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 September 30, 2007                                         
|                                                                                          
|                                                                                          
|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



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ____    NoX



The number of shares of the issuer's common stock outstanding, as of October 29, 2007 was 11,155,192.



Transitional Small Business Disclosure Format:  Yes  ; No X_



Page 1 of 22

---







|                                                              |                                                                                                        |                                            |         |           |          
|------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------ | ------------------------------------------ | ------- | --------- | ---------
|PART I:  FINANCIAL INFORMATION                               
|ITEM 1.  FINANCIAL STATEMENTS                                
|SIERRA MONITOR CORPORATION                                   
|Condensed Balance Sheet                                      
|September 30, 2007                                           
|(Unaudited)                                                  
|                                                             
|                                                              |                                                                                                        |                                            |         |           |          
|                                                              |                                                                                                        | Assets                                     |         |           |          
|                                                              |                                                                                                        |                                            |         |           |          
|Current assets:                                               |                                                                                                        |                                            |        
|                                                              | Cash                                                                                                   |                                            | $       | 604,177  
|                                                              | Trade receivables, less allowance for doubtful accounts of approximately $80,000                       |                                            |         | 2,091,481
|                                                              | Inventories, net                                                                                       |                                            |         | 2,099,566
|                                                              | Prepaid expenses and other current assets                                                              |                                            |         | 271,786  
|                                                              | Deferred income taxes - current                                                                        |                                            |         | 244,933  
|                                                              |                                                                                                        |                                            |         |           |          
|                                                              |                                                                                                        | Total current assets                       |         |           | 5,311,943
|                                                              |                                                                                                        |                                            |         |           |          
|Property and equipment, net                                   |                                                                                                        |                                            | 283,324
|Deferred income taxes                                         |                                                                                                        |                                            | 50,921 
|Other assets                                                  |                                                                                                        |                                            | 240,467
|                                                              |                                                                                                        |                                            |         |           |          
|                                                              |                                                                                                        | Total assets                               |         | $         | 5,886,655
|                                                              |                                                                                                        |                                            |         |           |          
|Liabilities and Shareholders' Equity                          |                                                                                                        |                                           
|                                                              |                                                                                                        |                                            |         |           |          
|Current liabilities:                                          |                                                                                                        |                                            |        
|                                                              | Accounts payable                                                                                       |                                            | $       | 648,839  
|                                                              | Accrued compensation expenses                                                                          |                                            |         | 451,444  
|                                                              | Income taxes payable                                                                                   |                                            |         | 359,669  
|                                                              | Other current liabilities                                                                              |                                            |         | 86,056   
|                                                              |                                                                                                        |                                            |         |           |          
|                                                              |                                                                                                        | Total current liabilities                  |         |           | 1,546,008
|                                                              |                                                                                                        |                                            |         |           |          
|Commitments and contingencies                                 |                                                                                                        |                                            |        
|                                                              |                                                                                                        |                                            |        
|Shareholders' equity:                                         |                                                                                                        |                                            |        
|                                                              | Common stock, $0.001 par value; 20,000,000 shares authorized; 11,155,192 shares issued and outstanding |                                            |         | 11,155   
|                                                              | Additional paid-in capital                                                                             |                                            |         | 3,343,838
|                                                              | Retained earnings                                                                                      |                                            |         | 985,654  
|                                                              |                                                                                                        |                                            |         |           |          
|                                                              |                                                                                                        | Total shareholders' equity                 |         |           | 4,340,647
|                                                              |                                                                                                        |                                            |         |           |          
|                                                              |                                                                                                        | Total liabilities and shareholders equity |         | $         | 5,886,655
|See accompanying notes to the condensed financial statements.



Page 2 of 22

---





SIERRA MONITOR CORPORATION

Condensed Statements of Operations

(Unaudited)



