Sierra Monitor Corporation Announces Financial Results for the Third Quarter Ended September 30, 2009

Receives Largest Ever Single Order for FieldServer Products Valued at More Than $275,000

Sierra Monitor Corporation (OTCBB: SRMC), a cleantech focused company that designs, manufactures and sells electronic safety and environmental instrumentation, today announced financial results for the third quarter ended September 30, 2009.

Financial Highlights

--  Reports third quarter revenues of $3.3 million
--  Achieves 61% gross margin in the third quarter of 2009 compared to 57%
    in the third quarter of the prior year
--  Returns to profitability in the third quarter of 2009
--  Generated income from operations of $219,128 and net income of
    $131,477 in the third quarter of 2009
--  Generated year-to-date revenues of $9.5 million
--  Strong balance sheet with $1.8 million in cash and no bank borrowings
    

Third Quarter 2009 Business Highlights

--  Received largest ever single FieldServer order, valued at more than
    $275,000.  The order totals over 100 protocol gateways to be used at the
    $10 billion King Abdullah University of Science and Technology (KAUST),
    Saudi Arabia
--  Became an approved supplier of gas detection systems for the Oman
    Refineries and Petrochemical Company, Oman
--  Introduced a new integrated Webserver with built-in XML support for
    its FieldServer range of products.  Based on AJAX technology the web server
    can be used to display dynamic real time building automation data
--  Supplied FieldServer communications products for integration of power,
    generator and fuel metering into an Ethernet based building control system
    in a new Federal penitentiary
    

Third Quarter and Nine Months of 2009 Financial Results

Net sales for the quarter ended September 30, 2009 were $3,323,758, a decrease of 13.3% from $3,831,832 reported for the same period of 2008. For the nine months ended September 30, 2009, net sales decreased 8.7% to $9,530,536, compared to $10,435,056 for the same period of 2008.

Sierra Monitor posted GAAP net income of $131,477, or $0.01 per share (basic and diluted), for the quarter ended September 30, 2009, compared to GAAP net income of $169,680, or $0.02 per share (basic) and $0.01 per share (diluted), for the same period of 2008. Sierra Monitor posted GAAP net income of $88,466, or $0.01 per share (basic and diluted), for the nine months ended September 30, 2009, compared to GAAP net income of $369,948, or $0.03 per share (basic and diluted), for the same period of 2008.

Sierra Monitor posted non-GAAP net income of $260,096 or $0.02 per share (basic and diluted), for the quarter ended September 30, 2009, compared to non-GAAP net income of $242,155, or $0.02 per share (basic and diluted), for the same period of 2008. Sierra Monitor posted non-GAAP net income of $398,518, or $0.03 per share (basic and diluted), for the nine months ended June 30, 2009, compared to non-GAAP net income of $635,112, or $0.06 per share (basic) and $0.05 per share (diluted), for the same period of 2008.

"In this quarter we increased our sales, improved our gross margins, lowered our inventories, lowered our accounts receivable and generated over a half million dollars of positive cash flow. I am delighted with these results," said Gordon Arnold, chairman and chief executive officer. "Our successful international activities, including the high visibility KAUST project in Saudi Arabia, were instrumental in these results and enhance our future access to other international projects."

Cash Position

Sierra Monitor had $1,764,026 in cash at September 30, 2009 with no bank borrowings. Trade receivables at September 30, 2009 were $1,703,137. The Company's Days Sales Outstanding was 46 days during the quarter.

About Sierra Monitor Corporation

Sierra Monitor Corporation is a cleantech focused company that designs, manufactures and sells electronic safety and environmental instrumentation. The company's hazardous gas detection systems can be found in a broad range of applications including US Navy ships, waste water treatment facilities, refineries, offshore oil platforms, chemical plants, parking garages and underground telephone vaults providing 24/7 protection of personnel and facilities. The company's unique protocol translator products enable communication between disparate electronic systems overcoming protocol language barriers. By enabling communication between central building automation systems and many electronic subsystems, such as fire panels, chillers and air handlers, Sierra Monitor assists with the integration of energy saving systems. The company's products improve the safety and comfort of workers while contributing to climate and natural resource protection. With almost 30 years experience, Sierra Monitor products can be found in more than 16,000 installations worldwide.

The company's vision is to capitalize on the expanding worldwide demand for cleantech knowledge-based products and services that improve operational performance, productivity, efficiency and safety in building automation, industrial, and military applications while reducing demands on resources and energy consumption.

