UNITED STATES
SECURITIES AND EXCHANGECOMMISSIONWashington, D.C. 20549

# FORM 10-Q

(Mark One)

|[X] |  | Quarterly
 Report Pursuant to Section 13 or 15(d) of the Securities  Exchange Act of 1934 For the
Quarter Ended September 30, 2003
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------

or

|[   ] |  | Transition
 Report  Pursuant to Section 13 or 15(d) of the  Securities  Exchange Act of 1934 For the
transition period from _________________ to _________________
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

Commission File Number 0-9273

MOCON, INC.
                              (Exact name of registrant as specified in its charter)

|MINNESOTA                       | 41-0903312         
|------------------------------- | -------------------
|(State or other jurisdiction of | (I.R.S. employer   
|incorporation or organization)  | identification no.)

7500 Boone Avenue
North, Minneapolis, Minnesota 55428             (Address of principal executive
offices)                  (Zip code)

(763) 493-6370
              (Registrant's telephone number, including area code)

Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by section 13 or 15
(d) of the SECURITIES EXCHANGE ACT OF 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
YES _X_ NO ___

Indicate by check mark whether the
registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). YES ___  NO _X_

5,391,869 Common Shares were
outstanding as of September 30, 2003



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MOCON, INC.

INDEX TO FORM 10-Q For the Quarter Ended
September 30, 2003

|                                                                   | PageNumber
|------------------------------------------------------------------ | ----------
|PART I. FINANCIAL INFORMATION                                      |           
|Item 1. Financial Statements                                      
|Condensed Consolidated Balance Sheets                             
|September 30, 2003 (Unaudited) and December 31, 2002               | 1         
|Condensed Consolidated Statements of Income(Unaudited)            
|Three months and nine months ended September 30, 2003 and 2002     | 2         
|Condensed Consolidated Statements of Cash Flows(Unaudited)        
|Nine months ended September 30, 2003 and 2002                      | 3         
|Notes to Condensed Consolidated Financial Statements(Unaudited)    | 4-8       
|Item 2. Management's Discussion and Analysis of Results of        
|Operations and Financial Condition                                 | 9-12      
|Item 3. Quantitative and Qualitative Disclosures About Market Risk | 13        
|Item 4. Controls and Procedures                                    | 13        
|PART II. OTHER INFORMATION                                         |           
|Item 6. Exhibits and Reports on Form 8-K                           | 14        
|Signatures                                                         | 15        



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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MOCON, INC.

CONDENSED CONSOLIDATED
BALANCE SHEETS                                             (Unaudited)

