SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549



                                   FORM 10-K


[X] Annual  report  pursuant to  Section 13 or 15(d) of the  Securities Exchange
    Act of 1934 for the fiscal year ended June 30, 1999 or


[ ] Transition  report   pursuant  to  Section  13  of  15(d)  of the Securities
    Exchange Act of 1934 for the transition period from        to        .

   Commission file number: 0-27122



                            ADEPT TECHNOLOGY, INC.
            (Exact name of registrant as specified in its charter)

            California                                  94-2900635
 (State or other jurisdiction of         (I.R.S. Employer Identification Number)
 incorporation or organization)


150 Rose Orchard Way, San Jose, California                95134
  (Address of principal executive office)               (Zip code)


       Registrant's telephone number, including area code: (408) 432-0888


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

                                                    Name of each exchange
           Title of each class                       on which registered
              ------------                              ------------
                   None                                      None



          Securities registered pursuant to Section 12(g) of the Act:
                           Common Stock, no par value
                                (Title of Class)


     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  the  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. [ ]

     The  aggregate  market  value of the voting stock held by non-affiliates of
the  registrant,  based  upon  the  closing  sale  price  of the common stock on
September  20, 1999 as reported on the Nasdaq National Market, was approximately
$48,762,318.  Shares  of  common  stock held by each officer and director and by
each  person  who  owns  5%  or  more  of the outstanding common stock have been
excluded   in   that   such  persons  may  be  deemed  to  be  affiliates.  This
determination  of affiliate status is not necessarily a conclusive determination
for other purposes.

     As  of  September  20, 1999, registrant had outstanding 8,793,197 shares of
common stock.


                      Documents Incorporated by Reference

     The  registrant  has incorporated by reference into Part III of this Annual
Report  on Form 10-K portions of its proxy statement for the 1999 Annual Meeting
of Shareholders.


<PAGE>

                                    PART I


               Special Note Regarding Forward-Looking Statements

     Certain  statements  in this Report constitute "forward-looking statements"
within  the  meaning  of  the  Private Securities Litigation Reform Act of 1995.
These  forward-looking statements involve known and unknown risks, uncertainties
and   other   factors  which  may  cause  our  actual  results,  performance  or
achievements  or  industry  results  to  be materially different from any future
results,   performance   or   achievements   expressed   or   implied  by  these
forward-looking  statements.  The following discussion of our business should be
read  in conjunction with our Consolidated Financial Statements and Management's
Discussion  and  Analysis  of  Financial Condition and Results of Operations. In
particular,  readers  should  review  carefully  the  section  entitled "Factors
Affecting  Future  Operating  Results,"  which  begins on page 24 of this Annual
Report on Form 10-K.

     In  this report, unless the context indicates otherwise, the terms "Adept,"
"we,"   "us,"   and   "our"  refer  to  Adept  Technology,  Inc.,  a  California
corporation, and its subsidiaries.

     This   report  contains  trademarks  and  tradenames  of  Adept  and  other
companies.


ITEM 1. BUSINESS


Our Company

     We  design,  manufacture  and  market  software  and hardware products that
automate   assembly,   material   handling,   and   packaging   processes   for
manufacturers.   Our   "intelligent   automation"   products   include   machine
controllers  for  robot  mechanisms  and  other  flexible  automation equipment,
machine   vision  systems,  simulation  software  and  a  family  of  mechanisms
including robots, a vision-based flexible part feeder and linear modules.

     We  offer  our  customers  a  complete, easily deployed automation solution
that  we  call  Rapid  Deployment  Automation  ("RDA").  Our goal with RDA is to
increase  deployment of automation solutions by reducing the total time required
to   conceptualize,   justify,   quote,  sell,  implement  and  change  over  an
intelligent automation system.

     We  sell, market and support our products on a worldwide basis through more
than  300  system  integrators,  our  direct  sales force and original equipment
manufacturers  ("OEMs").  Our  system  integrators,  OEMs  or  end users combine
various  components of our standard product line with material handling devices,
peripheral  equipment, application software and tooling into flexible automation
workcells or production lines.

     We  were  incorporated  in  California  in  1983.  Our  principal executive
offices  are  located  at  150 Rose Orchard Way, San Jose, California 95134. Our
telephone number at that address is (408) 432-0888.


  Recent Developments

     In  July  1999,  we  acquired  BYE/Oasis Engineering, Inc. ("BYE/Oasis"), a
manufacturer of micro-environment  systems  and  Standard  Mechanical  Interface
("SMIF")   for   the   microelectronics   industry.  In  consideration  for  the
acquisition,  we  issued  a  total  of 720,008 shares of our Common Stock to the
former   shareholders   of  BYE/Oasis  and  assumed  outstanding  options  under
BYE/Oasis's  stock option plan to acquire 185,361 shares of our Common Stock. We
believe  that  the  acquisition  of  BYE/Oasis will enhance our ability to offer
intelligent automation solutions to the semiconductor manufacturing industry.


Our Industry

  Development of the Intelligent Automation Industry

     Industrial  robots  provided  the  foundation  for  the  development of the
intelligent  automation  industry.  In the 1970s, robots with simple controllers
became  widely  used  in  the  automotive  industry  for  simple,  low precision
applications  such  as  spot  welding.  These  robots  were  fairly rudimentary,
however, and lacked


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<PAGE>

sensing  or  "machine vision" capabilities. By the late 1970s, industrial robots
with  more  advanced  capabilities  became  commercially  available.  These  new
capabilities   included   computer-based   motion   controllers,  which  enabled
flexible,  programmable  motion,  and  machine  vision  systems,  which  enabled
computer  analysis  of  camera  images.  With  these  technical advances, robots
gained  increased  acceptance.  Nevertheless, their use remained limited because
their  software  and  sensing  capabilities  were  insufficient  to support more
demanding tasks such as those required on flexible assembly lines.

     During  the  early  1980s,  technical  advances enabled robots to perform a
wide range of functions
in  new  applications  such  as assembly, material handling and packaging. These
advances included the following:

     *  sophisticated  sensing for robot guidance that allowed robots to locate,
        correctly orient and pick up parts;

     *  conveyor  tracking  that made it  possible  to handle  parts from moving
        conveyors; and

     *  direct-drive  robots that were faster and more accurate than gear-driven
        robots.

     In  addition,  the  deployment  of  advanced software and sensory products,
coupled   with   the   availability  of  high-level  programming  languages  and
computer-based  controller  architectures,  contributed  to the establishment of
the  intelligent  automation  industry.  In particular, "multi-tasking" software
enabled  the coordination, in real time, of the many asynchronous tasks required
in  assembly,  material  handling and packaging. This greater functionality made
robots viable in a broad range of production environments.

  Benefits of Deploying Intelligent Automation Solutions

     We  believe  that  intelligent  automation  solutions offer manufacturers a
number of benefits, including the following:

     *  intelligent  automation can assist in maintaining and improving  product
        quality standards;

     *  intelligent  automation can improve the time required for a manufacturer
        to reach full volume production;

     *  as products are made increasingly  smaller,  intelligent  automation can
        improve  accuracy  when  compared  to  manual  assembly,   handling,  or
        packaging; and

     *  in  industries  such  as  semiconductor   manufacture,   where  a  clean
        manufacturing environment is critical,  intelligent automation solutions
        can reduce contamination risks.


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<PAGE>

Our Rapid Deployment Automation Solution to Intelligent Automation

     Our   RDA  approach  to  implementing  intelligent  automation  systems  is
designed  to  reduce  the  total time required to conceptualize, justify, quote,
sell  and implement an intelligent automation system. RDA is implemented through
a  line  of  hardware  and  software products, including machine controllers for
robot  mechanisms  and  other  flexible  automation  equipment,  machine  vision
systems,  vision-based  flexible part feeders, simulation software, and a family
of  mechanisms  including  robots  and  linear  modules.  The  following diagram
illustrates our RDA approach:


   [Depicition of our Rapid Deployment Automation approach which includes the
            RDA System Design Layer, the RDA Process Knowledge Layer,
    the RDA Real-Time Control Layer and the RDA Mechanical Component Layer.]


     We  seek to provide the following key benefits to manufacturers through our
RDA approach:

     *  Increased Flexibility

     In   order   to  achieve  widespread  deployment,  we  believe  intelligent
automation  must become as flexible as traditional manual production lines. They
should  allow  for  quick  and  efficient  changeover  of  production  lines for
multiple  products  and  over  multiple  product  life  cycles.  We believe that
software  and  sensory  products, coupled with effective hardware solutions, are
the  key  competitive  elements  of  flexible  automation.  Software and sensory
products  provide  the  flexibility  to quickly reconfigure production lines for
product changeovers and to respond to product or process variations.

     * Reduced Custom Engineering

     A  significant  amount  of  time-consuming  and expensive custom content is
engineered  into most automated manufacturing lines. We provide a broad range of
modular  components  that are designed to reduce the custom engineering required
to  implement  intelligent  automation.  We  offer these components directly and
through  automation vendors who offer components that complement our RDA product
line.

     * Reduced Dependence on Manufacturing Engineers

     The  implementation  of  most  automation  lines  requires  both mechanical
engineering  and  advanced  computer  programming  skills.  Personnel with these
skills  are  difficult  to  find and expensive to employ. In order to reduce the
need  for  manufacturing engineers, we have developed smart application software
products  which utilize icon-based programming and are based on our Assembly and
Information  Management  ("AIM")  software  technology.  In  addition,  we  work
closely  with  over 300 system integrators worldwide that provide end users with
outside engineering resources.

     * Shortened Implementation Cycle

     We  believe that extended implementation cycles increase the perceived risk
of  automation  and  fail  to  address time-to-volume production requirements in
industries  with  short  product  life  cycles. Our simulation software products
employ  standard  networking and communication interfaces and are designed to be
quickly integrated into standard workcells or production lines.


                                       3


<PAGE>

Products Comprising Rapid Deployment Automation

     Our  core  product  families  include robot mechanisms and other mechanical
products,  guidance  and  inspection vision products, vision based flexible part
feeders,  machine controllers, machine control software, simulation software and
semiconductor  microenvironments.  The following diagram depicts our products by
RDA layer:


             [Chart illustrating our technology with respect to the
                          four levels of RDA approach.]


  Robot Mechanisms and Other Mechanical Products

     We  design and manufacture two floor standing Selective Compliance Assembly
Robot  Arm  ("SCARA")  style  robot  mechanisms  called  the AdeptOne-XL and the
AdeptThree-XL,  as  well  as  a table top robot mechanism called the Adept Cobra
800,  all  of  which  are designed for assembly, material handling and packaging
tasks.  The  links  and  joints  of  a SCARA robot are somewhat analogous to the
shoulder,  elbow  and  wrist  of a human. This configuration is well suited to a
large  number  of  assembly  and  material handling tasks. Of the floor standing
models,  the  AdeptOne-XL is the faster model, while the Adept Three-XL offers a
larger  work  envelope  and  handles  a  larger  payload.  Each  of these robots
utilizes  direct-drive  motor  technology.  The  Adept  Cobra  800  robot  is  a
light-duty  SCARA  robot  that  can  be  table  mounted  and offers a small work
envelope when space is at a premium.

     We  also  source  and  market  two  families of robot mechanisms, which are
built  to  our  specifications by Hirata Corporation ("Hirata"). The Adept Cobra
600  robot is a light-duty SCARA robot that can be table mounted and also offers
a  small  work  envelope. The second family of sourced robot mechanisms includes
the  Adept  1850  robot,  a  palletizing  robot. The Adept 1850 robot is used to
palletize  completed  product  assemblies  or packaged products at the end of an
assembly line.

     We  also  offer  a  line  of  linear modules, called AdeptModules, which we
purchase  from  NSK  Ltd.  ("NSK").  These  single  axis  devices can be coupled
together  by  the  user  to  form  a  custom  robot  mechanism  for applications
requiring  a robot with fewer than four axes. In addition, we offer these linear
modules  in  combination with our own Z-Theta module to provide customers with a
line of configurable Cartesian robots.

  Semiconductor Robots

     We  have  introduced  a line of flat panel and semiconductor wafer handling
robots.  The  mechanisms  are  sourced from Samsung Corporation ("Samsung"). The
AdeptAtlas  series is designed for flat panel display transfer applications, and
consists  of  two  models: the Adept Atlas 720S (single arm) and 720D (dual arm)
are  designed  to  handle  large-scale  substrates  up  to  600  by  720 mm. The
AdeptVicron  series  is  designed for semiconductor wafer handling applications,
and  consists  of  four models: the AdeptVicron 200S (single arm) and 200D (dual
arm)  are  designed  to  handle up to 200mm wafers; the AdeptVicron 300S (single
arm) and 300D (dual arm) models handle up to 300mm wafers.


                                       4


<PAGE>

  Semiconductor Contamination Control Products

     With  our  recent  acquisition  of  BYE/Oasis,  we  have  entered  into the
semiconductor   contamination   control  market.  We  offer  both  standard  and
customized  products  for  contamination  control (mini and micro environments),
Standard   Mechanical  Interfaces  ("SMIF")  integration  and  front  end  wafer
handling solutions for both semiconductor OEMs and end users.


  Guidance and Inspection Vision Products

     AdeptVision  VME  is  a  line  of machine vision products that are used for
robot  guidance  and  inspection  applications.  For  the guidance applications,
AdeptVision  VME  is  added  into  the controller by inserting a printed circuit
board  and enabling the vision system software. For inspection applications such
as  gauging  and  dimensioning,  the  AdeptVision  VME  product  is  sold  as an
integrated  inspection  vision  system comprised of a controller with the vision
board and software.


  Machine Controllers

     Our  controller  products are based on the VME bus architecture standard. A
large  array of controller configurations are possible depending on the features
selected  by  the customer. Our controllers are configured in four, five, or ten
slot   chassis.  All  controllers  include  a  system  processor  and  a  system
input/output  module(s).  Additional functionality can be incorporated by adding
printed  circuit  boards and additional software. For example, motion control is
added  by  inserting a motion control board. Printed circuit boards can be added
for   machine   vision,  graphical  user  interface  capability  and  additional
communication   inputs   and   outputs.   The   controller   products  are  sold
independently  for  machine  control  and inspection vision applications and are
also  sold  as  a  component  of  the  robot systems. The heart of the Company's
machine  controllers is the AdeptWindows Controller board ("AWC"), a single slot
central  processing  unit  ("CPU") board based on Motorola 68040/060 processors.
All  AWC  boards include solid state mass storage, direct ethernet connectivity,
DeviceNet fieldbus connectivity and international safety circuitry.


  Machine Control Software

     Our   V+  programming  language  and  operating  system  software  includes
specific  instructions  for  motion  control,  machine  vision,  force  sensing,
workcell  control  and general communications. These capabilities are integrated
to  perform  real-time machine control. The basic V+ software is included in the
price of the system.

     Our  AIM  software simplifies the integration, programming and operation of
automation  workcells  and  lines.  AIM  accomplishes  this  goal by providing a
formal  method  for  capturing  application  specific process knowledge and then
allowing  users  lacking  advanced  programming  expertise  to use this embedded
knowledge  to  accomplish  a specific task. We sell several application specific
versions  of AIM, including MotionWare, which addresses motion applications such
as   those   requiring   sophisticated   conveyor  tracking,  VisionWare,  which
simplifies  the  use of vision in both guidance and inspection applications, and
PalletWare, which includes special knowledge of box palletizing strategies.


  Simulation Software

     Our  simulation  software  products  simulate  the layout and throughput of
workcells  and  other  equipment and generate the programs to run the workcells.
Our  CimStation  Robotics  product  simulates  robot  workcells  for  our  robot
products  as  well as a number of other robot vendors' products. This product is
used  to  test  layouts  and  cycle  times  and  to  generate  robot application
programs.   The   CimStation  Inspection  product  simulates  the  operation  of
Coordinate  Measurement  Machines  ("CMM")  and generates programs that would be
tedious  to  program  manually  given the complex inspection tasks CMMs perform.
The  SoftMachines  product tests programs for machine tool operations. This is a
productivity  tool  for  machine  tool users who would otherwise have to perform
the  time  consuming  task  of  testing  programs  on  the  machine tool itself.
Additionally,  a  product  called  SoftAssembly  is  used  to  simulate and test
product  assembly  and  to  develop  assembly sequences and procedures. Finally,
Adept  Digital  Workcell  is  the  only  3D  robotic  assembly  simulation  tool
available  which  allows  engineers  to  program a workcell without the physical
robot  or  cell  hardware.  Adept  Digital  Workcell  increases  productivity by
allowing the user to


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<PAGE>

anticipate  cycle times, program logic errors, location errors, collision errors
and  motor  saturation  errors  far  earlier  in  the  development  process.  In
addition,  Adept  Digital  Workcell  quickly  generates  alternative  conceptual
layouts and cycletime estimates for project proposals

  Vision-Based Flexible Feeder

     Part  feeding  has  historically  been  accomplished  by  designing  custom
devices  that  could  only  accommodate a single part or class of parts. We have
developed  a  new  flexible feeder, the Adept FlexFeeder 250 that can be rapidly
reconfigured  through software to accommodate new products and a wide variety of
parts  ranging  from  simple  rectangular  objects to complex molded or machined
parts,  thus  preserving the flexibility of the Workcell or production line. The
Adept  FlexFeeder  250  integrates  machine  vision, software and motion control
technology   with   a   simple  mechanical  device.  The  Adept  FlexFeeder  250
recirculates  the  parts  and  separates  them,  relying  on  vision to identify
individual parts.


Technology

     Our  technology  integrates  the  following key elements of RDA: mechanical
design,  machine  controller  design,  advanced  servo  systems,  motion control
software,  machine  vision  software,  real-time  database  management software,
simulation  software  and  contamination  control. The following table lists our
technology by RDA layer:



[Depiction of our products with respect to the four layers of our RDA approach.]



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<PAGE>

  Hardware

     Direct-drive  robot technology. We offer a robot incorporating direct-drive
motor  technology.  Direct-drive  technology  eliminates gears and linkages from
the  drive  train of the mechanism, thereby significantly increasing robot speed
and improving the robot's product life, reliability and accuracy.

     Controller   technology. We  offer  an  open  architecture,  VME  bus-based
scalable  machine  controller.  Additionally,  we  have  enhanced our controller
technology  with  the  introduction  of  our  new  AdeptWindows  Controller. Our
controller  offers  plug-and-play  integration of personal computer hardware and
software  for  users  of the Windows platform. Specifically, this new technology
allows  customers  to do all development work, including vision applications, on
personal  computers  using  Windows  95,  98 and NT operating systems. This open
architecture  product allows customers to combine the features of our AIM and V+
software   products   with  other  personal  computer-based  software  products.
Finally,  all  of  our  controller  products  support  the same Windows NT-based
graphical  user interface and can execute the same application programs, thereby
allowing  software  development  investments  to be leveraged across a number of
applications.

     The  controller  includes a number of technologically advanced capabilities
designed  specifically  to address the intelligent automation market, including:
special   ASICs  for  controlling  direct-drive  motors,  reading  encoders  and
controlling  power  up sequencing of complex high power systems; safety circuits
that  meet  domestic and international specifications; technology to protect the
controller  from  voltage  spikes,  electrical  noise  and power brownouts; high
wattage  (6000  watt)  switching  power amplifiers; and networking circuitry for
LAN and field buses.


  Software

     Servo  software. The  most  basic level in our software architecture is the
servo  software  which  directs  individual  motors  to  follow  motion commands
generated  from the higher V+ software level. This software has been designed to
provide  closed-loop  control  for  our robots as well as other vendors' robots.
The  servo software layer includes algorithms for adaptive feed-forward control,
direct-drive  motor  control,  force  control,  position control and a number of
safety and diagnostic features.

     Real-time  programming  language  and  operating  system software. The next
level  in the software architecture is the V+ programming language and operating
system  layer.  V+  allows  software  developers  to  create automation software
systems  and  is  the  key  enabling  technology  for our intelligent automation
approach.   This  automation  programming  environment  provides  a  high  level
language  coupled  with  a multitasking operating system and built in capability
for  integrating  robots,  machine vision, sensors, workcell control and general
communications.  These  capabilities  enable  the  development  of sophisticated
application  software  that can adaptively control mechanical systems based upon
real-time  sensory  input  while  simultaneously  maintaining communication with
other factory equipment.

     V+  offers  the  user  approximately  300  instructions  for programming an
intelligent   automation  workcell.  It  includes  a  trajectory  generator  and
continuous  path planner which compute the path of the robot's tool in real time
based  upon  predefined  data  or  sensory  input.  V+ also includes a number of
network   communication   facilities   and   supports   a  variety  of  standard
communication  protocols.  In  addition,  this software includes a multitasking,
multiprocessor,  time-sliced,  deterministic,  real-time  operating system. This
operating  system  allows V+ to execute dozens of tasks concurrently and permits
control  to  pass between tasks in a predictable manner, often several times per
millisecond.  The V+ operating system also allows the installation of additional
processors  into  the  controller  and automatically reassigns tasks to optimize
overall  system  performance,  providing  a key scalability feature not found in
other  controllers.  The  development  environment  for V+ is Windows 95, 98 and
NT-based   and  allows  the  customer  to  utilize  industry  standard  personal
computers.

     Machine  vision. The  real-time control layer of the software also includes
machine  vision  software  technology,  which  quickly recognizes parts that are
randomly  positioned  and have an unknown orientation ranging up to 360 degrees,
as  compared  with  other  solutions  which simply locate translated images with
very  limited  rotation. The ability to quickly recognize parts which have large
variations  in orientation is crucial for high speed part feeding where the part
orientation is not known, such as in flexible part


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<PAGE>

feeders.  Our  machine  vision  software  can  also  measure part dimensions for
inspection  purposes.  Vision  can  be  used  to  acquire  parts from stationary
locations  or  from  conveyors. Cameras can be stationary, fixed in the workcell
or attached to a robot.

     Data  driven  module  software. The next level in our software hierarchy is
the  AIM  layer.  AIM  simplifies  the  implementation of intelligent automation
workcells  by  combining  a  point  and  click  graphical user interface with an
icon-based   programming   method   that  does  not  require  advanced  computer
programming  skills.  This  method  combines  task  level statements with a high
performance   real-time  database  and  a  structure  for  representing  process
knowledge.

     The  AIM  task-level  statements  allow  the developer to specify at a very
high  level  what  operations  the  workcell  is  to  perform, such as "insert a
component  into  a socket using vision to correct for part irregularities." This
command  is  automatically  coupled  to data contained in the real-time database
that  specifies  the physical aspects of the workcell, such as the location of a
part.  The  information  contained in the databases can be created or downloaded
from  a  computer  or  simulation  system  at  any time. Finally, the AIM system
automatically  invokes  the  routines  that  capture  the  process knowledge and
dictate  how  the  specified  operation  will  be performed. In this way, an AIM
workcell  can  be "programmed" by a person who understands as few as ten process
actions  rather  than hundreds of programming instructions or thousands of lines
of conventional code.

     We  provide application-specific versions of AIM that have built in process
knowledge  to address general motion, vision, part palletizing and flexible part
feeding  applications.  In addition, process knowledge can be added by end users
and   system   integrators,   many   of   whom  have  developed  their  own  AIM
application-specific  packages.  AIM  can be accessed via the Windows 95, 98 and
NT environment.

