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, 2003
                                          -------------


                                       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)


The number of shares of the issuer's common stock  outstanding,  as of August 8,
2003 was 10,971,546.

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, 2003

                                   (Unaudited)
                   Assets

Current assets:
      Cash                                                          $   447,087
      Trade receivables, less allowance for doubtful accounts         1,753,462
          of approximately $55,000
      Inventories, net                                                1,357,488
      Prepaid expenses                                                  180,873
      Income taxes receivable                                           134,397
      Deferred income taxes                                             289,954
                                                                    -----------

                    Total current assets                              4,163,261

Property and equipment, net                                             158,693
Deferred income taxes                                                    58,853
Other assets                                                            132,785
                                                                    -----------

                    Total assets                                    $ 4,513,592
                                                                    ===========

                    Liabilities and Shareholders' Equity

Current liabilities:
      Accounts payable                                              $   413,011
      Accrued compensation expenses                                     368,162
      Other current liabilities                                         145,230
                                                                    -----------

                    Total current liabilities                           926,403

Commitments and contingencies

Shareholders' equity:
      Common stock, $0.001 par value; 20,000,000 shares authorized;
      10,971,546 shares issued and outstanding                           10,972
      Additional paid-in capital                                      3,151,189
      Retained earnings                                                 425,733
      Notes receivable from shareholders                                   (705)
                                                                    -----------

                    Total shareholders' equity                        3,587,189
                                                                    -----------

                    Total liabilities and shareholders' equity      $ 4,513,592
                                                                    ===========

See accompanying notes to the condensed financial statements.

                                                                    Page 2 of 17
<PAGE>


                           SIERRA MONITOR CORPORATION

                            Statements of Operations

                                   (Unaudited)


<TABLE>
<CAPTION>
                                                Three months ended June 30,    Six months ended June30,
                                                ---------------------------   ---------------------------
                                                    2003           2002           2003           2002
                                                ------------   ------------   ------------   ------------
<S>                                             <C>            <C>            <C>            <C>
Net sales                                       $  2,248,724   $  2,079,204   $  3,997,538   $  4,314,836
Cost of goods sold                                   986,233        853,668      1,678,961      1,819,226
                                                ------------   ------------   ------------   ------------
        Gross profit                               1,262,491      1,225,536      2,318,577      2,495,610
                                                ------------   ------------   ------------   ------------
Operating expenses
    Research and development                         345,616        375,585        712,316        801,484
    Selling and marketing                            623,015        659,886      1,249,130      1,457,453
    General and administrative                       306,990        280,925        607,348        597,078
                                                ------------   ------------   ------------   ------------
                                                   1,275,621      1,316,396      2,568,794      2,856,015
                                                ------------   ------------   ------------   ------------
        Loss from operations                         (13,130)       (90,860)      (250,217)      (360,405)
Interest income (expense)                              1,478         (1,226)         1,949           (631)
                                                ------------   ------------   ------------   ------------
        Loss before income taxes                     (11,652)       (92,086)      (248,268)      (361,036)
Income tax benefit                                    (4,661)       (37,284)       (99,308)      (144,051)
        Net loss                                $     (6,991)  $    (54,802)  $   (148,960)  $   (216,985)
                                                ============   ============   ============   ============
Basic and diluted net loss available to
      common shareholders per common share      $      (0.00)  $      (0.00)  $      (0.01)  $      (0.02)
                                                ============   ============   ============   ============

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


See accompanying notes to the condensed financial statements.
                                                                    Page 3 of 17
<PAGE>


                           SIERRA MONITOR CORPORATION

                            Statements of Cash Flows

                                   (Unaudited)



