MOCON (MOCO)

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

        Substantially all of our marketable securities are at fixed interest rates. However, virtually all of the marketable securities mature in two years or less; therefore, we believe that the market risk arising from the holding of these financial instruments is minimal. Based on our average invested cash balances during 2007, a 1% (100 basis points) decrease in the interest rate on such balances would result in a reduction in interest income of approximately $138,000 on an annual basis.

Foreign Currency Exchange Risk

        Historically, approximately 50% of our consolidated sales have been to international destinations. Since we invoice these customers in U.S. dollars, we are not exposed to foreign currency transaction risk. However, our foreign operations expose us to foreign currency exchange risk when the euro currency results of operations are translated to U.S. dollars. While we historically have not experienced any material foreign currency translation losses, we may engage in hedging activity in the future to minimize this risk. Our net investment in foreign subsidiary translated into U.S. dollars is not hedged. Any changes in foreign currency exchange rates would be reflected as a foreign currency translation adjustment, a component of accumulated other comprehensive income in stockholders' equity, and would not impact our net income.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

        Substantially all of our marketable securities are at fixed interest rates. However, virtually all of the marketable securities mature in two years or less;
therefore, we believe that the market risk arising from the holding of these financial instruments is minimal. Based on our average invested cash balances during 2007, a 1% (100 basis points)
decrease in the interest rate on such balances would result in a reduction in interest income of approximately $138,000 on an annual basis.

Foreign Currency Exchange Risk

        Historically, approximately 50% of our consolidated sales have been to international destinations. Since we invoice these customers in U.S. dollars, we are
not exposed to foreign currency transaction risk. However, our foreign operations expose us to foreign currency exchange risk when the euro currency results of operations are translated to
U.S. dollars. While we historically have not experienced any material foreign currency translation losses, we may engage in hedging activity in the future to minimize this risk. Our net
investment in foreign subsidiary translated into U.S. dollars is not hedged. Any changes in foreign currency exchange rates would be reflected as a foreign currency translation adjustment, a
component of accumulated other comprehensive income in stockholders' equity, and would not impact our net income.