<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

  X      Quarterly Report Pursuant To Section 13 Or 15(d) of the Securities
-----    Exchange Act of 1934
               For the quarterly period ended September 30, 1998.

-----    Transition Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934
                For the transition period from ______ To ______.

                         Commission File Number 0-22089


                          BRUNSWICK TECHNOLOGIES, INC.
             (Exact Name of Registrant As Specified In Its Charter)


                    Maine                                      01-0405052
      (State or other jurisdiction of                        (I.R.S. Employer
       Incorporation or organization)                      Identification No.)

        43 Bibber Pkwy., Brunswick, ME                            04011
        (Address of principal executive offices)                (Zip Code)

                                 (207) 729-7792
               Registrant's telephone number including area code:


      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
          -----        -----

      The registrant had 5,164,563 shares of Common Stock, $.0001 par value,
outstanding as September 30, 1998.
<PAGE>   2
                          BRUNSWICK TECHNOLOGIES, INC.

                                      INDEX

                                                                        PAGE NO.
                                                                        --------

Part I.  Financial information.

         Item 1.  Financial Statements

            Report of Independent Accountants                              3

            Consolidated balance sheets as of September 30, 1998
              and December 31, 1997.                                       4

            Consolidated statements of income for the three months
              and nine months ended September 30, 1998 and 1997.           5

            Consolidated statements of cash flows for the nine
              months ended September 30, 1998 and 1997.                    6

            Consolidated statements of comprehensive income for the
              three and nine months ended June 30, 1998.                   7

            Notes to consolidated financial statements.                  7-9


         Item 2. Management's Discussion and Analysis of Financial
                 Condition And Results of Operations.                     10

         Item 3. Quantitative and Qualitative Disclosures about
                 Market Risk.                                             12


Part II.  Other Information.

         Item 5. Submission of Matters to a Vote of Security
                 Holders.                                                 13

         Item 6. Exhibits and Reports on Form 8-K.                        13


                                       2
<PAGE>   3
                        REPORT OF INDEPENDENT ACCOUNTANTS


October 29, 1998

To the Board of Directors and Shareholders of
Brunswick Technologies, Inc.

We have reviewed the accompanying consolidated balance sheet of Brunswick
Technologies, Inc. and Subsidiaries as of September 30, 1998, and the related
consolidated statements of income and comprehensive income for the three month
and nine month periods ended September 30, 1998 and 1997, and the consolidated
statements of cash flows for the nine month periods then ended. These financial
statements are the responsibility of the Company's management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements for them to be in
conformity with generally accepted accounting principles.


                                          /s/ PRICEWATERHOUSECOOPERS  L.L.P.
                                          Portland, Maine


                                       3
<PAGE>   4
BRUNSWICK TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(THOUSANDS EXCEPT SHARE INFORMATION)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                       SEPTEMBER 30,  DECEMBER 31,
                                                                           1998         1997
                                                                       -------------  ------------
                                                                       (Unaudited)
<S>                                                                    <C>            <C>
                                     ASSETS
Current assets:
   Cash                                                                  $  1,267      $    353
   Marketable securities available for sale                                  --           6,607
   Accounts receivable, net of allowance for
     doubtful accounts of $130 in 1998 and $46 in 1997                      5,259         2,909
   Inventories                                                              4,666         3,308
   Deferred income taxes                                                      179           179
   Other current assets                                                       424           354
                                                                         --------      --------
       Total current assets                                                11,795        13,710

Property, plant and equipment
   Land and building                                                          988           937
   Furniture and fixtures                                                     616           458
   Leasehold improvements                                                     113            81
   Machinery and equipment                                                  9,296         6,375
   Machine under construction                                                 896           231
   Vehicles                                                                    92            92
   Management information system                                              345           102
                                                                         --------      --------
                                                                           12,346         8,276
   Less accumulated depreciation and amortization                          (2,624)       (2,003)
                                                                         --------      --------
       Net property, plant and equipment                                    9,722         6,273
                                                                         --------      --------

