<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-K
       FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                       ---------------------------------

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 For the fiscal year ended February 28, 1999

                                   OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

                          Commission File No. 0-12991

                       THE LANGER BIOMECHANICS GROUP, INC.
             (Exact name of Registrant as specified in its charter)

<TABLE>
   <S>                                       <C>
            New York                               11-2239561
   (State or other jurisdiction              (I.R.S. employer iden-
     of incorporation or                      tification number)
        organization)

</TABLE>

                   450 Commack Road, Deer Park, New York 11729
               (Address of principal executive offices) (Zip code)

       Registrant's telephone number, including area code: (516) 667-1200

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

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

                     Common Stock, par value $.02 per share
                                 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

<PAGE>

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ( )

As of June 3, 1999, the aggregate market value of voting stock held by
non-affiliates of the Registrant was $2,441,142, as computed by reference to the
average bid and ask prices of the stock (1 1/2) multiplied by the number of
shares of voting stock outstanding on June 3, 1999 held by non-affiliates
(1,627,428).

Indicate the number of shares outstanding of each of the Registrant's classes of
common stock as of June 3, 1999.

<TABLE>
<CAPTION>

Class of Common Stock         Outstanding at June 3, 1999
---------------------         ---------------------------
<S>                                   <C>
Common Stock, par value               2,598,281  shares
$.02 per share

</TABLE>

                       DOCUMENTS INCORPORATED BY REFERENCE

Not applicable.

<PAGE>


                                     PART I


ITEM 1.    BUSINESS

GENERAL


     The Langer Biomechanics Group, Inc. ("LBG" or the "Company") is engaged in
the design, manufacture and marketing of foot and gait-related biomechanical
products. The Company's largest product line, custom-made, prescription orthotic
devices, accounted for approximately 83% of revenues for the fiscal year ended
February 28, 1999. Foot orthoses are contoured molds made from plastic,
graphite, leather or composite materials, which are placed in patients' shoes to
(i) correct or mitigate abnormalities in their gait and (ii) relieve symptoms
associated with foot or postural malalignment. These devices function by
maintaining the proper relationships between a patient's forefoot, rearfoot, leg
and horizontal walking surface. To the Company's knowledge, it has the greatest
overall unit volume and revenue in the custom foot orthoses industry. The
Company's customers are primarily podiatrists, and also include orthopedists,
physical therapists and Orthotic & Prosthetic ("O&P") centers. The Company also
makes ankle foot orthoses ("AFO"), boot-like devices which assist individuals
afflicted with neurological impairments, foot deformities and injuries to
achieve a more natural gait.

     In addition to its line of orthotics products, the Company has developed
and markets a number of other products that help treat biomechanical medical
problems related to feet and gait, including:

-   A proprietary medical grade soft tissue cushioning material named PPT(R),
    which the Company believes provides superior protection against forces of
    pressure, shock and shear. PPT conforms and bonds to a broad array of
    orthotic and prosthetic devices, braces and assemblies; and

-   The Pediatric Counter Rotation System ("CRS"-Registered Trademark-), a
    device which corrects in-toe/out-toe disorders of infancy, while
    allowing unrestricted movement of the feet and legs.

BACKGROUND

        Since its formation under the laws of the state of New York in 1971, the
Company has engaged in activities relating to the application of scientific and
quantitative methods for the diagnosis and treatment of foot and gait-related
problems. To date, the majority of the Company's revenues have been derived from
the sale of prescription biomechanical foot orthotic devices to health care
practitioners in the field of podiatric biomechanics. Podiatric biomechanics
deals essentially with the structure and function of segments of the feet as
they relate to each other and to the function of the legs, hips and spine.

        The Company has also endeavored to manufacture and market complementary
products relating to locomotor dysfunctions. Building on its experience in
treating disorders associated with the biomechanics of the foot and leg, the
Company has directed efforts towards producing therapeutic products which can
treat and improve patients' motor capabilities, biomechanical alignment and
function.

                                 3

<PAGE>


      Net sales by product category of the Company as derived from its
accounting records are set forth below (dollars in thousands):

<TABLE>
<CAPTION>

                                                       FISCAL  YEARS ENDED:
                                           --------------------------------------------
                                           FEB. 28,    FEB. 28,    FEB. 28,    FEB. 29,
PRODUCT CATEGORY                             1999        1998        1997        1996
----------------                           --------------------------------------------
<S>                                         <C>         <C>         <C>         <C>
Custom Orthoses                             $ 8,521     $ 8,618     $ 8,994     $ 8,652

PPT Products                                  1,269       1,281       1,085       1,121

Counter Rotation System ("CRS")                 108         111         129         165

Materials and Other (including Superform)       409         146         307         175
                                            -------     -------     -------     -------
Total                                       $10,307     $10,156     $10,515     $10,113
                                            -------     -------     -------     -------
                                            -------     -------     -------     -------
</TABLE>

       Export and foreign sales constituted approximately 26%, 26% and 25% of
revenues for the fiscal years ended February 28, 1999, 1998 and 1997,
respectively.

CUSTOM ORTHOTIC DEVICES

     The Company is engaged in the design, development, manufacture and sale of
custom-made foot orthoses. Biomechanical orthotic devices help provide near
normal function by maintaining the angular anatomical relationships between the
patient's forefoot, rearfoot, leg and horizontal walking surface. This is
achieved by the inherent contours of the neutral position shell of the device
and by the angled posts on the front and/or rear ends which cause the orthotic
device to move into specific positions at specific times during the gait cycle.
Accordingly, muscle action is enhanced and the efficiency and smoothness of
weight stress transmission through the feet and legs is improved. The result is
a reduction of abnormal motion without total restriction of normal motion and an
increase in foot and leg stability. Foot problems may be alleviated or
eliminated, as may leg and back fatigue caused by improper muscle use. The
formation and further growth of excrescences (e.g., corns or callouses) may be
prevented, decreased in size or eliminated. In addition, the future formation of
bunions may be prevented.

     During the twelve months ended February 28, 1999, sales of orthotic
products totaled $8,521,000, compared to $8,618,000 for the twelve months ended
February 28, 1998. Decreased revenue resulted from decreased unit volume in the
Company's United Kingdom subsidiary. The United Kingdom's volume decline in
custom orthotics was largely offset by a volume increase in the Company's North
America operations.

     While sales were primarily made to practitioners within the United States,
the Company also sold its orthotic products in approximately thirty-two foreign
countries. No single orthotic customer presently accounts for more than 1% of
the Company's annual sales. The primary market for custom orthotic devices is
podiatrists who prescribe such devices for their patients. There are
approximately 11,000 practitioners of podiatry licensed in the United States.
Orthotic devices are also sold to other health care professionals, such as
orthopedists, engaged in the treatment of the foot. The cost of the device to
the patient is typically included by the practitioner as part of his fee for
treatment. The Company does not sell the devices directly to the user-patient.
Orthotic devices are made in the Company's three facilities in Deer Park, New
York; Brea, California; and Stoke-on-Trent, England. The prescribing
practitioner furnishes plaster impression casts of the patient's feet and
necessary clinical information on an appropriate prescription order form. In
addition to its six-month warranty, the Company offers an optional "Protect
Program" at an additional cost of $55 per pair of orthoses. Under the program,
the Company will repair or replace the orthotics at no charge, or at a reduced
charge, during the first 24 months following sale.

    Biomechanical orthotic devices can be fabricated with different functional
capabilities and from various materials, depending upon the requirements of the
patient. The Company has designed orthotic devices to address the needs of
particular segments of the market. For example, the general interest in physical
fitness has resulted in demand for orthotic

                                 4

<PAGE>


devices and it has heightened the awareness of the importance of proper foot
function and foot care. To address this segment of the market, the Company
manufactures an extensive line of orthotics called Sporthotics-Registered
Trademark-, designed for the specific needs of runners and other
sport-specific athletes, including football, basketball and tennis players.
Other specialized products include: Healthflex-Registered Trademark-
(designed for the needs of aerobic dance, walking and exercise enthusiasts),
DesignLine-Registered Trademark- (a functional orthotic designed to fit into
dress shoes, such as high fashion shoes and loafers which cannot accommodate
a full-size orthotic), DressFlex-Registered Trademark- (a unique proprietary
device for use in women's high-heeled shoes), Slimthotics-Registered
Trademark- (designed to fit into shoes, such as high heels and ballet
slippers), Lyte Fit-Registered Trademark- (ultra-thin and lightweight devices
made from LBG's exclusive Superform-Registered Trademark- thermoplastic
material), the Golden Series-Registered Trademark-(designed for the needs of
active individuals who are over 50 years of age), Bioflex-Registered
Trademark- (devices suitable for younger, more active individuals),
BlueLine-Registered Trademark- (a flexible, durable, accommodative device
that provides a moderate level of of control), D.S.I.S.-Registered Trademark-
(a patented device for the effective treatment of pediatric flat foot), and
Diab-A-Thotics-Registered Trademark- (designed to meet the needs of diabetic
patients in the growing diabetic population).

    An additional product line called "FirstChoice" was introduced in fiscal
1995 in order to address price-sensitive market areas, including managed care
organizations. The product offering is limited to several basic products and
has flat rate pricing. The manufacturing and service areas are also limited
in order to reduce costs.

    Superform-Registered Trademark- is a proprietary composite material believed
to be superior to other composite materials available for orthotic fabrication.
Superform was first introduced in fiscal 1994 in several of the Company's
orthotic products due to its strength and mouldability. During fiscal 1995, the
Company began to market Superform to other orthotic labs.

    Ankle Foot Orthoses ("AFO") are plastic devices which are composed of a foot
plate and leg support. They assist individuals afflicted with neurological
impairments, previous trauma, ankle and leg instability, and arthritic
deformities, to achieve a more natural gait. These products include the Hinged
Ankle Foot Orthosis ("HAFO") used for neurological problems, the
Supra-Malleoloar Orthosis ("SMO") for instability of the ankle joint, the Solid
Ankle Foot Orthoses ("SAFO") to restrict motion at the ankle to treat arthritis
and other joint conditions, and the Posterior Leaf Spring ("PLS"), useful in
tendon ruptures and flaccid drop foot. AFO devices are prescribed by
podiatrists, physical therapists and rehabilitation therapists.

    While the Company obtains a number of its fabrication materials from single
sources, it has not experienced any significant shortages other than occasional
backorders. In most cases, any needed materials can usually be obtained from a
distributor.

    The Company believes that a relatively small percentage of custom orthotic
devices continue to be made by practitioners in their own offices or
laboratories. The vast majority of the market is serviced by professional
laboratories based on casts and prescriptions furnished by practitioners. There
are several other custom orthotic laboratories that are national in scope which
the Company believes hold approximately a combined 40% to 45% of the overall
custom market. The remainder of the market is fragmented among smaller regional
and local facilities.

PPT-Registered Trademark- PRODUCTS

    PPT is a medical grade soft tissue cushioning material with a high density,
open-celled urethane foam structure. PPT, a registered trademark of the Company,
is manufactured, pursuant to an agreement, for the Company by a large industrial
manufacturing company. This company manufactures urethane foam materials of
which PPT is a derivative. Pursuant to the agreement, the Company has the
exclusive worldwide rights to serve footcare, orthopedic and related medical
markets with such materials.

    The Company has developed and sells a variety of products fabricated from
PPT including moulded insoles, components for orthotic devices, laminated
sheets, and diabetic products. Some manufacturing operations associated with
these products are performed by outside vendors.

    Sales of PPT products for the twelve months ended February 28, 1999 were
$1,269,000 versus $1,281,000 in the prior fiscal year. The decrease is
attributable to supply chain problems that resulted in cancelled orders from
larger direct accounts and distributors.

                                 5

<PAGE>


    In 1993, the Company introduced a new generation of PPT, which independent
tests show to have improved properties over competitive materials. The essential
function of PPT and other soft tissue supplements is to provide protection
against forces of pressure, shock and shear. The Company believes that PPT's
characteristics make it a superior product in its field. PPT has a superior
"memory" that enables it to return to its original shape faster and more
accurately than other materials used for similar purposes. PPT is also odorless
and non-sensitizing to the skin, and has a porosity which helps the skin to
remain dry, cool and comfortable. These factors are especially important in
sports medicine applications.

     Besides podiatric use, PPT is suitable for other orthopedic and
medical-related uses such as liners for braces and prosthetics, as shock
absorbers and generally in devices used in sports and physical therapy.

