UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10 - QSB

(Mark One)

(X)  Quarterly  report under section 13 or 15(d) of the Securities  Exchange Act
     of 1934.

                  For the quarterly period ended June 30, 2005
                                                 -------------
                                       or

( )  Transition report under 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 No.)


                                1991 Tarob Court
                           Milpitas, California 95035
              -----------------------------------------------------
              (Address and zip code of principal executive offices)


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


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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 August 12,
2005 was 11,036,546.

Transitional Small Business Disclosure Format: Yes _____ ; No __X__


                                                                    Page 1 of 17

<PAGE>

                          PART I: FINANCIAL INFORMATION
                          -----------------------------

ITEM 1.  FINANCIAL STATEMENTS
-----------------------------

                           SIERRA MONITOR CORPORATION
                           --------------------------
                                  Balance Sheet
                                  -------------

                                  June 30, 2005
<TABLE>
<CAPTION>
                                   (Unaudited)
                   Assets
                   ------
<S>                                                                       <C>
Current assets:
      Cash                                                                $   418,489
      Trade receivables, less allowance for doubtful accounts               1,282,033
          of approximately $25,000
      Inventories, net                                                      1,395,176
      Prepaid expenses                                                        123,912
      Income taxes receivable                                                   1,000
      Deferred income taxes                                                   388,108
                                                                          -----------
                    Total current assets                                    3,608,718

Property and equipment, net                                                   180,928
Deferred income taxes                                                         144,784
Other assets                                                                   58,903
                                                                          -----------
                    Total assets                                          $ 3,993,333
                                                                          ===========

                    Liabilities and Shareholders' Equity
                    ------------------------------------

Current liabilities:
      Accounts payable                                                    $   469,553
      Accrued compensation expenses                                           260,029
      Other current liabilities                                               105,860
                                                                          -----------
                    Total current liabilities                                 835,442

Commitments and contingencies

Shareholders' equity:
      Common stock, $0.001 par value; 20,000,000 shares authorized;
      10,986,546 shares issued and outstanding                                 10,987
      Additional paid-in capital                                            3,216,074
      Accumulated deficit                                                     (69,170)
                                                                          -----------
                    Total shareholders' equity                              3,157,891
                                                                          -----------
                    Total liabilities and shareholders' equity            $ 3,993,333
                                                                          ===========

<FN>
See accompanying notes to the condensed financial statements.
</FN>
</TABLE>


                                                                    Page 2 of 17
<PAGE>


                           SIERRA MONITOR CORPORATION
                           --------------------------
                            Statements of Operations
                            ------------------------

                                   (Unaudited)
<TABLE>
<CAPTION>


                                                        Three months ended June 30,             Six months ended June 30,
                                                     ---------------------------------       --------------------------------
                                                      2005                2004               2005               2004
                                                     ------------        -------------       ------------        ------------
<S>                                                  <C>                 <C>                 <C>                 <C>
Net sales                                            $  2,005,402        $   2,291,350       $  4,217,078        $  4,207,875
Cost of goods sold                                        826,331              808,429          1,720,531           1,553,054
                                                     ------------        -------------       ------------        ------------
        Gross profit                                    1,179,071            1,482,921          2,496,547           2,654,821
                                                     ------------        -------------       ------------        ------------
Operating expenses
    Research and development                              439,621              424,714            855,332             916,561
    Selling and marketing                                 657,301              660,444          1,458,032           1,321,218
    General and administrative                            319,849              326,688            657,587             612,722
                                                     ------------        -------------       ------------        ------------
                                                        1,416,771            1,411,846          2,970,951           2,850,501
                                                     ------------        -------------       ------------        ------------
        Income (loss) from operations                    (237,700)              71,075           (474,404)           (195,680)
Income tax (benefit) provision                            (86,895)              27,269           (189,764)            (78,240)
                                                     ------------        -------------       ------------        ------------
        Net income (loss)                            $   (150,805)              43,806           (284,640)           (117,440)
                                                     ============        =============       ============        ============
Basic and diluted net income (loss) available        $      (0.01)       $        0.00       $      (0.03)       $      (0.01)
      to common shareholders per common share
                                                     ============        =============       ============        ============