<TABLE>
<CAPTION>
                                                              Six months ended June 30
                                                                 2003        2002
                                                               ---------   ---------
<S>                                                            <C>         <C>
Cash flows from operating activities:
        Net loss                                               $(148,960)  $(216,985)
        Adjustments to reconcile net loss to net cash used
         in operating activities:
           Depreciation and amortization                         155,190     154,829
           Allowance for doubtful accounts                         3,187       6,677
           Deferred income taxes                                 (99,308)   (144,870)
           Changes in operating assets and liabilities:
             Trade receivables                                  (420,358)        817
             Inventories                                          59,154       6,033
             Prepaid expenses                                    (36,169)     73,893
             Income taxes receivable                              19,571     148,187
             Accounts payable                                     47,760    (133,612)
             Accrued compensation expenses                       153,739      64,000
             Other current liabilities                            (1,419)    (50,440)
                                                               ---------   ---------
               Net cash used in operating activities            (267,614)    (91,471)
                                                               ---------   ---------
Cash flows from investing activities:
        Capital expenditures                                     (24,215)    (84,795)
        Other assets                                              (1,169)       (600)
                                                               ---------   ---------
               Net cash used in investing activities             (25,384)    (85,395)
                                                               ---------   ---------
Cash flows from financing activities:
        Proceeds from bank borrowings, net                          --       100,000
        Repayment of notes receivable                                767       8,580
                                                               ---------   ---------
               Net cash provided by financing activities             767     108,580
                                                               ---------   ---------
Net increase (decrease) in cash and cash equivalents            (292,231)    (68,286)
Cash and cash equivalents at beginning of period                 739,318     772,394
                                                               ---------   ---------
Cash and cash equivalents at end of period                     $ 447,087   $ 704,108
                                                               =========   =========
Supplemental cash flow information
       Cash paid for interest expense                          $    --     $   1,663
                                                               =========   =========
       Cash paid for income taxes                              $   2,525   $   5,188
                                                               =========   =========
</TABLE>

See accompanying notes to the condensed financial statements

                                                                    Page 4 of 17
<PAGE>


                           SIERRA MONITOR CORPORATION

                   Notes to the Condensed Financial Statements

                                  June 30, 2003

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 (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  and notes  thereto  included in the
Company's  Annual  Report on Form  10-KSB for the year ended  December  31, 2002
which was filed March 27, 2003. 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 June 30, 2003 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  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,  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.

      The  Company's  common stock  trades 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:  (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 when all of the following criteria have been met:
persuasive evidence of an arrangement exists;  delivery has
                                                                    Page 5 of 17
<PAGE>

occurred;  the fee is fixed or  determinable;  and  collectibility  is probable.
Additionally   the   software   should  not  require   significant   production,
modification or customization;  otherwise revenues should be deferred.  Deferred
revenues at June 30, 2003 were not significant.

      b) Reclassifications

      Certain  amounts  presented  in the  financial  statements  for  the  2002
comparative  period have been  reclassified  to conform to the current  period's
presentation.

      c) Recent Accounting Standards

      Recent  accounting  pronouncements  discussed in the notes to the December
31,  2002 and 2001  audited  financial  statements,  filed  previously  with the
Securities  and Exchange  Commission  on Form 10-KSB,  that were  required to be
adopted  during the year ending  December  31,  2003 did not have a  significant
impact on the Company's financial statements.

      d) Employee Stock-Based Compensation

      At June 30, 2003, 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-based employee compensation cost is reflected in net loss, as all
options  granted  under those  plans had an  exercise  price equal to the market
value of the underlying  common stock on the date of grant.  The following table
illustrates  the effect on net income and  earnings 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,"  as
amended to stock-based employee compensation.

<TABLE>
<CAPTION>
                                             For The Three Months    For The Six Months
                                                 Ended June 30,        Ended June 30,
                                                2003       2002        2003       2002
                                              --------   --------   ---------   ---------
<S>                                           <C>        <C>        <C>         <C>
Net loss:
   As reported                                $ (6,991)  $(54,802)  $(148,960)  $(216,985)
   Deduct: Total stock-based employee
      compensation expense determined under
      fair value based method for all awards  $(46,000)  $(35,000)  $ (92,000)  $ (70,000)
                                              --------   --------   ---------   ---------
         Pro forma                            $(52,991)  $(89,902)  $(240,960)  $(286,985)
                                              ========   ========   =========   =========
Basic and diluted net loss per share:
         As reported                          $  (0.00)  $  (0.00)  $   (0.01)  $   (0.02)
         Pro forma                            $  (0.00)  $  (0.01)  $   (0.02)  $   (0.03)
</TABLE>

Inventories

A summary of inventories as of June 30, 2003 follows:

                    Raw Materials                        $          730,880
                    Work-in-process                                 437,430
                    Finished goods                                  189,178
                                                         ------------------
                                                         $        1,357,488
                                                         ==================

Net 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

                                                                    Page 6 of 17
<PAGE>

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 both the  three  and six month
periods ended June 30, 2003 and 2002. As a result,  400,000 and 1,314,500 shares
of common stock  issuable upon exercise of stock options have been excluded from
the  calculation  of diluted loss per share for the both the three and six month
periods  ended June 30, 2003 and 2002,  respectively,  because  their  inclusion
would  be  antidilutive.  At June  30,  2003,  outstanding  options  to  acquire
1,052,500 shares 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, 2003
and 2002, respectively:

<TABLE>
<CAPTION>
                                              Three months    Six months   Three months     Six months
                                                 ended          ended         ended           ended
                                               6/30/2003      6/30/2003      6/30/2002      6/30/2002
                                               ----------     ----------     ----------     ----------
<S>                                            <C>            <C>            <C>            <C>
Basic EPS - weighted-average number of common  10,971,546     10,971,546     10,971,546     10,971,546
    shares outstanding
Effect of dilutive potential common shares
    stock options outstanding                        --             --             --             --
                                               ----------     ----------     ----------     ----------
Diluted EPS - weighted-average number of
    common shares and potential common shares
    outstanding                                10,971,546     10,971,546     10,971,546     10,971,546
                                               ==========     ==========     ==========     ==========
</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.

      In  addition,  the CEO reviews the  following  information  on revenues by
product category:


                                    Three months ended       Six months ended
                                          June 30                June 30
                                  ----------------------  ----------------------
                                     2003        2002       2003         2002
                                  ----------  ----------  ----------  ----------
Gas detection devices             $1,613,386  $1,429,013  $2,724,082  $3,214,879
Environmental controllers            239,602     246,208     444,388     370,605
FieldServers                         395,736     403,983     829,068     729,352
                                  ----------  ----------  ----------  ----------
                                  $2,248,724  $2,079,204  $3,997,538  $4,314,836
                                  ==========  ==========  ==========  ==========

Line-of-Credit

      In June 2003 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 during 2003.

                                                                    Page 7 of 17
<PAGE>

Stock Options

      On May 13,  2003,  the Company  granted to an employee  options to acquire
10,000  shares of the  Company's  common stock at $0.10 per share.  Such options
were granted under the terms of the 1996 Stock Option Plan, have a 10-year life,
and vest as follows:  25% on June 1, 2004 with the balance  vesting ratably over
the following 36 months. No stock option compensation expense was recorded under
APB 25 as the fair value of the Company's  common stock was determined to be not
more than the strike price on the date of grant.

      During the quarter ended June 30, 2003,  options to acquire  36,000 shares
of the Company's common stock were forfeited by terminated employees. No options
have been exercised during 2003.

Lease Commitments

      In  April  2003,  the  Company  renegotiated  the  lease  for its  primary
facilities in Milpitas,  California. The new lease commenced on May 1, 2003, has
a term of six years, and requires monthly payments of $26,149.

      Additionally,  the Company moved its operations in Fort Myers,  Florida to
Milpitas,  California  when the related  lease expired  during the  three-months
ended June 30, 2003.  The Company  entered  into a new lease which  commenced on
June 1, 2003 with a term of 24 months and requiring monthly payments of $1,183.

      Future  minimum  lease  payments for all of the  Company's  non-cancelable
operating leases are as follows:

                          Year ending
                          December 31,
                          ------------
                              2003                          $      391,000
                              2004                                 328,000
                              2005                                 320,000
                              2006                                 314,000
                              2007                                 314,000
                              Thereafter                           418,000
                                                            --------------
                                                            $    2,085,000
                                                            ==============

                                                                    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, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended.  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,  2003  Sierra  Monitor  Corporation
reported net sales of  $2,248,724  compared to  $2,079,204  for the three months
ended June 30, 2002. For the six-month period ended June 30, 2003 net sales were
$3,997,538  compared with  $4,314,836 in the prior year  six-month  period.  The
sales  results for the second  quarter of fiscal 2003  represent  an 8% increase
from the same period in the prior year.  The results for the first six months of
fiscal 2003 represent a 7% decrease from the same period in the prior year.