    The Company has awarded exclusive distribution arrangements to certain
leading distributors serving selected end-use markets in the United States and
other countries. The Company sells direct to practitioners in non-exclusive
markets.

    The market for soft tissue supplements is highly competitive. Brand products
as well as commodity type foam rubber are all widely used. Brand name products
include Spenco, Sorbothane, medical-grade Poron, and DCS. The remainder of the
market is fragmented. The Company competes directly with one other manufacturer
of cellular urethane foam.

THE PEDIATRIC COUNTER-ROTATION SYSTEM ("CRS")

    The Company introduced the CRS-Registered Trademark- device in fiscal 1987
for the correction and management of a variety of in-toe and out-toe
disorders of infancy. The disorders manifest themselves in an excessive
angle, either inward or outward, from that which is normal in the
relationship of the foot to the direction of movement.

    Sales for CRS totaled $108,000 during the twelve months ended February 28,
1999 compared to sales of $111,000 in the prior twelve-month period. The
decrease in revenues is a result of a trend whereby more referring orthopedic
physicians diagnose the in-toe and out-toe disorders as naturally correcting
problems that do not require special devices such as the CRS.

    The CRS is designed to replace rigid bars or splints which have
traditionally been used (since 1934) and which not only inhibit normal leg
movement and are cumbersome and inconvenient, but can also lead to permanent
knee and hip damage. Unlike rigid bars or splints, the CRS requires no specific
measurement for sizing and may be used with almost any type of children's shoes.
Also, unlike other devices, it will allow the infant unrestricted movement of
the feet and legs while maintaining the abnormal foot or feet in the corrected
position. The CRS is also designed to compensate automatically for the rapid
growth of an infant's legs and hips, thus avoiding the possibility of damage to
the hips and knees. The potential for permanent knee and hip joint damage is a
significant drawback of rigid bar therapy.

    The CRS is prescribed by pediatricians, orthopedists and podiatrists and is
sold by the Company directly to practitioners as well as through selected
distributors. The level of reimbursement from third-party insurers for the CRS
varies from one state to another.

    The CRS was developed by BioResearch Ithaca, Inc. of Ithaca, New York, which
has obtained patents on the device in the United States and certain other
countries. In accordance with a license agreement entered into in l986 between
the Company and BioResearch Ithaca, Inc., the Company has been granted an
exclusive license, with the right to grant sublicenses, to make, use and sell
the CRS. Food and Drug Administration acceptance to market the CRS has been
obtained by the Company. See "Governmental Regulation".

    The primary competitive products for the CRS are rigid bars and splints.

MATERIALS AND OTHER (INCLUDING SUPERFORM) - (MOS)

SUPERFORM-Registered Trademark- (MOS)

                                 6

<PAGE>

    Superform thermoplastic composite is the Company's proprietary material used
for orthotic shell fabrication. Superform is lightweight and has superior impact
resistance, making it a suitable material for orthotics that are used by
athletes.

    Sales for MOS totaled $409,000 during the twelve months ended February 28,
1999 compared to sales of $146,000 in the prior twelve-month period. The
increase in revenues resulted from the use of MOS in non-Company products sold
throughout the United Kingdom and sold to distributors.

MARKETING

    The Company vitalized its field sales effort, targeting multi-practitioner
facilities, in addition to trade shows, advertising, educational sponsorships,
public relations and maintenance marketing. The Company continues to emphasize
customer service by maintaining a staff of customer service representatives at
each of its facilities.

    The Company continues its focus on providing the education and training for
healthcare practitioners who treat biomechanical problems of the lower extremity
through seminar and in-service programs. A comprehensive program is offered in
biomechanics, gait analysis and the cost-effectiveness of orthotic therapy.

    Management promotes awareness of orthotics through marketing and operational
initiatives. A Volume Incentive Program ("VIP") along with practice building
assistance is oriented toward helping practitioners expand the orthotic
components of their practices.

RESEARCH AND DEVELOPMENT

    The Company incurred no research and development costs for the twelve months
ended February 28, 1999, 1998 and 1997. However, the Company expects to incur
research and development costs in the future. As of March 1, 1999, the Company
established a Product Development department to explore new applications for
existing products and ensure that the Company remains on the cutting edge of
orthotic therapy.

PATENTS AND TRADEMARKS

    The Company believes that patent and trademark protection are beneficial.
The Company holds 13 patents, 94 trademarks and 9 copyrights. These patents and
trademarks are held in 12 countries, including the United States. The Company
has exclusive licenses to three types of orthotic devices which are patented in
the United States and several foreign countries. In addition, patents have also
been granted to a third party in the United States and numerous foreign
countries with respect to the CRS (as to which the Company has exclusive
marketing rights).

    Although a patent would have a statutory presumption of validity in the
United States, in the event that any patent awarded to the Company or a third
party is later tested in litigation, the issuance of a patent is not conclusive
as to such validity or as to the enforceable scope of the claims therein. The
validity and enforceability of a patent can be attacked after its issuance. If
the outcome of such litigation is adverse to the owner or licensor of the
patent, third parties may use the invention or technology pertaining to the
patent without restriction. Accordingly, any patents granted to the Company or
to third parties from whom the Company obtained licenses may not afford any
protection against competitors with similar products. Loss of patent protection
could have an adverse effect on the Company's business by permitting competitors
to utilize techniques developed by the Company.

GOVERNMENTAL REGULATION

    Rules of the Food and Drug Administration ("FDA") may require the submission
of a 510(k) notification of intent to market certain products. Upon submission
of a 510(k), the FDA may determine the product to be substantially equivalent to
products previously marketed in interstate commerce. Such submissions have been
made and determined to be substantially equivalent for the CRS.

                                 7

<PAGE>


EMPLOYEES

    At March 1, l999, the Company had 147 employees, of which 90 were located in
Deer Park, New York, 32 in Brea, California, and 25 in Stoke-on-Trent, England.
The employees are not represented by a union. The Stoke-on-Trent facility is a
75% owned subsidiary of the Company.

CONSULTANTS AND FIELD EVALUATION FORCE

    The Company has oral or written agreements with four medical specialists
with respect to their providing professional consultative services to the
Company in their areas of specialization. Two of the consultants are on the
faculties of podiatric medicine colleges in the United States.

    The consultants test and evaluate the Company's products, act as speakers
for the Company at symposiums and professional meetings, generally participate
in the development of the Company's products and services and disseminate
information about them. The Company also relies on practitioners in various
parts of the country to act as field evaluators of the Company's products.

SEASONALITY

     Revenue derived from the Company's sale of orthotic devices, a substantial
portion of the Company's operations, has historically been significantly higher
in the warmer months of the year.


ITEM 2. PROPERTIES

     The Company's executive offices, and its primary manufacturing facilities,
are located in Deer Park, New York. The Deer Park facility is leased through
July 31, 2005, with a four year extension option, and with monthly lease
payments averaging $25,181. The Company also leases space in Brea, California
(manufacturing facility) which expires on December 31, 1999, and with aggregate
monthly lease payments of $7,576. A 75% owned subsidiary of the Company
currently leases facilities in Stoke-on-Trent, England under a lease that
expired December 31, 1998 and for which it currently pays $2,536 monthly (at the
current exchange rate) on a week to week lease until June 30th, 1999. The
England subsidiary plans to occupy new premises on July 1, 1999. The Company
believes that its manufacturing facilities are suitable and adequate and provide
the productive capacity necessary for its current and reasonably foreseeable
future needs. The Company believes that while these manufacturing facilities are
being adequately utilized, they could be more fully utilized (e.g. with extended
night shift operations) should this become necessary.

ITEM 3. LEGAL PROCEEDINGS

     None.

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

     None.

                                 8

<PAGE>


                                     PART II


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


PRICE RANGE OF COMMON STOCK

    The Registrant's common stock, par value $.02 per share ("Common Stock"), is
traded on the over-the-counter market with quotations reported on the National
Association of Securities Dealers Automated Quotation System (NASDAQ) under the
symbol GAIT. The following table sets forth the high and low closing bid prices
for the Common Stock for the fiscal years ended February 28, 1998 and February
28, 1999. The NASDAQ quotations represent prices between dealers, do not include
retail markups, markdowns or commissions, and may not represent actual
transactions.

<TABLE>
<CAPTION>

TWELVE MONTHS ENDED FEBRUARY 28, 1998        HIGH        LOW
-------------------------------------        ----        ---
<S>                                         <C>         <C>
1st quarter                                 1-7/8       1-5/8
2nd quarter                                 2-1/4       1-11/16
3rd quarter                                 2           1-7/16
4th quarter                                 1 3/4       1-13/32
</TABLE>

<TABLE>
<CAPTION>

TWELVE MONTHS ENDED FEBRUARY 28, 1999        HIGH        LOW
-------------------------------------        ----        ---
<S>                                         <C>         <C>
1st quarter                                 1-9/16      1-5/16
2nd quarter                                 1-7/16      1-5/16
3rd quarter                                 1-3/8       1-1/16
4th quarter                                 1-7/8       1-1/4

</TABLE>

    On February 28, 1999, there were approximately 300 holders of record of the
Common Stock. However, this figure is exclusive of all owners whose stock is
held beneficially or in "street" name. Based on information supplied by various
securities dealers, the Company believes that there are in excess of 650
shareholders in total, including holders of record as well as those whose shares
are beneficially held.

DIVIDEND HISTORY AND POLICY

    The Registrant has never paid cash dividends on its Common Stock and
anticipates that, for the foreseeable future, it will follow a policy of
retaining earnings to finance the expansion and development of its business. In
any event, future dividend policy will depend upon the Company's earnings,
financial condition, working capital requirements and other factors.

RECENT ISSUANCE OF SECURITIES

On November 30, 1998, the Board of Directors authorized the issuance of 4000
shares of common stock to each of these outstanding directors (Kenneth Granat,
Stephen V. Ardia and Thomas I. Altholz) in consideration for their services as
outside directors. The Company relied upon the exemption provided Section 4(2)
of the Securities Exchange Act of 1933 in commencing with this issuance.

                                 9

<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>

                                                 (In thousands, except per share data.)

                                                               Fiscal Year Ended:
                                                 ------------------------------------------------------
                                                  Feb. 28,   Feb. 28,    Feb. 28,   Feb. 29,    Feb. 28,
                                                     1999       1998       1997      1996        1995
                                                  --------   --------   --------   --------    --------
<S>                                               <C>        <C>        <C>        <C>         <C>
Consolidated Statement of Operations:

   Net sales                                      $ 10,307   $ 10,156   $ 10,515   $ 10,113    $ 10,467

   Income (loss) before non-recurring charges
      and income taxes                                 346        370        331        113        (266)

   Non-recurring changes:
    Discontinuance of CAD-CAM project                   --         --         --       (499)         --
    Lab closings, write down of selected assets
      and legal fees                                    --         --         --        (49)       (363)

   Income (loss) before income taxes                   346        370        331       (435)       (629)

   Provision for (benefit from) income taxes            25          5         28         (2)          8

   Net income (loss)                                   304        365        303       (433)       (637)

   Earnings per share:

   Income (loss) before non-recurring charges
     and income taxes                                 0.12       0.14       0.12       0.04       (0.11)

   Non-recurring changes:
    Discontinuance of CAD-CAM project                   --         --         --      (0.19)         --
    Lab closings, write down of selected assets
      and legal fees                                    --         --         --      (0.02)      (0.14)

   Net income (loss) per common share:
        Basic                                         0.12       0.14       0.12      (0.17)      (0.25)
        Diluted                                       0.12       0.14       0.11      (0.17)      (0.25)

Weighted average number of common shares:
        Basic                                        2,584      2,585      2,583      2,568       2,547
        Diluted                                      2,607      2,658      2,666      2,568       2,547

Cash dividends per share                                --         --         --         --          --

Consolidated Balance Sheets:

   Working Capital                                   2,423      2,090      2,050      1,576       1,456

   Total Assets                                      5,125      4,848      4,445      4,035       4,535

   Long-term Indebtedness
     (excluding current maturities)                     --        375        444        430         482

   Stockholders' Equity                              2,950      2,663      2,291      1,978       2,311

</TABLE>

                                 10

<PAGE>


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


STATEMENTS OF OPERATIONS:

    The Company's net sales of $10,307,000 for the twelve months ended February
28, 1999 were 1.5 percent above net sales of $10,156,000 for the twelve months
ended February 28, 1998. Net sales in fiscal 1998 were 3.4 percent below net
sales of $10,515,000 for the twelve months ended February 28, 1997.