|ASSETS                                                     | September 30,
2003 | December 31,
2002
|---------------------------------------------------------- | ------------------ | -----------------
|Current assets:                                            |                    |                  
|Cash and temporary cash investments                        |                    |                  
|Marketable securities, current                             |                    |                  
|Trade accounts receivable, less allowance for doubtful     |                    |                  
|accounts of $239,000 in 2003 and $202,000 in 2002          |                    |                  
|Other receivables                                          |                    |                  
|Inventories                                                |                    |                  
|Prepaid expenses                                           |                    |                  
|Deferred income taxes                                      |                    |                  
|                                                           |                    |                  
|Total current assets                                       |                    |                  
|                                                           |                    |                  
|Marketable securities, noncurrent                          |                    |                  
|                                                           |                    |                  
|Property, plant and equipment, net                         |                    |                  
|                                                           |                    |                  
|Other assets:                                              |                    |                  
|Software development costs, net of accumulated             |                    |                  
|amortization of $362,957 in 2003 and $162,634 in 2002      |                    |                  
|Goodwill                                                   |                    |                  
|Technology rights and other intangibles, net               |                    |                  
|Other                                                      |                    |                  
|                                                           |                    |                  
|Total other assets                                         |                    |                  
|                                                           |                    |                  
|                                                           |                    |                  
|TOTAL ASSETS                                               |                    |                  
|                                                           |                    |                  
|                                                           |                    |                  
|LIABILITIES AND STOCKHOLDERS' EQUITY                       |                    |                  
|Current liabilities:                                       |                    |                  
|Accounts payable                                           |                    |                  
|Accrued compensation and vacation                          |                    |                  
|Other accrued expenses                                     |                    |                  
|Accrued product warranties                                 |                    |                  
|Accrued income taxes                                       |                    |                  
|Dividends payable                                          |                    |                  
|                                                           |                    |                  
|Total current liabilities                                  |                    |                  
|Deferred income taxes                                      |                    |                  
|                                                           |                    |                  
|Total liabilities                                          |                    |                  
|                                                           |                    |                  
|Stockholders' equity:                                      |                    |                  
|Capital stock  undesignated  authorized 3,000,000 shares |                    |                  
|Common stock  $.10 par value.  Authorized 22,000,000      |                    |                  
|shares; issued and outstanding 5,391,869 shares in 2003    |                    |                  
|and 5,470,189 shares in 2002                               |                    |                  
|Capital in excess of par value                             |                    |                  
|Retained earnings                                          |                    |                  
|Accumulated other comprehensive income                     |                    |                  
|                                                           |                    |                  
|Total stockholders' equity                                 |                    |                  
|                                                           |                    |                  
|TOTAL LIABILITIES AND                                      |                    |                  
|STOCKHOLDERS' EQUITY                                       |                    |                  
|                                                           |                    |                  

See accompanying notes to condensed
consolidated financial statements.

-1-

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MOCON, INC.

CONDENSED CONSOLIDATED
STATEMENTS OF INCOME                     (Unaudited)

|                                             | Three Months Ended
September 30, | Nine Months Ended
September 30,
|-------------------------------------------- | -------------------------------- | -------------------------------
|
|                                             |                                  |                                
|Sales:                                       |                                  |                                
|Products                                     |                                  |                                
|Consulting services                          |                                  |                                
|                                             |                                  |                                
|Total sales                                  |                                  |                                
|                                             |                                  |                                
|Cost of sales:                               |                                  |                                
|Products                                     |                                  |                                
|Consulting services                          |                                  |                                
|                                             |                                  |                                
|Total cost of sales                          |                                  |                                
|                                             |                                  |                                
|Gross profit                                 |                                  |                                
|                                             |                                  |                                
|Selling, general and administrative expenses |                                  |                                
|Research and development expenses            |                                  |                                
|                                             |                                  |                                
|Operating income                             |                                  |                                
|Investment income                            |                                  |                                
|                                             |                                  |                                
|Income before income taxes                   |                                  |                                
|Income taxes                                 |                                  |                                
|                                             |                                  |                                
|Net income                                   |                                  |                                
|                                             |                                  |                                
|Net income per common share:                 |                                  |                                
|Basic                                        |                                  |                                
|                                             |                                  |                                
|Diluted                                      |                                  |                                
|                                             |                                  |                                
|Weighted average shares outstanding:         |                                  |                                
|Basic                                        |                                  |                                
|                                             |                                  |                                
|Diluted                                      |                                  |                                
|                                             |                                  |                                

See accompanying notes to condensed
consolidated financial statements.

-2-

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MOCON, INC.

CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS                                             (Unaudited)