Due from shareholder                                                           74            70
Investment in European technology, net of accumulated
  amortization of $87 in 1998                                               2,149          --
Goodwill, net of accumulated amortization of $513 in
  1998 and $322 in 1997                                                     4,912         5,039
Other assets                                                                   77           124
                                                                         --------      --------
       Total assets                                                      $ 28,729      $ 25,216
                                                                         ========      ========

                      LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Current installments of long-term debt                                $    100      $    100
   Due to stockholder                                                         534            84
   Accounts payable                                                         2,046           538
   Accrued expenses                                                           628           514
   Income taxes payable                                                       201           130
                                                                         --------      --------
       Total current liabilities                                            3,509         1,366

Long-term debt, excluding current installments                                253           253
Deferred income taxes                                                         370           370

Shareholders' equity:
   Preferred stock, $10 par value; 1,000,000 authorized,
     none outstanding                                                        --            --
   Common stock, $0.0001 par value; 20,000,000 shares authorized,
     5,164,563 outstanding in 1998 and 5,146,606 outstanding in 1997            1             1
   Additional paid in capital                                              24,749        24,715
   Treasury stock at cost; 3,300 shares in 1998 and 1997                       (5)           (5)
   Cumulative translation adjustment                                          140          --
   Accumulated deficit                                                       (288)       (1,484)
                                                                         --------      --------
       Total shareholders' equity                                          24,597        23,227
                                                                         --------      --------
           Total liabilities and shareholders' equity                    $ 28,729      $ 25,216
                                                                         ========      ========
</TABLE>


                     The accompanying notes are an integral
                       part of these financial statements.


                                       4
<PAGE>   5
BRUNSWICK TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(THOUSANDS EXCEPT PER SHARE INFORMATION)
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                      For the Three Months Ended       For the Nine Months Ended
                                                                             September 30,                    September 30,
                                                                      --------------------------       -------------------------
                                                                         1998            1997             1998            1997
                                                                       --------        --------         --------        --------
                                                                              (Unaudited)                      (Unaudited)
<S>                                                                    <C>             <C>              <C>             <C>
Net sales                                                              $ 10,309        $  7,603         $ 30,325        $ 23,008
Cost of goods sold (raw material purchased from a
  stockholder amounted to $2,561 in 1998 and $2,226 in 1997 for
  the three months ended September 30, and $6,386 in 1998 and
  $4,217 in 1997 for the nine months ended September 30)                  8,158           5,682           23,458          17,002
                                                                       --------        --------         --------        --------

     Gross profit                                                         2,151           1,921            6,867           6,006

Selling, general and administrative expenses                              1,714           1,219            4,882           3,819
Research and development expenses                                           138             152              437             418
                                                                       --------        --------         --------        --------
     Operating income                                                       299             550            1,548           1,769
                                                                       --------        --------         --------        --------

Other income (expense):
  Interest income                                                            14              95               77             226
  Interest expense                                                         --               (93)            --              (325)
  Miscellaneous, net                                                         99             124              238             179
                                                                       --------        --------         --------        --------
                                                                            113             126              315              80
                                                                       --------        --------         --------        --------
     Income before income tax                                               412             676            1,863           1,849

Income tax expense                                                          152             230              667             670
                                                                       --------        --------         --------        --------

     Net income                                                             260             446            1,196           1,179
                                                                       --------        --------         --------        --------

Preferred stock dividend                                                   --              --               --               (48)
Accretion of preferred stock redemption value                              --              --               --                (8)
                                                                       --------        --------         --------        --------
Net income attributable to common stock                                $    260        $    446         $  1,196        $  1,123
                                                                       ========        ========         ========        ========

Basic:
  Earnings per share                                                   $   0.05        $   0.10         $   0.23        $   0.28
  Weighted average common shares outstanding                              5,161           4,687            5,157           3,967

Diluted:
  Earnings per share                                                   $   0.05        $   0.09         $   0.22        $   0.25
  Weighted average common shares outstanding                              5,423           5,112            5,447           4,807
</TABLE>



                     The accompanying notes are an integral
                       part of these financial statements.


