U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10 - QSB

(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, 2002
                                          --------------

                                       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 0-7441

                           SIERRA MONITOR CORPORATION

        (Exact name of small business issuer as specified in its charter)


         California                                            95-2481914
         (State or other jurisdiction of                       (I.R.S. Employer
         incorporation or organization)                        Identification
                                                               Number)

                                1991 Tarob Court
                           Milpitas, California 95035

              (address and zip code of principal executive offices)

                                 (408) 262-6611
              (Registrant's telephone number, including area code)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
     required to be filed by Section 13 or 15 (d) of the Securities and Exchange
     Act of 1934 during the preceding 12 months (or for such shorter period that
     the registrant was required to file such reports), and (2) has been subject
     to such filing requirements for the past 90 days.

      Yes__X__    No _____

      The number of shares of the issuer's common stock  outstanding,  as of May
8, 2002 was 10,971,546.

      Transitional Small Business Disclosure Format:  Yes ___; No _X_

                                                                    Page 1 of 12
<PAGE>


                          PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                           SIERRA MONITOR CORPORATION
                            Condensed Balance Sheets
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                     March 31,             December 31,
                                                                        2002                   2001
                                                                    -----------            -----------
<S>                                                                 <C>                    <C>
                                   Assets
Current assets:
      Cash and cash equivalents                                     $   397,008            $   772,394
      Trade receivables, less allowance for doubtful accounts         1,780,775              1,500,611
          of $30,276 in 2002 and $28,026 in 2001
      Notes receivable                                                    6,089                  8,258
      Inventories                                                     1,664,205              1,580,959
      Prepaid expenses                                                  101,706                156,785
      Income taxes receivable                                           148,187                148,187
      Deferred income taxes                                             284,460                179,864
                                                                    -----------            -----------

                        Total current assets                          4,382,430              4,347,058

Property and equipment, net                                             287,817                310,622
Deferred income taxes                                                     4,741                  4,741
Other assets                                                            304,392                308,949
                                                                    -----------            -----------

                        Total assets                                $ 4,979,380            $ 4,971,370
                                                                    ===========            ===========

                Liabilities and Shareholders' Equity

Current liabilities:
      Accounts payable                                              $   613,151            $   509,017
      Accrued compensation expenses                                     403,037                346,429
      Other current liabilities                                         136,386                129,518
                                                                    -----------            -----------

                        Total current liabilities                     1,152,574                984,964

Commitments

Shareholders' equity:
      Common stock, $0.001 par value; 20,000,000 shares
      authorized 10,971,546 shares issued and outstanding                10,972                 10,972
      Additional paid-in capital                                      3,151,189              3,151,189
      Retained earnings                                                 673,860                836,043
      Notes receivable from shareholders                                 (9,215)               (11,798)
                                                                    -----------            -----------

                        Total shareholders' equity                    3,826,806              3,986,406
                                                                    -----------            -----------

                        Total liabilities and shareholders' equity  $ 4,979,380            $ 4,971,370
                                                                    ===========            ===========
</TABLE>

See accompanying notes to the condensed financial statements.

                                                                    Page 2 of 12
<PAGE>

                           SIERRA MONITOR CORPORATION

                       Condensed Statements of Operations

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                  For the three months ended
                                                             ------------------------------------
                                                               March 31,               March 31,
                                                                 2002                    2001
                                                             ------------            ------------

<S>                                                          <C>                        <C>
Net sales                                                    $  2,235,632               2,626,298

Cost of goods sold                                                934,226               1,021,180
                                                             ------------            ------------

                  Gross profit                                  1,301,406               1,605,117
                                                             ------------            ------------

Operating expenses
      Research and development                                    425,899                 293,536
      Selling and marketing                                       797,567                 679,190
      General and administrative                                  347,485                 339,046
                                                             ------------            ------------

                                                                1,570,950               1,311,772
                                                             ------------            ------------