     Simulation  software. The highest level in our software architecture is the
simulation  software  layer,  developed  by  our SILMA division, a leader in the
field  of simulation software. SILMA's core product, CimStation, allows machines
to  be  modeled  with  3D  graphics  and  then  animated in response to software
control  programs.  Mechanisms  can  be  defined graphically and the mathematics
necessary  to  animate  them  (kinematic  models)  are  generated automatically.
CimStation  also  allows the dynamics of mechanisms to be modeled, which enables
machine  cycle  times  to  be  accurately  predicted.  Recently  SILMA has added
additional  computer-aided design interfaces to this core technology for certain
markets. CimStation is available on several workstation platforms.

  New Technology

     During   fiscal   1999,  we  introduced  and  announced  several  products,
including  Adept  Digital  Workcell,  Production  PILOT,  and  our semiconductor
robots,  the AdeptVicron and AdeptAtlas. Adept Digital Workcell is a 3-D robotic
assembly  simulation  tool  that  allows  integration  engineers  to  program  a
workcell  without  the  physical  robot or cell hardware. Adept Digital Workcell
increases  robot  engineering  productivity  by  allowing the user to anticipate
and/or  identify cycle times, program logic errors, unreachable location errors,
collision  errors  and  motor  saturation errors much earlier in the development
process.  We  first  shipped  Adept  Digital  Workcell  in the fourth quarter of
fiscal  1999.  Production PILOT was announced and previewed in the third quarter
of fiscal 1999. Production PILOT is a new 3D computer-aided      design-based
assembly  process  planning  and  design  software suite. It gives engineers and
designers   the   ability   to  analyze  and  verify  assembly  processes  while
simultaneously  finding  and  correcting  problems  before  investing in capital
equipment   or  fabricating  any  parts.  We  expect  commercial  production  of
Production  PILOT  in  mid  fiscal  2000.  We also announced the addition of the
AdeptVicron  and  AdeptAtlas  in the fourth quarter of fiscal 1999. Designed for
semiconductor  manufacturing,  the  new  robots  consist  of  several  models to
accommodate  multiple  applications  for  wafer  handling and flat panel display
transfer  automation.  We  expect  commercial  production of the AdeptVicron and
AdeptAtlas in the first quarter of fiscal 2000.


Customers and Applications

     We  sell  our products to system integrators, end users and OEMs. End users
of  our  products  include  a  broad  range  of  manufacturing  companies in the
electronics,   telecommunications,  semiconductor,  appliances,  pharmaceutical,
food processing and automotive components industries. These companies


                                       8


<PAGE>

use  our  products  to perform a wide variety of functions in assembly, material
handling  and  packaging  applications,  including  mechanical assembly, printed
circuit  board  assembly,  dispensing,  palletizing  and inspection. No customer
accounted for more than 10% of our net revenues in fiscal 1999, 1998 or 1997.


Sales, Distribution and Marketing

  Sales and Distribution

     We  market  our products through system integrators, our direct sales force
and OEMs.

     System  Integrators. We  ship a substantial portion of our products through
system  integrators,  and  we view our relationships with these organizations as
important  to  our  success.  We  have  established  relationships with over 300
system  integrators worldwide that provide expertise and process knowledge for a
wide  range  of  specific  applications.  These  relationships are generally not
regional  and are mutually nonexclusive. The greater the investment in equipment
and  training  and  the higher the purchase volume, the greater the discount the
system  integrator  receives.  In  certain  international  markets,  the  system
integrators perform marketing and support functions directly.

     A substantial portion of our sales is to system integrators that specialize
in designing  and building  production  lines for  manufacturers.  Many of these
companies are small  operations with limited  financial  resources,  and we have
from time to time experienced  difficulty in collecting payments from certain of
these  companies.  As a result,  we perform  ongoing  credit  evaluations of our
customers but do not require collateral.  In lieu of collateral,  we may require
customers  to make  payments  in advance of  shipment  or to provide a letter of
credit. We provide reserves for potential credit losses, and to date such losses
have been within our expectations.  To the extent we are unable to mitigate this
risk of collections from system  integrators,  our expenses would increase,  and
our  operating   results   would  be  adversely   affected.   Furthermore,   our
relationships with system  integrators are generally not exclusive,  and some of
these  system  integrators  may  expend a  significant  amount of effort or give
higher priority to selling products of our competitors. These system integrators
may not continue their  relationships  with us or may form additional  competing
arrangements with our competitors.  We believe that our ability to sell products
to system integrators will continue to be important to our success.  Although to
date none of our system  integrators has accounted for a material  percentage of
our net  revenues,  the loss of, or a  significant  reduction in revenues  from,
system  integrators  to which we sell a significant  amount of our product could
result in a decrease  in our  revenues  and could have an adverse  effect on our
operating  results.  In addition,  as we enter new geographic  and  applications
markets,  we must locate system  integrators  to assist us in building  sales in
those  markets.  We may not be  successful  in  obtaining  effective  new system
integrators or in maintaining our sales  relationships with them. In the event a
number of our system integrators experience financial problems,  terminate their
relationships  with us or  substantially  reduce the amount of our products they
sell, or in the event we fail to build an effective systems  integrator  channel
in any new markets,  our revenues could decrease  substantially  or our expenses
could  increase  substantially,  either of which  would have a material  adverse
effect on our operating results.

     Direct Sales Force. We employ a direct sales force which calls on end users
to communicate the  capabilities of our products and support services and obtain
up-to-date  information  on  market  requirements.  Our  sales  force  possesses
specific expertise in automation  solutions and advises end users on alternative
production line designs,  special application techniques,  equipment sources and
system  integrator  selection.  This  sales  force  works  closely  with  system
integrators and OEMs to integrate our product line into their systems,  provides
sales leads to certain system  integrators  and obtains  intelligent  automation
system quotes from system  integrators  for end users.  As of June 30, 1999, our
North American sales  organization  included 18 individuals.  We have four sales
and customer  support offices in North America located in San Jose,  California;
Southbury,  Connecticut;  Southfield, Michigan; and Cincinnati, Ohio. As of June
30, 1999,  our  international  sales  organization  included 9 persons  covering
Europe,  Singapore,  and South  Korea.  We have  eight  international  sales and
customer support offices located in Dortmund and Munich, Germany; Massy, France;
Arezzo, Italy; Kobe, Japan (through our joint venture);  Kenilworth,  the United
Kingdom; Seoul, South Korea; and Singapore.


                                       9


<PAGE>

     Some   of  our  larger  manufacturing  end  user  customers  have  in-house
engineering  departments  that  are  comparable  to a captive system integrator.
These   captive   engineering   groups  can  establish  a  corporate  integrator
relationship  with  us  that  offers  benefits  similar to those provided to our
system integrators.

     OEMs. Our   OEM   customers   typically   purchase   one  standard  product
configuration,  which  the  OEM integrates with additional hardware and software
and sells under the OEM's label to other resellers and end users.

     The sale of our products  generally  involves delays frequently  associated
with  purchases  of large  capital  expenditures.  Our net  revenues  depend  in
significant  part upon the  decision  of a  prospective  customer  to upgrade or
expand  existing  manufacturing  facilities  or to construct  new  manufacturing
facilities,  all of which typically involve a significant capital commitment. In
the event one or more large orders fails to close as  forecasted  for a quarter,
our net revenues would decrease and operating  results for that quarter could be
materially adversely affected.


  Marketing

     Our  marketing  organization,  which consisted of 49 persons as of June 30,
1999,  supports  our  various  channels  in a number of ways. Product management
works  with  end  users, system integrators, corporate integrators and our sales
engineers  to  continuously  gather  input  on  product performance and end user
needs.  This information is used to enhance existing products and to develop new
products.  A  marketing  programs  group  generates  and  qualifies new business
through  industrial  trade  shows,  various  direct  marketing  programs such as
direct  mail and telemarketing, public relations efforts, internet marketing and
advertising  in  industry  periodicals.  This marketing group is responsible for
tracking  customers  and prospects through our marketing database. The marketing
group  also  publishes  a  document  called  the MV Partner catalog, which lists
software  and  hardware  components  that  have  been  certified  by  us  to  be
compatible  with  our  product  line.  We also expend considerable effort on the
development  of  thorough  technical  documentation  and  user  manuals  for our
product  line,  and we view well-designed manuals as critical to simplifying the
installation, programming, use and maintenance of our products.


Backlog

     Our  product  backlog  at June 30, 1999 was approximately $19.9 million, as
compared  with  approximately  $17.6 million at June 30, 1998. We include in our
backlog  customer orders for products for which we have accepted signed purchase
orders  with  assigned delivery dates within nine months in the case of sales to
end  users  and  system  integrators, and one year in the case of sales to OEMs.
Our  business  is  characterized  by  short  term  order and shipment schedules.
Because  orders  constituting  our  current  backlog  are  subject to changes in
delivery  schedules  and  in  certain  instances  may be subject to cancellation
without  significant  penalty,  and  because  we  utilize our backlog to balance
seasonal  fluctuations  in  our  bookings,  and the sales cycle has continued to
shorten,  our  backlog  at  any  date  may  not  be indicative of demand for our
products  or actual net revenues for any period in the future. See "Management's
Discussion  and  Analysis  of  Financial  Condition  and Results of Operations,"
which  begins  on  page  20  of  this  Annual Report on Form 10-K, including the
section  titled  "Factors  Affecting  Future Operating Results," which begins on
page 24.

     Our product sales are seasonal.  We have  historically  had higher bookings
for our products  during the June quarter of each fiscal year and lower bookings
during the September  quarter of each fiscal year, due primarily to the slowdown
in  sales to  European  markets  and  summer  vacations.  In the  past,  we have
attempted to maintain  revenue  levels  during the September  fiscal  quarter by
filling backlog from the June fiscal  quarter.  If our backlog at the end of the
June fiscal quarter is reduced as a result of lower bookings in the June quarter
or is otherwise  insufficient  to compensate for lower bookings in the September
fiscal  quarter,  our revenues and operating  results for the  September  fiscal
quarter and future  quarters  would be reduced.  For  example,  our net revenues
decreased  as a result of reduced  product  bookings in each of the three fiscal
quarters ending March 27, 1999. In addition,  during fiscal 1999 as a whole, our
revenues were  adversely  affected by a decline in orders from  customers in the
disk-drive  and  telecommunications  markets.  Although our revenues and backlog
increased  in the  last  quarter  of  fiscal  1999,  this  increase  may  not be
indicative of increased future revenues or a sustainable recovery in our product
markets.


                                       10


<PAGE>

     In  addition,  you  should not rely on our  backlog as a useful  measure of
anticipated activity or future revenues. The orders constituting our backlog are
subject to changes in delivery schedules and in certain instances are subject to
cancellation  without significant  penalty by the customer.  We have in the past
experienced  changes in  delivery  schedules  and  customer  cancellations  that
resulted in our revenues in a given  quarter  being  materially  less than would
have been  anticipated  based on backlog at the  beginning  of the  quarter.  We
expect that these delivery changes and order  cancellations may adversely affect
our revenues in future quarters.  Our revenues are subject to the numerous risks
described under the caption "Factors That May Affect Future Results,"  beginning
on page 24. You should review these risks carefully.

     A significant  percentage of our product  shipments occur in the last month
of each fiscal  quarter.  Historically,  this has been due in part, at times, to
our inability to forecast the level of demand for our products or of the product
mix for a particular  fiscal  quarter.  To address this problem we  periodically
stock  inventory  levels of completed  robots,  machine  controllers and certain
strategic  components.  If  shipments of our  products  fail to meet  forecasted
levels,  our  revenues  would be  decreased  and we  would  have  increased  our
operating  expenses in  anticipation  of  unrealized  increases  in sales of our
products.


Services and Support

     Our  service  and support organization, which consisted of 93 persons as of
June  30,  1999,  is  designed  to  support  the customer from the design of the
automation   line   through  ongoing  support  of  the  installed  system.  This
organization  included  52  RDA and application engineers/programmers as of June
30,  1999  based  in a number of our sales offices in the U.S., Europe and Asia.
This  team  is experienced in applying our product line to solve a wide array of
application  issues  and  operates  toll-free telephone support lines to provide
advice  on  issues  such  as software programming structure, layout problems and
system  installation.  End  users  and  system  integrators  can also hire these
experts  on  a  consulting  basis  to  help resolve new or difficult application
issues.

     We  also maintain a team of instructors, consisting of 10 instructors as of
June  30,  1999,  who  develop  training  courses on subjects ranging from basic
system  maintenance  to  advanced programming. These courses are geared both for
manufacturing  engineers  who  design  and  implement  automation  lines and for
operators who operate and maintain equipment once it is in production.

     Our field service  organization,  which  consisted of 48 persons as of June
30, 1999, is based in eight  service  centers  located in San Jose,  California;
Cincinnati,  Ohio; Massy, France; Dortmund,  Germany; Arezzo, Italy; Kobe, Japan
(through our joint venture);  Seoul, South Korea and Singapore.  The field-based
service engineers maintain and repair our products at the end user's facilities.
Personnel  based at these  service  centers also provide  advice to customers on
spare parts, product upgrades, and preventative maintenance.


Research and Development

     Our  research  and  development  efforts  are  focused  on  the  design  of
intelligent  automation  products  which  address  the  challenges of designing,
implementing,  installing,  operating  and modifying automated production lines.
We  intend  to  focus our research and development efforts on the development of
an  integrated  product line which further implements our RDA approach and which
reduces cost, enhances performance and improves ease of use.

     We  have devoted, and intend to devote in the future, a significant portion
of  our  resources to research and development programs. As of June 30, 1999, we
had  80  persons,  including  two  temporary  or  contract personnel, engaged in
research,   development   and   engineering.   Our   research,  development  and
engineering  expenses  for  fiscal  1999, 1998 and 1997 were approximately $11.1
million,  $10.7  million  and $9.0 million, respectively, and represented 13.5%,
10.9% and 10.9%, respectively, of net revenues.

     The   intelligent   automation   industry   is   characterized   by   rapid
technological  change  and  new  product  introductions  and  enhancements.  Our
ability  to  remain  competitive  and our future success depend greatly upon the
technological  quality  of  our  products and processes relative to those of our
competitors.  In addition, we must continue to develop new and enhanced products
and  to  introduce  these new products at competitive prices and on a timely and
cost-effective  basis.  We  may  not  be successful in selecting, developing and
manufacturing  new  products  or  in enhancing our existing products on a timely
basis  or  at  all.  Our  new  or  enhanced  products  may  not  achieve  market
acceptance.  If  we  cannot  successfully  develop and manufacture new products,
timely   enhance   our  existing  technologies,  or  meet  customers'  technical
specifications,  our  products could lose market share, our revenues and profits
could decline, or we could


                                       11


<PAGE>

experience  operating  losses.  New  technology  or product introductions by our
competitors  could also cause a decline in sales or loss of market share for our
existing  products  or  force  us  to  significantly  reduce  the  prices of our
existing products.

     From  time  to  time,  we  have  experienced  and  will  likely continue to
experience  delays  in the introduction of new products. We have experienced and
may  continue  to experience technical and manufacturing difficulties and delays
in  future  introductions of new products and enhancements. Any failure of us to
develop,  manufacture and sell new products in quantities sufficient to offset a
decline  in  revenues  from  existing  products or to manage product and related
inventory  transitions  successfully  could  harm  our  business. Our success in
developing,  introducing,  selling  and  supporting  new  and  enhanced products
depends  upon a variety of factors, including timely and efficient completion of
hardware   and   software   design   and   development,   timely  and  efficient
implementation  of  manufacturing  processes  and effective sales, marketing and
customer  service. Because of the complexity of our products, significant delays
may  occur  between  a product's initial introduction and commencement of volume
production.

     The   development  and  commercialization  of  new  products  involve  many
difficulties, including the following:

     *  the identification of new product opportunities;

     *  the  retention  and  hiring  of  appropriate  research  and  development
        personnel;

     *  the definition of the product's technical specifications;

     *  the successful completion of the development process;

     *  the successful  marketing of the product,  the risk of having  customers
        embrace new technological advances;

     *  additional customer service costs associated with supporting new product
        introductions; and

     *  additional customer service costs required for field upgrades.

     For  example,  we are currently in the process of releasing our new Digital
Workcell,  semiconductor  robots  and  Production  PILOT. These products include
significant   new   networking,   communications,   and  hardware  and  software
technology.  The  development of these products may not be completed in a timely
manner  and  these  products  may  not  achieve  acceptance  in  the market. The
development  of  these  products  has required, and will require, that we expend
significant  financial and management resources. If we are unable to continue to
successfully  develop  these  or  other  new  products  that respond to customer
requirements  or  technological  changes, our business and operating results may
be harmed.


Manufacturing

     Our manufacturing  activities include the assembly,  test and configuration
of our products.  We believe that by performing  these  operations we can better
ensure the  quality and  performance  of our  products.  We  outsource  low unit
volume,  low  value-added  manufacturing  operations,   including  standard  and
build-to-print  HERE IT  ISvolume,  low  value-added  manufacturing  operations,
including standard and build-to-print fabricated parts such as machinery,  sheet
metal  fabrication and assembled  printed  circuit  boards.  We also source some
robot  mechanisms.  The purchased  robot  mechanisms  are tested to meet defined
quality  standards and then configured  into complete  products which are tested
again prior to shipment to the customer.  This  strategy  enables us to leverage
product  development,  manufacturing  and management  resources  while retaining
greater  control over product  delivery,  final  product  configuration  and the
timing of new  product  introductions,  all of which  are  critical  to  meeting
customer expectations.

     Our  manufacturing  organization  has  expertise in mechanical, electrical,
electronic  and  software  assembly  and  test. In addition, because outstanding
quality  and  reliability  over  the  life  of  our products are key to customer
satisfaction  and customers' repeat purchases of automation products, we believe
our  quality  assurance  plans  and  organization are a key part of our business
strategy.  Our quality assurance organization develops detailed instructions for
all  manufacturing  and  test  operations. These instructions are established in
writing,  implemented  through  training  of  the  manufacturing  work force and
monitored  to assure compliance. In addition, our quality assurance organization
works closely with vendors


                                       12


<PAGE>

to  develop  instructions  and to remedy quality problems if they arise. We have
initiated  an  ISO  9002  certification  program which we intend to successfully
register by the third quarter of fiscal 2000.

     We   obtain   many  key  components  and  materials  and  some  significant
mechanical  subsystems from sole or single source suppliers with whom we have no
guaranteed  supply arrangements. In addition, some of our sole or single sourced
components  and  mechanical  subsystems incorporated into our products have long
procurement  lead  times.  Our  reliance  on  sole  or  single  source suppliers
involves several significant risks, including the following:

     *  loss of control over the manufacturing process;

     *  potential absence of adequate supplier capacity;

     *  potential inability to obtain an adequate supply of required components,
        materials or mechanical subsystems; and

     *  reduced  control over  manufacturing  yields,  costs,  timely  delivery,
        reliability   and  quality  of  components,   materials  and  mechanical
        subsystems.

     If  any significant sole or single source supplier were unable or unwilling
to  manufacture  our  components,  materials  or  mechanical  subsystems  in the
volumes  and  timeframes  we  require,  we  would  have  to identify and qualify
acceptable  replacements.  The  process  of qualifying suppliers may be lengthy,
and  additional  sources  may  not  be  available  to  us  on a timely basis, on
acceptable  terms, or at all. If supplies of these items were not available from
our  existing  suppliers and a relationship with an alternative vendor could not
be  developed in a timely manner, shipments of our products could be interrupted
and  we  could  be  required  to  reengineer  our products. In the past, we have
experienced  quality  control  or  specification  problems  with  key components
provided  by  sole source suppliers and have had to design around the particular
flawed  item.  We have also experienced delays in filling customer orders due to
the  failure of our suppliers to meet our volume and schedule requirements. Some
of  our  suppliers in the past have also ceased manufacturing components that we
require  for  our  products,  and  we  have been required to purchase sufficient
supplies  for the estimated life of our product line. Problems of this type with
our suppliers may occur in the future.

     Disruption or  termination  of our supply  sources could require us to seek
alternative  sources of supply and could delay our product  shipments and damage
relationships with current and prospective customers.  Any of these events could
result in an increase in our  expenses,  reductions  in our revenues and profits
and could result in net losses.  If we  incorrectly  forecast  product mix for a
particular  period  and we are  unable  to  obtain  sufficient  supplies  of any
components  or mechanical  subsystems on a timely basis due to long  procurement
lead times, our business and operating results would be substantially  impaired.
Moreover,  if demand for a product  for which we have  purchased  a  substantial
amount of  components  fails to meet our  expectations,  we would be required to
write off the excess inventory.  A prolonged inability to obtain adequate timely
deliveries of key components would also impair our business, financial condition
and results of operations.


Competition

     The  market  for  intelligent automation products is highly competitive. We
believe  that  the  principal  competitive  factors affecting the market for our
products are:

     *  product functionality and reliability;

     *  customer service;

     *  price; and

     *  product features such as flexibility, programmability and ease of use.

     We  compete  with  a  number  of robot companies, motion control companies,
machine  vision  companies  and  simulation  software  companies.  Many  of  our
competitors  have  substantially  greater  financial,  technical,  marketing and
other  resources  than  us.  In  addition, we may in the future face competition
from new entrants in one or more of our markets.

     Many  of  our  competitors in the robot market are integrated manufacturers
of  products  that  produce  robotics equipment internally for their own use and
may also compete with our products for sales to other


                                       13


<PAGE>

customers.  Some of these large manufacturing companies have greater flexibility
in  pricing  than  we  have  because  they  generate substantial unit volumes of
robots  for internal demand. They may have access through their parent companies
to  large  sources  of  capital. Any of our competitors may seek to expand their
presence in other markets in which we compete.

     Our  current  or  potential  competitors may develop products comparable or
superior  in  terms  of price and performance features to those developed by us.
They  may  also  adapt  more quickly than we can to new or emerging technologies
and  changes  in  customer  requirements. We may be required to make substantial
additional   investments   in   connection   with   our  research,  development,
engineering,  marketing  and  customer  service  efforts  in  order  to meet any
competitive  threat,  or  that  we  will  be able to compete successfully in the
future.  We  expect that in the event the intelligent automation market expands,
competition  in the industry will intensify, as additional competitors enter our
markets   and   current   competitors  expand  their  product  lines.  Increased
competitive  pressure  could result in a loss of sales or market share, or cause
us to lower prices for our products, any of which could harm our business.

     Our   principal   competitors   in  the  U.S.  robot  market  include  U.S.
subsidiaries  of  the  Japanese  companies Fanuc Ltd., Seiko Instruments, Yamaha
Corporation,  Sony Corporation, Sankyo Company Limited, and other Japanese robot
companies.  In  the  European  robot  market, we principally compete with Robert
Bosch  GmbH,  which  to  date has sold most of its products in Germany, and with
Fanuc,  Seiko,  Yamaha,  Sony,  Sankyo,  and  other  Japanese  companies. In the
Japanese  robot  market, over a dozen robot companies compete with us, including
Fanuc,  Nippon Denso, Panasonic Company, Sankyo, Seiko, Sony and Yamaha. Some of
these  large manufacturing companies have greater flexibility in pricing than we
have  because  they  generate  substantial  unit  volumes of robots for internal
demand  and  may  have access through their parent companies to large sources of
capital.   In   addressing   the  Japanese  market,  we  are  at  a  competitive
disadvantage  as compared to Japanese suppliers, many of whom have long-standing
collaborative   relationships  with  Japanese  manufacturers.  Because  of  this
competitive  disadvantage, we closed our Japanese subsidiary in the fall of 1998
and  now  operate  through  a  joint  venture  in  Japan.  Although we expect to
continue  to  invest significant resources in the Japanese market in the future,
we  may  not  be  able  to  achieve  significant  sales  growth  in the Japanese
intelligent automation market.

