UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-K

(Mark one)

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2000

[ ]       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

       For the transition period from _______________ to _______________.

                           COMMISSION FILE NO.: 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)

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

        Securities registered pursuant to Section 12(b) of the Act: NONE

           Securities registered pursuant to Section 12(g) of the Act:

                          COMMON STOCK, $0.10 PAR VALUE

                              --------------------

         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 if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

         As of March 14, 2001, 5,458,827 shares of Common Stock of the
registrant were deemed outstanding, and the aggregate market value of the Common
Stock of the registrant (based upon the average of the high and low sales prices
of the Common Stock at that date as reported by the Nasdaq National Market),
excluding outstanding shares beneficially owned by directors and executive
officers, was approximately $34,431,078.

                       DOCUMENTS INCORPORATED BY REFERENCE

         Part III of this Annual Report on Form 10-K incorporates by reference
information (to the extent specific sections are referred to herein) from the
Company's Proxy Statement for its Annual Meeting of Shareholders to be held May
22, 2001 (the "2001 Proxy Statement").


                                       1
<PAGE>


                                     PART I

ITEM 1. BUSINESS

         MOCON, Inc., (the "Company"), designs, manufactures, markets, and
services products and provides consulting primarily for specialized applications
in the measurement and analytical instrument and services markets, including
detection, sample preparation, measurement, and monitoring instruments and
services used to analyze gases and chemical compounds. Several of the Company's
analytical services and products focus on the Company's expertise in barrier
analysis. The Company's principal business strategy is to employ its product
development and technological capabilities, manufacturing processes, and
marketing skills in market niches where the Company can successfully penetrate
the market and then pursue a strategy to become a leader in the market segment.
Management continually emphasizes product innovation, product performance,
quality improvements, cost reductions and other value-adding activities.
Although some of the markets for the Company's products are maturing, the
Company seeks growth opportunities through technological and product improvement
and by acquiring and developing new products that can be sold through its
distribution channels.

         The Company's principal executive offices are located at 7500 Boone
Avenue North, Minneapolis, Minnesota 55428 and its telephone number is (763)
493-6370.

DEVELOPMENT OF THE COMPANY

         MOCON, Inc. was incorporated in February 1966 and was involved in the
commercialization of technology developed for the measurement of water vapor
permeating through various materials. The Company has historically expanded
through internal development of new products and technologies, the acquisition
of product lines, technology or companies, and licensing of products or
technology. During 1998, the Company completed complementary acquisitions that
have provided additional technologies, products and product development
expertise.

         On January 28, 1998, the Company acquired Microanalytics
Instrumentation Corp. ("Microanalytics"), located near Austin, Texas.
Microanalytics produces ancillary gas chromatographic ("GC") instrumentation and
services with emphasis on multidimensional gas chromatography. A variety of GC
specific applications have been developed by Microanalytics personnel ranging
from petroleum and petrochemical purity assay to aroma and off-odor analysis for
the food and packaging fields.

         On December 7, 1998, the Company acquired Lab Connections, Inc. ("Lab
Connections"), located near Boston, Massachusetts. Lab Connections manufactures
hardware and software interfaces that combine the separations capability of
chromatography with the power to identify individual components by spectroscopy.
Lab Connections is a global specialty analytical instrument and software company
focused on laboratory measurements of commercial importance. Lab Connections'
products extend and enhance customers' productivity and their ability to obtain
crucial knowledge regarding the identification, composition and configuration of
complex mixtures. Typical applications are in the analysis of polymers and
adhesives.


                                       2
<PAGE>


FINANCIAL INFORMATION ABOUT SEGMENTS

         The Company operates in one segment; the development, manufacturing and
marketing of measurement, analytical, monitoring, sample preparation, and
consulting products used to detect, measure and analyze gases and chemical
compounds.

PRODUCTS AND SERVICES

         The Company develops, manufactures, markets, and services measurement,
analytical, monitoring, sample preparation and consulting products used to
detect, measure, and analyze gases and chemical compounds.

         PERMEATION PRODUCTS

         Permeation products consist of systems and services designed to measure
the rate of transmission of various gases and vapors through packages and
various materials. These products are designed to perform these measurements
under precise temperature and relative humidity conditions. The principal market
for these products consists of manufacturers of packaging materials, including
manufacturers of papers, plastics and coatings, and the users of such packaging
materials in the food, beverage, pharmaceutical and chemical industries. The
Company also provides certain laboratory testing services utilizing the
Company's permeation products. These services are primarily in the area of
testing film and package permeation. Users of these services are primarily those
companies with insufficient volume to warrant purchasing the Company's products
or others not familiar with such equipment. Other users include companies that
have purchased the Company's products but have a need for additional capacity.
Permeation products accounted for approximately 63%, 62%, and 58% of the
Company's consolidated sales in 2000, 1999, and 1998, respectively. Permeation
instruments currently manufactured by the Company include OX-TRAN(R) systems for
oxygen transmission rates, PERMATRAN-W(R) systems for water vapor transmission
rates, and PERMATRAN-C(TM) systems for carbon dioxide transmission rates.

         WEIGHING PRODUCTS

         Weighing products manufactured by the Company are used to automatically
determine the weight of pharmaceutical capsules and/or tablets and to reject
those found to be out of acceptable limits. The Company's VERICAP(R) high-speed
capsule weighing system runs at rates up to 2,000 capsules per minute and can be
integrated into a capsule production line in pharmaceutical factories. The other
weighing systems are designed for off-line use. These products are marketed
primarily to the pharmaceutical industry. Weighing products accounted for less
than 15% of the Company's consolidated sales in 2000 and 1999, and approximately
19% of the Company's consolidated sales in 1998. Weighing instruments currently
manufactured by the Company include the VERICAP(R) high-speed capsule weighing
systems, the VERITAB(R) high-speed tablet weighing systems, and the AB(TM)
automatic balance weighing systems for both tablets and capsules.

         CONSULTING AND ANALYTICAL SERVICES

         The Company provides consulting and analytical services, on a special
project basis, for customers that require unique problem solving capabilities.
The Company's services may relate to absorption or diffusion of various
compounds, harsh environment applications, shelf-life concerns,


                                       3
<PAGE>


flavor or odor detection, contract research or special permeation applications.
In providing the consulting and analytical services, the Company uses its most
advanced measurement technologies, including proprietary TRANSORPTION(R)
technology. The principal market for the consulting and analytical services
consists of manufacturers of foods, beverages, pharmaceuticals, automotive,
plastics, chemicals, electronics, and personal care products.

         HEADSPACE ANALYZER PRODUCTS

         The Company's headspace analyzers are used to analyze the amount of
oxygen and/or carbon dioxide present in the headspace of flexible and rigid
packages. Some analyzers measure the oxygen and/or carbon dioxide content in
flushing gases used in modified or controlled atmosphere packaging. The
principal market for these products consists of packagers of foods, beverages
and pharmaceuticals. The headspace analyzer products currently manufactured by
the Company include the PAC CHECK(TM) series of headspace analyzers and the
GSA(TM) series of on-line gas stream analyzers for continuous and intermittent
monitoring of modified atmosphere packaging (MAP) and other gas flushing
operations.

         SAMPLE PREPARATION PRODUCTS

         The Company designs, manufactures, markets, and services sample
preparation products. These products consist of hardware and software interfaces
that combine the separations capability of chromatography with the power to
identify individual components by spectroscopy analysis. The most time-consuming
part of chemical analysis is sample preparation. Procedures, techniques, and
instruments that reduce total sample preparation time are highly desirable for
analysis of chemical compounds. The Company's products provide fully automatic
sample collection from any Liquid Chromatograph or Gel Permeation Chromatograph
in a form suitable for immediate examination by Fourier transform infra-red
spectroscopy ("FTIR") and/or matrix assisted laser desorption ionization mass
spectrometry ("MALDI-MS"). The principal market for these products is to
analytical laboratories of polymer and adhesive manufacturers. The sample
preparation products currently manufactured by the Company are the
LC-Transform(R) for interfacing to FTIR and the LC-Transform for interfacing to
MALDI-MS.

         GC ANALYZER PRODUCTS

         The Company integrates its gas chromatography components with GCs to
form multidimensional GC analyzer systems. Multidimensional GC analyzers
represent state of the art technology in gas chromatographic separations. These
systems are used in identifying compounds causing off-odors in various products,
in identifying critical aroma compounds and in high purity analysis of single
component matrixes. The GC analyzer products currently manufactured by the
Company are the AROMATRAX(TM) systems for odor and aroma analysis and profiling,
the PURI-TRAX(TM) systems consisting of a vinyl chloride monomer purity analysis
system and a system for measuring trace levels of oxygenated hydrocarbons in a
variety of hydrocarbon products and process streams such as liquefied petroleum
gases, and the VAPO-JECT(TM) automated vaporizing injector system for permanent
and liquefied petroleum gases.

         The principal markets for the GC analyzer products consist of food,
beverage, petroleum, chemical and petrochemical manufacturers. The Company does
not manufacture gas


                                       4
<PAGE>


chromatographs but purchases such components from Agilent Technologies, Inc.
pursuant to a Channel Partner arrangement.

         GAUGING PRODUCTS

         The Company's gauging products use capacitance technology to measure
the thickness of thin films and coatings in laboratories. These gauges measure
all types of non-metallic materials, with very repeatable gauge readings at
thickness resolutions up to one millionth of an inch. Software packages allow
the display of each material's profile and provide analysis of the related data.
The principal market for this product group is made up of manufacturers of
plastic films. The Company currently manufactures the PROFILER(R) 140E
laboratory gauge.

         LEAK DETECTION PRODUCTS

         The leak detection products manufactured by the Company detect leaks in
sterile medical trays, pouches, blister packs and a wide range of other
packages. The principal market for these products includes packagers of sterile
medical items, pharmaceuticals, and food products. The Company manufactures two
main types of leak detection instruments. The first type of instrument is a
non-destructive leak detector that senses small amounts of carbon dioxide
escaping from a package or tray. The second type of instrument detects leaks and
checks for seal integrity by applying and measuring pressure within a package.

COMPETITION

         The Company experiences competition in both foreign and domestic
markets from one or more competitors with respect to all of its products and
services. The Company competes with several others in the design, manufacture
and sale of its measurement, analytical, monitoring, sample preparation and
consulting products. The principal competitive factors are product technology
and performance, quality and reliability, sales and marketing ability, product
support, delivery, and price. Some of the Company's competitors have greater
assets and resources than the Company and some are smaller than the Company.
Some of the Company's larger competitors may have greater financial resources,
stronger marketing organizations, broader product lines and other resources than
those of the Company.