Safe Harbor Statement

This release includes forward-looking statements that are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those contemplated by the forward-looking statements. These forward-looking statements include, without limitation, statements relating to Sierra Monitor's expected return to profitability in the third quarter and ability to take advantage of future opportunities. Forward-looking statements in this release are generally identified by words, such as "believes," "anticipates," "plans," "expects," "will," "would," "guidance," "projects" and similar expressions which are intended to identify forward-looking statements. There are a number of important factors that could cause the results of Sierra Monitor to differ materially from those indicated by such forward-looking statements, including, among others, the continuing impact of perceived or actual weakening of economic conditions on customers' and prospective customers' spending on Sierra Monitor products and services; quarterly fluctuations in Sierra Monitor's revenues or other operating results; periodic fluctuations in product mix resulting in significant variation of profit margins, risks related to the introduction of new products and market acceptance of such products; customization and deployment delays or errors associated with Sierra Monitor's products; impact of long sales and implementation cycles for certain products; and competitors' release of competitive products and other actions. Further information on potential factors that could affect the financial results of Sierra Monitor are included in risks described in Sierra Monitor's filings with the Securities and Exchange Commission, including, without limitation, Sierra Monitor's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. These filings are available on the web site maintained by the Securities and Exchange Commission at http://www.sec.gov. Sierra Monitor does not undertake any obligation to update forward-looking statements contained in this release.

TABLE A


                        SIERRA MONITOR CORPORATION
                        Statements of Operations
                                (unaudited)


                       For the three months ended For the nine months ended
                                September 30,          September 30,
                        ------------ ------------ ------------ ------------
                            2009         2008         2009         2008
                        ------------ ------------ ------------ ------------
Net sales               $  3,323,758 $  3,831,832 $  9,530,536 $ 10,435,056
Cost of goods sold         1,289,377    1,659,692    3,895,118    4,326,116
                        ------------ ------------ ------------ ------------
    Gross profit           2,034,381    2,172,140    5,635,418    6,108,940
                        ------------ ------------ ------------ ------------
Operating expenses
  Research and
   development               516,794      485,446    1,500,472    1,452,992
  Selling and
   marketing                 825,279      880,050    2,526,805    2,516,384
  General and
   administrative            473,180      522,600    1,460,697    1,499,854
                        ------------ ------------ ------------ ------------
                           1,815,253    1,888,096    5,487,974    5,469,230
                        ------------ ------------ ------------ ------------
    Income from
     operations              219,128      284,044      147,444      639,710

Income tax provision          87,651      114,364       58,978      269,762
                        ------------ ------------ ------------ ------------

    Net income          $    131,477 $    169,680 $     88,466 $    369,948
                        ============ ============ ============ ============
Net income per share:
  Basic                 $       0.01 $       0.02 $       0.01 $       0.03
                        ============ ============ ============ ============
  Diluted               $       0.01 $       0.01 $       0.01 $       0.03
                        ============ ============ ============ ============
Weighted-average number
 of shares used in per
 share computations:
  Basic                   11,438,212   11,423,212   11,432,656   11,291,199
                        ============ ============ ============ ============
  Diluted                 11,764,928   11,849,025   11,767,161   11,915,070
                        ============ ============ ============ ============



TABLE B

                        SIERRA MONITOR CORPORATION
                              Balance Sheet


                                               September 30,   December 31,
                 Assets                            2009           2008
                                               (unaudited)        (1)
                                              -------------- --------------
Current assets:
   Cash                                       $    1,764,026 $    1,338,647
   Trade receivables, less allowance for
    doubtful accounts of approximately
    $82,000 and $89,000 respectively               1,703,137      1,661,846
   Inventories, net                                1,852,116      1,968,006
   Prepaid expenses                                  190,725        189,389
   Income taxes deposit                               79,550         48,295
   Deferred income taxes                             297,442        299,421
                                              -------------- --------------
          Total current assets                     5,886,996      5,505,604

Property and equipment, net                          275,190        380,987
Other assets                                         170,916        185,015
                                              -------------- --------------

          Total assets                        $    6,333,102 $    6,071,606
                                              ============== ==============

   Liabilities and Shareholders' Equity
Current liabilities:
   Accounts payable                           $      569,881 $      521,823
   Accrued compensation expenses                     369,139        385,306
   Other current liabilities                         102,424         98,332
   Income taxes payable                               60,730          6,272
                                              -------------- --------------
          Total current liabilities                1,102,174     1,011,733


Deferred tax liability                                42,498         42,498
                                              -------------- --------------
          Total liabilities                        1,144,672     1,054,231


Commitments and contingencies

Shareholders’ equity:
   Common stock, $0.001 par value; 20,000,000
    shares authorized; 11,438,212 and
    11,428,212 shares issued and outstanding,
    respectively                                      11,438         11,428
   Additional paid-in capital                      3,568,543      3,485,964
   Retained earnings                               1,608,449      1,519,983
                                              -------------- --------------
          Total shareholders’ equity               5,188,430      5,017,375
                                              -------------- --------------

          Total liabilities and shareholders'
           equity                             $    6,333,102 $    6,071,606
                                              ============== ==============
(1) Derived from December 31, 2008 audited financial statements.