                                       5
<PAGE>   6
BRUNSWICK TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS EXCEPT FOR SHARE INFORMATION)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                     For the Nine Months Ended
                                                                           September 30,
                                                                         1998           1997
                                                                       --------       --------
                                                                            (Unaudited)
<S>                                                                    <C>            <C>
Cash flows from operating activities:
  Net income                                                           $  1,196       $  1,179
  Adjustments to reconcile net income to net provided
    by (used in) operating activities:
      Depreciation and amortization                                         919            594
      Deferred taxes                                                       --              325
      Changes in assets and liabilities:
        Increase in accounts receivable                                    (960)          (248)
        (Increase) decrease in inventories                                 (659)             5
        Decrease in refundable income taxes                                --               21
        (Increase) decrease in other current assets                         213           (167)
        (Increase) decrease in due from stockholder                          (5)          --
        Increase (decrease) in due to stockholder                           450           (820)
        Increase (decrease) in accounts payable
          and accrued expenses                                              488         (1,191)
        Increase in income taxes payable                                     29            244
                                                                       --------       --------
            Net cash provided by (used in) operating activities           1,671            (58)
                                                                       --------       --------

Cash flows from investing activities:
  Acquisition of business, net of cash acquired, including
    technology                                                           (5,993)          --
  Sale of marketable securities                                           6,607           --
  Purchases of property, plant and equipment                             (1,443)          (624)
  Decrease in other assets                                                   47           --
                                                                       --------       --------
            Net cash used in investing activities                          (782)          (624)
                                                                       --------       --------

Cash flows from financing activities:
  Decrease in bank overdraft                                               --             (301)
  Net repayments under line of credit                                      --           (1,180)
  Issuance of common stock, net of issuance cost                             11         14,262
  Repayment of long-term debt                                              --           (5,083)
  Other                                                                    --               (7)
                                                                       --------       --------
            Net cash provided by financing activities                        11          7,691
            Net effect of currency exchange rates changes on cash            14           --
                                                                       --------       --------
            Net increase in cash                                            914          7,009
Cash at beginning of period                                                 353            355
                                                                       --------       --------
Cash at end of period                                                  $  1,267       $  7,364
                                                                       ========       ========


  Preliminary allocation of purchase price of acquisition of Tech
    Textiles International Ltd., net of cash acquired:
      Working capital, other than cash                                 $  1,133       $   --
      Machinery & equipment                                               2,552           --
      Goodwill                                                               72           --
      Technology                                                          2,236           --
                                                                       --------       --------
      Net cash used to acquire Tech Textiles Ltd.                      $  5,993       $   --
                                                                       ========       ========
</TABLE>


                     The accompanying notes are an integral
                       part of these financial statements.


                                       6
<PAGE>   7
BRUNSWICK TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(THOUSANDS)
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                    For the Three Months Ended    For the Nine Months Ended
                                                            September                     September
                                                    --------------------------    -------------------------
                                                     1998                 1997     1998                1997
                                                    ------               ------   ------              ------
                                                            (Unaudited)                   (Unaudited)
<S>                                                 <C>                  <C>      <C>                 <C>
Net income                                          $  260               $  446   $1,196              $1,179
    Foreign currency translation adjustments            93                 --        140                --
                                                    ------               ------   ------              ------

Comprehensive income                                $  353               $  446   $1,336              $1,179
                                                    ------               ------   ------              ------
</TABLE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A. CONSOLIDATED FINANCIAL STATEMENTS:

   The consolidated financial statements included herein have been prepared by
   the Company, without audit, pursuant to the rules and regulations of the
   Securities and Exchange Commission. Certain information and footnote
   disclosures normally included in financial statements prepared in accordance
   with generally accepted accounting principles have been condensed or omitted
   pursuant to such rules and regulations, although the Company believes that
   the disclosures are adequate to make the information presented not
   misleading. In the opinion of management, the amounts shown reflect all
   adjustments necessary to present fairly the financial position and results of
   operations for the periods presented. All such adjustments are of a normal
   recurring nature. The year-end consolidated balance sheet was derived from
   audited financial statements, but does not include all disclosures required
   by generally accepted accounting principles. It is suggested that the
   financial statements be read in conjunction with the financial statements and
   notes thereto included in the Company's latest annual report.


   Foreign Currency Translation


   All assets and liabilities of foreign operations are translated into U.S.
   dollars at period end exchange rates. Income and expense items are translated
   at average exchange rates during the period. Foreign exchange gains and
   losses arising from transactions are reflected in net income.


B. ACQUISITION OF TECH TEXTILES INTERNATIONAL LTD.:

   On March 2, 1998 the Company acquired the business and assets of Tech
   Textiles International Ltd. ("TTI") based in Andover, UK from T&N plc, for
   approximately $5.9 million in cash. The acquisition was made by the Company
   and through the Company's recently formed wholly owned subsidiary in the UK,
   Brunswick Technologies Europe Ltd. ("BTI-Europe") and is being accounted for
   using the purchase method of accounting. A preliminary allocation of the
   purchase price has been made to the assets and technology acquired. The
   operations of BTI-Europe have been included in financial results of the
   Company since March 2, 1998 and have been consolidated for the period ending
   September 30, 1998.


                                   CONTINUED
                                       7
<PAGE>   8
BRUNSWICK TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(THOUSANDS)
--------------------------------------------------------------------------------


C. INVENTORIES:

   Inventories consist of the following components:


<TABLE>
<CAPTION>
                                                   SEPTEMBER 30,       DECEMBER 31,
                                                       1998                1997
                                                   -------------       ------------
                                                            (IN THOUSANDS)
<S>                                                <C>                 <C>
Raw materials                                         $1,335              $  752
Work-in-process                                          952                 706
Finished goods                                         2,379               1,850
                                                      ------              ------
                                                      $4,666              $3,308
                                                      ======              ======
</TABLE>



D  NEW ACCOUNTING PRONOUNCEMENTS:


   In June 1997, FASB issued SFAS No. 131, "Disclosure about Segments of an
   Enterprise and related Information," which revised existing guidelines for
   financial reporting of segment information. SFAF No. 131 is required to be
   adopted for the fiscal year end reporting as of December 31, 1998. The
   Company has not determined what effect, if any, this will have on its
   financial statements.


   In March 1998, the American Institute of Certified Public Accountants'
   Accounting Standards Executive Committee issued Statement of Position ("SOP")
   98-1, "Accounting for the Costs of Computer Software Developed or obtained
   for Internal Use." The requirements of SOP 98-1 will be adopted for the
   Company's fiscal year ending December 31, 1998 and are not expected to have a
   material effect on the Company's financial statements.


   In June 1998, FASB issued SFAS No. 133, "Accounting for Derivative
   Instruments and Hedging Activities," which establishes accounting and
   reporting standards for derivative instruments, including certain derivatives
   embedded in other contracts, and for hedging activities. SFAS 133 requires
   that an entity recognizes all derivatives as either assets or liabilities in
   the statement of financial position and measure those financial instruments
   at fair value. The accounting for changes in the fair value of a derivative
   under SFAS 133 depends on the intended use of the derivative and its hedging
   destination. SFAS 133 is required to be adopted for the Company's year ending
   December 31, 2000 and the Company has not yet determined the impact SFAS 133
   will have on its results of operations, liquidity or financial position.


