SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C. 20549


                                  FORM 10-K

              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                     THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)
[X] Annual report  pursuant to section 13 or 15 (d) of the Securities Exchange
    Act of 1934
    For the fiscal year ended December 31, 1999

[_] Transition report pursuant to section 13 or 15(d) of the Securities
    Exchange Act of 1934
    For the  transition period from______ to ______

Commission file number 0-12254

                    SCIENTIFIC TECHNOLOGIES INCORPORATED

Incorporated in Oregon             IRS Employer Identification Number:77-0170363

Address of principal executive offices:                Telephone: (510) 608-3400
6550 Dumbarton Circle, Fremont, CA 94555

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

                                                      Name of each exchange on
       Title of Class                                     which registered
-----------------------------                      ----------------------------
Common Stock, $.001 Par Value                     NASDAQ National Market System

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12
months,  and (2) has been subject to such filing requirements for the past
90 days. Yes   [X]   No [_]

Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.  [X]

The issuer's revenue for the most recent fiscal year was $49,105,000.

The aggregate market value of voting stock held by non-affiliates of the
Registrant, based on the closing sales price of Common Stock on March 1,
2000 as reported by the NASDAQ Market System , was approximately $7,175,137
Such amount excludes shares held by registrant's current directors and officers
and by each person who owns 5% or more of the outstanding Common Stock in that
such persons may be deemed to be "affiliates" as that term is defined pursuant
to the Rules and Regulations of the Securities Exchange Act of 1934.  This
determination of affiliate status is not necessarily a conclusive determination
for other purposes.

The number of shares of the Registrant's Common Stock outstanding as of
March 1, 2000 was 9,641,204 shares.

                      DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's definitive Proxy statement to be filed with the
Securities and ExchangeCommission in connection with the Company's 1999 Annual
Annual Meeting of Shareholders ("the Proxy Statement") are incorporated by
reference in Part III of this Form 10K.


<PAGE>


Item 1. BUSINESS

        Scientific Technologies Incorporated (the "Company" or "STI",
designs, manufactures and distributes electrical and electronic
industrial controls. The Company's products include safety light guards,
profiling scanners, factory automation sensors, controls, components,
microcomputers, fiber optics, power monitoring, safety mats, non-contact
ultrasonic sensors and controllers, and other electronic equipment
supplied to industrial automation, commercial and defense customers.

        Eighty-six percent (86%) of the Company's capital stock is
currently held by Scientific Technology Inc., a California corporation
(the "Parent").

        The Company is organized into two product groups, Safety
Automation Products and Automation Products, doing business in one
segment, factory automation. This new structure was initiated in 2000 to
allow each product group to target its area of specialization, customer-
focused applications and products. This organization is intended to
facilitate more efficient integration of new products and acquisitions.

Products

1. Safety Automation Products Group:

a. Safety Light Guards. The Company's leading product group,
which accounted for a significant majority of the Company's
sales in 1999, 1998 and 1997, is a family of safety light
guards, also called presence sensing devices or safety light
curtains, used to safeguard personnel in manufacturing
environments against injury which could be caused by robots
and moving machinery. STI offers several product variations,
providing customers with a complete line of optical guarding
solutions.
        Safety light curtains are devices that emit a "curtain"
of harmless infrared light beams in front of the hazard area.
When any of the beams are blocked, the light curtain sends a
stop signal to the guarded machine. Light curtains are
extremely versatile and can guard areas that are more than 100
feet wide. By the use of mirrors, the light beams can be
diverted around corners to enclose a machine. Safety light
curtains are available with different light beam spacings,
which makes them suitable for many applications.
        The Company manufactures and markets a miniaturized
light guard called the MiniSafe, designed for inclusion in
systems offered by original equipment manufacturers ("OEM's")
and other applications where space is limited.
        Applications for safety light curtains are found in a
variety of manufacturing environments. STI customers use
safety light curtains to guard a wide variety of hazardous
applications including automotive assembly lines, robot work
cells, semiconductor production equipment, metal stamping and
forming, food processing, aircraft manufacturing, photographic
film production, tire manufacturing and hone appliance
production.

Scientific Technology, Scientific Technologies, Datricon, STI,
The STI logo, OptoSwitch, OptoData, OptoSafe and Fiberlens,
are registered trademarks of Scientific Technology
Incorporated. Aegis, MiniSafe, FlexSafe, MicroSafe, BeamSafe,
FastScan, SpectraData, PartScan and ValuScan are trademarks of
Scientific Technologies Incorporated, This Annual Report on
Form 10-K also refers to trademarks and service marks of other
companies and entities.

        The MiniSafe MS4600 series is the Company's newest
product with a complete feature set and an easy-to-install
design which eliminates the need for a separate control
enclosure. All intelligence and feature settings are located
in the receiver. All of STI's most desired options are
standard in the MiniSafe MS 4600, including DeviceNet Standard
interface for communicating systems status data to the machine
control system.
             The MiniSafe MS4300 is available in four-inch
increments ranging from four inches to 64 inches in coverage
height. The operating distance, the distance between the
transmitter and receiver, is up to 30 feet.
             The MiniSafe MS4400 Series offers a longer-range
product, up to 100 feet, in a larger, more robust package. The
MS4400 series includes Individual Beam Indicators, an STI-
patented feature, which provide the customer with a visual
indicator of the status of each individual beam in the sensing
array. The Individual Beam Indicators assist in both the
installation and operation of the MiniSafe.
        The FlexSafe is a segmented safety light curtain that
offers greater flexibility and machine guarding for unusually
shaped applications. Instead of a single transmitter and
receiver, the FlexSafe is offered with two or more segments
comprising each transmitter and receiver. The respective
transmitter and receiver segments are connected with flexible
cables to facilitate fitting to the machinery.
        The Company also offers the MicroSafe safety light
curtain, which is more compact than the MiniSafe but has
comparable features. Designed for use in locations in which
space is limited, the small size of the MicroSafe allows it to
be integrated with the support framing used on many automated
industrial machines.
        The DuoSafe controller allows the customer to configure
two independent safety light curtains to achieve common or
discrete outputs. The DuoSafe provides further application
flexibility for customers when selecting their safeguarding
solution.
        Selected models of the safety light curtain products are
certified by independent laboratories to comply with safety
and electrical standards; including those standards required
in the European Union. Products which pass the stringent
European safety certifications carry the CE test mark.

b. Mechanical Safety Interlocks and Safety Relays. The Company
has had a relationship with EJA Engineering, Ltd. (EJA), the
manufacturer of Guardmaster mechanical safety interlocks based
in the United Kingdom. EJA is a subsidiary of Rockwell
International Guardmaster safety interlock switches are
utilized on hinged, sliding, or lift-off guards and barriers
that are often installed with STI safety light curtains. When
the guard is opened, the power supply to the machine is
disconnected. Safety relays are electromechanical devices
which often serve as a safety interface between the mechanical
safety interlocks and the machine's control system. The
function and design of Guardmaster interlocks are
complementary to the STI range of safety products. Since 1993,
STI has been the exclusive distributor of Guardmaster products
in the United States and Canada, and an affiliate of EJA has
been the distributor for the STI product line in the United
Kingdom.
        Under a new agreement, signed in 1999, EJA/Rockwell will
have the non-exclusive right to distribute the Guardmaster
product worldwide and STI will have the right to distribute
the products on a private label basis under the STI brand.

c. Safety Mats and Controllers. STI safety mats are designed
for use in industrial environments where safety enhancements
or zone detection is required. The mats are sensitive to foot
or vehicular traffic. Safety mats are used with a mat
controller, which is the interface between the safety mat and
the control system of the guarded machine.
        During 1998, STI commenced limited deliveries of a new
safety mat, the STI Universal Safety Mat ("UM Series"). The UM
Series is the first vinyl mat manufactured by STI, replaced a
previous safety mat, the OM Series, which was a product
manufactured by other suppliers.
        In the first quarter of 1999, the UM Series mat and a
new safety mat controller were tested and certified by an
independent test agency to a new international safety mat
standard. Theses products carry the European CE test mark. The
UM Series and the associated controller was introduced to
STI's sales channel during 1999.