MANUFACTURING AND SUPPLIES

         The Company manufactures products at three locations in the United
States. The Company's manufacturing capabilities include electro-mechanical
assembly, testing, integration of components and systems, calibration, and
validation of systems. Certain components are currently purchased from single
source suppliers. An interruption of one of these sources could result in delays
in the Company's production while the Company developed an alternative supplier
and could result in a loss of sales and income. There are other single source
components for which the Company has determined that other sources are readily
available. The Company has experienced no significant production delays because
of a supplier's inability to ship an acceptable component.


                                       5
<PAGE>


MARKET RISK MANAGEMENT

         Substantially all of the Company's marketable securities are at fixed
interest rates and therefore the fair value of these instruments is affected by
changes in market interest rates. However, almost all of the Company's
marketable securities mature within three years. Accordingly, the Company
believes that the market risk arising from its holding of these financial
instruments is minimal.

         The Company currently sells its products and services in United States
dollars; accordingly, the exposure to foreign currency exchange risk is minimal.

BACKLOG

         The Company had a total backlog of approximately $1,959,000 as of
December 31, 2000 as compared to approximately $1,870,000 and $1,876,000 as of
December 31, 1999 and 1998, respectively. The Company anticipates filling the
entire current backlog in 2001.

PATENTS AND LICENSES

         Generally, the Company believes that the protection afforded by patent
rights is important to its business and it will continue to seek patent
protection for its technology and products. The Company has required certain
employees and consultants to assign to the Company all inventions that are
conceived and developed during their employment, except to the extent prohibited
by applicable law. The Company holds both United States and international
patents and has both U.S. and international patents pending. The Company
currently holds 36 U.S. patents and 25 international patents. In addition, the
Company holds license rights under four U.S. patents subject to royalty payments
and/or minimum required royalties. These patents and licenses will expire during
the period from 2005 through 2018.

         Even though the Company has obtained the patents mentioned above, there
can be no guarantee that these patents will keep competitors from producing
substantially similar products. Although it can offer no assurance, the Company
believes its products do not infringe on patents owned by any other persons. Any
determination that a material component of the Company's products infringes upon
the rights of others could have a material adverse effect upon the Company. In
the event that the Company's products may be covered in whole or in part by
patents owned by others, the Company may find it desirable to obtain licenses
with respect to such patents.

         The Company also owns or has applied for certain trademarks which
protect and identify its products, including the trademark MOCON(R), which the
Company has designated as a house trademark under which all its products
manufactured at its headquarters are sold, and the trademarks and servicemarks
VERICAP(R), OX-TRAN(R), PERMATRAN-W(R), PROFILER(R), COULOX(R), HERSCH(R),
VERITAB(R), AROMATRAN(R), SKYE(R), PAC CHECK 200(R), LC-Transform(R),
TRANSORPTION(R) and 1-TIME(R). The Company's trademarks have a life, subject to
periodic maintenance, of 10 to 20 years, which may be extended.


                                       6
<PAGE>


RESEARCH AND DEVELOPMENT

         The Company incurred expenses of approximately $1,127,000, $1,234,000
and $1,061,000 during the fiscal years ended December 31, 2000, 1999 and 1998,
respectively, for research and development of its products. Research and
development costs were 7% of sales for the fiscal years ended December 31, 2000,
1999 and 1998. For the foreseeable future, the Company expects to allocate, on
an annual basis, approximately 6% to 9% of sales to research and development.

WORKING CAPITAL PRACTICES

         The Company maintains inventory levels in its product groups consistent
with projected sales. The Company's standard domestic payment terms are net 30
days. International sales are transacted pursuant to letters of credit in some
cases. The Company generally warrants its products for one year from the date of
shipment. There have been few instances when the Company was required to accept
the return of merchandise that failed to comply with the Company's warranty.

FOREIGN AND DOMESTIC MARKETING

         The Company markets its products and services, provides support
services, and distributes expendables and accessories required to support the
operation of the products. The Company sells the majority of its products in the
United States and Canada through a direct sales channel to end-users. A network
of independent representatives serves the Company's foreign markets. To the
Company's knowledge, no independent sales representative of the Company sells a
material amount of products manufactured by the Company's competitors.

         The Company's wholly-owned subsidiary, MoCon FSC, Inc., a Barbados
corporation ("FSC") carries out all the foreign distribution of the Company's
products. The Company acts as the selling agent of FSC.

         The Company denominates all foreign sales in U.S. dollars and
consequently does not hedge against exchange rate fluctuations. Nonetheless,
should the value of the dollar rise relative to other currencies, the Company's
sales abroad would be negatively impacted. Additionally, the Company can give no
assurances that foreign tariff, trade or tax policies or foreign economic
conditions will not negatively affect sales and earnings of the Company in the
future.

         For information concerning the Company's export sales by geographic
area, see Note 9 of the Notes to Consolidated Financial Statements contained on
page F-16. No single customer accounted for 10% or more of the Company's
consolidated sales in the fiscal years ended December 31, 2000, 1999 and 1998
and the Company does not believe that the loss of any single customer would have
a material adverse effect on the Company. One of the Company's independent
representatives accounted for approximately 16%, 15%, and 12% of the Company's
sales in 2000, 1999 and 1998 respectively. For additional information concerning
sales by such independent representatives, see Note 9 of the Notes to
Consolidated Financial Statements contained on page F-16. The Company's business
is not seasonal in nature.


                                       7
<PAGE>


EMPLOYEES

         As of December 31, 2000, the Company had 85 full-time employees. The
Company employs scientists and engineers who research and develop potential new
products. To protect the Company's proprietary information, the Company has
confidentiality and non-compete agreements with its employees. None of the
Company's employees are represented by a labor union, and the Company considers
its employee relations to be satisfactory.

ITEM 2. PROPERTIES

         The Company leases 54,900 square feet of office, engineering,
laboratory, and production space in Minnesota, Massachusetts, and Texas.
Management believes that the Company's facilities are generally adequate for its
present operations and that suitable space is readily available if any of such
leases are not extended.

         The Company headquarters and operations occupy approximately 47,200
square feet of space in Minneapolis, Minnesota. The current lease expires in
June 2010.

         Microanalytics' operations occupy approximately 2,400 square feet of
space in the metropolitan area of Austin, Texas. This space is leased until
January 2002.

         Lab Connections' operations occupy approximately 5,300 square feet of
space near Boston, Massachusetts. This space is leased until July 2004.

ITEM 3.  LEGAL PROCEEDINGS

         There are no material pending legal, governmental, administrative or
other proceedings to which the Company is a party or of which any of its
property is the subject.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matter was submitted to a vote of security holders during the fourth
quarter of 2000.


                                       8
<PAGE>


ITEM 4A. EXECUTIVE OFFICERS OF THE COMPANY

         The executive officers of the Company, their ages, the year first
elected or appointed as an executive officer and the offices held, as of March
14, 2001, are as follows:

                                                                       Executive
                                                                        Officer
           Name           Age                   Title (1)                Since
--------------------------------------------------------------------------------
Robert L. Demorest (2)     55   President and Chief Executive Officer,    1985
                                Chairman of the Board
Daniel W. Mayer            50   Executive Vice President                  1988
Dane D. Anderson (3)       39   Vice President and Chief Financial        2000
                                Officer, Treasurer and Secretary
Douglas J. Lindemann (4)   43   Vice President and General Manager        2001
Ronald A. Meyer (5)        50   Vice President                            1985

------------------------
(1)      All executive officers have been employed in the capacity set forth for
         at least five years unless otherwise indicated.

(2)      Mr. Robert L. Demorest has been the Company's President, Chief
         Executive Officer, and Chairman of the Board since April 2000. Prior to
         that time, Mr. Demorest had been President of the Company for more than
         five years.

(3)      Mr. Dane D. Anderson has been the Company's Chief Financial Officer,
         Vice President, Treasurer and Secretary since January 2001. Mr.
         Anderson had been the Company's Chief Financial Officer, Treasurer and
         Secretary since August 2000, and was the acting Vice President -
         Finance and Administration, Treasurer and Secretary from May 2000 to
         August 2000. From July 1996 to May 2000 Mr. Anderson had been a
         Business Manager for the Company. Prior to July 1996, Mr. Anderson had
         been the Company's Controller for more than five years.

(4)      Mr. Douglas J. Lindemann has been a Vice President and General Manager
         for the Company since January 2001. From July 2000 to December 2000 Mr.
         Lindemann was a General Manager for the Company. Prior to that time Mr.
         Lindemann had been a Business Manager for the Company since 1995.

(5)      Mr. Ronald A. Meyer has been a Vice President of the Company for more
         than five years. From 1995 to April 2000, Mr. Meyer also served as the
         Company's Chief Financial Officer, Treasurer and Secretary.


                                       9
<PAGE>


                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         As of March 8, 2001, there were 458 record holders of the Company's
Common Stock. The Company's Common Stock trades on the Nasdaq Stock Market under
the symbol MOCO. The following table sets forth, for the fiscal periods
indicated, the high and low quotations for the Company's Common Stock as
reported by the Nasdaq National Market System.

<TABLE>
<CAPTION>
                                                2000                                1999
                                                ----                                ----
Quarter                                Low      High     Dividend         Low       High     Dividend
-------                                ---      ----     --------         ---       ----     --------
<S>                                  <C>       <C>         <C>          <C>        <C>         <C>
1st Quarter..................        $ 5.06    $ 7.69      $ .055       $ 4.38     $ 5.88      $ .05
2nd Quarter..................        $ 5.00    $ 6.00      $ .055       $ 4.38     $ 6.13      $ .05
3rd Quarter..................        $ 5.19    $ 7.00      $ .055       $ 4.38     $ 8.50      $ .05
4th Quarter..................        $ 5.50    $ 6.88      $ .060       $ 4.50     $ 7.38      $ .05
</TABLE>


ITEM 6. SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                          Years Ended December 31,
                                           -----------------------------------------------------
                                              2000       1999       1998       1997       1996
                                              ----       ----       ----       ----       ----
                                                  (in thousands, except per share data)
                                           -----------------------------------------------------
<S>                                         <C>        <C>        <C>        <C>        <C>
OPERATIONS DATA:
Sales (1) ..............................    $17,158    $16,838    $14,432    $16,173    $14,085
Net income .............................    $ 3,270    $ 2,899    $ 2,328    $ 3,728    $ 3,082
Net income per share:
         Basic .........................    $   .55    $   .46    $   .37    $   .58    $   .48
         Diluted .......................    $   .55    $   .46    $   .36    $   .57    $   .47
Dividends declared per share ...........    $  .225    $   .20    $   .20    $   .18    $   .16

<CAPTION>
                                                             As of December 31,
                                           -----------------------------------------------------
                                              2000       1999       1998       1997       1996
                                              ----       ----       ----       ----       ----
                                                               (in thousands)
                                           -----------------------------------------------------
<S>                                         <C>        <C>        <C>        <C>        <C>
BALANCE SHEET DATA:
Total assets ...........................    $18,418    $18,204    $17,675    $17,404    $14,881
Long-term liabilities ..................    $   187    $   112    $    98    $     2    $    92
</TABLE>

------------------------
(1)      As further described in Note 1(k) to the Company's financial statements
         on page F-8, certain foreign distributor commission expenses have been
         reclassified from operating expenses to a reduction in revenues. The
         amounts of these reclassifications were $1,158,000, $1,005,000,
         $714,000, $844,000, and $682,000 in 2000, 1999, 1998, 1997 and 1996,
         respectively. This reclassification had no impact on previously
         recorded net income.

