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, 2004
                                          ------------------

                                       or

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

           For the transition period from _____to  _____


                          Commission file number 0-7441

                           SIERRA MONITOR CORPORATION
        -----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)


          California                                             95-2481914
-------------------------------                              -------------------
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

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


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

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes X ; No
                                                             ---     ---

The number of shares of the issuer's  common stock  outstanding,  as of November
10, 2004 was 10,981,546.

Transitional Small Business Disclosure Format:  Yes   ; No X
                                                   ---    ---

                                                                    Page 1 of 16
<PAGE>


                          PART I: FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                           SIERRA MONITOR CORPORATION

                             Condensed Balance Sheet

                               September 30, 2004

                                   (Unaudited)

             Assets
             ------

Current assets:
      Cash                                                            $  790,009
      Trade receivables, less allowance for doubtful accounts          1,490,583
          of approximately $31,000
      Inventories, net                                                 1,399,608
      Prepaid expenses                                                    82,473
      Deferred income taxes                                              238,997
                                                                      ----------
                    Total current assets                               4,001,670

Property and equipment, net                                              192,921
Deferred income taxes                                                     71,147
Other assets                                                              71,537
                                                                      ----------

                    Total assets                                      $4,337,275
                                                                      ==========

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

Current liabilities:
      Accounts payable                                                $  367,144
      Accrued compensation expenses                                      397,924
      Other current liabilities                                          115,167
                                                                      ----------
                    Total current liabilities                            880,235

Commitments and contingencies

Shareholders' equity:
      Common stock, $0.001 par value; 20,000,000 shares authorized;
      10,981,546 shares issued and outstanding                            10,982
      Additional paid-in capital                                       3,153,379
      Retained earnings                                                  292,679
                                                                      ----------
                    Total shareholders' equity                         3,457,040
                                                                      ----------
                    Total liabilities and shareholders' equity        $4,337,275
                                                                      ==========


See accompanying notes to the condensed financial statements.


                                                                    Page 2 of 16
<PAGE>
<TABLE>
<CAPTION>

                                                     SIERRA MONITOR CORPORATION

                                                 Condensed Statements of Operations

                                                             (Unaudited)

                                                                     Three months ended                    Nine months ended
                                                                         September 30,                       September 30,
                                                               ------------------------------       --------------------------------
                                                                    2004              2003               2004               2003
                                                               ------------      ------------       ------------       ------------
<S>                                                            <C>               <C>                <C>                <C>
Net sales                                                      $  2,336,103      $  2,038,312       $  6,543,978       $  6,035,851
Cost of goods sold                                                  926,298           750,899          2,479,352          2,429,860
                                                               ------------      ------------       ------------       ------------
       Gross profit                                               1,409,805         1,287,413          4,064,626          3,605,991
                                                               ------------      ------------       ------------       ------------
Operating expenses
    Research and development                                        410,420           410,146          1,326,982          1,122,463
    Selling and marketing                                           675,526           572,300          1,996,744          1,821,430
    General and administrative                                      308,866           267,768            921,588            875,116
                                                               ------------      ------------       ------------       ------------
                                                                  1,394,812         1,250,214          4,245,314          3,819,009
                                                               ------------      ------------       ------------       ------------
        Income (loss) from operations                                14,992            37,199           (180,688)          (213,018)
Interest income                                                           0                 3                  0              1,952
                                                               ------------      ------------       ------------       ------------
        Income (loss) before income taxes                            14,992            37,202           (180,688)          (211,066)
Income tax (benefit) provision                                        5,965            (4,278)           (72,276)          (103,586)
                                                               ------------      ------------       ------------       ------------
        Net income (loss)                                      $      9,027      $     41,480       $   (108,412)      $   (107,480)
                                                               ============      ============       ============       ============
Basic and diluted net income (loss) available
      to common shareholders per common share                  $       0.00      $       0.00       $      (0.01)      $      (0.01)
                                                               ============      ============       ============       ============

Weighted average number of shares used in per
      share computations
                                        Basic:                   10,981,546        10,971,546         10,974,879         10,971,546
                                                               ============      ============       ============       ============
                                      Diluted:                   11,312,340        11,326,479         10,974,879         10,971,546
                                                               ============      ============       ============       ============

<FN>
See accompanying notes to the condensed financial statements.
</FN>
</TABLE>
                                                                    Page 3 of 16
<PAGE>
                           SIERRA MONITOR CORPORATION