                  Income (loss) from operations                  (269,545)                293,346

Interest income                                                       595                  10,742
                                                             ------------            ------------

               Income (loss) before income taxes                 (268,950)                304,088

Income tax expense (benefit)                                     (106,767)                121,712
                                                             ------------            ------------

                Net income (loss)                            $   (162,183)                182,376
                                                             ============            ============

Net income (loss) per share - basic                          $      (0.01)                   0.02
                                                             ============            ============
Net income (loss) per share - diluted                        $      (0.01)                   0.02
                                                             ============            ============

Weighted-average number of shares used in per share
  computations:
         Basic                                                 10,971,546              10,967,588
                                                             ============            ============
         Diluted                                               10,971,546              11,546,624
                                                             ============            ============
</TABLE>

See accompanying notes to the condensed financial statements.

                                                                    Page 3 of 12
<PAGE>

                           SIERRA MONITOR CORPORATION

                       Condensed Statements of Cash Flows

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                      For the three months ended
                                                                                                   ---------------------------------
                                                                                                   March 31,             March 31,
                                                                                                      2002                  2001
                                                                                                   ----------            ----------
<S>                                                                                                <C>                      <C>
Cash flows from operating activities:
       Net income (loss)                                                                           $ (162,183)              182,376
       Adjustments to reconcile net income (loss) to net cash used
       in operating activities:
              Depreciation and amortization                                                            77,629                71,542
              Allowance for doubtful accounts                                                           2,250                 2,250
              Deferred income taxes                                                                  (104,596)                 --
              Change in operating assets and liabilities:
                 Trade receivables                                                                   (282,414)             (116,456)
                 Inventories                                                                          (83,246)             (130,001)
                 Prepaid expenses                                                                      55,079               (57,071)
                 Accounts payable                                                                     104,134                90,550
                 Accrued compensation expenses                                                         56,608               (23,465)
                 Other current liabilities                                                              6,868                 2,594
                 Income taxes payable                                                                    --                (210,490)
                                                                                                   ----------            ----------

                  Net cash used in operating activities                                              (329,871)             (188,171)
                                                                                                   ----------            ----------

Cash flows from investing activities -
       Capital expenditures                                                                           (50,266)              (69,132)
                                                                                                   ----------            ----------

Cash flows from financing activities -
       Repayment of notes receivable                                                                    4,751                 6,319
                                                                                                   ----------            ----------

Net decrease in cash and cash equivalents                                                            (375,386)             (250,984)

Cash and cash equivalents at beginning of period                                                      772,394             1,166,296
                                                                                                   ----------            ----------

Cash and cash equivalents at end of period                                                         $  397,008               915,312
                                                                                                   ==========            ==========


Supplemental cash flow information:
     Cash paid for income taxes                                                                    $    1,398               329,018
                                                                                                   ==========            ==========
</TABLE>

See accompanying notes to the condensed financial statements.

                                                                    Page 4 of 12
<PAGE>

                           SIERRA MONITOR CORPORATION

                   Notes to the Condensed Financial Statements

                                 March 31, 2002

Basis of Presentation

      The unaudited  condensed  financial  statements  have been prepared by the
Company,  pursuant to the rules and  regulations  of the Securities and Exchange
Commission (SEC). Certain information and footnote disclosures normally included
in  financial   statements   prepared  in  accordance  with  generally  accepted
accounting  principles  have  been  omitted  pursuant  to  such  SEC  rules  and
regulations;  nevertheless,  the  Company  believes  that  the  disclosures  are
adequate to make the  information  presented  not  misleading.  These  financial
statements and the notes hereto should be read in conjunction with the financial
statements  and notes thereto  included in the  Company's  Annual Report on Form
10-KSB for the year ended  December 31, 2001 which was filed March 28, 2002.  In
the  opinion  of  the  Company,  all  adjustments,  including  normal  recurring
adjustments necessary to present fairly the financial position of Sierra Monitor
Corporation  as of March 31,  2002 and the  results of its  operations  and cash
flows for the quarter then ended, have been included.  The results of operations
for the interim  period are not  necessarily  indicative  of the results for the
full year.

