Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained in this form, and no disclosure will 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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).     Yes   ¨    No   x

We are greatly dependent on the ability to retain key management and technical personnel, and our future success is highly dependent upon the personal efforts of our management and technical personnel. The loss of services of any one of them could have a material adverse effect on our business, financial condition, and results of operations. Our success will also be dependent in part upon our ability to attract, retain, and motivate highly skilled employees. We may need to offer additional compensation or incentives to attract and retain these and other employees.

We have to develop, integrate, and expand our international distribution networks in an effort to increase international sales of our products. We may not be successful in developing or expanding the international distribution network or in marketing and selling products in foreign markets. If the revenues generated by our international sales are not adequate to recover the expense of establishing, expanding, and maintaining an international distribution network, our business, financial condition, and results of operations could be materially adversely affected. If international sales become a more significant component of net sales, our business could become more vulnerable to the risks inherent in doing business internationally, including:

The market risk inherent in our investments represents the potential loss arising from adverse changes in interest rates. We are exposed to market risk in the area of interest rate changes impacting the fair value of our investment securities. Our policy is to invest primarily in money market accounts and short-term investments held at financial institutions. We do not have any derivative instruments in our investment portfolio. Due to their highly liquid nature, our investments are subject to minimal credit and market risk.

	Page
Report of Independent Auditors	**
Consolidated Balance Sheets - December 31, 2003 and 2002	**
Consolidated Statement of Operations - Years ended    December 31, 2003, 2002 and 2001	**
Consolidated Statement of Cash Flows - Years ended    December 31, 2003, 2002 and 2001	**
Consolidated Statement of Stockholders' Equity - Years    ended December 31, 2003, 2002 and 2001	**
Notes to Consolidated Financial Statements	**

(2) Financial Statement Schedules

Financial Statement Schedules have been omitted because they are not required or applicable, or the information required to be set forth therein is included in the Financial Statements or notes thereto.

To the Board of Directors and
Shareholders of Scientific Technologies Incorporated

In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of operations, of cash flows and of shareholders' equity present fairly, in all material respects, the financial position of Scientific Technologies Incorporated (a subsidiary of Scientific Technology Incorporated) and its subsidiaries at December 31, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

San Jose, California
March 15, 2004

Scientific Technologies Incorporated
Consolidated Balance Sheet
(In thousands, except per share data)

                                                              December 31,
                                                           ------------------
                                                             2003      2002
                                                           --------  --------
Assets                                                                       
Current assets:
    Cash and cash equivalents............................ $  2,312  $  2,620
    Accounts receivable, net.............................    8,139     7,636
    Receivable from Parent...............................      838       384
    Inventories..........................................    9,281     8,719
    Deferred income taxes................................    2,015     2,380
    Other assets.........................................    1,034       835
                                                           --------  --------
          Total current assets...........................   23,619    22,574

Property and equipment, net..............................    3,740     3,725
Goodwill and other intangible assets, net................   10,321    11,593
                                                           --------  --------
          Total assets................................... $ 37,680  $ 37,892
                                                           ========  ========
                                                                             
Liabilities and Shareholders' Equity                                         
Current liabilities
    Accounts payable..................................... $  2,758  $  2,942
    Accrued expenses.....................................    3,267     2,836
    Current portion of capital lease with Parent.........       68        60
                                                           --------  --------
          Total current liabilities......................    6,093     5,838

Capital lease with Parent................................      164       240
Deferred income taxes ...................................    1,134     2,064
                                                           --------  --------
          Total liabilities..............................    7,391     8,142

Commitments and contingencies (Note 9)

Shareholders' equity
    Common stock; $.001 par value; 100,000
       shares authorized; shares issued and
       outstanding - 9,711 and 9,687.....................       10        10
    Capital in excess of par value.......................    5,792     5,681
    Retained earnings....................................   24,487    24,059
                                                           --------  --------
          Total shareholders' equity.....................   30,289    29,750
                                                           --------  --------
          Total liabilities and shareholders' equity..... $ 37,680  $ 37,892
                                                           ========  ========

The accompanying notes are an integral part of these financial statements.