Weighted average number of shares used in per
      share computations
                                        Basic:         10,986,546           10,973,213         10,984,046          10,972,319
                                                     ============        =============       ============        ============
                                      Diluted:         10,986,546           11,313,398         10,984,046          10,972,319
                                                     ============        =============       ============        ============

<FN>
See accompanying notes to the condensed financial statements.
</FN>
</TABLE>


                                                                    Page 3 of 17
<PAGE>

                           SIERRA MONITOR CORPORATION
                           --------------------------
                            Statements of Cash Flows
                            ------------------------

                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                  Six months ended June 30,
                                                                    2005             2004
                                                                 ---------        -----------
<S>                                                              <C>              <C>
Cash flows from operating activities:
        Net income (loss)                                        $(284,640)       $  (117,440)
         Adjustments to reconcile net income (loss) to net
           cash used in operating activities:
           Depreciation and amortization                            77,953             89,527
           Provision for bad debt expense                            6,323             (2,497)
           Provision for inventory losses                           18,000               --
           Deferred income taxes                                  (189,794)           (80,229)
           Warrants compensation expense                            30,800               --
           Changes in operating assets and liabilities:
             Trade receivables                                     236,227            (95,437)
             Inventories                                           (62,438)          (113,810)
             Prepaid expenses and other current assets              40,156             35,019
             Other assets                                              324               --
             Accounts payable                                     (117,085)           159,634
             Accrued compensation expenses                         (81,869)           108,768
             Other current liabilities                              (3,291)            (7,493)
                                                                 ---------        -----------
               Net cash used in operating activities              (329,334)           (23,958)
                                                                 ---------        -----------
Cash flows from investing activities:
        Capital expenditures                                       (41,965)           (65,995)
        Other assets                                                  --               (2,500)
                                                                 ---------        -----------
               Net cash used in investing activities               (41,965)           (68,495)
                                                                 ---------        -----------
Cash flows from financing activities:
        Repayment of notes receivable                                 --                 --
        Proceeds from exercise of stock options                      1,100              1,100
                                                                 ---------        -----------
               Net cash provided by financing activities             1,100              1,100
                                                                 ---------        -----------
Net decrease in cash and cash equivalents                         (370,199)           (91,353)
Cash and cash equivalents at beginning of period                   788,688          1,055,081
                                                                 ---------        -----------
Cash and cash equivalents at end of period                       $ 418,489        $   963,728
                                                                 =========        ===========
Supplemental cash flow information
       Cash paid for income taxes                                $   2,486        $     1,458
                                                                 =========        ===========

<FN>
See accompanying notes to the condensed financial statements.
</FN>
</TABLE>


                                                                    Page 4 of 17
<PAGE>

                           SIERRA MONITOR CORPORATION
                           --------------------------
          Notes to the Unaudited Interim Condensed Financial Statements
          -------------------------------------------------------------

                                  June 30, 2005

Basis of Presentation
---------------------

     The accompanying unaudited interim condensed financial statements have been
prepared by Sierra Monitor  Corporation (the  "Company"),  pursuant to the rules
and regulations of the Securities and Exchange  Commission (the "SEC").  Certain
information and footnote  disclosures  normally included in financial statements
prepared in accordance  with  accounting  principles  generally  accepted in the
United  States of  America  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,  accounting  policies and notes  thereto  included in the  Company's
Annual  Report on Form 10-KSB for the year ended  December 31,  2004,  which was
filed March 30, 2005. In the opinion of the Company, all adjustments,  including
normal recurring adjustments necessary to present fairly the financial position,
results of  operations,  and cash flows of Sierra  Monitor  Corporation  for the
interim  periods 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  was  founded  in 1978 to design  and  develop
hazardous gas  monitoring  devices for protection of personnel and facilities in
industrial  workplaces.  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
communication  protocols.   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,  companies in the semiconductor industry and are used in other
applications  which  involve the  handling or  generation  of  hazardous  gases.
Environment controllers, which provide management of environmental conditions in
small  structures  such as local DSL  distribution  nodes and  buildings at cell
tower sites ("cell sites"), are sold to  telecommunications  companies and their
suppliers. FieldServers are typically sold to integration companies that service
building and plant automation projects.