|                                                                 |                            |                                  |            |                                 |   |            |           |      |            |           |   |            |          
|---------------------------------------------------------------- | -------------------------- | -------------------------------- | ---------- | ------------------------------- | - | ---------- | --------- | ---- | ---------- | --------- | - | ---------- | ---------
|                                                                 |                            | Three months ended
September 30, |            | Nine months ended
September 30,
|                                                                 |                            | 2007                             |            | 2006                            |   | 2007       |           | 2006
|Net sales                                                        |                            | $                                | 3,368,102  |                                 | $ | 2,706,751  |           | $    | 9,610,988  |           | $ | 7,863,672 
|Cost of goods sold                                               |                            |                                  | 1,311,712  |                                 |   | 1,018,368  |           |      | 3,869,853  |           |   | 3,088,854 
|                                                                 | Gross profit               |                                  |            | 2,056,390                       |   |            | 1,688,383 |      |            | 5,741,135 |   |            | 4,774,818
|Operating expenses                                               |                            |                                  |            |                                 |   |            |           |      |            |           |   |           
|Research and development                                         |                            |                                  | 524,668    |                                 |   | 466,990    |           |      | 1,553,708  |           |   | 1,336,351 
|Selling and marketing                                            |                            |                                  | 693,801    |                                 |   | 562,855    |           |      | 2,031,697  |           |   | 1,860,360 
|General and administrative                                       |                            |                                  | 450,041    |                                 |   | 311,945    |           |      | 1,257,341  |           |   | 998,662   
|                                                                 |                            |                                  |            | 1,668,510                       |   |            | 1,341,790 |      |            | 4,842,746 |   |            | 4,195,373
|                                                                 | Income from operations     |                                  |            | 387,880                         |   |            | 346,593   |      |            | 898,389   |   |            | 579,445  
|Interest expense                                                 |                            |                                  | (5,276)    |                                 |   | (3,704)    |           |      | (8,679)    |           |   | (12,429)  
|                                                                 | Income before income taxes |                                  |            | 382,604                         |   |            | 342,889   |      |            | 889,710   |   |            | 567,016  
|Income tax provision                                             |                            |                                  | 154,451    |                                 |   | 136,802    |           |      | 357,293    |           |   | 226,807   
|                                                                 | Net income                 |                                  | $          | 228,153                         |   | $          | 206,087   |      | $          | 532,417   |   | $          | 340,209  
|Net income available to common shareholders per common share     |                            |                                  |            |                                 |   |            |           |      |            |           |   |           
|Basic:                                                           |                            | $                                | 0.02       |                                 | $ | 0.02       |           | $    | 0.05       |           | $ | 0.03      
|Diluted:                                                         |                            | $                                | 0.02       |                                 | $ | 0.02       |           | $    | 0.05       |           | $ | 0.03      
|Weighted average number of shares used in per share computations |                            |                                  |            |                                 |   |            |           |      |            |           |   |           
|Basic:                                                           |                            |                                  | 11,075,192 |                                 |   | 11,050,539 |           |      | 11,055,192 |           |   | 11,048,988
|Diluted:                                                         |                            |                                  | 11,742,979 |                                 |   | 11,479,136 |           |      | 11,580,243 |           |   | 11,542,967
|                                                                 |                            |                                  |            |                                 |   |            |           |      |            |           |   |           
|See accompanying notes to the condensed financial statements.   





Page 3 of 22

---





SIERRA MONITOR CORPORATION

Condensed Statements of Cash Flows

(Unaudited)



|                                                                                                                                                          |                                                                               |                                                     |         |                                 |           |           |           |          
|--------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------- | --------------------------------------------------- | ------- | ------------------------------- | --------- | --------- | --------- | ---------
|                                                                                                                                                          |                                                                               |                                                     |         | Nine months ended September 30,
|                                                                                                                                                          |                                                                               |                                                     |         | 2007                            |           | 2006     
|Cash flows from operating activities:                                                                                                                     |                                                                               |                                                     |         |                                
|                                                                                                                                                          | Net income                                                                    |                                                     | $       | 532,417                         |           | $         | 340,209  
|                                                                                                                                                          | Adjustments to reconcile net income to net cash used in operating activities: |                                                     |         |                                 |           |           |          
|                                                                                                                                                          |                                                                               | Depreciation and amortization                       |         |                                 | 127,276   |           |           | 104,876  
|                                                                                                                                                          |                                                                               | Provision for bad debt expense                      |         |                                 | 16,619    |           |           | 6,834    
|                                                                                                                                                          |                                                                               | Provision for inventory losses                      |         |                                 | -         |           |           | (25,984) 
|                                                                                                                                                          |                                                                               | Deferred income taxes                               |         |                                 | -         |           |           | 166,312  
|                                                                                                                                                          |                                                                               | Stock based compensation expense                    |         |                                 | 69,234    |           |           | 32,787   
|                                                                                                                                                          |                                                                               | Changes in operating assets and liabilities:        |         |                                 |           |           |           |          
|                                                                                                                                                          |                                                                               | Trade receivables                                   |         |                                 | (465,628) |           |           | (580,639)
|                                                                                                                                                          |                                                                               | Inventories                                         |         |                                 | 156,339   |           |           | (436,276)
|                                                                                                                                                          |                                                                               | Prepaid expenses and other current assets           |         |                                 | (125,496) |           |           | (45,418) 
|                                                                                                                                                          |                                                                               | Other assets                                        |         |                                 | (225)     |           |           | 26       
|                                                                                                                                                          |                                                                               | Accounts payable                                    |         |                                 | (293,969) |           |           | 159,329  
|                                                                                                                                                          |                                                                               | Income taxes payable                                |         |                                 | 342,641   |           |           | 59,039   
|                                                                                                                                                          |                                                                               | Accrued compensation expenses                       |         |                                 | 158,482   |           |           | 95,701   
|                                                                                                                                                          |                                                                               | Other current liabilities                           |         |                                 | 11,834    |           |           | (7,683)  
|                                                                                                                                                          |                                                                               | Net cash provided by (used in) operating activities |         |                                 | 529,524   |           |           | (130,887)
|Cash flows from investing activities:                                                                                                                     |                                                                               |                                                     |         |                                 |           |          
|                                                                                                                                                          | Capital expenditures                                                          |                                                     |         | (249,306)                       |           |           | (49,108) 
|                                                                                                                                                          | Acquisition of other long-term assets                                         |                                                     |         | (132,036)                       |           |           | (44,750) 
|                                                                                                                                                          |                                                                               | Net cash used in investing activities               |         |                                 | (381,342) |           |           | (93,858) 
|Cash flows from financing activities:                                                                                                                     |                                                                               |                                                     |         |                                 |           |          
|                                                                                                                                                          | Proceeds from bank borrowings                                                 |                                                     |         | 200,000                         |           |           | 100,000  
|                                                                                                                                                          | Repayments of bank borrowings                                                 |                                                     |         | (200,000)                       |           |           | (200,000)
|                                                                                                                                                          | Proceeds from exercise of stock options                                       |                                                     |         | 9,600                           |           |           | 3,238    
|                                                                                                                                                          |                                                                               | Net cash provided by (used in) financing activities |         |                                 | 9,600     |           |           | (96,762) 
|Net increase (decrease) in cash                                                                                                                           |                                                                               |                                                     | 157,782 |                                 |           | (321,507)
|Cash at beginning of period                                                                                                                               |                                                                               |                                                     | 446,395 |                                 |           | 656,003  
|Cash at end of period                                                                                                                                     |                                                                               | $                                                   | 604,177 |                                 | $         | 334,496  
|Supplemental cash flow information                                                                                                                        |                                                                               |                                                     |         |                                 |           |          
|Cash paid for income taxes                                                                                                                                |                                                                               | $                                                   | 106,493 |                                 | $         | 1,046    
|Cash paid for interest                                                                                                                                    |                                                                               | $                                                   | 8,679   |                                 | $         | 12,429   
|See the accompanying notes for information on non-cash investing and financing activities.

