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, 1998 .

                                       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 12,
1997 was 10,566,263.

Transitional Small Business Disclosure Format: Yes     No X
                                                   ---   ---
                                                                     Page 1 of 9
<PAGE>

                          PART I: FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                           SIERRA MONITOR CORPORATION

                                 Balance Sheets


                                                       March 31,    December 31,
                                                         1998          1997
                                                     -----------    -----------
                                   Assets            (unaudited)
Current assets:
     Cash and cash equivalents                       $   192,011        297,485
     Short-term investments                              446,756        441,833
     Trade receivables, less allowance for doubtful    1,021,505        833,344
          accounts of $44,568 in 1998 and $41,003
          in 1997
     Notes receivable                                     40,471         39,422
     Inventories                                       1,035,761        797,546
     Prepaid expenses                                    179,278        138,210
     Deferred income taxes                               299,172        299,172
                                                     -----------    -----------

                        Total current assets           3,214,954      2,847,012

Property and equipment, net                              157,174        137,914
Other assets                                              40,644         47,562
                                                     -----------    -----------

                                                     $ 3,412,772      3,032,488
                                                     ===========    ===========

                Liabilities and Shareholders' Equity

Current liabilities:
     Accounts payable                                $   413,817        153,916
     Accrued compensation expenses                       214,677        224,762
     Other current liabilities                            64,145         54,804
     Income taxes payable                                 50,660         43,855
                                                     -----------    -----------

                        Total current liabilities        743,299        477,337

Shareholders' equity:
     Common stock                                      2,937,035      2,937,035
     Accumulated deficit                                (244,737)      (357,497)
     Note receivable from shareholders                   (22,825)       (24,387)
                                                     -----------    -----------

                        Total shareholders' equity     2,669,473      2,555,151
                                                     -----------    -----------

                                                     $ 3,412,772      3,032,488
                                                     ===========    ===========

See accompanying notes to financial statements.

                                                                     Page 2 of 9
<PAGE>

                           SIERRA MONITOR CORPORATION

                            Statements of Operations

                                   (Unaudited)

                                                      For the three months ended
                                                      -------------------------
                                                        March 31,     March 31,
                                                          1998          1997
                                                      -----------   -----------

Net sales                                             $ 1,533,424     1,146,157

Cost of goods sold                                        568,976       460,303
                                                      -----------   -----------

                  Gross profit                            964,448       685,854
                                                      -----------   -----------

Operating expenses
      Research and development                            124,333        96,923
      Selling and marketing                               452,387       415,222
      General and administrative                          273,201       228,454
                                                      -----------   -----------

                                                          849,921       740,599
                                                      -----------   -----------

                  Income (loss) from operations           114,527       (54,745)

Other income                                               38,349          --
Interest income                                            10,544         5,202
                                                      -----------   -----------

               Income (loss) before income taxes          163,420       (49,543)

Income taxes                                               50,660          --
                                                      -----------   -----------

                Net income (loss)                     $   112,760       (49,543)
                                                      ===========   ===========

Net income (loss) per share - basic                   $      0.01         (0.00)
                                                      ===========   ===========
Net income (loss) per share - diluted                 $      0.01         (0.00)
                                                      ===========   ===========

Weighted-average number of shares used in
     per share computations:

         Basic                                         10,566,263    10,332,513
                                                      ===========   ===========
         Diluted                                       10,848,584    10,332,513
                                                      ===========   ===========

See accompanying notes to financial statements.

                                                                     Page 3 of 9
<PAGE>
<TABLE>
                           SIERRA MONITOR CORPORATION

                            Statements of Cash Flows

                                   (Unaudited)
<CAPTION>
                                                             For the three months ended
                                                               ----------------------
                                                                March 31,    March 31,
                                                                 1998          1997
                                                               ---------    ---------
<S>                                                            <C>            <C>     
Cash flows from operating activities:
      Net income (loss)                                        $ 112,760      (49,543)
      Adjustments to reconcile net income (loss) to net cash
      provided
         by (used in) operating activities:
              Depreciation and amortization                       22,396       26,603
              Allowance for doubtful accounts                      3,565        2,250
              Change in items affecting operations
                 Trade and notes receivables                    (192,775)     150,000
                 Inventories                                    (238,215)      (5,591)
                 Prepaid expenses                                (41,068)        (933)
                 Accounts payable                                259,901      (60,938)
                 Accrued compensation expenses                   (10,085)      19,077
                 Other current liabilities                         9,341       (3,072)
                 Income taxes payable                              6,805      (11,269)
                                                               ---------    ---------