2. Automation Products Group:

a. Optical Profiling Scanners. In today's industrial
environment, non-contact, on-the-move sensing is vital to
control automated processes and improve industrial
productivity. STI has developed a line of optical profiling
scanner products. These scanners provide non-contact sensing
for a variety of customer applications.
        STI scanners are a family of high speed,
microprocessor-based profiling scanners designed to provide an
economical way to measure the physical size of various
objects. The modular design of these scanners enables the user
to select among various output and programming functions,
including infrared beam spacings, size of the scanned area and
single or multiple axes. Software is included for a variety of
scanning applications. STI can customize the software for a
customer's specific needs.
        The Company also manufactures and sells the STI Vehicle
Scanner Series of high speed, profiling scanners utilized in
automated highway toll collection systems. These scanners are
used for vehicle detection, separation and classification,
providing imaging information to a host computer, which
determines the appropriate toll to be charged in an automatic
fare collection application.
        STI Vehicle Scanners have been selected or installed on
a number of bridges and toll roads both in the United States
and internationally. Locations include the Triborough and
Verrazano Narrows bridges in New York, a number of bridges in
the San Francisco Bay Area, including the Golden Gate Bridge
and the Oakland-San Francisco Bay Bridge, and toll roads in
Colorado, Florida, Maine, New Jersey and Kansas domestically,
as well as locations in France, Belgium, Singapore and Brazil.

b. Photoelectric and Fiberoptic Sensors. STI also manufactures
and/or markets a variety of photoelectric and fiberoptic
sensors used for detecting the presence or absence of objects
in a wide range of factory automation applications.
        Fiberoptic sensors utilize flexible glass or
plastic fiberoptic cable to traverse the light beam from the
solid state light source to the receiving electronics. This
cable is very small, and is resistant to high temperatures,
corrosive chemicals or repeated flexing. Fiberoptic sensors
are often used in confined spaces and in environments in which
standard photoelectric sensors typically would not survive.
        Typical uses and applications for photoelectric
and fiberoptic sensors include canning and bottling lines,
conveyor warehousing, palletizing, printing, food processing,
plastic molding, wood and forest products manufacturing,
automotive manufacturing, material handling and a variety of
other applications in an array of industries.
        Users of STI photoelectric and fiberoptic sensors
include companies in the automotive, machine tool, metal
forming, robotics, electronics, material handling, packaging,
food processing, pulp and paper, forest products, personal
care products, printing, chemical, defense and textile
industries.
        To cover this diversified industrial market, these
products are marketed primarily to end-users and original
equipment manufacturers through more than 275 US distributors
and sales representatives and 33 foreign distributors.
Customers include end-users and original equipment
manufacturers.

        c. Control components, power monitoring and defense
electronics. The Company manufactures and markets a variety of
sensors and relays for commercial and defense customers. Such
products include custom magnetic components, current sensors,
RPM sensors, voltage sensors, current monitors, time delay
relays, flashers, phase sequence relays and indicators, DC to
DC converters, and isolation transformers.
        STI is qualified as a supplier of a variety of military-
specified sensors and controls. Many of these products are
selected for use on military and general aviation aircraft and
ground support systems. Products are sold to original
equipment manufacturers, government agencies and end users.
        STI markets and sells these products primarily through
its direct sales force.

        d. Industrial control microcomputers, peripherals and
software.  The Company also designs and produces modular,
board-level, computer products under the Datricon label. This
product line consists of a series of single printed circuit
board microcomputers and related peripheral boards for
industrial applications and use by original equipment
manufacturers, and printed circuit pre-packaged systems. Most
of the Datricon microcomputers are constructed on a single
circuit board and are designed using a set of electrical and
mechanical connections known as "STD-Bus". STD-Bus is one of
several electronic bus structures used for microcomputers and
peripherals in the industrial automation control marketplace.
        Datricon products can be used in a range of customer
applications, including remote-controlled robots, process
control equipment, measuring instrumentation, plastics
manufacturing, lighting controls, semiconductor processing
equipment, photographic processing and automatic test
equipment. STI markets its Datricon products directly to end-
users and original equipment manufacturers.

        e. Level and Flow Sensors. STI markets a variety of
level and flow sensing products imported from several
manufacturers. The principal provider of these products is
Nohken, the largest level control manufacturer in Japan. STI
is the exclusive US distributor of the Nohken products. These
products provide point level detection of solids, liquids and
solids/liquids, as well as contiguous measurement of
continuous flow of solids and liquids, in a wide variety of
environments.

        f. Non-contact Ultrasonic Sensors and Controllers. In
April 1999, the Company acquired Lundahl Instruments, Inc. of
Logan Utah, a manufacturer of non-contact ultrasonic sensors
and controllers. Lundahl produces over 75 types of specialized
ultrasonic sensors and controller systems as well as custom
designed products. These products fall into 2 categories:
Sensor/Controller Systems, which are used for monitoring,
displaying or controlling level in tanks or bins, open channel
flow, tank volume, obstacle avoidance and product
dimensioning; Self-Contained Sensor Systems, in which all
electronics are located within the sensor, requiring no
separate controller or transmitting unit. These products are
used for linear position measurements in industrial and level
applications, as well as dimensioning and sorting, measurement
of roll diameter, loop control, monitoring liquids and bulk
solids and level gauging.

        In January 2000, the Company created a new business unit
entitled STI Automation Sensors, by combining STI's Level and Flow
Products with the Lundahl Instruments operations.  This new unit is
located in Logan, Utah and offers STI's customers one location to
obtain level, flow and positioning sensor expertise. Automation
Sensors is a part of the Automation Products Group.

Sources and availability of components

        The Company maintains an inventory of components and parts for
its manufacturing activities. There are many sources for most of the
components needed; however STI purchases some products, components
and sub-assemblies from sole sources, which may be the only
available supplier or may enable the Company to obtain pricing or
supply efficiencies. In the event of supply interruptions from these
vendors, the Company believes it could obtain most sole source
components from alternate suppliers, but this would require the
Company to transfer tooling or designs or redesign its products to
facilitate use of alternate source components. STI could incur
delays by switching to an alternate source, which could have an
adverse effect on the its business, financial condition and results
of operations.
                The Company also derives revenue from the distribution of
products from third party manufacturers, including, pursuant to its
relationship with EJA (See "Business - Products - Safety Automation
Products - Mechanical Safety Interlocks and Safety Relays"). In the
event such arrangements are terminated or third party products otherwise
become unavailable, the Company's results of operations could be
adversely affected. As of December 31, 1999, the Company had an open
purchase commitment with a vendor for $750,000.

