U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington D.C. 20549
                                FORM 10-KSB

[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACTOF 1934 for the fiscal year ended. APRIL 30, 1998.

[   ]  TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the transition period 
from.....................................to
 .............................................

Commission file number  0-1684


GYRODYNE COMPANY OF AMERICA, INC.
----------------------------------------------
(Name of small business issuer in its charter)


NEW YORK                                
-------------------------------
(State or other jurisdiction of
incorporation or organization)            

 11-1688021                               
------------------------------------
(I.R.S. Employer Identification No.)

7 FLOWERFIELD, SUITE 28, ST. JAMES, NY      11780
----------------------------------------    ---------
(Address of principal executive offices)    (Zip Code)

Issuer's telephone number    (516) 584-5400


Securities registered under Section 12(b) of the Exchange Act: NONE
Securities registered under Section 12(g) of the Exchange Act:

Title of each class
COMMON STOCK, PAR VALUE $1.00 PER SHARE                       
---------------------------------------

Name of each exchange on which registered
NASDAQ SMALL CAP
----------------

Securities registered under Section 12(g) of the Exchange Act: NONE

Check whether the issuer (1) Filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
a shorter period that the registrant was required to file such reports), and
(2) has been subject to such filling requirements for the past 90 days.
Yes....X........No.............

Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B  contained  in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [x]

The issuer's revenues for its most recent fiscal year were: $2,235,655

The aggregate market value of the  510,097 shares of voting stock held by
non-affiliates of the registrant on JULY 20, 1998 was $10,297,583.  The
aggregate market value was computed by reference to the average bid and asked
prices of the common stock, on such date, on the NASDAQ system.

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
The number of shares outstanding of the issuer's Common $1.00  par value stock
as of  JULY 20, 1998 was 1,061,992.

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy statement to be filed pursuant to
regulation 14A for the FY 1998 annual meeting of Shareholders of the Company
are incorporated by reference into Part III hereof.



                            INDEX TO FORM 10-KSB
                              FISCAL YEAR 1998



ITEM #

PART I

     1    -Business                                                 
     2    -Properties                                              
     3    -Legal Proceedings                                       
     4    -Submission of Matters to a Vote of Security Holders

PART II
 
     5    -Market for Registrant's Common Stock and 
           Related Stockholders' Matters
     6    -Management's Discussion and Analysis of         
           Financial Position and Results of Operations
     7    -Financial Statements and Supplementary Data
              Independent Auditors' Reports                           
              Consolidated Balance Sheet                              
              Consolidated Statements of Operations                   
              Consolidated Statement of Stockholders' Equity
              Consolidated Statements of Cash Flows                   
              Notes to Consolidated Financial Statements
     8    -Disagreements on Accounting and Financial Data

PART III

     9    -Directors and Executive Officers of Registrant
    10    -Compensation of Executive Officers and Directors
    11    -Security Ownership of Certain Beneficial Owners and Management
    12    -Certain Relationships and Transactions                   
    13    -Exhibits, Financial Statement Schedules,and Reports on Form 8K
              Signatures                                             


PART I
ITEM 1. DESCRIPTION OF BUSINESS

     (a) BUSINESS DEVELOPMENT:
     Incorporated in New York in August 1946, Gyrodyne Company of
     America, Inc. (GCA) was engaged in the design, development,
     testing, and production of coaxial helicopters.  Although still
     involved in aerospace, the Company's primary focus is in
     developing its real estate assets.  Gyrodyne Petroleum, Inc.
     (GPI), a wholly owned subsidiary, was incorporated in Delaware in
     1965 and was established to diversify away from the aerospace
     industry. In 1966, Flowerfield Properties, Inc. (FPI), a wholly
     owned subsidiary, was incorporated in New York to manage
     investments in marketable securities and to participate in a
     citrus grove limited partnership in Florida.

     GCA since its inception and for the next 25 years was primarily
     engaged in design, testing, development and production of coaxial
     helicopters.  The Company's 326 acre Flowerfield  property in St.
     James, New York was originally purchased in 1951 for use as a
     manufacturing facility and to provide sufficient space for flight
     tests.  In order to diversify away from sole reliance on military
     contracts, the Company during the mid-sixties invested in limited
     partnerships for oil and gas exploration and in the development of
     raw land for citrus, the Callery-Judge Grove.

