BOLT TECHNOLOGY CORP, 10-K405, 1999-09-23

BOLT TECHNOLOGY CORP
10-K405, 1999-09-23
OIL & GAS FIELD MACHINERY & EQUIPMENT

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SECURITIES AND EXCHANGE COMMISSION
FORM 10-K
Washington, DC 20549

_______________

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

For the Fiscal Year Ended June 30, 1999
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 [No Fee Required]
For the transition period from _____ to _____

Commission File Number 0-10723

BOLT TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)

Connecticut 06-0773922
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

Four Duke Place, Norwalk, Connecticut 06854
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (203) 853-0700

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

Title of Class Name of Each Exchange
--------------
on Which Registered
-------------------
Common Stock, without par value American Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

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]

The aggregate market value of Common Stock, without par value, held by non-
affiliates on August 20, 1999: $26,481,125

As of August 20, 1999, there were 5,370,378 shares of Common Stock, without par
value, outstanding.

Documents Incorporated By Reference

Definitive Proxy Statement for 1999 Annual Meeting, which will be filed no later
than 120 days after June 30, 1999, is incorporated by reference in Part III to
the extent stated in this report.

1
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Note Regarding Forward-Looking Statements

Forward-looking statements in this Form 10-K, future filings by the Company with
the Securities and Exchange Commission, the Company's press releases and oral
statements by authorized officers of the Company are intended to be subject to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Investors are cautioned that all forward-looking statements involve risks
and uncertainty, including without limitation (i) the risk of technological
change relating to the Company's products and the risk of the Company's
inability to develop new competitive products in a timely manner, (ii) the risk
of decreased demand for the Company's products due to fluctuations in energy
industry activity, (iii) the Company's reliance on certain significant
customers, (iv) risks associated with a significant amount of foreign sales, and
(v) risk of fluctuations in future operating results. The Company believes that
forward-looking statements made by it are based on reasonable expectations.
However, no assurances can be given that actual results will not differ
materially from those contained in such forward-looking statements. The words
"estimate," "project," "anticipate," "expect," "predict," "believe" and similar
expressions are intended to identify forward looking statements.

PART I

ITEM 1. Business

Bolt Technology Corporation operates in two business segments: geophysical
equipment and industrial clutches. Geophysical equipment includes the
development, manufacture and sale of the Company's marine seismic energy sources
and through its subsidiary AG Geophysical Products, Inc. ("AG") the Company
manufactures and sells underwater electrical connectors and cables, air gun
signature hydrophones and pressure transducers used by the marine seismic
industry. AG was acquired on April 20, 1999. The industrial clutch segment
manufactures and sells precision mechanical and pneumatic clutches through the
Company's subsidiary, Custom Products Corporation ("Custom Products"). Custom
Products was acquired on January 6, 1998. See Note 2 to the consolidated
financial statements for information related to these acquisitions. Also see
Note 10 for information regarding industry segments. A description of the
Company's products follows.

Geophysical Equipment

Marine Air Guns

An energy source, such as the Company's air gun, used in seismic exploration
creates elastic waves at frequencies that readily travel to great depths in the
earth. As elastic waves travel through the earth, portions are reflected by
variations in the underlying rock layers and the reflected energy is received as
signals by devices known as hydrophones. A shipboard unit containing electronic
recording equipment converts the signals to digital form. By using computer
programs with complex calculations to manipulate the processed seismic data,
geoscientists can model and visualize the subsurface through the creation and
analysis of spatial representations. The analysis of seismic and other
geological data forms the basis of decisions to drill exploratory and
development wells. Because of the significant expense associated with drilling
oil and gas wells, decisions on whether or where to drill are critical to the
overall process. A seismic exploration vessel may tow 60 to 70 air guns along
with multiple hydrophone streamers of up to 12,000 meters in length. The air
guns are fired simultaneously every 75-150 feet along the survey line.

Because of improvements in the quality and reductions in the per unit cost of
three dimensional ("3-D") seismic surveys, oil and gas companies have increased
their use of seismic data for development and production purposes. The increased
use of seismic data by oil and gas companies has increased the demand for the
Company's air guns and replacement parts.

2
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ITEM I. Business (cont'd.)

The precise shot to shot repeatability of the Company's marine air guns and
their reliability of operation make them especially beneficial for use in 3-D
surveys.

The Company's latest generation of marine air guns extends the period between
routine air gun maintenance cycles. These "long-life" guns also provide improved
high peak sound pressure levels and improved frequency spectrum as compared with
older models. These improved characteristics are advantageous to geoscientists
in designing 3-D surveys. A retro-fit kit, which incorporates the improvements
of the long-life guns, allows users to easily upgrade existing air gun models to
the long-life standard.

The Company sells a modified version of the marine air gun, in which the
portholes are closed at all times except when the gun is firing, for use in mud-
holes, sand, or other penetrable materials. Unlike the Company's marine air
guns which are used primarily in the exploration for new accumulations of oil
and gas, the Company's down-hole air guns are used for seismic surveys at
established oil and gas wells ("well-shooting") both on and offshore.

The Company sells various models of air guns that range in price from $3,000 to
$76,000. A majority of the air guns sold by the Company are priced in the
$10,000 range. A significant source of the Company's revenue is from the sale
of replacement parts.

Underwater Connectors, Cables and Hydrophones

The marine cables and connectors manufactured by the Company are injection
molded of thermoplastic polyurethane designed for marine air gun firing lines,
bulkhead connectors and other connectors which are needed from the rear of the
seismic vessel to the marine air gun. The cables and connectors are primarily
for use with marine air guns and firing control systems where the connector is
operating in close proximity to the high pressure release of air from marine air
guns. The Company manufactures cables and connectors that can be used with
marine air guns manufactured by the Company and air guns manufactured by
Input/Output Inc., and Seismic Systems, Inc.

The Company's signature hydrophones and pressure transducers are designed for
marine applications in a high shock environment. Their primary use is with
marine air guns firing and control systems. The purpose of the hydrophone or
pressure transducer is for near field measurements of the outgoing energy
waveforms from marine air guns.

Industrial Clutches

Slip clutches manufactured by the Company are used to control torque for
intermittent, continuous or overload slip. The clutch will slip when the torque
setting is reached and resume driving as the load is reduced. Other types of
clutches manufactured by the Company include one-way clutches, jaw clutches and
friction hinges.

The slip clutch is basically two components, a cartridge and a housing. The
cartridge contains inner and outer plates, friction pads, coil springs and a
torque adjusting collar or a nut, all mounted in a central hub. The pins in the
housing engage the outer clutch plates, carrying the controlled torque to a
second shaft, gear or pulley mounted to the housing.

The Company manufactures many variations of its standard clutch design depending
on the specific application required by the customer. The Company's clutches
are used in a wide variety of applications such as labeling machines, robotics
computer peripheral equipment and medical devices.

The sales price of a clutch ranges from $5 for a standard design to $300
depending on size and complexity. The quantity ordered also affects the
ultimate sales price.

3
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ITEM 1. Business (cont'd)

Foreign Sales

During fiscal 1999, 1998 and 1997, approximately 63%, 60% and 55%, respectively,
of the Company's revenue was derived from sales to customers outside the United
States. See Note 10 of Notes to the Consolidated Financial Statements for the
geographic distribution of sales. In addition, sales are made to domestic
customers who frequently use the Company's equipment internationally.

Backlog

Geophysical Equipment

Because of the short period between order and shipment dates for the principal
portion of geophysical equipment sales, the dollar amount of current backlog is
not considered to be a reliable indication of future sales.

Industrial Clutches

As of June 30, 1999, the Company had an order backlog of $1,035,000 as compared
to $1,022,000 at June 30, 1998. It is estimated that substantially all of the
backlog as of June 30, 1999 will be shipped during the fiscal year ended June
30, 2000.

Competition

Geophysical Equipment

The Company's marine air guns compete primarily with marine air guns
manufactured by Input/Output, Inc. and Seismic Systems, Inc. The Company's
principal competitor for connectors and cables is Input/Output, Inc. The
Company believes that technology and product durability are the primary basis of
competition in the market for geophysical equipment. The Company believes that
the remaining competitive factors in the industry are field product support and
price. The Company believes that it competes effectively with respect to each
of these factors, although there can be no assurance that the sales of the
Company's geophysical equipment will not be adversely affected if its current
competitors introduce equipment with better performance or lower price.

Industrial Clutches

It is not possible to determine with accuracy the relative competitive position
of the Company in the market for industrial clutches. The industry in which the
Company operates is characterized by active and substantial competition. No
single company dominates the market for the types of clutches manufactured by
the Company. The Company's competitors include both larger and smaller
manufacturers and divisions of larger diversified companies with substantial
financial resources. Principal competitive factors in the market for the
Company's products are quality, service, reliability and price. The Company's
clutches compete with other torque control devices to solve design problems such
as electric clutches and wrap spring clutches. Electric clutches are
significantly more expensive than the pneumatic and mechanical clutches
manufactured by the Company. Wrap spring clutches are comparable in price to the
clutches manufactured by the Company but do not offer smooth and consistent
operation.