                  Net cash  provided by (used in) operating
                     activities                                  (67,375)      66,584
                                                               ---------    ---------

Cash flows from investment activities:
      Capital expenditures                                       (34,738)     (42,609)
      Short term investments                                      (4,923)      (1,907)
                                                               ---------    ---------

                  Net cash used in investing activities          (39,661)     (44,516)
                                                               ---------    ---------

Cash flows from financing activities:
      Proceeds from exercise of stock options
         net of notes receivable                                   1,562        1,556
                                                               ---------    ---------

                   Net cash provided by financing activities       1,562        1,556
                                                               ---------    ---------

Net increase (decrease) in cash and cash equivalents            (105,474)      23,624

Cash and cash equivalents at beginning of period                 297,485      478,910
                                                               ---------    ---------

Cash and cash equivalents at end of period                     $ 192,011      502,534
                                                               =========    =========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
                                                                     Page 4 of 9
<PAGE>

                           SIERRA MONITOR CORPORATION

                        Notes to the Financial Statements

                                 March 31, 1998


Basis of Presentation

The unaudited financial  statements have been prepared by the Company,  pursuant
to the rules and regulations of the Securities and Exchange Commission.  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, 1997
which was filed March 30, 1998. 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, 1998 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.

Accounting Policies

There have been no changes in accounting policies used by the Company during the
quarter ended March 31, 1998, except as discussed below:

Effective  January,  1 1998, the Company  adopted the provisions of Statement of
Financial  Accounting  Standards  (FASB) No.  130,  Reporting  of  Comprehensive
Income.  FASB No. 130  establishes  standards  for the display of  comprehensive
income and its components in a full set of financial  statements.  Comprehensive
income  includes all changes in equity  during a period  except those  resulting
from  the  issuance  of  shares  of  stock  and  distributions  to  stockholders
(shareholders, as applicable). There were no differences between net income (net
loss) and  comprehensive  income (loss) during the quarters ended March 21, 1998
and 1997.

In June 1997,  the FASB issued SFAS No. 131,  Disclosures  about  Segments of an
Enterprise and Related Information.  SFAS No. 131 establishes  standards for the
way public business  enterprises  report information about operating segments in
annual  financial  statements and requires those  enterprises to report selected
information  about  operating  segments in interim  financial  reports issued to
stockholders.  SFAS No. 131 is effective  for financial  statements  for periods
beginning  after  December 31, 1997.  The Company  does not  anticipate  it will
change its reporting methodology as a result of this pronouncement.

Summary of Business

Sierra  Monitor  Corporation  ("SMC" or the  "Company")  was  founded in 1978 to
design and develop hazardous gas monitoring  devices for protection of personnel
and facilities in industrial work places.

Products  manufactured by the Company are sold primarily to oil and gas drilling
and  refining  companies,   chemical  plants,   waste-water   treatment  plants,
telecommunications   companies,  parking  garages  and  landfill  rehabilitation
projects.

                                                                     Page 5 of 9
<PAGE>

Inventories

A summary of inventories follows:
                                                 March 31,   December 31,
                                                   1998         1997
                                                ----------   ----------

                   Raw Materials                $  403,717      323,237 
                                               
                   Work-in-process                 422,496      338,631
                                               
                   Finished goods                  209,548      135,678
                                                ----------   ----------
                                               
                                                $1,035,761      797,546
                                                ==========   ==========
                                               
Net Income per share                
<TABLE>

In 1997,  the Company  adopted SFAS No. 128,  Earnings per Share.  In accordance
with SFAS No. 128,  basic 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  common  equivalent  shares
outstanding  during the period.  Dilutive  common  equivalent  shares consist of
common stock  issuable upon  exercise of stock options using the treasury  stock
method.  No adjustments to earnings / (loss) were made for purposes of per share
calculations.  The  following  is a  reconciliation  of the shares  using in the
computation  of basic and diluted EPS for the periods  ending March 31, 1998 and
1997 respectively:
<CAPTION>
                                                                 1998         1997
<S>                                                          <C>           <C>       
        Basic  EPS -  weighted-average  number
            of common shares outstanding                     10,566,263    10,332,513