See accompanying notes to the condensed financial statements.



Page 4 of 22

---







| |  |  |  |  |  |  |  | 
| |  |  |  |  |  |  |  | 

SIERRA MONITOR CORPORATION

Notes to the Unaudited Interim Condensed Financial Statements



September 30, 2007 and 2006

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, 2006, which was filed with the SEC on March 21, 2007.  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



The Company



was formed in 1978 and

delivers

 information technology

for

 environment measurement

and

 control

by developing specialized embedded software that is deployed on proprietary hardware platforms.  Embedded software enables data transfer between subsystems using protocol and physical medium translation. Proprietary hardware platforms allow the Company to increase the value proposition while protecting its intellectual property.

The Companys hardware platforms include original equipment modules for installation in customer devices and controllers, gateway boxes generally used by integrators for machine to machine (M2M) protocol translation, and multi-component safety systems generally focused on gas and fire detection. Each of the hardware platforms utilize the Companys proprietary data handling software allowing communication from lower level sensor systems through to the highest levels of Internet Protocol (IP) networks.

By providing

an

 intelligent interface

,



the Companys products

 enable various machines, devices, systems and people to



reliably communicate useful information for the measurement and control of various environments including buildings, plants, factories and over the Internet. By

delivering

 the data on various communications

 levels, including ethernet, internet

, LONworks, Profibus, and others,

the Companys products

 make it possible for data to be accessed at more appropriate

 levels,

such as NOCs, control rooms or remote locations

..

The Companys products, including gas detection systems, environment controls for remote telephone company structures and protocol gateways, are based on complex proprietary software developed by the Company.  The software, embedded in each of the Companys product groups, provides key functions including sensor management, utilization of data for alarm and control purposes and delivery of data across various networks including the Internet.

Gas monitoring products manufactured by the Company are sold for a variety of safety applications ranging from oil and gas processing and chemical plants to wastewater treatment, alternate fuel vehicle programs and other users or producers 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, are sold to telecommunications companies and their suppliers. The Companys



Page 5 of 22

---





FieldServer products are sold generally to integration companies that implement building and plant automation projects and to manufacturers of equipment for the same industry.

The Companys common stock is quoted on the OTC Bulletin Board under the symbol SRMC.OB.

Accounting Policies

a)

Revenue Recognition

The Company recognizes revenues in accordance with Staff Accounting Bulletin (SAB) No. 104, Revenue Recognition, when all of the following conditions exist:  a) persuasive evidence of an arrangement exists in the form of an accepted purchase order; b) delivery has occurred, based on shipping terms, or services have been rendered; c) the Companys price to the buyer is fixed or determinable, as documented on the accepted purchase order; and d) collectibility is reasonably assured.  By product and service type, revenues are recognized when the following specific conditions are met:



Gas Detection and Environment Control Products

Gas Detection and Environment Control products are sold as off-the-shelf products with prices fixed at the time of order. Orders delivered to the Company by phone, fax, mail or email are considered valid purchase orders and once accepted by the Company are deemed to be the final understanding between us and our customer as to the specific nature and terms of the agreed-upon sale transaction.  Products are shipped and are considered delivered when (a) for FOB factory orders they leave our shipping dock or (b) for FOB customer dock orders upon confirmation of delivery.  The creditworthiness of customers is generally assessed prior to the Company accepting a customers first order. Additionally, international customers and customers who have developed a history of payment problems are generally required to prepay or pay through a letter-of-credit.