4
<PAGE>

ITEM 1. Business (cont'd.)

Marketing

Geophysical Equipment

The Company's principal customers for geophysical equipment are seismic
contractors which operate seismic vessels to collect seismic data in accordance
with their customers specifications or for their own seismic data libraries and
foreign national oil and gas companies.

Marketing of the Company's geophysical equipment is principally performed by
salaried sales personnel, all of whom are based in the United States. The
Company also uses sales agents for individual sales in certain foreign
countries. In general, the Company markets its products and services through its
sales force, together with its technical services and engineering staffs,
primarily to representatives of major geophysical contractors. The principal
marketing techniques used by the Company are direct sales visits to current and
potential customers, product demonstrations, and participation at industry trade
shows and meetings.

In general, products are sold on standard 30-day credit terms. In certain
instances, the Company requires its customers to furnish letters of credit,
payable upon shipment.

Industrial Clutches

The Company's clutches are primarily sold to original equipment manufacturers
("OEMs"). OEMs use the clutches manufactured by the Company to seek engineering
solutions to torque related problems which will provide lower installed cost and
high reliability, thereby lowering production and service costs. The Company's
engineering staff and its independent sales representatives continually work in
close collaboration with OEMs to determine the appropriate clutch for the
specific application. Sales are made on standard 30-day credit terms. The
Company sells its clutches in the United States, Canada and Europe.

Research and Development

The Company's ability to compete successfully depends upon, among other things,
its ability to develop new products as well as to improve the technical
capabilities of its existing products. The Company, during the fiscal years
1999, 1998 and 1997, has spent $386,000, $216,000 and $204,000, respectively, to
develop new products and to upgrade its existing products and services.

Employees

As of June 30, 1999, the Company employed 89 persons. The Company is not a party
to any collective bargaining agreement and has had no work stoppages. The
Company believes that its employee relations are good.

5
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ITEM 1. Business (cont'd.)

Manufacturing and Raw Materials

The Company manufactures and assembles its geophysical equipment in Norwalk,
Connecticut and Cypress, Texas and manufactures its industrial clutches in North
Haven, Connecticut. Manufacturing and assembly operations consist of machining
or molding the necessary components and assembling and testing the final
product. The Company maintains adequate levels of inventory to enable it to
satisfy customer requirements within the shortest amount of time. The raw
materials used by the Company are generally in adequate supply. For some marine
air gun orders, the Company occasionally supplies auxiliary equipment such as
compressors, air gun controllers or towing equipment. The Company has not
experienced any supply problems with respect to these auxiliary items. Because
the Company manufactures based on customer orders, no inventory of finished
goods is maintained.

Regulatory Matters

The Company believes that it is currently in substantial compliance with the
requirements of environmental and occupational health and safety laws and
regulations. Compliance with such laws and regulations has not represented a
significant expense to the Company in the past and the Company does not foresee
the need for material expenditures to ensure compliance with such laws and
regulations as they currently exist.

Intellectual Property

The Company seeks to protect its intellectual property by means of patents,
trademarks and other measures. The Company currently owns more than 20 United
States patents and 30 patents in foreign countries relating to the manufacture
of its products. These patents have been of value in the growth of the Company's
business and may continue to be of value in the future. However, the Company's
business is generally not dependent upon the protection of any patent and would
not be materially affected by the expiration thereof.

Major Customers

Geophysical Equipment

Historically a significant portion of the Company's revenues have been
attributable to a few large customers. In 1999, sales to Schlumberger, Ltd.,
Petroleum Geo-Services (PGS) and Eagle Geophysical, Inc., accounted for 19%, 14%
and 10%, respectively, of total consolidated revenue. In 1998, sales to
Schlumberger, PGS and Veritas DCG accounted for 22%, 10% and 10%, respectively,
of total consolidated revenue. In 1997, sales to Schlumberger, PGS and
Geoscience Corporation accounted for 38%, 20%, and 19%, respectively, of total
consolidated revenue.

The loss of Schlumberger or PGS as a customer or a significant decrease in the
amount of their purchases could have a material adverse effect on the Company.

Industrial Clutches

No customer accounted for 10% of total consolidated revenue.

6
<PAGE>

ITEM 2. Properties

The following table sets forth certain information with respect to the Company's
principal properties:

<TABLE>
<CAPTION>
Approximate
Area Expiration
Location Nature of Property (Sq. Feet) Date of Lease
-------- ------------------ ---------- --------------
<S> <C> <C> <C>
Norwalk, Connecticut Manufacturing 22,300 1999
Norwalk, Connecticut Administration/Engineering 6,600 1999
Houston, Texas Sales Office 3,000 2001
North Haven, Connecticut Manufacturing 6,500 2004
Cypress, Texas Manufacturing 30,000 2002
</TABLE>

In the opinion of the Company's management, the properties described above are
in good condition and repair and are suitable and adequate for the Company's
purposes. The properties are currently fully utilized on a one shift basis which
provides sufficient productive capacity. The building located in Cypress, Texas
is leased from the former shareholder of AG Geophysical Products, Inc. which was
acquired by the Company in April 1999. Monthly rental payments are $10,000.

ITEM 3. Legal Proceedings

From time to time, the Company is a party to what it believes is routine
litigation and proceedings that may be considered as part of the ordinary course
of its business. The Company is not aware of any current or pending litigation
or proceedings that could have a material adverse effect on the Company's
financial position, results of operations, or cash flow.

ITEM 4. Submission of Matters to a Vote of Security Holders

During the fourth quarter of fiscal 1999, no matter was submitted to a vote of
the Company's security holders.

7
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PART II

ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters

The Company's common stock is listed on the American Stock Exchange ("AMEX")
under the symbol "BTJ". The following table sets forth the high and low sales
prices for the Company's Common Stock for the quarters indicated:

Fiscal 1999 High Low
----------- ---- ---
First Quarter 9 7/16 5 1/16
Second Quarter 8 1/8 5 1/2
Third Quarter 8 3/4 6 1/8
Fourth Quarter 8 15/16 5

Fiscal 1998 High Low
----------- ---- ---
First Quarter 7 1/4 5
Second Quarter 10 5 5/8
Third Quarter 6 7/8 5
Fourth Quarter 10 3/4 6 1/4

The number of stockholders of record at July 23, 1999 was 357 and does not
include those stockholders who had shares in broker nominee accounts. The
Company believes that the number of beneficial owners is substantially greater
than the number of record holders, because a large portion of the Common Stock
is held of record in broker "street names".

The Company has not paid a dividend since 1985. Under the Company's loan
agreement, approximately $225,000 is available for the payment of dividends.
The Company currently has no plans to pay dividends on its Common Stock. The
payment of any future dividends will be determined by the Board of Directors in
light of conditions then existing, including the Company's earnings, financial
conditions and other factors.

Sales of Unregistered Securities During the Fourth Quarter of 1999

On April 20, 1999 the Company issued in a privately-negotiated transaction
63,492 shares of its Common Stock in connection with the acquisition of AG
Geophysical Products, Inc. as part of the consideration of such acquisition.
The issuance of the Common Stock was exempt from registration under the
Securities Act of 1933, as amended ("the Act"), pursuant to Section 4(2) of the
Act.

8
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ITEM 6. Selected Financial Data

The following table sets forth selected consolidated financial data with
respect to the Company and should be read in conjunction with the consolidated
financial statements provided elsewhere herein.

<TABLE>
<CAPTION>
Year Ended June 30,
---------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------ -------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Income Statement Data:

Sales............................................. $19,591 $18,053 $10,531 $8,631 $ 7,707
------- ------- ------- ------ -------

Costs and expenses:
Cost of sales and service.................... 10,091 9,745 5,788 5,220 4,658
Research and development..................... 386 216 204 161 200
Selling, general and administrative.......... 3,804 3,300 2,485 2,034 1,830
Amortization of intangibles.................. 335 114 - - -
Interest (income) expense, net............... (34) (98) (67) 6 66
------- ------- ------- ------ -------
14,582 13,277 8,410 7,421 6,754
------- ------- ------- ------ -------

Income before income taxes........................ 5,009 4,776 2,121 1,210 953
Provision (benefit) for income taxes (1).......... 728 (358) - - (1,000)
------- ------- ------- ------ -------
Net Income........................................ $ 4,281 $ 5,134 $ 2,121 $1,210 $ 1,953
======= ======= ======= ====== =======

Per Share Data:
Earnings per common share:
Net income:
Basic..................................... $ 0.81 $ 1.00 $ 0.43 $ 0.24 $ 0.39
Diluted................................... $ 0.80 $ 0.97 $ 0.41 $ 0.24 $ 0.38
Average number of common shares outstanding:
Basic..................................... 5,293 5,146 4,989 4,971 4,967
Diluted................................... 5,379 5,287 5,178 5,010 5,151

Financial Position Data:
Working capital.............................. $ 7,651 $ 6,500 $ 6,182 $4,122 $ 2,890
Total assets................................. 27,887 16,462 8,321 6,462 4,922
Long-term debt............................... 5,300 - - - -
Stockholders' equity......................... 17,865 13,043 7,011 4,872 3,662
Cash dividends paid.......................... None None None None None
======= ======= ======= ====== =======
</TABLE>

(1) Reflects recognition of previously reserved tax benefits in 1998 and 1995.