    Sales of orthotic products, which accounted for 83 percent of the Company's
fiscal 1999 sales, decreased by approximately $97,000 or 1.1 percent to
approximately $8,521,000 in the most recent twelve-month period. Decreased
revenue resulted from decreased unit volume in the Company's United Kingdom
subsidiary. The United Kingdom's volume decline in custom orthotics was largely
offset by a volume increase in the Company's North America operations. Sales of
orthotic products in fiscal 1998 decreased by $376,000 or 4.2 percent to
$8,618,000 from fiscal 1997. Decreased revenues resulted from decreased unit
volume from the elimination of marginal accounts and a shift in doctor
preference toward lower priced orthoses, partially offset by an earlier unit
price increase.

    Sales of PPT (the Company's soft tissue supplement material) for the recent
twelve months were $1,269,000, which decreased by $12,000 or 0.9 percent from
sales in the prior fiscal year. The decrease in PPT sales over the prior fiscal
year was due to supply chain problems that resulted in cancelled orders from
larger direct accounts and distributors. For the year ended February 28, 1998,
sales were $1,281,000, representing a 18.1 percent increase of $196,000 from the
prior year. The increase was due to the addition of several larger volume
accounts.

    Sales of the Counter Rotation System ("CRS"-Registered Trademark-) were
$108,000 for the twelve months ended February 28, 1999, representing a $3,000
or 2.7 percent decrease from the prior twelve-month period. The decrease in
revenues is a result of a trend whereby more referring orthopedic physicians
diagnose the in-toe and out-toe disorders as naturally correcting problems
that do not require special devices such as the CRS. Sales for fiscal 1998
declined by $18,000 or 14.0 percent from the prior fiscal year. The decreased
revenue resulted from a reduced level of direct promotion together with a
shift toward wholesale sales to distributors in the United States and
overseas.

    Gross profit (net sales less cost of sales) as a percentage of sales
decreased from 40.0 percent for the twelve months ended February 28, 1998 to
36.4 percent for the recent twelve-month period. The decreased gross profit
percentage largely resulted from increased labor and freight costs associated
with unusual customer support efforts that revolved around operational issues
caused by the installation of a new company-wide computer system. Increased
material costs also accounted for some of the decrease in gross margin. Gross
profit as a percentage of sales decreased from 41.5 percent for the twelve
months ended February 28, 1997 to 40.0 percent for the year-end February 28,
1998. The decreased gross profit percentage resulted from increased
manufacturing overhead on reduced unit sales in United States operations, and
increased labor costs in United Kingdom operations.

    For the current fiscal year, selling expenses decreased by $97,000, and
general and administrative expenses decreased by $3,000, compared to the prior
twelve-month period. The decrease in selling expenses was driven by reductions
in salaries, direct mail and advertising. The decrease in general and
administrative expenses was due to net reductions in salaries and fringe
benefits. For the twelve-month period ended February 28, 1998, selling expenses
decreased by $332,000, and general and administrative expenses decreased by
$18,000, compared to the prior twelve-month period. These reductions were due to
lower promotional expense and tighter controls over operational expenditures and
staff reductions.

                                 11

<PAGE>


    The Company incurred no research and development expenses in fiscal 1999,
1998 or 1997. However, the Company expects to incur research and development
costs in the future. As of March 1, 1999, the Company established a Product
Development department to explore new applications for existing products and
ensure that the Company remains on the cutting edge of orthotic therapy.

    Interest income for the recent twelve-month period of $44,000 decreased
$9,000 from the prior twelve-month period. The decrease is due to a reduction in
interest charged on past due receivables. Interest income of $53,000 for fiscal
1998 was above fiscal 1997 by $3,000. This was primarily due to higher cash
balances and more effective short-term investment of excess cash.

    Other income for fiscal year 1999 was $208,000. The significant increase is
due to an insurance claim settlement for a fire at the main production facility
several years ago. For the twelve months ended February 28, 1998 and 1997, other
income was $13,000 and $20,000, respectively.

    For the year ended February 28, 1999, the Company had net income of $304,000
compared with net income of $365,000 for the prior fiscal year. Net income
remained substantially consistent with the prior year as declines in operating
income were offset by increases in other income as explained above. The fiscal
1999 declines in operating profit were due to unexpected installation costs for
the Company's new computer system. Also, the Company's effective tax rate was
higher in fiscal 1999, primarily due to increased profits in the United Kingdom
subsidiary, which further reduced net income.

    For the year ended February 28, 1998, the Company had net income of $365,000
compared with a profit of $303,000 for the prior fiscal year. Income increased
due to increased sales of PPT, the sales price increase on orthotic products for
the full fiscal year, reduced selling expenses and a lower effective tax rate.

    For the year ended February 28, 1997, the Company had net income of $303,000
compared with a profit of $115,000 before non-recurring expenses for the prior
fiscal year. Income increased primarily due to higher unit volume, a sales price
increase effective in the last four months of the year, improved manufacturing
efficiencies and reduced general and administrative expenses.

LIQUIDITY AND CAPITAL RESOURCES

    Working capital as of February 28, 1999 increased $333,000 to $2,423,000
from $2,090,000 at February 28, 1998. The increase is due to increases in cash
and accounts receivable of $511,000 and $37,000, respectively, less decreases in
inventories and prepaid expenses of $6,000 and $151,000, respectively. The
increase was further offset by increases in accounts payable and accrued payroll
and related payroll taxes of $89,000 and $4,000, respectively, and augmented by
decreases in other current liabilities and unearned revenue of $4,000 and
$34,000, respectively.

        Cash balances at February 28, 1999 of $1,700,000 were $511,000 above the
prior year-end balance of $1,189,000.

        The Company anticipates that cash generated from operations as well as
existing funds will be adequate to finance its present and contemplated future
level of operations for a period of at least twelve months.

REVOLVING CREDIT

        The Company has a one year (August 1, 1998 - July 31, 1999) agreement
for revolving credit of $1,500,000, at an interest rate of prime plus 1/2
percent, from a bank, but to date has not found it necessary to use this
credit line. The agreement contains, among other items, restrictions relating
to incurrence of additional indebtedness and the payment of dividends.
Additionally, the Company is required to maintain certain minimum financial
ratios. Borrowings under this agreement are collateralized by substantially
all of the assets of the Company.

                                 12

<PAGE>


SEASONALITY

        Revenue derived from the Company's sale of orthotic devices, a
substantial portion of the Company's operations, has historically been
significantly higher in the warmer months of the year.

INFLATION

        The Company has in the past been able to increase the prices of its
products or reduce overhead costs sufficiently to offset the effects of
inflation on wages, materials and other expenses, and anticipates that it will
be able to continue to do so in the future.

RECENT PRONOUNCEMENTS OF THE FINANCIAL ACCOUNTING STANDARDS BOARD

    During the year ended February 28, 1999, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income" ("SFAS No. 130"), SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS No. 131"), and SFAS No. 132,
"Employers' Disclosure about Pension and Other Post Retirement Benefits" ("SFAS
No. 132). SFAS No. 130 establishes standards for the reporting and display of
comprehensive income and its components (revenues, expenses, gains and losses)
in a set of financial statements. SFAS No. 131 establishes standards for
reporting financial and descriptive information about reportable operating
segments on the basis that is used internally for evaluating segment performance
and allocating segment resources. SFAS No. 132 revises employers' disclosure
requirements regarding pension and post retirement benefit plans. The adoption
of SFAS No. 130, SFAS No.131 and SFAS No.132 did not have a material effect on
the Company's consolidated financial statements.

        In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS No. 133"), which requires that
derivative instruments be measured at fair value and recognized as assets or
liabilities in the Company's balance sheet. SFAS No.133 is effective for all
quarters of all fiscal years beginning after June 15, 2000. The Company is
currently evaluating the effect that SFAS No. 133 will have on the Company's
consolidated financial statements.

YEAR 2000 COMPLIANCE

    The inability of computers, software and other equipment utilizing
microprocessors to recognize and properly process data fields containing a 2
digit year is commonly referred to as the "Year 2000 Compliance" issue. As the
year 2000 approaches, such systems may be unable to accurately process certain
date-based information. The Company commenced a program in fiscal 1998 to
identify, remediate, test and develop contingency plans for Year 2000
Compliance. Currently, the Company is substantially complete with its Year 2000
Compliance Program, the results of which are summarized as follows:

    COMPUTER INFORMATION SYSTEMS ("CIS"). Beginning in fiscal 1998 (March 1997 -
February 1998) the Company began implementing a new enterprise-wide CIS. The CIS
is customized software running on a Windows NT Server. The server, customer
software and all networked personal computers are fully Year 2000 compliant.
The Company has been operating the new CIS since February 1998 and it is now
considered fully implemented. The Company anticipates that CIS, as it relates
to the Year 2000 Compliance issue, will have no effect on business operations.

    PRODUCTS. The Year 2000 Compliance issue affects none of the Company's
current products. Due to the nature of the Company's business, custom orthotics
and related materials and services, no software or microprocessors are used in
the products.

    THIRD PARTIES. The Company solicited statements of compliance from its key
outside vendors, manufacturers and suppliers with respect to their CIS and
overall business operations. Approximately 70% of these parties responded and
informed the Company that they are currently compliant or plan to be compliant
by December 31, 1999. To the extent that any of these parties have been unable
to certify that they will be substantially Year 2000 compliant by early 1999,
the Company is reviewing its alternatives with respect to other vendors,
manufacturers or suppliers (as applicable). Currently, the Company has received
responses from its critical suppliers and its CIS vendor certifying full Year
2000 compliance. Throughout the remainder of 1999 the Company will continue its
efforts to monitor the progress and obtain and evaluate responses of its key
vendors, suppliers and other significant third parties.

                                 13
<PAGE>

    COSTS. The Company's most significant Year 2000 Compliance costs relate to
the implementation of the new CIS. The costs related to the new CIS for the
years ended February 28, 1998 and 1999 were approximately $400,000 and $200,000,
respectively. The Company does not currently anticipate that future costs
associated with its ongoing Year 2000 Compliance program will be material to its
financial condition or results of operations.

    The Year 2000 issue presents far-reaching implications, some of which cannot
be anticipated with any degree of certainty. Satisfactorily addressing the Year
2000 Compliance issue is dependent on many factors, some of which are not
completely in the Company's control, such as availability of certain
resources, third party remediation plans and other market-wide factors. Based
on the assessment that has been made under the Year 2000 Compliance program,
and other than stated above, the Company has no other contingency plans in
the event of Year 2000 noncompliance and does not currently believe that any
other contingency plans are necessary. In addition, management is not able to
determine the effect of any Year 2000 noncompliance (including with respect
to a "worst-case scenario") on the Company, and there can be no guarantee
that any such noncompliance would not have an adverse effect on the Company's
CIS, results of operations and financial condition.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

Information contained or incorporated by reference in the annual report on Form
10-K and in other SEC filings by the Company contains "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 which can be identified by the use of forward-looking terminology such
as "believes," "expects," "may," "will," "should," or "anticipates" or the
negative thereof, other variations thereon or comparable terminology, or by
discussions of strategy. No assurance can be given that future results covered
by the forward-looking statements will be achieved, and other factors could also
cause actual results to vary materially from the future results covered in such
forward-looking statements. Factors which might cause such a difference include,
but are not limited to, product demand, the impact of competitive products and
pricing and general business and economic conditions.

ITEM 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSES ABOUT MARKET RISK

Not applicable.


ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Begins on the next page.

                                 14

<PAGE>


                       THE LANGER BIOMECHANICS GROUP, INC.
                                AND SUBSIDIARIES
            INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
                        FEBRUARY 28, 1999, 1998 AND 1997

<TABLE>
<CAPTION>

                                                                                  Page
<S>                                                                              <C>
Independent Auditors' Report                                                       16

Consolidated Financial Statements:

   Consolidated Balance Sheets as of February 28, 1999 and 1998                    17

   Consolidated Statements of Operations for the years ended February 28, 1999,
      1998 and 1997                                                                18

   Consolidated Statements of Stockholders' Equity for the years
      ended February 28, 1999, 1998 and 1997                                       19

Consolidated Statements of Cash Flows for the years ended
   February 28, 1999, 1998 and l997                                                20

Notes to Consolidated Financial Statements                                       21 - 30


Consolidated Financial Statement Schedule II -
   Valuation and Qualifying Accounts for the years ended
   February 28, 1999, 1998 and 1997                                                31

</TABLE>

All other schedules have been omitted because they are not applicable, not
required or the information is disclosed in the consolidated financial
statements, including the notes thereto.