Scientific Technologies Incorporated
Consolidated Statement of Operations
(In thousands, except per share data)

                                                        Year Ended December 31,
                                                     ----------------------------
                                                       2003      2002      2001
                                                     --------  --------  --------
Sales.............................................. $ 55,494  $ 51,207  $ 49,053
Cost of goods sold.................................   32,462    29,000    29,329
                                                     --------  --------  --------
  Gross profit.....................................   23,032    22,207    19,724
                                                     --------  --------  --------

Operating expenses:
  Selling, general and administrative..............   17,504    16,110    16,111
  Research and development.........................    4,355     4,653     5,429
  Amortization of acquired intangibles.............      676       700       658
                                                     --------  --------  --------
   Total operating expenses........................   22,535    21,463    22,198
                                                     --------  --------  --------
Income (loss) from operations......................      497       744    (2,474)

Interest and other income, net.....................      193        17       176
                                                     --------  --------  --------

Income (loss) before income taxes..................      690       761    (2,298)
Provision (benefit) for income taxes...............      262       289      (873)
                                                     --------  --------  --------

Net income (loss).................................. $    428  $    472  $ (1,425)
                                                     ========  ========  ========

Basic and diluted net income (loss) per share...... $   0.04  $   0.05  $  (0.15)
                                                     ========  ========  ========

Shares used to compure net income (loss) per share.    9,734     9,698     9,659
                                                     ========  ========  ========

The accompanying notes are an integral part of these financial statements.

Scientific Technologies Incorporated
Consolidated Statement of Cash Flows
(In thousands)

                                                          Year Ended December 31,
                                                        -------------------------
                                                         2002     2002     2001
                                                        -------  -------  -------
Cash flows from operating activities:
  Net income (loss)................................... $   428  $   472  $(1,425)
  Adjustments to reconcile net income (loss) to
    cash provided by operating activities:
    Depreciation and amortization.....................   2,692    2,631    2,266
    Changes in assets and liabilities:
       Accounts receivable, net.......................    (503)  (1,182)   2,727
       Receivable from Parent.........................    (454)    (384)      --
       Inventories....................................    (562)     406      369
       Prepaid expenses and other assets..............    (199)    (254)    (170)
       Accounts payable...............................    (184)   1,056   (1,020)
       Deferred income taxes..........................    (565)    (167)    (209)
       Accrued expenses...............................     431      188      (25)
                                                        -------  -------  -------
Cash flows provided by operating activities...........   1,084    2,766    2,513
                                                        -------  -------  -------
Cash flows from investing activities:
   Purchases of property  and equipment...............  (1,435)  (1,223)  (1,010)
   Acquisition of Dunn Sales..........................      --       --   (3,992)
   Sale of short-term investments, net................      --       --      406
                                                        -------  -------  -------
Cash flows used in investing activities...............  (1,435)  (1,223)  (4,596)
                                                        -------  -------  -------

Cash flows from financing activities:
   Issuance of common stock, net......................     111       44       84
   Long-term debt.....................................     (68)      --       --
   Dividends..........................................      --       --   (1,016)
                                                        -------  -------  -------
Cash flows provided by (used in) financing activities.      43       44     (932)
                                                        -------  -------  -------
Change in cash and cash equivalents...................    (308)   1,587   (3,015)
Cash and cash equivalents at beginning of year........   2,620    1,033    4,048
                                                        -------  -------  -------
Cash and cash equivalents at end of year.............. $ 2,312  $ 2,620  $ 1,033
                                                        =======  =======  =======

Supplemental disclosure of cash flow information:
   Cash paid to (received from) Parent for
      income taxes.................................... $   262  $   289  $  (873)
                                                        =======  =======  =======

Supplemental disclosure of non-cash activities:
   Capital lease with Parent.......................... $   232  $   300  $    --
                                                        =======  =======  =======

   Deferred tax liability related to acquisition of
      Dunn Sales...................................... $    --  $ 1,500  $    --
                                                        =======  =======  =======

The accompanying notes are an integral part of these financial statements.