9
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ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Liquidity and Capital Resources

As of June 30, 1999 the Company had $3,500,000 of cash and cash equivalents. For
the year ended June 30, 1999 cash generated from operating activities was
$6,817,000 principally resulting from net income of $4,281,000 and a $4,083,000
decrease in accounts receivable. These amounts were partially offset by a
$1,248,000 decrease in accounts payable.

As of June 30, 1998 the Company had $1,317,000 of cash and cash equivalents. For
the year ended June 30, 1998 cash provided by operating activities was
$3,946,000 principally resulting from net income of $5,134,000 and an increase
in accounts payable of $1,217,000. The cash provided by operating activities was
partially offset by a $2,515,000 increase in accounts receivable.

In 1999 and 1998 the Company used $4,598,000 and $4,974,000, respectively of
cash for acquisitions. Over the past three years the Company spent $188,000 for
additions to property and equipment. The Company does not anticipate capital
expenditures for 2000 to exceed $150,000.

The Company has a $3,000,000 unsecured credit facility which matures in 2003.
Available borrowings under the terms of the agreement decrease by $500,000 each
year. Any borrowings under the agreement bear interest at the prime rate.
There are no borrowings outstanding under this agreement at June 30, 1999.

As part of the consideration for the acquisition of AG Geophysical Products,
Inc. in April 1999, the Company issued a note to its former shareholder for
$7,000,000. The note bears interest at 8.25% payable monthly and requires
quarterly principal payments of $425,000 with a final maturity in April 2002.
The Company pledged the assets and common stock of AG as collateral for the
note.

Under the terms of the January 1998 asset purchase agreement for Custom
Products, the Company may be required to make additional payments to the former
owners of Custom Products in the amount of $800,000 each year through December
2002 if net sales of Custom Products increase to certain levels. Because the
sales of Custom Products for the period January 1, 1998 to December 31, 1998 did
not meet the amount specified in the purchase agreement, the Company was not
required to make an additional $800,000 payment. Total contingent payments of
$4,000,000 could still be payable if sales of Custom Products increase to the
amounts required by the asset purchase agreement.

The Company is owner of a one-half interest in its administrative and
engineering building located in Norwalk, Connecticut through a joint venture
agreement. The agreement expired in July 1999. Under the terms of the agreement,
the Company can purchase the one-half interest owned by its joint venture
partner, estimated at approximately $300,000. The Company is currently exploring
various alternatives with its joint venture partner. If the Company does
purchase the building, it will use existing cash on hand.

On October 5, 1998, the Company announced that its board of directors approved a
stock repurchase program under which the Company was authorized to buy up to
500,000 shares of its common stock in open market or private transactions. The
Company will use its cash flow from operations and existing cash balances for
the repurchase of any shares. The Company has not repurchased any shares under
the program.

Current cash and cash equivalent balances, exisiting borrowing capacity and
projected cash flow from operations are currently considered adequate to meet
foreseeable operating needs.

The Company believes that inflation and changing prices have not had a material
effect on the Company's revenues and profitability during the last three years.

10
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ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (cont'd.)

Year 2000 ("Y2K") Compliance

Many computer systems and software products are not capable of distinguishing
twenty-first century ("Y2K") dates. As a result, many companies could experience
operating problems because of the century change. There exists uncertainty
concerning the magnitude of the problem associated with the century change.

The Company expects to complete its upgrade of its computer hardware and
software applications by October 1999. The supplier of a major portion of the
software used for financial reporting and production control has informed the
Company that its software upgrade is Y2K compliant. Products sold by the Company
and its subsidiaries are not Y2K sensitive. Nor is any of the key manufacturing
equipment used by the Company Y2K sensitive.

The Company has not contacted its major vendors to determine if there are any
Y2K issues that would cause an interruption in the delivery of raw materials or
key components. The Company believes that since its has multiple sources of
supply, any Y2K problems encountered by current vendors would not prevent the
Company from obtaining necessary raw materials or components from other sources.

The cost of the Company's Y2K program will not be material to financial
condition or results of operations. The Company believes that there will be no
significant disruptions in operations from Y2K related issues. However, failure
of telecommunications or banking service providers to be Y2K compliant could
have a material effect on the Company's financial position or results of
operations. Since the Company does not believe that any material exposure to
significant business interruption exists as a result of Y2K issues, the Company
has not adopted any formal contingency plan in the event its Y2K program is not
completed in a timely manner. There can also be no assurance that the Company
has identified all Y2K problems.

Results of Operations

Year Ended June 30, 1999 Compared to Year Ended June 30, 1998

The results of operations of Custom Products are included in the consolidated
statement of income from January 6, 1998. The results of AG are included in the
consolidated statement of income from April 20, 1999.

Sales for the year ended June 30, 1999 were $19,591,000 an increase of
$1,538,000 or 9% from $18,053,000 for the year ended June 30, 1998. The increase
in sales was primarily attributable to the inclusion of Custom Products in the
results of operations for the entire year which had the effect of increasing
sales by $1,277,000 and the inclusion of AG for the fourth quarter of 1999 which
had the effect of increasing sales by $1,468,000. Offsetting these increases was
a $1,207,000 decrease in sales of marine air guns and replacement parts. The
factors that caused this decrease was the deterioration in late 1998 and the
first part of 1999 of the oil and gas prices which resulted in significant
reductions in exploration spending. In addition, the consolidation in the oil
and gas industry delayed a number of exploration projects decreasing the demand
for the Company's geophysical products.

Cost of sales as a percentage of sales decreased from 54% in 1998 to 52% in
1999. Reduced purchases of auxiliary equipment required for marine air gun
systems sold by the Company caused the reduction in the cost of sales percentage
from 1999 to 1998. Auxiliary equipment historically has lower margins than the
Company's proprietary marine air guns and replacement parts.

Research and development costs increased $170,000 as the Company increased its
efforts to develop a new marine energy source.

11
<PAGE>

Results of Operations (cont'd)

Selling, general and administrative expenses increased $504,000. The inclusion
of Custom Products for all of 1999 caused $330,000 of the increase and the
inclusion of AG since April 1999 represented $313,000 of the increase.
Offsetting these increases was a $118,000 decrease in incentive compensation
expense due to lower operating earnings during the last half of the fiscal year.

Amortization of intangible assets (primarily goodwill) associated with the
acquisition of Custom Products and AG amounted to $335,000 in fiscal 1999 as
compared to $114,000 in fiscal 1998. The Company is amortizing the goodwill
related to these acquisitions over 20 years.

Interest expense increased from $6,000 in 1998 to $115,000 in 1999. The 1999
increase in interest expense represents amounts paid in connection with the
$7,000,000 note issued for the acquisition of AG.

Interest income increased from $104,000 in 1998 to $149,000 in 1999 because of
the higher balances of short-term investments during 1999.

The provision for income taxes for 1999 was $728,000, an effective rate of 15%.
This provision reflects the benefit of previously reserved net deferred tax
assets of $1,197,000 realized during the first six months of fiscal 1999. The
Company expects that its provision for taxes in fiscal 2000 will be at the
statutory income tax rate. Because of the anticipated level of future taxable
income the Company believes that realization of its net deferred tax asset is
more likely than not.

Year Ended June 30, 1998 Compared to Year Ended June 30, 1997

The results of operations for 1998 include the operations of Custom Products
from January 6, 1998, the date it was acquired by the company.

The Company's revenues increased 71% to $18,053,000 for 1998 in $10,531,000 for
1997. Net income for 1998 increased 142% to $5,134,000. The acquisition of
Custom Products accounted for 22% of the revenue increase and 13% of the
increase in net income for 1998. The remainder of the increase in revenue and
net income was caused by the strong demand for the Company's marine seismic
energy sources and replacement parts. The worldwide fleet of seismic vessels
expanded to meet increasing demand for seismic data needed for oilfield
exploration, development and reservoir production monitoring.

Cost of sales as a percentage of sales decreased from 55% in 1997 to 54% in
1998. Factors contributing to the decrease in the cost of sales percentage in
1998 were manufacturing efficiencies due to higher demand, the inclusion of
Custom Products which has slightly higher margins than the air guns sold by the
Company and higher service costs in 1997 which negatively impacted margins in
1997.

Research and development costs increased 6% in 1998. The Company has continued
to concentrate its research and development efforts in developing a new marine
seismic energy source.

Selling, general and administrative expenses increased by $815,000 in 1998 as
compared to 1997. The inclusion of Custom Products for the last half of 1998
caused selling, general and administrative expenses to increase by $333,000.
Higher incentive compensation expense due to increased profits caused a $306,000
increase and travel expenses related to the Company's foreign sales increased
$105,000.