                                 15

<PAGE>


INDEPENDENT AUDITORS' REPORT


To the Stockholders and Board of Directors of
The Langer Biomechanics Group, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of The Langer
Biomechanics Group, Inc. and subsidiaries (the "Company") as of February 28,
1999 and 1998, and the related consolidated statements of operations,
stockholders' equity, and cash flows for each of the three years in the period
ended February 28, 1999. Our audits also included the consolidated financial
statement schedule listed in the foregoing index for the three years in the
period ended February 28, 1999. These consolidated financial statements and
financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on the consolidated financial
statements and financial statement schedule based on our audits.

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

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company at February 28, 1999
and 1998, and the results of their operations and their cash flows for each of
the three years in the period ended February 28, 1999 in conformity with
generally accepted accounting principles. Also, in our opinion, such
consolidated financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly, in
all material respects, the information set forth therein.


Jericho, New York
June 4, 1999

                                 16

<PAGE>


                       THE LANGER BIOMECHANICS GROUP, INC.
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           FEBRUARY 28, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                      1999           1998
                                                                      ----           ----
<S>                                                            <C>            <C>
Assets
Current assets:
   Cash and cash equivalents                                   $ 1,700,156    $ 1,189,046
   Accounts receivables, net of allowance for
   doubtful accounts of approximately
   $36,000 in 1999 and $23,000 in 1998                           1,396,878      1,360,420
   Inventories, net (Note 2)                                     1,034,001      1,039,718
   Prepaid expenses and other current receivables                  160,723        311,447
                                                               -----------    -----------
        Total current assets                                     4,291,758      3,900,631

   Property and equipment, net (Note 3)                            673,152        777,991
   Other assets (Note 7)                                           159,670        169,214
                                                               -----------    -----------
     Total assets (Note 11)                                    $ 5,124,580    $ 4,847,836
                                                               -----------    -----------
                                                               -----------    -----------
Liabilities and Stockholders' Equity
Current liabilities:
   Accounts payable                                            $   700,590    $   614,915
   Accrued liabilities:
     Accrued payroll and related payroll taxes                     285,540        281,961
     Other current liabilities (Note 4)                            542,250        522,384
   Unearned revenue (Note 1)                                       356,887        391,081
                                                               -----------    -----------
     Total current liabilities                                   1,885,267      1,810,341

   Accrued pension expense (Note 7)                                195,254        220,609
   Unearned revenue (Note 1)                                       104,420        148,733
   Deferred income taxes (Note 5)                                    5,288          5,423
                                                               -----------    -----------
        Total liabilities                                        2,190,229      2,185,106
                                                               -----------    -----------
Commitments and Contingencies (Note 6)

Stockholders' equity (Note 8):
   Common stock, $.02 par value. Authorized
     10,000,000 shares; issued 2,598,281
     shares in 1999 and 2,585,281 in 1998                           51,966         51,706
   Additional paid-in capital                                    6,291,564      6,277,543
   Accumulated deficit                                          (3,070,630)    (3,375,120)
   Accumulated other comprehensive loss (Note 7)                  (299,199)      (291,399)
                                                               -----------    -----------
                                                                 2,973,701      2,662,730
Less treasury stock at cost, 25,000 shares in 1999                 (39,350)            --
                                                               -----------    -----------
        Total stockholders' equity                               2,934,351      2,662,730
                                                               -----------    -----------
Total Liabilities and Stockholders' Equity                     $ 5,124,580    $ 4,847,836
                                                               -----------    -----------
                                                               -----------    -----------
</TABLE>

See accompanying notes to consolidated financial statements

                                 17

<PAGE>


                       THE LANGER BIOMECHANICS GROUP, INC.
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED FEBRUARY 28, 1999, 1998 AND 1997


<TABLE>
<CAPTION>



                                                             1999            1998            1997
                                                        ------------    ------------    ------------
<S>                                                     <C>             <C>             <C>
Net sales (Note 9)                                      $ 10,307,114    $ 10,156,085    $ 10,514,842
Cost of sales                                              6,557,200       6,095,412       6,149,872
                                                        ------------    ------------    ------------
        Gross profit                                       3,749,914       4,060,673       4,364,970

Selling expenses                                           1,399,339       1,496,148       1,828,144
General and administrative expenses                        2,245,467       2,248,365       2,266,217
                                                        ------------    ------------    ------------
Operating profit                                             105,108         316,160         270,609
                                                        ------------    ------------    ------------
Other income (expense):
        Interest income                                       43,958          52,592          48,978
        Interest expense                                     (11,303)        (11,980)         (9,298)
        Other (Note 9)                                       208,070          13,453          20,261
        Minority interest                                    (16,030)             --              --
                                                        ------------    ------------    ------------

Other income, net                                            224,695          54,065          59,941
                                                        ------------    ------------    ------------

Income before income taxes                                   329,803         370,225         330,550
        Provision for income taxes (Note 5)                   25,313           4,943          27,503
                                                        ------------    ------------    ------------
                Net income                              $    304,490    $    365,282   $     303,047
                                                        ------------    ------------    ------------
                                                        ------------    ------------    ------------
Weightedaverage number of common shares used
        in computation of net income per share:
                Basic                                      2,584,336       2,584,780       2,583,344
                Diluted                                    2,607,285       2,658,378       2,666,420

Net income per common share:
                Basic                                   $       0.12    $       0.14    $       0.12
                                                        ------------    ------------    ------------
                                                        ------------    ------------    ------------
                Diluted                                 $       0.12    $       0.14    $       0.11
                                                        ------------    ------------    ------------
                                                        ------------    ------------    ------------

</TABLE>


See accompanying notes to consolidated financial statements.

                                 18

<PAGE>

                 LANGER BIOMECHANICS GROUP, INC AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED FEBRUARY 28, 1999, 1998 AND 1997

<TABLE>
<CAPTION>
                                                                                               Accumulated Other
                                                                                           Comprehensive Income (Loss)
-----------------------------------------------------------------------------------------------------------------------
                                                                Additional                  Foreign         Minimum
                                   Common Stock     Treasury     Paid-in     Accumulated   Currency         Pension
                               Shares      Amount     Stock      Capital       Deficit    Translation      Liability
-----------------------------------------------------------------------------------------------------------------------
<S>                          <C>          <C>       <C>        <C>           <C>            <C>           <C>
Balance at March 1, 1996     2,581,281     $51,627             $ 6,274,497   ($4,043,449)   ($49,788)     ($255,168)
Comprehensive income:
  Net income for 1997                                                            303,047
  Foreign currency
   adjustment                                                                                  1,279
  Minimum pension liability
   adjustment                                                                                                  6,920
Total comprehensive
 income
Exercise of stock options        3,000          59                   2,285
-----------------------------------------------------------------------------------------------------------------------
Balance at February 28,
 1997                        2,584,281      51,686               6,276,782    (3,740,402)    (48,509)       (248,248)
Comprehensive income:
  Net income for 1998                                                            365,282
  Foreign currency
   adjustment                                                                                (1,062)
  Minimum pension liability
   adjustment                                                                                                  6,420
Total comprehensive
 income

Exercise of stock options        1,000          20                     761
-----------------------------------------------------------------------------------------------------------------------
Balance at February 28,
 1998                        2,585,281      51,706               6,277,543    (3,375,120)    (49,571)      (241,828)
Comprehensive income:
  Net income for 1999                                                            304,490
  Foreign currency
   adjustment                                                                                  2,676
  Minimum pension liability
   adjustment                                                                                               (10,476)
Total comprehensive
 income

Treasury stock acquired                             ($39,350)

Issuance of stock               12,000         240                  13,260

Exercise of stock options        1,000          20                     761
-----------------------------------------------------------------------------------------------------------------------
Balance at February 28,
 1999                        2,598,281    $ 51,966  ($39,350)  $ 6,291,564   ($3,070,630)   ($46,895)     ($252,304)
-----------------------------------------------------------------------------------------------------------------------

<CAPTION>

------------------------------------------------------------
                                                   Total
                               Comprehensive   Stockholders'
                                   Income         Equity
------------------------------------------------------------
<S>                              <C>            <C>
Balance at March 1, 1996                         $ 1,977,719
Comprehensive income:
  Net income for 1997               $303,047
  Foreign currency
   adjustment                          1,279
  Minimum pension liability
   adjustment                          6,920
                                       -----
Total comprehensive
 income                             $311,246         311,246
                                    --------
                                    --------
Exercise of stock options                              2,344
-------------------------------------------------------------
Balance at February 28,
 1997                                              2,291,309
Comprehensive income:
  Net income for 1998               $365,282
  Foreign currency
   adjustment                         (1,062)
  Minimum pension liability
   adjustment                          6,420
                                       -----
Total comprehensive
 income                             $370,640         370,640
                                    --------
                                    --------
Exercise of stock options                                781
-------------------------------------------------------------
Balance at February 28,
 1998                                              2,662,730
Comprehensive income:
  Net income for 1999               $304,490
  Foreign currency
   adjustment                          2,676
  Minimum pension liability
   adjustment                        (10,476)
                                     -------
Total comprehensive
 income                             $296,690         296,690
                                    --------
                                    --------
Treasury stock acquired                              (39,350)

Issuance of stock                                     13,500

Exercise of stock options                                781
-------------------------------------------------------------
Balance at February 28,
 1999                                            $ 2,934,351
-------------------------------------------------------------
</TABLE>


See accompanying notes to consolidated financial statements.

                                 19
<PAGE>

                       THE LANGER BIOMECHANICS GROUP, INC.
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED FEBRUARY 28, 1999, 1998 AND 1997
<TABLE>
<CAPTION>

                                                                  1999           1998           1997
                                                                  ----           ----           ----
<S>                                                        <C>            <C>            <C>
Cash Flows From Operating Activities:

Net income                                                 $   304,490    $   365,282    $   303,047

Adjustments to reconcile net income to net cash
   provided by operating activities:
   Deferred foreign tax (benefit) provision                       (135)            47            747
   Depreciation and amortization                               213,536        207,233        190,618
   Provision for doubtful accounts receivable                   59,788         17,525          7,524

Changes in operating assets and liabilities:
   Accounts receivable                                         (91,260)        52,540       (158,868)
   Inventories                                                   9,294       (118,199)       (52,516)
   Prepaid expenses and other assets                           152,831        (30,219)        38,435
   Accounts payable and accrued liabilities                    102,290        101,891         81,157
   Net pension liability                                       (28,041)       (52,495)         2,845
   Unearned revenue                                            (79,468)        (2,154)        27,484
                                                           -----------    -----------    -----------
Net cash provided by operating activites                       643,325        541,451        440,473
                                                           -----------    -----------    -----------
Cash Flows From Investing Activities -

   Capital expenditures                                       (107,146)      (478,474)       (53,282)
                                                           -----------    -----------    -----------
      Net cash used in investing activities                   (107,146)      (478,474)       (53,282)
                                                           -----------    -----------    -----------
Cash Flows From Financing Activities:

   Common stock options exercised                                  781            781          2,344
    Issuance of stock                                           13,500             --             --
   Treasury stock acquired                                     (39,350)            --             --
   Principal payments of note payable                               --           (301)        (3,406)
                                                           -----------    -----------    -----------
      Net cash (used in) provided by financing activites       (25,069)           480         (1,062)
                                                           -----------    -----------    -----------
Net increase in cash and cash equivalents                      511,110         63,457        386,129
Cash and cash equivalents at beginning of year               1,189,046      1,125,589        739,460
                                                           -----------    -----------    -----------
Cash and cash equivalents at end of year                   $ 1,700,156    $ 1,189,046    $ 1,125,589
                                                           -----------    -----------    -----------
                                                           -----------    -----------    -----------
Supplemental Disclosures of Cash Flow Information-
      Cash paid during the year for:

         Interest                                          $    11,303    $    11,980    $     9,298
                                                           -----------    -----------    -----------
                                                           -----------    -----------    -----------
         Income taxes                                      $     5,600    $     1,500    $     8,286
                                                           -----------    -----------    -----------
                                                           -----------    -----------    -----------
</TABLE>

See accompanying notes to consolidated financial statements.