         The Company's acquisition of Lab Connections, Inc. and Microanalytics
Instrumentation Corp. in 1998 affects the comparability of the information in
the table above. For information concerning these acquisitions, see Note 11 to
the Company's financial statements on page F-17.


                                       10
<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

         This Form 10-K 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-K that address activities, events, or developments that the
Company expects, believes, or anticipates will or may occur in the future, are
forward-looking statements. These statements are based on certain assumptions
and analyses made by the Company in light of its experience and its perception
of historical trends, current conditions, expected future developments, and
other factors it believes are appropriate in the circumstances. Such statements
are subject to a number of assumptions, risks, and uncertainties, many of which
are beyond the control of the Company. 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.

SUMMARY

         On January 28, 1998 the Company acquired Microanalytics Instrumentation
Corp. of metro Austin, Texas and on December 7, 1998 the Company acquired Lab
Connections, Inc. of metro Boston, Massachusetts. The acquisitions were recorded
using the purchase method of accounting and, accordingly, their results of
operations have been included since the acquisition dates. Sales increased 2
percent in 2000 compared to 1999, while net income increased 13 percent for the
same period. The Company's financial position as of December 31, 2000 reflects
an increase in working capital to $8,462,000 compared to $8,035,000 at December
31, 1999. Basic earnings per share were $0.55 in 2000, $0.46 in 1999, and $0.37
in 1998.

RESULTS OF OPERATIONS

         Net sales were $17,158,000 in 2000, compared to $16,838,000 in 1999 and
$14,432,000 in 1998. The increase in sales from 1999 to 2000 was due primarily
to increases in the sales volume of the Company's permeation products,
consulting and analytical service products, leak detection products, and the
sales volume of Lab Connections, a wholly owned subsidiary of the Company,
offset by decreases in the sales volume of the Company's gauging products and
weighing products. The increase in sales from 1998 to 1999 was due primarily to
increases in the sales volume of the Company's permeation products, consulting
and analytical service products, and the sales volume of Lab Connections, a
wholly owned subsidiary of the Company, offset by decreases in the sales volume
of the Company's weighing products. In 2000, international sales increased 14%
to $7,067,000 and domestic sales decreased 5% to $10,091,000. International and
domestic sales increased 26% and 12% in 1999 to $6,203,000, and $10,635,000,
respectively.

         Total sales of the Company's permeation products increased in 2000 due
to expanded market penetration with lower priced, less precise multiple test
station products, and to testing services. The Company is positioning its
permeation products to address applications outside the traditional measurement
of barrier packages and materials. Products have been introduced to analyze high
transmitting materials such as surgical gowns and diaper lining. Permeation
products


                                       11
<PAGE>


accounted for approximately 63%, 62%, and 58% of the Company's consolidated
sales in 2000, 1999, and 1998, respectively.

         Weighing product sales decreased in 2000 due to declining sales of the
VERICAP high-speed capsule weighing and sorting system. Weighing products
accounted for approximately 7%, 10% and 19% of the Company's consolidated sales
in 2000, 1999, and 1998, respectively.

         Consulting and analytical service sales increased in 2000 as expertise
in the areas of material analysis and specialty permeation testing expanded.
Services using the Company's most advanced technologies are positioning the
Company to address new applications in markets such as life sciences, medical,
automotive and electronics. A significant portion of the sales from these
services relate to applications outside of the Company's traditional
measurements of barrier packages and materials.

         Sales of headspace and GC analyzer products remained steady in 2000
compared to 1999. Sales of sample preparation products increased in 2000 due to
increased market penetration.

         International revenues increased 14% to $7,067,000, or 41% of total
revenue in 2000 compared to $6,203,000, or 37% of revenue in 1999, and
$4,910,000, or 34% of total revenue in 1998. The Company uses a network of
independent representatives to market and service its products in foreign
countries. A single currency called the euro was introduced in Europe on January
1, 1999. Although MOCON sells its products in United States dollars, the
increased price transparency resulting from the use of a single currency may
affect the ability of its independent representatives to price products
differently in the various European markets. The use of a single European
currency may increase the foreign currency risks of such independent
representatives and affect the prices at which products are sold.

         The gross profit margin was 63% in each of the fiscal years ended
December 31, 2000, 1999 and 1998, which is in line with the Company's historical
average of approximately 62 to 67 percent of sales. The 2000, 1999 and 1998
gross profit percentages are at the low end of the historical range primarily
due to reclassifications of certain foreign distributor commission expenses as
outlined in Note 1(k) of the Company's consolidated financial statements.

         Selling, general and administrative ("SG&A") expenses were $5,330,000
in 2000 or 31% of sales, compared to $5,474,000, or 33% of sales in 1999, and
$5,033,000, or 35% of sales in 1998. The decrease in SG&A expenses from 1999 to
2000 is primarily due to a decrease in general and administrative expenses
associated with the retirement of the Company's former Chief Executive Officer.
The increase in SG&A expenses from 1998 to 1999 is primarily due to the
amortization of intangible assets related to the acquisition of Lab Connections.

         Research and development expenses amounted to $1,127,000, or 7% of
sales in 2000, compared to $1,234,000, or 7% of sales in 1999, and $1,061,000,
or 7% of sales in 1998. For the foreseeable future, the Company expects to
allocate on an annual basis approximately 6 to 9 percent of sales to research
and development.

         Investment income increased to approximately $468,000 in 2000 from
$419,000 in 1999. The increase in 2000 is primarily due to a higher average
yield on investments, partially offset by


                                       12
<PAGE>


lower average investment balances, during 2000. The decrease in investment
income from 1998 to 1999 is primarily the result of lower average investment
balances during 1999 as compared to 1998.

         The Company's provision for income taxes was 32% of income before
income taxes in 2000 and 33.5% and 34% of pretax income in 1999 and 1998,
respectively. Based on current operating conditions and income tax laws, the
Company expects the tax rate for 2001 to be in the range of 32 to 35%.

         Net income was $3,270,000 in 2000 compared to $2,899,000 in 1999, and
$2,328,000 in 1998. Basic net income per share was $.55 per share in 2000
compared to $.46 per share in 1999, and $.37 per share in 1998.

LIQUIDITY AND CAPITAL RESOURCES

         Total cash, temporary cash investments and marketable securities
decreased $373,000 during 2000 to $9,509,000. In addition to funding its
operations, the Company used its cash resources to pay dividends totaling
$1,286,000 and to repurchase of shares of the Company's common stock during the
period totaling approximately $1,621,000. Depending upon market conditions and
subject to approval of the board of directors, the Company plans to continue to
repurchase shares of its common stock at prices not exceeding the market price.

         Cash flow from operations has historically been sufficient to meet
liquidity requirements, capital expenditures and research and development costs.
Cash flow from operations totaled $3,436,000, $3,783,000 and $3,222,000 in 2000,
1999 and 1998, respectively.

         The Company has no long-term debt and has no material commitments for
capital expenditures as of December 31, 2000. The Company's plant and equipment
does not require any major expenditures to accommodate a significant increase in
operating demands. The Company anticipates that a combination of its 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 in the foreseeable
future.

NEW ACCOUNTING PRONOUNCEMENTS

         During 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, ACCOUNTING FOR
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (as amended by SFAS No. 137 with
respect to the effective date), which establishes new standards for recognizing
all derivatives as either assets or liabilities, and measuring those instruments
at fair value. The Company adopted the new standard beginning in fiscal 2001.
Its adoption did not impact the Company's financial condition or results of
operations.


                                       13
<PAGE>


RISK FACTORS

         In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the Company wishes to caution readers
that the following important factors, among others, in some cases have affected,
and in the future could affect, the Company's actual results and could cause its
actual results in 2001 and beyond to differ materially from those expressed in
any forward-looking statements made by, or on behalf of, the Company.

         CHANGING PRICES/EFFECT OF INFLATION. Inflation has not had a material
impact on the Company's operations. The prices of some components purchased by
the Company have increased in the past several years due in part to decreased
volume. Certain other material and labor costs have increased, but the Company
believes that such increases are approximately consistent with overall inflation
rates. The Company believes that competition based on price is a significant
factor affecting its customers' buying decisions. There is no assurance that the
Company can pass along cost increases in the form of price increases or sustain
profit margins that have been achieved in prior years.

         GROWTH POTENTIAL. The analytical and measurement instrument markets in
which the Company operates have been somewhat flat in recent years. The Company
has identified a number of strategies it believes will allow it to grow its
business, including developing new products and technologies, developing new
applications for its technologies, acquiring complementary businesses or product
lines, and strengthening its sales force. No assurance can be given that the
Company will be able to successfully implement these strategies, or that these
strategies will result in growth of the Company's business.

         ACQUISITION STRATEGY. One of the Company's growth strategies is to
supplement its internal growth with the acquisition of businesses and
technologies that complement or augment the Company's products. Certain
businesses acquired by the Company have initially produced net operating losses
or low levels of profitability. In addition, businesses that the Company may
seek to acquire in the future may also be marginally profitable or unprofitable.
In order for any acquired business to achieve the level of profitability desired
by the Company, the Company typically must successfully change operations of the
acquired companies and improve their market penetration. No assurance can be
given that the Company will be successful in this regard. In addition, promising
acquisitions are difficult to identify and complete for a number of reasons,
including competition among prospective buyers. There can be no assurance that
the Company will be able to complete future acquisitions. In order to finance
any such acquisitions, it may be necessary for the Company to raise additional
funds either through public or private financing. Any equity or debt financing,
if available at all, may be on terms that are not favorable to the Company and
may result in dilution to the Company's shareholders.


                                       14
<PAGE>


         TECHNOLOGICAL CHANGE, OBSOLESCENCE, AND THE DEVELOPMENT AND ACCEPTANCE
OF NEW PRODUCTS. The market for the Company's products and services is
characterized by rapid and significant technological change and evolving
industry standards. New product introductions responsive to these factors
require significant planning, design, development and testing at the
technological, product, and manufacturing process levels, and may render
existing products and technologies uncompetitive or obsolete. There can be no
assurance that the Company's products will not become uncompetitive or obsolete.
In addition, industry acceptance of new technologies developed by the Company
may be slow to develop due to, among other things, existing regulations or
standards written specifically for older technologies and general unfamiliarity
of users with new technologies.