|                                                                     | Nine Months
Ended September 30,
|-------------------------------------------------------------------- | -------------------------------
|                                                                     |                                
|
|                                                                     |                                
|Cash flows from operating activities:                                |                                
|Net income                                                           |                                
|Adjustments to reconcile net income to net cash provided by          |                                
|operating activities:                                                |                                
|Write-offs of intangible assets                                      |                                
|Depreciation and amortization                                        |                                
|Deferred income taxes                                                |                                
|Changes in operating assets and liabilities:                         |                                
|Trade accounts receivable                                            |                                
|Other receivables                                                    |                                
|Inventories                                                          |                                
|Prepaid expenses                                                     |                                
|Accounts payable                                                     |                                
|Accrued compensation and vacation                                    |                                
|Other accrued expenses                                               |                                
|Accrued product warranties                                           |                                
|Accrued income taxes                                                 |                                
|                                                                     |                                
|Net cash provided by operating activities                            |                                
|                                                                     |                                
|Cash flows from investing activities:                                |                                
|Purchases of marketable securities                                   |                                
|Proceeds from sales or maturities of marketable securities           |                                
|Purchases of property and equipment                                  |                                
|Purchases and development of software                                |                                
|Purchases of patents and trademarks                                  |                                
|Other                                                                |                                
|                                                                     |                                
|Net cash used in investing activities                                |                                
|                                                                     |                                
|Cash flows from financing activities:                                |                                
|Proceeds from the exercise of stock options                          |                                
|Purchases and retirement of common stock                             |                                
|Dividends paid                                                       |                                
|                                                                     |                                
|Net cash used in financing activities                                |                                
|                                                                     |                                
|Net decrease in cash and temporary cash investments                  |                                
|Cash and temporary cash investments:                                 |                                
|Beginning of period                                                  |                                
|                                                                     |                                
|End of period                                                        |                                
|                                                                     |                                
|Supplemental disclosures of cash flow information:                   |                                
|Cash paid during the period for income taxes                         |                                
|Supplemental schedule of noncash investing and financing activities: |                                
|Unrealized holding gain (loss) on available-for-sale securities      |                                
|Dividends accrued                                                    |                                

See accompanying notes to condensed
consolidated financial statements.

-3-

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MOCON, INC.

NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)



Note 1  Condensed Consolidated
Financial Statements

The condensed consolidated balance
sheet as of September 30, 2003, the condensed consolidated statements of income for the
three- and nine-month periods ended September 30, 2003 and 2002, and the condensed
consolidated statements of cash flows for the nine-month periods ended September 30, 2003
and 2002 have been prepared by us, without audit. However, all adjustments (consisting
solely of normal recurring adjustments) which are, in the opinion of management,
necessary to present fairly the financial position, results of operations and cash flows
at September 30, 2003, and for all periods presented, have been made. The results of
operations for the period ended September 30, 2003 are not necessarily indicative of
operating results for the full year.

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
condensed or omitted. It is suggested that these condensed consolidated financial
statements be read in conjunction with the consolidated financial statements and notes
included in our December 31, 2002 annual report to shareholders.

StockBased Compensation

We use the intrinsic-value method
for employee stock-based compensation pursuant to Accounting Principles Board Opinion No.
25 (Opinion 25), Accounting for Stock Issued to Employees. Under the guidelines of
Opinion 25, compensation cost for stock-based employee compensation plans is recognized
based on the difference, if any, between the quoted market price of the stock on the date
of grant and the amount an employee must pay to acquire the stock.

We have adopted the disclosure-only
provisions for employee stock-based compensation and the fair-value method for
non-employee stock-based compensation of Statement of Financial Accounting Standards No.
123 (SFAS 123), Accounting for Stock-Based Compensation. These provisions require
us to show, on a pro forma basis, our net income and income per common share if we had
recorded an expense for our stock options at the time of grant. Other than disclosure in
this footnote, we do not use these pro forma results for any purpose.