     Substantially all aerospace work was conducted for the U.S. Navy,
     with a small procurement by the Japanese Maritime Self-Defense
     Force.  From the mid-fifties to the early seventies, Gyrodyne
     manufactured and sold approximately 800 coaxial helicopters from
     its first small one-man helicopter, dubbed Rotorcycle, through its
     remotely piloted models QH-50A through QH-50D, with total sales
     amounting to approximately $200,000,000.

     Following a sharp reduction in the Company's helicopter
     manufacturing business by 1972, and the total elimination of it by
     1975 (except for providing spare parts), the Company began
     subdividing and renting out its idle manufacturing facilities in
     order to derive income.  Aerospace operations were essentially
     halted until the mid-eighties when the Company negotiated two
     separate technology transfer agreements: one with Dornier GmbH of
     Germany and the other with Israel Aircraft Industries (IAI) of
     Israel.  Although subjected to extensive delays due to changing
     world conditions, each licensee continues to show interest in the
     coaxial helicopter's future prospects.  From 1992-94, the Company
     was engaged in the manufacture of replacement rotor blades for QH-50
     helicopters still in service with the U.S. Navy.  This was the
     Company's first production contract in over twenty years.

     In FY1997 the Company incorporated two wholly-owned subsidiaries:
     Gyrodyne Rotorcycle Company Inc. (GRC) and Gyrodyne Coaxial
     Helicopter Company Inc.(GCHC).  These companies were created for the
     express purpose of positioning the Company to realize economic
     benefits from distinctly different markets.  GRC includes all the
     assets of the Company's one-manned Rotorcycle helicopter (a vehicle
     with a Gross Takeoff Weight  (GTOW) of less than 1,000 lbs.) while
     GCHC exclusively controls the QH-50 assets (a vehicle with a GTOW of
     1,500-3000 lbs.).  As noted in a previous report, two YRON platforms
     have been sold through Aviodyne U.S.A. with whom the GRC now has a
     50/50 joint venture: Rotorcycle 2000, LLC.

     Established in 1909, the Flowerfield property initially spanned
     one thousand acres.  Today the property is identified solely with
     the Company's 326 acre parcel.  Flowerfield increased to its
     present size in 1994 with the purchase of five acres for
     approximately one half million dollars.  Flowerfield Realty, Inc.
     a wholly owned subsidiary was incorporated in 1994 to handle the
     transaction.  Flowerfield is home to approximately 202,000 square
     feet of buildings suitable for office, engineering, manufacturing
     and warehouse space.  Flowerfield is the Company's single largest
     asset and primary focus.

     Gyrodyne Petroleum, Inc. (GPI), was established primarily to invest
     in oil and gas limited partnership interests.  Beginning in 1965,
     the initial major partners were Apache Oil and Austral Oil Company.
     During 1976, all Apache Oil partnership interests were disposed of.
     The Austral limited partnership assets through various acquisitions
     and mergers came under the management of Mobil Oil Corporation in
     1984.  In January 1988, Mobil Oil Corporation, then our general
     partner, divested itself of its interest in Rulison Field, Colorado.
     Four nonaffiliated firms acquired individual leases and became the
     operators for our then segmented Rulison Field interest.

     In 1991 Parker and Parsley purchased Mobil's entire interest in
     Ackerly Field, Texas, and in 1992, Meridian Oil Inc. acquired
     Mobil's entire interest in the Basin Dakota Field, New Mexico.  The
     sale of Mobil's interests also signaled the demise of Oil
     Participants Inc., the umbrella company which was the vehicle for
     limited partnership investment by GPI.  No longer a limited partner,
     GPI became a working interest owner in these various properties.  In
     July 1995, the Company sold its interests in the Rulison and Basin
     Dakota assets.  In August 1997, Parker and Parsley merged with MESA
     Operating Company which changed its name to Pioneer Natural
     Resources USA, Inc. (Pioneer).  Subsequently, in February 1998,
     Henry Petroleum Corp. bought out Pioneer and is the current operator
     in the Ackerly Field.  The balance of the remaining oil assets,
     Ackerly Field, is not deemed to be a significant portion of the
     Company's total assets.

     In 1966, Flowerfield Properties, Inc. (FPI), was incorporated to
     manage investments in marketable securities and to participate in a
     citrus grove limited partnership in Florida.  Active management of a
     securities portfolio was phased out in the late seventies.  The
     Callery-Judge Grove is located 16 miles west of Palm Beach, Florida
     with a portion lying in the Indian River Basin.  The Company's
     initial net investment position, after payout per the partnership
     agreement, was 17.5% which today, subsequent to two new equity
     offerings, is approximately 12.74%.  In accordance with the
     partnership agreement, the Company has no active voice in the
     Grove's management which authority rests solely with the Managing
     Partner.  The Grove interest is the Company's second largest asset.