Amortization of intangible assets (principally goodwill) associated with the
acquisition of Custom Products amounted to $114,000 in fiscal 1998.

12
<PAGE>

Results of Operations (cont'd)

The higher level of interest income in 1998 reflects an increase in the level of
short-term investments during the first half of fiscal 1998. These investments
provided the majority of the funding for the Custom Products acquisition in
January 1998. Interest expense of $6,000 in 1998 represents short-term
borrowings related to the Custom Products acquisition.

During 1998 management continued its assessment of the realization of its
deferred tax asset and concluded that future taxable income would be higher than
amounts previously estimated at the end of 1997 and, therefore, it was more
likely than not that previously reserved tax assets would be realized in future
years. As required by FAS 109, $1,000,000 of the reduction in the valuation
allowance was reflected in the allocation of the purchase price of the Custom
Products acquisition and $642,000 was reflected as an income tax benefit in the
consolidated statement of income. The remaining $1,531,000 decrease in the
valuation allowance offset reductions in gross deferred tax assets, principally
from the utilization of the operating loss carry-forwards.

Recent Accounting Pronouncements

For the year ended June 30, 1999, the Company adopted Financial Accounting
Standards No. 130 (FAS 130), "Reporting Comprehensive Income." FAS 130
established standards for reporting and display of comprehensive income and its
components in a full set of general purpose financial statements. For fiscal
1999, 1998 and 1997, the Company did not have any components of other
comprehensive income to report.

Effective July 1, 1997, the Company adopted Financial Accounting Standards No.
131 (FAS 131), "Disclosures about Segments of an Enterprise and Related
Information." FAS 131 established a new method by which companies must report
operating segment information. This method is based on the manner in which
management organizes the segments within a company for making operating
decisions and assessing performance. FAS 131 also established standards for
related disclosures about products and services, geographic areas and major
customers. The Company had included the required disclosures in the notes to its
financial statements included elsewhere herein.

ITEM 7.a. Quantitative and Qualitative Disclosures about Market Risk

Not applicable

ITEM 8. Financial Statements and Supplementary Data

See Item 14 for an Index to Financial Statements and Financial Statement
Schedule. Such Financial Statements and Schedule are incorporated herein by
reference.

ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

None

13
<PAGE>

PART III

ITEM 10. Directors and Executive Officers of the Registrant

The information as to Directors required by Item 401 and 405 of Regulation S-K
is incorporated by reference to the Company's definitive proxy statement (the
ADefinitive Proxy Statement@) which will be filed with the Securities and
Exchange Commission pursuant to Regulation 14A within 120 days after the end of
the fiscal year covered by this Form 10-K.

ITEM 11. Executive Compensation

The information required by Item 402 of Regulation S-K is incorporated by
reference to the Definitive Proxy Statement.

ITEM 12. Security Ownership of Certain Beneficial Owners and Management

The information required by Item 403 of Regulation S-K is incorporated by
reference to the Definitive Proxy Statement.

ITEM 13. Certain Relationships and Related Transactions

The information required by Item 404 of Regulation S-K is incorporated by
reference to the Definitive Proxy Statement.

PART IV

ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

Consolidated Financial Statements Page Number
-----------

Independent Auditors' Report 16
Consolidated Balance Sheets as of June 30, 1999 and 1998 17
Consolidated Statements of Income for the
Years Ended June 30, 1999, 1998 and 1997 18
Consolidated Statements of Cash Flows for the
Years Ended June 30, 1999, 1998 and 1997 19
Notes to Consolidated Financial Statements 20-32

Financial Statement Schedule for the Years Ended
June 30, 1999, 1998 and 1997

II - Valuation and Qualifying Accounts 33

Schedules other than that listed above are omitted because they are not
applicable, or the required information is shown in the financial statements or
the notes thereto.

14
<PAGE>

Exhibit Index

Exhibit
No.
- ----
2.1 Asset Purchase Agreement dated as of November 14, 1997, by and among Bolt
Technology Corporation and Gerald Shaff and Carole Shaff (incorporated by
reference to Exhibit 2.1 to Form 8-K dated January 14, 1998).

2.2 Stock Purchase Agreement for the acquisition at AG Geophysical Products,
Inc. by Bolt Technology Corporation from Albert H. Gerrans, Jr., Stephen Clay
and Robert Bernard dated as of April 20, 1999 (incorporated by reference to
Exhibit 2.1 to form 8-K dated April 30, 1999).

3.1 Restated Certificate of Incorporation of the Registrant (incorporated by
reference to Exhibit 3.1 to Registration Statement No. 2-73456 on Form S-1).

3.2 Amendment of Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3.2 to Registration Statement No. 2-85529 on Form S-1).

3.3 Amendment of Restated Certificate of Incorporation of the Registrant
(incorporated by reference to Exhibit 3.3 to the August 15, 1996 Form 8-A).

3.4 Amendment of Restated Certificate of Incorporation of the Registrant
(incorporated by reference to Exhibit 3.4 to the August 15, 1996 Form 8-A).

3.5 By-laws of the Registrant, as amended (incorporated by reference to
Exhibit 3 to the September 30, 1983 Form l0-Q).

4.1 Promissory Note dated April 20, 1999 between Bolt Technology Corporation
and Albert H. Gerrans, Jr. (incorporated by reference to Exhibit 4.1 to Form 8-K
dated April 30, 1999).

4.2 Pledge agreement dated April 20, 1999 between Bolt Technology Corporation
and Albert H. Gerrans, Jr. (incorporated by reference to Exhibit 4.2 to Form 8-K
dated April 30, 1999).

4.3 Security Agreement dated April 20, 1999 between AG Geophysical Products,
Inc., Albert H. Gerrans, Jr. and Bolt Technology Corporation (incorporated by
reference to Exhibit 4.3 to Form 8-K dated April 30, 1999).

10.1 Bolt Technology Corporation Amended and Restated 1993 Stock Option Plan
(incorporated by reference to Exhibit 10.1 to Form 10-K for the for the year
ended June 30, 1998).

10.2 Commercial Revolving Loan and Security Agreement dated January 5, 1998 by
and between Bolt Technology Corporation and Fleet National Bank (incorporated by
reference to Exhibit 4.1 to Form 8-K dated January 14, 1999).

10.3 Modification to Commercial Revolving Loan and Security Agreement dated
April 20, 1999 between Bolt Technology Corporation and Fleet National Bank
(incorporated by reference to Exhibit 10.1 to Form 8-K dated April 30, 1999).

10.4 Lease Agreement dated April 20, 1999 between Albert H. Gerrans, Jr. and
Bolt Technology Corporation (incorporated by reference to Exhibit 10.2 to Form
8-K dated April 30, 1999).

21. Subsidiaries of the Registrant.*

27. Financial Data Schedule.*

Reports on Form 8-K
Form 8-K dated April 30, 1999 (earliest event reported April 20, 1999); Items
2 and 7 were reported.
*Filed herewith

15
<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
Bolt Technology Corporation
Norwalk, Connecticut

We have audited the accompanying consolidated balance sheets of Bolt Technology
Corporation and subsidiaries as of June 30, 1999 and 1998, and the related
consolidated statements of income and cash flows for each of the three years in
the period ended June 30, 1999. Our audits also included the financial statement
schedule listed in the Index at Item 14. These consolidated financial statements
and financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on the consolidated
financial statements and financial statement schedule based on our audits.

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

In our opinion, such consolidated financial statements present fairly, in all
material respects, the consolidated financial position of Bolt Technology
Corporation and subsidiaries as of June 30, 1999 and 1998, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended June 30, 1999 in conformity with generally accepted accounting
principles. Also, 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
therein.

/s/ Deloitte & Touche LLP
Stamford, Connecticut
August 10, 1999

16
<PAGE>

Bolt Technology Corporation and Subsidiaries
Consolidated Balance Sheets

<TABLE>
<CAPTION>
June 30,
--------------------------
Assets 1999 1998
----------- ------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents....................... $ 3,500,000 $ 1,317,000
Accounts receivable, less allowance for
uncollectible accounts of $360,000 in
1999 and $136,000 in 1998...................... 2,208,000 5,002,000
Inventories..................................... 5,413,000 2,451,000
Deferred income taxes........................... 1,091,000 1,060,000
Other current assets............................ 161,000 89,000
----------- ------------
Total current assets 12,373,000 9,919,000
----------- ------------

Plant and Equipment:
Building and leasehold improvements............. 534,000 534,000
Geophysical equipment........................... 460,000 1,523,000
Machinery and equipment......................... 5,573,000 4,233,000
Equipment held for rental....................... 480,000 822,000
----------- ------------
7,047,000 7,112,000
Less accumulated depreciation................. (5,614,000) (6,911,000)
----------- ------------
1,433,000 201,000

Goodwill, net.................................... 12,610,000 4,339,000
Deferred Income Taxes............................ 1,403,000 1,945,000
Other Assets..................................... 68,000 58,000
----------- ------------
Total assets................................ $27,887,000 $ 16,462,000
=========== ============

Liabilities and Stockholders' Equity
Current Liabilities:
Current maturities of long-term debt............ $ 1,700,000 $ -
Accounts payable................................ 549,000 1,717,000
Accrued expenses................................ 1,748,000 1,596,000
Income taxes payable............................ 725,000 106,000
----------- ------------
Total current liabilities................... 4,722,000 3,419,000
Long-term Debt................................... 5,300,000 -
----------- ------------
Total liabilities........................... 10,022,000 3,419,000
----------- ------------

Stockholders' Equity:
Common stock, no par value, authorized
9,000,000 shares; issued and outstanding
5,370,378 shares in 1999 and 5,232,478
in 1998....................................... 26,117,000 25,576,000
Accumulated deficit............................. (8,252,000) (12,533,000)
----------- ------------
Total Stockholders' equity.................... 17,865,000 13,043,000
----------- ------------
Total liabilities and stockholders' equity.. $27,887,000 $ 16,462,000
=========== ============
</TABLE>

See Notes to Consolidated Financial Statements.