Scientific Technologies Incorporated
Consolidated Statement of Changes in Shareholders' Equity
(In thousands)

                                      Common Stock
                                ---------------------------
                                                   Capital
                                                  in Excess
                                           Par     of Par    Retained
                                Shares    Value     Value    Earnings    Total
                                -------  -------  ---------  ---------  --------
Balances December 31, 2000.....  9,650  $    10  $   5,553  $  26,028  $ 31,591
   Issuance of common stock....     33       --        116         --       116
   Repurchase of common stock..     (7)      --        (32)        --       (32)
   Net loss for the year.......     --       --         --     (1,425)   (1,425)
   Dividends paid..............     --       --         --     (1,016)   (1,016)
                                -------  -------  ---------  ---------  --------
Balances December 31, 2001.....  9,676       10      5,637     23,587    29,234
   Issuance of common stock....     22       --         69         --        69
   Repurchase of common stock..    (11)      --        (25)        --       (25)
   Net income for the year.....     --       --         --        472       472
                                -------  -------  ---------  ---------  --------
Balances December 31, 2002.....  9,687       10      5,681     24,059    29,750
   Issuance of common stock....     24       --        111         --       111
   Net income for the year.....     --       --         --        428       428
                                -------  -------  ---------  ---------  --------
Balances December 31, 2003.....  9,711  $    10  $   5,792  $  24,487  $ 30,289
                                =======  =======  =========  =========  ========

The accompanying notes are an integral part of these financial statements.

Scientific Technologies Incorporated (the "Company") develops, manufactures and markets safety light curtains, industrial sensors, optical profilers, microcomputers and power monitoring devices for factory automation applications. In addition, the Company provides safeguarding equipment installation, rebuilding, repair and maintenance of fabricating machinery. A majority of the Company's outstanding common stock is held by Scientific Technology Incorporated, a California corporation (the "Parent").

The Company operates in two business segments - the development, manufacture and marketing of industrial safety products and the development, manufacture and marketing of industrial automation products. The Company operates in an industry characterized by significant competition.

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 reported periods. Actual results could differ from those estimates.

The consolidated financial statements include the accounts of the Company and its subsidiaries after elimination of all significant intercompany accounts and transactions.

The Company invests primarily in money market accounts held at financial institutions and considers all highly liquid investments with a maturity of less than 90 days when purchased to be cash equivalents. Accordingly, these investments are subject to minimal credit and market risk.

Short-term investments consist of highly liquid investments, which mature in less than one year and are classified as "held-to-maturity." Interest income is accrued as earned.

Inventories are stated at the lower of cost (first-in, first-out) or market.

Property and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation is provided using the straight-line method over the estimated useful lives, which range from three to ten years. Leasehold improvements are amortized over the shorter of the term of the lease or the estimated life of the improvements.

Intangible assets include tradenames, customer relationships, product lines, technologies and a covenant not to compete acquired as part of the acquisitions of Dunn Sales, Inc., PSI-Tronix, Inc. and Lundahl Instruments, Inc. Intangible assets are generally amortized on a straight-line basis over a period of two to fifteen years. Goodwill is not amortized and is subject to impairment testing at the reporting unit level at least annually and more frequently upon the occurrence of certain events. A reporting unit is the same level as or one level below an operating segment.

The Company periodically evaluates the recoverability of its long-lived assets based upon the expected undiscounted cash flows attributable to such assets, and recognizes impairment from the carrying value of long-lived assets, if any, based on the fair value of such assets. No losses from impairment have been recognized for any of the periods presented.

The Company measures its financial assets and liabilities in accordance with generally accepted accounting principles. For certain of the Company's financial instruments, including cash, cash equivalents, short-term investments, trade accounts receivable, accounts payable and accrued expenses, the carrying amounts approximate fair value due to the short maturities.

Revenue from product sales to customers is recognized upon shipment when shipped FOB shipping point or upon receipt by the customer when shipped FOB destination, if a signed purchase order exists, the price is fixed or determinable, collection of the resulting receivable is considered reasonably assured and product returns can be reasonably estimated. Subsequent to the sale of the products, we have no obligation to provide any modification or customization, upgrades, enhancements or postcontract customer support. Upon revenue recognition, we provide for the estimated costs that may be incurred for product warranties. We estimate sales returns and warranty costs based on historical experience and the best information we have at the time we report our financial statements. Actual results could differ from these estimates.