Had we recorded compensation cost
based on the estimated fair value on the date of grant, as defined by SFAS 123, our net
income and net income per common share would have been reduced to the pro forma amounts
indicated below:

-4-

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|                                            | Three Months Ended
September 30, | Nine Months Ended
September 30,
|------------------------------------------- | -------------------------------- | -------------------------------
|                                            |                                  |                                
|
|                                            |                                  |                                
|Net income - as reported                    |                                  |                                
|Deduct:  Total stock-based employee         |                                  |                                
|compensation expense determined under       |                                  |                                
|fair value based method for all awards, net |                                  |                                
|of related tax effects                      |                                  |                                
|                                            |                                  |                                
|Net income - pro forma                      |                                  |                                
|                                            |                                  |                                
|Net income per common share - as reported:  |                                  |                                
|Basic                                       |                                  |                                
|Diluted                                     |                                  |                                
|Net income per common share - pro forma:    |                                  |                                
|Basic                                       |                                  |                                
|Diluted                                     |                                  |                                

New Accounting Pronouncements

In May 2003, the FASB issued
Statement of Financial Accounting Standards No. 150 (SFAS 150), Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity. SFAS 150
establishes standards on the classification and measurement of financial instruments with
characteristics of both liabilities and equity. SFAS 150 is effective for financial
instruments entered into or modified after May 31, 2003, and otherwise is effective at
the beginning of the first interim period beginning after June 15, 2003. The adoption of
this statement did not have a material impact on our financial condition or results of
operation.

In December 2002, the Emerging
Issues Task Force issued EITF 00-21, Revenue Arrangements with Multiple
Deliverables. This issue addresses certain aspects of the accounting for
arrangements under which a company will perform multiple revenue-generating activities.
In some arrangements, the different revenue-generating activities (deliverables) are
sufficiently separable, and there exists sufficient evidence of their fair values to
separately account for some or all of the deliverables (that is, there are separate units
of accounting). In other arrangements, some or all of the deliverables are not
independently functional, or there is not sufficient evidence of their fair values to
account for them separately. This issue addresses when and, if so, how an arrangement
involving multiple deliverables should be divided into separate units of accounting. This
issue does not change otherwise applicable revenue recognition criteria. This issue was
applicable for us for revenue arrangements entered into beginning in third quarter 2003.
The adoption of EITF 00-21 did not have an impact on revenue recognition.

-5-

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Note 2  Inventories

Inventories consist of the following:

|                  | September 30,
2003 | December 31,
2002
|----------------- | ------------------ | -----------------
|                  |                    |                  
|Finished products |                    |                  
|Work in process   |                    |                  
|Raw materials     |                    |                  
|                  |                    |                  
|                  |                    |                  
|                  |                    |                  

Note 3  Net Income Per Common
Share

Basic net income per common share is
computed by dividing net income by the weighted average number of shares of common stock
outstanding during the period. Diluted net income per common share is computed using the
treasury stock method to compute the weighted average common stock outstanding assuming
the conversion of potential dilutive common shares.

The following table presents a
reconciliation of the denominators used in the computation of net income per common share
 basic and net income per common share  diluted for the three- and nine-month
periods ended September 30, 2003, and 2002:

|                                | Three Months Ended
September 30, | Nine Months Ended
September 30,
|------------------------------- | -------------------------------- | -------------------------------
|                                |                                  |                                
|
|                                |                                  |                                
|Weighted shares of common stock |                                  |                                
|outstanding - basic             |                                  |                                
|Weighted shares of common stock |                                  |                                
|assumed upon exercise of stock  |                                  |                                
|options                         |                                  |                                
|                                |                                  |                                
|Weighted shares of common stock |                                  |                                
|outstanding - diluted           |                                  |                                
|                                |                                  |                                

Note 4  Goodwill
and Intangible Assets

As of September 30, 2003, we have
unamortized goodwill in the amount of $1,346,795. Other intangible assets (all of which
are being amortized) are as follows:

|                          | As of September 30, 2003
|------------------------- | ------------------------
|                          |                         
|
|                          |                         
|Patents                   |                         
|Trademarks and tradenames |                         
|Technology rights         |                         
|Other intangibles         |                         
|                          |                         
|                          |                         
|                          |                         