                                   CONTINUED
                                       8
<PAGE>   9
BRUNSWICK TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(thousands)

E. EARNINGS PER SHARE:

   The following is a reconciliation of the numerators and denominators of the
   basic and diluted earnings per share calculations:


   Three months ending September 30:


<TABLE>
<CAPTION>
                                          (IN THOUSANDS EXCEPT PER SHARE INFORMATION)
                                             1998                             1997
                                 -----------------------------    --------------------------
                                   NET                    PER       NET                 PER
                                 INCOME     SHARES       SHARE    INCOME     SHARES    SHARE
                                 ------     ------       -----    ------     ------    -----
<S>                              <C>        <C>         <C>       <C>        <C>      <C>
Basic EPS                        $ 260      5,161       $ 0.05    $ 446      4,687    $ 0.10


Conversion of stock options                   262                              425
                                 -----      -----                 -----      -----

Diluted EPS                      $ 260      5,423       $ 0.05    $ 446      5,112    $ 0.09
                                 -----      -----                 -----      -----
</TABLE>


   Nine months ending September 30:


<TABLE>
<CAPTION>
                                           (IN THOUSANDS EXCEPT PER SHARE INFORMATION)
                                               1998                            1997
                                 ------------------------------   -----------------------------
                                   NET                     PER      NET                    PER
                                 INCOME       SHARES      SHARE   INCOME      SHARES      SHARE
                                 ------       -----      ------   ------      ------      ------
<S>                              <C>          <C>        <C>      <C>         <C>         <C>
Basic EPS                        $1,196       5,157      $ 0.23   $1,123       3,967      $ 0.28


Conversion of stock options
  and preferred stock                           290                   56         840
                                 ------       -----               ------       -----

Diluted EPS                      $1,196       5,447      $ 0.22   $1,179       4,807      $ 0.25
                                 ------       -----               ------       -----
</TABLE>


F. RECLASSIFICATIONS:

   Certain prior year amounts have been reclassified to conform with the
   presentation used in the 1998 financial statements.


                                       9
<PAGE>   10
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
       RESULTS OF OPERATIONS


   Matters discussed in this Report 10-Q, including any discussion of or impact,
   expressed or implied, on the Company's anticipated operating results and
   future earnings per share contain forward-looking statements (identified by
   the words "expect", "estimate", "project", "plans", "believe", and similar
   expressions) that involve known and unknown risks and uncertainties. For
   these statements the Company claims the protection of the safe harbor of the
   private Securities Litigation Reform Act of 1995. The Company's results may
   differ significantly from the results indicated by such forward-looking
   statements. The Company's future results are dependent upon general economic
   conditions, the availability and pricing of supplies of raw materials, the
   ability to improve production capacity and scheduling, the ability to expand
   current markets, competitions from competing product lines from both
   fiberglass and non-fiberglass suppliers, the stability of its customers'
   capital spending plans and the ability of the Company to obtain necessary
   capital from time to time. These and other risks are detailed from time to
   time in the Company's SEC reports, including Form 10K for the year ended
   December 31, 1997.

   Results of Operations


   Net sales increased 35% in the third quarter of 1998 over the same period
   last year, however there was a 6% decline in net sales when compared to the
   second quarter of 1998. Excluding BTI-Europe's revenues, net sales increased
   16% when compared to the third quarter of 1997 but declined 7% from the level
   achieved in the second quarter of 1998. On a consolidated basis, gross profit
   declined to 20.9% of net sales in the quarter from 25.3% in the same quarter
   last year and 23.0% in the second quarter of 1998. Net income declined 42%
   compared to the same period last year and 50% from the second quarter of 1998
   driven largely by the decline in the gross margin. Fully diluted earnings per
   share of $.05 was off from $.09 and $.10 earned during the same period last
   year and the second quarter of 1998, respectively. The results of operations
   for 1998 include the operations of Brunswick Technologies Europe Ltd.
   ("BTI-Europe", formerly known as Tech Textiles International, Ltd.) which was
   acquired on March 2, 1998.