17
<PAGE>

Bolt Technology Corporation and Subsidiaries
Consolidated Statements of Income

<TABLE>
<CAPTION>
For the Year Ended June 30,
---------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Sales....................................... $19,591,000 $18,053,000 $10,531,000

Costs and Expenses:

Cost of sales............................... 10,091,000 9,745,000 5,788,000
Research and development.................... 386,000 216,000 204,000
Selling, general and administrative......... 3,804,000 3,300,000 2,485,000
Amortization of intangibles................. 335,000 114,000 -
Interest expense............................ 115,000 6,000 20,000
Interest (income)........................... (149,000) (104,000) (87,000)
----------- ----------- -----------
14,582,000 13,277,000 8,410,000
----------- ----------- -----------

Income before income taxes.................... 5,009,000 4,776,000 2,121,000
Provision (benefit) for income taxes.......... 728,000 (358,000) -
----------- ----------- -----------

Net income................................. $ 4,281,000 $ 5,134,000 $ 2,121,000
=========== =========== ===========

Earnings per share:
Basic....................................... $ 0.81 $ 1.00 $ 0.43
Diluted..................................... $ 0.80 $ 0.97 $ 0.41

Average number of common shares outstanding:
Basic....................................... 5,293,156 5,146,185 4,989,383
Diluted..................................... 5,378,724 5,287,355 5,177,943
</TABLE>

See Notes to Consolidated Financial Statements.

18
<PAGE>

Bolt Technology Corporation and Subsidiaries
Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
For the Year Ended June 30,
---------------------------------------
1999 1998 1997
----------- ----------- ----------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income............................................. $ 4,281,000 $ 5,134,000 $2,121,000
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization......................... 448,000 163,000 56,000
Deferred income taxes................................. 421,000 (642,000) (155,000)
----------- ----------- ----------
5,150,000 4,655,000 2,022,000
Change in operating assets and liabilities:
Accounts receivable................................... 4,083,000 (2,515,000) (85,000)
Inventories......................................... (418,000) (26,000) (262,000)
Other assets.......................................... (134,000) (60,000) (62,000)
Accounts payable.................................... (1,248,000) 1,217,000 (456,000)
Accrued liabilities................................... (321,000) 675,000 176,000
Income taxes payable.................................. (295,000) - -
----------- ----------- ----------
Net cash provided by operating activities............ 6,817,000 3,946,000 1,333,000
----------- ----------- ----------

Cash Flows From Investing Activities:
Payments for acquisitions, net of cash acquired........ (4,598,000) (4,974,000) -
Purchase of property and equipment..................... (77,000) (24,000) (87,000)
----------- ----------- ----------
Net cash used in investing activities................ (4,675,000) (4,998,000) (87,000)
----------- ----------- ----------

Cash Flows From Financing Activities:
Exercise of stock options.............................. 41,000 17,000 18,000
Borrowings from bank................................... - 800,000 -
Repayment of long-term debt............................ - (1,076,000) -
----------- ----------- ----------
Net cash provided by (used in) financing activities.. 41,000 (259,000) 18,000
----------- ----------- ----------
Net increase (decrease) in cash......................... 2,183,000 (1,311,000) 1,264,000
Cash and cash equivalents at beginning of year.......... 1,317,000 2,628,000 1,364,000
----------- ----------- ----------
Cash and cash equivalents at end of year................ $ 3,500,000 $ 1,317,000 $2,628,000
=========== =========== ==========

Supplemental disclosure of cash flow information:
Cash transactions:
Interest paid........................................... $ 115,000 $ 6,000 $ 16,000
Income taxes paid....................................... $ 673,000 $ 278,000 $ 186,000
Non-cash transactions:
Common stock issued for businesses acquired............ $ 500,000 $ 881,000 -
Debt issued for business acquired....................... $ 7,000,000 - -
</TABLE>

See Notes to Consolidated Financial Statements.

19
<PAGE>

Bolt Technology Corporation
Notes To Consolidated Financial Statements

Note 1 - Description of Business and Significant Accounting Policies

Bolt Technology Corporation operates in two business segments: geophysical
equipment and industrial clutches. Geophysical equipment includes the
development, manufacture and sale of marine seismic energy sources and through
its subsidiary AG Geophysical Products, Inc. ("AG") the manufacture of
underwater electrical connectors and cables, air gun signature hydrophones and
pressure transducers. The industrial clutch segment manufactures and sells
precision mechanical and pneumatic clutches through the Company's subsidiary,
Custom Products Corporation ("Custom Products"). AG was acquired on April 20,
1999 and Custom Products was acquired on January 6, 1998. See Note 2 to the
consolidated financial statements for information related to these acquisitions.
See Note 10 for information regarding industry segments.

Principles of Consolidation:

The consolidated financial statements include the accounts of the Company and
its subsidiary companies. All significant intercompany balances and transactions
have been eliminated.

Cash and Cash Equivalents:

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

Inventories:

Inventories are valued at the lower of cost or market, with cost principally
determined on an average cost method which approximates the first-in, first-out
method. The Company reserves for all slow moving inventory. Amounts are charged
to the reserve when the Company scraps or disposes of inventory.

Plant and Equipment:

Plant and equipment are carried at cost. Depreciation for financial accounting
purposes is computed using the straight-line method over the estimated useful
lives of 5 to l0 years for machinery and equipment and rental assets, 1 to l0
years for geophysical equipment, 15 to 30 years for buildings, and over the
terms of the lease for leasehold improvements.

Goodwill:

Goodwill represents the excess of the purchase price of acquired subsidiaries
over the estimated fair value of the net assets at the date of acquisition.
Goodwill is being amortized over a 20 year period on a straight-line basis.
Accumulated amortization at June 30, 1999 was $441,000 ($111,000-1998).

Revenue Recognition and Warranty Costs:

The Company recognizes revenue from equipment sales upon shipment. Rental income
from short-term leases, which has not been significant, and service income are
recorded monthly as earned. Warranty costs and product returns incurred by the
Company have been insignificant.

20
<PAGE>

Bolt Technology Corporation
Notes To Consolidated Financial Statements

Note 1 - Description of Business and Significant Accounting Policies ( cont'd.)

Income Taxes:

Income taxes are provided using the liability method in accordance with
Statement of Financial Accounting Standards No. 109 (FAS 109), "Accounting for
Income Taxes". Deferred tax assets and liabilities are recognized based upon
differences between book and tax basis of assets and liabilities, using
presently enacted tax rates. The provision for income taxes is the sum of the
amount of income taxes paid or payable for the year as determined by applying
the provisions of enacted tax laws to taxable income for that year and the net
changes during the year in the Company's deferred tax assets and liabilities.

Stock-Based Compensation:

The Company accounts for its stock based compensation arrangements under the
provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees." Since stock options are granted by the Company with
exercise prices at fair market value of the shares at date of grant, no
compensation expense is recognized.

Long-Lived Assets:

The Company reviews for the impairment of long-lived assets and certain
identifiable intangibles whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. The carrying amount
of a long-lived asset is considered impaired when anticipated nondiscounted cash
flows expected to result from the use of the asset and its eventual disposition
is less than its carrying amount. The Company believes that no material
impairment existed at June 30, 1999.

Use of Estimates:

The preparation of financial statements in conformity with generally accepted
accounting principles 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 financial statements, and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

21
<PAGE>

Bolt Technology Corporation
Notes To Consolidated Financial Statements

Note 1 - Description of Business and Significant Accounting Policies (cont'd.)