                       Condensed Statements of Cash Flows

                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                         Nine moths ended
                                                                           September 30,
                                                                       2004           2003
                                                                    -----------    -----------
<S>                                                                 <C>            <C>
Cash flows from operating activities:
        Net loss                                                    $  (108,412)   $  (107,480)
         Adjustments to reconcile net loss to net cash
           provided by (used in) operating activities:
           Depreciation and amortization                                127,435        227,352
           Allowance for doubtful accounts                               (6,373)       (16,160)
           Deferred income taxes                                        (74,264)       (83,616)
           Changes in operating assets and liabilities:
             Trade receivables                                         (305,558)        39,880
             Inventories                                               (106,497)        84,022
             Prepaid expenses and other current assets                  115,710         85,095
             Accounts payable                                            22,067        (70,007)
             Accrued compensation expenses                              192,025        116,959
             Other current liabilities                                   (1,402)        (1,893)
                                                                    -----------    -----------
               Net cash provided by (used in) operating
                 activities                                            (145,269)       274,152
                                                                    -----------    -----------
Cash flows from investing activities:
        Capital expenditures                                           (118,803)       (80,209)
        Other assets                                                     (3,200)        (1,169)
                                                                    -----------    -----------
               Net cash used in investing activities                   (122,003)       (81,378)
                                                                    -----------    -----------
Cash flows from financing activities:
        Repayment of notes receivable                                      --            1,329
        Proceeds from exercise of stock options                           2,200           --
                                                                    -----------    -----------
               Net cash provided by financing activities                  2,200          1,329
                                                                    -----------    -----------
Net increase (decrease) in cash                                        (265,072)       194,103
Cash at beginning of period                                           1,055,081        739,318
                                                                    -----------    -----------
Cash at end of period                                               $   790,009    $   933,421
                                                                    ===========    ===========
Supplemental cash flow information
       Cash paid for income taxes                                   $     1,458    $       628
                                                                    ===========    ===========

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

                                                                    Page 4 of 16
<PAGE>
                           SIERRA MONITOR CORPORATION

          Notes to the Unaudited Interim Condensed Financial Statements

                               September 30, 2004

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

     The accompanying unaudited interim 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,  accounting  policies and
notes  thereto  included in the  Company's  Annual Report on Form 10-KSB for the
year ended December 31, 2003,  which was filed March 25, 2004. In the opinion of
the Company, all adjustments,  including normal recurring  adjustments necessary
to present fairly the financial position,  results of operations, and cash flows
of Sierra Monitor  Corporation for the interim  periods have been included.  The
results of operations for the interim period are not  necessarily  indicative of
the results for the full year.

Summary of Business
-------------------

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

     Gas monitoring  products  manufactured by the Company are sold primarily to
oil and gas  drilling  and  refining  companies,  chemical  plants,  waste-water
treatment plants,  semiconductor  industry, and other applications which involve
the handling or generation of hazardous gases.  Environment  Controllers,  which
provide management of environmental conditions in small structures such as local
DSL  distribution  nodes and buildings at cell tower sites ("cell  sites"),  are
sold to  telecommunications  companies  and their  suppliers.  FieldServers  are
typically  sold  to  integration  companies  that  service  building  and  plant
automation projects.

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

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

     a) Revenue Recognition

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

                                                                    Page 5 of 16
<PAGE>

     The Company  recognizes revenue from the sale of FieldServers in accordance
with  Statement of Position  ("SOP")  97-2,  Software  Revenue  Recognition,  as
amended. Revenue is recognized when all of the following criteria have been met:
persuasive evidence of an arrangement exists;  delivery has occurred; the fee is
fixed or determinable;  and  collectibility is probable.  Additionally  software
related  to  the  FieldServers  should  not  require   significant   production,
modification or customization;  otherwise revenues should be deferred.  Deferred
revenues at September 30, 2004 were not significant.

     b) Reclassifications

     Certain  amounts  presented  in  the  financial  statements  for  the  2003
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,
2003 and 2002 audited  financial  statements,  filed  previously with the SEC on
Form 10-KSB,  that were required to be adopted  during the year ending  December
31, 2004 did not have a significant impact on the Company's financial statements
for the three-month and nine-month periods ended September 30, 2004.