     Our  principal  competition in the semiconductor atmospheric wafer handling
and  contamination  control  market  comes  from  Asyst  Technologies,  Inc. The
majority  of  Asyst's revenue comes from adaptive Standard Mechanical Interface,
or  SMIF,  devices  sold  to  end  users.  They have been the leader in SMIF and
isolation  technology  in  the semiconductor industry. Additional competitors in
the  semiconductor  robot  market  are  Brooks  Automation,  Inc.  and Equipe, a
division of PRI Automation, Inc.

     Our  principal competitors in the market for motion control systems include
Allen-Bradley  Co.,  a  subsidiary of Rockwell International Corporation, in the
United  States,  and  Siemens  AG in Europe. In addition, we face motion control
competition  from  two  major  suppliers  of motion control boards, Galil Motion
Control,  Inc.  and Delta Tau Data Systems, Inc. These motion control boards are
purchased  by  end users which engineer their own custom motion control systems.
In   the   simulation   software   market  our  competitors  include  Tecnomatix
Technologies,  Inc.,  an  Israel-based  company  which  sells  mostly  to  major
automotive  manufacturers,  and  Deneb  Robotics  Inc., a subsidiary of Dassault
Systemes.  In  the  machine  vision  market,  we  face  competition  from Cognex
Corporation, and Robotic Vision Systems Inc.

     There  can  be  no assurance that our current or potential competitors will
not  develop  products  comparable or superior in terms of price and performance
features  to  those  developed by us or adapt more quickly than we can to new or
emerging  technologies  and  changes  in  customer requirements. In addition, no
assurance  can  be  given  that  we  will  not  be  required to make substantial
additional   investments   in   connection   with   our  research,  development,
engineering,  marketing  and  customer  service  efforts  in  order  to meet any
competitive  threat,  or  that  we  will  be able to compete successfully in the
future.  We  expect that in the event the intelligent automation market expands,
competition  in the industry will intensify, as additional competitors enter our
markets   and   current   competitors  expand  their  product  lines.  Increased
competitive  pressure  could result in a loss of sales or market share, or cause
us  to  lower  prices  for our products, any of which could materially adversely
affect our business, financial condition and results of operations.


                                       14


<PAGE>

ITEM 2. PROPERTIES

     Our  headquarters  and principal research and development and manufacturing
facilities  are  located  in a 92,448 square foot building we lease in San Jose,
California.  The  lease  expires  in December 2003 and provides for annual lease
payments  of  approximately  $1,165,000  in calendar year 1999 and $1,220,000 in
calendar  year  2000.  We  lease an additional 30,804 square feet in an adjacent
building  in  San  Jose for our SILMA division, which commenced in October 1998.
The  lease  expires  in  December 2003 and provides for annual lease payments of
approximately  $610,000  in  calendar  year  1999  and $636,000 in calendar year
2000.  We  have  entered  into  an agreement to sublease to a third party 20,387
square  feet  of the above lease. The sublease commenced in October 1998 and has
a  one  year  term  with  a  six month renewal option. The sublease provides for
receipts  of  approximately $420,000 in calendar year 1999, including the option
of  extending  the  lease  through  December  1999. We lease a 4,844 square foot
facility  in  City  of  Industry,  California  at which our software development
group  is  based. This lease expires in September 2001. We also lease a facility
in  Livermore,  California  consisting of 12,862 square feet that houses certain
research  and  development  activities  starting  from  October 1998. This lease
expires  in October 2003 and provides for annual lease payments of approximately
$166,000  and  $167,000 in calendar years 1999 and 2000, respectively. Under the
lease  agreement, we have a right of first refusal to lease an additional 12,862
square  feet  adjacent  to  the  current  facility. We also lease facilities for
sales  and  customer  training  in Southbury, Connecticut; Southfield, Michigan;
Cincinnati,  Ohio;  Massy,  France; Dortmund and Munich, Germany; Arezzo, Italy;
Kobe,  Japan (through our joint venture); Kenilworth, the United Kingdom; Seoul,
South Korea; and Singapore.

     Subsequent  to  June 30, 1999, our sublessee defaulted on its sublease. The
monthly  base  rent  under  the  sublease agreement was $34,658 to September 30,
1999  and  $36,085  until  December  31,  1999. We are evaluating our rights and
remedies relating to this matter.


ITEM 3. LEGAL PROCEEDINGS

     From  time  to  time,  we are party to various legal proceedings or claims,
either  asserted  or  unasserted,  which  arise  in  the  ordinary course of our
business.  Management  has  reviewed  pending  legal  matters and, except to the
extent  set  forth  below, believes that the resolution of such matters will not
have  a material adverse effect on our business, financial condition, or results
of operations.

     Some  end  users of our products have notified us that they have received a
claim  of  patent  infringement from the Jerome H. Lemelson Foundation, alleging
that  their  use of our machine vision products infringes certain patents issued
to  Mr. Lemelson. In addition, we have been notified that other end users of our
AdeptVision  VME  line  and  the  predecessor  line  of  Multibus machine vision
products  have  received letters from Mr. Lemelson which refer to Mr. Lemelson's
patent  portfolio  and  offer  the end user a license to the particular patents.
Certain  end  users  have notified us that they may seek indemnification from us
for  damages  or  expenses  resulting  from  this  matter. We cannot predict the
outcome  of  this or any similar litigation which may arise in the future. There
can  be  no  assurance  that  such  litigation  will not have a material adverse
effect on our business, financial condition or results of operations.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     Not Applicable.

                                       15


<PAGE>

<TABLE>
ITEM 4A. EXECUTIVE OFFICERS

     Our executive officers of the Company are as follows:

<CAPTION>
            Name             Age                          Position
---------------------------- -----   -----------------------------------------------------
<S>                          <C>     <C>
Brian R. Carlisle  .........  48     Chairman of the Board of Directors and Chief
                                     Executive Officer
Bruce E. Shimano   .........  50     Vice President, Research and Development, Secretary
                                     and Director
Marcy R. Alstott   .........  42     Vice President, Operations
Richard J. Casler, Jr.   ...  47     Vice President, Engineering
Charles S. Duncheon   ......  48     Senior Vice President, Marketing and Sales
Kathleen M. Fisher    ......  44     Vice President, Finance and Chief Financial Officer
</TABLE>

     Brian  R.  Carlisle  has served as our Chief Executive Officer and Chairman
of  the  Board  of  Directors since he co-founded the Company in June 1983. From
June  1980 to June 1983, he served as General Manager and from June 1977 to June
1980,  he  served  as  project  manager of the West Coast Division of Unimation,
Inc.  ("Unimation"),  where  he  was  responsible  for  new product strategy and
development  for  Unimation's  electric robots, control systems, sensing systems
and  other  robotics  applications.  Mr. Carlisle received a B.S. and an M.S. in
mechanical engineering from Stanford University.

     Bruce   E.   Shimano  has  served  as  our  Vice  President,  Research  and
Development  and  a director since he co-founded the Company in June 1983. Prior
to  that time, he was Director of Software Development at Unimation. Mr. Shimano
received  a  B.S.,  an  M.S. and a Ph.D. in mechanical engineering from Stanford
University.

     Marcy  R.  Alstott  joined  Adept  Technology  in  March  of  1998  as Vice
President  of  Operations. From August 1995 to March 1998, Ms. Alstott served as
Program   Director   responsible  for  switching  product  development  at  3Com
Corporation,  a  networking  company.  Ms.  Alstott  served  as  the Director of
Manufacturing  Engineering  responsible  for  technical  operations  at  Chipcom
Corporation,  a  networking company, from May 1994 to August 1995. Prior to that
time,  from  May  1979  to May 1994, Ms. Alstott served in various capacities at
Hewlett-Packard  Company,  most recently as Materials Manager. Ms. Alstott has a
B.S.  in  mechanical  engineering  from Purdue University, an M.S. in mechanical
engineering  from Stanford University and an M.B.A. from the University of Santa
Clara.

     Richard  J.  Casler,  Jr.  has  served as our Vice President of Engineering
since  April  1993 and from October 1992 to March 1993 served as our Director of
Robot  Interface  Development.  In  October  1986, Mr. Casler co-founded Genesis
Automation,  Inc.,  a  developer  of  robots  and  automation  for  the  service
industry,  and  served as its president until October 1992. From October 1981 to
October  1986, Mr. Casler was manager of product development at Unimation and at
Unimation's  parent  company,  Westinghouse  Electric  Corporation.  Mr.  Casler
received  a  B.S.  and  an M.S. in mechanical engineering from the Massachusetts
Institute of Technology.

     Charles  S.  Duncheon  has served as our Senior Vice President of Marketing
and  Sales  since  September  1988.  From May 1984 to May 1987, he served as our
General  Sales  Manager and from May 1987 to September 1988 as Vice President of
North  American  Sales.  Prior  to  that  time,  Mr.  Duncheon served in various
marketing  positions  with  Fared  Robot  Systems, Inc., a robot company, and in
various  engineering  and  manufacturing  positions  at Monsanto Corporation, an
international  chemicals  company.  Mr.  Duncheon  received a B.S. in industrial
engineering  from  Purdue  University  and  an  M.B.A.  from  Southern  Illinois
University. Mr. Duncheon is a registered professional engineer.

     Kathleen  M.  Fisher has served as our Vice  President,  Finance  and Chief
Financial  Officer since August 1999.  From April 1997 to April 1999, Ms. Fisher
served as Chief Financial Officer,  Treasurer,  and Vice President of Operations
of Inprise Corp. (formerly Borland  International Inc.). Prior to that time, Ms.
Fisher held positions of Chief Financial Officer, Vice President of Finance, and
Treasurer  for  Softbank   Content   Services,   a  privately   held,   software
publishing/management  and  replication  company.  Ms. Fisher received an M.B.A.
from the University of Southern California and a B.S. in Business Administration
from the University of Redlands.


                                       16


<PAGE>

                                    PART II


<TABLE>
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
        SHAREHOLDER MATTERS

     Our  common  stock  has been traded on the Nasdaq National Market under the
symbol  ADTK  since  our  initial  public  offering  on  December  15, 1995. The
following  table  reflects  the range of high and low sale prices as reported on
the Nasdaq National Market for the quarters ended:


<CAPTION>
                                                         Three Months Ended
                -----------------------------------------------------------------------------------------------------
                Jun. 30,     Mar. 31,     Dec. 31,     Sep. 30,     Jun. 30,     Mar. 31,     Dec. 31,     Sep. 30,
                  1999         1999         1998         1998         1998         1998         1997         1997
                ----------   ----------   ----------   ----------   ----------   ----------   ----------   ----------
<S>             <C>          <C>          <C>          <C>          <C>          <C>          <C>          <C>
High   ......     $ 10.50      $ 8.50       $ 8.50       $ 8.00       $ 12.00      $ 15.75      $ 16.13      $ 14.50
Low    ......     $  6.00      $ 6.00       $ 4.25       $ 4.75       $  7.00      $  9.25      $  7.69      $  8.63
</TABLE>

     At  June  30, 1999, there were approximately 348 shareholders of record. To
date,  we  have neither declared nor paid cash dividends on shares of our common
stock.  We  currently  intend  to  retain  all  future earnings, if any, for our
business  and do not anticipate paying cash dividends on our common stock in the
foreseeable future.


Recent Sales of Unregistered Securities

     In  July  1999,  we issued 720,008 shares of our common stock in connection
with  our  acquisition  of  BYE/Oasis Engineering, Inc., a Texas corporation. We
issued   these  shares  in  reliance  on  an  exemption  from  the  registration
requirements  of  the Securities Act of 1933 contained in Regulation D under the
Securities  Act.  We also granted the former shareholders of BYE/Oasis the right
to  require  us to register for resale up to 350,000 of the shares issued in the
aquisition.


                                       17


<PAGE>

<TABLE>
ITEM 6. SELECTED FINANCIAL DATA

<CAPTION>
                                                                        Year Ended June 30,
                                                  ---------------------------------------------------------------
                                                    1999         1998         1997        1996          1995
                                                  ----------   ----------   ----------   ---------   ------------
                                                               (in thousands, except per share data)
<S>                                               <C>          <C>          <C>          <C>         <C>
Results of Operations:
Net revenues  .................................    $ 82,027     $ 98,394     $ 82,767     $81,572      $59,069
                                                   ---------    ---------    ---------    --------     -------
Cost of revenues    ...........................      44,255       56,503       48,761      46,812       34,788
                                                   ---------    ---------    ---------    --------     -------
   Gross margin  ..............................      37,772       41,891       34,006      34,760       24,281
                                                   ---------    ---------    ---------    --------     -------
Operating expenses:
   Research, development and
    engineering  ..............................      11,063       10,731        9,016       8,098        6,598
   Selling, general and administrative   ......      23,296       25,150       21,628      20,201       14,722
   Restructuring and other nonrecurring
    charges (3)  ..............................         --         2,756          --          --           --
   Acquired in-process research and
    development (1)    ........................         --           --           --          --         2,972
                                                   ---------    ---------    ---------    --------     -------
Total operating expenses  .....................      34,359       38,637       30,644      28,299       24,292
                                                   ---------    ---------    ---------    --------     -------
Operating income (loss)   .....................       3,413        3,254        3,362       6,461          (11)
Interest income, net   ........................         958          998          704         496          440
                                                   ---------    ---------    ---------    --------     -------
Income before provision for income taxes              4,371        4,252        4,066       6,957          429
Provision for (benefit from) income taxes             1,749        1,701        1,309       1,180         (496)
                                                   ---------    ---------    ---------    --------     -------
Net income    .................................    $  2,622     $  2,551     $  2,757     $ 5,777      $   925
                                                   =========    =========    =========    ========     =======
Net income per share (2):
   Basic   ....................................    $    .31     $    .30     $    .34     $   .83      $   .16
                                                   =========    =========    =========    ========     =======
   Diluted    .................................    $    .30     $    .29     $    .33     $   .75      $   .15
                                                   =========    =========    =========    ========     =======
Number of shares used in computing per
 share amounts (2):
   Basic   ....................................       8,590        8,455        8,062       7,003        5,635
                                                   =========    =========    =========    ========     =======
   Diluted    .................................       8,688        8,923        8,442       7,736        6,379
                                                   =========    =========    =========    ========     =======



                                                                            June 30,
                                                  ---------------------------------------------------------------
                                                    1999         1998         1997         1996         1995
                                                  ----------   ----------   ----------   ---------   ------------
                                                                         (in thousands)
Balance Sheet Data:
Cash, cash equivalents and short-term
 investments  .................................      26,920       20,903     $ 18,467     $10,975      $ 8,812
Working capital  ..............................      47,561       45,474       38,931      35,030       19,757
Total assets  .................................      69,695       67,958       59,493      56,352       38,371
Long-term liabilities  ........................         --           --           --           26          117
Total shareholders' equity   ..................      54,567       52,669       47,094      42,823       25,678
<FN>

------------
(1) In  June  1995  we acquired SILMA Incorporated and incurred a charge of $3.0
    million  for  acquired  in-process  research  and  development in connection
    with this purchase.

(2) See  Notes  1  and  8  of  Notes  to Consolidated Financial Statements for a
    discussion of the computation of net income per share.

(3) During  1998,  we  recorded  restructuring and other nonrecurring charges of
    approximately  $2.8  million.  See Note 1 of Notes to Consolidated Financial
    Statements.

</FN>
</TABLE>

                                       18


<PAGE>

<TABLE>
Quarterly Results of Operations (Unaudited)

     We operate and report  financial  results  ending on the last Saturday of a
thirteen week period for each of our first three fiscal  quarters and at June 30
for our fiscal  year end.  For  convenience,  we have  indicated  in this Annual
Report  on Form  10-K our  fiscal  quarters  end on March  31,  December  31 and
September 30.

<CAPTION>
                                                      Three Months Ended,
                                          -------------------------------------------
                                           Jun. 30,   Mar. 31,   Dec. 31,   Sep. 30,
                                             1999       1999       1998       1998
                                          ---------- ---------- ---------- ----------
                                             (in thousands, except per share data)
<S>                                       <C>        <C>        <C>        <C>
Net revenues  ........................... $ 22,061   $ 20,371   $ 19,398   $ 20,197
Cost of revenues    .....................   11,658     10,832     10,469     11,296
                                          --------   --------   --------   --------
Gross margin  ...........................   10,403      9,539      8,929      8,901
                                          --------   --------   --------   --------
Operating expenses:
  Research, development and
   engineering   ........................    3,094      2,807      2,691      2,471
  Selling, general and administrative   .    6,322      5,861      5,454      5,659
  Restructuring and other
   nonrecurring charges(1)   ............       --        --         --         --
                                          --------   --------   --------   --------
Total operating expenses  ...............    9,416      8,668      8,145      8,130
                                          --------   --------   --------   --------
Operating income (loss)   ...............      987        871        784        771
Interest income, net   ..................      280        230        233        215
                                          --------   --------   --------   --------
Income (loss) before provision for
 income taxes ...........................    1,267      1,101      1,017        986
Provision for (benefit from) income
 taxes  .................................      507        441        407        394
                                          --------   --------   --------   --------
Net income (loss)   ..................... $    760   $    660   $    610   $    592
                                          ========   ========   ========   ========
Net income (loss) per share:
  Basic    .............................. $    .09   $    .08   $    .07   $    .07
                                          ========   ========   ========   ========
  Diluted  .............................. $    .09   $    .08   $    .07   $    .07
                                          ========   ========   ========   ========
Number of shares used in computing
 per share amounts:
  Basic    ..............................    8,633      8,511      8,559      8,655
                                          ========   ========   ========   ========
  Diluted  ..............................    8,782      8,630      8,633      8,706
                                          ========   ========   ========   ========
As a Percentage of Net Revenues:   ......
Net revenues  ...........................   100.0 %    100.0 %    100.0 %    100.0 %
Cost of revenues    .....................    52.8       53.2       54.0       55.9
                                          --------   --------   --------   --------
Gross margin  ...........................    47.2       46.8       46.0       44.1
                                          --------   --------   --------   --------
Operating expenses:
  Research, development and
   engineering   ........................    14.0       13.8       13.9       12.2
  Selling, general and administrative   .    28.7       28.7       28.1       28.0
  Restructuring and other
   nonrecurring charges   ...............      --        --         --         --
                                          --------   --------   --------   --------
Total operating expenses  ...............    42.7       42.5       42.0       40.2
                                          --------   --------   --------   --------
Operating income (loss)   ...............     4.5        4.3        4.0        3.9
Interest income, net   ..................     1.3        1.1        1.2        1.0
                                          --------   --------   --------   --------
Income (loss) before provision for
 income taxes ...........................     5.8        5.4        5.2        4.9
Provision for (benefit from) income
 taxes  .................................     2.3        2.2        2.1        2.0
                                          --------   --------   --------   --------
Net income (loss)   .....................     3.5 %      3.2 %      3.1 %      2.9 %
                                          ========   ========   ========   ========
</TABLE>
<TABLE>
<CAPTION>

                                           Jun. 30,    Mar. 31,   Dec. 31,    Sep. 30,
                                             1998        1998       1997        1997
                                          ----------- ---------- ---------- ------------
<S>                                       <C>         <C>        <C>         <C>
Net revenues  ........................... $ 22,279    $ 23,669   $ 26,464    $ 25,982
Cost of revenues    .....................   13,142      13,445     14,945      14,971
                                          ----------- --------   --------    --------
Gross margin  ...........................    9,137      10,224     11,519      11,011
                                          ----------- --------   --------    --------
Operating expenses:
  Research, development and
   engineering   ........................    3,055       2,647      2,647       2,382
  Selling, general and administrative   .    5,788       6,284      6,499       6,579
  Restructuring and other
   nonrecurring charges(1)   ............    2,081         --         675         --
                                          ----------- --------   --------    --------
Total operating expenses  ...............   10,924       8,931      9,821       8,961
                                          ----------- --------   --------    --------
Operating income (loss)   ...............   (1,787)      1,293      1,698       2,050
Interest income, net   ..................      253         259        230         256
                                          ----------- --------   --------    --------
Income (loss) before provision for
 income taxes ...........................   (1,534)      1,552      1,928       2,306
Provision for (benefit from) income
 taxes  .................................     (614)        621        771         923
                                          ----------- --------   --------    --------
Net income (loss)   ..................... $   (920)   $    931   $  1,157    $  1,383
                                          =========== ========   ========    ========
Net income (loss) per share:
  Basic    .............................. $   (.11)   $    .11   $    .14    $    .17
                                          =========== ========   ========    ========
  Diluted  .............................. $   (.11)   $    .10   $    .13    $    .16
                                          =========== ========   ========    ========
Number of shares used in computing
 per share amounts:
  Basic    ..............................    8,679       8,499      8,375       8,265
                                          =========== ========   ========    ========
  Diluted  ..............................    8,679       8,949      8,961       8,829
                                          =========== ========   ========    ========
As a Percentage of Net Revenues:   ......
Net revenues  ...........................    100.0%     100.0 %    100.0 %     100.0 %
Cost of revenues    .....................     59.0       56.8       56.5        57.6
                                          ----------- --------   --------    --------
Gross margin  ...........................     41.0       43.2       43.5        42.4
                                          ----------- --------   --------    --------
Operating expenses:
  Research, development and
   engineering   ........................     13.7       11.2       10.0         9.2
  Selling, general and administrative   .     26.0       26.5       24.6        25.3
  Restructuring and other
   nonrecurring charges   ...............      9.3         --        2.5          --
                                          ----------- --------   --------    --------
Total operating expenses  ...............     49.0       37.7       37.1        34.5
                                          ----------- --------   --------    --------
Operating income (loss)   ...............     (8.0)       5.5        6.4         7.9
Interest income, net   ..................      1.1        1.1        0.9         1.0
                                          ----------- --------   --------    --------
Income (loss) before provision for
 income taxes ...........................     (6.9)       6.6        7.3         8.9
Provision for (benefit from) income
 taxes  .................................     (2.8)       2.6        2.9         3.6
                                          ----------- --------   --------    --------
Net income (loss)   .....................     (4.1)%      4.0 %      4.4 %       5.3 %
                                          =========== ========   ========    ========

<FN>
------------
(1) During  the  fourth  quarter  of fiscal year 1998, we recorded restructuring
    and  other  nonrecurring  charges  of approximately $2.8 million. See Note 1
    of Notes to Consolidated Financial Statements.
</FN>
</TABLE>


                                       19


<PAGE>

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

     This  report  contains  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.  These  forward-looking  statements are subject to certain
risks and  uncertainties  that could cause actual  results to differ  materially
from historical results or anticipated results,  including those set forth under
"Factors  Affecting  Future  Results"  beginning on page 24 and elsewhere in, or
incorporated by reference into, this report.


OVERVIEW

     We  design,  manufacture  and  market  intelligent  automation software and
hardware  products  for  assembly, material handling and packaging applications.
Our  products  currently  include  machine  controllers for robot mechanisms and
other   flexible   automation  equipment,  machine  vision  systems,  simulation
software   and   a  family  of  mechanisms  including  robots,  linear  modules,
vision-based  flexible  part  feeders,  as  well as a line of Cartesian scalable
robots  targeted  for  the  electronics  and  assembly  applications markets. In
recent  years,  we  have expanded our robot product lines and developed advanced
software  and  sensing  technologies that have enabled robots to perform a wider
range  of  functions. Most recently, we announced a new line of robots expressly
designed  for  use  in  the  semiconductor  fabrication  industry.  We have also
expanded  our  channel  of  system  integrators  and our international sales and
marketing  operations.  As  a  result  of  these  developments,  the  nature and
composition  of  our  revenues  have  changed  over time. Specifically, software
license  and  service  revenues,  although  still relatively insignificant, have
increased   as   a   percentage   of  total  revenues  in  recent  periods,  and
international sales comprise a significant portion of our revenues.