Computation of Earnings Per Share:

As required by Statement of Financial Accounting Standards No. 128 (FAS 128),
"Earnings Per Share", the Company must report both basic and diluted earnings
per share. Basic earnings per share is computed by dividing net income by the
average number of common shares outstanding during the year. Diluted earnings
per share is computed by dividing net income by the average number of common
shares outstanding assuming dilution, the calculation of which assumes that all
stock options are exercised at the beginning of the period and the proceeds used
to purchase shares at the average market price for the period. The following is
a reconciliation from basic earnings per share to diluted earnings per share for
each of the last three years:

<TABLE>
<CAPTION>
Year Ended June 30,
-------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Net income available to
common stockholders $4,281,000 $5,134,000 $2,121,000
========== ========== ==========
Divided by weighted common shares
and common share equivalents
Weighted average common shares 5,293,156 5,146,185 4,989,383
Weighted average common share equivalents 85,568 141,170 188,560
---------- ---------- ----------

Total weighted average common
shares and common share equivalents 5,378,724 5,287,355 5,177,943
========== ========== ==========

Basic earnings per share $ 0.81 $ 1.00 $ 0.43
========== ========== ==========

Diluted earnings per share $ 0.80 $ 0.97 $ 0.41
========== ========== ==========
</TABLE>

22
<PAGE>

Bolt Technology Corporation
Notes to Consolidated Financial Statements

Note 1 - Description of Business and Significant Accounting Policies (cont'd.)

Recent Accounting Pronouncements:

Effective July 1, 1997, the Company adopted Financial Accounting Standards No.
131 (FAS 131), "Disclosures about Segments of an Enterprise and Related
Information". FAS 131 established a new method by which companies must report
operating segment information. This method is based on the manner in which
management organizes the segments within a company for making operating
decisions and assessing performance. FAS No. 131 also established standards for
related disclosures about products and services, geographic areas and major
customers. The Company had included the required disclosures in the financial
statements included elsewhere herein.

Reclassification:

Certain prior year amounts have been reclassified to conform to current year
presentation.

Note 2 -Acquisitions

In January 1998, the Company completed the acquisition of Custom Products
Corporation ("Custom Products") pursuant to the terms of an asset purchase
agreement. Custom Products is a manufacturer of precision mechanical and
pneumatic slip clutches sold under the "Polyclutch" tradename. The purchase
price of the assets acquired included (i) $4,971,000 in cash; (ii) 135,000
shares of common stock valued at $881,000; (iii) acquisition costs of $208,000;
and (iv) contingent cash payments. Such contingent cash payments could total
$4,000,000 and are dependent on the annual increases in the net sales of Custom
Products for the period January 1, 1998 to December 31, 2002. Any contingent
purchase price paid will be capitalized as earned and amortized over the
remaining life of the goodwill.

The allocation of the purchase price, including related expenses, for the Custom
Products acquisition based upon estimated fair values of the net assets
acquired, at the date of acquisition follows:

<TABLE>
<S> <C>
Net current assets $ 749,000
Property and equipment 97,000
Deferred income tax asset 1,000,000
Goodwill 4,450,000
Other assets 40,000
Long-term debt (276,000)
----------
Total purchase price allocation 6,060,000
Consideration:
Cash of acquired company (205,000)
Common stock issued (881,000)
----------
Cash used for acquisition $4,974,000
==========
</TABLE>

23
<PAGE>

Bolt Technology Corporation
Notes To Consolidated Financial Statements

Note 2 - Acquisitions (cont'd.)

In April 1999, the Company acquired all of the outstanding common stock of AG
Geophysical Products, Inc. ("AG"). AG manufactures underwater electrical
connectors and cables, air gun signature hydrophones and pressure transducers
used in the marine seismic industry. The purchase price totaled $13,783,000 and
consisted of $6,100,000 in cash; a note to the selling shareholder for
$7,000,000; 63,492 shares of common stock valued at $500,000 and acquisition
costs of $183,000.

The allocation of the purchase price, including related expenses, for the AG
acquisition based upon estimated fair value of the net assets acquired, at the
date of acquisition follows:

<TABLE>
<S> <C>
Net current assets $ 4,094,000
Property and equipment 1,263,000
Other assets 11,000
Goodwill 8,600,000
Deferred tax liabilities (185,000)
-----------
Total purchase price allocation 13,783,000
Consideration:
Cash of acquired company (1,685,000)
Common stock issued (500,000)
Note payable (7,000,000)
-----------
Cash used for acquisition $ 4,598,000
===========
</TABLE>

Both transactions were accounted for by the purchase method of accounting with
the goodwill being amortized over 20 years on the straight line basis. The
consolidated results of operations of the Company include the results of
operations of the acquired companies from the date of their respective
acquisition.

The following table summarizes, on an unaudited pro forma basis, the
consolidated results of operations of the Company for the years ended June 30,
1999 and 1998 as though each acquisition described above was made on July 1,
1997.

<TABLE>
<CAPTION>
June 30,
--------
1999 1998
---- ----
<S> <C> <C>
Sales $26,824,000 $29,125,000
Net income $ 5,716,000 $ 6,833,000
Basic earnings per share $ 1.07 $ 1.31
Diluted earnings per share $ 1.05 $ 1.28
</TABLE>

These results are not necessarily indicative of the actual results of operations
that might have occurred, nor are they necessarily indicative of results in the
future.

24
<PAGE>

Bolt Technology Corporation
Notes to Consolidated Financial Statements

Note 3 - Debt

Credit Facility

The Company has a $3,000,000 unsecured credit facility which expires in January
2003. Maximum borrowings under the facility decrease $500,000 each January and
bear interest at the prime rate. The credit facility contains covenants which
include: (i) prohibition of additional indebtedness; (ii) minimum tangible net
worth of $4,998,000 at June 30, 1999 which increases by 75% of net income each
year and; (iii) a ratio of total liabilities to tangible net worth of not more
than 3 to 1 through December 31, 1999. This ratio decreases to 1.25 to 1 by
December 31, 2000. Also, under the terms of the agreement the Company must
maintain minimum debt service of not less than 2 to 1 and cannot have two
consecutive quarterly losses. The Company is in compliance with these covenants
at June 30, 1999.

8.25% Non-Negotiable Promissory Note

In connection with the acquisition of AG, the Company issued a $7,000,000 note
to the selling shareholder for a portion of the purchase price. The note has a
final maturity of April 2002 and requires minimum principal payments of $425,000
per quarter. The Company has pledged the assets and common stock of AG as
collateral for the note. Also under the terms of the note the Company must have
AG maintain a current ratio of no less than 3 to 1 and maintain minimum tangible
net worth of $4,000,000.

Maturities of the Company's debt for each of the years at June 30, are as
follows:

Note 4 - Inventories

Inventories, net of reserves, at June 30 consist of the following:

<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Raw materials and sub-assemblies $4,947,000 $2,182,000
Work-in-process 466,000 269,000
---------- ----------
$5,413,000 $2,451,000
========== ==========
</TABLE>

Note 5 - Income Taxes

Income tax expense (benefit) consists of the following for the three years
ended June 30:

1999 1998 1997
-------- ---------- ---------
<S> <C> <C> <C>
Current:
State $307,000 $ 284,000 $ 155,000
Deferred:
Federal 421,000 (642,000) (155,000)
-------- --------- ---------
Income tax expense (benefit) $728,000 $(358,000) $ -
======== ========= =========
</TABLE>

25
<PAGE>

Bolt Technology Corporation
Notes to Consolidated Financial Statements

Note 5 - Income Taxes (cont'd.)

The differences between the effective tax rate reflected in the total provision
for income taxes and the statutory federal rate of 34% follows:

<TABLE>
<CAPTION>
Year Ended June 30,
-------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Federal income taxes at the statutory rate 34% 34% 34%
State income taxes, net of federal tax benefit 4 4 5
Nondeductible expenses 1 1 2
Utilization of net operating loss carry-forwards (24) (33) (39)
Reduction in deferred tax valuation allowance - (13) (2)
---- ---- ----
15% (7%) -
==== ==== ====
</TABLE>

Deferred income taxes under the liability method reflect the net tax effects of
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's net deferred income tax asset were as
follows:

<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Deferred tax assets:
Tax loss carry-forward $1,780,000 $ 3,462,000
Investment tax credit carry-forward 200,000 200,000
Inventory reserves 179,000 328,000
Allowance for doubtful accounts 132,000 53,000
Alternative minimum tax
credit carry-forward 266,000 171,000
Other - 2,000
---------- -----------
Gross deferred tax asset 2,557,000 4,216,000
---------- -----------
Deferred tax liability:
Plant and equipment (22,000) -
Amortization of intangibles (41,000) (14,000)
---------- -----------
Gross deferred tax liability (63,000) (14,000)
Deferred tax asset valuation allowance - (1,197,000)
---------- -----------
Net deferred tax asset $2,494,000 $ 3,005,000
========== ===========
</TABLE>

The company has net operating loss carry-forwards totaling $5,234,000 which
expire as follows: 2004 - $1,511,000; 2005 - $3,415,000; 2006 - $63,000 and
2007 - $245,000. In addition, the Company has $200,000 of investment tax credits
which expire in 2001 and 2002.

26
<PAGE>

Bolt Technology Corporation
Notes to Consolidated Financial Statements

Note 5 - Income Taxes (cont'd.)