Gas Detection and Environment Control Services

Gas Detection and Environment Control services consist of field service orders (technical support) and training, which are provided separate from product orders.  Orders are accepted in the same forms as discussed under Gas Detection and Environment Control Productsabove with hourly prices fixed at the time of order. Revenue recognition occurs only when the service activity is completed.  Such services are provided to current and prior customers, and, as noted above, creditworthiness has generally already been assessed by the time the services have been performed. In cases where the probability of receiving payment is low, a credit card number is collected for immediate processing.



FieldServer Products

FieldServer products are sold in the same manner as Gas Detection and Environment Control products (as discussed above) except that the products contain embedded software, which is integral to the operation of the device.  The software embedded in FieldServer products includes two items:  (a) a compiled program containing (i) the basic operating system for FieldServer products, which is common to every unit, and (ii) the correct set of protocol drivers based on the customer order (see FieldServer Services below for more information); and (b) a configuration file that identifies and links each data point as identified by the customer.  The Company does not deem the hardware, operating systems with protocol drivers and configuration files to be separate units of accounting, as defined in Emerging Issues Task Force (EITF) Issue No. 00-21, Revenue Arrangements with Multiple Deliverables, because the Company does not believe that they have value on a stand-alone basis.  The hardware is useless without the software, and the software is only intended to be used in FieldServer hardware.  Additionally, the software included in each sale is deemed to not require significant production, modification or customization, as described in Statement of Position (SOP) 97-02, Software Revenue Recognition, as amended, and therefore the Company recognizes revenues upon the shipment or



Page 6 of 22

---





delivery of products (depending on shipping terms), as described in Gas Detection and Environment Control Products above.



FieldServer Services

FieldServer services consist of orders for custom development of protocol drivers.  Generally customers place orders for FieldServer products concurrently with their order for protocol drivers.  However if custom development of the protocol driver is required, the product order is not processed until development of the protocol driver is complete. Orders are received in the same manner as described in FieldServer Products above, but due to the non-recurring engineering aspect of the customized driver development the Company is more likely to have a written evidence trail of a quotation and a hard copy order.  The driver development involves further research after receipt of order, preparation of a scope document to be approved by the customer and then engineering time to write, test and release the driver program.  When development of the driver is complete the customer is notified and can proceed with a FieldServer product (see FieldServer Products above).  Revenues for driver development are billed and recognized upon shipment or delivery of the related product that includes the developed protocol drivers (as noted in FieldServer Products above). Collectibility is reasonably assured as described in FieldServer Products above.

Discounts and Allowances

Discounts are applied at time of order entry and sales are processed at net pricing.  No allowances are offered to customers.

b)

Recent Accounting Standards

In June 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes, which supplements Statement of Financial Accounting Standard (SFAS) No. 109, Accounting for Income Taxes, by defining the confidence level that a tax position must meet in order to be recognized in the financial statements. FIN 48 requires the tax effect of a position to be recognized only if it is more-likely-than-not to be sustained based solely on its technical merits as of the reporting date. If a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits, no benefits of the position are recognized. This is a different standard for recognition than was previously required. The more-likely-than-not threshold must continue to be met in each reporting period to support continued recognition of a benefit. At adoption, companies must adjust their financial statements to reflect only those tax positions that are more-likely-than-not to be sustained as of the adoption date. Any necessary adjustment is recorded directly to opening retained earnings in the period of adoption and reported as a change in accounting principle. Sierra Monitor adopted the provisions of FIN No. 48 on January 1, 2007, which was the first day of the Companys fiscal year. The Company applies FIN No. 48 to each income tax position accounted for under SFAS No. 109, Accounting for Income Taxes, at each financial statement reporting date. This process involves the assessment of whether each income tax position is more likely than not of being sustained based on its technical merits. In making this assessment, the Company must assume that the taxing authority will examine the income tax position and have full knowledge of all relevant information. For each income tax position that meets the more likely than not recognition threshold, the Company then assesses the largest amount of tax benefit that is greater than 50 percent likely of being realized upon effective settlement with the taxing authority. The Company reports the difference between the tax benefit recorded for financial statement purposes and the amount reflected in the tax return within income tax receivable, income tax payable, deferred tax assets or deferred tax liabilities. Management believes that the Companys tax positions reported on income tax returns, or to be reported on income tax returns, meets the more likely than not standard.  As a result there is no material impact on the financial statements regarding the adoption of FIN No. 48. The Company is subject to federal income tax. With few exceptions, the Company is no longer subject to U.S. federal income tax examination for years before 2000; state and local tax examinations before 2000. However, to the extent allowed by law, the tax authorities may have the right to examine prior periods where net operating losses were generated and carried forward, and make adjustments up to the amount of the net operating loss carryforward amount.