     We sell our products through system integrators, our direct sales force and
original  equipment  manufacturers  ("OEMs").  System  integrators  and OEMs add
application-specific  hardware and software to our products, thereby enabling us
to provide solutions to a diversified  industry base, including the electronics,
telecommunications,  semiconductor,  appliances, pharmaceutical, food processing
and automotive components industries.  Due to a worldwide slowdown in our served
markets, our net revenues have declined in four of the last six fiscal quarters.
Although our net revenues  increased in the third and fourth  quarters of fiscal
1999  compared to the  respective  preceding  quarters,  our net revenues in the
third and fourth  quarters of fiscal  1999  remained  below the same  respective
periods a year ago. Accordingly, our historical results of operations should not
be relied upon as an indication of future  performance.  We do not know when, or
if, a sustainable recovery in our product markets will occur.

     In  July  1999,  we  acquired  BYE/Oasis Engineering, Inc. ("BYE/Oasis"), a
leading  manufacturer  of  mini  and  micro  environment  systems  and  Standard
Mechanical  Interface  ("SMIF")  for  the microelectronics industry. We acquired
BYE/Oasis  through the issuance of 720,008 shares of our common stock which were
exchanged  for  all  of  the  common stock of BYE/Oasis. In addition, we assumed
options  to  purchase  an aggregate of 185,361 shares of our common stock in the
acquisition.  We  intend  to  account  for  the  acquisition  as  a  pooling  of
interests.

     This   discussion   summarizes   the   significant  factors  affecting  our
consolidated  operating  results,  financial  condition, liquidity and cash flow
during  the  three  year period ended June 30, 1999 (i.e., fiscal 1999, 1998 and
1997).  Unless  otherwise indicated, references to any year in this Management's
Discussion  and  Analysis  of Financial Condition and Results of Operation refer
to  our fiscal year ended June 30. This discussion should be read in conjunction
with  the  consolidated  financial  statements and financial statement footnotes
included in this Annual Report on Form 10-K.


Results of Operations


  Comparison of 1999 to 1998

     Net  Revenues. Our net revenues decreased by 16.6% to $82.0 million in 1999
from  $98.4  million  in  1998.  The  decrease in net revenues for 1999 over the
prior  year  was  primarily  due to decreased product sales, including robot and
motion  controller sales, decreased service and upgrade revenues, offset in part


                                      20


<PAGE>

by increased software revenue, primarily from our SILMA products. Revenue growth
slowed  substantially  beginning in the second half of 1998 as a result of lower
sales  to  the  computer  disk-drive,   telecommunications,   semiconductor  and
electronics   industries.   Additionally,   while  our  direct  sales  into  the
Asian-Pacific HERE IT ISelectronics industries.  Additionally,  while our direct
sales into the Asian-Pacific region have been relatively  insignificant to date,
the widely  reported  economic  instability  in that region  during  fiscal 1998
adversely   affected   certain   domestic  and  OEM   customers  who  saw  their
Asian-Pacific  revenues  decline.  These revenue declines  continued into fiscal
1999 and were seen  throughout the markets and industries we serve.  Although we
experienced  some  improvement in our markets in the second half of fiscal 1999,
we cannot  estimate when or if a sustained  revival in our key hardware  markets
will occur.

     International  sales,  including  sales  to  Canada  and export sales, were
$41.2  million  or 50.2% of net revenues in 1999, as compared with $39.8 million
or  40.5%  of net revenues in 1998. International sales as a percentage of total
net  revenues have increased due to the greater relative decline in our domestic
sales  in  fiscal  1999  as  compared  to  the prior year. Because international
revenues  constitute a significant portion of our net revenues, adverse economic
conditions  or  instability  in foreign markets where we operate directly can be
expected  to  have  an adverse effect on our revenues and results of operations.
In   addition,   and   as  noted  above,  fluctuations  in  economic  conditions
internationally  can  also affect our revenues, including domestic revenues, and
operating  results  indirectly  to the extent significant customers (or industry
segments  on  which  we  are  significantly  dependent)  are  affected  by  such
international fluctuations.

     Gross  Margin. Gross  margin  was  46.0% in 1999 compared to 42.6% in 1998.
The  increase  in  gross margin percentage was primarily attributable to reduced
sales  of  lower margin hardware products, and to a lesser extent, to relatively
higher  margin  software  revenue and cost reductions on our products. We expect
that  we will continue to experience fluctuations in gross margin percentage due
to changes in our sales and product mix.

     Research,  Development and Engineering Expenses. Research,  development and
engineering expenses increased by 3.1% to $11.1 million or 13.5% of net revenues
in 1999 from $10.7 million or 10.9% of net revenues in 1998. The absolute dollar
increase in expenses in 1999 was primarily  due to increases in  facilities  and
information  system related  expenses  ($272,000),  offset by decreased  project
material  spending   ($159,000),   and  travel  expenses  ($85,000).   Research,
development and engineering  expenses in 1999 were partially  offset by $681,000
of third  party  development  funding as compared  with  $629,000 of third party
development  funding  in 1998.  We expect to  continue  to receive  third  party
development  funding from the federal  government as well as other third parties
during 2000 but that such funding  will be less than  funding  received in 1999.
However,  any funds  budgeted by the  government  or other third parties for our
development projects may be curtailed or eliminated at any time.

     Selling,   General   and   Administrative  Expenses. Selling,  general  and
administrative  expenses  decreased  7.4%  to  $23.3  million  or  28.4%  of net
revenues  in  1999  from  $25.2  million  or  25.6% of net revenues in 1998. The
decreased  level  of  spending  was primarily attributable to the closure of our
Japanese  office  ($805,000),  lower  compensation  related  expenses, including
commissions  ($256,000),  and  to  a  lesser  extent,  to  lower travel expenses
($108,000),  reduced  foreign  currency  losses  on  balance sheet remeasurement
($230,000),  and  partially offset by an increase in outside consulting services
($410,000).  The  increase  in selling, general and administrative expenses as a
percentage  of  total  net revenues was due to the relative decline in the level
of  net  revenues.  We  expect that selling, general and administrative expenses
will continue to fluctuate as a percentage of net revenues in future periods.

     Restructuring   and  Other  Nonrecurring  Charges. We  did  not  incur  any
restructuring  or  other  nonrecurring charges in 1999. During 1998, we recorded
restructuring  charges  of  approximately  $1.0  million  and other nonrecurring
charges  of  approximately  $1.7  million.  The  restructuring  charges  of $1.0
million  included  $651,000  for  relinquishing  control  of our branch in Japan
which  resulted in the write-off of certain assets and excess facilities. We now
operate  in  Japan through a joint venture in which we have a minority interest.
The  remaining  $362,000  relates  to  severance  for the termination of certain
employees.

     The  nonrecurring  charges  of approximately $1.7 million included $675,000
for  non-cash  compensation expenses related to our employee stock purchase plan
(see  Note 1 of Notes to Consolidated Financial Statements) and $383,000 related
to the write off of certain information system hardware and software


                                       21


<PAGE>

which  had  become  obsolete. Additionally, $413,000 related to the write off of
the  remaining  balance  of  capitalized  purchased software associated with the
acquisition  of SILMA. Due to technological changes in 1998 related to the SILMA
operating  platform,  we  determined  the  net realizable value of the purchased
software was impaired.

     We  reported  the  charge  of $675,000 in the second quarter of fiscal 1998
for  compensation  expense  related  to  the Emerging Issues Task Force ("EITF")
Issue  No.  97-12,  "Accounting  for  Increased  Share  Authorizations in an IRS
Section  423  Employee  Stock Purchase Plan under APB Opinion No. 25, Accounting
for  Stock  Issued  to  Employees"  which  was approved by the EITF in September
1997.  This nonrecurring, non-cash charge represented the difference between 85%
of  the  fair  market  value of common stock on the date of the beginning of the
offering  period  and  the  fair  market  value  of common stock on the date the
shareholders   approved   the   increase  in  shares  authorized  for  issuance,
multiplied  by  the  number  of  shares in the 1995 Employee Stock Purchase Plan
("1995  ESPP")  that  had  been  subscribed  for  purchase by employees, but not
authorized  by  the  shareholders,  prior  to  the  Company's  Annual Meeting of
Shareholders.  Shareholder  approval  was granted to make available for issuance
an additional 500,000 shares under the 1995 ESPP on October 31, 1997.

     We  completed  our  restructuring  plan  and other nonrecurring activity in
fiscal  1999  and do not have any amounts accrued for these items as of June 30,
1999.

     Interest  Income,  Net. Interest  income, net in 1999 was $958,000 compared
to  $998,000  in  1998.  The  decrease  was  primarily  as  a result of a higher
concentration  of  tax  advantaged  investments  yielding  lower  gross interest
income.

     Provision  for  Income Taxes. Our effective tax rate for both 1999 and 1998
was  40%.  Our  tax  rates  for  1999 and 1998 differ from the federal statutory
income  tax  of  34%  primarily  due  to  unbenefited foreign losses and foreign
taxes, partially offset by the benefits of federal and state tax credits.

     Derivative  Financial  Instruments. Our  product  sales  are  predominantly
denominated  in  U.S. dollars. However, certain international operating expenses
are  predominately  paid in their respective local currency. We generally do not
hedge  our  exposure  to  foreign  currency  exchange  risk on local operational
expenses  and  revenues.  Although we believe that unhedged risk associated with
foreign  currency  fluctuations for those transactions have not been material to
date,  there  can be no assurance that such risk will not become material in the
future  or that we will not incur foreign exchange transaction losses which will
have  an  adverse  effect  on our results of operations. We make yen-denominated
purchases   of  certain  components  and  mechanical  subsystems  from  Japanese
suppliers.  Based  on  the  amount  of  such  purchases,  current  exchange rate
fluctuations  would  not typically be expected to result in material unfavorable
foreign  exchange  transactions included in cost of revenues. From time to time,
we  manage the currency risk associated with the yen-denominated purchases using
forward  rate  currency  contracts.  We  had  no  outstanding  foreign  exchange
contracts at June 30, 1999.


  Comparison of 1998 to 1997

     Net  Revenues. Our net revenues increased by 18.9% to $98.4 million in 1998
from  $82.8  million in 1997. The growth in net revenues for 1998 over the prior
year  was  primarily  due to increased product sales, including robot and motion
controller   sales,  and  increased  service  and  upgrade  revenues,  including
revenues  from  our  Rapid  Deployment  Automation ("RDA") Services group, which
provides  engineering  contract services. Revenue growth slowed substantially in
the  second  half of 1998 relative to the prior six month period, primarily as a
result   of   lower   sales  to  the  computer  disk-drive,  telecommunications,
semiconductor  and  electronics industries. Additionally, while our direct sales
into  the  Asian-Pacific  region have been relatively insignificant to date, the
widely  reported  economic  instability  in  that  region  has  affected certain
domestic  and  OEM customers who have seen their Asian-Pacific revenues decline.
This  was  a  leading cause in our declining revenue for the second half of 1998
relative  to the prior six month period. International sales, including sales to
Canada,  were  $39.8  million or 40.5% of net revenues in 1998, as compared with
$29.6 million or 35.8% of net revenues in 1997.

     Gross  Margin. Gross  margin  was  42.6% in 1998 compared to 41.1% in 1997.
The  increase  in gross margin percentage was primarily attributable to improved
margins on mechanism systems sales as a result


                                       22


<PAGE>

of  increased  sales  of  higher  margin  products  and,  to a lesser extent, to
increased  service  and  upgrade  revenues,  including  our  new RDA engineering
contract  services.  We  expect  to continue to experience fluctuations in gross
margin percentage due to changes in our sales and product mix.

     Research,  Development  and Engineering Expenses. Research, development and
engineering  expenses  increased  by  19.0%  to  $10.7 million in 1998 from $9.0
million  in  1997.  As  a  percentage of net revenues, research, development and
engineering  expenses  remained  at  10.9%  in  both 1998 and 1997. The absolute
dollar  increase  in  expenses  in  1998  was  primarily  due  to  increases  in
compensation  related expenses ($765,000), including consulting expenses and, to
a  lesser extent, to increases in facilities information system related expenses
($483,000),  increased  project  material spending ($171,000) and to lower third
party  development  funding.  Research,  development and engineering expenses in
1998  were  partially  offset  by $629,000 of third party development funding as
compared with $767,000 of third party development funding in 1997.

     Selling,   General   and   Administrative  Expenses. Selling,  general  and
administrative  expenses  increased  16.3%  to  $25.2  million  or  25.6% of net
revenues  in  1998  from  $21.6  million  or  26.1% of net revenues in 1997. The
increased  level  of  spending was primarily attributable to increased headcount
and  compensation  related  expenses  ($2.9 million) and, to a lesser extent, to
higher  travel  expenses  ($467,000)  and  information  system  related expenses
($314,000).

     Interest  Income,  Net. Interest  income, net in 1998 was $998,000 compared
to  $704,000  in  1997.  The  increase  was  due  to  higher levels of available
invested  funds  generated  primarily from operating and financing activities as
well as higher investment yields in 1998.

     Provision  for  Income  Taxes. Our  effective  tax  rate  for  1998 was 40%
compared  to  32%  for  1997.  Our  tax  rates for 1998 and 1997 differ from the
federal  statutory  income  tax  rate  of  34%  primarily due to the unbenefited
foreign  losses  and  foreign taxes, partially offset by the benefits of federal
and state tax credits.


Impact of Inflation

     The  effect  of  inflation  on  our business and financial position has not
been significant to date.


Liquidity and Capital Resources

     As  of  June  30,  1999,  we  had  working  capital  of approximately $47.3
million,  including $11.7 million in cash and cash equivalents and $15.2 million
in short-term investments.

     Our  cash  requirements  during  the  year  ended  June  30,  1999 were met
primarily  through  cash  provided  by  operations.  Cash,  cash equivalents and
investments  increased  $6.0 million from June 30, 1998 primarily as a result of
$9.2  million  of  cash  generated  from  operating  activities,  offset by $2.2
million  of  net  expenditures  for  property  and  equipment, and approximately
$900,000 in financing activities.

     Net  cash  provided  by  operating activities was primarily attributable to
net  income  adjusted  by depreciation and amortization, decreased inventory and
accounts  receivable. Financing activities consisted of the repurchase of common
stock  offset  by  proceeds  from  employee  stock option incentive and purchase
plans.

     In  August  1998,  the Board of Directors authorized us to repurchase up to
450,000  shares  of  our  common  stock  on  the  open  market  or  in privately
negotiated  transactions  at  prices  not  to exceed $8.50 per share and a total
purchase  price not to exceed $3,825,000. We completed the repurchase of 450,000
shares  at  an average price of $7.10 per share in the first and second quarters
of fiscal 1999.

     We  currently anticipate capital expenditures of approximately $3.0 million
in 2000.

     We  believe  that the existing cash and cash equivalent balances as well as
short-term  investments  and  anticipated  cash  flow  from  operations  will be
sufficient  to  support  our  working capital requirements for at least the next
twelve  months.  Thereafter,  we  may  require  additional  funds to support our
working  capital  requirements  or for other purposes and may seek to raise such
additional  funds  through  public  or  private  equity  financing or from other
sources.  There  can be no assurance that additional financing will be available
at  all  or  that  if  available,  such  financing  will  be obtainable on terms
favorable to us.


                                       23


<PAGE>

New Accounting Pronouncements

     In  June 1998, the Financial Accounting Standards Board issued Statement of
Financial  Accounting  Standards No. 133, "Accounting for Derivative Instruments
and  Hedging  Activities:  ("SFAS  133").  SFAS 133 provides a comprehensive and
consistent  standard  for  the  recognition  and  measurement of derivatives and
hedging  activities.  SFAS  133  was  to be effective for fiscal years beginning
after  June  15, 1999. However, in July 1999, the Financial Accounting Standards
Board  issued  Statement  of Financial Accounting Standards No. 137, "Accounting
for  Derivative  Instruments  and  Hedging Activities--Deferral of the Effective
Date  of  FASB Statement No. 133" ("SFAS 137"). SFAS 137 defers for one year the
effective  date  of  SFAS 133 which will now apply to all fiscal quarters of all
fiscal  years  beginning  after June 15, 2000. We have not concluded whether the
adoption  of  SFAS 133 will have a material impact on our consolidated financial
position, results of operations or cash flows.

     In  March  1998,  the  American  Institute  of Certified Public Accountants
issued  Statement  of  Position  98-1 ("SOP 98-1"), "Accounting for the Costs of
Computer  Software  Developed  or  Obtained for Internal Use." SOP 98-1 provides
guidance  on accounting for the costs of computer software developed or obtained
for  internal  use.  The  SOP  is  effective for financial statements for fiscal
years  beginning after December 15, 1998. We have concluded adoption of this SOP
will  not have a material impact on our consolidated financial position, results
of operations or cash flows.


FACTORS AFFECTING FUTURE OPERATING RESULTS

You  should  not  rely  on  our  past  results to predict our future performance
because our operating results may fluctuate.

     Our  historical  operating  results may not be accurate  indicators  of our
future  performance.  Our  revenues and  operating  results have been subject to
significant quarterly and annual fluctuations in the past, and we expect this to
continue  in the future.  The factors  that may  contribute  to these  quarterly
fluctuations in the future include:

     *  fluctuations in capital spending domestically and internationally in one
        or more industries in which we sell our products;

     *  new product introductions by us or by our competitors;

     *  changes in product and pricing by us, our suppliers or our competitors;

     *  availability of components and raw materials for our products;

     *  our failure to  manufacture a sufficient  volume of products in a timely
        and cost-effective manner;

     *  our failure to  anticipate  the  changing  product  requirements  of our
        customers;

     *  a lack of market acceptance of our products or a shift in demand for our
        products;

     *  changes in the mix of sales by distribution channels;

     *  changes in the spending patters of our customers; and

     *  unusual or infrequent events such as litigation or acquisitions.

     Our  gross  margins may vary greatly depending on the mix of sales of lower
margin  hardware  products,  particularly  mechanical  subsystems purchased from
third party vendors, and higher margin software products.

     Our  operating  results  may also be affected by general economic and other
conditions  affecting  the  timing  of customer orders and capital spending. For
example,  our operations during the third and fourth quarters of fiscal 1998 and
the  first three quarters of fiscal 1999 were adversely affected by a continuing
downturn  in  hardware  purchases  by  customers  in  the  electronics industry,
particularly  disk-drive and telecommunication manufacturers. In connection with
this  downturn,  we  were forced to affect a restructuring program in the fourth
quarter  of  fiscal  1998.  Although  we  experienced  some  improvements in the
markets  in the third and fourth quarter of fiscal 1999, we cannot estimate when
or if a sustained revival in these key hardware markets will occur.


                                       24


<PAGE>

     We  generally  recognize  product  revenue  upon  shipment  or, for certain
international  sales, upon receipt of the product by the customers. As a result,
our  net revenues and results of operations for a fiscal period will be affected
by  the  timing  of  orders  received  and  orders shipped during the period. In
particular,  we  tend  to recognize a substantial portion of our revenues during
the  last  month  or weeks of a quarter. Any delay in shipments of our products,
therefore,  would  have  an adverse effect on our revenues and profitability. We
may  experience  such delays as a result of product development delays, problems
obtaining  raw  materials,  inability  to  complete  transactions  in  our sales
pipeline, or any of the other risks described in this section.

     In  addition,  our  continued  investments  in  research  and  development,
capital  equipment  and ongoing customer service and support capabilities result
in  significant  fixed  costs that we cannot reduce rapidly. As a result, if our
sales  for  a  particular  fiscal or quarterly period are below expected levels,
our  revenues  and  profits  for  that  period  would  be  reduced, and we could
experience a loss.

     In  the  event  that  in  some  future  fiscal  quarter our net revenues or
operating  results  fall  below  the  expectations of public market analysts and
investors,  the  price of our common stock may fall. We cannot assure you and we
will  be  able  to  increase  or  sustain our profitability on a quarterly or an
annual basis in the future.


Because  our product sales are seasonal, we may not be able to maintain a steady
revenue stream.

     Our  product  sales  are seasonal. We have historically had higher bookings
for  our products during the June quarter of each fiscal year and lower bookings
during  the September quarter of each fiscal year, due primarily to the slowdown
in  sales  to  European  markets  and  summer  vacations.  In  the past, we have
attempted  to  maintain  revenue  levels  during the September fiscal quarter by
filling  backlog  from the June fiscal quarter. If our backlog at the end of the
June  fiscal  quarter  is  reduced  as  a  result  of lower bookings in the June
quarter  or  is  otherwise  insufficient to compensate for lower bookings in the
September  fiscal  quarter, our revenues and operating results for the September
fiscal  quarter  and  future  quarters  would  be  reduced. For example, our net
revenues  decreased as a result of reduced product bookings in each of the three
fiscal  quarters  ending  March  27,  1999. In addition, during fiscal 1999 as a
whole,  our  net  revenues  were  adversely affected by a decline in orders from
customers in the disk-drive and telecommunications markets.

     In  addition,  you  should not rely on our  backlog as a useful  measure of
anticipated activity or future revenues. The orders constituting our backlog are
subject to changes in delivery schedules and in certain instances are subject to
cancellation  without significant  penalty by the customer.  We have in the past
experienced  changes in  delivery  schedules  and  customer  cancellations  that
resulted in our revenues in a given  quarter  being  materially  less than would
have been  anticipated  based on backlog at the  beginning  of the  quarter.  We
expect that these delivery changes and order  cancellations may adversely affect
our revenues in future quarters.

     A significant  percentage of our product  shipments occur in the last month
of each fiscal  quarter.  Historically,  this has been due in part, at times, to
our inability to forecast the level of demand for our products or of the product
mix for a particular  fiscal  quarter.  To address this problem we  periodically
stock  inventory  levels of completed  robots,  machine  controllers and certain
strategic  components.  If  shipments of our  products  fail to meet  forecasted
levels,  our  revenues  would be  decreased  and we  would  have  increased  our
operating  expenses in  anticipation  of  unrealized  increases  in sales of our
products.


Sales  of  our  products depend on the capital spending habits of our customers,
which tend to be cyclical.

     Intelligent  automation  systems using our products can range in price from
$75,000  to  several  million dollars. Accordingly, our success depends directly
on  the  capital expenditure budgets of our customers. Our future operations may
be  subject to substantial fluctuations because of domestic and foreign economic
conditions,  industry  patterns  and  other  factors affecting capital spending.
Although   the   majority   of  our  international  customers  are  not  in  the
Asian-Pacific  region,  we  believe that recent instability in the Asian-Pacific
economies  had  a  material  adverse  effect  on our operations as a result of a
reduction  in sales by our customers to those markets. Domestic or international
recessions  or  a  downturn  in  one  or  more of our major markets, such as the
electronics,   telecommunications,  semiconductor,  appliances,  pharmaceutical,
food  processing  or automotive components industries, and resulting cutbacks in
capital spending would have a direct, material adverse impact on our business.