Under the liability method, a valuation allowance is provided when it is more
likely than not that some portion of the deferred tax assets will not be
realized. Based primarily upon the Company's recent earnings history and
expected future levels of taxable income, management believes that it is more
likely than not that it will realize the benefit of its net deferred tax asset.
In 1999 the Company reduced the valuation allowance for deferred taxes by
$1,197,000 to reflect the utilization of net operating loss carry-forwards.

In 1998, the Company reduced the valuation allowance for its deferred tax asset
by $1,000,000 to reflect the allocation of the purchase price of the Custom
Products acquisition and $642,000 to reflect higher estimates of future taxable
income. The remaining $1,531,000 decrease in the valuation allowance offset
reductions in the gross deferred tax asset principally from the utilization of
net operating loss carry-forwards.

The amount of the net deferred tax asset recorded could be reduced if estimates
of future taxable income during the carry-forward period are reduced.

Note 6 - Stock Options

The 1993 Stock Option Plan provides for the granting of options to purchase up
to 550,000 shares of common stock of the Company at a price not less than fair
market value at date of grant. Options granted to employees are exercisable for
a period of up to ten years. The plan also provides for the granting to non-
employee directors options to purchase 3,000 shares of common stock each time
they are elected directors.

A summary of the status of the Company's Stock Option Plan as of June 30, 1999,
1998 and 1997, and the changes during the years ending on those dates is
presented below.

<TABLE>
<CAPTION>
1999 1998 1997
------------------- ------------------ -------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 285,500 $3.88 191,250 $1.80 260,000 $0.87

Granted 35,000 $6.46 117,500 $6.65 51,000 $4.22
Exercised (81,000) $1.05 (22,500) $0.78 (119,000) $0.80
Canceled (2,750) $6.63 (750) $1.00 (750) $0.75
------- ----- ------- ----- -------- -----
Outstanding at end of year 236,750 $5.20 285,500 $3.88 191,250 $1.80
======= ===== ======= ===== ======== =====
</TABLE>

There were 155,795 options available for future grants under the plan at June
30, 1999.

27
<PAGE>

Bolt Technology Corporation
Notes to Consolidated Financial Statements

Note 6 - Stock Options (cont'd.)

The following table summarizes information concerning outstanding and
exercisable stock options by three ranges of exercise prices at June 30, 1999:

<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
---------------------------------------------------- ------------------------------------
Range of Number Outstanding Weighted Average Weighted Number Weighted
Exercise as of Remaining Average Exercisable Average
Prices June 30, 1999 Contractual Life Exercise Price As of June 30, 1999 Exercise Price
- -------- ------------------ ---------------- -------------- ------------------- ---------------
<S> <C> <C> <C> <C> <C>
$1.00 - $1.81 41,000 0.1 years $ 1.15 40,250 $1.14
$4.12 - $4.94 46,000 2.5 years $ 4.23 43,000 $4.18
$6.63 - $7.75 149,750 3.8 years $ 6.60 114,750 $6.65
------- --------- -------- ------- -----
236,750 3.0 years $ 5.20 198,000 $4.99
======= ========= ======== ======= =====
</TABLE>

The estimated fair value of options granted during 1999, 1998 and 1997 were
$3.27, $3.97 and $2.45 per share, respectively. The Company applies Accounting
Principles Board Opinion No. 25 and related interpretations in accounting for
its stock option plan. Accordingly, no compensation cost has been recognized for
its stock option plan. Had compensation cost for the Company's stock option plan
been determined based on the fair value at option grant dates for awards in
accordance with accounting provisions of FAS 123, the Company's net income and
earnings per share for the years ended June 30, 1999, 1998 and 1997 would have
been reduced to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
Net Income: 1999 1998 1997
- ----------- ---- ---- ----
<S> <C> <C> <C>
As reported $4,281,000 $5,134,000 $2,121,000
Pro forma 4,000,000 $4,839,000 $2,062,000

Basic earnings per share:
- -------------------------

As reported $ 0.81 $ 1.00 $ 0.43
Pro forma $ 0.76 $ 0.94 $ 0.41

Diluted earnings per share:
- ---------------------------

As reported $ 0.80 $ 0.97 $ 0.41
Pro forma $ 0.75 $ 0.92 $ 0.40
</TABLE>

As required by FAS 123, the fair value of each grant is estimated on the date of
grant using the Black-Scholes option pricing model with the following weighted
average assumptions used for 1999, 1998 and 1997: dividend yield 0%; expected
volatility of 56% for 1999 grants, 65% for 1998 and 62% for 1997 grants; risk-
free interest rates of 4.10% for 1999 grants, 5.75% for 1998 and 6.00% for 1997
grants. The expected option life is 5 years for all option grants.

28
<PAGE>

Bolt Technology Corporation
Notes to Consolidated Financial Statements

Note 7 - Benefit Plans

The Company maintains defined contribution retirement plans covering
substantially all employees who satisfy the age and service requirements of the
plans. The Company's contributions to the plans for the years ended June 30,
1999, 1998 and 1997 amounted to $155,000, $102,000 and $42,000, respectively.
Two retirement plans maintained by AG were terminated at the date of acquisition
by the Company. Since both plans were fully funded, the Company did not have to
recognize any additional expense upon termination.

Note 8 - Stockholders' Equity

Changes in issued common stock and stockholders' equity for the three years
ended June 30, 1999 were as follows:

<TABLE>
<CAPTION>
Common Stock Accumulated
-------------------------
Shares Amount Deficit Total
----------- ----------- ----------- -----
<S> <C> <C> <C> <C>
Balance June 30, 1996...................... 4,971,431 $24,660,000 $(19,788,000) $ 4,872,000
Exercise of stock options.............. 103,547 18,000 - 18,000
Net income............................. - - 2,121,000 2,121,000
--------- ------------ ------------ -----------
Balance June 30, 1997...................... 5,074,978 24,678,000 (17,667,000) 7,011,000
Exercise of stock options.............. 22,500 17,000 - 17,000
Common stock issued for acquisition.... 135,000 881,000 - 881,000
Net income............................. - - 5,134,000 5,134,000
--------- ------------ ------------ -----------
Balance June 30,1998....................... 5,232,478 25,576,000 (12,533,000) 13,043,000
Exercise of stock options.............. 74,408 41,000 - 41,000
Common stock issued for acquisition.... 63,492 500,000 - 500,000
Net income............................. - - 4,281,000 4,281,000
--------- ------------ ------------ -----------
Balance June 30, 1999 5,370,378 $26,117,000 $ (8,252,000) $17,865,000
========= ============ ============ ===========
</TABLE>

Note 9 - Commitments and Contingencies

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentrations of
credit risk are primarily cash and cash equivalents and trade accounts
receivable. The Company believes that the concentration of credit risk in its
trade receivables is substantially mitigated by the Company's ongoing credit
evaluation and its short collection terms. The Company does not generally
require collateral from its customers but, in certain cases, the Company does
require the customer to provide a letter of credit or an advance payment. In
limited cases the Company will grant customers extended payment terms of up to
12 months. The Company establishes an allowance for uncollectible accounts based
upon factors surrounding the credit risk of specific customers. Historically,
the Company has not incurred significant credit related losses. The Company
invests its excess cash in certificates of deposit with maturities of usually
less than one month in an effort to maintain safety and liquidity.

Financial Instruments:

The Company does not hold or issue financial instruments for trading purposes,
nor does it hold interest rate, leveraged, or other types of derivative
financial instruments. Fair values of cash and cash equivalents, receivables,
accounts payable, accrued liabilities and long-term debt reflected in the June
30, 1999 and 1998 balance sheets approximate carrying value at that date.

29
<PAGE>

Bolt Technology Corporation
Notes to Consolidated Financial Statements

Note 9 - Commitments and Contingencies (cont'd.)

Lease Commitments:

Rent expense amounted to $348,000, $349,000 and $344,000 for the years ended
June 30, 1999, 1998 and 1997, respectively.

Minimum annual rental commitments under operating leases with terms in excess of
one year are as follows:
2000 - $194,000; 2001 - $173,000; 2002 - $131,000; 2003 - $31,000 and 2004 -
$26,000.

The Company leases a building from the former shareholder of AG for $10,000 per
month. The lease has an initial term through April 2002.

Employment Agreements:

The Company has a severance compensation plan for certain executive officers and
key employees of the Company which becomes operative upon their termination if
such termination occurs within 24 months subsequent to a change in ownership of
the Company, as defined in the plan. The Company also has an employment
agreement with its president and chief executive officer which provides for
severance in the case of voluntary or involuntary termination or change in
control. The employment agreement has a term through June 30, 2002, subject to
extension as set forth in the agreement. The aggregate commitment for these
employment agreements approximates $3,119,000 as of June 30, 1999. The Company
also has employment contracts with two other key executives. Minimum annual
salaries due under the agreements amount to $370,000 per year. These agreements
expire in January and February 2003, respectively.