      In the second  quarter of 2003 sales of our gas detection  systems,  which
generally account for approximately 70% of total revenue, increased 45% over the
first quarter of the year. This increase  contributed to the overall improvement
for the quarter and was the result of increases in sales to the US Navy and also
increased shipments of integrated gas detection systems for large projects.  Gas
detection  sales for the year to date period in 2003 remain  lower than the same
period in 2002.

      Sales of environment controllers to the telecommunications industry in the
second  quarter  of 2003  were at  approximately  the same  level as the  second
quarter of 2002.  Environment  controller  sales for the year to date  period in
2003 are approximately 20% higher than the same period in 2002

      Sales of FieldServers,  our communications  bridge,  were at approximately
the same level as the second quarter of 2002. On a year to date basis,  sales of
FieldServers are approximately 15% higher in 2003 than the same period in 2002.

      Gross profit of $1,262,491 for the three-month  period ended June 30, 2003
was 56% of sales compared to $1,225,536,  or 59% of sales, in the same period in
the previous year. The gross profit for the six-month period ended June 30, 2003
was $2,318,577 or 58% of sales,  compared to $2,495,610,  also 58% of 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.  The lower gross margins in the second quarter of 2003 compared
to the same period in 2002 are, in part,  due to lower  profit  margins on large
gas  detection  projects.  There  have  been no  other  significant  changes  in
materials costs, labor costs or manufacturing overheads.
                                                                    Page 9 of 17
<PAGE>

      Expenses  for  research  and   development,   which  include  new  product
development and engineering to sustain existing products,  were $345,616, or 15%
of sales, for the three-month  period ending June 30, 2003 compared to $375,585,
or 18% of sales,  in the  comparable  period in 2002. In the  six-month  periods
ending June 30, 2003 and June 30, 2002,  research and development  expenses were
$712,316, or 18% of sales, and $801,484, or 19% of sales, respectively. Early in
the second quarter of 2002 we initiated  actions to lower our overall  expenses.
The  actions  included  a  reduction  in all  salaries  and  wages and a similar
reduction in the rates paid to  consultants  and  contractors.  Our research and
development  expenses  in the  second  quarter of 2003 are lower than the second
quarter of 2002 due, in part, to lower operating costs  including  travel,  rent
and depreciation.  Our research and development expenses in the six-month period
ended  June 30,  2003,  compared  to the same  period in 2002,  are  lower  due,
primarily,  to the timing of the expense reduction actions in the middle of that
period.  Although our overall  research and  development  expenses are lower, we
have  continued  software  development  programs  which  extend the  FieldServer
software  library and we have also  continued  essential gas  detection  product
development and enhancements of existing products.

      Selling and  marketing  expenses,  which  consist  primarily  of salaries,
commissions  and  promotional  expenses  were  $623,015  or 28% of sales for the
three-month period ended June 30, 2003, compared to $659,886 or 32% of sales, in
the comparable  period in the prior year. For the six-month  periods ending June
30, 2003 and June 30, 2002,  selling and marketing  expenses were  $1,249,130 or
31% of sales,  and  $1,457,453,  or 34% of sales,  respectively.  In the  second
quarter of 2003,  compared  to the  second  quarter  of 2002,  lower  commission
expenses for independent sales  representatives  and lower advertising  expenses
were  partially  offset by higher  direct  selling  expenses  including  travel,
tradeshows  and  demonstration  equipment.  Our lower  selling  expenses for the
six-month  period ended June 30, 2003,  compared to the same period in 2002, are
primarily due to lower commission expenses to independent sales representatives.
During the first quarter of 2002 we terminated our representation agreement with
one of our  sales  representatives  and  installed  a  direct  salesperson.  The
resulting  reduction in  commission  expenses is partially  offset by the direct
selling expenses.

      General and  administrative  expenses,  which consist  primarily of salary
expenses,  building rent and insurance expenses, were $306,990, or 14% of sales,
for the three-month  period ended June 30, 2003 compared to $280,925,  or 14% of
sales, in the three-month  period ended June 30, 2002. For the six-month periods
ending June 30, 2003 and June 30, 2002, general and administrative expenses were
$607,348,  or 15% of sales,  and $597,078,  or 14% of sales,  respectively.  The
lower general and administrative  expenses, in the six month period, are due, in
part, to lower salary and wage expenses  resulting  from our company wide salary
reductions.