NON-GAAP FINANCIAL MEASURES

The accompanying news release dated November 5, 2009 contains non-GAAP financial measures. Table C reconciles the non-GAAP financial measures in that release to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles (GAAP). These non-GAAP financial measures include non-GAAP operating expenses, non-GAAP profit (loss) from operations and related non-GAAP profit (loss) as a percentage of revenue, non-GAAP net profit (loss) and basic and diluted non-GAAP net profit (loss) per share.

Sierra Monitor continues to provide all information required in accordance with GAAP and does not suggest or believe that non-GAAP financial measures should be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Sierra Monitor believes that non-GAAP financial measures provide meaningful supplemental information regarding its operating results primarily because they exclude amounts that the company does not consider part of ongoing operating results when assessing overall company performance.

We believe that our non-GAAP financial measures facilitate the comparison of results for current periods with results for past periods. We exclude the following items from non-GAAP financial measures:

Depreciation and Amortization of Tangible and Intangible Assets

In accordance with GAAP, depreciation and amortization of tangible and intangible assets includes depreciation of purchased capital assets and amortization of intangible assets including third party approval fees. We exclude these amounts from our internal measures for budget and planning purposes.

Provision for Bad Debt Expense

We maintain an allowance for doubtful accounts which is analyzed on a periodic basis to ensure that it is adequate to the best of management's knowledge. We exclude these amounts from our internal measures for budget and planning purposes.

Provision for Inventory Losses

We evaluate our inventories for excess or obsolescence on a quarterly basis. Inventories identified as slow moving or obsolete are determined based on historical experience and current product demand. The quarterly analysis is used to adjust the provision for inventory losses. We exclude the provision for inventory losses from our internal measures for budget and planning purposes.

Share-based Compensation Expense

Our non-GAAP financial measures exclude share-based compensation expenses, which consist of expenses for stock options. While share-based compensation is an expense affecting our results of operations, management excludes share-based compensation from our budget and planning process. For these reasons, we exclude share-based compensation expenses from our non-GAAP financial measures. We compute weighted average dilutive shares using the methods required by SFAS 128 and SFAS 123(R) for both GAAP and non-GAAP diluted net income per share.

Sierra Monitor refers to these non-GAAP financial measures in evaluating and measuring the performance of our ongoing operations and for planning and forecasting in future periods. These non-GAAP financial measures also facilitate our internal comparisons to historical operating results. We are reporting non-GAAP financial measures because we believe that the inclusion of comparative numbers provides consistency in our financial reporting. We compute non-GAAP financial measures using the same consistent method from quarter to quarter and year to year.

Sierra Monitor believes that non-GAAP measures have significant limitations in that they do not reflect all of the amounts associated with Sierra Monitor's financial results as determined in accordance with GAAP and that these measures should only be used to evaluate Sierra Monitor's financial results in conjunction with the corresponding GAAP measures. Because of these limitations, Sierra Monitor qualifies the use of non-GAAP financial information in a statement when non-GAAP information is presented. In addition, the exclusion of the charges and expenses indicated above from the non-GAAP financial measures presented does not indicate an expectation by Sierra Monitor management that similar charges and expenses will not be incurred in subsequent periods.

TABLE C

                        SIERRA MONITOR CORPORATION
              Reconciliation of GAAP to Non-GAAP Net Income
                                (unaudited)


                             For the three months    For the nine months
                                    ended                   ended
                                 September 30,           September 30,
                            ----------------------- ----------------------
                               2009        2008        2009        2008
                            ----------- ----------  ----------  ----------
GAAP Net Income             $   131,477 $  169,680  $   88,466  $  369,948
     Depreciation and
      amortization               69,039     70,518     216,403     188,773
     Provision for bad debt
      expense                     9,731    (25,307)     23,081      (1,625)
     Provision for
      inventory losses                -          -      (8,000)          -
     Deferred income taxes       24,372          -       1,979      (2,558)
     Stock based
      compensation expense       25,478     27,264      76,589      80,574
                            ----------- ----------  ----------  ----------
Total adjustments to GAAP
 net income                     128,620     72,475     310,052     265,164
                            ----------- ----------  ----------  ----------
Non GAAP Net income         $   260,097 $  242,155  $  398,518  $  635,112
                            =========== ==========  ==========  ==========
Non GAAP Net income per
 share:
     Basic                  $      0.02 $     0.02  $      .03  $     0.06
                            =========== ==========  ==========  ==========
     Diluted                $      0.02 $     0.02  $      .03  $     0.05
                            =========== ==========  ==========  ==========
Weighted-average number of
 shares used in per share
 computations
     Basic                   11,438,212 11,423,212  11,432,656  11,291,199
                            =========== ==========  ==========  ==========
     Diluted                 11,764,928 11,849,025  11,767,161  11,915,070
                            =========== ==========  ==========  ==========