     The  Company's  common stock is quoted on the OTC Bulletin  Board under the
symbol "SRMC.OB".

Accounting Policies
-------------------

     a) Revenue Recognition

     Revenue related to gas detection and monitoring  devices is recognized when
all  of  the  following  criteria  have  been  met:  persuasive  evidence  of an
arrangement  exists;  the fee for the  arrangement  is  fixed  or  determinable;
delivery has occurred or services  have been  rendered;  and  collectibility  is
probable.   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.


                                                                    page 5 of 17
<PAGE>

     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 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.  Additionally  software
related  to  the  FieldServers  should  not  require   significant   production,
modification or customization;  otherwise revenues should be deferred.  Deferred
revenues at June 30, 2005 were not significant.

     b) Recent Accounting Standards

     Recent accounting pronouncements discussed in the notes to the December 31,
2004 audited  financial  statements,  filed  previously  with the Securities and
Exchange  Commission in Form 10-KSB, that were required to be adopted during the
year  ending  December  31,  2005,  did not have or are not  expected  to have a
significant impact on the Company's 2005 financial statements.

     c) Employee Stock-Based Compensation

     At June 30, 2005,  the Company has two  stock-based  employee  compensation
plans.   The  Company  accounts  for  those  plans  under  the  recognition  and
measurement   principles  of  Accounting   Principles   Board  Opinion  No.  25,
"Accounting   for  Stock   Issued  to   Employees"   ("APB  25"),   and  related
interpretations.  No stock  options were granted  during the three and six month
periods ended June 30, 2005, and no employee  stock-based  compensation  expense
was recorded during such periods.  The following table illustrates the effect on
net income  (loss) and earnings  (loss) per share if the Company had applied the
fair value recognition provisions of Statement of Financial Accounting Standards
No. 123,  "Accounting for  Stock-Based  Compensation,"  to stock-based  employee
compensation.
<TABLE>
<CAPTION>

                                                        For The Three Months              For The Six Months
                                                           Ended June 30,                   Ended June 30,
                                                        2005            2004            2005              2004
                                                     ---------        --------        ---------        ---------
<S>                                                  <C>              <C>             <C>              <C>
Net income (loss):
   As reported                                       $(150,805)       $ 43,806        $(284,640)       $(117,440)
   Deduct: Total stock-based employee
      compensation expense determined under
      fair value based method for all awards         $ (38,000)       $(43,000)       $ (77,000)       $ (85,000)
                                                     ---------        --------        ---------        ---------
         Pro forma                                   $(188,805)       $    806        $(361,640)       $(202,440)
                                                     =========        ========        =========        =========
Basic and diluted net income (loss) per share:
         As reported                                 $   (0.01)       $   0.00        $   (0.03)       $   (0.01)
         Pro forma                                   $   (0.02)       $   0.00        $   (0.03)       $   (0.02)
</TABLE>


Inventories
-----------

A summary of inventories as of June 30, 2005 follows:


                Raw Materials              $   714,823
                Work-in-process                594,231
                Finished goods                 257,447
                Obsolescence reserve          (171,325)
                                           -----------
                                           $ 1,395,176
                                           ===========


                                                                    Page 6 of 17
<PAGE>

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  reported a net loss for the three and six month  periods ended
June 30,  2005.  As a result,  1,065,000  shares of common stock  issuable  upon
exercise of stock  options have been excluded  from the  calculation  of diluted
loss per share for the three and six month  periods  ended June 30, 2005 because
their inclusion would be  antidilutive.  The Company reported a net loss for the
six month  period  ended June 30, 2004.  As a result,  955,000  shares of common
stock  issuable  upon  exercise of stock  options  have been  excluded  from the
calculation  of diluted  loss per share for the six month  period ended June 30,
2004 because their inclusion would be antidilutive.  At June 30, 2005, and 2004,
outstanding options to acquire 461,500 shares and 592,000 shares,  respectively,
of common stock were not considered  potentially  dilutive  common shares due to
the  exercise  price  being  higher  than  the  stock  price  used  in  the  EPS
calculation.