         DEPENDENCE ON CAPITAL SPENDING POLICIES AND GOVERNMENT FUNDING. The
Company's customers include pharmaceutical, food, and chemical companies,
laboratories, government agencies, and public and private research institutions.
The capital spending of these entities can have a significant effect on the
demand for the Company's products. Any decrease in capital spending by any of
the customer groups that account for a significant portion of the Company's
sales could have a material adverse effect on the Company's business and results
of operations.

         INTERNATIONAL SALES. Sales outside the United States accounted for
approximately 41% of the Company's revenues in 2000 and for approximately 37%
and 34% of the Company's revenues in 1999 and 1998. The Company expects that
international sales will continue to account for a significant portion of the
Company's revenues in the future. Sales to customers in foreign countries are
subject to a number of risks, including the following: agreements may be
difficult to enforce and receivables difficult to collect through a foreign
country's legal system; foreign customers may have longer payment cycles; 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. There can be no assurance that any of these
factors will not have a material adverse effect on the Company's business and
results of operations.

         COMPETITION. The Company encounters and expects to continue to
encounter competition in the sale of its products. The Company believes that the
principal competitive factors affecting the market for its products include
product performance, price, reliability, and customer service. The Company's
competitors include large multinational corporations and their operating units.
Some of the Company's competitors have substantially greater financial,
marketing, and other resources than those of the Company. As a result, they may
be able to adapt more quickly to new or emerging technologies and changes in
customer requirements, or to devote greater resources to the promotion and sale
of their products than the Company. In addition, competition could increase if
new companies enter the market or if existing competitors expand their product
lines or intensify efforts within existing product lines. There can be no
assurance that the Company's current products, products under development or
ability to discover new technologies will be sufficient to enable it to compete
effectively with its competitors.

         PROTECTION, DEFENSE, AND USE OF INTELLECTUAL PROPERTY. The Company
holds patents relating to various aspects of its products and believes that
proprietary technical know-how is critical to many of its products. Proprietary
rights relating to the Company's products are protected from unauthorized use by
third parties only to the extent that they are covered by valid and enforceable


                                       15
<PAGE>


patents or are maintained in confidence as trade secrets. There can be no
assurance that patents will issue from any pending or future patent applications
owned by or licensed to the Company or that the claims allowed under any issued
patents will be sufficiently broad to protect the Company's technology, and in
the absence of patent protection, the Company may be vulnerable to competitors
who attempt to copy the Company's products or gain access to its trade secrets
and know-how. Proceedings initiated by the Company to protect its proprietary
rights could result in substantial costs to the Company. There can be no
assurance that competitors of the Company will not initiate litigation to
challenge the validity of the Company's patents, or that they will not use their
resources to design comparable products that do not infringe the Company's
patents. There may also be pending or issued patents held by parties not
affiliated with the Company that relate to the Company's products or
technologies. The Company may need to acquire licenses to, or contest the
validity of, any such patents. There can be no assurance that any license
required under any such patent would be made available on acceptable terms or
that the Company would prevail in any such contest. The Company could incur
substantial costs in defending itself in suits brought against it or in suits in
which the Company may assert its patent rights against others. If the outcome of
any such litigation is unfavorable to the Company, the Company's business and
results of operations could be materially adversely affected. In addition, the
Company relies on trade secrets and proprietary know-how that it seeks to
protect, in part, by confidentiality agreements with its collaborators,
employees, and consultants. There can be no assurance that these agreements will
not be breached, that the Company would have adequate remedies for any breach,
or that the Company's trade secrets will not otherwise become known or be
independently developed by competitors.

         FLUCTUATION OF STOCK PRICE. The Company believes factors such as
announcements of new products by the Company or its competitors, quarterly
fluctuations in the Company's financial results, customer contract awards,
developments in regulation and general conditions in the various markets where
the Company's products are sold have caused and are likely to continue to cause
the market price of the Company's common stock to fluctuate substantially. In
addition, instrumentation company stocks have experienced significant price and
volume fluctuations that often have been unrelated to the operating performance
of such companies. This market volatility may adversely affect the market price
of the Company's common stock.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Substantially all of the Company's marketable securities are at fixed
interest rates and therefore the fair value of these instruments is affected by
changes in market interest rates. However, almost all of the Company's
marketable securities mature within three years. Accordingly, the Company
believes that the market risk arising from its holding of these financial
instruments is minimal.


                                       16
<PAGE>


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The Company's Consolidated Financial Statements and Independent
Auditors' Report are included on pages F-1 to F-17 of this Form 10-K and are
incorporated herein by reference.

                  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

                      (in thousands, except per share data)

--------------------------------------------------------------------------------
                                            Quarter
                      1st              2nd            3rd             4th
--------------------------------------------------------------------------------
2000

Net Sales         $    4,250      $    4,253      $    4,230      $    4,425
Gross Profit      $    2,665      $    2,719      $    2,618      $    2,795
Net Income        $      794      $      810      $      827      $      839
Net Income
  Per Share
     Basic        $     0.13      $     0.13      $     0.14      $     0.14
     Diluted      $     0.13      $     0.13      $     0.14      $     0.14


1999
Net Sales         $    4,197      $    4,210      $    4,169      $    4,262
Gross Profit      $    2,678      $    2,654      $    2,613      $    2,704
Net Income        $      694      $      716      $      753      $      736
Net Income
  Per Share
     Basic        $     0.11      $     0.11      $     0.12      $     0.12
     Diluted      $     0.11      $     0.11      $     0.12      $     0.12

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

         Not applicable.


                                       17
<PAGE>


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

         (a)      DIRECTORS OF THE COMPANY

         The information under the captions "Election of Directors --
Information About Nominees" and "Election of Directors -- Other Information
About Nominees" in the Company's 2001 Proxy Statement is incorporated herein by
reference. The information concerning executive officers of the Company is
included in this Report under Item 4a, "Executive Officers of the Company."

         (b)      COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT

         The information under the caption "Section 16(a) Beneficial Ownership
Reporting Compliance" in the Company's 2001 Proxy Statement is incorporated
herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

         The information under the captions "Election of Directors -- Director
Compensation" and "Executive Compensation and Other Benefits" in the Company's
2001 Proxy Statement is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information under the caption "Principal Shareholders and
Beneficial Ownership of Management" in the Company's 2001 Proxy Statement is
incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information under the caption "Election of Directors -- Other
Information About Nominees" in the Company's 2001 Proxy Statement is
incorporated herein by reference.


                                       18
<PAGE>


                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a)  1.   FINANCIAL STATEMENTS:

     The following Consolidated Financial Statements of the Company and its
subsidiaries are included herein:

                                                                            Page

     Independent Auditors' Report........................................... F-1

     Consolidated Balance Sheets as of December 31, 2000 and 1999........... F-2

     Consolidated Statements of Income for the years ended
     December 31, 2000, 1999 and 1998....................................... F-3

     Consolidated Statements of Stockholders' Equity and Comprehensive
     Income for the years ended December 31, 2000, 1999 and 1998............ F-4

     Consolidated Statements of Cash Flows for the years ended
     December 31, 2000, 1999 and 1998....................................... F-5

     Notes to Consolidated Financial Statements............................. F-6

          2.   FINANCIAL STATEMENT SCHEDULES:

     The following financial statement schedules are included herein and should
be read in conjunction with the financial statements referred to above:

     Independent Auditors' Report on Financial Statement Schedule

     Financial Statement Schedule:

          II - Valuation and Qualifying Accounts

     All other schedules are omitted as the required information is inapplicable
or the information is presented in the financial statements or related notes.


                                       19
<PAGE>


          INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULE

The Board of Directors and Stockholders
MOCON, Inc.:

Under date of February 23, 2001, we reported on the consolidated balance sheets
of MOCON, Inc. and subsidiaries as of December 31, 2000 and 1999, and the
related consolidated statements of income, stockholders' equity and
comprehensive income, and cash flows for each of the years in the three-year
period ended December 31, 2000, as contained in this annual report on Form 10-K
for the year 2000. In connection with our audits of the aforementioned
consolidated financial statements, we also audited the related financial
statement schedule as included in Item 14(a)2. This financial statement schedule
is the responsibility of the Company's management. Our responsibility is to
express an opinion on this financial statement schedule based on our audits.

In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth herein.

                                             /s/  KPMG LLP

Minneapolis, Minnesota
February 23, 2001


                                       20
<PAGE>


                                   SCHEDULE II

                          MOCON, INC. AND SUBSIDIARIES

                        Valuation and Qualifying Accounts

<TABLE>
<CAPTION>
                                              Balance at    Charged to                    Balance
                                              beginning     costs and      Deductions     at end
              Description                      of year       expenses          (1)        of year
--------------------------------------------------------------------------------------------------
<S>                                            <C>             <C>           <C>          <C>
Year ended December 31, 2000
   allowance for doubtful accounts             $166,000              0         7,000      159,000

Year ended December 31, 1999
   allowance for doubtful accounts             $159,000         12,000         5,000      166,000

Year ended December 31, 1998
   allowance for doubtful accounts             $163,000         11,000        15,000      159,000

(1) Bad debts written off.


Year ended December 31, 2000
   allowance for inventory obsolescence        $183,000        187,000       214,000      156,000

Year ended December 31, 1999
   allowance for inventory obsolescence        $185,000         66,000        68,000      183,000

Year ended December 31, 1998
   allowance for inventory obsolescence        $188,000         72,000        75,000      185,000

(1) Inventory written off.


Year ended December 31, 2000
   allowance for product warranties            $284,000        318,000       330,000      272,000

Year ended December 31, 1999
   allowance for product warranties            $251,000        336,000       303,000      284,000

Year ended December 31, 1998
   allowance for product warranties            $199,000        315,000       263,000      251,000

(1) Expenses written off.
</TABLE>


                                       21
<PAGE>


          3.   EXHIBITS

     The exhibits to this Report are listed in the Exhibit Index.

     A copy of any of the exhibits listed or referred to above will be furnished
at a reasonable cost to any person who was a shareholder of the Company as of
March 23, 2001, upon receipt from any such person of a written request for any
such exhibit. Such request should be sent to MOCON, Inc., 7500 Boone Avenue
North, Minneapolis, Minnesota 55428; Attn.: Shareholder Information.

     The following is a list of each management contract or compensatory plan or
arrangement required to be filed as an exhibit to this Annual Report on Form
10-K pursuant to Item 14(c):

     A.   1990 Non-Employee Director Stock Option Plan (incorporated by
          reference to the Company's Registration Statement on Form S-8 (File
          No. 33-42255)).