Installation and engineering service revenue is recognized when services are rendered, or when an identifiable portion of the contract is completed, no significant post-delivery obligations exist and collection of the resulting receivable is considered reasonably assured.

All amounts billed to a customer in a sale transaction related to shipping and handling, if any, represent revenues earned for the goods provided and are classified as revenue. Costs incurred for shipping and handling are included in cost of sales.

Research and development costs are expensed as incurred.

Advertising costs are recorded as expenses when incurred. Advertising costs for the years ended December 31, 2003, 2002 and 2001 were $548,000, $590,000 and $609,000.

The Company accounts for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, or APB No. 25, "Accounting for Stock Issued to Employees." Under APB No. 25, compensation cost is measured as the excess, if any, of the quoted market price of the Company's stock at the date of grant over the exercise price of the option granted. Compensation cost for stock options, if any, is recognized ratably over the vesting period. The Company provides additional pro forma disclosures as required under Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation" and SFAS No. 148, "Accounting for Stock-Based Compensation, Transition and Disclosure".

SFAS No. 148, issued in December 2003 amends SFAS No. 123 in December 2003 to require that disclosures of the pro forma effect of using the fair value method of accounting for stock-based employee compensation be displayed more prominently and in a tabular format. The following table sets forth the effect on the Company's net income (loss) and net income (loss) per share as if the Company had recorded compensation costs based on the estimated grant date fair value as defined by SFAS No. 123 for all granted stock-based awards (in thousands, except per share amounts).

Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities. The Company is included in the consolidated tax return of the Parent, but provides for income taxes on a separate return basis pursuant to a tax sharing arrangement, which limits the Company's tax liability to the amount payable to the Parent. Income taxes payable are recorded as a reduction to the receivable from Parent account or as an increase to the payable to Parent account.

Comprehensive income is defined to include all changes in shareholders' equity during a period from non-owner sources. There were no significant differences between the Company's net income (loss) and its total comprehensive income (loss) for any of the periods presented.

The Company has reclassified certain prior years' information to conform to the current year's financial statements.

In January 2003, the Financial Accounting Standards Board ("FASB") issued Interpretation No. 46, or FIN 46, "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51." FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is effective immediately for all new variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after December 15, 2003. The Company believes that the adoption of this standard will not have material impact on its financial position, results of operations or cash flows.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." SFAS No. 149 amends and clarifies financial accounting and reporting of derivative instruments and hedging activities under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 149 amends SFAS No. 133 for decisions made: (a) as part of the Derivatives Implementation Group process that require amendment to SFAS No. 133; (b) in connection with other FASB projects dealing with financial instruments; and (c) in connection with the implementation issues raised related to the application of the definition of a derivative. SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003 and for designated hedging relationships after June 30, 2003. The Company adopted SFAS No. 149 during 2003. The adoption of SFAS No. 149 did not have a material impact on the Company's financial position, results of operations or cash flows.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." The Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity and further requires that an issuer classify as a liability (or an asset in some circumstances) financial instruments that fall within its scope because that financial instrument embodies an obligation of the issuer. Many of these instruments were previously classified as equity. The statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The Company adopted SFAS No. 150 during 2003. The adoption of this standard did not have a material impact on the Company's financial position, results of operations or cash flows.

In 2003, the Company provided certain management services to the Parent. Costs of these services were allocated to the Parent based upon the amount of time employees spent providing these services. The amount charged to the Parent for 2003 was $353,000. In 2002 and 2001, the Parent provided certain management, marketing and sales services to the Company. The costs of these services were allocated to the Company based on the percentage of the Company's sales to total sales of the Parent and its subsidiaries. The amounts allocated to the Company for 2002 and 2001 were $806,000, and $1,005,000, respectively.