     The following is a reconciliation  of the shares used in the computation of
basic and  diluted EPS for the three and six month  periods  ended June 30, 2005
and 2004, respectively:
<TABLE>
<CAPTION>

                                                   Three months    Six months    Three months    Six months
                                                      ended          ended         ended          ended
                                                     6/30/2005      6/30/2005      6/30/2004     6/30/2004
                                                    ----------     ----------     ----------    ----------
<S>                                                 <C>            <C>            <C>           <C>
Basic EPS - weighted-average number of common       10,986,546     10,984,046     10,973,215    10,972,319
    shares outstanding
Effect of dilutive potential common shares -              --             --          340,183          --
    stock options outstanding                       ----------     ----------     ----------    ----------
Diluted EPS - weighted-average number of
    common shares and potential common shares
    outstanding                                     10,986,546     10,984,046     11,313,398    10,972,319
                                                    ==========     ==========     ==========    ==========
</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
presented.

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 7 of 17
<PAGE>


     In  addition,  the CEO reviews  the  following  information  on revenues by
product category:
<TABLE>
<CAPTION>

                                              Three months ended June 30,               Six months ended June 30,
                                          ------------------------------------     ------------------------------------
                                               2005                2004                  2005                2004
                                          ----------------    ----------------     ----------------    ----------------
<S>                                       <C>                 <C>                  <C>                 <C>
Gas detection devices                     $       962,819     $     1,295,285      $     2,324,872     $     2,481,030
Environment controllers                           389,181             226,926              694,118             503,788
FieldServers                                      653,402             769,139            1,198,088           1,223,057
                                          ----------------    ----------------     ----------------    ----------------
                                          $     2,005,402     $     2,291,350      $     4,217,078     $     4,207,875
                                          ================    ================     ================    ================
</TABLE>

Line-of-Credit
--------------

     In June 2005,  the  Company  renewed its  $500,000  line of credit with its
commercial  bank.  There are currently no borrowings  and there has been no loan
activity by the Company during 2005.  Additionally,  the Company is currently in
compliance with restrictive financial covenants required under the line.

Stock Options
-------------

     No stock options were granted  during the three and six month periods ended
June 30, 2005 while 100,000  options were granted during the three and six month
periods  ended  June 30,  2004.  A total  of 5,000  options  were  exercised  by
employees  during the three  month  period  ended  June 30,  2005 and a total of
10,000  options  expired  during the same period.  A total of 5,000 options were
exercised by employees during the three month period ended June 30, 2004 with no
options expiring during the same period.

Subsequent Events
-----------------

     On July 27, 2005 an officer of the Company  exercised  an option to acquire
50,000 shares of the Company's common stock at $0.22 per share.


                                                                    Page 8 of 17
<PAGE>

     This Form  10-QSB  and the  accompanying  letter to  shareholders  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.  Statements
that are not statements of historical  fact may be deemed to be  forward-looking
statements.  The words "believe," "expect," "intend," "plan," "project," "will,"
and  similar  words and  phrases as they  relate to the  Company  also  identify
forward-looking  statements.  Such  statements  reflect  the  current  views and
assumptions of the Company and are not guarantees of future  performance.  These
statements are subject to various risks and uncertainties.  The Company's actual
results could differ materially from those anticipated in these  forward-looking
statements  as a result  of the risk  factors  described  in this  Form  10-QSB,
including  those  under the  heading  "Certain  Factors  That May Affect  Future
Results"  and those  issues  described  under the heading  "Critical  Accounting
Policies." The Company  expressly  disclaims any obligation to release  publicly
any updates or revisions to any forward-looking statement to reflect any changes
in  expectations,  or any  change  in  events or  circumstances  on which  those
statements are based, unless otherwise required by law.

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

Results of Operations
---------------------

     For the three  months  ended  June 30,  2005,  Sierra  Monitor  Corporation
reported net sales of  $2,005,402  compared to  $2,291,350  for the three months
ended June 30, 2004.  For the  six-month  period ended June 30, 2005,  net sales
were $4,217,078 compared with $4,207,875 in the prior year six-month period. The
sales  results for the second  quarter of fiscal 2005  represent a 13%  decrease
from the same  period in the prior  year.  The sales  results  for the first six
months of fiscal 2005 are  approximately the same as the first six months in the
prior year.