Summary of Business

      Sierra Monitor  Corporation  (the "Company") was founded in 1978 to design
and develop  hazardous gas  monitoring  devices for  protection of personnel and
facilities in industrial work places. In addition to gas monitoring systems, the
Company  also  manufactures  microprocessor-based  systems  used to monitor  and
control environmental conditions in small, remote,  structures used for cellular
and hard wire  telephone  equipment.  The Company  also  manufactures  a line of
products known as  Communications  Bridges.  These products  provide a means for
many industrial  instruments to communicate  with each other even when they have
different  communications  protocol.  Communications  Bridges are sold under the
name FieldServer by the FieldServer Technologies Division of the Company.

      Gas monitoring products  manufactured by the Company are sold primarily to
oil and gas  drilling  and  refining  companies,  chemical  plants,  waste-water
treatment plants,  semiconductor  industry and other  applications which involve
the handling or generation of hazardous gases.  Environment Controllers are sold
to telecommunications companies and their suppliers.  FieldServers are typically
sold to  integration  companies  that  service  building  and  plant  automation
projects.

Accounting Policies

      a) Revenue Recognition

      Revenue related to gas detection and monitoring devices is recognized when
all of the  following  criteria  have been met:  (1)  persuasive  evidence of an
arrangement  exists;  (2) the fee for the arrangement is fixed or  determinable;
(3) delivery has occurred or services have been rendered; and (4) collectibility
is reasonably assured. Revenue from government contracts is recognized utilizing
the  percentage-of-completion  method.  Contract  revenues  are  recorded as the
related  costs  (including  certain  general and  administrative  costs),  which
contribute to contract performance, are incurred.

      The Company recognizes revenue from the sale of FieldServers in accordance
with Statement of Position (SOP) 97-2, Software Revenue Recognition, as amended.
Revenue is  recognized  upon  shipment

                                                                    Page 5 of 12
<PAGE>

of the product  when all of the  following  criteria  have been met:  persuasive
evidence of an arrangement  exists;  delivery has occurred;  the fee is fixed or
determinable; and collectibility is probable.

      b) Reclassifications

      Certain  amounts  presented  in the  financial  statements  for  the  2001
comparative  period have been  reclassified  to conform to the current  period's
presentation.

      c) Recent Accounting Standards

      In July 2001,  the  Financial  Accounting  Standard  Board  (FASB)  issued
Statement  of  Financial   Accounting   Standards   (SFAS)  No.  141,   Business
Combinations,  and SFAS No. 142, Goodwill and Other Intangible Assets.  SFAS No.
141 requires  that the purchase  method of  accounting  be used for all business
combinations  initiated  or  completed  after June 30,  2001.  SFAS No. 141 also
specifies  criteria that intangible  assets  acquired in a business  combination
must meet to be recognized and reported  separately from goodwill.  SFAS No. 142
requires that goodwill and other intangible  assets with indefinite useful lives
no longer be amortized,  but instead be tested for  impairment at least annually
in  accordance  with the  provisions of SFAS No. 142. SFAS No. 142 also requires
that  intangible  assets with  definite  useful  lives be  amortized  over their
respective  estimated useful lives, and be reviewed for impairment in accordance
with SFAS No. 121,  Accounting for the  Impairment of Long-Lived  Assets and for
Long-Lived Assets to be Disposed Of.

      The Company  adopted the provisions of SFAS No. 141 as of July 1, 2001 and
SFAS No. 142  effective  January 1, 2002. As of the date of adoption of SFAS No.
142, the Company had no goodwill  and had  unamortized  identifiable  intangible
assets of $214,480, all of which were subject to the provisions of SFAS No. 142.