                                 20
<PAGE>

                      THE LANGER BIOMECHANICS GROUP, INC.
                                AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         FOR THE YEARS ENDED FEBRUARY 28,
                               1999, 1998 AND 1997


(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     (a) PRINCIPLES OF CONSOLIDATION

         The accompanying consolidated financial statements include the accounts
         of The Langer Biomechanics Group, Inc. and its subsidiaries (the
         "Company"). All significant intercompany transactions and balances have
         been eliminated in consolidation.

     (b) REVENUE RECOGNITION

         Revenue from the sale of the Company's products is recognized at
         shipment. Revenues derived from extended warranty contracts relating to
         sales of orthotics are recorded as deferred revenue and recognized over
         the lives of the contracts (24 months) on a straight-line basis.

     (c) CASH EQUIVALENTS

         For purposes of the statement of cash flows, the Company considers all
         short-term, highly liquid investments purchased with a maturity of
         three months or less to be cash equivalents (money market funds and
         short-term commercial paper).

     (d) INVENTORIES

         Inventories are stated at the lower of cost or market. Cost is
         determined using the first-in, first-out (FIFO) method.

     (e) PROPERTY AND EQUIPMENT

         Property and equipment is stated at cost less accumulated depreciation
         and amortization. Depreciation and amortization are calculated using
         the straight-line method. The lives on which depreciation and
         amortization are computed are as follows:

<TABLE>

            <S>                             <C>
            Leasehold improvements          Lesser of 5 years or life of lease
            Machinery and equipment         5 - 10 years
            Office equipment                5 - 10 years
            Automobiles                     3 - 5 years

</TABLE>

         The Company reviews long-lived assets and certain identifiable
         intangibles whenever events or changes in circumstances indicate that
         the carrying amount of an asset may not be recoverable. If the sum of
         expected future cash flows (undiscounted and without interest charges)
         is less than the carrying value of the asset, an impairment loss is
         recognized. Otherwise, an impairment loss is not recognized.

                                 21

<PAGE>


     (f) INCOME TAXES

         The Company accounts for income taxes using an asset and liability
         method. Under this method, deferred tax assets and liabilities are
         determined based on differences between 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. Income tax expense (benefit) is the tax payable or
         refundable for the period plus or minus the change during the period in
         defer tax assets and liabilities.

     (g) NET INCOME PER SHARE

         During the year ended February 28, 1998, the Company adopted SFAS No.
         128, "Earnings per share" ("SFAS No. 128"), which requires dual
         presentation of basic and diluted earnings per share on the face of the
         consolidated statements of operations for all periods presented.

         Basic earnings per share are based on the weighted average number of
         shares of common stock outstanding during the period. Diluted
         earnings per share are based on the weighted average number of
         shares of common stock and common stock equivalents (options and
         warrants) outstanding during the period, except where the effect
         would be antidilutive, computed in accordance with the treasury
         stock method.

     (h) FOREIGN CURRENCY TRANSLATION

         Assets and liabilities of the foreign subsidiary have been translated
         at year-end exchange rates, while revenues and expenses have been
         translated at average exchange rates in effect during the year.
         Resulting cumulative translation adjustments have been recorded as a
         separate component of accumulated other conmprehensive loss.

     (i) RECLASSIFICATIONS

         Certain amounts in the prior years' financial statements have been
         reclassified to conform to the current year's presentation.

     (j) USE OF ESTIMATES

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

     (k) FAIR VALUE OF FINANCIAL INSTRUMENTS

         At February 28, 1999 and 1998, the carrying amount of the Company's
         financial instruments, including cash and cash equivalents, accounts
         receivable, accounts payable and accrued liabilities approximated
         fair value because of their short-term maturity.

     (l) RECENT PRONOUNCEMENTS OF THE FINANCIAL ACCOUNTING STANDARDS BOARD

         During the year ended February 28, 1999, the Company adopted Statement
         of Financial Accounting Standards ("SFAS") No. 130, "Reporting
         Comprehensive Income" ("SFAS No. 130"), SFAS No. 131, "Disclosures
         about Segments of an Enterprise and Related Information" ("SFAS No.
         131"), and SFAS No. 132, "Employers' Disclosure about Pension and Other
         Post Retirement Benefits" ("SFAS No. 132). SFAS No. 130 establishes
         standards for the reporting and display of comprehensive income and its
         components (revenues, expenses, gains and losses) in a set of
         financial statements. SFAS No. 131 establishes standards for reporting
         financial and descriptive information about reportable operating
         segments on the basis that is used internally for evaluating segment
         performance and allocating segment resources. SFAS No. 132 revises
         employers' disclosure requirements regarding pension and

                                 22
<PAGE>


         post retirement benefit plans. The adoption of SFAS No. 130, SFAS
         No.131 and SFAS No.132 did not have a material effect on the Company's
         consolidated financial statements.

         In June 1998, the FASB issued SFAS No. 133 "Accounting for
         Derivative Instruments and Hedging Activities" ("SFAS No. 133")
         which requires that derivative instruments be measured at fair value
         and recognized as assets or liabilities in the Company's balance
         sheet. SFAS No. 133 is effective for all quarters of all fiscal
         years beginning after June 15, 2000. The Company is currently
         evaluating the effect that SFAS No. 133 will have on the Company's
         consolidated financial statements.

(2)      INVENTORIES

         Inventories consist of the following at February 28,:

<TABLE>
<CAPTION>
                                                           1999          1998
                                                       -----------   -----------
       <S>                                             <C>           <C>
       Raw materials                                   $ 1,017,080   $   921,065
       Work-in-process                                      84,448        62,925
       Finished goods                                           --       114,739
                                                       -----------   -----------
       Total inventories                                 1,101,528     1,098,729
       Less allowance for obsolescence                      67,527        59,011
                                                       -----------   -----------
       Net inventories                                 $ 1,034,001   $ 1,039,718
                                                       -----------   -----------
                                                       -----------   -----------
</TABLE>

(3)     PROPERTY AND EQUIPMENT

        Property and equipment, at cost, is comprised of the following at
        February 28,:

<TABLE>
<CAPTION>
                                                           1999          1998
                                                       -----------   -----------
       <S>                                             <C>           <C>
       Leasehold improvements                          $   464,189   $   465,019
       Machinery and equipment                             851,781       851,807
       Office equipment                                  1,897,086     1,787,304
       Automobiles                                          34,838        35,067
                                                       -----------   -----------
                                                         3,247,894     3,139,197
       Less accumulated depreciation and amortization    2,574,742     2,361,206
                                                       -----------   -----------
       Property and equipment, net                     $   673,152   $   777,991
                                                       -----------   -----------
                                                       -----------   -----------
</TABLE>

(4)     OTHER CURRENT LIABILITIES

        Other current liabilities consist of the following at February 28,:

<TABLE>
<CAPTION>
                                                           1999          1998
                                                       -----------   -----------
       <S>                                             <C>           <C>
       Sales credits payable                             $ 110,175     $ 102,710
       Accrued professional fees                            77,785        70,800
       Management bonus                                     34,000        80,082
       Health insurance                                     59,251        59,251
       Warranty reserve                                     46,797        33,797
       Rent                                                   -           44,526
       Other accrued liabilities                           214,242       131,218
                                                       -----------   -----------
       Total other accrued liabilities                   $ 542,250     $ 522,384
                                                       -----------   -----------
                                                       -----------   -----------
</TABLE>
                                 23
<PAGE>

(5)   INCOME TAXES

      The provision for (benefit from) income taxes is comprised of the
      following for the years ended February 28,:

<TABLE>
<CAPTION>
                                    1999              1998             1997
                                 ----------        ---------        ----------
       Current:
<S>                              <C>               <C>              <C>
            Federal              $   (2,500)       $     502        $   -
            State                     9,000            4,439             4,639
            Foreign                  18,948              (45)           22,117
                                 ----------        ---------        ----------
                                     25,448            4,896            26,756

       Deferred - Foreign              (135)              47               747
                                 ----------        ---------        ----------
                                 $   25,313        $   4,943        $   27,503
                                 ----------        ---------        ----------
                                 ----------        ---------        ----------
</TABLE>

      As of February 28, 1999, the Company has net Federal tax operating loss
      carryforwards of approximately $2,634,000, which may be applied against
      future taxable income and expire from 2000 through 2011. The Company also
      has available tax credit carryforwards of approximately $141,000.

      The following is a summary of deferred tax assets and liabilities as of
      February 28,:

<TABLE>
<CAPTION>
                                                        1999              1998
                                                   -------------     -------------
<S>                                                <C>               <C>
         Current deferred tax assets               $     199,443     $     227,994
                                                   -------------     -------------
         Non-current:
         Deferred tax assets                             909,343         1,156,364
         Deferred tax liability                           (5,288)           (5,423)
                                                   -------------     --------------
         Non-current deferred tax assets, net            904,055         1,150,941
                                                   -------------     -------------
         Total deferred tax assets, net                1,103,498         1,378,935
         Valuation allowance                          (1,108,786)       (1,384,358)
                                                   -------------     -------------
         Net                                       $      (5,288)    $      (5,423)
                                                   -------------     --------------
                                                   -------------     --------------
</TABLE>

      The current deferred tax assets are primarily composed of deferred
      revenue, inventory and accounts receivable reserves, accrued pension and
      accrued vacation. The non-current deferred tax assets are primarily
      composed of deferred revenue and Federal net operating loss carryforwards.
      The non-current deferred tax liability is primarily composed of excess tax
      depreciation over book depreciation. The decrease in the valuation
      allowance during fiscal 1999 resulted from a reduction in the net deferred
      tax assets.

      The Company's effective provision for income taxes differs from the
      Federal statutory rate. The reasons for such differences are as follows:

<TABLE>
<CAPTION>
                                                    FEBRUARY 28,          FEBRUARY 28,            FEBRUARY 28,
                                                       1999                   1998                     1997
                                            -------------------------- ----------------------  -----------------
                                                Amount         %       Amount         %       Amount          %
                                                ------        ---      ------        ---      ------         ---
<S>                                         <C>           <C>      <C>             <C>    <C>             <C>
      Provision at Federal
        statutory rate                      $   112,133       34.0%  $ 125,877       34.0%  $ 112,387       34.0%
      Increase (decrease) in taxes
        resulting from:
          State income taxes, net of
          Federal benefit                         9,000        2.7       4,439        1.2       4,639        1.4
      Foreign taxes                              18,813        5.7           2        -        22,864        6.9

      Use of net operating
        loss carryforwards                     (114,633)     (34.7)   (125,375)     (33.9)   (112,387)     (34.0)
                                            -----------     ------   ---------     ------   ---------     ------
      Effective tax rate                    $    25,313        7.7%  $   4,943        1.3%  $  27,503        8.30%
                                            -----------     ------   ---------     ------   ---------     -------
                                            -----------     ------   ---------     ------   ---------     -------
</TABLE>

                                          24
<PAGE>


(6)   COMMITMENTS AND CONTINGENCIES

      (A) LEASES

          Certain of the Company's facilities and equipment are leased under
          noncancellable lease agreements and certain operating leases contain
          minimum annual escalations in base rent. Rental expense amounted to
          $430,435, $445,088, and $439,972 for the years ended February 28,
          1999, l998 and 1997, respectively.

          The following is a schedule, by fiscal year, of future minimum rental
          payments required under operating leases as of February 28, l999:
<TABLE>
<CAPTION>
           FISCAL YEAR ENDING FEBRUARY:               AMOUNT
           ----------------------------               ------
               <S>                              <C>
                   2000                            $      97,475
                   2001                                  298,803
                   2002                                  301,282
                   2003                                  312,258
                   2004                                  324,748
                   Thereafter                            137,516
                                                   -------------
                   Total                           $   1,472,082
                                                   -------------
                                                   -------------

</TABLE>

      (b) ROYALTIES

          The Company has entered into a number of agreements with licensors,
      consultants and suppliers, including:

          1.   The Company has an agreement with a licensor, which provides for
               the Company to pay royalties of 15 percent, with a minimum annual
               royalty of $25,000, on the net sales of a product named the
               Pediatric Counter Rotation System.