Research and development

        In order to meet the changing needs of its customers, the
Company engages in research and development both to introduce new
products and to improve existing products. In addition, the Company
modifies products as necessary to meet original equipment
manufacturers' requirements. At December 31, 1999, there were
approximately 24 employees engaged in research and development
activities. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Business Factors - Rapid
Technological Change and New Product Development."
        In 1999, 1998, and 1997, the Company spent $4,780,000,
$3,314,000 and $3,135,000, respectively, on engineering, research
and development. In addition to new products such as DuoSafe and
enhancements to existing products, the Company's research and
development efforts are directed towards qualifying the Company's
light curtains, scanners and sensors for sale in foreign countries
and qualifying products the Company imports for sales in the U.S.
The Company anticipates that its level of research and development
expenditures may be higher in 2000.


Patents and trademarks

        The Company holds eight US patents and nine US registered
trademarks. In addition, the Company has been licensed by its Parent
to use three patents for its products and six US registered
trademarks, including the use of the Parent's logo "STI". Products
are marketed under the following US registered trademarks:
"DUOSAFE," "OPTOFENCE," "MINISAFE," "OPTOSAFE," "FIBERLENS,"
"BEAMSAFE," "SPECTRADATA," "FLEXSAFE" and "MICROSAFE". The Company
has filed for additional patent protection on certain of its
technologies.
        There can be no assurance that these patents or trademarks or
other steps taken by the Company to protect its intellectual
property will prove sufficient to prevent misappropriation of the
Company's technology. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Business Factors -
Protection and Enforcement of Intellectual Property Rights."
Because of the rapid rate of technology change in the electronics
industry, the Company believes its success in the future depends on
the quality of its products and services and the technical skills of
its personnel to adapt to technological developments, rather than
solely on its patents.

Backlog

        Because many customers place large orders for delivery
throughout the year and because of the possibility of customer
changes and cancellation of orders, the Company's backlog as of any
particular date may not be representative of the Company's sales for
any succeeding fiscal period. At February 28, 2000, the Company's
backlog was $4,171,000 compared to $5,135,000 at March 19, 1999. Of
this total, $195,000 is scheduled at the customer's request, to be
filled during periods after 2000. This total includes a $1.8 million
contract for vehicle scanner systems in New Jersey and Delaware.

Competition

        The industry in which the Company operates is competitive and
subject to rapid technological change.  Many of the Company's
competitors are significantly larger and possess greater financial
and other resources.
        Competitors of STI include, among others, Honeywell, Rockwell
Automation, Eaton Corporation, Banner Engineering, Sick Optic-
Electronic, Inc., Cutler Hammer, Danaher Controls, Data Instruments,
Link Controls  and Omron. Competitors of the control components
power monitoring and defense product lines include several of the
above-mentioned firms and also SCI Systems, Inc., Technitrol,
Logitek, Hi-G and Xentek. Certain of the Company's suppliers
(including Rockwell/EJA) also compete with the Company. The Datricon
line's competitors include Mizar, Pro-Log, and Ziatech. In addition,
the Company faces indirect competition from present and potential
end users who from time to time evaluate the "make or buy" decision
of whether to manufacture their own components or purchase them from
outside sources.
        Competition is based primarily upon product quality,
performance and price. The Company believes that it generally
competes favorably with respect to these factors. To maintain its
competitive position, the Company will continue to devote
substantial resources to the development of new products and
improvements to current products. See "Business - Research and
Development."

Foreign operations

        The Company has no foreign manufacturing operations. STI
Scientific Technologies GmbH, a wholly owned German subsidiary, was
established in 1995 as the Company's European sales office. The
Company's products are also sold in foreign countries by
distributors and independent sales representatives. Foreign sales
represented less than 10% of sales in each of 1999, 1998 and 1997.

Customers

        NCC Electronics, an independent distributor, represented 14%
of sales in 1999 and 1998, and 18% of sales in 1997. No other
customer represented more than 10% of sales in such periods.
Aggregate sales to both government agencies and government
contractors represented less than 5% of sales in 1999, 1998 and
1997.

Costs and effects of compliance with environmental laws

        Compliance with environmental protection laws or similar
ordinances is not expected to have any material affect on the
business of the Company.

Employees

        At December 31, 1999, the Company employed approximately 289
full time employees. Included in this total were the common
manufacturing, support and administrative staff that the Company
shares with the Parent and other subsidiaries of the Parent at the
Dumbarton Circle facility, in Fremont, California.
        None of the employees are represented by unions, and there has
never been a disruption of operations due to a labor dispute.
        Many of the Company's employees are skilled in technical and
engineering disciplines and the future success of the Company will
depend, in part, upon its ability to attract and retain such
employees. The Company believes that its relations with its
employees are good.

Item 2. PROPERTIES

        The Company owns no real estate. The Company's manufacturing
operations, corporate headquarters, administrative, engineering and
sales offices are located in a 95,000 square foot facility located
at 6550 Dumbarton Circle, Fremont, California. The facility is owned
by an affiliate of the Parent and the Company leases approximately
85,000 square feet, 89% of the total, for its use. Lundahl
Instruments is located in a 4,480 square foot facility at 429 S.
Main Street, Logan, Utah. The Company believes its current
facilities will be adequate for the foreseeable future. See Note 7
of Notes to Consolidated Financial Statements for information
regarding lease commitments.
        The Company maintains insurance policies for property,
casualty, fire, business interruption, workers compensation, general
liability and product liability. There can be no assurance that in
the future, the Company will continue to be able to obtain such
insurance on commercially and economically feasible terms. In the
event the Company were to suffer a claim not covered by insurance or
if insurance coverage is insufficient, such claim could have an
adverse effect on the Company's operations or financial condition.
The Company anticipates that additional space will be needed during
2000 for the Automation Sensors operations.

































                               PART II

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

Market Information

     The Common Stock of the Company is traded on the Nasdaq
National Market under the symbol STIZ.  The stock tables in most
daily newspapers list the Common Stock of the Company under
"SciTech".


Price of Common Stock
----------------------
1999              High      Low      1998              High      Low
--------------- --------- ---------  --------------- --------- ---------
1st Quarter       $6-1/2   $5-3/16   1st Quarter      $ 16     $ 9-3/4
2nd Quarter        6-3/4    4-17/32  2nd Quarter       12-1/2    8-1/4
3rd Quarter        7-3/8    4-7/16   3rd Quarter       10-5/8    6-1/4
4th Quarter        6-7/8      4      4th Quarter        7-1/2    4-3/4

The closing sales price of the Common Stock on March 1, 2000 was
$5.63 per share.

Holders

     There were 791 stockholders of record on March 1, 2000.

Dividends

        In 1999, regular quarterly dividends of $.0475 per share were
paid on April 1, July 1, September 1, and December 8. In 1998,
regular quarterly dividends of $.045 per share were paid on April 1,
July 1, September 9, and December 2. On March 6, 2000, the Company
declared a regular quarterly dividend of $.05 per share, payable on
April 1, 2000 to shareholders of record on March 19, 2000.



















ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA
                      SCIENTIFIC TECHNOLOGIES INCORPORATED
                      SELECTED CONSOLIDATED FINANCIAL DATA
                     (In thousands, except per share data)
<TABLE>
<CAPTION>
                                    For the Years Ended December 31,
                           ------------------------------------------------
                             1999      1998      1997      1996      1995
                           --------  --------  --------  --------  --------
<S>                        <C>       <C>       <C>       <C>       <C>
Income statement data
---------------------------
Net sales                  $49,105   $43,465   $44,859   $38,294   $36,006
Income from operations       6,834     6,340     9,266     7,798    10,247
Net income                   4,505     4,422     6,070     5,168     6,336
Basic income per common
  share                      $0.47     $0.46     $0.63     $0.54     $0.66
Diluted income per common
  share                      $0.47     $0.46     $0.62     $0.53     $0.66

                                             December 31,
                           ------------------------------------------------
                             1999      1998      1997      1996      1995
                           --------  --------  --------  --------  --------
Balance sheet data
-------------------
Total assets               $32,536   $29,821   $26,119   $21,713   $18,097
Long-term obligations           --        --        --        --        14
Stockholders equity         27,849    25,458    22,518    17,871    14,336
Dividends declared per
  share                      $0.19     $0.18     $0.17     $0.16     $0.13

                 UNAUDITED QUARTERLY CONSOLIDATED FINANCIAL DATA
                     (In thousands, except per share data)
1999                        First    Second   Third    Fourth
                           Quarter  Quarter  Quarter  Quarter
                           -------- -------- -------- --------
Sales                      $11,560  $12,014  $12,804  $12,727
Gross Profit                 5,751    6,064    6,394    6,127
Net Income                   1,024    1,119    1,305    1,058
Basic income per common
  share                      $0.11    $0.12    $0.14    $0.11
Diluted income per common
  share                      $0.11    $0.12    $0.14    $0.11

1998                        First    Second   Third    Fourth
                           Quarter  Quarter  Quarter  Quarter
                           -------- -------- -------- --------
Sales                      $11,113  $11,344  $10,161  $10,847
Gross Profit                 5,727    5,668    4,803    5,823
Net Income                   1,431    1,385      741    1,865
Basic income per common
  share                      $0.15    $0.14    $0.08    $0.09
Diluted income per common
  share                      $0.15    $0.14    $0.08    $0.08
</TABLE>

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

The discussion and analysis below contains trend analysis and other
forward looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of  1934. Such statements include statements regarding
anticipated future sales, margin and expense levels, future tax
rates, future cash flow and working capital requirements. Actual
results could differ materially from those projected in the forward
looking statements as a result of the risk factors set forth under
"Business Factors" and elsewhere in this report. The following
discussion should be read in conjunction with the Company's
consolidated financial statements and notes thereto. All references
to years are to fiscal years unless otherwise noted.

Results of Operations

Sales
Sales 1999 increased 13% from $43.5 million in 1998 to $49.1 million
in 1999. This was primarily due to increased units shipped of our
existing products, the introduction of new safety products, such as
the MS 4600, in 1999 and by sales related to the acquisition of
Lundahl Instruments Inc. in April 1999. Sales declined by 3% from
$44.9 million in 1997 to $43.5 million in 1998. During the latter
half of 1998, the General Motors labor dispute and the Asia economic
situation had an adverse impact on the Company's customers doing
business in those sectors, which in turn negatively impacted the
Company's sales in 1998. The table below summarizes operating costs
and expenses as a percent of sales for the most recent three years.

                                                 1998       1998       1997
                                              ---------- ---------- ----------
Sales                                               100%       100%       100%
                                              ---------- ---------- ----------
Gross margin                                         50%        51%        52%
                                              ---------- ---------- ----------
Operating expenses
  Selling, general and administrative                26%        29%        24%
  Research and development                           10%         8%         7%
                                              ---------- ---------- ----------
   Total operating expenses                          36%        37%        31%
                                              ---------- ---------- ----------
Income from operations                               14%        14%        21%
Interest income, net                                  1%         2%         1%
                                              ---------- ---------- ----------
Income before income taxes                           15%        16%        22%
Provision for income taxes                            6%         6%         8%
                                              ---------- ---------- ----------
Net income                                            9%        10%        14%
                                              ========== ========== ==========



Gross profit
1999 = $24.3 million
1998 = $22.0 million
1997 = $23.3 million
Increase in 1999 = 11%
Decrease in 1998 = (6%)

STI's gross margin was 50% of sales in 1999, 51% in 1998 and 52% in
1997. As a result of the higher level of shipments, gross profit
increased 11% over 1998. The decline in gross profit in 1998
compared to 1997 was attributable to a product mix change resulting
in increased sales of lower margin products as a percentage of total
sales. Gross margins in 1999 and 1998 were impacted by higher sales
of products manufactured by other companies and distributed by STI,
which generally have lower gross margins.

Selling, general and administrative expenses
1999 = $12.7 million
1998 = $12.4 million
1997 = $10.9 million
Increase in 1999 = 3%
Increase in 1998 = 14%

During 1999 selling, general and administrative expenses declined to
26% of sales compared to 29% in 1998 as a result of economies of
scale associated with the expanded sales revenue. Total expenditures
increased 3% from 1998 to 1999 primarily as the result of higher
expenditures relating to sales volume partially offset by non-
recurring legal expenses in 1998. During 1998 selling, general and
administrative expenses increased to 29% of sales compared to 24% in
1997. Total expenditures increased 14%, compared to 1997. During
1998, the Company continued to expand its sales force and began
distributing a product data book completed in 1997. The Company
anticipates that selling, general and administrative expenses will
increase in the future but may fluctuate as a percent of sales.

Research and development expenses
1999 = $4.8 million
1998 = $3.3 million
1997 = $3.1 million
Increase in 1999 = 44%
Increase in 1998 = 6%

Product creation, development and enhancement have always been and
continue to be an important factor in STI's long-term success.
Investments in this area enable the Company to serve the factory
automation market with increasingly sophisticated sensors and
manufacturing control products. During 1999, the Company undertook a
significant expansion of research and development efforts,
particularly in the use of outside consultants. In 1999 and 1998,
STI introduced a number of new products and product. The Company
anticipates that the level of research and development expenses will
increase in the future, although such expenses may fluctuate as a
percentage of sales. To date, all product development costs have
been expensed as incurred.

Income Tax
The Company's effective income tax rate was 38% in 1999, 1998 and
1997. The Company expects that its effective tax rate for 2000 will
be reasonably consistent with 1999. See Notes 1 and 5 of Notes to
Consolidated Financial Statements.

Liquidity and Capital Resources

STI's working capital needs have been met through funds generated
from operating activities. During 1999, operating funds were
provided by net income adjusted for depreciation, the sale of short-
term investments and increases in accounts payable and accrued
expenses. These operating funds were used to finance increased
accounts receivable and inventories, the acquisition of Lundahl
Instruments, Inc., to purchase fixed assets and to pay dividends.
Working capital amounted to $22.7 million at December 31, 1999. The
bank line of credit, consisting of a one year revolving line and
term loan commitment of $6.1 million, was renewed in 1999 and
extended to May 31, 2000. Secured by qualified receivables, fixed
assets and inventories, borrowing under this credit line bears
interest at the bank's prime rate. At December 31, 1999, none of the
revolving line of credit had been utilized. The Company has the
option to convert up to $1,000,000 of the credit line into a five-
year term note. See Note 4 of Notes to Consolidated Financial
Statements.