     In the  second  quarter of 2005 sales of our gas  detection  products  were
approximately $963,000 compared to $1,295,000 in the second quarter of 2004. For
the six month period ended June 30, 2005 our gas  detection  product  sales were
$2,325,000  compared to  $2,481,000  in the same  period in 2004.  The lower gas
detection  revenue in the second  quarter of 2005 is due to lower  shipments  of
both our military systems and Sentry systems.  Military sales are dependent upon
Navy ordering cycles. Sales to the Navy were higher than historical run-rates in
the first quarter and lower than normal run-rates in the second quarter of 2005.
We anticipated  second quarter Sentry system  shipments to a large  construction
project for which orders have been  received,  but weather delays earlier in the
year have delayed construction. Primarily as a result of the delays, our backlog
of unreleased shipments increased by $400,000 in the second quarter.

     Sales of Environment Controllers to the telecommunications  industry in the
second quarter of 2005 were  approximately  $390,000 compared to $227,000 in the
second  quarter of 2004.  In the six month  period  ended June 30, 2005 sales of
Environment  Controllers  were  approximately  $694,000 or a 38% increase to the
$504,000  sales for the same period in 2004.  The  increase in sales  reflects a
continued gradual increase in the number of new underground vault  installations
and the number of retrofits,  each of which require our  integrated  Environment
Controller.

     In the second quarter of 2005,  sales of FieldServers,  our  communications
bridge,  were approximately  $653,000 compared to approximately  $769,000 in the
same  period in 2004.  In the six month  period  ended  June 30,  2005  sales of
FieldServers  were  approximately  $1,198,000 or a 2% decrease  from  $1,223,000
sales reported in the same period in 2004.

     Gross profit of $1,179,071 for the  three-month  period ended June 30, 2005
was 59% of sales compared to $1,482,921,  or 65% of sales, in the same period in
the previous year. The gross profit for the six-month period ended June 30, 2005


                                                                    Page 9 of 17
<PAGE>

was $2,496,547, or 59% of sales, compared to $2,654,821, or 63% of sales, in the
same period in the previous  year. The lower gross margin in both periods is due
in  part to  product  mix and in part to  labor  and  benefit  expenses.  Labor,
benefits and contract assembly  expenses are, in total,  approximately 3% higher
in both periods of 2005  compared to 2004.  We have  undertaken a general  price
increase  for all  products  in an effort to offset the higher  expenses.  These
price  increases  require  several months to take effect so there is no apparent
impact in the current numbers.

     Expenses  for  research  and   development,   which   include  new  product
development and engineering to sustain existing products,  were $439,621, or 22%
of sales, for the three-month  period ending June 30, 2005 compared to $424,714,
or 19% of sales,  in the  comparable  period in 2004. In the  six-month  periods
ending June 30, 2005 and June 30, 2004,  research and development  expenses were
$855,332,  or 20% of sales,  and $916,561,  or 22% of sales,  respectively.  Our
product development is currently focused on the continued design of a new family
of gas  detectors,  continued  expansion of the library of protocol  drivers for
FieldServer   and  development  of  a  FieldServer   derivative   product  named
ProtoCessor.  The derivative  product provides a very low cost hardware platform
onto which the  FieldServer  software  functionality  can be loaded for sales to
Original Equipment Manufacturers.

     Selling and  marketing  expenses,  which  consist  primarily  of  salaries,
commissions  and  promotional  expenses were  $657,301,  or 33% of sales for the
three-month period ended June 30, 2005, compared to $660,444 or 29% of sales, in
the comparable  period in the prior year. For the six-month  periods ending June
30, 2005 and June 30, 2004, selling and marketing  expenses were $1,458,032,  or
35% of sales,  and  $1,321,218,  or 31% of sales,  respectively.  The  increased
selling  expenses  in the  first  six  months  of 2005  are due,  primarily,  to
non-recurring employee transition expenses.

