncements

In November 2002, the Emerging Issues Task Force, or EITF,
reached a consensus on Issue No. 00-21, "Revenue Arrangements with Multiple
Deliverables." EITF Issue No. 00-21 provides guidance on how to account for
arrangements that involve the delivery or performance of multiple products,
services and/or rights to use assets. The provisions of EITF Issue No. 00-21
will apply to revenue arrangements entered into in fiscal periods beginning
after June 15, 2003. The Company believes that the adoption of this standard
will not have a material impact on its financial condition, results of
operations or cash flows.

In January 2003, the Financial Accounting Standards Board, or
FASB, issued Interpretation No. 46 ("FIN No. 46") "Consolidation of
Variable Interest Entities." Until this interpretation, a company generally
included another entity in its consolidated financial statements only if it
controlled the entity through voting interests. FIN No. 46 requires a
variable interest entity to be consolidated by a company if that company is
subject to a majority of the risk of loss from the variable interest entity's
activities or entitled to receive a majority of the entity's residual returns.
The Company believes that the adoption of this standard will not have a material
impact on its financial condition, results of operations or cash flows.

In May 2003, the FASB issued Statement of Financial
Accounting Standards, or SFAS, No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity". SFAS No. 150
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. SFAS
No. 150 requires that an issuer classify a financial instrument that is within
its scope as a liability (or an asset in some circumstances). SFAS No. 150 is
effective for financial instruments entered into or modified after May 31, 2003,
and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003. The Company believes that the
adoption of this standard will not have a material impact on its financial
condition, results of operations or cash flows.

2. STOCK-BASED COMPENSATION

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
(loss) and net income (loss) 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 its stock-based awards (in thousands, except per share
amounts).



|                                                                                                       | Three Months Ended September 30, | 
|------------------------------------------------------------------------------------------------------ | -------------------------------- | 
|                                                                                                       |                                  | 
|                                                                                                       | 2003                             | 
|Net income (loss), as reported                                                                         | $ (246)                          | 
|Add: Stock-based employee compensation expense
included in reported net income (loss)                  | -                                | 
|Deduct: Stock-based employee compensation expense
determined under fair value based method, net of tax | 26                               | 
|Pro forma net income (loss)                                                                            | $(272)                           | 
|                                                                                                       |                                  | 
|Net income (loss) per share - basic and
diluted:                                                       |                                  | 
|As reported                                                                                            | $(0.03)                          | 
|Pro forma                                                                                              | $(0.03)                          | 
|                                                                                                       |                                  | 
|                                                                                                       | Nine Months Ended September 30,  | 
|                                                                                                       | 2003                             | 
|Net income, as reported                                                                                | $ 52                             | 
|Add: Stock-based employee compensation expense
included in reported net income                         | -                                | 
|Deduct: Stock-based employee compensation expense
determined under fair value based method, net of tax | 71                               | 
|Pro forma net income (loss)                                                                            | $(19)                            | 
|                                                                                                       |                                  | 
|Net income (loss) per share - basic and
diluted:                                                       |                                  | 
|As reported                                                                                            | $0.01                            | 
|Pro forma                                                                                              | $(0.01)                          | 
|                                                                                                       |                                  | 

3. INVENTORIES

Inventories consist of the following (In thousands):

|                | Sep. 30, 2003 | Dec. 31, 2002
|--------------- | ------------- | -------------
|Raw materials   | $4,654        | $4,501       
|Subassemblies   | 1,253         | 1,016        
|Work in process | 776           | 1,043        
|Finished goods  | 2,124         | 2,159        
|                | $8,807        | $8,719       
|                |               |              