     B.   1992 Stock Option Plan (incorporated by reference to the Company's
          Registration Statement on Form S-8 (File No. 33-49752)).

     C.   1998 Stock Option Plan (incorporated by reference to the Company's
          Registration Statement on Form S-8 (File No. 33-58789)).

     D.   Compensation Committee resolutions setting forth the Incentive
          Compensation Plan (incorporated by reference to the Company's
          Quarterly Report on Form 10-Q for the quarter ended June 30, 1999
          (File No. 0-9273)).

     E.   Paired Profit Sharing Plan effective July 1, 1996 (incorporated by
          reference to the Company's Annual Report on Form 10-K for the fiscal
          year ended December 31, 1996 (File No. 0-9273)).

     F.   Confidentiality Agreement, dated June 3, 1983, between the Company and
          William N. Mayer (incorporated by reference to the Company's Annual
          Report on Form 10-K for the fiscal year ended December 31, 1988 (File
          No. 0-9273)).

     G.   Form of Executive Severance Agreement (filed herewith)

     (b)  REPORTS ON FORM 8-K

     No reports on Form 8-K were filed during the fourth quarter of the fiscal
year ended December 31, 2000.

     (c)  EXHIBITS

     The exhibits to this Report are listed in the Exhibit Index.

     (d)  FINANCIAL STATEMENT SCHEDULES

     See Item 14, section (a) 2 above for the financial statement schedules
filed herewith.


                                       22
<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) 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.

Date: March 30, 2001            MOCON, INC.

                                By: /s/ Robert L. Demorest
                                    --------------------------------------------
                                    Robert L. Demorest, President, Chief
                                    Executive Officer, and Chairman of the Board
                                    (principal executive officer)

                                By: /s/ Dane D. Anderson
                                    --------------------------------------------
                                    Dane D. Anderson, Vice President, Chief
                                    Financial Officer, Treasurer and Secretary
                                    (principal financial and accounting officer)


         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated and on March 30, 2001.

             Signature and Title
             -------------------

             /s/ Robert L. Demorest
             -------------------------------------------------------------------
             Robert L. Demorest, President, Chief Executive Officer and Director

             /s/ Dean B. Chenoweth
             -------------------------------------------------------------------
             Dean B. Chenoweth, Director

             /s/ J. Leonard Frame
             -------------------------------------------------------------------
             J. Leonard Frame, Director

             /s/ Daniel W. Mayer
             -------------------------------------------------------------------
             Daniel W. Mayer, Executive Vice President and Director

             /s/ Ronald A. Meyer
             -------------------------------------------------------------------
             Ronald A. Meyer, Vice President and Director

             /s/ Richard A. Proulx
             -------------------------------------------------------------------
             Richard A. Proulx, Director

             /s/ Paul L. Sjoquist
             -------------------------------------------------------------------
             Paul L. Sjoquist, Director

             /s/ Tom C. Thomas
             -------------------------------------------------------------------
             Tom C. Thomas, Director


                                       23
<PAGE>


                          MOCON, INC. AND SUBSIDIARIES

                        Consolidated Financial Statements

                        December 31, 2000, 1999, and 1998

                   (With Independent Auditors' Report Thereon)





                                TABLE OF CONTENTS

                                                                            PAGE

Independent Auditors' Report                                                F-1

Consolidated Balance Sheets                                                 F-2

Consolidated Statements of Income                                           F-3

Consolidated Statements of Stockholders' Equity
     and Comprehensive Income                                               F-4

Consolidated Statements of Cash Flows                                       F-5

Notes to Consolidated Financial Statements                                  F-6


<PAGE>


                          INDEPENDENT AUDITORS' REPORT


The Board of Directors and Stockholders
MOCON, Inc. and subsidiaries:


We have audited the accompanying consolidated balance sheets of MOCON, Inc. (the
Company) and subsidiaries as of December 31, 2000 and 1999, and the related
consolidated statements of income, stockholders' equity and comprehensive
income, and cash flows for each of the years in the three-year period ended
December 31, 2000. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of MOCON, Inc. and
subsidiaries as of December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 2000, in conformity with accounting principles generally
accepted in the United States of America.

As discussed in note 1(k) to the consolidated financial statements, the Company
has retroactively reclassified certain foreign distributor commission expenses
as a reduction of revenue for all periods presented.


                                               /s/ KPMG LLP

Minneapolis, Minnesota
February 23, 2001


                                      F-1
<PAGE>


                          MOCON, INC. AND SUBSIDIARIES

                           Consolidated Balance Sheets

                           December 31, 2000 and 1999

<TABLE>
<CAPTION>
                                     ASSETS                                                   2000           1999
                                                                                          ------------   ------------
<S>                                                                                       <C>               <C>
Current assets:
   Cash and temporary cash investments                                                    $    641,942      1,275,838
   Marketable securities, current                                                            4,755,640      4,347,724
   Trade accounts receivable, less allowance for doubtful
     accounts of $159,000 in 2000 and $166,000 in 1999                                       2,848,049      2,497,850
   Other receivables                                                                           118,807        139,481
   Inventories                                                                               2,127,059      2,104,588
   Prepaid expenses                                                                            243,291        161,587
   Deferred income taxes                                                                       343,000        345,000
                                                                                          ------------   ------------

          Total current assets                                                              11,077,788     10,872,068
                                                                                          ------------   ------------

Marketable securities, noncurrent                                                            4,111,690      4,259,071

Property and equipment                                                                       3,789,397      3,388,294
Less accumulated depreciation and amortization                                               2,590,443      2,205,801
                                                                                          ------------   ------------

                                                                                             1,198,954      1,182,493
                                                                                          ------------   ------------

Other assets:
   Goodwill, net of accumulated amortization of $245,585 in 2000 and $122,204 in 1999          841,516        964,897
   Technology rights and other intangibles, net of accumulated amortization of $281,186
     in 2000 and $176,731 in 1999                                                            1,055,543        799,448
   Other                                                                                       132,087        125,899
                                                                                          ------------   ------------

          Total other assets                                                                 2,029,146      1,890,244
                                                                                          ------------   ------------

                                                                                          $ 18,417,578     18,203,876
                                                                                          ============   ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable                                                                       $    859,103        853,030
   Accrued compensation and vacation                                                           603,929        675,339
   Other accrued expenses                                                                      288,749        314,989
   Accrued product warranties                                                                  271,702        283,727
   Accrued income taxes                                                                        242,891        404,133
   Dividends payable                                                                           348,916        305,680
                                                                                          ------------   ------------

          Total current liabilities                                                          2,615,290      2,836,898
                                                                                          ------------   ------------

Deferred income taxes                                                                          187,000        112,000
                                                                                          ------------   ------------

          Total liabilities                                                                  2,802,290      2,948,898
                                                                                          ------------   ------------

Stockholders' equity:
   Capital stock - undesignated--authorized 3,000,000 shares                                        --             --
   Common stock - $.10 par value; authorized 22,000,000 shares; issued and outstanding
     5,809,431 shares in 2000 and 6,073,097 shares in 1999                                     580,943        607,310
   Capital in excess of par value                                                                   --             --
   Retained earnings                                                                        15,034,345     14,647,668
                                                                                          ------------   ------------

          Total stockholders' equity                                                        15,615,288     15,254,978

Commitments and contingencies (note 5)
                                                                                          ------------   ------------

                                                                                          $ 18,417,578     18,203,876
                                                                                          ============   ============
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-2
<PAGE>


                          MOCON, INC. AND SUBSIDIARIES

                        Consolidated Statements of Income

                  Years ended December 31, 2000, 1999, and 1998

<TABLE>
<CAPTION>
                                                                        1999             1998
                                                                  as reclassified   as reclassified
                                                      2000         see note 1(k)     see note 1(k)
                                                ---------------   ---------------   ---------------
<S>                                             <C>               <C>               <C>
Sales
    Products                                    $    14,684,209        14,752,978        13,080,297
    Consulting services                               2,474,017         2,084,954         1,352,152
                                                ---------------   ---------------   ---------------

            Total sales                              17,158,226        16,837,932        14,432,449
                                                ---------------   ---------------   ---------------

Cost of sales
    Products                                          5,108,179         5,218,887         4,639,320
    Consulting services                               1,252,873           970,041           642,735
                                                ---------------   ---------------   ---------------

            Total cost of sales                       6,361,052         6,188,928         5,282,055
                                                ---------------   ---------------   ---------------

            Gross profit                             10,797,174        10,649,004         9,150,394

Selling, general, and administrative expenses         5,329,514         5,474,447         5,033,313

Research and development expenses                     1,126,564         1,234,204         1,060,883
                                                ---------------   ---------------   ---------------

            Operating income                          4,341,096         3,940,353         3,056,198

Investment income                                       468,176           418,814           470,411
                                                ---------------   ---------------   ---------------

            Income before income taxes                4,809,272         4,359,167         3,526,609

Income taxes                                          1,539,000         1,460,000         1,199,000
                                                ---------------   ---------------   ---------------

            Net income                          $     3,270,272         2,899,167         2,327,609
                                                ===============   ===============   ===============

Net income per common share:
    Basic                                       $           .55               .46               .37
                                                ===============   ===============   ===============

    Diluted                                     $           .55               .46               .36
                                                ===============   ===============   ===============

Weighted average shares outstanding:
    Basic                                             5,980,467         6,250,254         6,358,963
                                                ===============   ===============   ===============

    Diluted                                           5,995,353         6,268,358         6,397,847
                                                ===============   ===============   ===============
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-3
<PAGE>


                          MOCON, INC. AND SUBSIDIARIES

    Consolidated Statements of Stockholders' Equity and Comprehensive Income

                  Years ended December 31, 2000, 1999, and 1998

<TABLE>
<CAPTION>
                                                COMMON STOCK
                                        ----------------------------    CAPITAL IN
                                           NUMBER                        EXCESS OF        RETAINED
                                          OF SHARES        AMOUNT        PAR VALUE        EARNINGS          TOTAL
                                        ------------    ------------    ------------    ------------    ------------
<S>                                     <C>             <C>             <C>             <C>             <C>
Balance, December 31, 1997                 6,435,340    $    643,534          67,253      14,321,713      15,032,500

    Stock options exercised                   34,645           3,465          91,289          71,000         165,754
    Purchase and retirement
      of common stock                       (363,369)        (36,337)       (225,772)     (1,907,613)     (2,169,722)
    Dividends declared
      ($.20 per share)                            --              --              --      (1,269,467)     (1,269,467)
    Issuance of shares in conjunction
      with the acquisitions of
      Microanalytics Instrumentation
      Corp. and Lab Connections, Inc.        181,344          18,134       1,001,261              --       1,019,395
    Net income and comprehensive
      income                                      --              --              --       2,327,609       2,327,609
                                        ------------    ------------    ------------    ------------    ------------