The Company leases a 95,000 square foot facility owned by an affiliate of the Parent. The Company also leases another 25,000 square feet in another facility owned by the Parent. The lease terms are for ten years. Overhead costs are allocated primarily on the basis of square footage utilized.

The Company utilizes a receivable from/payable to Parent account to record activity including cash received, cash disbursed and amounts owed to and receivable from the Parent for allocated charges and dividends. The net effect of transactions with the Parent resulted in a receivable from Parent of $838,000 at December 31, 2003 and $384,000 at December 31, 2002. In addition, the Company is party to a capital lease of $232,000 at December 31, 2003 under which the Parent is the lessor. At December 31, 2003, future minimum payments under this lease due in the years 2004 through 2006 were approximately $68,000 each and $28,000 in 2007.

On June 8, 2001, the Company acquired all of the outstanding common stock of Dunn Sales, Inc. ("DSI"), for a cash payment of $3,992,000. DSI is a leading provider of safeguarding equipment installation, rebuilding, repair and maintenance of fabricating machinery. The transaction was accounted for as a purchase and accordingly, the results of DSI operations are included in the Company's financial statements from the date of acquisition. In 2002, based on a reassessment of deferred tax liabilities related to the acquisition, $1,500,000 was recorded to deferred tax liabilities and goodwill. The total purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed based on their respective fair values on the date of acquisition as follows (in thousands):

                                                  Amortization
                                        Amount      period
                                      ----------  ----------
Working capital..................... $      140
Equipment...........................         96
Technology..........................      1,985     15 years
Customer relationships..............      1,061      7
Tradename...........................        710      5
                                      ----------
                                          3,992
Goodwill/deferred tax liability.....      1,500
                                      ----------
                                     $    5,492
                                      ==========

NOTE 4 - BALANCE SHEET DATA

                                                      December 31,
                                                  ----------------------
                                                     2002        2001
                                                  ----------  ----------
                                                     (In thousands)

     Accounts receivable........................ $    8,642  $    8,181
     Less: allowance for doubtful accounts......       (503)       (545)
                                                  ----------  ----------
                                                 $    8,139  $    7,636
                                                  ==========  ==========

     Balance at beginning of year............... $      545  $      661
     Addition...................................         80         409
     Utilized...................................       (122)       (525)
                                                  ----------  ----------
     Balance at end of year..................... $      503  $      545
                                                  ==========  ==========

     Finished goods............................. $    2,453  $    2,159
     Work in process............................      1,225       1,043
     Subassemblies..............................        911       1,016
     Raw materials..............................      4,692       4,501
                                                  ----------  ----------
                                                 $    9,281  $    8,719
                                                  ==========  ==========

     Equipment.................................. $   10,979  $    9,995
     Furniture and fixtures.....................      1,923       1,686
     Leasehold improvements.....................        737         523
                                                  ----------  ----------
                                                     13,639      12,204
     Less: accumulated depreciation.............     (9,899)     (7,144)
                                                  ----------  ----------
                                                 $    3,740  $    5,060
                                                  ==========  ==========

     Accrued compensation....................... $    1,797  $    1,610
     Accrued commissions........................        192         194
     Warranty reserve...........................        221         241
     Accrued income tax.........................        227         227
     Stock rotation reserve.....................        231         105
     Price allowance reserve....................        154          70
     Other......................................        445         389
                                                  ----------  ----------
                                                 $    3,267  $    2,836
                                                  ==========  ==========

		December 31, 2003		December 31, 2002
	Life (Years)	Gross Carrying Amount	Accumulated Amortization	Gross Carrying Amount	Accumulated Amortization
Technology	15	$ 7,146	(1,730)	$ 7,146	(1,252)
Customer relationships	7	3,476	(1,686)	3,476	(1,152)
Tradename	5	710	(296)	710	(156)
Product lines	12	1,596	(395)	1,596	(275)
Covenant not to compete	2	50	(50)	50	(50)
Total amortized intangible assets		12,978	$(4,157)	12,978	$(2,885)
Goodwill		1,500		1,500
Total		$14,478		$14,478

The Company incurred amortization expense of $1,272,000 and $1,296,000 in 2003 and 2002, respectively, of which $596,000 and $290,000 were included in cost of goods sold. The Company will incur amortization expense of approximately $1,271,000 in 2004 and 2005, $1,204,000 in 2006, $827,000 in 2007 and $676,000 in 2008.