      SFAS No. 141  requires,  upon  adoption of SFAS No. 142,  that the Company
evaluate its existing  intangibles  assets and  goodwill  that were  acquired in
prior purchase business combinations to make any necessary  reclassifications in
order to conform  with the new  criteria in SFAS No.  141; no  reclassifications
were deemed necessary. Upon adoption of SFAS No. 142, the Company reassessed the
useful lives and residual  values of all intangible  assets acquired in purchase
business  combinations,  and no significant  changes were deemed necessary.  The
Company  was also  required  to test its  intangible  assets for  impairment  in
accordance  with the provisions of SFAS No. 142 within the first interim period.
No impairment loss was deemed necessary  related to intangible assets during the
first interim period.

      The  Company  has  intangible  assets  of  $187,266,  net  of  accumulated
amortization  of $517,081,  as of March 31, 2002.  Amortization  expense for the
first  quarter of fiscal 2002 was $27,220.  The Company  expects that its annual
amortization expense will be approximately $110,000.

      In  August  2001,  the FASB  issued  SFAS No.  143,  Accounting  for Asset
Retirement  Obligations.   SFAS  No.  143  addresses  financial  accounting  and
reporting for obligations  associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. The purpose of SFAS No. 143 is
to develop  consistent  accounting of asset  retirement  obligations and related
costs in the financial  statements and to provide more information  about future
cash outflows,  leverage, and liquidity regarding retirement obligations and the
gross investment in long-lived  assets.  SFAS No. 143 is effective for financial
statements issued for fiscal years beginning after June 15, 2002. The Company is
required to adopt SFAS No. 143 effective  January 1, 2003.  The Company does not
anticipate  that the adoption of SFAS No. 143 will have a material effect on its
financial statements.

                                                                    Page 6 of 12
<PAGE>

      In  October  2001,  the FASB  issued  SFAS  No.  144,  Accounting  for the
Impairment or Disposal of Long-Lived  Assets.  SFAS No. 144 addresses  financial
accounting  and reporting for the  impairment or disposal of long-lived  assets.
SFAS No. 144 requires that long-lived assets be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be  recoverable.  The  Company  adopted the  provisions  of SFAS No. 144
effective  January 1, 2002. The adoption of SFAS No. 144 did not have a material
effect on the Company's financial statements.

Inventories

A summary of inventories follows:
                                                  March 31,         December 31,
                                                    2002                2001
                                                 ----------          ----------

               Raw Materials                     $  770,900          $  712,891

               Work-in-process                      583,937             575,150

               Finished goods                       309,368             292,918
                                                 ----------          ----------

                                                 $1,664,205          $1,580,959
                                                 ==========          ==========

Net Income (loss) per share

      Basic  earnings  per share (EPS) is computed  using the  weighted  average
number of common shares outstanding  during the period.  Diluted EPS is computed
using the weighted-average number of common and dilutive potential common shares
outstanding  during the period.  Dilutive  potential  common  shares  consist of
common stock  issuable upon  exercise of stock options using the treasury  stock
method.  No  adjustments  to  earnings  were  made  for  purposes  of per  share
calculations.

      The Company has reported a net loss for the three month period ended March
31, 2002. As a result  394,444  shares of common stock issuable upon exercise of
stock options have been excluded from the  calculation of diluted loss per share
for the three month  period.  In the same  period an  additional  611,000  stock
options were  excluded  from the  calculation  of diluted  earnings  because the
inclusion of such stock options would be antidilutive  due to the exercise price
being higher than the stock price used in the EPS computations.