Balance, December 31, 1998                 6,287,960         628,796         934,031      13,543,242      15,106,069

    Stock options exercised                   48,300           4,830         217,926              --         222,756
    Purchase and retirement
      of common stock                       (263,163)        (26,316)     (1,151,957)       (548,569)     (1,726,842)
    Dividends declared
      ($.20 per share)                            --              --              --      (1,246,172)     (1,246,172)
    Net income and comprehensive
      income                                      --              --              --       2,899,167       2,899,167
                                        ------------    ------------    ------------    ------------    ------------

Balance, December 31, 1999                 6,073,097         607,310              --      14,647,668      15,254,978

    Stock options exercised                   16,223           1,622          71,871              --          73,493
    Purchase and retirement
      of common stock                       (279,889)        (27,989)        (71,871)     (1,553,475)     (1,653,335)
    Dividends declared
      ($.225 per share)                           --              --              --      (1,330,120)     (1,330,120)
    Net income and comprehensive
      income                                      --              --              --       3,270,272       3,270,272
                                        ------------    ------------    ------------    ------------    ------------

Balance, December 31, 2000                 5,809,431    $    580,943              --      15,034,345      15,615,288
                                        ============    ============    ============    ============    ============
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-4
<PAGE>


                          MOCON, INC. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows

                  Years ended December 31, 2000, 1999, and 1998

<TABLE>
<CAPTION>
                                                                                         2000          1999          1998
                                                                                      -----------   -----------   -----------
<S>                                                                                   <C>             <C>           <C>
Cash flows from operating activities:
   Net income                                                                         $ 3,270,272     2,899,167     2,327,609
   Adjustments to reconcile net income to net cash provided by operating activities:
     Loss on disposition of long-term assets                                               56,635        38,698        19,401
     Depreciation and amortization                                                        730,231       611,596       378,887
     Deferred income taxes                                                                 77,000       (49,000)       (7,000)
     Changes in operating assets and liabilities, net of effect of acquisitions:
       Trade accounts receivable                                                         (350,199)     (373,790)    1,094,145
       Other receivables                                                                   20,674       (12,377)       48,947
       Inventories                                                                        (22,471)      217,599      (362,520)
       Prepaid expenses                                                                   (81,704)       74,071       (43,628)
       Accounts payable                                                                     6,073        51,494       125,435
       Accrued compensation and vacation                                                  (71,410)      234,643      (194,730)
       Other accrued expensess                                                            (26,240)       36,849      (149,525)
       Accrued product warranties                                                         (12,025)       32,869        36,466
       Accrued income taxes                                                              (161,242)       21,450       (51,740)
                                                                                      -----------   -----------   -----------

           Net cash provided by operating activities                                    3,435,594     3,783,269     3,221,747
                                                                                      -----------   -----------   -----------

Cash flows from investing activities:
   Purchases of marketable securities                                                  (5,324,204)   (6,379,304)   (2,744,874)
   Proceeds from sales of marketable securities at maturity                             5,063,669     5,794,760     4,883,500
   Cash paid in acquisitions, net of cash acquired                                             --            --    (1,032,642)
   Purchases of property and equipment                                                   (540,097)     (475,250)     (401,085)
   Proceeds from sale of property and equipment                                            18,686        18,308            --
   Purchases of patents and trademarks                                                   (414,629)      (50,169)      (53,179)
   Other                                                                                   (6,188)       (6,361)       (6,273)
                                                                                      -----------   -----------   -----------

           Net cash (used in) provided by investing activities                         (1,202,763)   (1,098,016)      645,447
                                                                                      -----------   -----------   -----------

Cash flows from financing activities:
   Proceeds from the exercise of stock options                                             40,368        14,630        17,006
   Purchase and retirement of common stock                                             (1,620,804)   (1,524,021)   (2,022,475)
   Dividends paid                                                                      (1,286,291)   (1,252,440)   (1,272,323)
                                                                                      -----------   -----------   -----------

           Net cash used in financing activities                                       (2,866,727)   (2,761,831)   (3,277,792)
                                                                                      -----------   -----------   -----------

           Net (decrease) increase in cash and temporary cash investments                (633,896)      (76,578)      589,402

Cash and temporary cash investments:
   Beginning of year                                                                    1,275,838     1,352,416       763,014
                                                                                      -----------   -----------   -----------

   End of year                                                                        $   641,942     1,275,838     1,352,416
                                                                                      ===========   ===========   ===========

Supplemental disclosures of cash flow information:
   Cash paid during the year for income taxes                                         $ 1,623,242     1,487,550     1,258,363
                                                                                      ===========   ===========   ===========

Supplemental schedule of noncash investing and financing activities:
   Noncash purchase and retirement of common stock                                    $    32,531       202,821       147,247
   Noncash exercise of stock options                                                       33,125       208,126       148,748
   Dividends accrued                                                                      348,916       305,680       317,253
   Issuance of common stock for acquisitions                                                   --            --     1,019,395
                                                                                      ===========   ===========   ===========
</TABLE>

See accompanying notes to consolidated financial statements.


                                       F-5
<PAGE>


                          MOCON, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                        December 31, 2000, 1999, and 1998


(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     MOCON, Inc. (the Company) operates in a single industry segment: the
     development, manufacturing, and marketing of measurement, analytical,
     monitoring, sample preparation, and consulting products used to detect,
     measure, and analyze gases and chemical compounds for customers in the
     barrier packaging, food, and pharmaceutical industries throughout the
     world. The following is a summary of the significant accounting policies
     used in the preparation of the Company's consolidated financial statements.

     (a)  PRINCIPLES OF CONSOLIDATION

          The consolidated financial statements include the accounts of the
          Company and its wholly owned subsidiaries. All material intercompany
          balances and transactions have been eliminated in consolidation.

     (b)  STATEMENTS OF CASH FLOWS

          The Company considers all highly liquid investments purchased with an
          original maturity of three months or less to be cash equivalents.

          Temporary cash investments consist of short-term investments which are
          readily convertible to cash.

     (c)  MARKETABLE SECURITIES

          Marketable securities at December 31, 2000 consist of United States
          government obligations, municipal bonds, and certificates of deposit.
          The Company classifies its debt and marketable equity securities in
          one of three categories: trading, available-for-sale, or
          held-to-maturity. Trading securities are bought and held principally
          for the purpose of selling them in the near term. Held-to-maturity
          securities are those securities in which the Company has the ability
          and intent to hold until maturity. All other securities not included
          in trading or held-to-maturity are classified as available-for-sale.

          Trading and available-for-sale securities are recorded at fair value.
          Held-to-maturity securities are recorded at amortized cost, adjusted
          for the amortization or accretion of premiums or discounts. 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 or
          held-to-maturity 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.

          Premiums and discounts are amortized or accreted over the life of the
          related held-to-maturity security as an adjustment to yield. Dividend
          and interest income are recognized when earned. Realized gains and
          losses for securities classified as available-for-sale and
          held-to-maturity are included in income and are derived using the
          specific identification method for determining the cost of securities
          sold.


                                      F-6                            (Continued)
<PAGE>


                          MOCON, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                        December 31, 2000, 1999, and 1998


     (d)  INVENTORIES

          Inventories are stated at the lower of cost or market. Cost is
          determined by the first-in, first-out method (FIFO), and market
          represents the lower of replacement cost or estimated net realizable
          value.

     (e)  PROPERTY AND EQUIPMENT

          Property and equipment are carried at cost. Depreciation and
          amortization are computed using the straight-line method. When assets
          are retired or otherwise disposed of, the cost and related accumulated
          depreciation are removed from the accounts, and any resulting gain or
          loss is recognized in income for the period. The cost of maintenance
          and repairs is charged to income as incurred and significant renewals
          and betterments are capitalized.

     (f)  INTANGIBLE ASSETS

          Intangible assets are carried at cost less accumulated amortization
          and consist of goodwill, technology rights, patents, and trademarks.
          Goodwill represents the excess of the purchase price over the fair
          value of assets acquired. Costs incurred in connection with
          applications for new patents are deferred until a final determination,
          with respect to the application, is made by appropriate regulatory
          agencies. Costs of patents abandoned are charged to income in the
          period of abandonment. Goodwill and technology rights are amortized on
          a straight-line basis over 7 to 10 years. Patent costs are amortized
          over the lesser of 17 years or their estimated useful lives using the
          straight-line method. Trademarks are amortized over five years.

          During fiscal 2000, the Company purchased $184,000 in technology
          rights and $180,000 in patents which are being amortized over 7 and 10
          years, respectively.

     (g)  INCOME TAXES

          The Company uses the asset and liability method for computing its
          deferred taxes. Under the asset and liability method, deferred taxes
          are based on the difference between the financial statement and tax
          basis of assets and liabilities and the enacted tax rates that will be
          in effect when these differences reverse. Deferred tax expense
          represents the change in deferred tax assets and liabilities during
          the year.

     (h)  USE OF ESTIMATES

          The preparation of financial statements in conformity with accounting
          principles generally accepted in the United States of America requires
          management to make estimates and assumptions that affect the reported
          amounts of assets and liabilities and disclosure of contingent assets
          and liabilities at the date of the financial statements and the
          reported amounts of revenues and expenses during the reporting period.
          Actual results could differ from those estimates.


                                      F-7                            (Continued)
<PAGE>


                          MOCON, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                        December 31, 2000, 1999, and 1998


     (i)  IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED
          OF

          The Company reviews its long-lived assets and certain identifiable
          intangibles for impairment whenever events or changes in circumstances
          indicate that the carrying amount of an asset may not be recoverable.
          Recoverability of assets to be held and used is measured by a
          comparison of the carrying amount of an asset to future net cash flows
          expected to be generated by the asset. If such assets are considered
          to be impaired, the impairment to be recognized is measured by the
          amount by which the carrying amount of the assets exceeds the fair
          value of the assets. Assets to be disposed of are reported at the
          lower of the carrying amount or fair value less costs to sell.

     (j)  FAIR VALUE OF FINANCIAL INSTRUMENTS

          The Company's financial instruments are recorded in its consolidated
          balance sheet. The carrying amount for cash and temporary cash
          investments, accounts receivable, accounts payable, and accrued
          liabilities approximates fair value due to the immediate or short-term
          maturity of these financial instruments. The fair values of
          investments in marketable securities are based on quoted market prices
          and are summarized in note 2.