-6-

---

Total amortization expense for the
three and nine months ended September 30, 2003 was $44,949 and $135,498, respectively.
Estimated amortization expense for each of the five succeeding fiscal years based on the
intangible assets as of September 30, 2003 is as follows:

|     | Estimated Expense
|---- | -----------------
|2003 | $179,725         
|2004 | 179,369          
|2005 | 179,275          
|2006 | 165,916          
|2007 | 158,256          

Note 5  Marketable Securities

Available-for-sale securities are
recorded at fair value. Unrealized holding gains and losses on available-for-sale
securities are excluded from income and are reported as a separate component of
stockholders equity until realized. A decline in the market value of any
available-for-sale security below cost that is deemed other than temporary is charged to
income resulting in the establishment of a new cost basis for the security. At September
30, 2003, and September 30, 2002, this resulted in a net unrealized gain of $5,553 and
$964, respectively, within stockholders equity.

Note 6  Comprehensive Income

|                              | Three Months Ended
September 30, | Nine Months Ended
September 30,
|----------------------------- | -------------------------------- | -------------------------------
|                              |                                  |                                
|
|                              |                                  |                                
|Net income                    |                                  |                                
|Net unrealized (loss) gain on |                                  |                                
|marketable securities         |                                  |                                
|                              |                                  |                                
|Comprehensive income          |                                  |                                
|                              |                                  |                                

Note 7  Warranty
Guarantees

We provide a warranty for most of
our products. Warranties are for periods ranging from ninety days to one year, and cover
parts and labor for non-maintenance repairs, at our location. Operator abuse, improper
use, alteration, damage resulting from accident, or failure to follow manufacturers
directions, are excluded from warranty coverage.

Warranty expense is accrued at the
time of sales based on historical claims experience. Special warranty reserves are also
accrued for special rework campaigns for known major product modifications. We also offer
service contracts for select products when the factory warranty period expires.

-7-

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Warranty provisions and claims for
the nine-month periods ended September 30, 2003 and 2002 were as follows:

|                    | Nine Months Ended
September 30,
|------------------- | -------------------------------
|                    |                                
|
|                    |                                
|Beginning balance   |                                
|Warranty provisions |                                
|Warranty claims     |                                
|                    |                                
|Ending balance      |                                
|                    |                                

Note 8  Stock Repurchase

In May of 2003, our Board of
Directors authorized a $1,200,000 increase in our common stock repurchase program,
bringing the total repurchase authorization up to $3,200,000 of our common stock.
Pursuant to this authorization, we have acquired $627,606 of our common stock.

-8-

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MOCON, INC.

Item 2. Management's Discussion and
Analysis of Results of Operations and Financial Condition

This Form 10-Q includes certain
statements that are deemed to be 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. All statements, other than statements of
historical facts, included in this Form 10-Q that address activities, events, or
developments that we expect, believe, or anticipate will or may occur in the future, are
forward-looking statements. The forward-looking statements in this filing are made
pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Investors are cautioned that any such statements are not guarantees of future
performance and that actual results or developments may differ materially from those
projected in the forward-looking statements because these statements are subject to a
number of risks and uncertainties including the risk factors described in our annual
report on Form 10-K for the year ended December 31, 2002, including, but not limited to,
the factors included in the section entitled Certain Important Factors.Persons
reading this Form 10-Q should carefully review the discussion of all of the risk factors
described in such Form 10-K and in our other filings made from time to time with the
Securities and Exchange Commission.

Summary

Sales decreased 2 percent and net
income decreased 1 percent for the three-month period ended September 30, 2003, compared
to the three-month period ended September 30, 2002. Sales increased 2 percent and net
income increased 1 percent for the nine-month period ended September 30, 2003, compared
to the same period in 2002. Basic and diluted net income per share was 10 cents for both
three-month periods ended September 30, 2003 and 2002. Basic net income per share was 32
cents for the nine-month periods ended September 30, 2003 and 2002 and diluted net income
per share was 32 cents for the nine-month period ending September 30, 2003, and 31 cents
for same period in 2002. International sales were 40 percent of sales for the three and
nine months ended September 30, 2003. We use a network of independent representatives to
market and service our products in foreign countries, and expect that international sales
will continue to account for a significant portion of our revenues for the foreseeable
future. We have four operating locations, all of which are located in the United States.