      The following is a reconciliation of the shares used in the computation of
basic  and  diluted  EPS  for  the  periods  ended  March  31,  2002  and  2001,
respectively:
<TABLE>
<CAPTION>
                                                                          2002             2001
                                                                          ----             ----
<S>                                                                    <C>              <C>
      Basic EPS - weighted-average number of common shares
        outstanding                                                    10,971,546       10,967,588

      Effect of dilutive potential common shares - stock options
        outstanding                                                          --            579,036

      Diluted EPS - weighted-average of common shares and
        potential common shares outstanding                            10,971,546       11,546,624
</TABLE>

Comprehensive Income

      The Company has no significant  components of other  comprehensive  income
and,  accordingly,  comprehensive  income  is the  same  as net  income  for all
periods.

                                                                    Page 7 of 12
<PAGE>

Segment Information

      The  Company  operates in one  segment,  industrial  instrumentation.  The
Company's chief operating decision maker, the Chief Executive Officer, evaluates
the performance of the Company and makes operating  decisions based on financial
data consistent with the presentation in the accompanying financial statements.

                                                                    Page 8 of 12
<PAGE>

      This  report  contains  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.  Actual  results  could  differ  materially  from  those
projected in the forward-looking  statements as a result of the risk factors set
forth in, or  incorporated  by  reference  into this  report.  The  Company  has
attempted to identify  forward-looking  statements  in this report by placing an
asterisk (*) at the end of sentences or paragraphs containing such material.

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

Results of Operations

      For the three months ended March 31, 2002 Sierra Monitor  Corporation (the
"Company") reported net sales of $2,235,632 compared to $2,626,298 for the three
months  ended March 31, 2001.  The results for the first  quarter of fiscal 2002
represent a 15% decrease from the same period in the prior year.

      The sales decline is primarily the result of changes in the market for the
Company's  environment  controllers  used  by the  telecommunications  industry.
During the approximate two year period through the middle of calendar year 2001,
major  telephone  companies  undertook  extensive  infrastructure  expansion  to
deliver broadband Internet capacity to their customers. The expansion was slowed
dramatically in the second half of 2001 resulting in substantial inventory build
up throughout the  telecommunications  equipment supply chain.  Sierra Monitor's
customers,  manufacturers of remote telecommunications  structures,  experienced
significant inventory build up and, as a result, cancelled or delayed deliveries
of our  products.  As a  result  of these  actions  the  Company's  sales to the
telecommunications  industry  in the first  quarter  of 2002 were  approximately
$900,000 lower than in the first quarter of 2001.  Improvements  in sales of gas
detection  products and FieldServers  offset a portion of the lower  environment
controller sales.

      Gross  profit  for the  three  month  period  ended  March  31,  2002  was
$1,301,406  compared to $1,605,117  in the same period in the previous  year. In
the current period, the gross margin was approximately 58% of net sales compared
to 61% of net sales in the same period in the  previous  year.  Gross margin can
vary due to the mix of  products  shipped in a given  period  and the  discounts
which may be applied to those shipments.  In the first quarter of 2002, compared
with the first quarter of 2001, the Company  experienced a substantial change in
the mix of product  shipments and the level of  discounting,  resulting in lower
gross margins to the Company.

      Expenses  for  research  and   development,   which  include  new  product
development and engineering to sustain existing products,  were $425,899, or 19%
of net sales,  for the three month period ended March 31,  2002,  compared  with
$293,536,  or 11% of net sales,  in the  comparable  period in 2001.  The higher
research and  development  expenses were  undertaken  in a continuing  effort to
increase the number of software  drivers  available for sale in FieldServers and
to  introduce  a new  product  in the  telecommunications  industry.  The higher
percentage  of net sales is a result of the  shortfall  of revenues  relative to
budget  expectations.  Subsequent to the end of the first  quarter of 2002,  the
Company  has taken  actions  to reduce  the level of  research  and  development
expenses. These actions have included reduction of employees,  salary reductions
and re-negotiated rates for outside contractors.