     General and  administrative  expenses,  which  consist  primarily of salary
expenses,  building rent and insurance expenses, were $319,843, or 16% of sales,
for the three-month  period ended June 30, 2005 compared to $326,688,  or 14% of
sales, in the three-month  period ended June 30, 2004. For the six-month periods
ending June 30, 2005 and June 30, 2004, general and administrative expenses were
$657,587,  or 16% of sales, and $612,722, or 15% of sales,  respectively.  There
were no significant changes in general and administrative  expenses in the three
month period ended June 30, 2005  compared to the same period in the prior year.
General and administrative  expenses in the six month period ended June 30, 2005
include a  non-recurring  expense  of  $30,800  related  to  warrant  issued for
services in 2004.

     Our net loss for the  three-month  period  ended June 30, 2005 was $150,805
compared  to a net  income  of  $43,806  in the same  period  of  2004.  For the
six-month  period ended June 30, 2005 our net loss was $284,640  compared to net
loss of $117,440 in the same period of 2004.  The net loss in both the three and
six month  periods  ended June 30, 2005 is due to lower gross margins and higher
fixed  expenses  without an increase in net sales.  The  staffing and fixed cost
structure  were  established  based on  expectations  of  higher  levels  of gas
detection shipments and incremental business as a result of the release of a new
Environment Controller for wireless industry  applications.  As neither of these
revenue  expectations  has been met, we have made  adjustments  to the  staffing
level while  maintaining  our ability to respond to those  opportunities  in the
future.

Liquidity and Capital Resources
-------------------------------

     Working  capital,  which  is  comprised,   primarily,   of  cash,  accounts
receivable and inventories offset by current liabilities, was $2,773,277 at June
30, 2005.  Working capital  decreased by $216,427 from December 31, 2004 to June
30, 2005.  The decrease in working  capital was  primarily the result of the net


                                                                   Page 10 of 17
<PAGE>


loss of $284,640 and capital  investments of  approximately  $42,000  reduced by
approximately  $78,000 of depreciation and amortization of fixed assets. Cash on
hand, a component of working capital,  was $418,489 at June 30, 2005, a decrease
of $370,199 compared to December 31, 2004.

     In the current  fiscal year,  we have not  utilized  our  $500,000  line of
credit with our commercial  bank. As a result of the net loss  sustained  during
the first six months of 2005 we believe that we will need to borrow  against the
line of credit to meet cash flow demands. Current resources, which include cash,
accounts receivable,  and the line of credit are anticipated to be sufficient to
fund our  anticipated  level of  operations  through  at least  the next  twelve
months.  The line of credit carries certain  covenants  related to profitability
and it is  important  that we  return to  profitable  operations  to retain  the
current credit facility.

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  our  industry,  lack  of  growth  in our
end-markets,  and our  ability to  develop,  manufacture,  and sell both new and
existing products at a profitable yet competitive price.

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

     Our  operations  are   concentrated  in  a  single  building  in  Milpitas,
California. 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.  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.

     Our short-term liquidity is dependent upon our ability to reduce collection
cycles,  reduce inventories and manage expenses and cash  distribution.  We must
also maintain our compliance with the conditions of our bank line of credit.

Critical Accounting Policies
----------------------------

     The  preparation  of  financial   statements  and  related  disclosures  in
conformity with accounting principles generally accepted in the United States of
America  requires  management to make judgments,  assumptions and estimates that
affect the amounts reported in the Company's  consolidated  financial statements
and the accompanying  notes.  The amounts of assets and liabilities  reported on
our balance sheets and the amounts of revenues and expenses reported for each of
our fiscal  periods are affected by estimates  and  assumptions,  which are used
for,  but not  limited to, the  accounting  for  revenue  recognition,  accounts
receivable,  doubtful accounts and inventories. Actual results could differ from
these estimates.  The following critical  accounting  policies are significantly
affected by judgments,  assumptions and estimates used in the preparation of the
consolidated financial statements:

     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.


                                                                   Page 11 of 17
<PAGE>


We recognize  revenue from the sale of FieldServers in accordance with 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 provided by the clients' need for our services is
critical  to the  effective  application  of credit  terms and  minimization  of
accounts receivable losses.