Results of Operations

Sales for the three-month period
ended September 30, 2003, were $4,778,161, down 2 percent from third quarter 2002 sales
of $4,853,612. The decrease in 2003 sales was primarily the result of decreases in the
sales volume of our sample preparation and gas analyzer products, offset somewhat by
increases in the foreign sales volume of our permeation products and domestic sales
volume of our weighing products. The decrease in the sales volume of our sample
preparation products was primarily due to decreased sales in the life sciences and drug
discovery markets. The impact of price increases was not significant.

Sales for the nine-month period
ended September 30, 2003, were $14,939,584, up 2 percent from sales for the first nine
months of 2002 of $14,637,325. The 2 percent increase was due primarily to increases in
the sales volume of our permeation and weighing products, offset somewhat by decreases in
the sales volume of our gas analyzer and sample preparation

-9-

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products. The decrease in the sales
volume of our sample preparation products was primarily due to decreased sales in the
life sciences and drug discovery markets. The impact of price increases was not
significant.

Total domestic sales for the quarter
ended September 30, 2003 decreased 13 percent from the third quarter of 2002 to
$2,856,792, and total foreign sales increased 23 percent to $1,921,369. Domestic sales
were 60 percent of total third quarter 2003 sales, compared to $3,287,711, or 68 percent,
of third quarter 2002 sales. Foreign sales were 40 percent of total third quarter 2003
sales, compared to $1,565,901, or 32 percent, of third quarter 2002 sales. The increase
in foreign sales in the third quarter of 2003 is primarily due to an increase in sales to
customers in Canada.

Total domestic sales for the nine
months ended September 30, 2003, decreased 8 percent over the nine months ended September
30, 2002, to $8,928,636, and total foreign sales increased 22 percent to $6,010,948.
Domestic sales were 60 percent of total sales for the nine months ended September 30,
2003, compared to $9,724,449, or 66 percent for the same period in 2002. Foreign sales
were 40 percent for the first nine months of 2003, compared to $4,912,876, or 34 percent,
for the same period in 2002. The increase in foreign sales in the first nine months of
2003 is primarily due to an increase in sales to customers in Japan.

Our sales to customers located in
foreign countries are subject to a number of risks. These include, but are not limited
to, the following: agreements may be difficult to enforce; receivables may be difficult
to collect; foreign customers may have longer payment cycles; the countries into which we
sell may impose tariffs or adopt other restrictions on foreign trade; fluctuations in
exchange rates may affect product demand; export licenses, if required, may be difficult
to obtain; and the protection of intellectual property in foreign countries may be more
difficult to enforce. If any of the above risks were to materialize, our sales into
foreign countries could decline or our operating costs could increase, which would
adversely affect our financial results.

We derive our revenue from product
sales and consulting services, consisting of standard laboratory testing services and
consulting and analytical services performed for various customers. In the third quarter
of 2003, product sales were $4,318,284 and consulting services were $459,877, or 90 and
10 percent, respectively, of our total third quarter 2003 sales. This compares to product
sales of $4,364,453 and consulting services of $489,159 in the third quarter of 2002,
also 90 and 10 percent of total sales, respectively. For the first nine months of 2003,
product sales were $13,548,271 and consulting services were $1,391,313, or 91 and 9
percent, respectively, of our total sales for the first nine months of 2003. This
compares to product sales of $13,205,189 and consulting services of $1,432,136, or 90 and
10 percent of total sales, respectively, for the same period in 2002.