The Company made certain capital expenditures during 1999, primarily
for production, quality assurance, research and development
equipment, information systems and software. Consistent with its
customary operations and plans for growth, the Company plans to make
certain capital expenditures during 2000, primarily for production,
quality assurance and research and development equipment. While the
Company had no formal commitments at December 31, 1999, it is
anticipated that capital expenditures in 2000 will be approximately
$1,700,000.

STI believes that its cash flow from operations and available bank
borrowings will be sufficient to meet anticipated working capital
requirements through at least 2000. While the Company continues to
evaluate its financing alternatives from time to time, it has no
current plans to raise additional outside capital.

Relationship with Parent
Cash transfers, management service and  interest charges from the
Parent to the Company, charges for income taxes and the Parent's
share of dividends are reflected as increases to the Payable to
Parent account or as decreases to the Receivable from Parent
account. The Parent files consolidated returns, including the
accounts of the Company, for federal and state income taxes. See
Note 2 of Notes to Consolidated Financial Statements.






Business Factors

Because of the variety of factors and uncertainties affecting the
Company's operating results, past financial performance and historic
trends may not be a reliable indicator of future performance. These
factors, as well as other factors affecting the Company's operating
performance, may result in significant volatility in the Company's
common stock price. Among the factors which could affect the
Company's future business, financial condition or operating results
are the following:

Variability of operating results
The Company has experienced fluctuations in annual and quarterly
operating results and anticipates that these fluctuations will
continue. These fluctuations are caused by a number of factors,
including the level and timing of customer orders, fluctuations in
complementary third party products with which STI products are sold,
the mix of products sold and the timing of operating expenditures.
Although STI conducts only a small amount of business with Asian
companies, a number of our original equipment manufacturer (OEM)
customers, primarily in the semiconductor equipment market, were
adversely affected by the Asian financial crisis in 1998.

Seasonality
The industrial manufacturing equipment industry can be subject to
seasonality. This is also true with respect to European markets
where business activity declines due to vacations taken in the
summer months.

Competition
The market for industrial sensors is highly competitive. Many
competitors have substantially greater name recognition and
technical, marketing and financial resources than the Company.
Competitive pressures could reduce market acceptance of the
Company's products and result in price reductions, decreased
revenues and increases in expenses.

Rapid technological change and new product development
The market for the Company's products is characterized by rapidly
changing technology, evolving industry standards, changes in
customer needs and frequent new product introductions. The Company's
future success will depend on its ability to enhance its current
products, develop new products and respond to emerging industry
standards, all on a timely and cost-effective basis. The
introduction of new products also requires the Company to manage the
transition from older products in order to minimize disruption of
customer orders, avoid excessive levels of older product inventories
and ensure that adequate supplies of new products can be delivered
to meet customer demands.

Dependence on indirect distribution channel
A majority of the Company's sales are through third party
distributors, system integrators and original equipment
manufacturers. These resellers are not required to offer the
Company's products exclusively. There can be no assurance that a
reseller will continue to offer the Company's products. In addition
many of the Company's resellers are privately owned firms and some
may not be well capitalized.

International sales
The Company's international sales may be disrupted by currency
fluctuations or other events beyond the Company's control, including
political or regulatory changes.

Protection and Enforcement of Intellectual Property Rights
The Company relies on a combination of patent, trademark and trade
secret laws and contractual restrictions to establish and protect
certain proprietary rights in its products and services. There can
be no assurance that the Company's patents, trademarks, or
contractual arrangements or other steps taken by the Company to
protect its intellectual property will prove sufficient to prevent
misappropriation of the Company's technology or defer independent
third party development of similar technologies. Moreover, there can
be no assurance that the technology licenses granted to the Company
from its Parent will continue to be available. The loss of any of
the Company's proprietary technology could require the Company to
obtain technology of lower quality or performance standards or at
greater cost, which could materially adversely affect the Company's
business, results of operations and financial condition.
Furthermore, the laws of certain foreign countries may not protect
the Company's products, services or intellectual property rights to
the same extent as do the laws of the United States.

To date, the Company has not been notified that any of its products
infringe the proprietary rights of third parties, but there can be
no assurance that third parties will not claim infringement by the
Company with respect to current or future products. Any such claim,
whether meritorious or not, could be time-consuming, result in
costly litigation or require the Company to enter into royalty or
licensing agreements. Such royalty or licensing agreements might not
be available on terms acceptable to the Company or at all. As a
result, any such claim could have a material adverse affect upon the
Company's business, results and financial condition. See "Business -
Patents and Trademarks".


<PAGE>















Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

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

  (1) Financial Statements

        Consolidated Balance Sheet - December 31, 1999 and 1998

        Consolidated Statement of Operations - Years ended December 31, 1999,
           1998 and 1997

        Consolidated Statement of Cash Flows - Years ended December 31, 1999,
          1998 and 1997

        Consolidated Statement of Changes in Stockholders' Equity - Years
          ended December 31, 1999, 1998 and 1997

        Notes to Consolidated Financial Statements

        Report of Independent Accountants

  (2) Financial Statement Schedules

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

<PAGE>




























                      SCIENTIFIC TECHNOLOGIES INCORPORATED
                           CONSOLIDATED BALANCE SHEET
                     (In thousands, except per share data)
<TABLE>
<CAPTION>
                                                          December 31,
                                                      --------------------
                                                        1999       1998
                                                      ---------  ---------
<S>                                                   <C>        <C>
                            ASSETS
Current assets:
    Cash and cash equivalents                           $3,362     $2,577
    Short-term investments                               5,209     10,798
    Accounts receivable, net                             8,822      6,612
    Inventories                                          8,414      5,812
    Deferred income taxes                                  852      1,132
    Other assets                                           740        345
                                                      ---------  ---------
          Total current assets                          27,399     27,276

Intangible assets, net                                   2,271        --
Property and equipment, net                              2,866      2,545
                                                      ---------  ---------
          Total assets                                 $32,536    $29,821
                                                      =========  =========

             LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
    Trade accounts payable                              $2,695     $2,391
    Accrued expenses                                     1,992      1,972
                                                      ---------  ---------
          Total current liabilities                      4,687      4,363
                                                      ---------  ---------
Commitments (Note 8)

Stockholders' Equity
    Voting Preferred stock; shares authorized -
       10,000; shares issued and outstanding -
       none; $.10 par value                                --         --
    Non-voting Preferred stock; shares authorized -
       10,000; shares issued and outstanding -
       none; $.10 par value                                --         --
    Common stock; shares authorized - 100,000;
       shares issued and outstanding - 9,633 and
       9,671, respectively; $.001 par value                 10         10
    Capital in excess of par value                       5,509      5,787
    Retained earnings                                   22,330     19,661
                                                      ---------  ---------
          Total stockholders' equity                    27,849     25,458
                                                      ---------  ---------
          Total liabilities and stockholders' equity   $32,536    $29,821
                                                      =========  =========
</TABLE>
   The accompanying notes are an integral part of these financial statements.
<PAGE>
                      SCIENTIFIC TECHNOLOGIES INCORPORATED
                      CONSOLIDATED STATEMENT OF OPERATIONS
                     (In thousands, except per share data)
<TABLE>
<CAPTION>
                                              For the Years Ended December 31,
                                              --------------------------------
                                                 1999       1998       1997
                                              ---------- ---------- ----------
<S>                                           <C>        <C>        <C>
Sales                                           $49,105    $43,465    $44,859
Cost of goods sold                               24,769     21,444     21,510
                                              ---------- ---------- ----------
  Gross profit                                   24,336     22,021     23,349
Operating expenses
  Selling, general and administrative            12,722     12,367     10,948
  Research and development                        4,780      3,314      3,135
                                              ---------- ---------- ----------
   Total operating expenses                      17,502     15,681     14,083
                                              ---------- ---------- ----------