Page 7 of 22

---





The Company is not currently under Internal Revenue Service (IRS), state, local or foreign jurisdiction tax examinations.

For the quarter ended September 30, 2007, the Company recorded $154,451 in income tax provision.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, to define how the fair value of assets and liabilities should be measured in more than 40 other accounting standards where it is allowed or required. In addition to defining fair value, the statement establishes a framework within GAAP for measuring fair value and expands required disclosures surrounding fair-value measurements. While it will change the way companies currently measure fair value, it does not establish any new instances where fair-value measurement is required. SFAS No. 157 defines fair value as an amount that a company would receive if it sold an asset or paid to transfer a liability in a normal transaction between market participants in the same market where the company does business. It emphasizes that the value is based on assumptions that market participants would use, not necessarily only the company that might buy or sell the asset. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years, with early adoption allowed. We are currently evaluating the impact of adopting this Statement.

In February 2007, SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilitieswas released. SFAS No. 159 provides companies with an option to report selected financial assets and liabilities at fair value and establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 will be effective for the Company beginning January 1, 2008. The Company is currently evaluating the potential effect of SFAS No. 159 on its financial statements.

Other recent accounting pronouncements discussed in the notes to the December 31, 2006 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, 2007, did not have or are not expected to have a significant impact on the Companys 2007 financial statements.

c)

Employee Stock-Based Compensation

As of September 30, 2007, the Company had one approved stock-based employee compensation plan for issuing new options, the 2006 Stock Plan.  The Companys 1996 Stock Plan expired by its terms in March 2006, but the 1996 Stock Plan will continue to govern awards previously granted thereunder that have not expired or otherwise terminated.

Under the 2006 Stock Plan, the Company initially reserved 500,000 shares of common stock for issuance. Options are granted under the 2006 Stock Plan at the fair market value of the Company's common stock at the grant date, vest ratably over 4 years, and expire 10 years from the grant date. Prior to January 1, 2006, the Company accounted for grants for these plans under Accounting Principals Board Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees" and related interpretations, and applied SFAS No. 123, "Accounting for Stock-Based Compensation," as amended by SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure," for disclosure purposes only. Under APB No. 25, stock-based compensation cost related to stock options was not recognized in net income since the options underlying those plans had exercise prices greater than or equal to the market value of the underlying stock on the date of the grant.



Page 8 of 22

---





Effective January 1, 2006, the Company adopted SFAS No. 123 (revised 2004), "Share Based Payment," ("SFAS No. 123(R)") which revises SFAS No. 123 and supersedes APB No. 25. SFAS No. 123(R) requires that all share-based payments to employees be recognized in the financial statements based on their fair values at the date of grant. The calculated fair value is recognized as expense (net of any capitalization) over the requisite service period, net of estimated forfeitures, using the straight-line method under SFAS No. 123(R). The Company considers many factors when estimating expected forfeitures, including types of awards, employee class and historical experience. The statement was adopted using the modified prospective method of application which requires compensation expense to be recognized in the financial statements for all unvested stock options beginning in the quarter of adoption. No adjustments to prior periods have been made as a result of adopting SFAS No. 123(R). Under this transition method, compensation expense for share-based awards granted prior to January 1, 2006, but not yet vested as of January 1, 2006, is recognized in the Company's financial statements over their remaining service period. The cost is based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123. As required by SFAS No. 123(R), compensation expense recognized in future periods for share-based compensation granted prior to adoption of the standard will be adjusted for the effects of estimated forfeitures.

For the nine month periods ended September 30, 2007 and 2006, the impact of adopting SFAS No. 123(R) on the Company's condensed statements of operations was an increase in general and administrative expenses of $69,234 and $32,787, respectively, with a corresponding decrease in the Company's income from continuing operations, income before provision for income taxes and net income resulting from the first-time recognition of compensation expense associated with employee stock options. There was no material impact on the Company's basic and diluted net income per share as a result of the adoption of SFAS No. 123(R). The Company did not modify the terms of any previously granted stock options during the nine-month periods ended September 30, 2007 and 2006.

Inventories

A summary of inventories as of September 30, 2007 follows:



|                                         |  |   |          
|---------------------------------------- |  | - | ---------
|Raw Materials                            |  | $ | 730,149  
|Work-in-process                          |  |   | 1,076,754
|Finished goods                           |  |   | 391,043  
|Less: Allowance for obsolescence reserve |  |   | (98,380) 
|                                         |  | $ | 2,099,566



Net income 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.

As of September 30, 2007, there were no potentially dilutive common shares that had an exercise price higher than the stock price used in the EPS calculation.  However, as of September 30, 2006, outstanding options to acquire 360,000 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.