     d) Employee Stock-Based Compensation

     At  September  30,  2004,   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  income
(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 Nine Months
                                                                           Ended September 30,               Ended September 30,
                                                                       --------------------------        ---------------------------
                                                                         2004             2003             2004             2003
                                                                       ---------        ---------        ---------        ---------
<S>                                                                    <C>              <C>              <C>              <C>
Net income (loss):
   As reported                                                         $   9,027        $  41,480        $(108,412)       $(107,480)
   Deduct: Total stock-based employee
      compensation expense determined under
      fair value based method for all awards                           $ (41,000)       $ (46,000)       $ (82,000)       $(138,000)
                                                                       ---------        ---------        ---------        ---------
         Pro forma                                                     $ (31,973)       $  (4,520)       $(190,412)       $(245,480)
                                                                       =========        =========        =========        =========

Basic and diluted net income (loss) per share:
         As reported                                                   $    0.00        $    0.00        $   (0.01)       $   (0.01)
         Pro forma                                                     $   (0.00)       $   (0.00)       $   (0.02)       $   (0.02)

</TABLE>

                                                                    Page 6 of 16
<PAGE>

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

A summary of inventories as of September 30, 2004 follows:

              Raw Materials                        $   650,217
              Work-in-process                          633,226
              Finished goods                           189,596
              Obsolescence reserve                     (73,431)
                                                   -----------
                                                   $ 1,399,608
                                                   ===========

Net income (loss) per share
---------------------------

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

     The  Company  reported  a net loss for both the  nine-month  periods  ended
September 30, 2004 and 2003.  As a result,  835,000  shares and 605,000  shares,
respectively,  of common stock issuable upon exercise of stock options have been
excluded  from the  calculation  of  diluted  loss per share for the  nine-month
periods  ended  September  30, 2004 and 2003 because  their  inclusion  would be
antidilutive.  At September  30, 2004 and 2003,  outstanding  options to acquire
672,000  shares  and  847,500  shares,  respectively,  of common  stock were not
considered  potentially  dilutive  common shares due to the exercise price being
higher than the stock price used in the EPS calculation.

     The following is a reconciliation  of the shares used in the computation of
basic and diluted EPS for the three and nine month periods  ended  September 30,
2004 and 2003, respectively:

<TABLE>
<CAPTION>
                                                                    Three months     Nine months      Three months       Nine months
                                                                       ended            ended             ended              ended
                                                                    9/30/2004         9/30/2004         9/30/2003         9/30/2003
                                                                    ----------        ----------        ----------        ----------
<S>                                                                 <C>               <C>               <C>               <C>
Basic EPS - weighted-average number of common                       10,981,546        10,974,879        10,971,546        10,971,546
    shares outstanding
Effect of dilutive potential common shares -
    stock options outstanding                                          330,794              --             354,933              --
                                                                    ----------        ----------        ----------        ----------
Diluted EPS - weighted-average number of
    common shares and potential common shares outstanding           11,312,340        10,974,879        11,326,479        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.


                                                                    Page 7 of 16
<PAGE>


     In  addition,  the CEO reviews  the  following  information  on revenues by
product category:
<TABLE>
<CAPTION>
                                                   Three months ended                        Nine months ended
                                                       September 30,                           September 30,
                                          ------------------------------------     ------------------------------------
                                               2004                2003                  2004                2003
                                          ----------------    ----------------     ----------------    ----------------
<S>                                       <C>                 <C>                  <C>                 <C>
Gas detection devices                     $     1,352,207     $     1,204,008      $     3,832,996     $     3,929,636
Environment Controllers                           315,862             334,117              819,846             777,679
FieldServers                                      668,034             500,187            1,891,136           1,328,536
                                          ----------------    ----------------     ----------------    ----------------
                                          $     2,336,103     $     2,038,313      $     6,543,978     $     6,035,851
                                          ================    ================     ================    ================
</TABLE>

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

     In June 2004,  the  Company  renewed its  $500,000  line of credit with its
commercial  bank.  There are currently no borrowings  and there has been no loan
activity by the Company during 2004.

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

     On July 20, 2004 an employee exercised an option to acquire 5,000 shares of
the Company's common stock at $0.22 per share. Additionally,  options to acquire
15,000 shares of the Company's common stock were forfeited in connection with an
employee's termination.

     On May 27,  2004,  the  Company  granted to a  director  options to acquire
100,000  shares of the Company's  common stock at $0.63 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, 2005, 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.

Reclassifications
-----------------

     Certain amounts in the 2003 financial  statements have been reclassified to
conform to the 2004 presentation.