     Neither the Company nor any of its subsidiaries have ever been in
     any bankruptcy, receivership or similar proceeding.

     (b) BUSINESS OF ISSUER:
     The Company is currently involved in four business segments.  The
     Company manages its real estate and helicopter activities while it is a
     passive investor in the citrus operation and maintains a working
     interest only in a single oil property, Ackerly Field. Below is a
     summary of financial results by business segment for  FY 1998 and 1997.


<TABLE>
<CAPTION>
                                                   YEAR ENDED                   YEAR ENDED
                                                   APRIL 30,                    APRIL 30,
                                                   1998                         1997

<S>                                          <C>                          <C> 
Rental Income                                 $   2,125,161                 $  2,020,979   
Aerospace Income                                    110,494                      104,606   
Less:  Rental costs and expenses                  1,325,670                    1,388,322   
         Net Aerospace expense                      137,178                       98,135   
                                                  ---------                    ---------  
Operating Margin                              $     772,807                 $    639,128   
                                                  =========                    =========
Other Income/(Loss):
     Oil and Gas Income (Notes 1,             $      75,237                 $    126,467   
     2, & 3)
     Other Expense (Net) (Notes 4 & 5               (63,946)                     (67,137)
                                                  ---------                   ----------  
Total Other Income                            $      11,291                 $     59,330   
                                                  =========                   ==========

Identifiable Assets at Net
Carrying Value
Real Estate Fixed Assets (Note 6)             $   2,749,615                 $  2,555,953   
                                                 ==========                   ==========

</TABLE>


Note 1 - All inter-company transactions have been eliminated.
Note 2 - All company activity was within the United States of America.
Note 3 - See note number 3 of "NOTES TO CONSOLIDATED FINANCIAL  STATEMENTS."
Note 4 - See Other Income and expense discussion in Item 6 "Management's
         Discussion."
Note 5 - See the Other Income and (Expenses) section of "CONSOLIDATED
         STATEMENTS OF OPERATIONS."
Note 6 - See note number 2 of "NOTES TO CONSOLIDATED FINANCIAL STATEMENTS."

The Business Segments in the financial statements reflect the
unconsolidated real estate, aerospace and investment activities of
Gyrodyne Company of America, Inc.  The oil and gas activity of Gyrodyne
Petroleum, Inc. is carried as investment income on the consolidated
statements of income under the heading "Other Income."

(1) Real Estate

     The Company is not a real estate developer in the traditional sense.
     Acquisition of additional real estate assets is solely for the
     purpose of augmenting the development prospects of the Flowerfield
     property.   Gyrodyne owns a 326 acre site, primarily zoned for light
     industry, approximately 50 miles east of New York City on the north
     shore of Long Island.  Purchased in 1951, the property was initially
     surrounded by farm land.  Major residential developments sprang up
     in the sixties, most notably, those constructed by the Levitt
     Organization.  In the early sixties the State of New York  began
     construction of a campus which today is the State University of New
     York (SUNY) at Stony Brook.  Covering over one thousand acres, Stony
     Brook University is a major research center complete with tertiary
     care hospital and veterans hospital.  The University's High
     Technology Incubator already boasts numerous graduates creating an
     ongoing need for research and development space.

     There are two major industrially zoned parcels bracketing the
     University, one to the east and Flowerfield to the west.  The
     eastern parcel, located solely in the township of Brookhaven, is
     approximately one hundred acres in size with road accessibility
     provided by a four lane east-west route.  Currently the parcel is
     approximately eighty percent under contract or already developed.
     At the current rate of construction, the balance of the park should
     be committed in two to three years with an aggregate total build out
     of approximately 1,000,000 square feet.

     The Flowerfield property is bisected by the town lines of Smithtown
     and Brookhaven Townships.  The existing buildings and approximately
     144 acres are located in the town of St. James, Township of
     Smithtown, and the contiguous balance of approximately 182 acres is
     located in the town of Stony Brook, Township of Brookhaven.

     The approximately 326 acres of land are zoned for use as shown
     below:
                             Approximate Acreage
<TABLE>
<CAPTION>
                                           Light           Residential
Township                 Total           Industry         and/or Buffer
<S>                <C>               <C>               <C>
Smithtown               144               120                 24   
Brookhaven              182               173                  9   
Total                   326               293                 33  
                      =====             =====              =====  
</TABLE>


     Flowerfield is the single largest undeveloped privately
     owned industrially zoned parcel in the township of
     Smithtown.  All of the acreage is contiguous.  However,
     the Port Jefferson Branch of the Long Island Railroad
     runs through the property, with 73.5 acres lying to the
     north of the Railroad, and the balance to the south.