Litigation:

30
<PAGE>

Bolt Technology Corporation
Notes to Consolidated Financial Statements

Note 10 - Segment and Customer Information:

Bolt Technology Corporation's reportable segments are: (1) geophysical equipment
and (2) industrial clutches. The following table provides selected financial
information for each of the Company's segments for 1999 and 1998. Prior to
1998, the Company operated in only one segment, geophysical equipment.

<TABLE>
<CAPTION>
Geophysical Industrial
Fiscal Year ended June 30, 1999 Equipment Clutches Total
- --------------------------------- ----------- ---------- -----
<S> <C> <C> <C>

Sales $16,678,000 $2,913,000 $19,591,000
Interest income 149,000 - 149,000
Interest expense 115,000 - 115,000
Depreciation and amortization 198,000 250,000 448,000
Income before income taxes 4,456,000 553,000 5,009,000
Segment assets 21,723,000 6,164,000 27,887,000
Fixed asset additions 62,000 15,000 77,000

<CAPTION>
Geophysical Industrial
Fiscal Year ended June 30, 1998 Equipment Clutches Total
- --------------------------------- ----------- ---------- -----
<S> <C> <C> <C>
Sales $16,417,000 $1,636,000 $18,053,000
Interest income 104,000 - 104,000
Interest expense 5,000 1,000 6,000
Depreciation and amortization 39,000 124,000 163,000
Income before income taxes 4,394,000 382,000 4,776,000
Segment assets 9,987,000 6,475,000 16,462,000
Fixed asset additions 24,000 - 24,000
</TABLE>

The Company does not allocate income taxes to segments.

The following table reports sales by country for the years ended June 30, 1999,
1998 and 1997. Sales are attributed to each country based on the location of
the customer.

<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
United States.............. $ 7,161,000 $ 7,215,000 $ 4,788,000
Norway..................... 4,378,000 3,458,000 3,670,000
Peoples Republic of China.. 349,000 2,014,000 308,000
United Kingdom............. 3,180,000 1,930,000 95,000
Former Soviet Union........ 612,000 1,269,000 92,000
Singapore.................. 940,000 671,000 1,014,000
Japan...................... 1,650,000 384,000 339,000
Other...................... 1,321,000 1,112,000 225,000
----------- ----------- -----------
$19,591,000 $18,053,000 $10,531,000
=========== =========== ===========
</TABLE>

31
<PAGE>

Bolt Technology Corporation
Notes to Consolidated Financial Statements

Note 10 - Segment and Customer Information (cont'd)

A relatively small number of customers has accounted for the Company's
geophysical equipment segment sales. The segment's three largest customers in
1999, 1998 and 1997 accounted for 43%, 42%, and 77% of total consolidated sales,
respectively. Customers accounting for 10% or more of consolidated sales for
1999, 1998 and 1997 are as follows:

<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Customer A........................................ 19% 22% 38%
Customer B........................................ 14 10 20
Customer C........................................ - 10 -
Customer D........................................ 10 - -
Customer E........................................ - - 19
</TABLE>

Note 11 - Supplementary Information

Accrued liabilities at June 30 consist of the following:

<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Compensation and related taxes.................... $ 806,000 $1,043,000
Compensated absences.............................. 286,000 195,000
Commissions payable............................... 403,000 192,000
Professional fees................................. 125,000 84,000
Other............................................. 128,000 82,000
---------- ----------
$1,748,000 $1,596,000
========== ==========
</TABLE>

Included in sales in 1998 and 1997 is $15,000 and $471,000 of service revenue.
Cost of sales in 1998 and 1997 includes $80,000 and $569,000, respectively, of
service costs. There was no service revenue or related costs for 1999.

Note 12 - Quarterly Results (unaudited)

The following table summarizes results for each of the four quarters for the
years ended June 30, 1999 and 1998.

<TABLE>
<CAPTION>
Costs and Earnings per Share
------------------
Sales Expenses Net Income Basic Diluted
---------- ---------- ---------- ----- -------
<S> <C> <C> <C> <C> <C>
Quarters Fiscal 1999:
First $5,360,000 $3,825,000 $1,535,000 $0.29 $ 0.29
Second 5,849,000 3,921,000 1,781,000 0.34 0.33
Third 4,618,000 3,491,000 708,000 0.13 0.13
Fourth 3,764,000 3,345,000 257,000 0.05 0.05

Quarters Fiscal 1998:
First $2,657,000 $2,047,000 $ 868,000 $0.17 $ 0.17
Second 3,750,000 2,866,000 984,000 0.19 0.19
Third 5,117,000 3,894,000 1,223,000 0.23 0.23
Fourth 6,529,000 4,470,000 2,059,000 0.39 0.38
</TABLE>

32
<PAGE>

Bolt Technology Corporation

Schedule II - Valuation and Qualifying Accounts and Reserves

For the Three Years Ended June 30, 1999

<TABLE>
<CAPTION>
Additions Charged
Balance At (Credited) To Balance At
Beginning Of Costs And End of
Description Year Expenses Deductions Other Year
----------- ------------ ----------------- ---------- ----- ----------
<S> <C> <C> <C> <C> <C>
Allowance for uncollectible
accounts:

1997 $ 84,000 $ 85,000 $ (73,000) $ - $ 96,000
1998 96,000 79,000 (39,000) - 136,000
1999 136,000 154,000 - 70,000(3) 360,000

Reserve for inventory
valuation:

1997 $ 950,000 $ 66,000 $ (217,000)(1) $ 799,000
1998 799,000 82,000 (40,000)(1) 841,000
1999 841,000 69,000 (50,000)(1) 860,000

Valuation allowance
for deferred
tax assets:

1997 $ 5,258,000 $ (214,000) $ (674,000) $ 4,370,000
1998 4,370,000 (642,000) (2,531,000)(2) 1,197,000
1999 1,197,000 - (1,197,000) -
</TABLE>

(1) Inventory scrapped.

(2) Includes $1,000,000 allocated to the purchase price of Custom Products
Corporation.

(3) Represents allowance for uncollectible accounts assumed through acquisition.

33
<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 on the 22nd day
of September 1999.

BOLT TECHNOLOGY CORPORATION

By /s/ Raymond M. Soto
---------------------------------------
Raymond M. Soto
(President and Chief Executive 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 and on the dates indicated.

<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Raymond M. Soto President, September 22 , 1999
- ----------------------------
(Raymond M. Soto) and Director
(Principal Executive
Officer and Principal
Financial Officer)

/s/ Alan Levy Vice President - Finance, September 22, 1999
- ----------------------------
(Alan Levy) Secretary and Treasurer
(Principal Accounting
Officer)

/s/ Kevin M. Conlisk Director September 22, 1999
- ----------------------------
(Kevin M. Conlisk)

/s/ Stephen Chelminski Director September 22, 1999
- ----------------------------
(Stephen Chelminski)

/s/ John H. Larson Director September 22, 1999
- ----------------------------
(John H. Larson)

/s/ Joseph Espeso Director September 22, 1999
- ----------------------------
(Joseph Espeso)

/s/ Joseph Mayerick, Jr. Director September 22, 1999
- ----------------------------
(Joseph Mayerick, Jr.)

/s/ Gerald H. Shaff Director September 22, 1999
- ----------------------------
(Gerald H. Shaff)

/s/ Gerald A. Smith Director September 22, 1999
- ----------------------------
(Gerald A. Smith)
</TABLE>

<PAGE>

EXHIBIT 21

SUBSIDIARIES

The Registrant, Bolt Technology Corporation, a Connecticut Corporation, has no
parent.

The following are the subsidiaries of the Registrant
(at June 30, 1999)

State of
Incorporation
-------------

Bolt International Corporation Connecticut
Duke Place Investments Delaware
Bolt Export Corporation United States,
Virgin Islands
Criterion Exploration, Inc. Texas
Custom Products Corporation Connecticut
AG Geophysical Products, Inc. Texas

The names of certain subsidiaries are omitted since such subsidiaries considered
in the aggregate would not constitute a significant subsidiary at the end of the
year covered by this report.

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE YEAR ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> JUN-30-1999
<CASH> 3,500,000
<SECURITIES> 0
<RECEIVABLES> 2,208,000
<ALLOWANCES> 360,000
<INVENTORY> 5,413,000
<CURRENT-ASSETS> 12,373,000
<PP&E> 7,047,000
<DEPRECIATION> (5,614,000)
<TOTAL-ASSETS> 27,887,000
<CURRENT-LIABILITIES> 4,722,000
<BONDS> 0
0
0
<COMMON> 26,117,000
<OTHER-SE> (8,252,000)
<TOTAL-LIABILITY-AND-EQUITY> 27,887,000
<SALES> 19,591,000
<TOTAL-REVENUES> 19,591,000
<CGS> 10,091,000
<TOTAL-COSTS> 10,091,000
<OTHER-EXPENSES> 4,525,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 115,000
<INCOME-PRETAX> 5,009,000
<INCOME-TAX> 728,000
<INCOME-CONTINUING> 4,281,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,281,000
<EPS-BASIC> .81
<EPS-DILUTED> .80

</TABLE>