          2.   The Company has agreements with certain licensors, which provide
               for the Company to pay royalties ranging from 2.5 percent to 15
               percent on the net sales of certain biomechanical devices.

          Royalties under the above-mentioned agreements aggregated $34,095,
          $34,157 and $37,881 for the years ended February 28, 1999, 1998 and
          1997, respectively.

(7)   PENSION PLAN AND 401(K) PLAN

      The Company maintains a non-contributory defined benefit pension plan
      covering substantially all employees. In 1986, the Company adopted an
      amendment to the plan under which future benefit accruals to the plan will
      cease (freezing of the maximum benefits available to employees as of July
      30, 1986), other than those required by law. Previously accrued benefits
      will remain in effect and will continue to vest under the original terms
      of the plan.

      The following table sets forth the Company's defined benefit plan status
      at February 28, 1999 and 1998, determined by the plan's actuary in
      accordance with Statement of Financial Accounting Standards ("SFAS") No.
      87, "Employers' Accounting for Pensions", as amended by SFAS No. 132:

                                 25

<PAGE>

      The following tables set forth the plan's benefit obligation and funded
status for the years ended February 28,:

<TABLE>
<CAPTION>
                                                                                      1999             1998
                                                                                -------------    -------------
<S>                                                                             <C>              <C>
         Projected benefit obligation                                           $    (413,708)   $    (404,730)
         Plan assets at fair market value (primarily bond mutual funds)               257,244          184,121
                                                                                -------------    -------------

         Projected benefit obligation in excess of plan assets                       (156,464)        (220,609)

         Unrecognized transition liability                                            151,275          159,066
         Unrecognized net loss                                                        252,304          241,828
         Minimum additional liability                                                (403,579)        (400,894)
                                                                                -------------    -------------
         Accrued pension cost                                                   $    (156,464)   $    (220,609)
                                                                                -------------    -------------
                                                                                -------------    -------------
         Change in projected benefit obligation:
         Projected benefit obligation, beginning of year                        $    (404,730)   $    (388,431)
         Interest cost                                                                (30,355)         (27,409)
         Benefits paid                                                                 27,514           18,455
         Actuarial loss                                                                (6,137)          (7,345)
                                                                                -------------    -------------

         Projected benefit obligation, end of year                              $    (413,708)   $    (404,730)
                                                                                -------------    -------------
                                                                                -------------    -------------
         Change in plan assets:
         Fair value of plan assets, beginning of year                           $     184,121    $     101,116
         Actual return on plan assets                                                   9,462           14,610
         Employer contribution                                                         91,175           86,850
         Benefits paid                                                                (27,514)         (18,455)
                                                                                --------------   -------------
         Fair value of plan assets, end of year                                 $     257,244    $     184,121
                                                                                -------------    -------------
                                                                                -------------    -------------
</TABLE>

         Net periodic pension expense is comprised of the following components
         for the years ended February 28,:
<TABLE>
<CAPTION>
                                                                        1999              1998             1997
                                                                  --------------    -------------    --------------
<S>                                                               <C>               <C>              <C>
         Interest cost on projected benefit obligations           $       30,355    $      27,409    $       27,585
         Expected return on plan assets                                  (17,595)         (12,713)           (6,993)
         Amortization of unrecognized transition liability                 7,791            7,791             7,791
         Recognized actuarial loss                                        11,834           11,868            11,859
                                                                  --------------    -------------    --------------
         Net periodic pension expense                             $       32,385    $      34,355    $       40,242
                                                                  --------------    -------------    --------------
</TABLE>

      The discount rate used in determining the actuarial present value of the
      projected benefit obligations was 7.50% at February 28, 1999 and 1998. The
      rate of return on plan assets was assumed to be 7.50% at February 28,
      1999 and 1998. No assumed increase in compensation levels was used
      since future benefit accruals have ceased (as discussed above). The
      unrecognized transition liability and unrecognized net loss are being
      amortized over 30.4 and 20.4 years, respectively.

      In fiscal l999 and l998, as required by Statement of Financial
      Accounting Standards No. 87, the Company recorded additional pension
      liability ($156,464 and $220,609, respectively, included in Accrued
      Pension expense) to reflect the excess of accumulated benefits over the
      fair value of pension plan assets. Since this liability is in excess of
      the related unrecognized prior service cost (unrecognized transition
      liability), an amount equal to the unrecognized prior service cost has
      been recognized as an intangible asset ($151,275 and $159,066, included
      in "Other assets" as of February 28, 1999 and 1998, respectively). The
      remaining liability required to be recognized is reported as a separate
      component of stockholders' equity.

                                       26
<PAGE>

      The Company has a defined contribution retirement and savings plan (the
      "401(k) Plan") designed to qualify under Section 401(k) of the Internal
      Revenue Code (the "Code"). Eligible employees include those who are at
      least twenty-one years old and who have worked at least 1,000 hours during
      any one year. The Company may make matching contributions in amounts that
      the Company determines at its discretion at the beginning of each year. In
      addition, the Company may make further discretionary contributions.
      Participating employees are immediately vested in amounts attributable to
      their own salary or wage reduction elections, and are vested in Company
      matching and discretionary contributions under a vesting schedule that
      provides for ratable vesting over the second through sixth years of
      service. The assets of the 40l(k) Plan are invested in stock, bond and
      money market mutual funds. For the years ended February 28, 1999, 1998 and
      1997, the Company made contributions totaling $27,387, $31,477 and
      $25,734, respectively, to the 401(k) Plan.

(8)   STOCK OPTIONS AND WARRANTS

      On July 27, 1992, the Company adopted a qualified stock option plan for
      employees, officers, directors, consultants and advisors of the Company
      covering 125,000 shares of common stock. On January 4, 1995, the Board of
      Directors increased the number of shares authorized to be issued under the
      plan to 350,000 shares, which amendment has been approved by stockholders
      at the September 13, 1995 stockholders' meeting. On January 21, 1999, the
      Board of Directors further increased the number of shares authorized to be
      issued under the plan to 550,000 shares. This amendment has yet to be
      approved by stockholders. Options granted under the plan are exercisable
      for a period of either five or ten years at an exercise price at least
      equal to 100 percent of the fair market value of the Company's common
      stock at date of grant. The Board of Directors has the discretion as to
      the persons to be granted options as well as the number of shares and
      terms of the option agreements. The expiration date of the plan is July
      26, 2002.

      The Company has also granted non-incentive stock options. These options
      are generally exercisable for a period of five or ten years and are issued
      at a price equal to or higher than the fair market value of the Company's
      common stock at the date of grant. At February 28, 1999, 375,250
      non-incentive and incentive stock options were outstanding.

      The following is a summary of activity related to the Company's incentive
and non-incentive stock options:

<TABLE>
<CAPTION>
                                                              EXERCISE         WEIGHTED AVERAGE
                                                              NUMBER OF           PRICE RANGE      EXERCISE PRICE
                                                               SHARES              PER SHARE          PER SHARE
                                                               ------              ---------          ---------
<S>                                                              <C>            <C>                 <C>
         Outstanding at February 29, 1996                       156,250          $.56 - $1.31            $.90
              Granted                                            58,000          1.56 -  2.19            2.14
              Exercised                                          (3,000)                  .78             .78
              Cancelled                                          (2,000)                  .78             .78
                                                             ----------          ------------        --------

         Outstanding at February 28, 1997                       209,250            .56 - 2.19            1.25
              Granted                                            43,000           1.63 - 1.88            1.81
              Exercised                                          (1,000)                  .78             .78
                                                             ----------          ------------        --------


         Outstanding at February 28, 1998                       251,250           .56 -  2.19            1.35
              Granted                                           175,000                  1.13            1.13
              Exercised                                          (1,000)                  .78             .78
              Cancelled                                         (50,000)                  .75             .75
                                                             ----------          ------------        --------

         Outstanding at February 28, 1999                       375,250          $.56 - $2.19           $1.36
                                                             ----------          ------------        --------
                                                             ----------          ------------        --------
</TABLE>

                                 27

<PAGE>


      At February 28, l999, 375,250 options were exercisable and 139,250 options
      were available for issuance. The 375,250 shares outstanding at February
      28, 1999 had remaining lives of between less than one year and more than
      nine years, with a weighted average life of 6.15 years.

      At February 28, 1999, there were 514,500 shares of common stock reserved
      for issuance under the Company's stock option plan.

      ADDITIONAL STOCK PLAN INFORMATION

      The Company continues to account for its stock-based awards using the
      intrinsic value method in accordance with APB 25, "Accounting for Stock
      Issued to Employees", and its related interpretations. Accordingly, no
      compensation expense has been recognized in the financial statements for
      employee stock arrangements.

      SFAS No. 123, "Accounting for Stock-Based Compensation", requires the
      disclosure of pro forma net income and net income per share had the
      Company adopted the fair value method as of the beginning of fiscal 1997.
      Under SFAS No. 123, the fair value of stock-based awards to employees is
      calculated through the use of option pricing models, even though such
      models were developed to estimate the fair value of freely tradeable,
      fully transferable options without vesting restrictions, which
      significantly differ from the Company's stock option awards. These models
      also require subjective assumptions, including future stock price
      volatility and expected time to exercise, which greatly affect the
      calculated values. The Company's calculations were made using the
      Black-Scholes option pricing model with the following weighted average
      assumptions: expected life, 60 months following vesting; stock volatility
      of 39.08%, 42.82% and 44.95%, and risk free interest rates of 5.4%, 7.5%
      and 7.0% in fiscal 1999, 1998 and 1997, respectively, and no dividends
      during the expected term. The Company's calculations are on a multiple
      option valuation approach and forfeitures are recognized as they occur. If
      the computed fair values of the award had been amortized to expense over
      the vesting period of the awards, the pro forma net income and net income
      per share for the years ended February 28, 1999, 1998 and 1997 would have
      been net income of $170,020, or $.07 per share, $311,532, or $.12 per
      share, and $280,553, or $.11 per share, respectively, on both a primary
      and fully diluted basis.

(9)   EXPORT SALES AND OTHER INCOME

      The Company had export sales from its United States operations of
      approximately 15, 16 and 16 percent of net sales for each of the years
      ended February 28, 1999, 1998 and 1997.

      Included in Other Income for the year ended February 28, 1999 is
      $150,000 related to the settlement of an insurance claim.

(10)  SEGMENT INFORMATION

      The Company operates in two segments (North America and United Kingdom)
      principally in the design, development, manufacture and sale of foot and
      gait-related products. Intersegment sales are recorded at cost. The
      prior years' financial statements have been restated to conform with
      SFAS No. 131. Segment information for the years ended February
      28, 1999, 1998 and 1997 are summarized in accordance with SFAS No. 131 as
      follows:

<TABLE>
<CAPTION>
                                                                NORTH           UNITED           CONSOLIDATED
                                                               AMERICA          KINGDOM             TOTAL
                                                               -------          -------             -----
                                   1999
               ----------------------------------------------------------------------------------------------------
<S>                                                           <C>             <C>               <C>
               Net sales from external customers              $   8,948,501   $   1,358,614     $  10,307,114
               Intersegment net sales                               176,277         -                 176,277
               Gross margins                                      3,207,393         542,521         3,749,914
               Operating (loss) profit                              (68,615)        173,723           105,108
               Depreciation and amortization                        196,509          17,027           213,536
               Total assets                                       4,633,039         491,541         5,124,580
               Capital expenditures                                 100,351           6,795           107,146
               ----------------------------------------------------------------------------------------------------
</TABLE>

                                 28

<PAGE>
<TABLE>
<CAPTION>
                                   1998
               ----------------------------------------------------------------------------------------------------
<S>                                                           <C>             <C>               <C>
               Net sales from external customers              $   9,024,360   $   1,131,725     $  10,156,085
               Intersegment net sales                               142,814      -                    142,814
               Gross margins                                      3,648,092         412,581         4,060,673
               Operating profit                                     240,644          75,516           316,160
               Depreciation and amortization                        182,191          25,042           207,233
               Total assets                                       4,392,538         455,298         4,847,836
               Capital expenditures                                 435,716          42,758           478,474
               ----------------------------------------------------------------------------------------------------
                                   1997
               ----------------------------------------------------------------------------------------------------
               Net sales from external customers              $   9,473,108   $   1,041,734     $  10,514,842
               Intersegment net sales                               123,900      -                    123,900
               Gross margins                                      3,896,409         468,561         4,364,970
               Operating profit                                     114,405         156,204           270,609
               Depreciation and amortization                        172,855          17,774           190,618
               Total assets                                       4,014,392         430,634         4,445,026
               Capital expenditures                                  40,810          12,472            53,282
               ----------------------------------------------------------------------------------------------------
</TABLE>

(11)  REVOLVING CREDIT LINE

      The Company has a revolving credit facility with a bank. The agreement,
      which expires July 31, 1999, provides for a revolving credit line not to
      exceed $1,500,000. Interest on the outstanding balance is payable at prime
      (7 3/4 percent at February 28, 1999) plus 1/2 percent per annum.