                                                                    Page 8 of 16
<PAGE>

     This Form  10-QSB  and the  accompanying  letter to  shareholders  contains
forward-looking  statements  within the meaning of Section 27A of the Securities
Act of 1933, and Section 21E of the Securities Exchange Act of 1934.  Statements
that are not statements of historical  fact may be deemed to be  forward-looking
statements.  The words "believe," "expect," "intend," "plan," "project," "will,"
and  similar  words and  phrases as they  relate to the  Company  also  identify
forward-looking  statements.  Such  statements  reflect  the  current  views and
assumptions of the Company and are not guarantees of future  performance.  These
statements are subject to various risks and uncertainties.  The Company's actual
results could differ materially from those anticipated in these  forward-looking
statements  as a result  of the risk  factors  described  in this  Form  10-QSB,
including  those  under the  heading  "Certain  Factors  That May Affect  Future
Results"  and those  issues  described  under the heading  "Critical  Accounting
Policies." The Company  expressly  disclaims any obligation to release  publicly
any updates or revisions to any forward-looking statement to reflect any changes
in  expectations,  or any  change  in  events or  circumstances  on which  those
statements are based, unless otherwise required by law.

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

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

     Sierra Monitor  Corporation  reported net sales of $2,336,103 for the three
months ended  September 30, 2004,  compared to  $2,038,312  for the three months
ended  September 30, 2003. Net sales were  $6,543,978 for the nine-month  period
ended September 30, 2004,  compared with $6,035,851 in the prior year nine-month
period.  The sales results for the third quarter of fiscal 2004  represent a 15%
increase from the same period in the prior year.  The results for the first nine
months of fiscal 2004 represent an 8% increase from the same period in the prior
year.

     In the  third  quarter  of 2004  sales of our gas  detection  systems  were
$1,352,207 or 12% higher than in the third quarter of 2003. Gas detection  sales
for the nine  month  year to date  period  were 2.5% lower that the year to date
period on 2003.  The increased  sales in the third quarter were, in part, due to
the release of a new  product  which had been  delayed in the second  quarter of
2004.  The delay had  suppressed  sales of fixed gas  monitoring  systems in the
second quarter of 2004.

     Sales of Environment Controllers to the telecommunications  industry in the
third  quarter of 2004 were  $315,862  or 5% lower than in the third  quarter of
2003 but were approximately 39% higher than the second quarter of 2004. Sales of
Environment  Controllers  for the  nine-month  year to date  period in 2004 were
approximately  5%  higher  than the same  period  in  2003.  As a result  of the
generally  flat sales  environment  for  infrastructure  spending  by land based
carriers we are  continuing an initiative  to focus our  Environment  Controller
products and our sales efforts toward wireless company applications in line with
the trends of the industry.

     In the third quarter of 2004,  sales of  FieldServers,  our  communications
bridge,  were  $668,034  or 34%  higher  than  in the  third  quarter  of  2003.
FieldServer   sales  for  the  nine-month  year  to  date  period  in  2004  are
approximately  42% higher  than the same period in 2003.  Sales of  FieldServers
have  increased  partially  as a  result  of  increased  product  awareness  and
utilization by building automation  integrators who use the products to increase
the number of devices that can  communicate  with central  control  systems.  In
addition,  second and third quarter sales included  delivery of two large orders
for integration of multiple  buildings on a university  campus.  Our FieldServer
unit is  continuing  to target  university  and other  campuses  as  significant
opportunities for large integration projects.


                                                                    Page 9 of 16
<PAGE>

     Gross profit of $1,409,805 for the  three-month  period ended September 30,
2004 was 60% of sales  compared  to  $1,287,413,  or 63% of  sales,  in the same
period in the previous year.  The gross profit for the  nine-month  period ended
September 30, 2004 was $4,064,626,  or 62% of sales, compared to $3,605,991,  or
60% of sales, in the same period in the previous year. The lower gross profit in
the third quarter of 2004, compared to the same period in 2003 was due, in part,
to higher labor and materials expenses relating to the initial  manufacturing of
a new sensor module released early in the third quarter.  We anticipate that the
higher  expenses for the new product are temporary and that the gross margin for
the  nine-month  period in 2004 is a better  indicator of the normal margins for
the current product mix.