     The site has several additional positive features.
     Flowerfield's location places it in hydrological zone
     VIII, one of the most liberal with respect to effluent
     discharge rates.  Flowerfield and Stony Brook
     University share mirroring road frontage on a local
     secondary road which has become the basis for a
     road/bridge link between the two campuses.  The
     possible linkup could provide a regional traffic
     solution.  The pristine nature of the Flowerfield
     property adds to planning flexibility thus permitting a
     wide range of development plans such as corporate
     headquarters buildings, satellite incubators and a
     conference center.

     Improvements to Flowerfield over the years include
     nearly five miles of roads and approximately ten acres
     of paved parking areas.  There are five main building
     groups with rental unit sizes ranging from 300 square
     feet to 25,000 square feet, with the 1,000 square foot
     units being most numerous.  Where practical, separate
     utilities have been provided for each suite. Given the
     location and size of rental units, the Flowerfield
     Industrial Park attracts small startup companies that
     are not dependent on extensive material or product
     handling.  Flowerfield lies seven miles north of the
     Long Island Expressway.

         MANDATED INFRASTRUCTURE IMPROVEMENTS
<TABLE>
<CAPTION>
         Project(s)                   Agency or Mandate            Projected
                                                                  Completion
<S>                           <C>                              <C>
Industrial building           Suffolk County Department of
public water backflow         Health                               on-going
prevention                    Suffolk County, New York

Inspection, maintenance       N.Y.S. Department of
and/or removal of             Environmental Control (DEC)          on-going
in-ground oil tanks

Handicap access to            Americans With Disabilities          on-going
facilities                    Act

Hazardous material            Environmental Protection             on-going
disposal                      Agency (EPA)
</TABLE>


     It is currently estimated that costs associated for
     compliance with government regulations will cumulatively
     approach $150,000 over the next few years.  It must be
     noted that there may be additional compliance costs in
     the event that proposed approaches to various projects
     are modified or nullified by pending changes in
     regulations or adverse administrative interpretations.

     The Company has undergone extensive reviews of
     development possibilities, and in June 1996, the Board
     of Directors adopted a preliminary Master Plan for
     Development.  A broad range of efforts are now underway
     to further focus the preliminary plan and garner
     community input and support.  The adoption and
     implementation of the development plan will be market
     driven and should not be viewed as a short term project.
     Further marketing and technical surveys must be
     conducted prior to the promulgation and submittal of a
     required environmental impact statement to village, town
     and county officials.

     With the exception of two individuals assigned to
     aerospace activities, essentially all Company personnel
     are directly involved in support of real estate
     operations.  Depending on seasonal requirements, total
     full time personnel vary between twenty and twenty-five.

     (2) Oil and Gas

     As noted earlier, Henry Petroleum acquired Pioneer's
     interest in the Ackerly Field, Texas property in
     February 1998.  GPI's interest is:
<TABLE>
<CAPTION>
Name                        Location                            % Avg. Net
of - FIELD                  County/State - GROSS ACREAGE        Revenue - INTEREST
<S>                        <C>                                 <C>
Ackerly                     Dawson, Texas  -  6,540 Acres        4.5%
</TABLE>


     GPI's initial acquisition of Ackerly was as an operating field and as
     such, the field is well over thirty years old.  Environmental
     compliance expenses, particularly for casing leaks, have tended to
     rise over time.  The estimated monthly output is roughly seven
     hundred and fifty barrels per month with gross revenues fluctuating
     with the spot price of oil, currently $13.49/bbl (June 98 vs.
     $18.00/bbl for FY98) range.  Expenses, ad valorem taxes and mandated
     maintenance reworks average approximately $8,500 per month.

     (3) Citrus Grove

     From its inception in 1965, the net worth of the Grove Partnership,
     based on its appraised value, has increased approximately 600% while
     cash distributions to the partners have amounted to $31 million or
     500% on a base investment of $5.5 million.  At the formation of the
     Partnership, the Company's interest was 20%.  However, as provided in
     the Agreement, upon payout of each limited partner's initial equity
     participation, the General Partner was granted a 12.5% share of Grove
     earnings and equity which effectively reduced the Company's share of
     the Partnership to 17.5%.  Based on two recent capital infusions, in
     which the Company did not participate, the Company's share has
     declined to approximately 12.74%.  During calendar year 1976, the
     Grove realized its first profit from operations and by 1981 the
     Limited Partners had recouped their original cash investment.  To
     date Flowerfield Properties Inc. has received, in cash, five times
     its $1.1 million original investment.