     (k)  REVENUE RECOGNITION

          Revenue is recognized upon shipment of product or upon completion of
          services. During the quarter ended December 31, 2000, the Company
          reclassified foreign distributor commission expenses from operating
          expense to a reduction in revenues. This reclassification has been
          reflected in the Company's historical financial statements, and has no
          effect on the Company's net earnings. The Company has reclassified
          foreign distributor commission expenses of $1,158,000, $1,005,000, and
          $714,000 as a reduction in revenues for the years ended December 31,
          2000, 1999, and 1998, respectively.

     (l)  ADVERTISING COSTS

          The Company incurs advertising costs associated with trade shows,
          print advertising, and brochures. Such costs are charged to expense as
          incurred. Advertising expense was $211,000, $192,000, and $219,000, in
          2000, 1999, and 1998, respectively.

     (m)  NET INCOME PER COMMON SHARE

          Basic net income per common share is computed by dividing net income
          by the weighted average of common shares outstanding during the year.
          Diluted net income per share is computed by dividing net income by the
          weighted average of common and dilutive potential common shares
          outstanding during the year.


                                      F-8                            (Continued)
<PAGE>


                          MOCON, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                        December 31, 2000, 1999, and 1998


     (n)  STOCK-BASED EMPLOYEE COMPENSATION

          The Company uses the intrinsic-value method for employee stock-based
          compensation pursuant to APB Opinion No. 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. The Company adopted the disclosure provisions for
          employee stock-based compensation and the fair-value method for
          nonemployee stock-based compensation of Statement of Financial
          Accounting Standards (SFAS) No. 123, ACCOUNTING FOR STOCK-BASED
          COMPENSATION.

     (o)  RECLASSIFICATIONS

          Certain 1999 and 1998 amounts have been reclassified to conform to the
          2000 presentation.

     (p)  NEW ACCOUNTING PRONOUNCEMENTS

          During 1998, the Financial Accounting Standards Board (FASB) issued
          SFAS No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
          ACTIVITIES (as amended by SFAS No. 137 with respect to the effective
          date), which establishes new standards for recognizing all derivatives
          as either assets or liabilities, and measuring those instruments at
          fair value. The Company adopted the new standard beginning with the
          first quarter of fiscal 2001. The adoption of SFAS No. 133 did not
          impact the Company's financial condition or results of operations.

(2)  MARKETABLE SECURITIES

     The amortized cost, gross unrealized holding gains, gross unrealized
     holding losses, and fair value for available-for-sale and held-to-maturity
     securities by major security type at December 31, 2000 and 1999 were as
     follows:

<TABLE>
<CAPTION>
                                                                 2000
                                           ---------------------------------------------------
                                                           GROSS        GROSS
                                                        UNREALIZED    UNREALIZED
                                            AMORTIZED     HOLDING       HOLDING        FAIR
                                               COST        GAINS        LOSSES        VALUE
                                           ----------   ----------    ----------    ----------
<S>                                        <C>          <C>           <C>           <C>
Held-to-maturity:
    Municipal bonds                        $5,266,204       18,271        (4,179)    5,280,296
    Other securities                        3,601,126      132,578          (392)    3,733,312
                                           ----------   ----------    ----------    ----------

                                           $8,867,330      150,849        (4,571)    9,013,608
                                           ==========   ==========    ==========    ==========
</TABLE>


                                      F-9                            (Continued)
<PAGE>


                          MOCON, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                        December 31, 2000, 1999, and 1998


<TABLE>
<CAPTION>
                                                                 1999
                                           ---------------------------------------------------
                                                           GROSS        GROSS
                                                        UNREALIZED    UNREALIZED
                                            AMORTIZED     HOLDING       HOLDING        FAIR
                                               COST        GAINS        LOSSES        VALUE
                                           ----------   ----------    ----------    ----------
<S>                                        <C>          <C>           <C>           <C>
Available-for-sale:
    Municipal bonds                        $  635,000           --            --       635,000
                                           ----------   ----------    ----------    ----------

                                           $  635,000           --            --       635,000
                                           ==========   ==========    ==========    ==========

Held-to-maturity:
    Municipal bonds                        $7,002,798        4,509       (28,318)    6,978,989
    Other securities                          968,997       27,004        (7,509)      988,492
                                           ----------   ----------    ----------    ----------

                                           $7,971,795       31,513       (35,827)    7,967,481
                                           ==========   ==========    ==========    ==========
</TABLE>


     Other securities consist primarily of U.S. government obligations and
     marketable certificates of deposit.

     Maturities of investment securities classified as available-for-sale and
     held-to-maturity were as follows at December 31, 2000 and 1999:

<TABLE>
<CAPTION>
                                                     2000                     1999
                                           -----------------------   -----------------------
                                            AMORTIZED      FAIR       AMORTIZED      FAIR
                                              COST         VALUE        COST         VALUE
                                           ----------   ----------   ----------   ----------
<S>                                        <C>          <C>          <C>          <C>
Available-for-sale:
    Municipal bonds                        $       --           --      635,000      635,000
                                           ----------   ----------   ----------   ----------

                                           $       --           --      635,000      635,000
                                           ==========   ==========   ==========   ==========

Held-to-maturity:
    Due within one year                    $4,755,640    4,768,435    3,712,724    3,720,183
    Due after one through five years        4,111,690    4,245,173    4,259,071    4,247,298
                                           ----------   ----------   ----------   ----------

                                           $8,867,330    9,013,608    7,971,795    7,967,481
                                           ==========   ==========   ==========   ==========
</TABLE>


                                      F-10                           (Continued)
<PAGE>


                          MOCON, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                        December 31, 2000, 1999, and 1998


(3)  INVENTORIES

     The major components of inventories are as follows:

                                                         2000           1999
                                                    ------------   ------------

Finished products                                   $    138,505        240,784
Work-in-process                                          710,351        808,267
Raw materials                                          1,278,203      1,055,537
                                                    ------------   ------------

                                                    $  2,127,059      2,104,588
                                                    ============   ============

(4)  PROPERTY AND EQUIPMENT

     Property and equipment consist of the following:

                                                                     ESTIMATED
                                        2000           1999        USEFUL LIVES
                                    ------------   ------------   -------------

Machinery and equipment             $  2,678,703      2,381,625   3 to 10 years
Office equipment                         548,957        516,660   2 to 15 years
Leasehold improvements                   462,591        377,352   1 to 5 years
Vehicles                                  99,146        112,657   3 to 5 years
                                    ------------   ------------

                                    $  3,789,397      3,388,294
                                    ============   ============

     Depreciation and amortization of property and equipment charged to earnings
     was $468,613, $418,083, and $336,886 for the years ended December 31, 2000,
     1999, and 1998, respectively.

(5)  COMMITMENTS AND CONTINGENCIES

     (a)  LEASES

          The Company leases its facilities and certain equipment pursuant to
          operating leases. The facility leases expire at various times through
          June 2010 and require the Company to pay operating costs, including
          real estate taxes.

          Rental expense, including charges for operating costs, was as follows:

                            2000         1999         1998
                        -----------  -----------  -----------

                        $   410,303      389,143      329,123
                        ===========  ===========  ===========


                                      F-11                           (Continued)
<PAGE>


                          MOCON, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                        December 31, 2000, 1999, and 1998


          The following is a schedule of future minimum lease payments,
          excluding charges for operating costs, for operating leases as of
          December 31, 2000:

                   YEAR ENDING
                   DECEMBER 31
                  -------------

                    2001                        $    297,040
                    2002                             286,200
                    2003                             290,901
                    2004                             276,402
                    2005                             253,743
                    Later years                    1,192,002
                                                ------------

                                                $  2,596,288
                                                ============

     (b)  EXECUTIVE SEVERANCE AGREEMENTS

          The Company has entered into severance agreements with four executives
          that require payment of two times their annual salary if they are
          terminated within 24 months after a change of control occurs or upon
          the occurrence of other events as described in the agreements.

(6)  INCOME TAXES

     The provision for income taxes consists of the following:

                                             2000         1999          1998
                                         ----------    ----------    ----------

      Current tax expense:
          Federal                        $1,246,000     1,311,000     1,021,000
          State                             216,000       198,000       185,000
                                         ----------    ----------    ----------

           Total current expense          1,462,000     1,509,000     1,206,000

      Deferred                               77,000       (49,000)       (7,000)
                                         ----------    ----------    ----------

           Provision for income taxes    $1,539,000     1,460,000     1,199,000
                                         ==========    ==========    ==========


                                      F-12                           (Continued)
<PAGE>


                          MOCON, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                        December 31, 2000, 1999, and 1998


     The effective income tax rate varies from the federal statutory tax rate
     for the following reasons:

                                                    PERCENTAGE OF PRETAX INCOME
                                                    FOR YEARS ENDED DECEMBER 31,
                                                   -----------------------------
                                                     2000      1999       1998
                                                   --------  --------   --------

Tax at statutory federal income tax rate            34.0 %    34.0 %     34.0 %
Increases (reductions) in taxes resulting from:
    State income taxes, net of federal benefit       3.0       2.9        3.5
    Tax-exempt earnings of FSC                      (2.3)     (2.4)      (2.7)
    Tax-exempt investment earnings                  (1.9)     (2.3)      (3.5)
    Other                                           (0.8)      1.3        2.7
                                                   --------  --------   --------

             Effective income tax rate              32.0 %    33.5 %     34.0 %
                                                   ========  ========   ========

     The tax effect of significant temporary differences representing deferred
     tax assets and liabilities are as follows:

                                                          2000          1999
                                                      ------------  ------------

Deferred tax assets:
    Allowance for doubtful accounts not
      currently deductible                            $    57,000        60,000
    Inventory costs not currently deductible               39,000        35,000
    Inventory reserves                                     78,000        88,000
    Warranty reserves                                      98,000       108,000
    Other accruals                                         71,000        78,000
    Other intangibles                                      47,000        43,000
    Net operating loss and tax credit carryforwards            --        76,000
                                                      -----------   -----------

             Total deferred tax assets                    390,000       488,000
                                                      -----------   -----------

Deferred tax liabilities:
    Technology rights                                    (173,000)     (194,000)
    Excess of book over tax depreciation                  (61,000)      (61,000)
                                                      -----------   -----------

             Total deferred tax liabilities              (234,000)     (255,000)
                                                      -----------   -----------

             Net deferred tax asset                   $   156,000       233,000
                                                      ===========   ===========

     The Company has determined that establishing a valuation allowance for the
     deferred tax assets is not required since it is more likely than not that
     the deferred tax assets will be realized through future taxable income. Net
     operating loss and tax credit carryforwards aggregated $145,000 and
     $25,000, respectively, at December 31, 1999. All net operating loss and tax
     credit carryforwards were utilized in 2000.