Page 9 of 22

---







The following is a reconciliation of the shares used in the computation of basic and diluted EPS for the three and nine month periods ended September 30, 2007 and 2006, respectively:



|                                                                                               |  |  |                    |  |                    |  |                    |  |                   
|---------------------------------------------------------------------------------------------- |  |  | ------------------ |  | ------------------ |  | ------------------ |  | ------------------
|                                                                                               |  |  | Three months ended |  | Nine months ended 
|                                                                                               |  |  | September 30,
2007 |  | September 30,
2006 |  | September 30,
2007 |  | September 30,
2006
|Basic EPS  weighted-average number of common shares outstanding                               |  |  | 11,075,192         |  | 11,050,539         |  | 11,055,192         |  | 11,048,988        
|Effect of dilutive potential common shares  stock options outstanding                         |  |  | 667,787            |  | 428,597            |  | 525,051            |  | 493,979           
|Diluted EPS  weighted-average number of common shares and potential common shares outstanding |  |  | 11,742,979         |  | 11,479,136         |  | 11,580,243         |  | 11,542,967        



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 (CEO), 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
September 30, |           | Nine months ended
September 30,
|                        |  |  | 2007                             |           | 2006                            |   | 2007      |  | 2006
|Gas detection devices   |  |  | $                                | 1,848,088 |                                 | $ | 1,138,144 |  | $    | 5,293,376 |  | $ | 4,063,177
|Environment controllers |  |  |                                  | 186,362   |                                 |   | 654,848   |  |      | 716,669   |  |   | 1,229,010
|FieldServers            |  |  |                                  | 1,333,652 |                                 |   | 913,759   |  |      | 3,600,943 |  |   | 2,571,485
|                        |  |  | $                                | 3,368,102 |                                 | $ | 2,706,751 |  | $    | 9,610,988 |  | $ | 7,863,672



Page 10 of 22

---





Line-of-Credit

During the quarter ended September 30, 2007, the Company increased its line of credit with its commercial bank from $500,000 to $1,000,000 and had no borrowings against the line of credit.  At September 30, 2007, there was no outstanding balance and the Company was in compliance with all covenants under the line of credit.

Stock Options

No stock options were granted during the three month period ended September 30, 2007.  During the nine month period ended September 30, 2007, a total of 216,500 options were granted under the Companys 2006 Stock Plan with an exercise price of $1.50.  Options are granted under the 2006 Stock Plan at the fair market value of the Companys common stock at the grant date, vest ratably over 4 years, and expire 10 years from the grant date.  Such options had a per-share grant date fair value of $1.50, as calculated by the Black-Scholes option pricing model using the following assumptions: expected life of 8 years; estimated volatility of 210%; risk-free interest rate of 5.25%; and no expected dividends. No options were granted during the three and nine month period ended September 30, 2006.

A total of 100,000 stock options were exercised for shares previously owned by an employee for a value of $37,500 while 5,000 stock options were exercised by an employee for cash proceeds of $2,800 in the three-month period ended September 30, 2007.  During the nine-month period ended September 30, 2007, a total of $125,000 stock options were exercised.  A total of 6,979 stock options were exercised by employees for cash proceeds of $3,238 during the three and nine-month periods ended September 30, 2006.   No stock options expired during the three and nine-month periods ended September 30, 2007. A total of 500 options expired during three-month period ended September 30, 2006 while 48,521 options expired during nine-month period ended September 30, 2006.



Page 11 of 22

---





This Form 10-QSB and any 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 September 30, 2007, Sierra Monitor Corporation reported net sales of $3,368,102 compared to $2,706,751 for the three months ended September 30, 2006.  For the nine-month period ended September 30, 2007, net sales were $9,610,988 compared with $7,863,672 in the prior year nine-month period.   The sales results for the three and nine-month periods ended September 30, 2007 represent increases of 24% and 22% for the respective periods, compared to the same periods in 2006.

In the third quarter of 2007, sales of our gas detection products were approximately $1,848,000 compared to $1,138,000 in the third quarter of 2006.  For the nine-month period ended September 30, 2007, our gas detection product sales were approximately $5,293,000 compared to $4,063,000 in the same period in 2006.  These results represent a 62% year over year increase in the third quarter and a 30% year over year increase in the year-to-date period.  Our gas detection system sales include products designed and manufactured exclusively for the U.S. Navy.  In the third quarter and year-to-date periods of 2007, those sales were unusually high compared to our past experience.  The increase in U.S. Navy sales in the third quarter and year-to-date periods of 2007 was approximately $260,000 and $696,000 respectively.  The remaining increase in gas detection sales is the result of shipments of large integrated systems based on our Sentry controller and our new family of sensor modules.