     In 1995 the Company signed an amendment to the Partnership agreement
     which extends the life of the Partnership from 1999 to 2019.  In
     addition, it provides greater flexibility to the General Partner in
     such areas as financing, cash distribution and bonuses.  In April of
     1995, a $6 million subscription program for additional capital was
     instituted by the Grove as well as another subscription of $5 million
     in June 1997.  Existing Partners were given the opportunity to
     subscribe to this financing at the same level as their current
     investment.  Gyrodyne deferred and did not participate in either
     offering.

     Although Management has determined that development of the
     Callery-Judge Grove is in the best interests of the Partnership, the
     requirement to husband cash and invest in the development of
     Flowerfield's Master Plan far outweighs this alternative investment
     opportunity.

     Beginning May 1, 1995 (FY96) the Company changed from the equity
     method of accounting to the cost method of accounting.  Thereafter,
     the Company's investment in the Grove only changes when capital
     distributions are received or when cash payments are made to the
     Grove.  There were no such transactions in FY 1998.  The Company does
     not anticipated receiving any significant cash distributions from the
     Grove prior to FY2000.  The Company's last cash receipt from the
     Grove was in calendar year 1991 and amounted to $294,000.

     With a change in the Managing Partner in 1992, the Grove began
     aggressively marketing not only the private Callery-Judge brand
     through direct sales to institutions and individuals but also
     directly to Japan.  Acquisition of additional shares in the Ocean
     Spray Co-Op has helped stabilize the juice-solids market while
     receipts and savings from the packing house operation continue to
     rise.  However, a glut of grapefruit product throughout Florida
     continues to be a dampening factor on earnings for the foreseeable
     future.

     In 1997 the Grove changed its financial reporting year from a
     December 31 calendar year to a June 30 fiscal year.

     (4)  Aerospace:

     The Company's primary aerospace product is the QH-50 model remotely
     piloted coaxial helicopter.  Although sold as an integrated package:
     engine, fuselage, rotating controls, avionics, rotor blades,
     actuators, fuel tank(s) and payloads to the U.S. Navy, Gyrodyne
     currently specializes in the assembly and testing of dynamic
     platforms only.  This consists of the fuselage, rotating controls,
     rotor blades and fuel tank(s).  All chemical testing and processing
     is subcontracted, and therefore, there is no environmental exposure.

     From the late forties through the sixties, the Company ushered in
     numerous technological milestones including the world's first
     successful coaxial flight test, first convert-a-plane, first free
     drone helicopter flight, and first fully composite rotor blade.  The
     Company's unique patented "tip brake" design solved directional
     control problems inherent in the coaxial rotor system thus fostering
     development.  In 1993 the Company was granted a new patent on a
     retractable tip brake which will permit the design of more efficient
     blades in the future.

     As a result of efforts during the 1980's, the Company negotiated two
     multi-phased licensing agreements which cover both evaluation and
     manufacturing stages for its QH-50 helicopters and derivatives.
     Dornier, GmbH, a subsidiary of Daimler-Benz AG, Friedrichshafen,
     Germany, was awarded a license (1986) for the European NATO countries
     while Israel Aircraft Industries Ltd./Technologies Division (IAI),
     Ben-Gurion International Airport, Israel received a license (1987)
     for Israel.

     The agreements provide for Gyrodyne to furnish Dornier and IAI with
     technical assistance and technical data in order for them to evaluate
     the suitability of the Gyrodyne helicopter for their various
     applications.  It is anticipated that, if the evaluations provide
     favorable results, final licensing agreements will be signed whereby
     Gyrodyne will furnish additional technical and manufacturing data to
     enable each licensee to produce the remotely piloted QH-50
     helicopters.

     It was initially anticipated that the evaluation phase of each
     licensing contract would last approximately two and one half to three
     years.  Numerous extended delays have been encountered by each
     licensee with respect to the promulgation of air vehicle requirements
     by their respective governments, securing incremental development
     funding, and attracting third party customers.  Both licensees have
     opted to market the basic QH-50 configured platform with modern
     customized electronics, updated software and a new power plant.  Each
     version of the QH-50 is capable of handling varied mission
     requirements and/or integrating various payloads such as sensors,
     radars, armaments, and communications gear.