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

     c) Inventories

     Inventories are stated at the lower of cost or estimated market,  with 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.

ITEM 3:  CONTROLS AND PROCEDURES
--------------------------------

     Evaluation of disclosure controls and procedures. Our management evaluated,
with the  participation  of  Gordon  R.  Arnold,  our  principal  executive  and
financial officer,  the effectiveness of our disclosure  controls and procedures
as of the end of the period  covered by this  Quarterly  Report on Form  10-QSB.
Based on this evaluation,  Mr. Arnold has 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 SEC rules and forms.

     Changes in internal control over financial  reporting.  There was no change
in our internal control over financial reporting that occurred during the period
covered by this Quarterly Report on Form 10-QSB that has materially affected, or
is reasonably likely to materially  affect,  our internal control over financial
reporting.


                                                                   Page 12 of 17
<PAGE>

                           PART II: OTHER INFORMATION
                           --------------------------

Item 4.  Submission of Matters to a Vote of Security Holders

     The Annual Meeting of Shareholders of the Company was held on May 26, 2005.

     1.  At the Annual  Meeting,  the following  directors were elected to serve
         for the ensuing year and until their successors are elected:

                                         For          Against        Abstain
           Gordon R. Arnold           5,800,984          0              0
           C. Richard Kramlich        5,800,984          0              0
           Jay T. Last                5,800,984          0              0
           Robert C. Marshall         5,800,984          0              0

     2.  At the Annual  Meeting,  Squar,  Milner,  Reehl &  Williamson,  LLP was
         ratified as the Company's independent public accountants for the fiscal
         year ended December 31, 2005 by the following votes:

                                         For          Against        Abstain
                                      5,800,984          0              0

Item 6.  Exhibits and Reports on Form 8-K

         (a) Exhibits.

             Exhibit
             Number      Description
             ------      -----------

             3.1(1)   Articles of Incorporation of the Registrant.

             3.2(2)   Bylaws of the Registrant.

             31       Certification   of  Chief  Executive   Officer  and  Chief
                      Financial   Officer   pursuant   to  Section  302  of  the
                      Sarbanes-Oxley Act of 2002.

             32       Certification   of  Chief  Executive   Officer  and  Chief
                      Financial  Officer  pursuant to 18 U.S.C.  Section 350, as
                      adopted pursuant to Section 906 of the  Sarbanes-Oxley Act
                      of 2002.

                (1)   Incorporated  by reference to the Company's  Annual Report
                      on Form 10-K for the fiscal year ended December 31, 1989.

                (2)   Incorporated  by  reference  to  the  Company's  Quarterly
                      Report on Form 10-QSB (File No.  000-07441) filed with the
                      SEC on August 14, 1998.

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


                                                                   Page 13 of 17
<PAGE>


                                   SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

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

Date:   August 12, 2005                    By:    /s/ Gordon R. Arnold
                                                  --------------------
                                                  Gordon R. Arnold
                                                  President
                                                  Chief Executive Officer
                                                  Chief Financial Officer


                                                                   Page 14 of 17
<PAGE>

                                Index to Exhibits
                                -----------------

     Exhibit
     Number           Description
     ------           -----------

     3.1(1)      Articles of Incorporation of the Registrant.

     3.2(2)      Bylaws of the Registrant.

     31          Certification  of Chief  Executive  Officer and Chief Financial
                 Officer  pursuant to Section 302 of the  Sarbanes-Oxley  Act of
                 2002.

     32          Certification  of Chief  Executive  Officer and Chief Financial
                 Officer pursuant to 18 U.S.C.  Section 350, as adopted pursuant
                 to Section 906 of the Sarbanes-Oxley Act of 2002.

         (1)     Incorporated  by reference to the  Company's  Annual  Report on
                 Form 10-K for the fiscal year ended December 31, 1989.

         (2)     Incorporated by reference to the Company's  Quarterly Report on
                 Form 10-QSB (File No.  000-07441)  filed with the SEC on August
                 14, 1998.


                                                                   Page 15 of 17