        Effect  of  dilutive  common  equivalent 
            shares  -  stock options outstanding                282,321     See note
                                                             ----------    ----------

        Diluted EPS -  weighted-average of common shares
            and common equivalent shares outstanding         10,848,584    10,332,514
                                                             ==========    ==========

<FN>

Note:    Common stock equivalents of 317,660 were excluded from the net loss per
         share computations due to the antidilutive effect.
</FN>
</TABLE>

                                                                     Page 6 of 9
<PAGE>

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

Results of Operations:

For the three  months  ended  March 31,  1998 Sierra  Monitor  Corporation  (the
"Company") reported net sales of $1,533,424 compared to $1,146,157 for the three
months ended March 31, 1997. The results for the first quarter of 1998 represent
a 33.8% increase from the same period in the prior year. Sales increased in each
of the Company's product groups including a 44% increase in Sentry systems.  The
level of sales of Sentry systems,  the Company's  primary product group,  can be
influenced by release of orders for construction  projects. In the first quarter
of 1998 there were two construction  projects released,  compared to none in the
first quarter of 1997.

Gross  profit for the three month  period  ended March 31, 1998 was  $964,448 or
62.9% of net sales,  compared  to  $685,854  or 59.8% of net sales,  in the same
period in the previous year.  Labor  efficiencies  due to the higher sales level
contributed to the improved gross margin.

Expenses for research and development, which include new product development and
engineering  to sustain  existing  products,  were  $124,333 for the three month
period ended March 31, 1998,  compared with $96,923 in the comparable  period in
1997.  Product  development  costs in the first quarter of 1998 include  outside
consulting fees for ongoing development of new products and expanded features of
existing  products.  During the first quarter of 1997, there were no significant
new product development projects.

Selling and  marketing  expenses for the three month period ended March 31, 1998
were  $452,387,  or 29.5% of net sales,  compared to  $415,222,  or 36.2% of net
sales,  in the same  period in the prior year.  As a result of the higher  sales
level in first quarter of 1998, commissions to independent sales representatives
increased by $38,530 over those paid in the first quarter of 1997. There were no
other significant changes in selling and marketing expenses.

General and administrative  expenses for the first quarter of 1998 were $273,201
or 17.8% of net sales  compared  to  $228,454 or 19.9% in the same period in the
prior year.  Increases in salary and benefit  expenses,  depreciation of capital
equipment,   and  professional  fees  contributed  to  the  higher  general  and
administrative expenses.

Net income for the three month  period ended March 31, 1998 was $112,760 or 7.4%
of net sales,  compared  with a net loss of $49,543 or 4.3% of net sales for the
same period in the prior year.  The higher income is the result of a significant
increase in sales  combined  with  improvement  in gross  margin and lower fixed
costs as a percent of sales.

Since  the  Company  generally  ships its  products  in the same  month  that it
receives a purchase order,  the Company believes that its backlog at any time is
generally not indicative of its level of future  business.  However,  during the
three month period ending March 31, 1998 the Company  received  orders  totaling
$2,674,165  compared to orders of  $1,087,678  in the three month period  ending
March 31, 1997. As a result of the  significant  increase in orders in the first
quarter,  the backlog at the end of the period was  $1,612,838,  compared to the
backlog of  $454,296 at  December  31,  1997.  The  Company  has  increased  its
inventory and, temporarily,  increased its workforce to meet the higher level of
demand.

Liquidity and Capital Resources:

During the period ended March 31, 1998, the Company's  working capital increased
by $101,980  compared to December  31, 1997.  At March 31,  1998,  cash and cash
equivalents  and short  term  investments,  totaled  $638,767.  The  short  term
investments   consist  of  certain  Federal  Agency   Securities 

                                                                     Page 7 of 9
<PAGE>

with original  maturities greater than 90 days. The Company has not drawn on its
line of credit with its commercial  bank. The Company  believes that its current
capital  resources are sufficient to support existing and anticipated  levels of
business.

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 but competitive price.

                                                                     Page 8 of 9
<PAGE>


                           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 8-K

                       (a)   Exhibits.
                                  27.0      Financial Data Schedule

                       (b)   Reports on Form 8-K.
                                  None.


                                    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 13, 1997                 By:    /s/ Gordon R. Arnold
                                                 ------------------------------
                                                 Gordon R. Arnold
                                                 President
                                                 Chief Financial Officer


                                                                     Page 9 of 9