     For the evaluation phase, the Company received fees of $500,000.
     Should both final agreements be executed, additional fees of
     approximately $3 million plus royalties are possible.  The licensing
     agreements would remain in effect in perpetuity and provide for
     staged royalty payments.  The exclusive sales territories for Dornier
     are the European NATO nations and for IAI, Israel.  An amendment to
     extend the Agreement has been issued to IAI.  All licenses and sales
     are subject to the approval of the U.S. Department of State.

     On September 6, 1995, Gyrodyne signed a contract with Dornier GmbH for
     the sale of two re-manufactured QH 50 helicopters for $700,000.  The
     vehicles were used for the VTOL UAV Demonstrator Program conducted for
     the German government.  The second platform was shipped to Dornier in
     April 1996 with the on-site technical assistance portion of the
     agreement concluded in June 1996.

     During FY1998, the Company redrafted its original Technology Transfer
     Agreement with Dornier GmbH in response to a modified set of
     procurement parameters issued by the German Ministry of Defense
     (MOD), Dornier's primary customer.  The decision by the German MOD to
     greatly expand the number of naval ships that qualify for Dornier's
     SEAMOS program has enhanced the likelihood that the program will be
     deployed.  Although the purchase price of the technology and general
     terms of the agreement remain the same, the funding timeline has been
     altered, an exemption has been granted on any royalties on the first
     fifty production platforms, and Dornier's marketing area has been
     expanded with the inclusion of a non-exclusive worldwide license
     except Israel.  In January 1998, $50,000 in income was realized from
     the Dornier Technical Data Package Transfer Agreement.  Another
     $760,000 is anticipated in September 1998 from that same agreement.

ITEM 2. DESCRIPTION OF PROPERTY

     (c) Description of Real Estate and Operating Data

     Gyrodyne Company of America, Inc. (Consolidated) owns, in fee,
     approximately 326 acres located on the north shore of Suffolk County,
     Long Island, New York just west of the State University of New York
     at Stony Brook.  The Company currently has approximately 202,000
     square feet of industrial building space and maintains its corporate
     office and manufacturing facilities on site.  In  1994, approximately
     5 acres of land adjacent to the Company's property were purchased.
     For a more detailed description, see Item 1. DESCRIPTION OF BUSINESS
     (b) (1) Real Estate.

     The land and land improvements are carried on the Company's books at
     cost in the amount of $808,338, while the 202,000 square feet of
     space is carried at a depreciated cost of $1,351,158.  At the current
     time, the property and buildings that are used by the Real Estate
     segment of the business, except for Building #7 and the surrounding 6
     1/2 acres which are encumbered by a 10 year collateral mortgage in
     the amount of $1,050,000, are entirely without financial
     encumbrances.  The balance of the mortgage as of April 30, 1998 is
     $879,634.

     The average age of all the buildings is nearly thirty-eight years,
     and the facilities are undergoing continuous maintenance repair
     cycles for roofs, paved areas, and building exteriors.  The external
     appearance of all buildings is that of well maintained mature
     properties.  The general condition of internal infrastructure HVAC,
     electrical and plumbing is above average for facilities of this age.
     The grounds feature extensive landscaping and are neatly groomed
     commensurate with other business parks.

     A Phase I Environmental Study was conducted by Lockwood, Kessler &
     Bartlett, Inc., September 1993, with the resulting assessment that
     "...there appear to be no significant grounds for concern regarding
     hazardous materials use, storage, or contamination at the subject
     site."  For further discussion on environmental issues, see Item 1.
     DESCRIPTION OF BUSINESS (b) (1) Real Estate.

     On June 13, 1996, the Board of Directors adopted a preliminary Master
     Plan for the development of the Flowerfield property.  The plan,
     generated by consultants Henderson and Bodwell L.L.P. of Plainview,
     New York, is based on a planned unit development concept.  A more
     detailed discussion follows in Item 6. MANAGEMENT'S DISCUSSION AND
     ANALYSIS.

     The Company's official address is:

                      Gyrodyne Company of America, Inc.
                           7 Flowerfield Suite 28
                       St. James, New York 11780-1551

     The Company currently maintains a $10 million dollar liability
     umbrella policy and has selectively insured certain buildings and
     rent receipts predicated on an analysis of risk, exposure, and loss
     history.  Of the five large noncontiguous industrial buildings: two,
     are constructed of prefabricated metal panels; two, of cement blocks
     with metal deck roofing; and one, clay brick and stucco with a gabled
     wood roof.  One of the block buildings has an in-place sprinkler
     system which is currently functional but not recognized for insurance
     purposes. It is Management's opinion that the premises are adequately
     insured.