      The agreement contains, among other items, restrictions relating to the
      incurrence of additional indebtedness and the payment of dividends.
      Additionally, the Company is required to maintain certain minimum
      financial ratios. Borrowings under this agreement are collateralized by
      substantially all of the assets of the Company.

      At February 28, 1999 and 1998, there were no borrowings outstanding under
      this credit facility.

(12)  RECONCILIATION OF BASIC AND DILUTED EARNINGS PER SHARE

      In accordance with SFAS No. 128, basic earnings per common share ("EPS")
      are computed based on the weighted average number of common shares
      outstanding during each period. Diluted earnings per common share are
      computed based on the weighted average number of common shares, after
      giving effect to dilutive common stock equivalents outstanding during each
      period. The following table provides a reconciliation between basic and
      diluted earnings per share:
<TABLE>
<CAPTION>
                                                                       FOR THE YEAR ENDED
                                     -------------------------------------------------------------------------------------------
                                        FEBRUARY 28, 1999               FEBRUARY 28, 1998               FEBRUARY 28, 1997
                                     ---------------------------   ----------------------------    -----------------------------
                                                           PER                            PER                              PER
                                      INCOME     SHARES   SHARE     INCOME     SHARES    SHARE      INCOME     SHARES     SHARE
                                     --------  ---------  ------   --------   ---------  ------    ---------  ---------  -------
<S>                                  <C>       <C>         <C>     <C>        <C>         <C>      <C>        <C>          <C>
      BASIC EPS
      Income available to common
        Stockholders                 $304,490  2,584,336  $  .12   $365,282   2,584,780  $  .14    $ 303,047  2,583,344  $   .12

      EFFECT OF DILUTIVE  SECURITIES
      Stock options                      -        22,949      -         -        73,598     -           -        83,076     (.01)
                                     --------  ---------  ------   --------   ---------  ------    ---------  ---------  -------
      DILUTED EPS
      Income available to common
       stockholders plus assumed
       exercise of stock options    $304,490   2,607,285  $  .12   $365,282   2,658,378  $  .14    $ 303,047  2,666,420  $   .11
                                    --------   ---------  ------   --------   ---------  ------    ---------  ---------  -------
                                    --------   ---------  ------   --------   ---------  ------    ---------  ---------  -------
</TABLE>
                                                                       * * * * *
                                 29
<PAGE>

                       THE LANGER BIOMECHANICS GROUP, INC.
                                AND SUBSIDIARIES
                        VALUATION AND QUALIFYING ACCOUNTS
                                   SCHEDULE II

              FOR THE YEARS ENDED FEBRUARY 28, 1999, 1998 AND 1997

<TABLE>
<CAPTION>
                                                SALES         ALLOWANCE
                                             RETURNS AND     FOR DOUBTFUL        WARRANTY    INVENTORY
                                             ALLOWANCES   ACCOUNTS RECEIVABLE    RESERVE      RESERVE
                                             ----------   -------------------    -------      -------
<S>                                         <C>               <C>               <C>              <C>
         At February 29, 1996               $       32,058    $      20,570     $  31,479    $    78,020

            Additions                           -                     7,524         6,207          -
            Deletions                           -                     8,319         3,889         18,408
                                            --------------    -------------     ----------   -----------
         At February 28, 1997                       32,058           19,775        33,797         59,612

            Additions                           -                    17,525          -                -
            Deletions                           -                    13,951          -               601
                                            --------------    -------------     ---------    -----------
         At February 28, 1998                       32,058           23,349        33,797         59,011

            Additions                               14,000           59,788        13,000         27,000
            Deletions                           -                    46,982          -            18,484
                                            --------------    -------------     ---------    -----------
         At February 28, 1999               $       46,058    $      36,155     $  46,797    $    67,527
                                            --------------    -------------     ---------    -----------
                                            --------------    -------------     ---------    -----------

</TABLE>




                                 30
<PAGE>

ITEM 9.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
             AND FINANCIAL DISCLOSURE

Not applicable.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

OFFICERS AND DIRECTORS

The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
                  NAME                     AGE                                                OFFICE
         --------------------              ---                -------------------------------------------------
<S>                                         <C>            <C>
         Stephen V. Ardia                   57                Chairman of the Board

         Kenneth Granat                     54                Director

         Daniel J. Gorney                   55                President and Chief Executive Officer

         Dr. Justin Wernick                 63                Chief Medical Director, Secretary and Director

         Thomas I. Altholz                  48                Director

         Howell S. Schorr                   53                Vice President - Operations
</TABLE>

     Mr. Ardia was appointed as Chairman of the Board of Directors of the
Company in January 1999 and has been a Director of the Company since November
1998. From 1969 to 1994, he was employed by Goulds Pumps, Inc., including most
recently as President and Chief Executive Officer. Goulds Pumps, Inc. is a
Fortune 500 manufacturer of industrial and residential pumps. From 1995 to 1999,
Mr. Ardia was President at Environment One Corporation, a maker of advanced,
environmentally sensitive sewage collection systems. Mr. Ardia serves on the
Board of Directors of the New York College of Chiropractic Medicine.

     Mr. Granat has been a Director of the Company since January 1995, including
serving as Chairman of the Board from January 1995 to January 1999. Since 1987,
he has been President of Active Screw and Fastener Inc., an Elk Grove. Village,
Illinois company, engaged in full line distribution of fasteners with plants in
Chicago, Illinois and Tucson, Arizona. Since 1991, he has also been Vice
President and a Director of Trigran Investments Inc., Deerfield, Illinois, the
general partner and investment advisor for Trigran Investments, L.P., and a more
than 10 percent shareholder of the Company. Mr. Granat holds a J.D. from the
University of Illinois as well as a B.B.A. degree in Business from the
University of Michigan.

    Mr. Gorney has been President and Chief Executive Officer of the Company
since November 1998. From 1996 to 1998, he was Chief Executive Officer of
LifeVision, LLC, a health care services company. From 1994 to 1996, Mr. Gorney
was Chief Operating Officer of Visionics Corporation, a vision care company. He
received a Bachelor of Arts degree in History and Business from the University
of Buffalo with advanced studies in Organizational Development and Marketing
Management.

     Dr. Wernick is the co-founder, Secretary and a Director of the Company
since its formation. From the formation of the Company until June 30, 1997, Dr.
Wernick was Executive Vice President of the Company; commencing July 1, 1997, he
became Chief Medical Director of the Company. In addition, since July 1997, Dr.
Wernick has been Medical Director of Eneslow Comfort Shoe Centers, a shoe
retailer. Dr. Wernick is a Diplomate of the American Board of Podiatric
Orthopedics, a Fellow of the American College of Foot Orthopedics and of the
Academy of Podiatric Sports Medicine and a member of several other professional
societies. In l975, he was the President of the Nassau County Division, Podiatry
Society of the State of New York and was granted the Podiatrist of the Year
Award from that Society in that same year. Since l969, he has held various
academic positions at the New York College of Podiatric Medicine and since l979
has been serving as a professor, and since December 1998 as Chairman, with the
Department of Orthopedic Sciences at the New York College of Podiatric Medicine.
He has guest lectured and directed educational programs, both nationally and
internationally, at many other podiatric colleges and seminars during the past
25 years. He has co-authored a book entitled "A Practical

                                 31

<PAGE>

Manual for a Basic Approach to Biomechanics" in l972 and a report entitled "A
Radiologic Study of Motion of the Foot within a Ski Boot" which was published in
the Journal of the American Podiatry Association for which he is also a
corresponding consultant. Dr. Wernick received his podiatric medical degree from
M.J. Lewi College of Podiatry (now known as the New York College of Podiatric
Medicine).

       Mr. Altholz has been President, owner and Chief Executive Officer of TIA
Solutions, Highland Park, Illinois, a business consulting firm, since 1997. From
1995 to 1996, Mr. Altholz was Director of Acquisitions of Unisource Worldwide,
Inc. (since acquired by Georgia Pacific), a company engaged in the paper and
packaging distribution business. From 1980 to 1995, he was President and owner
of Inlander Steindler Paper Company (ISP), a paper distribution company with
regional sales and warehousing centers in the Midwest, which Company was
acquired by Alco Standard in November 1995. He has served on several industry
advisory Boards such as Minnesota Mining and Manufacturing (MMM) and Scott
Paper, and was Chairman of Affiliated Paper Companies. He is a member of the
Board of Directors of Regal Ware, Inc., a company engaged in manufacturing and
marketing of housewares products, and Northmoor Country Club and also is a
member of the Board of Trustees of Ripon College. Mr. Altholz received his B.A.
in Economics from Ripon College in Ripon, Wisconsin. .

     Mr. Schorr has been Vice President of Operations since l99l. From 1988 to
1991, prior to becoming an executive officer of the Company, he was the
Operations Manager for the Deer Park, New York, and Branch Manager for the Brea,
California, facilities of the Company. From l966 to l987, Mr. Schorr was
employed by Hazeltine Corporation/Esprit Systems, Inc. During his 21 years of
service with Hazeltine Corporation/Esprit Systems, Inc., he held the positions
of Director of Operations, National Service Manager, Customer Service/Production
Manager, as well as other various supervisory and managerial positions. He has a
B.S. in Business Administration from New York Institute of Technology.

     All directors are normally elected at the annual meeting of shareholders to
hold office until the next annual meeting and until their successors are duly
elected and qualified. The Company's By-Laws provide that the annual meeting of
shareholders be held each year at a time and place to be designated by the Board
of Directors. Directors may be removed at any time for cause by the Board of
Directors and with or without cause by a majority of the votes cast at a meeting
of shareholders entitled to vote for the election of directors.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     The Company is not aware of any late filings of, or failures to file,
during the fiscal year ended February 28, 1999, the reports required by Section
16(a) of the Securities Exchange Act of 1934, except as follows:

     Mr. Gorney and Mr. Ardia each filed one late Form 4, in each case relating
to a single private purchase of Common Stock from the former President of the
Company. In addition, Mr. Altholz filed a late Form 4 related to open market
purchases of common stock.

LIMITATION ON LIABILITY OF DIRECTORS

     As permitted by New York law, the Company's Certificate of Incorporation
contains an article providing for the elimination of the personal liability of
the directors of the Company to the fullest extent permitted by the provisions
of paragraph (b) of Section 402 of the New York Business Corporation Law.
Accordingly, a director's personal liability would be eliminated for any breach
of a director's duty, unless, among other things, the director's actions or
omissions were in bad faith, involved intentional misconduct or a knowing
violation of the law, or personal gain in fact of a financial profit to which
the director was not lawfully entitled. This article is intended to afford
directors additional protection, and limit their potential liability, from suits
alleging a breach of the duty of care by a director. The Company believes this
article enhances the Company's ability to attract and retain qualified persons
to serve as directors. As a result of the inclusion of such a provision,
shareholders may be unable to recover monetary damages against directors for
actions taken by them which constitute negligence or gross negligence or which
are in violation of their fiduciary duties, although it may be possible to
obtain injunctive or other equitable relief with respect to such actions. If
equitable remedies are found not to be available to shareholders for any
particular case, shareholders may not have any effective remedy against the
challenged conduct.