Debt:

The Company has a $6,100,000 line of credit with a bank, of which no amount was outstanding at December 31, 2003 or 2002. The line bears interest at the bank's prime rate (4.00% at December 31, 2003), is secured by accounts receivable, inventories and fixed assets, and expires on June 30, 2004. The Company's Bank line of credit as amended, contains covenants which require the Company to meet specific financial tests. The financial tests for 2003 were as follows: (1) a requirement of profitably on an annual basis and (2) a minimum tangible net worth requirement of $16,500,000. At December 31, 2003, the Company was in compliance with the covenants.

The provision (benefit) for income taxes was as follows:

The provision (benefit) for income taxes differs from the amount of tax determined by applying the applicable federal statutory income tax rate to pretax income as a result of the following differences:

	2003	2002	2001
Statutory U.S. tax rate	34%	34%	(34)%
State income taxes, net of federal benefit	6	6	(1)
Research and development and other credits	(24)	(27)	(7)
Nondeductible expenses	22	25	4
Effective tax rate	38%	38%	(38)%

Deferred tax assets (liabilities) consist of the following: (In thousands)

A reconciliation of the numerators and denominators of the basic and diluted income (loss) per common share computations is provided below.

                                               (In thousands)     (Per
                                            ------------------   Share)
                                             Income    Shares    Amount
                                            --------  --------  --------
2003:
Basic earnings per share calculation...... $    428     9,711  $   0.04
Effect of dilutive securities:
  Stock options...........................       --        23        --
                                            --------  --------  --------
Diluted earnings per share calculation.... $    428     9,734  $   0.04
                                            ========  ========  ========

2002:
Basic earnings per share calculation...... $    472     9,683  $   0.05
Effect of dilutive securities:
  Stock options...........................       --        15        --
                                            --------  --------  --------
Diluted earnings per share calculation.... $    472     9,698  $   0.05
                                            ========  ========  ========

2001:
Basic earnings per share calculation...... $ (1,425)    9,659  $  (0.15)
Effect of dilutive securities:
  Stock options...........................       --        --        --
                                            --------  --------  --------
Diluted earnings per share calculation.... $ (1,425)    9,659  $  (0.15)
                                            ========  ========  ========

The number of common stock equivalents excluded from the earnings per share calculation because they would be antidilutive total to 444,000 in 2003, 523,000 in 2002 and 461,000 in 2001.

During 2003 and 2002, the Company paid no dividends. During 2001, the Company paid quarterly dividends of $.0525 per share for the first two quarters of the year on April 3 and July 5.

The 1997 Stock Option Plan (the "Plan") provides for the granting of stock options to employees and consultants of the Company. Options granted under the Plan may be either incentive stock options or nonqualified stock options. Incentive stock options ("ISO") may be granted only to Company employees (including officers and directors who are also employees). Nonqualified stock options ("NSO") and stock purchase rights may be granted to Company employees and consultants. The Company has reserved 1,000,000 shares of common stock for issuance under the Plan. No person will be eligible to receive options for more than 250,000 shares in any fiscal year.

Options under the Plan may be granted for periods of up to ten years and at prices no less than 85% of the estimated fair market value of the shares on the date of grant, provided, however, that (i) the exercise price of an ISO shall not be less than 100% of the estimated fair market value of the shares on the date of grant, and (ii) the exercise price of an ISO granted to a 10% or more shareholder shall not be less than 110% of the estimated fair value of the shares on the date of grant. Most options granted under the Plan through December 31, 2003 vest over a five-year period.