     Almost all available space has been subdivided and is available for
     rent, except for approximately 18,000 square feet which has been
     reserved for Company use.  Of the 184,000 gross square footage
     available for rent, approximately 15,000 square feet comprise common
     areas such as hallways, foyers and rest rooms.  A summary of
     operating results:

<TABLE>
<CAPTION>
  Fiscal                                  Operating    Occupancy        Nominal
   Year        $ Revenue    $ Expenses    $ Margin     Rate in Pct.     $ Rate per sqft*
                                      
<S>          <C>            <C>           <C>           <C>             <C>
    1995      1,667,067      1,167,325     499,742       82              10.15
    1996      1,879,287      1,430,192     449,095       86              11.35
    1997      2,020,979      1,388,322     632,657       85              11.57
    1998      2,125,161      1,325,670     799,491       86              11.91
</TABLE>
     *EXCLUSIVE OF LAND RENTALS BUT INCLUSIVE OF THE CATERING
      FACILITY AND BUS TERMINAL.

In FY 1998 three tenants individually exceeded 10% of total
rental income, representing an aggregate 46%, with one tenant
exceeding 22%. Correspondingly, in FY 1997, three tenants
each exceeded 10% of total rental income for a 44% aggregate
total.  The leases of these major tenants all contain
periodic cost of living escalators as well as various
pass-through increases for such items as real estate taxes,
fuel oil increases, security services and building insurance.
For tenants with stand alone buildings, certain pass-throughs
do not apply because the associated service costs are fully
assumed by the tenants.

     As of April 30, 1998, the Company had a 14.4% vacancy
     rate vs.15.0% for the same period last year.
     Most of the Company's tenants are startup or small
     businesses that seek small spaces and short term leases.
     The average square footage of tenants whose leases
     expire within twelve months is approximately 1,900 sqft.
     The Company's exposure to short term market rental rate
     conditions is reflected in the accompanying table.  A
     summary of lease terms:

                 FY 1998 LEASE SUMMARY
<TABLE>
<CAPTION>
BALANCE OF         # OF        TOTAL        RELATIVE      RELATIVE      APPROXIMATE
TIME               TENANTS     SQUARE         PCT           PCT         DOLLAR
REMAINING                      FOOTAGE      OF TOTAL      OF TOTAL      VALUE OF
ON LEASE                                    RENTED        DOLLAR        RENTALS
                                            SPACE         VALUE
<S>                <C>         <C>          <C>           <C>          <C>
Up to 1 year        46          60,711        35.5%         26.0%         $ 552,000

From 1 to 2 yrs     14          47,003        27.5%         21.7%           462,000

over 2 years        11          63,397        37.0%         52.3%         1,111,000

Total               71          171,111      100.0%        100.0%        $2,125,000
                   ===          =======      ======        ======        ==========
</TABLE>


A summary of occupancies at April 30 1998:

<TABLE>
<CAPTION>
TYPE OF OCCUPANCY         SQUARE FOOTAGE            PERCENT OF
                                                    TOTAL
<S>                       <C>                   <C>
Office                        31,889                  18.6%
Manufacturing/R & D           39,122                  22.9%
Service/Misc.                100,100                  58.5%
TOTAL                        171,111                 100.0%
                             =======                =======
</TABLE>


Depending on the type of prospective occupancy, there are approximately
5,100 square feet of long term vacancies that require extensive
renovation.  Management estimates that the cost of renovation will be
approximately $30/sqft. or $153,000.  Upon securing viable tenants, the
Company may seek outside financing for such renovations.  Rental units
turned over in the normal course of business are refurbished from internal
cash flow.

Depreciable asset categories and rates are enumerated in Footnote 2 to the
Financial Statements.  Real estate taxes paid to the township of Smithtown
for FY1998 were $240,563.10 based on a rate of $104.89/$100 of assessed
value.   Real estate taxes paid to the township of Brookhaven for FY98
were $114,933.68 based on a rate of $152.23/$100 of assessed value.

ITEM 3. LEGAL PROCEEDINGS.

     The Company is named as a defendant in a number of legal proceedings
     arising in the normal course of business.  Management, after
     reviewing all actions and proceedings pending against or involving
     the Company considers that the aggregate loss, if any, resulting from
     the final outcome of these proceedings will not be material.