     Selling and  marketing  expenses for the three month period ended March 31,
2002 were  $797,567  or 36% of net sales,  compared  to  $679,190  or 26% of net
sales, in the same period in the prior year. The increase in selling expenses is

                                                                    Page 9 of 12
<PAGE>

due,  primarily,  to higher salary  expense and higher  commission  expenses for
independent  sales  representatives.  The Company has added  professional  sales
staff  including  a Vice  President  of Sales and a Regional  Manager  for Latin
America.  During the three month period ended March 31, 2002 the mix of products
sold  included  large  gas  detection  projects  for which  full  representative
commissions were paid resulting in higher than normal commission expenses.

      General and  administrative  expenses  for the first  quarter of 2002 were
$347,485  or 16% of net sales  compared to $339,046 or 13% in the same period in
the prior year.  In the current  quarter  lower  salary and wage  expenses  were
offset by increases in costs for rent and liability insurance.

      Net loss for the three month  period  ended March 31, 2002 was $162,183 or
approximately  7% of  net  sales,  compared  with  net  income  of  $182,376  or
approximately  7% of net sales for the same  period in the prior  year.  The net
loss is the result of significantly lower sales without corresponding reductions
in expenses.  Subsequent  to the end of the first  quarter the Company has taken
actions to reduce  operating  costs through  reduction of  employees,  temporary
salary reductions and other short term cost reductions.

Liquidity and Capital Resources

      During the period  ended March 31, 2002,  the  Company's  working  capital
decreased by $132,238  compared to December  31,  2001.  The decrease in working
capital is primarily due to the net loss generated in the quarter.  At March 31,
2002, cash and cash  equivalents,  totaled $397,008 a decrease of $375,386.  Net
trade  receivables,  a  component  of working  capital,  increased  by  $280,164
compared to December 31, 2001. Likewise, inventories increased by $83,246 during
the quarter.

      The Company has identified the lower cash level,  higher receivables level
and increased  inventories  as  challenges  during a period of reduced sales and
lack of  profitability.  Specific  actions  have  been put in  place to  improve
collections  of  accounts  and  to  control,  and  lower,  inventory  levels  as
strategies to improve the cash position. In the current fiscal year, the Company
has not utilized  its  $500,000  line of credit with its  commercial  bank,  but
anticipates utilizing it during the second quarter.*

Certain Factors That May Affect Future Results

      The  Company's  future  operating  results  may be affected by a number of
factors,  including  general  economic  conditions  in both foreign and domestic
markets,  cyclical factors affecting the Company's  industry,  lack of growth in
the Company's  end-markets,  and the Company's ability to develop,  manufacture,
and sell both new and existing products at a profitable yet competitive price.

      The industry in which the Company  competes is highly  competitive and the
Company  expects  such  competition  to  continue  in the  future.  Most  of the
Company's competitors are larger than the Company and have substantially greater
financial,  technical,  marketing and manufacturing resources. While the Company
has invested in new products,  there can be no assurance that it can continue to
introduce  new products on a timely  basis or that certain of its products  will
not be rendered non-competitive or obsolete by its competitors.

      Our  operations  are  concentrated  in  a  single  building  in  Milpitas,
California,  and a small assembly plant in Fort Myers,  Florida.  Our operations
could be interrupted by fire, earthquake, power loss, telecommunications failure
and other events beyond our control. We do not have a detailed disaster recovery
plan.  Our  facilities  in  California  are  potentially  subject to  electrical
blackouts as a consequence of a shortage of available  electrical  power. In the
event these blackouts  continue or increase in severity,

                                                                   Page 10 of 12
<PAGE>

they could  disrupt our  operations.  In  addition,  we do not carry  sufficient
business  interruption  insurance to compensate us for losses that may occur and
any losses or damages incurred by us could have a material adverse effect on our
business.

      The Company's short term liquidity is dependent upon our ability to reduce
collection cycles, reduce inventories and manage expenses and cash distribution.
We must also renew or expand our bank line of credit in June,  2002 under  terms
similar to the current terms of the line of credit.

Critical Accounting Policies.