Activity under the Plan is set forth below:

Information relating to stock options outstanding and exercisable at December 31, 2003 is as follows:

The Company has reserved 600,000 shares of Common Stock for issuance under the 1997 Employee Stock Purchase Plan (the "Purchase Plan"). Employees generally will be eligible to participate in the Purchase Plan if they are customarily employed by the Company for more than 20 hours per week and more than five months in a calendar year and are not (and would not become as a result of being granted an option under the Purchase Plan) 5% Shareholders of the Company. Under the Purchase Plan, eligible employees may choose each year to have up to 15% of their eligible annual compensation withheld to purchase the Company's common stock. Each offering period commences on the first trading day of each calendar quarter, or on such other date as the Board shall determine. The price at which the common stock is purchased under the Purchase Plan is 85% of the lesser of the closing price of the Company's common stock on the first day of the applicable offering period or on the last day of that purchase period. The Purchase Plan will terminate after a period of ten years unless terminated earlier as permitted by the Purchase Plan. During the years ended December 31, 2003, 2002 and 2001, 20,826, 15,091and 22,958 shares of common stock were purchased under this plan at a weighted-average price of $4.12, $2.68 and $5.77, respectively.

This information is required to be determined as if the Company had accounted for its employee stock options (including shares issued under the Employee Stock Purchase Plan, collectively called options) as defined by SFAS No. 123. The fair value of options reported below has been estimated at the date of grant using the Black-Scholes option-pricing model for 2003, 2002 and 2001 using the following assumptions:

The weighted-average estimated fair value of options granted during the year 2003, 2002 and 2001 were $1.72, $1.43 and $1.78, respectively. The weighted-average estimated fair value of employee stock purchase rights granted under the Employee Stock Purchase Plan were $0.66, $.57 and $1.10 in 2003, 2002 and 2001, respectively. The effect on earnings per share of using the fair value of options is disclosed in Note 1 above.

The Company adopted a defined contribution retirement savings plan under Section 401(k) of the Internal Revenue Code. This plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. The plan allows employer's matching contributions equal to 50% of employees' contributions subject to a maximum of 6% of employees' compensation. Contributions to the plan may be made at the discretion of the Board of Directors. The Company made no contributions in 2003 or 2002 and contributed $219,000 in 2001.

The Company is organized into two business segments: Safety Products Group, whose products include safety light curtains, safety interlocks and relays, safety mats and controllers, safety contact strips, and optical profiling scanners, and installation services, and Automation Products Group, whose products include photoelectric and fiberoptic sensors, control components, power monitoring electronics, defense electronics, industrial control microcomputers, peripherals and software, level and flow sensors, non- contact ultrasonic sensors and controllers, pressure transducers, digital pressure gauges, displacement and velocity transducers and pressure comparators.

Financial information for each product group for the years ended December 31, 2003, 2002 and 2001 follows:

                                       Safety Products   Automation Products
                                       ----------------  -------------------
2003 
Sales................................ $         46,708  $             8,786
Group operating profit (loss)........ $          2,265  $            (1,769)
Total assets......................... $         32,469  $             5,210
Capital expenditures................. $            636  $               799
Depreciation and amortization........ $          1,552  $             1,140
                                                                            
2002 
Sales................................ $         43,493  $             7,714
Group operating profit (loss)........ $          2,419  $            (1,675)
Total assets......................... $         28,646  $             9,246
Capital expenditures................. $          1,101  $               122
Depreciation and amortization........ $          1,517  $             1,114
                                                                            
2001 
Sales................................ $         40,085  $             8,968
Group operating profit (loss)........ $           (846) $            (1,628)
Total assets......................... $         25,526  $             8,674
Capital expenditures................. $            859  $               151
Depreciation and amortization........ $          1,920  $               346

The Company's sales by geographic location of customers in 2003 were: North America - $53,356,000, Europe - $1,093,000 and Asia - $1,045,000. Foreign sales represented 12% of sales in 2003 and less than 10% of sales in each of 2002 and 2001.

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, cash equivalents, short-term investments and trade accounts receivable. The Company places its cash and cash equivalents in a variety of money market accounts. The Company further limits its exposure to these investments by placing such investments with various high quality financial institutions. The Company routinely performs evaluations of these financial institutions. The Company offers credit terms on the sale of its products to its customers in the normal course of business. The Company performs ongoing credit evaluations of its customers' financial condition and, generally, requires no collateral from its customers. The Company maintains an allowance for uncollectible accounts receivable based upon the expected collectability of all accounts receivable. No customer accounted for more than 10% of accounts receivable at December 31, 2003, 2002 or 2001.