   The decline in gross profit margin is largely due to lower than anticipated
   production rates in the Brunswick, Maine plant. The production rates were
   below expectations for several reasons:

-     The domestic backlog as of September 30, 1998 was up over 60% compared
      to a year ago.  Typically, the Company has seen seasonal softness of
      demand by end users during the summer months.  In 1998, however, much
      of the anticipated softness did not occur.  This served to push orders
      for goods produced in the Brunswick, Maine facility to record levels in
      the third quarter and the demand for certain styles of goods
      outstripped available capacity. This meant that shorter production runs
      were required to meet the immediate needs of customers due to the tight
      supply of the requested materials.  This cycle was first experienced in
      the second quarter of the year and carried into the third quarter.

-     One machine was taken offline during the quarter for modifications to
      expand its capabilities to produce a wider range of material. The machine
      was brought back on line in September and is now producing goods that are
      in higher demand. This is helping to reduce the required style changes on
      other machines allowing for more efficient and longer production runs.


                                       10
<PAGE>   11
-     Third, a relatively tight labor market in the Brunswick, Maine area has
      driven up labor and training costs. Experienced machine operators have
      been difficult to find which has also impacted efficiencies.

   These factors combined to hold production rates below what were needed to
   meet the demand for goods, particularly in the first two months of the
   period. The lower production rates have also negatively impacted the gross
   margin as purchases of raw material have fallen below the quarterly
   thresholds needed to earn rebates from a major supplier. The rebates can
   still be retroactively earned if an annual threshold is met by the Company
   during the fourth quarter. However, it is uncertain if this threshold will be
   achieved. At the beginning of 1998, the Company also experienced an increase
   in raw stock prices which are negotiated annually. The Company has been
   unsuccessful in completely passing the price increase through to the end user
   and the shortfall was absorbed in the gross margin. Negotiations for 1999 raw
   stock pricing have not been finalized so the impact on future margins cannot
   be determined.

   Late in the third quarter, the Company brought a new machine on line in the
   Maine facility. In conjunction with the aforementioned modifications to
   existing equipment, the additional capacity is being directed at goods which
   are in high demand. Production rates improved in September and October and
   the Company is cautiously optimistic that the downward trend in the gross
   profit margin will be successfully reversed in the fourth quarter of 1998.
   (Note that effective November, 1998 the Company began paying an additional
   $10,500 per month for rent of its expanded facility in Maine. While this will
   add to the overhead expense, the labor and overhead components of cost of
   goods sold are relatively non-variable, or fixed expenses.)

   Sales, General & Administrative expenses were up 2.4%, or $41,000 during the
   third quarter in 1998 compared to the second quarter. The increase was due
   primarily to increased wage expense (the Company filled a new corporate
   controller position) and increased travel expense of senior management
   associated with the integration and management of BTI-Europe. Research &
   development ("R&D") expense was relatively unchanged during the period.
   Interest income was also relatively unchanged during the period but continues
   to be down substantially from 1997 when proceeds from the Initial Public
   Offering ("IPO") were invested in marketable instruments. The remaining funds
   from the IPO were used to acquire BTI-Europe in the first quarter of 1998.
   Miscellaneous income was up modestly in the quarter as the Company continued
   to benefit from reimbursement of R&D costs under various government programs
   in the United States and in the United Kingdom. The major program in the
   United States was substantially finalized in September 1998. This accounted
   for approximately $29,000 in income in the third quarter and no further
   income associated with this program is anticipated.

   Financial Condition

   September 30, 1998 compared to December 31, 1997.

   The consolidated balance sheet at September 30, 1998 continues to reflect a
   significantly different picture from that of fiscal year ended December 31,
   1997. Most significant was the Company's acquisition of BTI-Europe and
   associated "Euro-Technology" and goodwill which occurred in the first quarter
   of 1998. This served to consume substantially all of the remaining proceeds
   from the 1997 IPO. There was no substantial change in the Company's financial
   condition in the third quarter. Cash flow from operations continues to be
   adequate to meet the projected needs of the Company for at least the next
   twelve months along with intermittent use of its unsecured $4.0 million line
   of credit.