                                      F-13                           (Continued)
<PAGE>


                          MOCON, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                        December 31, 2000, 1999, and 1998


(7)  STOCKHOLDERS' EQUITY

     As of December 31, 2000, the Company has reserved 190,993 shares of common
     stock for options that are still available for grant under the Company's
     stock option plans, and 381,015 shares for options that have been granted
     but have not yet been exercised.

     Under the stock option plans, option exercise prices are 100% of the market
     value of the common stock at the date of grant, except for incentive
     options granted under the 1992 and 1998 Plans to persons owning more than
     10% of the Company's stock, in which case the option price is 110% of the
     market value, and nonqualified options granted under the 1992 and 1998
     Plans, which may be granted at option prices no less than 25% of the market
     value. Exercise periods are generally for five to ten years. Certain of the
     plans allow for the granting of nonqualified stock options. Upon the
     exercise of these nonqualified options, the Company may realize a
     compensation deduction allowable for income tax purposes. The after-tax
     effect of these tax deductions is included in the accompanying consolidated
     financial statements as an addition to capital in excess of par value.

     The Company has adopted the disclosure-only provisions of SFAS No. 123,
     ACCOUNTING FOR STOCK-BASED COMPENSATION. Accordingly, no compensation cost
     has been recognized with respect to the Company's stock option plans. Had
     compensation cost for these plans been determined based on the fair value
     methodology prescribed by SFAS 123, the Company's net earnings and earnings
     per share would have been reduced to the pro forma amounts indicated below:

                                          2000          1999           1998
                                      ------------   -----------   ------------

Net earnings - as reported            $  3,270,272     2,899,167      2,327,609
Net earnings - pro forma                 3,066,627     2,818,972      2,202,542
Earnings per share - as reported:
    Basic                                      .55           .46            .37
    Diluted                                    .55           .46            .36
Earnings per share - pro forma:
    Basic                                      .51           .45            .35
    Diluted                                    .51           .45            .34


                                      F-14                           (Continued)
<PAGE>


                          MOCON, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                        December 31, 2000, 1999, and 1998


     The pro forma amounts may not be representative of the effects on reported
     net earnings for future years. The fair value of each option grant is
     estimated on the date of grant using the binomial option-pricing model with
     the following weighted-average assumptions used for grants in 2000, 1999,
     and 1998:

                                            2000          1999          1998
                                         ----------    ----------    ----------

Dividend yield                                3.30%         2.50%         2.25%
Expected volatility                             53%           44%           36%
Risk-free interest rate                        6.2%          5.5%          5.1%
Expected lives                            7.9 years     7.0 years     7.6 years

     Information regarding the Company's stock option plans for 2000, 1999, and
     1998 is as follows:

                                                                     WEIGHTED-
                                                                     AVERAGE
                                                                     EXERCISE
                                                     SHARES           PRICE
                                                   -----------     ------------

Options outstanding, December 31, 1997                198,773      $     6.26

    Granted                                           145,460            6.33
    Exercised                                         (34,645)           4.78
    Canceled or expired                                (7,300)           8.16
                                                   -----------     ------------

Options outstanding, December 31, 1998                302,288            6.42

    Granted                                             5,000            5.69
    Exercised                                         (48,300)           4.61
    Canceled or expired                               (30,095)           6.09
                                                   -----------     ------------

Options outstanding, December 31, 1999                228,893            6.83

    Granted                                           197,000            5.87
    Exercised                                         (16,223)           4.53
    Canceled or expired                               (28,655)           6.29
                                                   -----------     ------------

Options outstanding, December 31, 2000                381,015      $     6.47
                                                   ===========     ============


                                      F-15                           (Continued)
<PAGE>


                          MOCON, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                        December 31, 2000, 1999, and 1998


                                              2000         1999         1998
                                           ----------   ----------   ----------

Weighted-average fair value of options,
    granted during the year                $     2.67         2.23         2.38

Weighted-average exercise price of
    options, exercisable at end of year    $     6.66         6.77         6.17

Options exercisable                           221,440      143,221      147,809

(8)  INCOME PER COMMON SHARE

     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 years ended December 31, 2000, 1999, and
     1998:

                                               2000         1999         1998
                                           -----------  -----------  -----------

Weighted shares of common stock
    outstanding - basic                      5,980,467    6,250,254    6,358,963

Weighted shares of common stock
    assumed upon exercise of stock options      14,886       18,104       38,884
                                           -----------  -----------  -----------

Weighted shares of common stock
    outstanding - diluted                    5,995,353    6,268,358    6,397,847
                                           ===========  ===========  ===========

     The following represents securities outstanding at December 31, 2000, 1999,
     and 1998, which have been excluded from the net income per common share
     calculations because the effect on net income per common share would not
     have been dilutive:

                                        2000         1999         1998
                                     ----------   ----------   ----------

           Options                       94,620      107,335      166,110

(9)  SALES

        Export sales were $7,067,386, $6,202,822, and $4,910,119, in 2000, 1999,
        and 1998, respectively. Of the export sales, $3,182,898, $2,766,956, and
        $1,755,419, in 2000, 1999, and 1998, respectively, were to customers in
        Western Europe. Sales to customers in Japan were $1,833,964, $1,442,925,
        and $1,172,781, for 2000, 1999, and 1998, respectively. The Company's
        products are marketed outside of North America through various
        independent representatives. One independent representative accounted
        for approximately 16%, 15%, and 12%, of sales in 2000, 1999, and 1998,
        respectively. Another independent representative accounted for
        approximately 9%, 7%, and 7%, of sales in 2000, 1999, and 1998,
        respectively.


                                      F-16                           (Continued)
<PAGE>


                          MOCON, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                        December 31, 2000, 1999, and 1998


(10) SAVINGS AND RETIREMENT PLAN

     The Company has a 401(k) Savings and Retirement Plan covering substantially
     all of its employees. The Company provides matching contributions in
     accordance with the plan. The Company's contributions to this plan in 2000,
     1999, and 1998 were $47,895, $40,626, and $31,122, respectively.

(11) ACQUISITION

     On December 7, 1998, the Company acquired Lab Connections, Inc. (LabCon), a
     manufacturer of instruments used to automate sample preparation from liquid
     chromatography for analysis by spectroscopy, of Marlborough, Massachusetts.
     In addition, the Company acquired Microanalytics Instrumention Corp.
     (Micro) on January 28, 1998.

     The following unaudited pro forma consolidated results of operations have
     been prepared as if the acquisition of LabCon and Micro had occurred as of
     the beginning of fiscal 1998. Pro forma adjustments consist primarily of
     realization of tax benefits resulting from operating losses and goodwill
     and other intangible amortization:

                                                              1998
                                                        -------------
               Net sales                                $  15,844,277
               Net income                                   2,001,721

               Net income per common share:
                   Basic                                          .31
                   Diluted                                        .31


                                      F-17
<PAGE>


                                   MOCON, INC.

                        EXHIBIT INDEX TO ANNUAL REPORT ON
                                    FORM 10-K
                     FOR FISCAL YEAR ENDED DECEMBER 31, 2000

Item                                                                   Method of
 No.                                 Item                               Filing
------     --------------------------------------------------------   ----------

3.1        Restated Articles of Incorporation of the Company             (1)

3.2        Amendment to Restated Articles of Incorporation of the
           Company, effective May 27, 1987                               (2)

3.3        Amendment to Restated Articles of Incorporation of the
           Company, effective June 28, 1991                              (3)

3.4        Amendment to Restated Articles of Incorporation of the
           Company, effective May 21, 1998                               (11)

3.5        Amendment to Restated Articles of Incorporation of the
           Company, effective May 26, 1999                               (13)

3.6        Third Restated Bylaws of the Company                          (4)

10.1       Office/Warehouse Lease, dated July 29, 1994                   (5)

10.2       Office/Warehouse Lease Extension, dated June 6, 1997          (8)

10.3       Office/Warehouse Lease Extension, dated November 17, 1999     (13)

10.4       1990 Non-Employee Director Stock Option Plan                  (3)

10.5       1992 Stock Option Plan                                        (6)

10.6       1998 Stock Option Plan                                        (9)

10.7       Compensation Committee resolutions setting forth the
           Incentive Compensation Plan                                   (12)

10.8       Paired Profit Sharing Plan effective July 1, 1996             (7)

10.9       Confidentiality Agreement, dated June 3, 1983, between the
           Company and William N. Mayer                                  (4)

<PAGE>


10.10      Agency and Service Agreement, dated January 1, 1987,
           between the Company and MoCon FSC, Inc.                       (4)

10.11      Foreign Sales Corporation Suppliers Agreement, dated March
           28, 1985, between the Company and MoCon FSC, Inc.             (4)

10.12      Agreement and Plan of Merger, dated November 20, 1998, by
           and among Modern Controls, Inc., MOCON Acquisition
           Corporation and Lab Connections, Inc.                         (10)

10.13      Form of Executive Severance Agreement                         (14)

21.1       Subsidiaries of the Company                                   (14)

23.1       Independent Auditors' Consent                                 (14)


------------------------
(1)   Incorporated by reference to the Company's Annual Report on Form 10-K for
      the fiscal year ended January 31, 1984 (File No. 0-9273).

(2)   Incorporated by reference to the Company's Annual Report on Form 10-K for
      the fiscal year ended December 31, 1987 (File No. 0-9273).

(3)   Incorporated by reference to the Company's Registration Statement on Form
      S-8 (File No. 33-42255).

(4)   Incorporated by reference to the Company's Annual Report on Form 10-K for
      the fiscal year ended December 31, 1988 (File No. 0-9273).

(5)   Incorporated by reference to the Company's Annual Report on Form 10-K for
      the fiscal year ended December 31, 1994 (File No. 0-9273).

(6)   Incorporated by reference to the Company's Registration Statement on Form
      S-8 (File No. 33-49752).

(7)   Incorporated by reference to the Company's Annual Report on Form 10-K for
      the fiscal year ended December 31, 1996 (File No. 0-9273).

(8)   Incorporated by reference to the Company's Annual Report on Form 10-K for
      the fiscal year ended December 31, 1997 (File No. 0-9273).

(9)   Incorporated by reference to the Company's Registration Statement on Form
      S-8 (File No. 33-58789).

(10)  Incorporated by reference to the Company's Report on Form 8-K filed on
      December 21, 1998 (File No. 0-9273)

<PAGE>


(11)  Incorporated by reference to the Company's Annual Report on Form 10-K for
      the fiscal year ended December 31, 1998 (File No. 0-9273).

(12)  Incorporated by reference to the Company's Quarterly Report on Form 10-Q
      for the quarter ended June 30, 1999 (File No. 0-9273).

(13)  Incorporated by reference to the Company's Annual Report on Form 10-K for
      the fiscal year ended December 31, 1999 (File No. 0-9273).

(14)  Filed herewith.