The Company operates principally in the United States. The Company's operations in Germany are insignificant to the Company as a whole.

The Company leases certain office and manufacturing space and other equipment under noncancellable operating leases. At December 31, 2003, future minimum payments under these leases due in the years 2004 through 2005 were approximately $1,265,000 and $1,083,000 and $230,000 per year from 2006 to 2008. Of these amounts $1,026,000 in 2004, $951,000 in 2005 and $126,000 from 2006 to 2008 was related to lease agreements with the Parent or an affiliate of the Parent.

Rent expense under operating lease agreements was approximately $1,168,000 in 2003, $1,123,000 in 2002, and $1,007,000 in 2001. Of these amounts, $963,000, $974,000 and $900,000 were related to lease agreements with the Parent or an affiliate of the Parent.

From time to time, the Company is involved in litigation in the normal course of business. Management believes that the outcome of existing matters will not have a material adverse effect on the Company's consolidated financial position, results of operations or cash flows.

The Company offers warranties on certain products and records a liability for the estimated future costs associated with warranty claims, which is based upon historical experience and the Company's estimate of the level of future costs. A reconciliation of the changes in the Company's warranty liability for the years ended December 31, 2003 and 2002 follows (in thousands):

As permitted under Oregon law the Company has agreements whereby the Company indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was serving at the Company's request in such capacity. The indemnification term is for the period that the officer or director is serving in such capacity or is subject to any possible claim or action by reason of the fact that the Indemnitee was serving in that capacity. The maximum potential amount of future payments by the Company could be unlimited; however the Company has a director and officer insurance policy that limits the Company's exposure and enables the Company to recover a portion of any future amounts paid. As a result of the insurance policy coverage, the Company believes that the estimated fair value of these agreements is minimal.

None.

(a) Evaluation of disclosure controls and procedures.    Based on their evaluation as of December 31, 2003, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

(b) Changes in internal controls.    There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Certain information required by Part III is omitted from this Report in that the registrant will file a definitive Proxy Statement for its 2003 Annual Meeting of Shareholders pursuant to Regulation 14A (the "Proxy Statement") no later than 120 days after the end of the fiscal year covered by this Report, and certain information included therein is incorporated herein by reference.

The information required by this Item concerning the Company's directors and the Company's executive officers is incorporated by reference to the sections entitled "Nominees" and "Management", respectively, appearing in the Company's Proxy Statement for its 2003 Annual Meeting of Shareholders.

The information required by this Item is incorporated by reference to the sections entitled "Executive Compensation" and "Report of the Compensation Committee" appearing in the Proxy Statement for its 2003 Annual Meeting of Shareholders.

The information required by this Item is incorporated by reference to the sections entitled "Security Ownership of Certain Beneficial Owners and Management" and "Equity Compensation" appearing in the Proxy Statement for its 2003 Annual Meeting of Shareholders.

The information required by this Item is incorporated by reference to the sections entitled "Certain Relationships and Related Transactions" appearing in the Proxy Statement for its 2003 Annual Meeting of Shareholders.

The information required by this Item is incorporated by reference to the sections entitled "Principal Accountant" appearing in the Proxy Statement for its 2003 Annual Meeting of Shareholders.

(a) The following documents are filed as a part of this Report:

Reference is made to the index appearing in Item 8(a) of this report.

All other exhibits for which provision is made in Regulation S-K of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have

been omitted.

(b) A Report on Form 8-K was filed on November 4, 2003 furnishing the Company's Earnings Release for the quarter ended September 30, 2003 to the Securities and Exchange Commission.

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: March 29, 2004

	SCIENTIFIC TECHNOLOGIES INCORPORATED

	By:	/s/ Anthony R. Lazzara

	Anthony R. Lazzara, Chairman of the Board

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Anthony R. Lazzara and Joseph J. Lazzara, jointly and severally, his attorney-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to this Report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.