                                       25


<PAGE>

Many  of  the  key  components  and  materials  of our products come from single
source suppliers, and their procurement requires lengthy lead times.

     We   obtain   many  key  components  and  materials  and  some  significant
mechanical  subsystems from sole or single source suppliers with whom we have no
guaranteed  supply arrangements. In addition, some of our sole or single sourced
components  and  mechanical  subsystems incorporated into our products have long
procurement  lead  times.  Our  reliance  on  sole  or  single  source suppliers
involves several significant risks, including the following:

     *  loss of control over the manufacturing process;

     *  potential absence of adequate supplier capacity;

     *  potential inability to obtain an adequate supply of required components,
        materials or mechanical subsystems; and

     *  reduced  control over  manufacturing  yields,  costs,  timely  delivery,
        reliability   and  quality  of  components,   materials  and  mechanical
        subsystems.

     If  any significant sole or single source supplier were unable or unwilling
to  manufacture  our  components,  materials  or  mechanical  subsystems  in the
volumes  and  timeframes  we  require,  we  would  have  to identify and qualify
acceptable  replacements.  The  process  of qualifying suppliers may be lengthy,
and  additional  sources  may  not  be  available  to  us  on a timely basis, on
acceptable  terms, or at all. If supplies of these items were not available from
our  existing  suppliers and a relationship with an alternative vendor could not
be  developed in a timely manner, shipments of our products could be interrupted
and  we  could  be  required  to  reengineer  our products. In the past, we have
experienced  quality  control  or  specification  problems  with  key components
provided  by  sole source suppliers and have had to design around the particular
flawed  item.  We have also experienced delays in filling customer orders due to
the  failure of our suppliers to meet our volume and schedule requirements. Some
of  our  suppliers in the past have also ceased manufacturing components that we
require  for  our  products,  and  we  have been required to purchase sufficient
supplies  for the estimated life of our product line. Problems of this type with
our suppliers may occur in the future.

     Disruption  or  termination  of our supply sources could require us to seek
alternative  sources  of supply and could delay our product shipments and damage
relationships  with current and prospective customers. Any of these events could
result  in  an  increase in our expenses, reductions in our revenues and profits
and  could  result  in  net losses. If we incorrectly forecast product mix for a
particular  period  and  we  are  unable  to  obtain  sufficient supplies of any
components  or  mechanical  subsystems on a timely basis due to long procurement
lead  times, our business and operating results would be substantially impaired.
Moreover,  if  demand  for  a  product for which we have purchased a substantial
amount  of  components  fails  to meet our expectations, we would be required to
write  off the excess inventory. A prolonged inability to obtain adequate timely
deliveries  of  key  components  would  also  impair our business and results of
operations.


Any  problems  we  encounter  integrating  BYE/Oasis  Engineering  Inc. into our
business  could  increase  our  expenses  and  adversely  affect  our  operating
results.

     We  recently  completed  the  acquisition  of  BYE/Oasis  Engineering  Inc.
BYE/Oasis  is  a  manufacturer  of  contamination  control  systems and standard
mechanical  interfaces  for  semiconductor fabrication facilities, a business in
which  we  have  no  operational experience. This acquisition will require us to
integrate  two  geographically  separated  companies  that  previously  operated
independently,  and  we  have  limited  experience  with integration of acquired
companies.  We  may encounter difficulties integrating our product offerings and
operations  with  those  of  BYE/Oasis.  In  addition,  we  may  not  be able to
successfully  market  BYE/Oasis's  products  or  develop  any  new products as a
result  of  the  acquisition.  The  public  announcement  of  our acquisition of
BYE/Oasis  could  result  in  suppliers, distributors, or customers of BYE/Oasis
canceling  or  otherwise  terminating  their  arrangements with BYE/Oasis. If we
fail  to  achieve  the  product,  marketing, distribution, and other operational
benefits  and efficiencies we originally anticipated in the merger, we will have
overpaid  for  the  acquisition,  and  our  shareholders  will  have experienced
substantial dilution without off-setting benefits.


                                       26


<PAGE>

We face intense competition in the market for intelligent automation products.

     The  market  for  intelligent automation products is highly competitive. We
believe  that  the  principal  competitive  factors affecting the market for our
products are:

     *  product functionality and reliability;

     *  customer service;

     *  price; and

     *  product features such as flexibility, programmability and ease of use.

     We  compete  with  a  number  of robot companies, motion control companies,
machine  vision  companies  and  simulation  software  companies.  Many  of  our
competitors  have  substantially  greater  financial,  technical,  marketing and
other  resources  than  us.  In  addition, we may in the future face competition
from new entrants in one or more of our markets.

     Many  of  our  competitors in the robot market are integrated manufacturers
of  products  that  produce  robotics equipment internally for their own use and
may  also  compete with our products for sales to other customers. Some of these
large  manufacturing  companies have greater flexibility in pricing than we have
because  they  generate  substantial unit volumes of robots for internal demand.
They  may  have  access  through  their  parent  companies  to  large sources of
capital.  Any  of  our  competitors  may  seek to expand their presence in other
markets in which we compete.

     Our  current  or  potential  competitors may develop products comparable or
superior  in  terms  of price and performance features to those developed by us.
They  may  also  adapt  more quickly than we can to new or emerging technologies
and  changes  in  customer  requirements. We may be required to make substantial
additional   investments   in   connection   with   our  research,  development,
engineering,  marketing  and  customer  service  efforts  in  order  to meet any
competitive  threat,  or  that  we  will  be able to compete successfully in the
future.  We  expect that in the event the intelligent automation market expands,
competition  in the industry will intensify, as additional competitors enter our
markets   and   current   competitors  expand  their  product  lines.  Increased
competitive  pressure  could result in a loss of sales or market share, or cause
us to lower prices for our products, any of which could harm our business.

     Our   principal   competitors   in  the  U.S.  robot  market  include  U.S.
subsidiaries  of  the  Japanese  companies Fanuc Ltd., Seiko Instruments, Yamaha
Corporation,  Sony Corporation, Sankyo Company Limited, and other Japanese robot
companies.  In  the  European  robot  market, we principally compete with Robert
Bosch  GmbH,  which  to  date has sold most of its products in Germany, and with
Fanuc,  Seiko,  Yamaha,  Sony,  Sankyo,  and  other  Japanese  companies. In the
Japanese  robot  market, over a dozen robot companies compete with us, including
Fanuc,  Nippon Denso, Panasonic Company, Sankyo, Seiko, Sony and Yamaha. Some of
these  large manufacturing companies have greater flexibility in pricing than we
have  because  they  generate  substantial  unit  volumes of robots for internal
demand  and  may  have access through their parent companies to large sources of
capital.   In   addressing   the  Japanese  market,  we  are  at  a  competitive
disadvantage  as compared to Japanese suppliers, many of whom have long-standing
collaborative   relationships  with  Japanese  manufacturers.  Because  of  this
competitive  disadvantage, we closed our Japanese subsidiary in the fall of 1998
and  now  operate  through  a  joint  venture  in  Japan.  Although we expect to
continue  to  invest significant resources in the Japanese market in the future,
we  may  not  be  able  to  achieve  significant  sales  growth  in the Japanese
intelligent automation market.

     Our  principal  competition in the semiconductor atmospheric wafer handling
and  contamination  control  market  comes  from  Asyst  Technologies,  Inc. The
majority  of  Asyst's revenue comes from adaptive Standard Mechanical Interface,
or  SMIF,  devices  sold  to  end  users.  They have been the leader in SMIF and
isolation  technology  in  the semiconductor industry. Additional competitors in
the  semiconductor  robot  market  are  Brooks  Automation,  Inc.  and Equipe, a
division of PRI Automation, Inc.

     Our  principal competitors in the market for motion control systems include
Allen-Bradley  Co.,  a  subsidiary of Rockwell International Corporation, in the
United  States,  and  Siemens  AG in Europe. In addition, we face motion control
competition  from  two  major  suppliers  of motion control boards, Galil Motion
Control,  Inc.  and Delta Tau Data Systems, Inc. These motion control boards are
purchased by end


                                       27


<PAGE>

users  which engineer their own custom motion control systems. In the simulation
software  market  our  competitors  include  Tecnomatix  Technologies,  Inc., an
Israel-based  company  which sells mostly to major automotive manufacturers, and
Deneb  Robotics  Inc.,  a subsidiary of Dassault Systemes. In the machine vision
market,  we face competition from Cognex Corporation, and Robotic Vision Systems
Inc.


We  may  not  be able to keep up with the rapid pace of technological change and
new product development that characterize the intelligent automation industry.

     The   intelligent   automation   industry   is   characterized   by   rapid
technological  change  and  new  product  introductions  and  enhancements.  Our
ability  to  remain  competitive  and our future success depend greatly upon the
technological  quality  of  our  products and processes relative to those of our
competitors.  In addition, we must continue to develop new and enhanced products
and  to  introduce  these new products at competitive prices and on a timely and
cost-effective  basis.  We  may  not  be successful in selecting, developing and
manufacturing  new  products  or  in enhancing our existing products on a timely
basis  or  at  all.  Our  new  or  enhanced  products  may  not  achieve  market
acceptance.  If  we  cannot  successfully  develop and manufacture new products,
timely   enhance   our  existing  technologies,  or  meet  customers'  technical
specifications,  our  products could lose market share, our revenues and profits
could  decline,  or  we  could  experience  operating  losses. New technology or
product  introductions by our competitors could also cause a decline in sales or
loss  of  market  share  for  our existing products or force us to significantly
reduce the prices of our existing products.

     From  time  to  time,  we  have  experienced  and  will  likely continue to
experience  delays  in the introduction of new products. We have experienced and
may  continue  to experience technical and manufacturing difficulties and delays
in  future  introductions of new products and enhancements. Any failure by us to
develop,  manufacture and sell new products in quantities sufficient to offset a
decline  in  revenues  from  existing  products or to manage product and related
inventory  transitions  successfully  could  harm  our  business. Our success in
developing,  introducing,  selling  and  supporting  new  and  enhanced products
depends  upon a variety of factors, including timely and efficient completion of
hardware   and   software   design   and   development,   timely  and  efficient
implementation  of  manufacturing  processes  and effective sales, marketing and
customer  service. Because of the complexity of our products, significant delays
may  occur  between  a product's initial introduction and commencement of volume
production.

     The   development  and  commercialization  of  new  products  involve  many
difficulties, including the following:

     *  the identification of new product opportunities;

     *  the  retention  and  hiring  of  appropriate  research  and  development
        personnel;

     *  the definition of the product's technical specifications;

     *  the successful completion of the development process;

     *  the successful  marketing of the product,  the risk of having  customers
        embrace new technological advances;

     *  additional customer service costs associated with supporting new product
        introductions; and

     *  additional customer service costs required for field upgrades.

     For  example,  we are currently in the process of releasing our new Digital
Workcell,  semiconductor  robots  and  Production  PILOT. These products include
significant   new   networking,   communications,   and  hardware  and  software
technology.  The  development of these products may not be completed in a timely
manner  and  these  products  may  not  achieve  acceptance  in  the market. The
development  of  these  products  has required, and will require, that we expend
significant  financial and management resources. If we are unable to continue to
successfully  develop  these  or  other  new  products  that respond to customer
requirements  or  technological  changes, our business and operating results may
be harmed.


Our  software  products  may  contain defects that could harm our reputation and

     future business prospects.  New   or   existing   software   products   or
enhancements  may  contain errors or performance problems when first introduced,
when new versions or enhancements are released, or even after products or


                                       28


<PAGE>

enhancements  have  been  used  in the marketplace for a period of time. Despite
our  testing,  product  defects  may be discovered only after a product has been
installed  and  used  by  customers.  Errors  and  performance  problems  may be
discovered  in  future  shipments  of our products. These errors could result in
expensive  and  time  consuming  design modifications or large warranty charges,
damage  customer  relationships and result in loss of market share, any of which
could  harm our reputation and future business prospects. In addition, increased
development  and  warranty  costs  would  reduce our operating profits and could
result in losses.


We rely on systems integrators to sell our products.

     We  believe  that  our  ability to sell products to system integrators will
continue  to be important to our success. A substantial portion of our sales are
to  system  integrators  that  specialize  in  designing and building production
lines  for  manufacturers.  Many  of  these  companies are small operations with
limited  financial  resources,  and  we  have  from  time  to  time  experienced
difficulty  in collecting payments from certain of these companies. As a result,
we  perform  ongoing  credit  evaluations  of  our customers. From time to time,
because  we do not require collateral, we may require customers to make payments
in  advance  of  shipment  or to provide a letter of credit. We provide reserves
for  potential  credit  losses, and to date losses of this type have been within
our  expectations.  To  the  extent  we  are  unable  to  mitigate  this risk of
collections   from   system  integrators,  our  results  of  operations  may  be
materially adversely affected.

     Our  relationships with system integrators are generally not exclusive, and
some  of  our  system  integrators  may expend a significant amount of effort or
give  higher priority to selling products of our competitors. In the future, any
of  these system integrators may discontinue their relationships with us or form
additional  competing  arrangements  with our competitors. Although to date none
of  our  system  integrators  has accounted for a material percentage of our net
revenues,  the  loss  of,  or  a  significant reduction in revenues from, system
integrators  to  which  we sell a significant amount of our product could result
in  a  material  reduction  in  our  revenues  and  a reduction in our operating
results.

     As  we enter new geographic and applications markets, we must locate system
integrators  to  assist  us  in generating sales in those markets. We may not be
successful  in  obtaining  effective  new  system  integrators or in maintaining
sales  relationships with them. If a number of our system integrators experience
financial  problems,  terminate  their  relationships  with  us or substantially
reduce  the  amount  of  our  products  they  sell,  or  if  we fail to build an
effective  systems  integrator  channel  in  any  new  markets, our revenues and
operating results would be adversely affected.


Our presence in international markets exposes us to risk.

     We  anticipate  that  international  sales  will  continue to account for a
significant  portion  of  our  net  revenues; however, we cannot assure you that
international  sales  will  increase  or that the current level of international
sales  will be sustained. Net revenues from international sales, including sales
to  Canada,  have  accounted  for  a  significant  portion  of our net revenues.
International  sales were $41.2 million, $39.8 million and $29.6 million for the
fiscal  years ended June 30, 1999, 1998 and 1997. This represented 50.2%, 40.5%,
and  35.8%  of  net  revenues  for the respective periods. We also purchase some
components  and  mechanical  subsystems from foreign suppliers. As a result, our
operating  results  are subject to the risks inherent in international sales and
purchases, which include the following:

     *  Different regulatory requirements;

     *  political and economic changes and disruptions;

     *  transportation delays, foreign currency fluctuations;

     *  export/import controls;

     *  tariff regulations;

     *  higher freight rates;

     *  difficulties in staffing and managing foreign sales operations;

     *  greater difficulty in accounts receivable collection; and

                                       29


<PAGE>

     * potentially adverse tax consequences.

     In  addition,  duty,  tariff  and freight costs can materially increase the
cost  of  crucial components for our products. Foreign exchange fluctuations may
render  our  products  less competitive relative to locally manufactured product
offerings,  or  could  result  in  foreign  exchange  losses.  Moreover, because
substantially  all  of  our  foreign  sales  are  denominated  in  United States
dollars,  increases  in  the  value of the dollar relative to the local currency
would  increase  the  price  of  our  products  in  foreign markets and make our
products  relatively more expensive and less price competitive than competitors'
products  that  are  priced in local currencies. Any of these factors may result
in a reduction in our revenues and a decrease in our earnings

     We  anticipate  that  past  turmoil  in  Asian  financial  markets  and the
deterioration  of  the underlying economic conditions in certain Asian countries
may  continue  to  have  an impact on our sales to customers located in or whose
projects  are  based  in  those  countries.  Specific factors that may affect us
include  the  impact  of  currency fluctuations on the relative price of the our
products  and  restrictions  on government spending imposed by the International
Monetary  Fund  on  those  countries receiving the International Monetary Fund's
assistance.  In  addition,  customers in those countries may face reduced access
to  working  capital  to fund capital expenditures due to higher interest rates,
reduced   bank   lending  due  to  contractions  in  the  money  supply  or  the
deterioration  in the customer's or bank's financial condition, or the inability
to access local equity financing.

     We  make  yen-denominated  purchases  of  certain components and mechanical
subsystems  from  Japanese suppliers. Depending on the amount of yen-denominated
purchases,  we  may  engage  in  hedging  transactions  in  the future. However,
notwithstanding   these  precautions,  we  remain  subject  to  the  transaction
exposures  that arise from foreign exchange movements between the date a foreign
currency  export  sale  or purchase transaction is recorded and the date cash is
received  or  payments are made in foreign currencies. We cannot assure you that
our  current  or  any  future  currency  exchange strategy will be successful in
avoiding  exchange  related  losses or that any of the factors listed above will
not impair our business or operating results.


If  our hardware products do not comply with standards set forth by the European
Union, we will not be able to sell them in Europe.

     Our  hardware  products  are  required  to  comply  with European Union Low
Voltage, Electro-Magnetic  Compatibility,  and  Machinery Safety Directives. The
European  Union mandates that our products carry the CE mark denoting that these
products  are  manufactured in strict accordance to design guidelines in support
of  these  directives.  These  guidelines  can change and are subject to varying
interpretation.  New  guidelines  impacting machinery design go into effect each
year.  To  date,  we  have  retained  TUV  Rheinland  to  help  certify that our
controller-based  products,  including  some  of  our  robots,  meet  applicable
European  Union  directives  and  guidelines.  Although  our  existing certified
products  meet  the requirements of the applicable European Union directives, we
cannot  assure  you  that  future products can be designed, within market window
and  financial constraints, to meet the future requirements. In the event any of
our  robot  products  or  any  other  major  hardware  products  do not meet the
requirements  of  the  European  Union directives, we would be unable to legally
sell  these  products  in Europe. As a result, our business, financial condition
and results of operations could be impaired.


If  we do not comply with environmental regulations, our business may be harmed.


     We  are  subject  to a variety of environmental regulations relating to the
use,  storage,  handling,  and  disposal of certain hazardous substances used in
the  manufacturing  and  assembly  of  our  products.  We  believe  that  we are
currently   in   compliance  with  all  material  environmental  regulations  in
connection  with  our  manufacturing  operations,  and that we have obtained all
necessary  environmental  permits  to conduct our business. However, our failure
to  comply  with  present or future regulations could subject us to a variety of
consequences that could harm our business, including:

     *  the imposition of substantial fines;

     *  suspension of production; and

                                       30


<PAGE>

     *  alteration of manufacturing processes or cessation of operations.

     Compliance  with  environmental  regulations  could  require  us to acquire
expensive  remediation  equipment  or to incur substantial expenses. Our failure
to  control the use, disposal, removal, or storage of, or to adequately restrict
the  discharge  of,  or assist in the cleanup of, hazardous or toxic substances,
could  subject  us  to  significant  liabilities,  including  joint  and several
liabilities  under  certain statutes. The imposition of liabilities of this kind
could harm our financial condition.


We  could  lose revenues and incur significant costs if our systems, the systems
of  our  customers  or  third-party  systems  that  we  use  are  not  Year 2000
compliant.

     We  may experience significant problems and costs associated with Year 2000
compliance  that  could adversely affect our business, results of operations and
financial  condition.  Significant  uncertainty  exists in the software industry
concerning the potential effects associated with such compliance.

     In  fiscal  1998,  we commenced a program, to be substantially completed by
the  Fall of 1999, to review the Year 2000 compliance status of the software and
systems   used  in  our  internal  business  processes,  to  obtain  appropriate
assurances  of  compliance  from  the  manufacturers  of  these products, and to
obtain  an  agreement  to  modify or replace all non-compliant products. We have
contacted  our  critical  suppliers and major customers to determine whether the
products  obtained  from  such  vendors or sold by the customer to third parties
are  Year  2000  compliant. Our suppliers and customers are under no contractual
obligation  to  provide  such  information  to the Company. In addition, we have
implemented  at  our  San  Jose  headquarters  the  initial phase of a Year 2000
compliant  enterprise resource planning system from a third-party vendor and are
also  considering  converting  certain  of  our  other  software  and systems to
commercial  products  that are known to be Year 2000 compliant. Additionally, in
Europe,  we  are in the process of upgrading our management information systems.
We  have been advised by the third party suppliers of these systems and upgrades
that  the  upgrades will render our European management information systems Year
2000  compliant.  Implementation of software products of third parties, however,
will  require  the  dedication  of  substantial  administrative  and  management
information  resources,  the assistance of consulting personnel from third party
software vendors and the training of our personnel using such systems.

     Based  on  the information available to date, we believe we will be able to
complete  our Year 2000 compliance review and make necessary modifications prior
to  the end of calendar year 1999. Software or systems which are deemed critical
to  our  business are scheduled to be Year 2000 compliant by the end of calendar
year  1999.  Nevertheless, particularly to the extent we rely on the products of
other  vendors  to  resolve Year 2000 issues, there can be no assurances that we
will  not  experience delays in implementing such products. If key systems, or a
significant  number  of  systems were to fail as a result of Year 2000 problems,
or  we  were  to  experience  delays  implementing  Year 2000 compliant software
products,  we  could  incur  substantial  costs  and disruption of our business,
which  would  potentially  have  a  material  adverse effect on our business and
results of operations.

     In  the  ordinary  course  of  our  business,  we test and evaluate our own
software  products.  We  believe  that  our software products are generally Year
2000  compliant, meaning that the use or occurrence of dates on or after January
1,  2000  will  not  materially  affect the performance of our software products
with  respect to four digit date dependent data or the ability of these products
to  correctly create, store, process and output information related to such date
data.  To  the  extent  our software products are not fully Year 2000 compliant,
our  software products may not contain all necessary software routines and codes
necessary  for  the  accurate  calculation, display, storage and manipulation of
data  involving  dates.  To the extent that our products are sold through system
integrators  or  other  third  parties,  our  products  may experience Year 2000
problems  as  a result of the integration of our software with noncompliant Year
2000   products   of  such  third  party  suppliers.  In  addition,  in  certain
circumstances,  we  have  warranted  that  the  use or occurrence of dates on or
after  January  1,  2000  will  not  adversely  affect  the  performance  of the
Company's  products  with  respect  to  four  digit  date  dependent data or the
ability  to  create, store, process and output information related to such data.
If  any  of  our  licensees experience Year 2000 problems, these licensees could
assert claims for damages against us.

     To  date,  we  have  not  identified  a  complete  and  separate budget for
investigating  and  remedying  issues  related  to  Year 2000 compliance whether
involving our own software products or the software of


                                       31


<PAGE>

systems   used   in   our   internal  operations.  We  have  incurred  costs  of
approximately  $3.3  million  and  expect  to incur in total, approximately $3.5
million  in  connection  with  our  implementation  of a new enterprise resource
planning  software  system  and  upgrades  for  other  systems  at  our San Jose
headquarters  and  in  our  European  offices,  which  is  Year  2000 compliant.
Additionally,  we  are currently in the process of developing a contingency plan
related  to  Year  2000. Our resources spent on investigating and remedying Year
2000  compliance issues will not have a material adverse effect on our business,
financial condition and results of operations.


We may not be able to handle the introduction of the Single European Currency.