   Income from operations                         6,834      6,340      9,266

Interest income, net                                432        794        524
                                              ---------- ---------- ----------

   Income before income taxes                     7,266      7,134      9,790
Provision for income taxes                        2,761      2,712      3,720
                                              ---------- ---------- ----------

        Net income                               $4,505     $4,422     $6,070
                                              ========== ========== ==========

   Basic net income per common share              $0.47      $0.46      $0.63
                                              ========== ========== ==========
   Shares used to compure basic
     net income per common share                  9,658      9,650      9,615
                                              ========== ========== ==========

   Diluted net income per common share            $0.47      $0.46      $0.62
                                              ========== ========== ==========
   Shares used to compure diluted
     net income per common share                  9,682      9,721      9,777
                                              ========== ========== ==========
</TABLE>
  The accompanying notes are an integral part of these financial statements.
<PAGE>









                      SCIENTIFIC TECHNOLOGIES INCORPORATED
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
                                 (In thousands)
<TABLE>
<CAPTION>
                                            For the Years Ended December 31,
                                            --------------------------------
                                               1999       1998       1997
                                            ---------- ---------- ----------
<S>                                         <C>        <C>        <C>
Cash flows from operating activities:
  Net income                                   $4,505     $4,422     $6,070
  Adjustments to reconcile net income to
    cash provided by (used in)
     operating activities:
    Depreciation and amortization               1,189        921        833
    Changes in assets and liabilities:
       Accounts receivable, net                (2,210)       862       (782)
       Inventories                             (2,602)      (699)    (1,047)
       Other assets                              (115)      (163)      (196)
       Trade accounts payable                     304        457       (451)
       Accrued expenses                            20        305        210
                                            ---------- ---------- ----------
  Cash flows provided by operating
   activities                                   1,091      6,105      4,637
                                            ---------- ---------- ----------
Cash flows from investing activities:
       Purchases of property  and
        equipment                              (1,471)      (780)    (1,042)
       Acquisition of Lundahl Instruments,
        net of cash                            (2,310)
       Sale (purchase) of short-term
        investments, net                        5,589     (5,825)        16
                                            ---------- ---------- ----------
  Cash flows used in investing activities       1,808     (6,605)    (1,026)
                                            ---------- ---------- ----------
Cash flows from financing activities:
   Payments on debt                               --         --         --
   Issuance (repurchase) of common stock, ne     (278)       255        213
   Dividends                                   (1,836)    (1,737)    (1,636)
                                            ---------- ---------- ----------
  Cash flows used in financing activities      (2,114)    (1,482)    (1,423)
                                            ---------- ---------- ----------
Change in cash and cash equivalents               785     (1,982)     2,188
Cash and cash equivalents at beginning
 of year                                        2,577      4,559      2,371
                                            ---------- ---------- ----------
Cash and cash equivalents at end of year       $3,362     $2,577     $4,559
                                            ========== ========== ==========

Supplemental disclosure of cash flow information:
  Cash paid to Parent for income taxes         $2,761     $2,712     $3,720
                                            ========== ========== ==========
</TABLE>
   The accompanying notes are an integral part of these financial statements.
<PAGE>
                  SCIENTIFIC TECHNOLOGIES INCORPORATED
 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE YEARS ENDED
                       DECEMBER 31, 1997, 1996 AND 1995
                                 (In thousands)
<TABLE>
<CAPTION>
                                         Common Stock
                               ----------------------------
                                                   Capital
                                                  in excess
                                           Par     of par   Retained
                                Shares    Value     Value   Earnings   Total
                               --------- -------- --------- -------- ---------
<S>                            <C>       <C>      <C>       <C>      <C>
Balances December 31, 1995        9,602      $10    $5,319  $12,542   $17,871
   Repurchase of common stock        33      --        213       --       213
   Net income for the year           --      --          --   6,070     6,070
   Dividends paid                    --      --          --  (1,636)   (1,636)
                               --------- -------- --------- -------- ---------
Balances December 31, 1996        9,635       10     5,532   16,976    22,518
   Issuance of common stock          36      --        255       --       255
   Net income for the year           --      --          --   4,422     4,422
   Dividends paid                    --      --          --  (1,737)   (1,737)
                               --------- -------- --------- -------- ---------
Balances December 31, 1997        9,671       10     5,787   19,661    25,458
   Issuance of common stock          27      --        107       --       107
   Repurchase of common stock       (65)     --       (385)     --       (385)
   Net income for the year           --      --          --   4,505     4,505
   Dividends paid                    --      --          --  (1,836)   (1,836)
                               --------- -------- --------- -------- ---------
Balances December 31, 1998        9,633      $10    $5,509  $22,330   $27,849
                               ========= ======== ========= ======== =========
</TABLE>
   The accompanying notes are an integral part of these financial statements.
<PAGE>




















Scientific Technologies Incorporated
Notes to Consolidated Financial Statements

NOTE 1-OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES

The Company
Scientific Technologies Incorporated (the "Company") develops,
manufactures and markets safety light curtains, industrial sensors,
optical profilers, microcomputers and power monitoring devices for
factory automation applications. A majority of the Company's outstanding
common stock is held by Scientific Technology Incorporated, a California
corporation (the "Parent").

The Company operates in one business segment - the development,
manufacture and marketing of electronic and infrared safety light
curtains, sensors and scanning products. Sales to foreign customers
represented less than 10% of total sales in 1999, 1998 and 1997. One
customer, a distributor, accounted for 14% of total sales in 1999 and
1998 and 18% of total sales in 1997.

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

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
at the date of the financial statements and the reported amounts of
revenues and expenses during the reported periods. Actual results could
differ from those estimates.

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

Revenues
Revenues from product sales are recognized when products are shipped.
The Company warranties its products for 12 months from date of
installation and provides for warranty upon shipment.

Cash and Cash Equivalents and Short-Term Investments
The Company invests primarily in money market accounts and short-term
investments held at financial institutions and considers all highly
liquid investments with an original maturity of less than 90 days to be
cash equivalents.

Short-term investments consist of highly liquid investments which
generally mature in less than one year and are classified as "available
for sale". Interest income is accrued as earned. The investments are
carried at cost plus accrued interest, which approximates market value.

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

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

Intangible assets
Intangible assets include technology, customer lists, a covenant not to
compete and goodwill acquired as part of the acquisition of Lundahl
Instruments, Inc. Goodwill represents the excess of the acquisition
costs over the fair market value of the assets acquired. Intangible
assets are generally amortized on a straight-line basis not exceeding
twenty years.