4. NET INCOME (LOSS) PER SHARE

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



|                                                  | (In thousands) |       
|------------------------------------------------- | -------------- | ------
|                                                  | Income (loss)  | Shares
|Three months ended September 30, 2003             |                |       
|Basic and dilutive loss per share calculation     | $ (246)        | 9,705 
|Three months ended September 30, 2002             |                |       
|Basic earnings per share calculation              | $ 348          | 9,671 
|Effect of dilutive securities
      Stock options |                | 1     
|Diluted earnings per share calculation            | $ 348          | 9,672 
|Nine months ended September 30, 2003              |                |       
|Basic earnings per share calculation              | $  52          | 9,699 
|Effect of dilutive securities
      Stock options |                | 67    
|Diluted earnings per share calculation            | $ 52           | 9,766 
|Nine months ended September 30, 2002              |                |       
|Basic earnings per share calculation              | $  284         | 9,673 
|Effect of dilutive securities
      Stock options |                | 2     
|Diluted earnings per share calculation            | $ 284          | 9,675 

5. COMPREHENSIVE INCOME (LOSS)

For the three and nine months ended September 30
,2003 and 2002, there are no significant differences between net
income (loss) and comprehensive income (loss).

6. SEGMENT REPORTING AND OTHER INFORMATION

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



|                       | Three months ended
|---------------------- | ------------------
|                       | September 30,     
|Safety Products        | 2003              
|Sales                  | $11,861           
|Group operating profit | 107               
|                       |                   
|Automation Products    |                   
|Sales                  | $ 2,140           
|Group operating loss   | (515)             
|                       |                   
|                       | Nine months ended 
|                       | September 30,     
|Safety Products        | 2003              
|Sales                  | $34,792           
|Group operating profit | 1,455             
|                       |                   
|Automation Products    |                   
|Sales                  | $ 6,441           
|Group operating loss   | (1,422)           
|                       |                   
|                       | At                
|                       | Sep. 30           
|Total Assets           | 2003              
|Safety Products        | $32,887           
|Automation Products    | 5,126             
|Total                  | $38,013           

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 15% of total sales in the three and
nine months ended September 30, 2003 and 2002. We have experienced an increase
in our international sales in the first nine months of 2003.

7. 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):

For the three months ended September 30, 2003

|Warranty accrual at July 1, 2003       | $228
|-------------------------------------- | ----
|Accruals for warranties issued         | 35  
|Expenses incurred                      | (41)
|Warranty accrual at September 30, 2003 | $222

For the nine months ended September 30, 2003

|Warranty accrual at January 1, 2003    | $241 
|-------------------------------------- | -----
|Accruals for warranties issued         | 131  
|Expenses incurred                      | (150)
|Warranty accrual at September 30, 2003 | $222 

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 Exchange 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 September 30,
2003 increased 7% to $14,001 from $13,034 in the comparable period in 2002.
Sales for the nine months ended September 30, 2003 increased 11% to $41,233 from
$37,092 in the same period in 2002. The Safety Products Group sales grew 8% and
12% for the three and nine months ended September 30, 2003. These increases
resulted from increased shipments of safety light curtains by the Optical Sensor
Division, and higher project revenue from the Machine Services Division. The
Automation Products Group sales grew 4% and 9% for the three and nine months
ended September 30, 2003, compared to the same periods in 2002. This was the
result of increased shipments of ultrasonic and level sensing products,
offsetting lower pressure product sales.



Gross margin as a percentage of sales declined to
38% for the three months ended September 30, 2003 compared to 44% for the
comparable period in 2002. Year to date gross margin declined to 41% compared to
44% of sales in the first nine months of 2002. Our third quarter and nine month
gross margins were negatively impacted by cost overruns associated with certain
projects at MSD, the write down of inventory as a result of the bankruptcy
filing by a customerandcosts relating to the
discontinuance of a sensor product line. Also, during the second and third
quarters of 2003 we experienced a change in the mix of products sold by both
groups to products bearing a higher relative cost of sales. In addition, service
revenue from our Machine Services Division (MSD), which carries a lower gross
margin than our other divisions, represented a larger proportionate share of our
total sales in 2003 compared to 2002.