                                       11
<PAGE>   12
   Year 2000 Disclosure

   The year 2000 (Y2K) issue is best defined as the ability of systems to
   accurately process all date related information before, during and after
   midnight on 12/31/99, including other 'magic' or 'null-set' dates such as
   9/9/99, 1/11/11.

   BTI (the Company) has undertaken an initiative (begun in the second quarter
   of 1998) to assess the readiness of its internal systems in regards to
   compliance with the pending millennium change. The Company has assigned
   direct responsibility for the Y2K project to the corporate controller, in
   conjunction with the chief financial officer. All sites, domestically and
   internationally, are in the process of review for compliance.

   The Company has identified mission critical versus non-mission critical
   applications that have the potential to be adversely affected by the Y2K
   problem. The internal review is focused on operational, process and
   manufacturing related systems and network computer hardware and software. The
   review is inconclusive to date. However, the Company anticipates completion
   of the review by the end of 1998. The Company believes that any systems
   identified as failing Y2K compliance testing will either be repaired or
   replaced by the second quarter of 1999. It should be noted that the Company
   is in the process of implementing a company wide Enterprise Resource Planning
   (ERP) system supplied by a third party which is Y2K compliant. The impetus
   for installing the new ERP system was the need for an enhanced, fully
   integrated, management information system to support continued growth, not
   specifically due to Y2K exposure. The company continues to capitalize the
   costs of the ERP consistent with GAAP under Management Information Systems,
   which totaled $345,200 as of September 30, 1998. The implementation of this
   ERP system substantially addresses Y2K compliance issues related to our
   financial and manufacturing data collection and reporting systems.

   In addition to assessing our internal systems, the company is reviewing
   suppliers, service providers and customers whose systems failures as a result
   of Y2K non-compliance could have a significant impact on the Company's
   continued business operations. The Company is principally dependent on a
   small number of suppliers for the majority of its raw material. The Company
   has initiated communications to directly address these suppliers' Y2K
   preparedness. However, the Company has limited or no control over the actions
   of these third party suppliers to address and resolve their Y2K issues. Any
   failure of these principal third party suppliers to resolve their Y2K issues
   could have a materially adverse effect on continued uninterrupted business
   operations.

   It is the company's goal to be Y2K system compliant and to have performed a
   thorough assessment of critical third parties by the end of the second
   quarter of 1999. Based on the results of the internal compliance initiative
   and the assessment of third parties preparedness for the millennium change,
   management will determine the extent to which contingency planning is
   necessary. At this time, based on management's opinion of overall risk, no
   formal contingency planning has been initiated.

   It is management's opinion that the Company's overall internal, as opposed to
   supplier, risks associated with the Y2K problem are low. The implementation
   costs associated with the ERP project are the only material costs incurred to
   date in system software that would be reviewed as part of the Company's 
   Y2K project. The company has not incurred any other material costs related to
   the Y2K project, and it is anticipated that future costs associated with
   ensuring compliance will not exceed $50,000 and will be funded by cash flows
   generated from ongoing business operations. However, these expectations are
   subject to uncertainties. Although the Company expects that its internal
   systems will be Y2K compliant by the end of 1999, there can be no assurances
   that system failures will not occur,


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    or that such failures will not have a materially adverse effect on continued
    uninterrupted business operations.



   ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

            Not Applicable


   PART II. OTHER INFORMATION.

   ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

   (a)   Exhibit 27 - Financial Data Schedule

   (b)   Exhibit 10 - Amended and Restated Lease Agreement Between Brunswick
         Development Corporation and Brunswick Technologies Inc. Dated June
         5, 1998


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