     We  are  in the process of addressing the issues raised by the introduction
of  the  Single  European  Currency,  or  the  Euro,  as  of January 1, 1999 and
transition  to  full  adoption  as of January 1, 2002. Our internal systems that
are  affected  by  the  initial introduction of the Euro were Euro-capable as of
January  1,  1999.  We  do not presently expect that the introduction and use of
the  Euro will materially affect our foreign exchange and hedging activities, or
our  use  of  derivative instruments, or will result in any material increase in
costs  to  us.  While  we  will  continue  to  evaluate  the  impact of the Euro
introduction  over  time,  based  on currently available information, management
does  not  believe  that  the  introduction  of  the  Euro  currency will have a
material  adverse impact on our financial condition or overall trends in results
of operations.


The success of our business depends on our key employees.

     We  are  highly  dependent  upon  the  continuing  contributions of our key
management,  sales,  and  product development personnel. In particular, we would
be  materially  adversely  affected  if  we  were  to lose the services of Brian
Carlisle,  Chief  Executive  Officer and Chairman of the Board of Directors, who
has  provided  significant  leadership  to  the  Company since our inception, or
Bruce  Shimano, Vice President, Research and Development and a Director, who has
guided  our  research and development programs since our inception. In addition,
the  loss  of  the  services of any of our senior managerial, technical or sales
personnel  could  materially adversely affect our business, financial condition,
and  results  of operations. We do not have employment contracts with any of our
executive  officers  and  do not maintain key man life insurance on the lives of
any of our key personnel.

     Our  future  success  also  heavily  depends  on our continuing ability, to
attract,  retain,  and motivate highly qualified managerial, technical and sales
personnel.  Competition  for  qualified  technical  personnel in the intelligent
automation  industry  is  intense.  Our  inability to recruit and train adequate
numbers  of  qualified  personnel  on  a timely basis would adversely affect our
ability to design, manufacture, market and support our products.


We are subject to the risks associated with acquisitions.

     From  time  to  time,  we  may  consider  the  acquisition  of companies or
technologies  that  management  believes  may  complement  or extend our current
products,  businesses,  or  technologies.  In the last three years, we have made
some  acquisitions  of  various  sizes,  including  the  recent  acquisition  of
BYE/Oasis.  In  the  future  we  may  make  material  acquisitions  of, or large
investments   in,   other   businesses   that   offer  products,  services,  and
technologies  that  management  believes  will further our strategic objectives.
Any  future  acquisitions  or  investments  we  might  make  would present risks
commonly associated with these types of transactions, including:

     *  difficulty in combining the technology, operations, or work force of the
        acquired business; o disruptions of our on-going businesses;

     *  difficulties in realizing our potential financial and strategic position
        through the successful integration of the acquired business;

     *  difficulty in maintaining uniform standards,  controls,  procedures, and
        policies;  difficulty  in  obtaining  preferred  acquisition  accounting
        treatment;

     *  potential  negative  impact in results of operations due to amortization
        of goodwill or other intangible assets acquired; and


                                       32


<PAGE>

     *  the diversion of management attention.

     The  risks  described above, either individually or in the aggregate, could
materially  adversely  affect  our  business,  operating  results, and financial
condition.  We  expect  that  future  acquisitions,  if  any,  could provide for
consideration  to  be paid in cash, shares of our common stock, or a combination
of cash and common stock.


Our  failure to protect our intellectual property and proprietary technology may
significantly impair our competitive advantage.

     Third  parties  may  infringe  or misappropriate our copyrights, trademarks
and  similar  proprietary  rights.  We  cannot be certain that the steps we have
taken   to  prevent  the  misappropriation  of  our  intellectual  property  are
adequate,  particularly  in foreign countries where the laws may not protect our
proprietary  rights  as  fully as in the United States. We rely on a combination
of  patent,  copyright  and trade secret protection and nondisclosure agreements
to  protect  our  proprietary  rights. However, we cannot be certain that patent
and  copyright  law  and  trade  secret  protection may not be adequate to deter
misappropriation  of  our  technology, that any patents issued to Adept will not
be  challenged,  invalidated or circumvented, that the rights granted thereunder
will  provide  competitive advantages to us, or that the claims under any patent
application  will  be allowed. We may be subject to or may initiate interference
proceedings  in  the United States Patent and Trademark Office, which can demand
significant  financial  and  management resources. The process of seeking patent
protection  can  be  time  consuming and expensive and there can be no assurance
that  patents  will  issue from currently pending or future applications or that
our  existing  patents  or any new patents that may be issued will be sufficient
in  scope  or  strength  to  provide  meaningful  protection  or  any commercial
advantage to us.

     We  may  in  the future initiate claims or litigation against third parties
for  infringement  of our proprietary rights in order to determine the scope and
validity   of   our   proprietary  rights  or  the  proprietary  rights  of  our
competitors.  These  claims  could result in costly litigation and the diversion
of our technical and management personnel.


We may face costly intellectual property infringement claims.

     We  have  from  time  to  time  received  communications from third parties
asserting  that  we  are  infringing  certain  patents  and  other  intellectual
property  rights  of  others  or  seeking  indemnification  against such alleged
infringement.  As  claims  arise,  we  evaluate  their  merits.  Any  claims  of
infringement  brought  by  third  parties  could result in protracted and costly
litigation,  damages for infringement, and the need to obtain a license relating
to  one  or more of our products or current or future technologies. Such license
may  not  be  available  on commercially reasonable terms or at all. Litigation,
which  could  result  in  substantial cost to us and diversion of our resources,
may  be  necessary  to enforce our patents or other intellectual property rights
or  to  defend  us  against  claimed  infringement  of the rights of others. Any
intellectual  property  litigation  and the failure to obtain necessary licenses
or  other rights could have a material adverse effect on our business, financial
condition and results of operations.

     For  example,  some  end  users  of our products have notified us that they
have  received  a  claim  of  patent  infringement  from  the Jerome H. Lemelson
Foundation,  alleging  that  their  use of our machine vision products infringes
certain  patents issued to Mr. Lemelson. In addition, we have been notified that
other  end  users  of  our  AdeptVision  VME  line  and  the predecessor line of
Multibus  machine  vision  products  have  received  letters  from  the Lemelson
Foundation  which  refer  to  Mr.  Lemelson's patent portfolio and offer the end
user  a  license  to the particular patents. Some of our end users have notified
us  that they may seek indemnification from us for damages or expenses resulting
from  this  matter.  We  cannot  predict  the  outcome  of  this  or any similar
litigation  which  may  arise  in the future. Litigation of this kind may have a
material  adverse  effect  on  our  business,  financial condition or results of
operations.

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<PAGE>

<TABLE>
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Our  exposure  to  market  risk  for  changes  in  interest  rates  relates
primarily  to  our  investment portfolio. We maintain an investment policy which
ensures  the  safety  and preservation of our invested funds by limiting default
risk,  market  risk,  and  reinvestment risk. The table below presents principal
cash  flow  amounts  and  related  weighted-average  interest  rates  by year of
maturity for our investment portfolio.


<CAPTION>
                                                                                                Fair
                                               1999         2000     2001        Total         Value
                                            -------------   ------   ------   -------------   ----------
                                                                   (in thousands)
<S>                                         <C>             <C>      <C>      <C>             <C>
Cash equivalents
   Fixed rate    ........................    $  11,720       --       --       $  11,720       $ 11,720
   Average rate  ........................         3.93%      --       --            3.93%
Auction rate securities
   Fixed rate    ........................    $   9,400       --       --       $   9,400       $  9,400
   Average rate  ........................         3.62%      --       --            3.62%
Auction rate preferred
   Variable rate    .....................    $   5,800       --       --       $   5,800       $  5,800
   Average rate  ........................         3.05%      --       --            3.05%
                                             ---------                         ---------       ---------
      Total Investment Securities  ......    $  26,920       --       --       $  26,920       $ 26,920
                                             ---------                         ---------       ---------
   Average rate  ........................         3.63%      --       --            3.63%
</TABLE>

     We  mitigate  default  risk  by attempting to invest in high credit quality
securities  and by constantly positioning our portfolio to respond appropriately
to  a  significant  reduction  in  a  credit  rating of any investment issuer or
guarantor.  our  portfolio  includes  only  marketable  securities  with  active
secondary  or  resale  markets  to  ensure  portfolio  liquidity and maintains a
prudent amount of diversification.

     We  conduct  business on a global basis. As such, we are exposed to adverse
or  beneficial  movements  in foreign currency exchange rates. We may enter into
foreign  currency  forward  contracts  to  minimize  the impact of exchange rate
fluctuations   on   certain  foreign  currency  commitments  and  balance  sheet
positions.  The  realized  gains  and losses on these contracts are deferred and
offset  against  realized  and  unrealized gains and losses when the transaction
occurs.  At  June  30,  1999 there were no outstanding foreign currency exchange
contracts.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
     The  information  required  by  this  Item  is  set  forth in the Company's
Financial Statements and Notes thereto beginning at page F-1 of this report.


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
        AND FINANCIAL DISCLOSURE
     Not applicable.


                                       34


<PAGE>

                                   PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The   information  required  by  this  item  concerning  our  directors  is
incorporated  by  reference  from  the section captioned "Election of Directors"
contained  in  our Proxy Statement related to the Annual Meeting of Shareholders
to  be  held November 5, 1999 to be filed by us with the Securities and Exchange
Commission  within  120  days  of the end of our fiscal year pursuant to General
Instruction  G(3) of Form 10-K (the "Proxy Statement"). The information required
by  this  item  concerning  executive  officers  is  set forth in Part I of this
Report.  The  information  required  by  this  item  concerning  compliance with
Section  16(a) of the Exchange Act is incorporated by reference from the section
captioned  "Section  16(a)  Beneficial Ownership Reporting Compliance" contained
in the Proxy Statement.


ITEM 11. EXECUTIVE COMPENSATION

     The  information  required  by  this item is incorporated by reference from
the  section  captioned  "Executive Compensation and Other Matters" contained in
the Proxy Statement.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT

     The  information  required  by  this item is incorporated by reference from
the  section  captioned  "Security  Ownership  of  Certain Beneficial Owners and
Management" contained in the Proxy Statement.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The  information  required  by  this item is incorporated by reference from
the   sections   captioned   "Compensation   Committee  Interlocks  and  Insider
Participation" and "Certain Transactions" contained in the Proxy Statement.


                                       35


<PAGE>

                                    PART IV


<TABLE>
<CAPTION>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

<S>         <C>
   (a)(1)   Financial Statements
            The financial statements (including the Notes thereto listed in the Index to
            Consolidated Financial Statements (set forth in Item 8 of Part II of this Form 10-K)
            are filed as part of this Annual Report on Form 10-K.
   (a)(2)   Financial Statement Schedules
            The following financial statement schedule is included herein:
            Schedule II--Valuation and Qualifying Accounts
            Additional schedules are not required under the related schedule instructions or are
            inapplicable, and therefore have been omitted.
   (a)(3)   Exhibits
             3.1(1)  Restated Articles of Incorporation of the Registrant.
             3.2(1)  Bylaws of the Registrant, as amended to date.
            10.1(1)  1983 Stock Incentive Program, and form of Agreement thereto.
            10.2(2)  1993 Stock Plan as amended, and form of agreement thereto.
            10.3     1998 Employee Stock Purchase Plan as amended, and form of agreements
                     thereto.
            10.4(2)  1995 Director Option Plan as amended, and form of agreement thereto.
            10.5(1)  Form of Indemnification Agreement between the Registrant and its officers and
                     directors.
          10.6.1(1)  Lease Agreement between the Registrant and Technology Associates I dated
                     July 18, 1986, as amended.
          10.6.2(1)  Office Building Lease between Registrant and Puente Hills Business Center II
                     dated May 20, 1993, as amended.
          10.6.3(1)  Standard Office Lease--Gross between SILMA Incorporated and South
                     Bay/Copley Joint Venture dated November 11, 1992.
          10.6.4(2)  Fifth Amendment to Lease between Registrant and Metropolitan Life Insurance
                     Company dated as of December 5, 1996.
          10.7(1)      Loan Payoff Plan dated August 3, 1993 between Registrant and Charles
                     Duncheon.
          10.7.1     Promissory Note between Registrant and Charles Duncheon dated August 20,
                     1998
          10.7.2     Promissory Note between Registrant and Richard Casler dated April 16, 1999.
          10.7.3     Promissory Note between Registrant and Brian Carlisle dated May 7, 1999.
          10.7.4     Promissory Note between Registrant and Bruce Shimano dated May 7, 1999.
          10.8(3)    Offer Letter between the Registrant and Marcy Alstott dated February 19, 1998,
                     as amended.
          10.8.1(3)  Promissory Note between Registrant and Marcy Alstott dated April 27, 1998.
          10.8.2     Offer Letter between the Registrant and Kathleen Fisher dated July 16, 1999.
          10.8.3     Promissory Note between Registrant and Kathleen Fisher dated August 2, 1999.
          10.9(3)    Lease Agreement dated as of April 30, 1998 between the Registrant and the
                     Joseph and Eda Pell Revocable Trust dated August 18, 1989.
          10.10(3)   Lease Agreement dated June 1, 1998 between the Registrant and Technology
                     Centre Associates LLC for the premises located at 180 Rose Orchard Way,
                     San Jose, California.

                                       36


<PAGE>


          10.10.1(3) First Amendment to Lease Agreement dated June 1, 1998 between the
                     Registrant and Technology Centre Associates LLC dated July 31, 1998.
          10.10.2(3) Sublease between the Registrant and Ascent Logic Corporation dated as of July
                     31, 1998.
          21.1(3)    Subsidiaries of the Registrant.
          23.1       Consent of Ernst & Young LLP, Independent Auditors
          24.1       Power of Attorney (See Page 39).
          27.1       Financial Data Schedule.
<FN>
------------
(1)  Incorporated by reference to exhibits filed with Registrant's  Registration
     Statement on Form S- 1 (Reg.  No.  33-98816)  as declared  effective by the
     Commission on December 15, 1995.

(2)  Incorporated  by reference to exhibits filed with the  Registrant's  Annual
     Report on Form 10-K for the fiscal  year ended June 30,  1997 as filed with
     the Commission on September 26, 1997.

(3)  Incorporated  by reference to exhibits filed with the  Registrant's  Annual
     Report on Form 10-K for the fiscal  year ended June 30,  1998 as filed with
     the Commission on September 28, 1998.

     (b) Reports on Form 8-K.

      We did not file any reports on Form 8-K during the quarter  ended June 30,
      1999.  However,  on July  28,  1999 we filed a Form  8-K to  announce  the
      acquisition of BYE/Oasis Engineering, Inc.

     (c)  Exhibits.
     See Item 14(a)(3) above.

     (d) Financial Statement Schedules.
     See Item 14(a)(2) above.

</FN>
</TABLE>

                                       37


<PAGE>

                                  SIGNATURES

     Pursuant  to  the  requirements  of  Section  13 or 15(d) of the Securities
Exchange  Act of 1934, as amended, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized.


                                            ADEPT TECHNOLOGY, INC.


                                            By: /s/ Kathleen M. Fisher
                                            -----------------------------------
                                               Kathleen M. Fisher
                                               Vice President, Finance
                                               and Chief Financial Officer


Date: September 24, 1999


                                       38


<PAGE>

<TABLE>
                               POWER OF ATTORNEY

     KNOW  ALL  PERSONS  BY  THESE  PRESENTS,  that  each person whose signature
appears  below constitutes and appoints Brian R. Carlisle and Kathleen M. Fisher
and  each of them, his or her true and lawful attorneys-in-fact and agents, each
with  full  power  of  substitution  and  resubstitution,  to  sign  any and all
amendments  (including  post-effective amendments) to this Annual Report on Form
10-K  and  to  file  the  same, with all exhibits thereto and other documents in
connection  therewith,  with  the  Securities  and Exchange Commission, granting
unto  said  attorneys-in-fact  and  agents,  and  each  of  them, full power and
authority  to  do  and  perform  each  and  every  act  and  thing requisite and
necessary  to  be  done  in  connection  therewith,  as fully to all intents and
purposes  as  he  or  she  might  or  could  do  in person, hereby ratifying and
confirming  all  that  said attorneys-in-fact and agents, or their substitute or
substitutes, or any of them, shall do or cause to be done by virtue hereof.

     Pursuant  to  the  requirements  of the Securities Exchange Act of 1934, as
amended,  this  Report  has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated:

<CAPTION>
         Signature                              Title                             Date
-----------------------------   ----------------------------------------   --------------------
<S>                             <C>                                        <C>
      /s/ Brian R. Carlisle     Chairman of the Board of Directors and     September 24, 1999
---------------------------     Chief Executive Officer (Principal
      (Brian R. Carlisle)       Executive Officer)

     /s/ Kathleen M. Fisher     Vice President, Finance and Chief          September 24, 1999
---------------------------     Financial Officer (Principal Financial
      (Kathleen M. Fisher)      and Accounting Officer)

      /s/ Bruce E. Shimano      Vice President, Research and               September 24, 1999
---------------------------     Development, Secretary and Director
       (Bruce E. Shimano)

     /s/ Ronald E. F. Codd      Director                                   September 24, 1999
---------------------------
      (Ronald E. F. Codd)

      /s/ Michael P. Kelly      Director                                   September 24, 1999
---------------------------
       (Michael P. Kelly)

        /s/ Cary R. Mock        Director                                   September 24, 1999
---------------------------
         (Cary R. Mock)

      /s/ John E. Pomeroy       Director                                   September 24, 1999
---------------------------
       (John E. Pomeroy)
</TABLE>




                                       39


<PAGE>

                  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                            ADEPT TECHNOLOGY, INC.

<TABLE>
<CAPTION>

                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


<S>                                                                                         <C>
Report of Ernst & Young, LLP, Independent Auditors   ....................................   F-1
Consolidated Balance Sheets at June 30, 1999 and June 30, 1998   ........................   F-2
Consolidated Statements of Income for each of the three years in the period ended
 June 30, 1999   ........................................................................   F-3
Consolidated Statements of Cash Flows for each of the three years in the period ended
 June 30, 1999   ........................................................................   F-4
Consolidated Statements of Shareholders' Equity for each of the three years in the period
 ended June 30, 1999   ..................................................................   F-5
Notes to Consolidated Financial Statements  .............................................   F-6
</TABLE>


                                       40


<PAGE>

               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS


The Shareholders and Board of Directors
Adept Technology, Inc.

     We  have  audited  the  accompanying  consolidated  balance sheets of Adept
Technology,  Inc.  as  of  June  30, 1999 and 1998, and the related consolidated
statements  of  income,  shareholders'  equity,  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 as Item 14(a). These financial
statements  and schedule are the responsibility of the Company's management. Our
responsibility  is  to  express  an  opinion  on  these financial statements and
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  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. An audit
also   includes   assessing  the  accounting  principles  used  and  significant
estimates  made  by  management,  as  well  as  evaluating the overall financial
statement  presentation.  We  believe that our audits provide a reasonable basis
for our opinion.

     In  our  opinion,  the  consolidated financial statements referred to above
present  fairly,  in  all material respects, the consolidated financial position
of  Adept  Technology,  Inc.  at  June  30,  1999 and 1998, and the consolidated
results  of its operations and its 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,  the related financial statement schedule,
when  considered  in  relation  to  the  basic  financial statements as a whole,
presents fairly in all material respects the information set forth therein.


                                                Ernst & Young LLP


San Jose, California
August 2, 1999



                                      F-1


<PAGE>


<TABLE>
                            ADEPT TECHNOLOGY, INC.

                          CONSOLIDATED BALANCE SHEETS


<CAPTION>
                                                                             June 30,     June 30,
                                                                               1999         1998
                                                                             ----------   ----------
                                                                                 (in thousands)
<S>                                                                          <C>          <C>
ASSETS
Current assets:
   Cash and cash equivalents    ..........................................    $ 11,720     $  9,603
   Short-term investments    .............................................      15,200       11,300
   Accounts receivable, less allowance for doubtful accounts of $637 in
    1999 and $452 in 1998 ................................................      19,084       19,904
   Inventories   .........................................................      11,284       15,190
   Deferred tax and other current assets    ..............................       5,401        4,766
                                                                              ---------    ---------
      Total current assets   .............................................      62,689       60,763
Property and equipment, net  .............................................       5,672        5,853
Other assets  ............................................................       1,334        1,342
                                                                              ---------    ---------
      Total assets  ......................................................    $ 69,695     $ 67,958
                                                                              =========    =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable    ...................................................    $  5,943     $  5,226
   Accrued payroll and related expenses  .................................       3,129        3,584
   Accrued warranty    ...................................................       1,358        1,830
   Deferred revenue    ...................................................       1,274          999
   Accrued restructuring and nonrecurring charges    .....................         --         1,019
   Taxes payable and other accrued liabilities    ........................       3,424        2,631
                                                                              ---------    ---------
      Total current liabilities    .......................................      15,128       15,289
Commitments and contingencies
Shareholders' equity:
   Preferred stock, no par value: 5,000 shares authorized, none issued and
    outstanding  .........................................................         --           --
   Common stock, no par value: 25,000 shares authorized, 8,739 issued
    and outstanding in 1999, and 8,723 in 1998    ........................      50,161       50,225
   Retained earnings   ...................................................       4,406        2,444
                                                                              ---------    ---------
      Total shareholders' equity   .......................................      54,567       52,669
                                                                              ---------    ---------
      Total liabilities and shareholders' equity  ........................    $ 69,695     $ 67,958
                                                                              =========    =========
<FN>

                                       See accompanying notes.
</FN>
</TABLE>

                                                F-2


<PAGE>

<TABLE>
                            ADEPT TECHNOLOGY, INC.

                          CONSOLIDATED BALANCE SHEETS


<CAPTION>
                                                                   Year Ended June 30,
                                                           -----------------------------------
                                                            1999         1998         1997
                                                           ---------   ----------   ----------
                                                             (in thousands, except per share
                                                                          data)
<S>                                                        <C>         <C>          <C>
Net revenues  ..........................................   $82,027      $ 98,394     $ 82,767
Cost of revenues    ....................................    44,255        56,503       48,761
                                                           --------     ---------    ---------
Gross margin  ..........................................    37,772        41,891       34,006
Operating expenses:
   Research, development and engineering    ............    11,063        10,731        9,016
   Selling, general and administrative   ...............    23,296        25,150       21,628
   Restructuring and other nonrecurring charges   ......       --          2,756          --
                                                           --------     ---------    ---------
Total operating expenses  ..............................    34,359        38,637       30,644
                                                           --------     ---------    ---------
Operating income    ....................................     3,413         3,254        3,362
Interest income  .......................................       966         1,025          717
Interest expense    ....................................         8            27           13
                                                           --------     ---------    ---------
Income before provision for income taxes    ............     4,371         4,252        4,066
Provision for income taxes   ...........................     1,749         1,701        1,309
                                                           --------     ---------    ---------
Net income    ..........................................   $ 2,622      $  2,551     $  2,757
                                                           ========     =========    =========
Net income per share:
   Basic   .............................................   $   .31      $    .30     $    .34
                                                           ========     =========    =========
   Diluted    ..........................................   $   .30      $    .29     $    .33
                                                           ========     =========    =========
Number of shares used in computing per share
 amounts:
   Basic   .............................................     8,590         8,455        8,062
                                                           ========     =========    =========
   Diluted    ..........................................     8,688         8,923        8,442
                                                           ========     =========    =========
<FN>

                                      See accompanying notes.