      In December 2001, the SEC requested that all registrants  list their three
to five most "critical  accounting policies" in the MD&A. The SEC indicated that
a "critical  accounting  policy" is one which is both important to the portrayal
of the Company's financial condition and results and requires  management's most
difficult,  subjective  or complex  judgments,  often as a result of the need to
make  estimates  about the effect of matters that are inherently  uncertain.  We
believe that our following  accounting policies fit this definition:

      a) Revenue Recognition

      Our net sales  consist of  revenue  from  sales of  products  net of trade
discounts  and  allowances.   We  generally  obtain  oral  or  written  purchase
authorizations  from our  customers  for a  specified  amount  of  product  at a
specified price and consider  delivery to have occurred at the time of shipment.
We  recognize  revenue  when  evidence  of an  arrangement  exists,  contractual
obligations have been satisfied, title and risk of loss have been transferred to
the customer and collection of the resulting  receivable is reasonably  assured.
We recognize  revenue from the sale of FieldServers in accordance with Statement
of Position (SOP) 97-2, Software Revenue Recognition,  as amended.  Management's
ability  to  determine  that  such  conditions  have been met is based on market
experience and judgment of the specific economic and contractual conditions that
exist at the time of shipment.  The Company does not enter into multiple-element
arrangements  related to the sales of FieldServers.

      b) Accounts Receivable and Related Allowances

      Our domestic  sales are  generally  made on an open  account  basis unless
specific  experience  or  knowledge  of the  customer's  potential  inability or
unwillingness  to  meet  the  payment  terms  dictate  secured   payments.   Our
international  sales are generally made based on secure payments  including cash
wire  advance  payments and letters of credit.  International  sales are made on
open account terms where sufficient  historical  experience justifies the credit
risks  involved.  In many of our larger  sales,  the  customers  are  frequently
construction contractors who are in need of our field services to complete their
work and obtain  payment.  Management's  ability to manage the credit  terms and
take  advantage  of the leverage of the need for our services is critical to the
effective  application of credit terms and  minimization of accounts  receivable
losses.

      We maintain an  allowances  for doubtful  accounts  which is analyzed on a
periodic  basis  to  insure  that it is  adequate  to the  best of  management's
knowledge.  We believe that we have  demonstrated the ability to make reasonable
and reliable  estimates of allowances for doubtful accounts based on significant
historical experience.

                                                                   Page 11 of 12
<PAGE>

      c) Inventories

      Inventories  are  stated  at the  lower  of cost  or  market,  cost  being
determined on the  first-in,  first-out  method.  The Company uses an Enterprise
Requirements  Planning  ("ERP")  software  system which provides data upon which
management can rely to determine  inventory  trends and identify  excesses.  The
carrying  value of  inventory  is reduced to market for slow moving and obsolete
items based on historical experience and current product demand. We evaluate the
carrying value of inventory quarterly. The adequacy of these carrying amounts is
dependent  upon  management's  ability to forecast  demands  accurately,  manage
product changes efficiently, and interpret the data provided by the ERP system.


                           PART II: OTHER INFORMATION

Item 1.   Legal Proceedings - N/A

Item 2.   Changes in Securities - N/A

Item 3.   Defaults Upon Senior Securities - N/A

Item 4.   Submission of Matters to a Vote of Security Holders - N/A

Item 5.   Other Information - N/A

Item 6.   Exhibits and Reports on Form S-8

               (a)   Exhibits.
                          None.

               (b)   Reports on Form S-8.
                          1996 Stock Plan as amended. Filed with the SEC on
                          March 29, 2002.


                                    SIGNATURE

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.


                                                   SIERRA MONITOR CORPORATION
                                                   ----------------------------
                                                   Registrant

Date:        May 9, 2002                    By:    /s/ Gordon R. Arnold
                                                   ----------------------------
                                                   Gordon R. Arnold
                                                   President
                                                   Chief Financial Officer

                                                                   Page 12 of 12