     Expenses  for  research  and   development,   which   include  new  product
development and engineering to sustain existing products,  were $410,420, or 18%
of sales,  for the  three-month  period  ending  September  30, 2004 compared to
$410,146,  or 20% of sales, in the comparable  period in 2003. In the nine-month
periods  ending  September  30,  2004  and  September  30,  2003,  research  and
development expenses were $1,326,982, or 20% of sales, and $1,122,463, or 19% of
sales,  respectively.  The current rate of research and  development  expense is
consistent  with our plans to continue  to release  new  products in each of our
three  product  groups.  During the third  quarter of 2004 we released a new gas
detection product, a new FieldServer  product and a series of hybrid electronics
modules   which  will  be  marketed   under  the  product  name   "ProtoCessor".
ProtoCessors allow original electronic control equipment manufacturers to design
FieldServer capabilities into their products.

     Selling and  marketing  expenses,  which  consist  primarily  of  salaries,
commissions  and  promotional  expenses were  $675,526,  or 29% of sales for the
three-month  period ended  September  30,  2004,  compared to $572,300 or 28% of
sales,  in the comparable  period in the prior year. For the nine-month  periods
ending September 30, 2004 and September 30, 2003, selling and marketing expenses
were $1,996,744, or 31% of sales, and $1,821,430, or 30% of sales, respectively.
There is no significant change in selling and marketing expenses as a percentage
of sales.  The  increase in total  selling and  marketing  expense is due to the
higher sales levels in the three and nine month periods ended September 30, 2004
compared to the same periods in the prior year.

     General and  administrative  expenses,  which  consist  primarily of salary
expenses,  building rent and insurance expenses, were $308,866, or 13% of sales,
for the three-month  period ended September 30, 2004 compared to $267,768,  also
13% of sales,  in the  three-month  period ended  September  30,  2003.  For the
nine-month periods ending September 30, 2004 and September 30, 2003, general and
administrative  expenses were $921,588, or 14% of sales, and $875,116, or 15% of
sales, respectively.  Our higher general and administrative expenses in both the
three and nine month  periods  ended  September  30,  2004  compared to the same
periods of 2003 are due higher personnel  expenses combined with higher expenses
for professional services.

     Our net income for the  three-month  period  ended  September  30, 2004 was
$9,027 compared to a net income of $41,480 in the same period of 2003. The lower
income in the third  quarter of 2004  compared  to the third  quarter of 2003 is
due,  primarily,  to the lower gross margins  combined with higher  research and
development  expenses and higher general and  administrative  expenses.  For the
nine-month  period  ended  September  30, 2004 our  operating  loss was $180,688
compared to an  operating  loss of  $213,018  in the same  period in 2003.  As a
result of changes  in the tax  benefit  our net loss in the nine  month  periods
ended September 30, 2004 and 2003 were $108,412 and $107,480 respectively.

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

     Working  capital,  which  is  comprised,   primarily,   of  cash,  accounts
receivable  and  inventories  offset by current  liabilities,  was $3,121,435 at
September 30, 2004. Working capital decreased by $100,778 from December 31, 2003


                                                                   Page 10 of 16
<PAGE>

to September 30, 2004. The decrease in working  capital was primarily the result
of the net loss of $108,412 and capital  investments of  approximately  $120,000
reduced by  approximately  $127,000 of  depreciation  and  amortization of fixed
assets. Cash on hand, a component of working capital,  was $790,009 at September
30, 2004, a decrease of $265,072  compared to December 31, 2003. The decrease in
cash on hand is, primarily, due to an increase in accounts receivable consistent
with the higher sales level in the third quarter of 2004.

     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,  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


                                                                   Page 11 of 16
<PAGE>

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 secured 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  allowance  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 estimated 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,  our  management  has concluded  that our  disclosure
controls and procedures are effective to ensure that information we are required
to disclose in reports that we file or submit under the Securities  Exchange Act
of 1934 is recorded, processed,  summarized and reported within the time periods
specified in SEC rules and forms.

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


                                                                   Page 12 of 16
<PAGE>
                           PART II: OTHER INFORMATION

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

         None

Item 6.  Exhibits

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

         3.1(1)   Articles of Incorporation of the Registrant.

         3.2(2)   Bylaws of the Registrant.

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

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

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

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



                                   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:  November 12, 2004                By:  /s/ Gordon R. Arnold
                                             -----------------------------------
                                             Gordon R. Arnold
                                             Chief Executive Officer
                                             Chief Financial Officer


                                                                   Page 13 of 16
<PAGE>
                                Index to Exhibits

        Exhibit
        Number     Description
        ------     -----------
         3.1(1)   Articles of Incorporation of the Registrant.

         3.2(2)   Bylaws of the Registrant.

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

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

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

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



                                                                   Page 14 of 16