</FN>
</TABLE>
                                               F-3


<PAGE>

<TABLE>
                            ADEPT TECHNOLOGY, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS


<CAPTION>
                                                                                   Year Ended June 30,
                                                                        ------------------------------------------
                                                                           1999           1998           1997
                                                                        ------------   ------------   ------------
                                                                                      (in thousands)
<S>                                                                     <C>            <C>            <C>
Operating activities
 Net income    ......................................................    $   2,622      $   2,551      $   2,757
 Adjustments to reconcile net income to net cash provided by
   operating activities:   ..........................................
   Depreciation and amortization    .................................        3,106          3,049          2,981
   (Gain) loss on disposal of property and equipment  ...............          (37)          (278)           316
   Compensation expense related to employee stock purchase
    plan    .........................................................           --            675             --
   Write-off of certain assets relating to restructuring and
    nonrecurring charges   ..........................................           --          1,062             --
   Tax benefit from stock plans  ....................................          164            544             73
   Changes in operating assets and liabilities:
    Accounts receivable    ..........................................          820         (2,541)         3,245
    Inventories   ...................................................        3,384         (2,678)         1,044
    Deferred tax and other current assets    ........................         (635)        (2,249)          (262)
    Other assets  ...................................................          (71)          (181)          (411)
    Accounts payable    .............................................          717          1,289         (2,967)
    Accrued payroll and related expenses  ...........................         (455)         1,273           (324)
    Accrued warranty    .............................................         (645)           (16)           459
    Deferred revenue    .............................................          275           (139)           577
    Accrued restructuring and nonrecurring charges    ...............       (1,019)         1,019             --
    Taxes payable and other accrued liabilities    ..................          927         (1,325)         1,131
                                                                         ---------      ---------      ---------
   Total adjustments    .............................................        6,531           (496)         5,862
                                                                         ---------      ---------      ---------
 Net cash provided by operating activities   ........................        9,153          2,055          8,619
                                                                         ---------      ---------      ---------
Investing activities
 Purchase of property and equipment    ..............................       (2,435)        (3,084)        (1,631)
 Proceeds from the sale of property and equipment  ..................          187            470             63
 Purchases of long-term available-for-sale investments   ............           --             --         (1,000)
 Sales of long-term available-for-sale investments    ...............           --          1,000             --
 Purchases of short-term available-for-sale investments  ............      (31,206)       (21,003)       (20,123)
 Sales of short-term available-for-sale investments   ...............       27,306         17,069         15,657
                                                                         ---------      ---------      ---------
 Net cash used in investing activities    ...........................       (6,148)        (5,548)        (7,034)
                                                                         ---------      ---------      ---------
Financing activities
 Proceeds from employee stock incentive program, employee
   stock purchase plan, net of repurchases and cancellations   ......        2,306          1,995          1,441
 Repurchase of common stock   .......................................       (3,194)            --             --
                                                                         ---------      ---------      ---------
 Net cash provided by (used in) financing activities  ...............         (888)         1,995          1,441
                                                                         ---------      ---------      ---------
Increase (decrease) in cash and cash equivalents   ..................        2,117         (1,498)         3,026
Cash and cash equivalents, beginning of period  .....................        9,603         11,101          8,075
                                                                         ---------      ---------      ---------
Cash and cash equivalents, end of period  ...........................    $  11,720      $   9,603      $  11,101
                                                                         =========      =========      =========
Supplemental disclosure of noncash activities:
 Inventory capitalized into property, equipment and related tax   .      $     561      $     863      $     718
 Addition to capital lease obligation  ..............................    $      --      $      13      $      --
Cash paid during the period for:
 Interest   .........................................................    $       8      $      27      $      13
 Taxes paid (refunded)  .............................................    $    (189)     $   3,894      $     638

<FN>
                                                   See accompanying notes.

</FN>
</TABLE>
                                                               F-4


<PAGE>

<TABLE>

                            ADEPT TECHNOLOGY, INC.

                CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

<CAPTION>

                                                 Common Stock         Retained          Total
                                             ---------------------    Earnings      Shareholders'
                                             Shares      Amount      (Deficit)         Equity
                                             --------   ----------   -----------   ---------------
                                                                (in thousands)
<S>                                          <C>        <C>          <C>           <C>
Balance at June 30, 1996  ..................  7,869     $ 45,383     $ (2,560)        $ 42,823
   Common stock issued under employee stock
    incentive program and employee stock
    purchase plan   ........................    371       1,441            --            1,441
   Tax benefit from stock plans    .........     --          73            --               73
   Net income    ...........................     --          --         2,757            2,757
                                              -----     --------     ---------        --------
Balance at June 30, 1997  ..................  8,240      46,897           197           47,094
   Common stock issued under employee stock
    incentive program and employee stock
    purchase plan   ........................    458       1,995            --            1,995
   Tax benefit from stock plans    .........     --         544            --              544
   Compensation charge    ..................     --         675            --              675
   Acquisition of RoboElektronik   .........     25         114          (304)            (190)
   Net income    ...........................     --          --         2,551            2,551
                                              -----     --------     ---------        --------
Balance at June 30, 1998  ..................  8,723      50,225         2,444           52,669
   Common stock issued under employee stock
    incentive program and employee stock
    purchase plan   ........................    466       2,306            --            2,306
   Repurchase of shares   ..................   (450)     (2,534)         (660)          (3,194)
   Tax benefit from stock plans    .........     --         164            --              164
   Net income    ...........................     --          --         2,622            2,622
                                              -----     --------     ---------        --------
Balance at June 30, 1999  ..................  8,739     $ 50,161     $  4,406         $ 54,567
                                              =====     ========     =========        ========
<FN>

                                      See accompanying notes.
</FN>
</TABLE>

                                                F-5


<PAGE>

                            ADEPT TECHNOLOGY, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. Organization and Summary of Significant Accounting Policies


  Organization

     Adept  Technology,  Inc.  ("Adept" or the "Company") was incorporated under
the  laws  of  the  state  of  California on June 14, 1983. The Company designs,
manufactures  and  markets intelligent automation software and hardware products
for automating assembly, material handling and packaging applications.


  Basis of Presentation

     The  accompanying consolidated financial statements include the accounts of
the  Company  and its wholly-owned subsidiaries, Adept Technology GmbH (formerly
known  as  RoboElektronik  GmbH,  "RoboElectronik"),  acquired by the Company on
February  13,  1998  (see Note 2), and SILMA Incorporated ("SILMA"), acquired by
the   Company   on  June  28,  1995.  All  material  intercompany  accounts  and
transactions have been eliminated.

     The  notes  to  the Company's consolidated financial statements are for the
three  year  period  ended  June  30,  1999  (i.e., 1999, 1998 and 1997). Unless
otherwise  indicated,  references  to  any  year  in these Notes to Consolidated
Financial Statements refer to the Company's fiscal year ended June 30.


  Use of Estimates

     The  preparation  of  the financial statements in conformity with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions   that  affect  reported  amounts  of  assets  and  liabilities  and
disclosure  of  contingent  assets  and liabilities at the date of the financial
statements  and  the  reported  amounts  of  revenues  and  expenses  during the
reporting period. Actual results could differ from those estimates.


  Foreign Currency Translation

     The  Company  applies Financial Accounting Standards Board Statement No. 52
("SFAS  52"),  "Foreign Currency Translation," with respect to its international
operations,  which  are  sales  and  service  entities.  All monetary assets and
liabilities  are  remeasured  at  the  current  exchange  rate at the end of the
period,   nonmonetary  assets  and  liabilities  are  remeasured  at  historical
exchange  rates,  and  revenues  and expenses are remeasured at average exchange
rates  in  effect  during  the  period.  Losses which result from the process of
remeasuring  foreign currency financial statements in U.S. dollars were $87,000,
$376,000  and  $141,000 in 1999, 1998 and 1997, respectively. Transaction losses
were  $52,000  in  1999,  transaction  gains were $6,000, and $8,000 in 1998 and
1997, respectively.


  Cash, Cash Equivalents and Short-term Investments

     The  Company  considers  all  highly  liquid  investments purchased with an
original  maturity  of  three  months or less to be cash equivalents. Short-term
investments  in  marketable  securities  consist principally of debt instruments
with  maturities  between three and twelve months. Investments are classified as
held-to-maturity, trading, or available-for-sale at the time of purchase.

     At  June  30, 1999 and 1998, all of the Company's investments in marketable
securities  were  classified  as  available-for-sale  and  were  carried at fair
market  value, which approximated cost. Material unrealized gains and losses, if
any,  would  have  been  recorded  in shareholders' equity. Fair market value is
based  on  quoted  market  prices  on  the last day of the year. The cost of the
securities is based upon the specific identification method.


                                      F-6


<PAGE>

                            ADEPT TECHNOLOGY, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(Continued)


                                                   June 30,
                                            -----------------------
                                              1999         1998
                                            ----------   ----------
                                                (in thousands)
Cash and cash equivalents:
     Cash   ....................................  $  2,113     $  1,626
     Money market funds    .....................     1,653        1,065
     Commercial paper   ........................     2,554        2,388
     Municipal notes and bonds   ...............     5,400        4,524
                                                  ---------    ---------
Cash and cash equivalents   ....................  $ 11,720     $  9,603
                                                  =========    =========
Short-term investments:
     Auction rate securities  ..................  $  9,400     $    --
     Market auction preferred stock    .........     5,800       11,300
                                                  ---------    ---------
Short-term investments .........................  $ 15,200     $ 11,300
                                                  =========    =========

     Realized  gains or losses, interest, and dividends are included in interest
income.  In  1999,  1998  and 1997, realized and unrealized gains or losses from
available-for-sale securities were not material.

  Loans to Employees

     Loans to employees are summarized as follows:

                                                      June 30,
                                                 -------------------
                                                  1999        1998
                                                 ---------   -------
                                                   (in thousands)
         Short-term loans to employees  ......    $   904     $  --
         Long-term loans to employees   ......        342       687
                                                  --------    ------
                                                  $ 1,246     $ 687
                                                  ========    ======

     Short-term  loans  to  employees  are  included in other current assets, of
which $865,000 were repaid in August 1999.

     Long-term loans to employees are included in other assets.


  Inventories

     Inventories  are  stated  at the lower of standard cost, which approximates
actual  (first-in, first-out method) or market (estimated net realizable value).
The components of inventories are as follows:

                                        June 30,
                                 -----------------------
                                   1999         1998
                                 ----------   ----------
                                     (in thousands)
         Raw materials .........  $  5,296     $  7,407
         Work-in-process  ......     1,953        4,916
         Finished goods   ......     4,035        2,867
                                  ---------    ---------
                                  $ 11,284     $ 15,190
                                  =========    =========


                                      F-7


<PAGE>

                            ADEPT TECHNOLOGY, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(Continued)

  Property and Equipment

     Property and equipment are recorded at cost.

     The components of property and equipment are summarized as follows:

                                                                   June 30,
                                                             -------------------
                                                              1999         1998
                                                             -------     -------
                                                                (in thousands)
Cost:
     Machinery and equipment ............................    $13,558     $12,395
     Computer equipment .................................      7,860       7,040
     Office furniture and equipment .....................      2,929       2,703
                                                             -------     -------
                                                              24,347      22,138
Accumulated depreciation and amortization ...............     18,675      16,285
                                                             -------     -------
Net property and equipment ..............................    $ 5,672     $ 5,853
                                                             =======     =======

     Depreciation  and  amortization are computed using the straight-line method
over  the  estimated  useful lives of the assets, which range from three to five
years.  Assets  under  capital  leases  are  depreciated over the shorter of the
asset life or the remaining lease term.

  Revenue Recognition

     The  Company  generally  recognizes  revenue  on  products  at  the time of
shipment.  For  certain  international  sales  where  title and risk of loss are
transferred  at  the  customer's  site,  revenue  is  recognized upon receipt of
product  by  the  customer.  A  provision  for  the  estimated cost to repair or
replace  products  under  warranty  at the time of sale are recorded in the same
period as the related revenues.

     The   Company   recognizes  software  revenue,  primarily  related  to  its
simulation  software  products,  in  accordance  with  the American Institute of
Certified  Public  Accountants'  Statement  of  Position  97-2  ("SOP  97-2") on
Software  Revenue  Recognition. License revenue is recognized on shipment of the
product   provided   that   no   significant  vendor  or  post-contract  support
obligations  remain  and  that  collection of the resulting receivable is deemed
probable by management. Insignificant vendor and post-contract       support
obligations  are  accrued  upon  shipment.  Service  revenue  includes training,
consulting  and  customer  support.  Revenues  from  training and consulting are
recognized at the time the service is performed.

     Deferred  revenue primarily relates to software support contracts sold. The
term  of  the  software  support contract is generally one year, and the Company
recognizes  the  associated  revenue  on  a  pro rata basis over the life of the
contract.


  Concentration of Credit Risk

     Financial   instruments   that   potentially   subject   the   Company   to
concentrations  of  credit  risk  consist  primarily  of cash equivalents, money
market  auction  rate  preferred  stocks,  auction  rate  securities  and  trade
receivables.  The Company places its cash equivalents and short-term investments
with high credit-quality  financial institutions. The Company invests its excess
cash   in   commercial   paper,   readily   marketable   debt   instruments  and
collateralized  funds  of  U.S.,  state  and  municipal government entities. The
Company  has  established guidelines relative to credit ratings, diversification
and  maturities  that  seek  to  maintain  safety  and  liquidity.  The  Company
manufactures  and  sells  its products to system integrators, end users and OEMs
in  diversified  industries.  The Company performs ongoing credit evaluations of
its  customers and does not require collateral. However, the Company may require
the  customers to make payments in advance of shipment or to provide a letter of
credit.  The  Company  provides  reserves  for potential credit losses, and such
losses have been within management's expectations.


                                      F-8


<PAGE>

                            ADEPT TECHNOLOGY, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(Continued)

  Research, Development and Engineering Costs

     Research,  development and engineering costs, other than purchased computer
software,  are  charged to expense when incurred. The Company has received third
party  funding  of  $681,000,  $629,000  and  $767,000  in  1999, 1998 and 1997,
respectively.  The  Company  has  offset  research,  development and engineering
expenses  by  the  third party funding, as the third party funding is based upon
research  and development expenditures and the Company retains the rights to any
technology that is developed.


  Software Development Costs

     The  Company  capitalizes software development costs incurred subsequent to
the   time   the   product   reaches   technical  feasibility.  All  capitalized
internally-developed  software  costs and purchased software costs are amortized
to  the  cost of revenues on a straight-line basis based on the estimated useful
lives  of  the  products or the ratio of current revenue to the total of current
and   anticipated   future   revenue,   whichever   is   greater.   Capitalized
internally-developed  software and purchased software are stated at the lower of
amortized cost or net realizable value.

     There  is  no unamortized software development and purchased software costs
at  June  30,  1999  or 1998. In 1998, $359,000 of purchased software costs were
written  off as part of the nonrecurring charges. Software amortization for 1999
was $0, and $180,000 in 1998 and 1997.


  Advertising Costs

     Advertising  costs  are  expensed in the period incurred. Advertising costs
were  $143,000,  $212,000 and $217,000 in 1999, 1998 and 1997, respectively. The
Company does not incur any direct response advertising costs.


  Income Taxes

     The  Company  accounts  for  income  taxes  under  Statement  of  Financial
Accounting  Standards  No.109 ("SFAS 109"), "Accounting for Income Taxes." Under
SFAS  109,  the  liability  method is used to account for income taxes. Deferred
tax  assets  and  liabilities  are  determined  based on differences between the
financial  reporting  and  tax  bases of assets and liabilities and are measured
using  the  enacted  tax  rates  and  laws  that  will  be  in  effect  when the
differences are expected to reverse.


  Stock-Based Compensation

     In  1995,  the  Financial  Accounting  Standards  Board issued Statement of
Financial   Accounting   Standards   No.   123  ("SFAS  123"),  "Accounting  for
Stock-Based  Compensation",  which provides an alternative to APB Opinion No. 25
(Opinion  25),  "Accounting  for  Stock  Issued to Employees", in accounting for
stock  issued  to  employees. The Company has elected to account for stock-based
compensation  to  employees  in  accordance  with  Opinion  25,  providing  only
proforma disclosure required by SFAS 123.


  Net Income Per Share

     SFAS  No. 128, "Earnings Per Share", requires the presentation of basic and
diluted  EPS. Basic EPS excludes dilution and is computed by dividing net income
available  to  common  stockholders  by  the  weighted-average  number of common
shares  outstanding  for the period. Diluted EPS reflects the potential dilution
that  could  occur  if  securities or other contracts to issue common stock were
exercised  or  converted into common stock or resulted in the issuance of common
stock  that  then  participates  in  the earnings of the Company. Diluted EPS is
computed  similarly  to  fully  diluted  EPS  under the previous rules. Dilutive
common  equivalent  shares  consist  of  stock  options,  calculated  using  the
treasury stock method.


  Restructuring and Other Nonrecurring Charges

     During  1998,  the  Company recorded restructuring charges of approximately
$1.0  million  and other nonrecurring charges of approximately $1.7 million. The
restructuring charges of $1.0 million included


                                      F-9


<PAGE>

                            ADEPT TECHNOLOGY, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(Continued)

$651,000  for relinquishing control of the Company's Japan branch which resulted
in  the  write-off  of  certain  assets  and  excess  facilities.  The remaining
$362,000 relates to severance for the termination of certain employees.

     The  nonrecurring  charges  of approximately $1.7 million included $675,000
for  compensation expenses related to the Company's employee stock purchase plan
(see  Note  5)  and  $383,000  related  to  the write-off of certain information
system  hardware and software which had become obsolete as a result of decisions
made   in  the  fourth  quarter  of  1998  related  to  the  information  system
implementation  and  upgrade.  Additionally $413,000 related to the write off of
the  remaining  balance  of  capitalized  purchased software associated with the
acquisition  of SILMA. Due to technological changes in 1998 related to the SILMA
operating  platform, the Company determined that the net realizable value of the
purchased software was impaired.

<TABLE>
     The  following  table  summarizes  the  Company's  restructuring  and other
nonrecurring  charges  and accrual activity for the year ended June 30, 1999 and
1998:

<CAPTION>
                                                                                      Intangible and
                                        Severance                                      Fixed Assets
                                           and          Japan        Compensation       and Other
                                         Benefits     Operations       Expense           Charges           Total
                                        -----------   ------------   --------------   ----------------   ------------
                                                                       (in thousands)
<S>                                     <C>           <C>            <C>              <C>                <C>
Restructuring charges   ...............   $  362        $  651          $   --            $   --          $  1,013
Nonrecurring charges    ...............       --            --             675             1,068             1,743
                                          ------        ------          ------            ------          --------
   Total charges in 1998   ............      362           651             675             1,068             2,756
Non-cash charges  .....................       --          (266)           (675)             (796)           (1,737)
                                          ------        ------          ------            ------          --------
Accrued liabilities as of June 30, 1998      362           385              --               272             1,019
Cash paid during 1999   ...............     (362)         (385)             --              (272)           (1,019)
                                          ------        ------          ------            ------          --------
Accrued liabilities as of June 30, 1999   $   --        $   --          $   --            $   --          $     --
                                          ======        ======          ======            ======          ========
</TABLE>

  New Accounting Pronouncements

     In  October 1997 and March 1998, the American Institute of Certified public
Accountants  issued Statements of Position 97-2, ("SOP 97-2"), "Software Revenue
Recognition"  and  98-4  ("SOP  98-4"),  "Deferral  of  The  Effective Date of a
Provision  of  SOP  97-2, Software Revenue Recognition". The Company adopted SOP
97-2  and  SOP  98-4 for transactions entered into after June 30, 1998. Adoption
of  the  statements  did  not  have  a  material  adverse  impact on revenues or
operating results for 1999.

     The  Company  adopted  Statement  of Financial Accounting Standards No. 130
("SFAS  130"),  "Reporting  Comprehensive  Income" in 1999. SFAS 130 establishes
new  rules  for  the  reporting  and  display  of  comprehensive  income and its
components. SFAS 130 requires unrealized gains or losses on available-for-sale
securities  and  foreign  currency  translation  adjustments  to  be included in
comprehensive  income  (loss).  The  Company  has  no significant items of other
comprehensive  income,  and  the adoption of SFAS 130 did not have a significant
impact.

     The  Company  adopted  Statement  of Financial Accounting Standards No. 131
("SFAS   131"),  "Disclosures  about  Segments  of  an  Enterprise  and  Related
Information,"  in 1999. SFAS 131 establishes standards for reporting information
about  operating  segments  and  related  disclosures about products, geographic
information   and   major   customers.   The   Company   conducts  its  business
predominantly   within  one  business  segment,  namely,  providing  intelligent
automation  software  and  hardware products for assembly, material handling and
packaging  applications. Management assesses the Company's performance, measures
the Company's operations and assets on a single segment basis (see Note 9).

     In  June 1998, the Financial Accounting Standards Board issued Statement of
Financial  Accounting  Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133").


                                      F-10


<PAGE>

                            ADEPT TECHNOLOGY, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(Continued)

SFAS  133  provides  a comprehensive and consistent standard for the recognition
and  measurement  of  derivatives  and  hedging  activities.  SFAS 133 was to be
effective  for  fiscal  years  beginning  after  June 15, 1999. However, in July
1999,  the  Financial  Accounting  Standards Board issued Statement of Financial
Accounting  Standards  No.  137,  "Accounting  for  Derivative  Instruments  and
Hedging  Activities--Deferral  of  the Effective Date of FASB Statement No. 133"
("SFAS  137"). SFAS 137 defers for one year the effective date of SFAS 133 which
will  now  apply to all fiscal quarters of all fiscal years beginning after June
15,  2000.  We  have  not concluded whether the adoption of SFAS 133 will have a
material  impact  on  our consolidated financial position, results of operations
or cash flows.

     In  March  1998,  the  American  Institute  of Certified Public Accountants
issued  Statement  of  Position  98-1 ("SOP 98-1"), "Accounting for the Costs of
Computer  Software  Developed  or  Obtained for Internal Use." SOP 98-1 provides
guidance  on accounting for the costs of computer software developed or obtained
for  internal  use.  The  SOP  is  effective for financial statements for fiscal
years  beginning after December 15, 1998. We have concluded adoption of this SOP
will  not have a material impact on our consolidated financial position, results
of operations or cash flows.

  Reclassification

     Certain  amounts  presented in the financial statements of prior years have
been reclassified to conform to the current presentation for 1999.


2. Merger and Acquisition

   RoboElektronik

     In    February    1998,    the   Company   acquired   RoboElektronik   GmbH
("RoboElektronik")  through  the  issuance  of  24,562  shares  of the Company's
common  stock  which  were exchanged for all of the outstanding capital stock of
RoboElektronik.  The  acquisition  was  accounted for as a pooling of interests.
RoboElektronik  GmbH  was  renamed  Adept Technology, GmbH on June 26, 1998. The
results  of  operations  of  RoboElektronik  have  been  consolidated  since the
acquisition.


3. Derivative Financial Instruments

     The  Company  from  time  to  time  may enter into forward foreign exchange
contracts  primarily  to hedge against the short term impact of foreign currency
fluctuations  of  purchase commitments denominated in yen. The maturities of the
forward  exchange contracts are short term in nature, generally 90 days. Because
the  impact  of movements in currency exchange rates on forward foreign exchange
contracts  offsets  the  related  impact  on  the underlying items being hedged,
these  financial instruments do not subject the Company to speculative risk that
would  otherwise  result  from  changes in currency exchange rates. Realized and
unrealized  gains  and  losses  on  instruments  that hedge firm commitments are
deferred  and  included  in  the  measurement  of  the  subsequent  transaction;
however,  losses are deferred only to the extent of expected gains on the future
commitment. At June 30, 1999, there were no hedging gains or losses deferred.