The cost of sales for product sales
was 45 percent and 49 percent, respectively, for the third quarters of 2003 and 2002. The
cost of sales for consulting services sales was 47 percent and 44 percent for the third
quarters of 2003 and 2002, respectively. The cost of sales for the product sales in the
nine-month periods ended September 30, 2003 and 2002 was 44 percent and 46 percent,
respectively. The cost of sales for consulting services sales was 48 percent for the nine
months ended September 30, 2003 and 54 percent for the same period in 2002. The
percentage decrease in the cost of sales for product sales was primarily due to the
product mix in the third quarter and first nine months of 2003 including more permeation
and weighing product sales, which on average carry a higher gross margin. The slight
increase in the cost of sales for consulting services for the third quarter of 2003 as
compared to the same period in 2002 was mostly due to fixed costs on reduced revenue. The
decrease in the cost of consulting services

-10-

---

sales for the nine months ended
September 30, 2003 as compared to the same period in 2002, both in total dollars and as a
percent of sales, was primarily the result of tighter cost controls, including lower
headcount, particularly in the consulting and analytical services area.

Selling, general and administrative
expenses were 31 percent of total sales for the three- and nine-month periods ended
September 30, 2003. This compares to 30 percent of total sales for the same periods in
2002. The $52,705 and $227,872 total dollar increases for the three- and nine-month
periods ended September 30, 2003, respectively, are due primarily to increased selling
expenses, including increases in travel and marketing expenses, and to increases in
general and administrative expenses, including increases in insurance costs and
professional expenses which are expected to continue to increase.

Research and development (R&D)
expenses increased $8,116 and $94,804 for the quarter and nine-month period ended
September 30, 2003, respectively, compared to the same periods in 2002. As a percent of
sales, R&D expenditures were 7 percent of sales for the quarter and nine-month period
ended September 30, 2003, and 6 percent of sales for the quarter and nine-month period
ended September 30, 2002. The increase is primarily due to R&D expenses associated
with the development of new permeation products. Continued R&D expenditures are
necessary as we develop new products to expand in our niche markets and into new markets.
For the foreseeable future, we expect to spend on an annual basis approximately 6 to 8
percent of sales on R&D.

Investment income decreased $16,155
in the third quarter of 2003 as compared to the third quarter of 2002, and decreased
$66,595 in the first nine months of 2003 as compared to the same period in 2002. The
decrease is the result of lower average investment yields, offset somewhat by higher
average investment balances in 2003 versus 2002.

Our provision for income taxes was
35 percent of income before income taxes for the three- and nine-month periods ended
September 30, 2003 compared to 33.5 and 33 percent of income before income taxes for the
three- and nine-month periods ended September 30, 2002, respectively. The increase in the
rate is due in part to lower benefits from export tax incentives and lower tax-exempt
interest income. We review the tax rate quarterly and may make adjustments to reflect
changing estimates. Based on current operating conditions and income tax laws, we expect
the effective tax rate for all of 2003 to be in the range of 34 to 36 percent.

Net income was $534,316 for the
third quarter of 2003, compared to $537,350 for the third quarter of 2002. Diluted net
income per share was $.10 for both the third quarters of 2003 and 2002. For the nine
months ended September 30, 2003, net income was $1,750,253 compared to $1,740,034 for the
nine months ended September 30, 2002. Diluted net income per share was $.32 and $.31,
respectively, for the nine-month periods ended September 30, 2003, and 2002.

Liquidity and Capital Resources

We continue to maintain a strong
financial position. Cash flow provided by operating activities totaled $2,231,733 in the
first nine months of 2003. Total cash, temporary cash investments and marketable
securities increased $238,630 during the same period, primarily as a result of the net
income for the period and decreases in accounts receivable, offset somewhat by dividend
payments totaling $1,027,080, repurchases of shares of our common stock totaling
$627,606, and decreases in accrued income taxes. The $136,091 year-to-date decrease in
accounts receivable is primarily due to lower shipments in the third quarter of 2003
compared to the fourth

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quarter of 2002. The $329,998
year-to-date decrease in current liabilities is primarily due to the decrease in accrued
income taxes resulting from the timing of payments.