Income Taxes
Deferred income taxes are provided for the temporary differences between
the financial reporting basis and the tax basis of the Company's assets
and liabilities.

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

Foreign Currency
The Company's German subsidiary transacts its business in German Marks.
Translation and transaction gains and losses to date have been
immaterial.

Comprehensive Income
For the periods presented, there is no significant difference between
net income and comprehensive income.

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

Concentration of Credit Risk
Financial instruments that potentially subject the Company to
significant concentrations of credit risk consist principally of cash,
cash equivalents, short-term investments and trade accounts receivable.
The Company places its cash and cash equivalents in a variety of money
market accounts. The Company further limits its exposure to these
investments by placing such investments with various high quality
financial institutions. The Company routinely performs evaluations of
these financial institutions. The Company's short-term investments are
primarily composed of highly rated mutual funds and Treasury bonds. The
Company offers credit terms on the sale of its products to its
customers. The Company performs ongoing credit evaluations of its
customers' financial condition and, generally, requires no collateral
from its customers. The Company maintains an allowance for uncollectable
accounts receivable based upon the expected collectability of all
accounts receivable.

NOTE 2 - RELATED PARTY TRANSACTIONS

The Parent provides certain management, marketing and sales services to
the Company. The costs are allocated to the Company based on the
percentage of the Company's sales to total sales of the Parent and its
subsidiaries. The amounts allocated to the Company for 1999, 1998 and
1997 were $977,000, $908,000 and $824,000, respectively.

The Company leases approximately 85,000 square feet in a 95,000 square
foot facility owned by an affiliate of the Parent. The lease term is for
ten years. Overhead costs are allocated primarily on the basis of square
footage utilized.

The Company utilizes a payable to Parent account to record activity
including cash received, cash disbursed and amounts owed to the Parent
for allocated charges and dividends. The net effect of transactions with
the Parent resulted in a zero balance at December 31, 1999, 1998 and
1997. The Company charges interest on the receivable from the Parent and
pays interest on payables to Parent at the Company's average interest
rate on bank borrowings. Interest expense amounted to $0 in 1999,
$20,000 in 1998 and $34,000 in 1997.

NOTE 3 - ACQUISITION OF LUNDAHL INSTRUMENTS, INC.

        On April 1, 1999, the Company acquired all of the outstanding
capital stock of Lundahl Instruments, Inc. ("LII"). In the transaction,
accounted for as a purchase, the Company paid $2,659,000 in cash of
which $1,060,000 was allocated to goodwill, $1,000,000 was allocated to
technology, $250,000 to customer lists and $50,000 to a covenant not to
compete. Intangible assets acquired are generally amortized using the
straight-line method over twenty years. The operations and financial
position of LII were accounted for in the consolidated financial
statements of the Company beginning in April 1999. LII designs and
manufactures non-contact ultrasonic sensors and controllers for use in
the automation of industrial processes for applications involving level
and flow control, environmental monitoring, automated vehicle collision
avoidance and material positioning.

NOTE 4 - BALANCE SHEET DATA

                                                      December 31,
                                               ----------------------
                                                  1999        1998
                                               ----------  ----------
  ACCOUNTS RECEIVABLE:
   Trade accounts receivable                      $9,152      $7,001
   Less: Allowance for doubtful accounts
            and sales returns                       (330)       (389)
                                               ----------  ----------
                                                  $8,822      $6,612
                                               ==========  ==========

  INVENTORIES:
   Finished goods                                 $3,108      $2,421
   Work in process                                   263         482
   Subassemblies                                     948         541
   Raw materials                                   4,095       2,368
                                               ----------  ----------
                                                  $8,414      $5,812
                                               ==========  ==========

  PROPERTY AND EQUIPMENT:
   Equipment                                      $6,305      $5,106
   Furniture and fixtures                           1076        1030
   Leasehold improvements                             96          53
                                               ----------  ----------
                                                   7,477       6,189
   Less: accumulated depreciation                 (4,611)     (3,644)
                                               ----------  ----------
                                                  $2,866      $2,545
                                               ==========  ==========

  INTANGIBLE ASSETS
   Goodwill                                       $1,060        --
   Technology                                      1,000        --
   Customer list                                     250        --
   Covenant not to compete                            50        --
                                               ----------  ----------
                                                  $2,360        --
   Less: accumulated amortization                   ($89)       --
                                               ----------  ----------
                                                  $2,271        --
                                               ==========  ==========
  ACCRUED EXPENSES:
   Accrued compensation and benefits              $1,111        $937
   Accrued commissions                               210         230
   Warranty reserve                                  321         298
   Other                                             350         507
                                               ----------  ----------
                                                  $1,992      $1,972
                                               ==========  ==========

The Company has a  $6,100,000 line of credit with a bank, of which
no amount was outstanding at December 31, 1999 or December 31,
1998. The line, which is subject to certain financial statement
covenants, bears interest at the bank's prime rate (7.75% at
December 31, 1999), is secured by accounts receivable, inventories
and fixed assets, and expires on May 31, 2000.









NOTE 5 - INCOME TAXES

The provision for income taxes was as follows:

                                           Year Ended December 31,
                                   ----------------------------------
                                      1999        1998        1997
                                   ----------  ----------  ----------
                                             (In thousands)
  Current tax expense:
   Federal                            $1,941      $2,224      $3,142
   State, net of federal benefit         540         600         758
                                   ----------  ----------  ----------
   Sub total                           2,481       2,824       3,900
   Deferred tax benefit                  280        (112)       (180)
                                   ----------  ----------  ----------
   Total                              $2,761      $2,712      $3,720
                                   ==========  ==========  ==========

Deferred income taxes are provided for the temporary differences between
the financial reporting basis and the tax basis of the Company's assets
and liabilities. Deferred tax assets of  $852,000 and $1,132,000 were
comprised of $460,000 and $507,000 of inventory reserves and of other
accruals and reserves not currently deductible of $392,000 and $625,000
at December 31, 1999 and 1998, respectively.

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

                                           Year Ended December 31,
                                   ----------------------------------
                                      1999        1998        1997
                                   ----------  ----------  ----------
Percentage of pretax income:
   Statutory U.S. tax rate                34%         34%         34%
   State income taxes, net of
     federal benefit                       6%          6%          6%
   Research and development
     and other credits                    -2%         -2%         -2%
                                   ----------  ----------  ----------
Effective tax rate                        38%         38%         38%
                                   ==========  ==========  ==========













NOTE 6 - INCOME PER SHARE

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

                                                       In Thousands      Per
                                               ----------------------   Share
                                                 Income      Shares     Amunt
                                               ----------  ---------- ----------
    1999
    Basic earnings per share calculation          $4,505       9,658      $0.47
    Effect of dilutive securities
         Stock options                              --            24       --
                                               ----------  ---------- ---------
    Dilutive earnings per share calculation       $4,505       9,682      $0.47
                                               ==========  ========== =========
    1998
    Basic earnings per share calculation          $4,422       9,650      $0.46
    Effect of dilutive securities
         Stock options                              --            71       --
                                               ----------  ---------- ---------
    Dilutive earnings per share calculation       $4,422       9,721      $0.46
                                               ==========  ========== =========
    1997
    Earnings per share of common stock            $6,070       9,615      $0.63
    Effect of dilutive securities
         Stock options                              --           162      $0.01
                                               ----------  ---------- ---------
    Earnings per share of common stock-
      assuming dilution                           $6,070       9,777      $0.62
                                               ==========  ========== =========

NOTE 7 - DIVIDENDS

On March 6, 2000, the Company declared a regular quarterly dividend of
$.05 per share on all of its common shares, payable on April 3, 2000
to shareholders of record on March 17, 1999.
During 1999, the Company paid quarterly dividends of $.0475 per share.
During 1998, the Company paid quarterly dividends of $.045 per share.
During 1997, the Company paid regular quarterly dividends of $.0425 per
share.