                                      F-11


<PAGE>

                            ADEPT TECHNOLOGY, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(Continued)

4. Commitments and Contingencies

   Commitments

     The  Company's  lease  on  its major facility will expire in December 2003.
Future  minimum  lease  payments  under  non-cancelable  operating leases are as
follows:


                                                                  Operating
                                                                    Leases
                                                               ----------------
                                                                (in thousands)
         Fiscal Year:
               2000   .......................................     $  2,605
               2001   .......................................        3,039
               2002   .......................................        3,156
               2003   .......................................        3,080
               2004   .......................................        1,573
               Later years  .................................           98
                                                                  ---------
         Total minimum lease payments   .....................     $ 13,551
                                                                  =========

     Rent   expense   net  of  sublease  income  of  $312,000,  $0  and  $0  was
approximately  $2,507,000,  $2,024,000  and  $1,665,000  in 1999, 1998 and 1997,
respectively.

   Contingencies

     The  Company  has  from  time  to  time  received communications from third
parties  asserting  that  the  Company  is  infringing certain patents and other
intellectual  property rights of others, or seeking indemnification against such
alleged  infringement.  While  it  is  not  feasible to predict or determine the
outcome  of  the  actions  brought against it, the Company believes the ultimate
resolution  of  these  matters  will  not  have a material adverse effect on its
financial position, results of operations or cash flows.

5. Shareholders' Equity

   Preferred Stock

     The  Board  of Directors has the authority to issue, without further action
by  the  Shareholders,  up to 5,000,000 shares of preferred stock in one or more
series  and  to  fix the price, rights, preferences, privileges and restrictions
thereof,  including  dividend  rights, dividend rates, conversion rights, voting
rights,  terms of redemption, redemption prices, liquidation preferences and the
number  of  shares  constituting  a  series  or  the designation of such series,
without  any  further vote or action by the Company's shareholders. The issuance
of  preferred  stock,  while  providing desirable flexibility in connection with
possible  acquisitions  and  other  corporate purposes, could have the effect of
delaying,  deferring  or  preventing  a change in control of the Company without
further  action  by  the  shareholders and may adversely affect the market price
of, and the voting and other rights of, the holders of common stock.

   Stock Option Plans

     The  Company's  1983 Employee Stock Incentive Program (the "1983 Plan") was
adopted  by  the  Board  of Directors in August 1983. The 1983 Plan provided for
the  grant  of  incentive  stock  options  to  employees (including officers and
employee  directors)  and  nonstatutory  stock  options  to employees (including
officers  and  employee  directors)  and consultants of the Company. In general,
options  and  common  stock  purchased pursuant to stock purchase rights granted
under  the  1983  Plan  vest  and become exercisable starting one year after the
date  of grant, with 25% of the shares subject to the option exercisable at that
time  and  an  additional  1|M/48th of the shares subject to the option becoming
exercisable   each   month   thereafter.   Upon  the  voluntary  or  involuntary
termination  of  employment  (including as a result of death or disability) by a
holder  of  unvested  shares of the Company's common stock purchased pursuant to
stock  purchase  rights granted under the 1983 Plan, the Company may exercise an
option to


                                      F-12


<PAGE>

                            ADEPT TECHNOLOGY, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(Continued)

repurchase  such  shares  at  their original issue price. The Board of Directors
determines  the  exercise  price which must be at least equal to the fair market
value  of  shares  on  the date of grant. The 1983 Plan expired according to its
terms  in  August  1993.  Currently  outstanding options under the 1983 Plan and
common  stock purchased pursuant to stock purchase rights granted under the 1983
Plan  continue  to be governed by the terms of the 1983 Plan and by the terms of
the  respective  option  and  stock  purchase  and  stock restriction agreements
between the Company and the holders thereof.

     The  Company's  1993  Stock Plan (the "1993 Plan") was adopted by the Board
of  Directors  in  April 1993 and approved by the shareholders of the Company in
June  1993.  The  1993  Plan  provides  for grants of incentive stock options to
employees  (including  officers  and  employee directors) and nonstatutory stock
options   to   employees   (including   officers  and  employee  directors)  and
consultants  of  the Company. The terms of the 1993 Plan are similar to the 1983
Plan,  and  the  terms  of the options granted under the 1993 Plan generally may
not  exceed  ten  years.  The  Board  of Directors determines the exercise price
which  must  be at least equal to the fair market value of shares on the date of
grant.

     The  Company's  1995 Director Option Plan (the "Director Plan") was adopted
by  the  Board  of  Directors and approved by the shareholders of the Company in
October  1995.  The  option  grants  under  the  Director Plan are automatic and
nondiscretionary,  and  the  exercise price of the options is at the fair market
value  of  the  common  stock on the date of grant. A total of 150,000 shares of
common  stock  has  been  reserved for issuance under the Director Plan. At June
30,  1999  and  1998, respectively, 87,000 and 75,000 shares were granted and no
shares were exercised.

     The  options  may be exercised at the time or times determined by the Board
of Directors.

     In  August  1998,  the  Company  offered  all employees holding outstanding
options  the  opportunity to exchange such options with exercise prices equal to
the  then  fair  market  value. Under the August 1998 offer, options to purchase
367,827  shares  with  exercise  prices exceeding $7.00 per share were exchanged
for  similar options exercisable at $7.00 per share. The vesting schedule of all
exchanged  options  was  delayed  by  12  months  and the expiration date of the
exchanged  options  will  be  August  2008.  The effect of the exchange has been
included in the table in 1999 activity for options granted and canceled.


                                      F-13


<PAGE>

                            ADEPT TECHNOLOGY, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(Continued)

<TABLE>
   The following table summarizes activities of the stock option plans:

<CAPTION>
                                                                       Options
                                           ----------------------------------------------------------------
                                           Available     No. of Shares     Aggregate     Weighted Average
                                           for Grant      Outstanding        Price        Exercise Price
                                           -----------   ---------------   -----------   ------------------
                                                        (in thousands, except per share data)
<S>                                        <C>           <C>               <C>           <C>
Balance at June 30, 1996    ............      873              824          $  3,824          $  4.64
   Granted   ...........................     (465)             465             3,091             6.65
   Canceled  ...........................       35              (35)             (269)            7.70
   Exercised ...........................       --             (158)             (268)            1.70
                                            ------           -----          --------
Balance at June 30, 1997    ............      443            1,096             6,378             5.82
   Additional shares authorized   ......    1,000               --                --               --
   Granted   ...........................     (413)             413             4,908            11.87
   Canceled  ...........................       47              (47)             (484)           10.27
   Shares Expired  .....................         (1)            --                --               --
   Exercised    ........................       --             (270)             (706)            2.61
                                            ------           -----          --------
Balance at June 30, 1998 ...............    1,076            1,192            10,096             8.47
   Granted   ...........................     (913)             913             5,757             6.31
   Canceled  ...........................      451             (451)           (5,156)           11.43
   Shares Expired  .....................       --               --                --               --
   Exercised    ........................       --             (250)           (1,199)            4.80
                                            ------           -----          --------
Balance at June 30, 1999 ...............      614            1,404          $  9,498          $  6.76
                                            ======           =====          ========
</TABLE>

<TABLE>
     The  following  table  summarizes  information  concerning  outstanding and
exercisable  options  at  June 30, 1999 (at June 30, 1998, 537,000 stock options
were exercisable):

<CAPTION>
                                 Options Outstanding                  Options Exercisable
                      ------------------------------------------   --------------------------
                                       Weighted
                                        Average       Weighted                     Weighted
                                       Remaining       Average                      Average
Range of Exercise       Options       Contractual     Exercise       Options       Exercise
     Prices           Outstanding        Life          Price       Exercisable      Price
-------------------   -------------   -------------   ----------   -------------   ----------
                                               (shares in thousands)
<S>                   <C>             <C>             <C>          <C>             <C>
$4.63 - $ 5.56              327          8.58           $ 5.17           70          $ 5.31
$5.88 - $ 6.44               71          3.73           $ 6.06           49          $ 6.00
$6.50 - $ 6.50              291          7.14           $ 6.50          186          $ 6.50
$6.63 - $ 6.63              113          9.12           $ 6.63           21          $ 6.63
$7.00 - $14.75              602          8.09           $ 7.87          214          $ 8.17
                          ------                                        ----
$4.63 - $14.75            1,404          7.87           $ 6.76          540          $ 6.97
                          ======                                        ====
</TABLE>

   Employee Stock Purchase Plan

     In  1995,  the  Company  adopted an Employee Stock Purchase Plan (the "1995
ESPP")  and,  as  amended,  reserved  an  aggregate  total of 800,000 shares. In
November  1998,  the  Company's  shareholders  approved the adoption of the 1998
Employee  Stock  Purchase  Plan (the "1998 ESPP"), which replaced the 1995 ESPP.
Under  the  1998 ESPP, 600,000 shares were initially reserved for issuance. Both
1995  and  1998  ESPP  have overlapping twelve-month offering periods that begin
every  six  months,  starting  on  the  first  trading day on or after May 1 and
November  1  of each year. Each twelve-month offering period is divided into two
six-month  purchase periods. Both stock purchase plans allow eligible employees,
through  payroll deductions, to purchase shares of the Company's common stock at
85%  of  fair market value on either the first day of the offering period or the
last day of the purchase period, whichever is lower. The 1998 ESPP


                                      F-14


<PAGE>

                            ADEPT TECHNOLOGY, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(Continued)

includes  a  provision  for an annual automatic increase in the number of shares
reserved  for  issuance  by  the  lesser of (i) 300,000, (ii) 3% of common stock
outstanding  on  the  last day of the prior fiscal year, or (iii) such amount as
may be determined by the Board of Directors.

     As  of  June  30,  1999,  594,000 shares of the Company's common stock were
issued  under the 1995 ESPP and the 206,000 shares unissued under this plan were
cancelled.  In  addition,  as of June 30, 1999, 600,000 shares were reserved for
issuance under the 1998 ESPP, of which 94,000 shares have been issued.

     The  Company  reported  a  charge of $675,000 in the second quarter of 1998
for  compensation  expense  related  to the Emerging Issues Task Force Issue No.
97-12,  "Accounting  for  Increased  Share  Authorizations in an IRS Section 423
Employee  Stock  Purchase  Plan  under  APB Opinion No. 25, Accounting for Stock
Issued  to  Employees"  which  was  approved by the EITF in September 1997. This
nonrecurring,  non-cash  charge  represented  the  difference between 85% of the
fair  market  value of common stock on the date of the beginning of the offering
period  and  the  fair market value of common stock on the date the shareholders
approved  the  increase  in  shares  authorized  for issuance, multiplied by the
number  of  shares  in  the  1995  ESPP that had been subscribed for purchase by
employees,  but  not  authorized  by  the  shareholders,  prior to the Company's
Annual Meeting of Shareholders.

     In   August  1998,  the  Board  of  Directors  authorized  the  Company  to
repurchase  up  to  450,000  shares  of  the  Company's common stock on the open
market  or  in  privately  negotiated transactions at prices not to exceed $8.50
per  share and a total purchase price not to exceed $3,825,000. During 1999, the
Company  repurchased  450,000  shares  at an average purchase price of $7.10 per
share.


<TABLE>
   Stock Based Compensation

     At  June  30, 1999, the Company had three stock-based compensation plans as
described   above.   The   Company  applies  APB  Opinion  No.  25  and  related
interpretations  in  accounting for its plans. Accordingly, no compensation cost
has  been  recognized  for  its  fixed  stock  option  plans  and  its  ESPP. If
compensation  cost  for  the  Company's  stock-based compensation plans had been
determined  consistent  with Statement of Financial Accounting Standards No. 123
("SFAS  123"), the Company's net income and net income per share would have been
reduced to the pro forma amounts indicated below:

<CAPTION>
                                                                    June 30,
                                                        ---------------------------------
                                                         1999        1998        1997
                                                        ---------   ---------   ---------
                                                         (in thousands, except per share
                                                                      data)
<S>                              <C>                    <C>         <C>         <C>
Net income                       As reported   ......    $ 2,622     $ 2,551     $ 2,757
                                 Pro forma  .........    $   301     $   580     $ 1,464
Basic net income per share       As reported   ......    $   .31     $   .30     $   .34
                                 Pro forma  .........    $   .04     $   .07     $   .18
Diluted net income per share     As reported   ......    $   .30     $   .29     $   .33
                                 Pro forma  .........    $   .03     $   .07     $   .17
</TABLE>

     Because  the  method  of  accounting  prescribed  by  SFAS 123 has not been
applied  to  options  granted  prior  to  July  1, 1995, the resulting pro forma
compensation  cost  may  not  be representative of that to be expected in future
years.

     The  fair  value  of  each  option  grant is estimated on the date of grant
using   the   Black-Scholes   option   pricing   model   with   the   following
weighted-average  assumptions  for  grants during the years ended June 30, 1999,
1998  and  1997,  risk-free  interest  rates of 4.84%, 5.77% and 6.63% for 1999,
1998  and  1997,  respectively;  a  dividend  yield of 0% for all three years; a
weighted-average  expected  life  of  3.5,  3.4 and 3.0 years for 1999, 1998 and
1997,  respectively; and a volatility factor of the expected market price of the
Company's


                                      F-15


<PAGE>

                            ADEPT TECHNOLOGY, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(Continued)

common  stock  of  .99,  .65  and .69 for 1999, 1998 and 1997, respectively. The
weighted  average grant date fair value of options granted during 1999, 1998 and
1997 was $3.83, $5.86 and $3.26, respectively.

     Compensation  cost  is  estimated  for  the  fair  value  of the employees'
purchase rights using the Black-Sholes  model with the following assumptions for
these  rights  granted  in  1999,  1998 and 1997: a dividend yield of 0% for all
three  years; expected life of 6 months for all three years; expected volatility
of  .99,  .65  and  .69  for  1999, 1998 and 1997, respectively; and a risk-free
interest  rate  of 4.78%, 5.59% and 5.27% for 1999, 1998 and 1997, respectively.
The  weighted  average fair market value of the purchase rights granted in 1999,
1998 and 1997 was $3.11, $2.90 and $3.45, respectively.

     The   Black-Scholes  option  valuation  model  was  developed  for  use  in
estimating  the  fair value of traded options which have no vesting restrictions
and  are  fully  transferable.  In  addition, option models require the input of
highly  subjective  assumptions  including  the expected stock price volatility.
Because  the Company's employee stock options have characteristics significantly
different  from  those  of traded options, and because changes in the subjective
assumptions  can  materially  affect  the  fair  value estimate, in management's
opinion,  the  existing  models  do  not  necessarily  provide a reliable single
measure of the fair value of its employee stock options.


6. Employee Savings and Investment Plan

     In  May  1988,  the Company adopted a 401(k) savings and investment plan in
which  employees  are  eligible  to  participate.  In 1998 and 1997, the Company
matched  the  employee's contribution at a rate of $.50 per dollar, to a maximum
of  $19.23  per  person,  per  week. During 1999, the matching was suspended for
part  of  the  year  to  reduce costs. The Company's matching contributions were
$125,000, $252,000, and $235,000 in 1999, 1998 and 1997, respectively.


7. Income Taxes

     The provision for income taxes consists of the following:

                                                    Year Ended June 30,
                                           -------------------------------------
                                            1999         1998          1997
                                           ---------   ----------   ------------
                                                      (in thousands)
Current:
     Federal    ........................   $  414      $ 2,852        $ 1,029
     State   ...........................      184          363            187
     Foreign ...........................      851          330            187
                                           -------     --------       -------
         Total current    ...............   1,449        3,545          1,403
Deferred:
     Federal ............................     389       (1,580)           (78)
     State   ............................     (89)        (264)           (16)
                                           -------     --------       -------
Total deferred ..........................     300       (1,844)           (94)
                                           -------     --------       -------
Provision for income taxes ..............  $ 1,749     $ 1,701        $ 1,309
                                           =======     ========       =======


                                      F-16


<PAGE>

                            ADEPT TECHNOLOGY, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(Continued)

     The  difference  between  the  provision  for  income  taxes and the amount
computed  by  applying  the  federal  statutory income tax rate to income before
provision for income taxes is explained below:

                                                       Year Ended June 30,
                                                --------------------------------
                                                 1999        1998       1997
                                                ---------   --------  ----------
                                                          (in thousands)
      Tax at federal statutory rate   ........  $ 1,486     $ 1,446    $ 1,382
      State taxes, net of federal benefit   ..      63          33         113
      Foreign taxes    .......................     562         218         132
      Tax credits   ..........................    (350)       (180)       (373)
      Other   ................................     (12)        184          55
                                                -------     -------    -------
      Provision for income taxes   ...........  $ 1,749     $ 1,701    $ 1,309
                                                =======     =======    =======

     Significant   components   of   the   Company's  deferred  tax  assets  and
liabilities are as follows:


                                                                   June 30,
                                                            --------------------
                                                             1999         1998
                                                            -------     -------
                                                                (in thousands)
Deferred tax assets:
     Net operating loss carryforwards                       $   459     $   550
     Tax credit carryforwards .....................             553         377
     Inventory valuation accounts                             1,146       1,218
     Warranty reserves                                          785         628
     Other accruals and reserves not currently
       deductible for tax purposes ................           2,239       2,648
     Other                                                      202         229
                                                            -------     -------
     Total deferred tax assets                                5,384       5,650
     Valuation allowance                                       (836)       (927)
                                                            -------     -------
     Net deferred tax assets                                  4,548       4,723
                                                            -------     -------
Deferred tax liabilities:
     Foreign earnings                                          (410)       (285)
                                                            -------     -------
     Net deferred tax liabilities                              (410)       (285)
                                                            -------     -------
Total net deferred tax assets                               $ 4,138     $ 4,438
                                                            =======     =======


     The  change  in the valuation allowance was a net increase of approximately
$143,000 for 1998.

     At  June  30,  1999,  the  Company had net operating loss carryforwards for
federal  income  tax  purposes  of  approximately $1.3 million, which if unused,
will  expire  beginning  in  2001.  The Company also had credit carryforwards of
approximately  $350,000,  which  if  unused,  will  expire  beginning  in  1999.
Utilization  of  the  net  operating  loss  carryforwards  and  the  tax  credit
carryforwards is limited to approximately $300,000 per year.

     For  financial  reporting  purposes,  a valuation allowance of $836,000 has
been  established  to  offset  the  deferred  tax  assets related to certain tax
credits and net operating loss carryforwards.

     Pretax  income  (losses)  from  foreign  operations  was approximately $1.5
million, ($605,000), and ($271,000) in 1999, 1998 and 1997, respectively.


                                      F-17


<PAGE>

                            ADEPT TECHNOLOGY, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(Continued)

<TABLE>
8. Net Income Per Share
     Net income per share is calculated as follows:

<CAPTION>
                                                            Year Ended June 30,
                                                     ---------------------------------
                                                      1999        1998        1997
                                                     ---------   ---------   ---------
                                                 (in thousands, except per share amounts)
<S>                                                  <C>         <C>         <C>
     Net income    .................................  $ 2,622     $ 2,551     $ 2,757
                                                      ========    ========    ========
     Basic:
        Weighted-average shares outstanding   ......    8,590       8,455       8,062
                                                      ========    ========    ========
        Net income per share   .....................  $   .31     $   .30     $   .34
                                                      ========    ========    ========
     Diluted:
        Weighted-average shares outstanding   ......    8,590       8,455       8,062
        Effect of dilutive securities:
        Stock options    ...........................       98         468         380
                                                      --------    --------    --------
        Weighted-average shares outstanding   ......    8,688       8,923       8,442
                                                      ========    ========    ========
        Net income per share   .....................  $   .30     $   .29     $   .33
                                                      ========    ========    ========
</TABLE>

     Stock  options  to  purchase  160,480; 463,054 and 120,007 shares of common
stock  were  outstanding  during  the  years ended June 30, 1999, 1998 and 1997,
respectively,  but  were not included in the calculations of diluted EPS because
the  option's  exercise  price  was greater than the average market price of the
Company's  common  shares during those years. The options that were antidilutive
in  1999  may  be  dilutive  in  future  years'  calculations as they were still
outstanding at June 30, 1999.


9. Segment Information

     The  Company  adopted  Statement  of Financial Accounting Standards No. 131
("SFAS   131"),  "Disclosures  about  Segments  of  an  Enterprise  and  Related
Information,"  in 1999. SFAS 131 establishes standards for reporting information
about  operating  segments  and  related  disclosures about products, geographic
information   and   major   customers.   The   Company   conducts  its  business
predominantly   within  one  business  segment,  namely,  providing  intelligent
automation  software  and  hardware products for assembly, material handling and
packaging  applications. Management assesses the Company's performance, measures
the Company's operations and assets on a single segment basis.


                                      F-18


<PAGE>

                            ADEPT TECHNOLOGY, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(Continued)

     Although  the Company operates in a single segment, revenues and long-lived
assets  are  tracked  by  geographic  areas, and are summarized in the following
table:

                                                 Year Ended June 30,
                                         ------------------------------------
                                           1999         1998         1997
                                         ----------   ----------   ----------
                                                    (in thousands)
Revenue:
     United States  ..................    $ 40,819     $ 58,584     $ 53,138
     Germany  ........................      12,702       10,088        7,764
     France   ........................      10,990       11,834        8,497
     Other European countries   ......      12,908       12,815        8,646
     All other countries  ............       4,608        5,073        4,722
                                          ---------    ---------    ---------
                                          $ 82,027     $ 98,394     $ 82,767
                                          =========    =========    =========
Long-lived assets:
     United States  ..................    $  5,594     $  5,520     $  5,406
     All other countries  ............         473          508          596
                                          ---------    ---------    ---------
                                          $  6,067     $  6,028     $  6,002
                                          =========    =========    =========

     No  single  customer  accounted  for  more  than  10%  of the Company's net
revenue in 1999, 1998 and 1997.


10. Subsequent event

     On  July  14,  1999,  the  Company  acquired  BYE/Oasis  Engineering,  Inc.
("BYE/Oasis")  through  the  issuance  of 720,008 shares of the Company's common
stock,  which  were  exchanged  for  all  of  the  outstanding  capital stock of
BYE/Oasis.  In  addition,  options to purchase an aggregate of 185,361 shares of
the  Company's common stock were assumed in the acquisition. The acquisition was
intended  to  constitute  a  tax-free reorganization under Section 368(a) of the
Internal  Revenue  Code  of  1986.  The  Company  intends  to  account  for  the
acquisition as a pooling of interests.


                                      F-19


<PAGE>

                                                                    SCHEDULE II


<TABLE>

                             ADEPT TECHNOLOGY, INC.

                       VALUATION AND QUALIFYING ACCOUNTS
                                 (in thousands)

<CAPTION>
                                        Balance       Additions
                                          at         Charged to                        Balance
                                       Beginning      Costs and                        at End
           Description                 of Period      Expenses      Deductions(1)     of Period
------------------------------------   -----------   ------------   ---------------   -----------
<S>                                    <C>           <C>            <C>               <C>
Year ended June 30, 1997:
  Allowance for doubtful accounts         $ 465         $ 129            $ 145           $ 449
Year ended June 30, 1998:
  Allowance for doubtful accounts           449           346              343             452
Year ended June 30, 1999:
  Allowance for doubtful accounts           452           320              135             637
<FN>
------------
(1) Includes write offs net of recoveries.
</FN>
</TABLE>

                                      S-1