                                 32

<PAGE>

ITEM 11.    EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

     The following table shows the cash compensation received by the three
executive officers either whose compensation exceeded $100,000 during the fiscal
year ended February 28, 1999 or was Chief Executive Officer of the Company
during such year:
<TABLE>
                                                                                                  LONG-TERM
                                                                        ANNUAL COMPENSATION     COMPENSATION
                  NAME AND                     FISCAL     SALARY        BONUS       OTHER          OPTIONS
               PRINCIPAL POSITION               YEAR         $            $          $          (NO. OF SHARES)
             ----------------------           --------   --------      -------    --------      ---------------
<S>                                              <C>       <C>          <C>       <C>            <C>
        Daniel J. Gorney                         1999      34,663 (1)      -            -          15,000
        President and
          Chief Executive Officer

        Gary L. Grahn                            1999     160,000       64,000     26,666 (2)          -

        Former President and                     1998     160,000       53,440         (3)             -
        Chief Executive Officer                  1997     160,000       28,000         (3)         30,000

        Howell S. Schorr                         1999      99,585        5,000          -              -
        Vice President - Operations              1998      94,000          -            -           5,000
                                                 1997      85,800       10,000          -           5,000
</TABLE>

(1)  MR. GORNEY'S EMPLOYMENT COMMENCED ON NOVEMBER 30, 1998.
(2)  MR. GRAHN'S EMPLOYMENT WAS TERMINATED IN DECEMBER 1999, OTHER COMPENSATION
     OF $26,666 REPRESENTS SEVERANCE PAY AND OTHER MINOR NON-DISCLOSED ITEMS ARE
     LESS THAN 10% OF TOTAL ANNUAL SALARY AND BONUS.
(3)  LESS THAN 10% OF THE TOTAL ANNUAL SALARY AND BONUS.


OPTION GRANTS IN LAST FISCAL YEAR


<TABLE>
<CAPTION>


                                                                                        POTENTIAL REALIZABLE VALUE
                                                                                           AT ASSUMED ANNUAL
                                                                                          RATES OF STOCK PRICE
                                                                                             APPRECIATION
                                  INDIVIDUAL GRANTS                                        FOR OPTIONTERM (1)
                     ---------------------------------------------                         ------------------
                       NUMBER OF   PERCENT OF TOTAL
                      SECURITIES     OPTIONS/SARS      EXERCISE
                      UNDERLYING     GRANTED TO        OR BASE
                      OPTION/SARS   EMPLOYEES IN        PRICE           EXPIRATION
NAME                  GRANTED (#)    FISCAL YEAR        ($/SH)             DATE           5% ($)            10% ($)
----                  -----------    -----------        ------             ----           ------            -------
<S>                      <C>           <C>              <C>            <C>             <C>              <C>
Daniel J. Gorney         75,000        42.9             $1.1250          11/30/08         $53,063          $134,472

Gary L. Grahn                -           -                  -                -               -                  -

Howell S. Schorr             -           -                  -                -               -                  -

</TABLE>


          (1) The potential realizable value portion of the foregoing table
illustrates value that might be received upon exercise of the options
immediately prior to the expiration of their term, assuming the specified
compounded rates of appreciation on the Company's Common Stock over the term of
the options. These numbers do not take into account provisions of certain
options providing for termination of the option following termination of
employment.

                                 33

<PAGE>

FISCAL YEAR-END OPTION VALUES

          The table below sets forth information regarding unexercised options
held by the Company's named executive officers as of February 28, 1999. No
options were exercised by the Company's executive officers during fiscal 1999.
<TABLE>
<CAPTION>
                     NUMBER OF SECURITIES UNDERLYING         VALUE OF UNEXERCISED
                        UNEXERCISED OPTIONS AT               IN-THE-MONEY OPTIONS
                          FISCAL YEAR END                      AT FISCAL YEAR END
                       EXERCISABLE/UNEXERCISABLE            EXERCISABLE/UNEXERCISABLE
   ---------------   -------------------------------        ---------------------------
    Name                        (#)                                  $  (1)
<S>                         <C>                                <C>
   Daniel J. Gorney         15,000/60,000                        11,250/45,000
   Gary L. Grahn                -/-                                   -/-
   Howell S. Schorr           15,000/-                             25,782/-
</TABLE>

(1)       The closing bid price of the Company's Common Stock as reported by
          NASDAQ on February 26, 1999 was $1.875. Value is calculated on the
          difference between the option exercise price of in- the-money options
          and $1.75 multiplied by the number of shares of Common Stock
          underlying the option.

LONG-TERM INCENTIVE PLAN-AWARDS IN LAST FISCAL YEAR

          None.

COMPENSATION OF DIRECTORS

          Directors, who are not executive officers of the Company, are expected
to be compensated by means of the issuance of shares of Common Stock. In this
connection, each outside director was awarded 4,000 shares of Common Stock in
1999.

EMPLOYMENT AGREEMENTS

        None.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL  OWNERS AND MANAGEMENT

          The following table sets forth, as of May 27, l999, the shares of
Common Stock owned beneficially and of record (unless otherwise indicated) by
each person owning more than five percent (5%) of the outstanding shares, each
director of the Company, each named executive officer of the Company and all
directors and officers of the Company as a group.
<TABLE>
                                               NUMBER OF
      NAME (AND ADDRESS OF 5% HOLDERS)        SHARES OWNED    PERCENT
      --------------------------------        ------------    -------
<S>                                            <C>          <C>
        Kenneth Granat                         707,153 (1)     26.1%
        155 Pfingsten, Suite 360
        Deerfield, Illinois  60015

        Donald Cecil                           248,553          9.6%
        1114 Avenue of the Americas
        New York, New York  10036

        Dr. Justin Wernick                     242,867          9.3%
        450 Commack Road
        Deer Park, New York  11729
</TABLE>

                                 34

<PAGE>

<TABLE>
                                               NUMBER OF
      NAME (AND ADDRESS OF 5% HOLDERS)        SHARES OWNED    PERCENT
      --------------------------------        ------------    -------
<S>                                          <C>            <C>
        Stephen V. Ardia                        91,333 (2)      3.5%

        Thomas I. Altholz                       49,500 (3)      1.9%

        Daniel J. Gorney                        40,000 (4)      1.5%

        Howell S. Schorr                        15,000 (5)       .6%

        Gary Grahn                                  -            -

        All Directors and Officers
          as a Group (7 persons)             1,145,853 (6)     41.4%
</TABLE>


(1)  INCLUDES 110,000 SHARES ISSUABLE UNDER OUTSTANDING STOCK OPTIONS
     EXERCISABLE WITHIN SIXTY DAYS AND 552,753 HELD BY TRIGRAN INVESTMENTS LP.
     MR. GRANAT IS A DIRECTOR AND VICE PRESIDENT OF THE GENERAL PARTNER OF
     TRIGRAN INVESTMENTS, LP. AN ADDITIONAL 30,000 SHARES ARE OWNED BY THE
     GRANAT FAMILY LIMITED PARTNERSHIP OF WHICH MR. GRANAT IS A GENERAL PARTNER
     AND 10,400 SHARES ARE OWNED BY A TRUST OF WHICH MR. GRANAT IS A
     BENEFICIARY. MR. GRANAT ALSO OWNS 4,000 SHARES PERSONALLY.
(2)  INCLUDES 25,000 SHARES ISSUABLE UNDER OUTSTANDING STOCK OPTIONS EXERCISABLE
     WITHIN SIXTY DAYS.
(3)  INCLUDES 5,000 SHARES ISSUABLE UNDER OUTSTANDING STOCK OPTIONS EXERCISABLE
     WITHIN SIXTY DAYS.
(4)  INCLUDES 20,000 SHARES ISSUABLE UNDER OUTSTANDING STOCK OPTIONS EXERCISABLE
     WITHIN SIXTY DAYS.
(5)  INCLUDES 15,000 SHARES ISSUABLE UNDER OUTSTANDING STOCK OPTIONS.
(6)  INCLUDES 170,000 SHARES ISSUABLE UNDER OUTSTANDING STOCK OPTIONS.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         None.

                                 35

<PAGE>

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K

(A)   1. FINANCIAL STATEMENTS

      The following consolidated financial statements are filed as part of this
      Form l0-K:

      Independent Auditors' Report

      Consolidated Financial Statements:

      Consolidated Balance Sheets as of February 28, l999 and February 28, l998

      Consolidated Statements of Operations for the years ended February 28,
      l999, l998 and 1997

      Consolidated Statements of Stockholders' Equity for the years ended
      February 28, l999, l998 and l997

      Consolidated Statements of Cash Flows for the years ended February 28,
      l999, l998 and 1997

      Notes to Consolidated Financial Statements

2.    FINANCIAL STATEMENT SCHEDULES

      The following Financial Statement Schedule is filed as part of this Form
      10-K:

      Schedule II - Valuation and Qualifying Accounts for the years ended
      February 28, l999, 1998 and 1997

      All other schedules have been omitted because they are not applicable, not
      required or the information is disclosed in the consolidated financial
      statements, including the notes thereto.

3.      EXHIBITS

       NUMBER                DOCUMENT
       ------                --------
        (3) (a)   Copy of Restated Certificate of Incorporation and amendments
                  thereto. (l)(4)

            (b)   Copy of Bylaws, as amended through July 2, 1987. (3)

        (4) (a)   Specimen of Common Stock Certificate. (1)

            (b)   Copy of 1992 Stock Option Plan. (6 )

        (10)(a)   Copy of Agreements, dated February 23, 1993, relating to
                  the Company's 75% ownership interest in Langer Orthotic
                  Laboratory (U.K.) Limited. (6)

            (b)   Copy of The Langer Biomechanics Group Retirement Plan,
                  restated as of July 30, l979. (1)

            (c)   Copy of Leases related to the Company's Deer Park facilities.
                  (6)

            (d)   Copy of Agreement, dated July 8, l986, between BioResearch
                  Ithaca, Inc. and the Company relating the licensing of the
                  Pediatric Counter Rotation System. (2)

                                 36

<PAGE>

            (e)   Copy of Leases relating to the Company's Brea, California
                  facilities. (5)

            (f)   Copy of Agreement, dated March 26, l992 and effective as of
                  March l, l992, relating to the Company's 40l(k) Tax Deferred
                  Savings Plan. (5)

            (g)   Copy of letter agreement, dated January 27, 1995, between the
                  Company and Tekscan, Incorporated. (7)

            (h)   Copy of Employment Agreement, dated as of May 2, 1997, between
                  the Company and Dr. Justin Wernick. (8)

        (22)      List of subsidiaries (4)

        (24)      Consent of Independent Auditors

            (l)   Incorporated by reference to the Company's Registration
                  Statement on Form S-1 (No. 2-87183), which became effective
                  with the Securities and Exchange Commission on January 17,
                  1984.

            (2)   Incorporated by reference to the Company's Form 10-K for the
                  fiscal year ended July 31, l986.

            (3)   Incorporated by reference to Post-Effective Amendment No. 1 to
                  the Company's Registration Statement on Form S-8.

            (4)   Incorporated by reference to the Company's Form 10-K for the
                  fiscal year ended February 28, 1989.

            (5)   Incorporated by reference to the Company's Form 10-K for the
                  fiscal year ended February 29, 1992.

            (6)   Incorporated by reference to the Company's Form 10-K for the
                  fiscal year ended February 28, 1993.

            (7)   Incorporated by reference to the Company's Form 10-K for the
                  fiscal year ended February 28, 1995.

            (8)   Incorporated by reference to the Company's Form 10-K for the
                  fiscal year ended February 28, 1997.

        (27)      Financial Statement Schedule

            (b)   REPORTS ON FORM 8-K:

                  None.

                                 37

<PAGE>

                                   SIGNATURES


      Pursuant to the requirements of Section l3 or l5(d) of the Securities
Exchange Act of l934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                      THE LANGER BIOMECHANICS GROUP, INC.


Date:   June 14, 1999               By: /s/ Daniel J. Gorney
                                        --------------------------------------
                                        Daniel J. Gorney, President and
                                        Chief Executive Officer
                                        (Principal Executive, Financial and
                                        Accounting Officer)





      Pursuant to the requirements of the Securities Exchange Act of l934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.



Date:   June 14, 1999                   By:  /s/ Kenneth Granat
                                             -----------------------------------
                                             Kenneth Granat, Director

Date:   June 14, 1999                   By:  /s/ Stephen V. Ardia
                                             -----------------------------------
                                             Stephen V. Ardia, Director

Date:   June 14, 1999                   By:  /s/ Justin Wernick
                                             -----------------------------------
                                             Dr. Justin Wernick, Director


Date:   June 14, 1999                   By:  /s/ Thomas I. Altholz
                                             -----------------------------------
                                             Thomas I. Altholz, Director






                                 38