Sales of Environment Controllers to the telecommunications industry in the third quarter of 2007 were approximately $186,000 compared to $655,000 in the third quarter of 2006.  In the nine-month period ended September 30, 2007, sales of Environment Controllers were approximately $717,000 compared to $1,229,000 in the same period in 2006.  A single, one-time order in the third quarter of 2006 accounted for most of the difference in sales of this product group. The order was for replacement of a large number of aging monitors in one telephone companys remote underground communications sites

In the third quarter of 2007, sales of FieldServer products, our communications bridges, were approximately $1,334,000 compared to $914,000 in the same period in 2006. In the nine-month period ended September 30, 2007, sales of FieldServers were approximately $3,601,000 compared to $2,571,000 sales reported in the same period in 2006.  The sales results for the three and nine-month periods ended September 30, 2007 represent increases of 46% and 40% respectively compared to the same periods in 2006.   FieldServer products are sold in two basic packages, box level products marketed as FieldServers and original equipment manufacturer (OEM) board level products marketed as ProtoCessors.  Box level products are generally used in building automation projects.  Sales of box level products have increased, in part, due to shipments for individual projects that require higher quantities of boxes.  ProtoCessor products are generally sold to



Page 12 of 22

---





manufacturers of equipment used in building automation.  ProtoCessor is a newer product group and shipments of production quantities began in the third quarter of 2006.  As a result of increasing acceptance and shipments to additional manufacturers, the quantities of ProtoCessor shipped in third quarter of 2007 were higher than in the prior year.

Gross profit of $2,056,390 for the three-month period ended September 30, 2007 was 61% of sales compared to $1,688,383, or 62% of sales, in the same period in the previous year.  The gross profit for the nine-month period ended September 30, 2007 was $5,741,135, or 60% of sales, compared to $4,774,818, or 61% of sales, in the same period in the previous year.  The gross margin results are consistent with our historical experience.

Expenses for research and development, which include new product development and engineering to sustain existing products, were $524,668, or 16% of sales, for the three-month period ended September 30, 2007 compared to $466,990, or 17% of sales, in the comparable period in 2006.  In the nine-month periods ended September 30, 2007 and September 30, 2006, research and development expenses were $1,553,708, or 16% of sales, and $1,336,351, or 17% of sales, respectively.  The increased research and development expenses are primarily the result of higher salary and consulting expenses as we continue increasing engineering activities to support growing opportunities for our ProtoCessor products and continued development of new gas detection products.  We anticipate maintaining, or increasing the current level of engineering expense.

Selling and marketing expenses, which consist primarily of salaries, commissions and promotional expenses were $693,801, or 21% of sales for the three-month period ended September 30, 2007, compared to $562,855, or 21% of sales, in the comparable period in the prior year.  For the nine-month periods ended September 30, 2007 and September 30, 2006, selling and marketing expenses were $2,031,697, or 21% of sales, and $1,860,360, or 24% of sales, respectively.  The higher selling expenses are due, primarily, to increased salary and benefit costs combined with higher sales commissions paid to representatives.  The increases are consistent with the higher level of sales.  Marketing expenses have also increased because we budgeted for additional advertising, brochure and tradeshow activity in the current year compared to 2006.

General and administrative expenses, which consist primarily of salary expenses, building rent and insurance expenses, were $450,041 or 14% of sales, for the three-month period ended September 30, 2007 compared to $311,945 or 12% of sales, in the three-month period ended September 30, 2006.  For the nine-month periods ended September 30, 2007 and September 30, 2006, general and administrative expenses were $1,257,341, or 13% of sales, and $998,662, or 13% of sales, respectively.  General and administrative expenses have increased in both the third quarter and year-to-date periods due to higher stock option expensing, new investor relations expenses and higher legal expenses.  In the fourth quarter of 2006, we implemented an ongoing investor relations program aimed at keeping our shareholders and potential investors informed through press releases and web site updates.  Our legal expenses in the third quarter of 2007 included the cost of defending a patent suit that has now been dismissed.

In the three-month period ended September 30, 2007, our income from operations was $387,880 compared to $346,593 in the three-month period ended September 30, 2006.  In the nine-month period ended September 30, 2007, our income from operations was $898,389 compared to $579,445 in the nine-month period ended September 30, 2006.  Our higher gross profit was partially offset by increases in each of our fixed expense categories.

After interest and tax expenses, our net income for the three-month period ended September 30, 2007 was $228,153 compared to $206,087 in the same period of 2006.  For the nine-month period ended September 30, 2007, our net income was $532,417 compared to net loss of $340,209 in the same period of 2006.



Page 13 of 22

---







Liquidity and Capital Resources

Working capital was approximately $3,765,935 at September 30, 2007, an increase of approximately $357,000 from December 31, 2006.   Significant current asset changes include increase in cash of approximately $158,000 and increase in accounts receivable of approximately $449,000, offset by a decrease in inventory of approximately $156,000.  Significant current liability changes include a decrease in accounts payable of approximately $294,000 offset by an increase in income taxes payable of approximately $342,000.  The changes in liquidity are consistent with the financial results that include higher sales levels and continued profitability.