NOTE 8 - COMMITMENTS

The Company leases certain office and manufacturing space and other
equipment under noncancellable operating leases. At December 31, 1999,
future minimum payments under these leases due in the years 2000 through
2005 were approximately $730,000 per year.

Rent expense under operating lease agreements was approximately $720,000
in 1999, $685,000 in 1998 and $630,000 in 1997, respectively.

As of December 31, 1999, the Company had an open purchase commitment
with a vendor for $750,000.

<PAGE>



REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and
Shareholders of Scientific Technologies Incorporated

In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of operations, of cash flows and of
changes in stockholders' equity present fairly, in all material
respects, the financial position of Scientific Technologies
Incorporated (a subsidiary of Scientific Technology Incorporated)
and its subsidiaries at December 31, 1999 and 1998, and the results
of their operations and their cash flows for each of the three years
in the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted
in the United States, which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for the opinion expressed
above.






PricewaterhouseCoopers LLP
San Jose, California
March 3, 2000















<PAGE>
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
             ACCOUNTING AND FINANCIAL DISCLOSURE

              None.
                                           PART III

Certain information required by Part III is omitted from this Report in
that the registrant will file a definitive Proxy Statement for its 2000
Annual Meeting of Stockholders pursuant to Regulation 14A (the "Proxy
Statement") no later than 120 days after the end of the fiscal year
covered by this Report, and certain information included therein is
incorporated herein by reference.

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this Item concerning the Company's directors
and the Company's executive officers is incorporated by reference to the
sections entitled "Nominees" and "Management", respectively, appearing
in the Company's Proxy Statement for its 2000 Annual Meeting of
Stockholders.

Item 11. EXECUTIVE COMPENSATION

The information required by this Item is incorporated by reference to
the sections entitled "Executive Compensation" and "Report of the
Compensation Committee" appearing in the Proxy Statement for its 2000
Annual Meeting of Stockholders.

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                MANAGEMENT

The information required by this Item is incorporated by reference to
the sections entitled "Security Ownership of Certain Beneficial Owners
and Management" appearing in the Proxy Statement for its 2000 Annual
Meeting of Stockholders.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item is incorporated by reference to
the sections entitled "Certain Relationships and Related Transactions"
appearing in the Proxy Statement for its 2000 Annual Meeting of
Stockholders.











<PAGE>


                                PART IV

Item 14. EXHIBITS LIST AND REPORTS ON FORM 8-K.

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

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

        2. EXHIBITS AND EXHIBIT INDEX:

        Exhibit 2.1 -  Stock Acquisition Agreement by and Among Scientific
                       Technologies Incorporated,
                       Lundahl Instruments, Inc. and Mark Lundahl dated
                       March 31, 1999.

        Exhibit 3.1 -  Articles of Incorporation, as amended, are
                       incorporated by reference to the
                       Registrant's Form 10-K for the year ended December
                       31, 1988, Exhibit 3.1.

        Exhibit 3.3 -  By-Laws are incorporated by reference to the
                       Registrant's Form 10-K for the
                       year ended December 31, 1985, Exhibit 3.

        Exhibit 4.1 -  1997 Employee Stock Purchase Plan is incorporated
                       by reference to the Registrant's
                       Registration Statement on Form S-8 dated October 2, 1998

        Exhibit 4.2 -  1997 Stock Plan is incorporated by reference to the
                       Registrant's Registration Statement on Form S-8 dated
                       October 2, 1998.

        Exhibit 10.1 - Lease agreement dated February 21, 1995 for 6550
                       Dumbarton Circle, Fremont, California 94555,
                       is incorporated by reference to the Registrant's
                       Form 10-KSB for the year ended
                       December 31, 1994, Exhibit 10.4.

        Exhibit 10.2 - Bank agreement dated November 29, 1994 with Bank of
                       The West is incorporated by reference to the
                       Registrant's Form 10-KSB for the year ended
                       December 31, 1994, Exhibit 10.3.

        Exhibit 10.3 - Amendment dated June 9, 1999 to Bank Agreement
                       dated November 29, 1994 with Bank of The West

        Exhibit 21.1-  Subsidiaries of the Registrant.

        Exhibit 23.1 - Consent of PricewaterhouseCoopers LLP, Independent
                       Accountants.

        Exhibit 24.1 - Power of Attorney (included on page 28).

        Exhibit 27.1 - Financial Data Schedule.

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

(b)  No Reports on Form 8-K were filed during the last quarter of 1999.














<PAGE>


































                                  SIGNATURES

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

                                 SCIENTIFIC TECHNOLOGIES INCORPORATED

Dated: March 6, 2000             By /s/ Anthony R. Lazzara
       --------------              ---------------------------------
                                        Anthony R. Lazzara
                                        Chairman

                               POWER OF ATTORNEY

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

  In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
        Signature                         Title                      Date
-------------------------  -----------------------------------  ---------------
<S>                        <C>                                  <C>
/s/ Anthony R. Lazzara     Chairman of the Board and             March 6,2000
------------------------     Director                           ---------------
Anthony R. Lazzara

/s/ Joseph J. Lazzara      President, Chief Executive Officer,   March 6,2000
------------------------     Treasurer, Director (Principal     ---------------
Joseph J. Lazzara          Executive and Financial Officer)

/s/ James A. Lazzara       Vice President, Secretary and         March 6, 2000
------------------------     Director                           ---------------
James A. Lazzara

/s/ James A. Ashford       Vice President and Director           March 6,2000
------------------------                                        ---------------
James A. Ashford

/s/ Carl H. Frei           Director                              March 6, 2000
------------------------                                        ---------------
Carl H. Frei

/s/ Bernard J. Ploshay     Director                              March 6, 2000
------------------------                                        ---------------
Bernard J. Ploshay

/s/ Richard O. Faria       Vice President, Finance and           March 6,2000
------------------------   Administration (Principal Accounting ---------------
Richard O. Faria           Officer)
</TABLE>

<PAGE>


















































                     SCIENTIFIC TECHNOLOGIES INCORPORATED

                                   EXHIBITS

                                      TO


                          ANNUAL REPORT ON FORM 10-K
                         YEAR ENDED DECEMBER 31, 1999


                         EXHIBITS - TABLE OF CONTENTS

Exhibit  2.1 - Stock Acquisition  Agreement between Lundahl Inc. and
               Scientific Technologies Incorporated dated March 31, 1999

Exhibit 10.3 - Amendment dated June 9, 1999 to Bank Agreement
               dated November 29, 1994

Exhibit 21.1 - Subsidiaries of the Registrant

Exhibit 23.1 - Consent of Independent Accountants

Exhibit 24.1 - Power of Attorney (included on page 28)

Exhibit 27.1 - Financial Data Schedule