We have no long-term debt or
material commitments for capital expenditures as of September 30, 2003. Our plant and
equipment would not require any major expenditures to accommodate a significant increase
in operating demands. We anticipate that a combination of our existing cash, temporary
cash investments and marketable securities, plus an expected continuation of cash flow
from operations, will continue to be adequate to fund operations, capital expenditures
and dividend payments for the foreseeable future.

Critical Accounting Policies

Our estimates related to certain
significant assets and liabilities are an integral part of these consolidated financial
statements. These estimates are considered critical to the consolidated financial
statements because they require subjective and complex judgements. We consider our
critical accounting policies to be the policies applicable to allowance for doubtful
accounts, inventory reserves, and the recoverability of long-lived assets. These policies
are discussed in the section of the Managements Discussion and Analysis of
Financial Condition and Results of Operations entitled Critical Accounting Policies
contained in our Annual Report on Form 10-K for the year ended December 31, 2002. No
material change occurred in these policies in the periods covered by this report.

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MOCON, INC.

Item 3. Quantitative and Qualitative
Disclosures About Market Risk

Market Risk Management

Substantially all of our marketable
securities are at fixed interest rates. However, virtually all of our marketable
securities mature within two years, therefore, we believe that the market risk arising
from the holding of these financial instruments is minimal.

We currently sell our products and
services in United States dollars; accordingly, the exposure to foreign currency exchange
risk is minimal.

There have been no significant
changes since December 31, 2002.

Item 4. Controls and Procedures

As of September 30, 2003, the end of
the period covered by this report, we conducted an evaluation, under the supervision and
with the participation of our Chief Executive Officer and Chief Financial Officer, of our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934 (the Exchange Act)). Based on this evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure controls and
procedures were effective in alerting them in a timely manner to material information
required to be included in our periodic SEC filings. There were no changes identified by
our Chief Executive Officer and Chief Financial Officer in our internal control over
financial reporting during our most recently completed fiscal quarter that has materially
affected, or is reasonably likely to materially affect, our internal control over
financial reporting.

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MOCON, INC.

PART II. OTHER INFORMATION

|Item 6. |  | Exhibits
and Reports on Form 8-K
|------- |  | --------------------------------

|a. |  | Exhibits
|-- |  | --------

| | 31.1 |  | Principal
Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
| | ---- |  | ---------------------------------------------------------------------------------------------------

| | 31.2 |  | Principal
Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
| | ---- |  | ---------------------------------------------------------------------------------------------------

| | 32.1 |  | Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
| | ---- |  | -----------------------------------------------------------------------

|b. |  | Reports
on Form 8-K
|-- |  | -------------------

| | On
July 22, 2003, we furnished a report on Form 8-K under Item 12,  "Results of  Operations
 and Financial          Condition,"  to announce that we issued a press release on July
22, 2003  announcing  preliminary  results          for the second  quarter  ended June
30, 2003 which such press  release  was  attached as an exhibit to the          report.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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SIGNATURES

Pursuant to the  requirements  of
the  SECURITIES  EXCHANGE ACT of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.

|                        | MOCON, INC.Registrant                                                                         
|----------------------- | ----------------------------------------------------------------------------------------------
|Date: November 13, 2003 | By: /s/ Robert L. Demorest                                                                    
|                        | Robert L. Demorest,Chairman, President and ChiefExecutive Officer(Principal Executive Officer)

|                        |                                                                                                                 
|----------------------- | ----------------------------------------------------------------------------------------------------------------
|Date: November 13, 2003 | By: /s/ Dane D. Anderson                                                                                        
|                        | Dane D. Anderson,Vice President, Treasurer and ChiefFinancial Officer(Principal Financial andAccounting Officer)

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