Selling, general and administrative expenses for the
three and nine months ended September 30, 2003 increased 12% and 13% to $4,454
and $13,211 from $3,986 and $11,716 in the same periods of 2002. This was the
result of increased costs associated with our increased revenue, costs related
to the relocation and combining of our Tulare, California operations with our
current facility in Logan, Utah and increased premiums on our business
insurance. As a percentage of sales for the three and nine month periods ended
September 30, 2003, selling, general and administrative expenses were constant
at 32% compared to 31% and 32% for the comparable 2002 periods,
respectively.

Research and development expenses for the second quarter
increased by 1% to $1,066 from $1,058 during the same 2002 period and declined
4% for the first nine months of 2003 to $3,394 from $3,548 in the comparable
2002 period. This decline was due primarily to reduced consulting expenses. As a
percentage of sales for the three and nine months ended September 30, 2003,
research and development expenses were constant at 8% compared to 8% and 10% for
the same periods of 2002. We expect to continue our emphasis on new product
development, and as such, these expenses may fluctuate in the future, depending
on the timing of our development projects.

Intercompany transactions between our parent company and
us include charges to our parent for management services provided by us, other
cash transfers and expenses paid on behalf of our parent.

Liquidity and Capital Resources

At September 30, 2003, our working capital increased
5% to $17,251 compared to $16,428 reported at December 31, 2002, as a result of
an increase in accounts receivable of $565, an increase in receivable from
Parent of $1,140 and a decrease in accounts payable of $266, offset by a
decrease in cash balances of $763 and an increase accrued expenses of $291. We
have certain operating lease obligations expiring in 2005 through 2010. (See our
Annual Report on Form 10-K for the year ended December 31, 2002). Purchases of
property, plant and equipment increased by $101 in the nine months ended
September 30, 2003 as compared to the same period in 2002.

Available bank borrowings were $6,100, all of which were
unused at September 30, 2003. 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 2002 Annual Report on Form 10-K, which was filed with the
Securities and Exchange Commission on March 3l, 2003. There were no material
changes in any of our critical accounting estimates or judgments during the
first nine months of 2003.

Business Factors

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 purchases of complementary third party
products with which our products are sold, the mix of products sold and the
timing of operating expenditures. Our operating results have been, and could
continue to benegatively impacted by generally
adverse economic conditions throughout the high technology sector. In
particular, the relocation of our PSI-Tronix subsidiary may prove to be more
costly than anticipated or may not result in the expected benefits, and its
continuing decreases in sales due to the current market conditions in the
semiconductor industry could negatively effect our operating results.

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 indicators 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 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 be
assured 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 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

For qualitative and quantitative disclosures about market
risks affecting us, see Item 7A "Quantitative Disclosure About Market Risk" of
our Annual Report on Form 10-K for the year ended December 31, 2002. Our
exposure to market risk has not changed materially since December 31,
2002.



Item 4. CONTROLS AND PROCEDURES.

(a)	As of the end of the period covered by this
quarterly report on Form 10-Q, our management evaluated, under the supervision
and with the participation of our officers performing the functions of Chief
Executive Officer and Chief Financial Officer, the effectiveness of our
disclosure controls and procedures. Based on this evaluation, our officers
performing the functions of Chief Executive Officer and Chief Financial Officer
have concluded that our disclosure controls and procedures are effective to
ensure that information we are required to disclose in reports that we file or
submit under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in Securities and
Exchange Commission rules and forms.

(b) There was no change in our internal control over
financial reporting that occurred during the period covered by this quarterly
report on Form 10-Q that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.

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, 2002, 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 August 11, 2003 furnishing the Second
Quarter Earnings Release of Scientific Technologies Incorporated to the
Securities and Exchange Commission.

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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: November 14, 2003 |  | /s/Joseph J. Lazzara  
                  Joseph J. Lazzara
                  President and Chief Executive Officer
                  (Principal Executive Officer)
|----------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Date: November 14, 2003 |  | /s/ Richard O. Faria  
                  Richard O. Faria
                  Vice-President and Chief Financial Officer
                  (Principal Financial Officer)
|----------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

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