      Our net loss for the  three-month  period  ended June 30,  2003 was $6,991
compared to a net loss of $54,802 in the same period of 2002.  For the six-month
period ended June 30, 2003 our net loss was $148,960 compared to $216,985 in the
same period of 2002. The lower net loss in the second quarter of 2003 is due, in
part,  to higher sales of gas  detection  systems  combined  with our  continued
emphasis on fixed expense controls.  The lower net loss for the six-month period
ended June 30,  2003,  compared  to the same period in 2002,  accomplished  with
lower sales and lower gross profit,  was due to lower fixed  expenses  resulting
from  actions  implemented  in the second  quarter of 2002 and  further  actions
implemented during the past twelve months ended June 30, 2003.

Liquidity and Capital Resources

      Working  capital,  which  is  comprised,   primarily,  of  cash,  accounts
receivable and inventories offset by current liabilities, was $3,236,858 at June
30, 2003.  During the period ended June 30, 2003, our

                                                                   Page 10 of 17
<PAGE>

working capital decreased by $18,530 compared to December 31, 2002. The decrease
in  working  capital  was the  result  of the net loss of  $148,960  reduced  by
approximately  $150,000 of depreciation and amortization of fixed assets, net of
capital equipment investments. Cash on hand, a component of working capital, was
$447,087 at June 30, 2003, a decrease of $292,231 compared to December 31, 2002.
Other   significant   working  capital   component  changes  include  net  trade
receivables  which  increased  by  $417,029  and  deferred  income  taxes  which
increased by $99,308 in the same period.

      During the second  quarter  of 2003 we closed our  manufacturing  plant in
Fort Myers, Florida. The plant was used for assembly of Environment  Controllers
for the  telecommunications  industry. Due to the extended period of low revenue
levels from the telecommunications  industry, we consolidated manufacturing into
our plant in Milpitas,  California.  The plant equipment and inventory was moved
into  storage in  Milpitas.  One employee was retained in Fort Myers in a rented
office  to  provide  technical  support  for  our  telecommunications   industry
customers.  All costs  related to the plant  closure  were  expensed  during the
second  quarter  and  no  future  related   expenses  are   anticipated.   Sales
responsibility for the product line was reassigned within our sales team.

      In the current  fiscal year,  we have not  utilized  our $500,000  line of
credit  with  our  commercial  bank.  We  believe  that our  present  resources,
including cash and accounts  receivable,  are sufficient to fund our anticipated
level of operations through at least the next twelve months.

      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,

                                                                   Page 11 of 17
<PAGE>

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.
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 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.

      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.

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

                                                                   Page 12 of 17
<PAGE>

the  Securities  Exchange Act of 1934 is  recorded,  processed,  summarized  and
reported within the time periods specified in Securities and Exchange Commission
rules and forms.

         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 13 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 13,
2003.

           1.  At the Annual  Meeting,  the following  directors were elected to
               serve  for the  ensuing  year  and  until  there  successors  are
               elected:
                                                  For      Against   Abstain
                      Gordon R. Arnold         7,257,568      0         0
                      C. Richard Kramlich      7,257,568      0         0
                      Jay T. Last              7,257,568      0         0
                      Robert C. Marshall       7,257,568      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, 2003 by the following votes:

                                                  For      Against   Abstain
                                               7,257,568      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.

                       4.1(3)  Specimen   Common   Stock   certificate   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.

                           (3) Incorporated by reference to the Company's Annual
                               Report on Form 10-KSB (File No.  000-07441) filed
                               with the SEC on March 27, 2003.

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

                                    SIGNATURE

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 8, 2003              By:    /s/ Gordon R. Arnold
                                                --------------------
                                                Gordon R. Arnold
                                                President
                                                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.

                       4.1(3)  Specimen   Common   Stock   certificate   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.

                           (3) Incorporated by reference to the Company's Annual
                               Report on Form 10-KSB (File No.  000-07441) filed
                               with the SEC on March 27, 2003.


                                                                   Page 15 of 17