Management believes that the Companys present resources, including cash and accounts receivable, are sufficient to fund its 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 profitable yet competitive prices.

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 us 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 some 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 covenants under 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:



Page 14 of 22

---







a)

Revenue Recognition

The Company recognizes revenues in accordance with Staff Accounting Bulleting (SAB) No. 104, Revenue Recognition, when all of the following conditions exist:  a) persuasive evidence of an arrangement exists in the form of an accepted purchase order; b) delivery has occurred, based on shipping terms, or services have been rendered; c) the Companys price to the buyer is fixed or determinable, as documented on the accepted purchase order; and d) collectibility is reasonably assured.  By product and service type, revenues are recognized when the following specific conditions are met:



Gas Detection and Environment Control Products

Gas Detection and Environment Control products are sold as off-the-shelf products with prices fixed at the time of order. Orders delivered to the Company by phone, fax, mail or email are considered valid purchase orders and once accepted by the Company are deemed to be the final understanding between us and our customer as to the specific nature and terms of the agreed-upon sale transaction.  Products are shipped and are considered delivered when (a) for FOB factory orders they leave our shipping dock or (b) for FOB customer dock orders upon confirmation of delivery.  The creditworthiness of customers is generally assessed prior to the Company accepting a customers first order. Additionally, international customers and customers who have developed a history of payment problems are generally required to prepay or pay through a letter-of-credit.



Gas Detection and Environment Control Services

Gas Detection and Environment Control services consist of field service orders (technical support) and training, which are provided separate from product orders.  Orders are accepted in the same forms as discussed under Gas Detection and Environment Control Products above with hourly prices fixed at the time of order. Revenue recognition occurs only when the service activity is completed.  Such services are provided to current and prior customers, and, as noted above, creditworthiness has generally already been assessed. In cases where the probability of receiving payment is low, a credit card number is collected for immediate processing.



FieldServer Products

FieldServer products are sold in the same manner as Gas Detection and Environment Control products (as discussed above) except that the products contain embedded software, which is integral to the operation of the device.  The software embedded in FieldServer products includes two items:  (a) a compiled program containing (i) the basic operating system for FieldServer products, which is common to every unit, and (ii) the correct set of protocol drivers based on the customer order (see FieldServer Services below for more information); and (b) a configuration file that identifies and links each data point as identified by the customer.  The Company does not deem the hardware, operating systems with protocol drivers and configuration files to be separate units of accounting, as defined in EITF Issue No. 00-21, Revenue Arrangements with Multiple Deliverables, because the Company does not believe that they have value on a stand-alone basis.  The hardware is useless without the software, and the software is only intended to be used in FieldServer hardware.  Additionally, the software included in each sale is deemed to not require significant production, modification or customization, as described in Statement of Position (SOP) No. 97-02, Software Revenue Recognition, as amended, and therefore the Company recognizes revenues upon the shipment or delivery of products (depending on shipping terms), as described in Gas Detection and Environment Control Products above.



Page 15 of 22

---







FieldServer Services

FieldServer services consist of orders for custom development of protocol drivers.  Generally customers place orders for FieldServer products concurrently with their order for protocol drivers.  However if custom development of the protocol driver is required, the product order is not processed until development of the protocol driver is complete. Orders are received in the same manner as described in FieldServer Products above, but due to the non-recurring engineering aspect of the customized driver development the Company is more likely to have a written evidence trail of a quotation and a hard copy order.  The driver development involves further research after receipt of order, preparation of a scope document to be approved by the customer and then engineering time to write, test and release the driver program.  When development of the driver is complete the customer is notified and can proceed with a FieldServer product (see FieldServer Products above).  Revenues for driver development are billed and recognized upon shipment or delivery of the related product that includes the developed protocol drivers (as noted in FieldServer Products above). Collectibility is reasonably assured as described in FieldServer Products above.

Discounts and Allowances

Discounts are applied at time of order entry and sales are processed at net pricing.  No allowances are offered to customers.

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.

Off Balance Sheet Arrangements

As of September 30, 2007, the Company had no off-balance sheet arrangements as defined in Item 303(c) of the SECs Regulation S-B.





Page 16 of 22

---





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 principal 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 were effective as of the end of the period covered by this Quarterly Report to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934, as amended, 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.

Limitations on the Effectiveness of Internal Controls.Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.



Page 17 of 22

---





PART II:  OTHER INFORMATION

Item 6.

Exhibits

Exhibit

Number

Description

3.1(1)

Articles of Incorporation of the Registrant.

3.2(2)

Bylaws of the Registrant.

31.1

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

31.2

Certification of 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.



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:

October 29, 2007

By:    /s/ Gordon R. Arnold

Gordon R. Arnold

President

Chief Executive Officer

Chief Financial Officer



Page 18 of 22

---





Index to Exhibits



Exhibit

Number

Description

3.1(1)

Articles of Incorporation of the Registrant.

3.2(2)

Bylaws of the Registrant.

31.1

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

31.2

Certification of 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 19 of 22