     None of the Company's subsidiaries is party to, nor is any
     subsidiary-owned property subject to, any material pending legal
     proceedings.

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

     No matters were submitted to the vote of security holders during the
     fourth quarter of either Fiscal Year 1997 or 1998.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.

     (a) Market information:

     The Company's Common Stock $1 P.V. (symbol: "GYRO") is traded in the
     NASDAQ Small-Cap Market.  Set forth below are the high and low bid
     and asked prices as reported by NASDAQ for the periods indicated.
     Such prices reflect inter-dealer quotations, without retail markup,
     markdown or commission, and do not necessarily reflect actual
     transactions.

<TABLE>
<CAPTION>
                        Bid Price   Asked Price
     QUARTER ENDED      Low         High
<S>                     <C>         <C>
      Fiscal 1997
July 31, 1996                $12.00      $13.75
October 31, 1996             $11.06      $12.38
January 31, 1997             $11.25      $12.38
April 30, 1997               $12.00      $13.00

      Fiscal 1998
July 31, 1997                $17.00      $19.25
October 31, 1997             $20.88      $20.88
January 31, 1998             $19.50      $19.50
April 30, 1998               $20.50      $20.50
</TABLE>


   (b) Approximate Number of Equity Security Holders, including shares held in
       Street name by brokers.
                                                   Number of Holders
                  TITLE OF CLASS                   AS OF JULY 20, 1998
        -----------------------------              -------------------
        Common Stock, $1.00 Par Value                    1,673

   (c) There were no dividends declared in the current or prior
       fiscal year.


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION.

     DISCUSSION

     Subsequent to the close of the fiscal year, the Company consummated its
     first major land lease agreement on June 5, 1998 with TCR
     MidAlantic/NE Properties, Inc. (TCR).  Trammel Crow Residential is
     one of the nation's most highly regarded and active multifamily
     residential developers.  The two phase agreement calls for the
     construction of a luxury apartment community of approximately 250
     units on twenty-five acres with an option for an additional 25 acres
     for a Phase II development.  The Agreement to Lease specifies a
     99-year ground lease which is conditioned upon the completion of a
     feasibility and due diligence period, closing on the ground lease
     which has been negotiated and commencement of construction by
     December 31, 2000.

     The TCR residential development will be part of a Planned Development
     District (PDD) submitted by the Company to the Town of Brookhaven.
     The PDD will require a substantial investment in the development of a
     comprehensive environmental impact statement, a sewage treatment
     plant (STP) and infrastructure improvements.  During the past three
     months, the Company has contracted for the update of the 1993 Phase I
     Environmental Study, begun the engineering design study for the STP
     and defined the infrastructure requirements for the Master Plan
     Development of Flowerfield.

     As noted in last year's report, the Company's northern boundary is
     located along an historic corridor.  In order to minimize
     environmental impacts, generate revenues and maintain a green buffer,
     the Company entered into a lease on June 17, 1998 with MNM Camp
     Corporation d/b/a Flowerfield Country Day Camp for approximately 15
     acres of Gyrodyne's Flowerfield property along New York State Route
     25A.  The salient terms of the agreement include a minimum aggregate
     rent of $2.7 million and a lease encompassing 11 camp seasons.
     Constructed by the Company, the camp is scheduled to commence
     operations in 1999.  The facility will be comprised of a central
     activities and administration building, swimming pools, tennis courts
     and ball fields.  The Company intends to utilize the summer camp
     acreage as a basis for requesting higher building densities on other
     portions of the Flowerfield property.

     The Company has entered into serious negotiations with a well
     established provider of assisted living quarters for seniors.
     Substantial progress has been made to date.  As with all proposed
     uses that deviate from the Company's basic light industrial zoning,
     governmental approval will be required.  The timing of any such
     approvals can not be estimated at this time.

     Subsequent to the adoption of the new Technology Data Package Transfer
     Agreement (TDPTA) with Dornier,  a Letter of Intent was executed
     which provides for a change in the funding mechanism in Dornier's
     program with the German Ministry of Defense.  The Company now
     anticipates receiving $760,000 in August or September, 1998 towards
     payment of the TDPTA contract price of $2,000,000.  At this juncture,
     the IAI Hellstar program is in abeyance with no recent developments
     to report.  The Company is not anticipating any change in status in
     the near future.

     Rotorcycle 2000, LLC was created to address the two primary factors
     constraining the manufacture of the one-manned YRON helicopter: the
     lack of an economically viable power plant and the need for a modern
     rotor blade.  Rotorcycle 2000 partner Aviodyne has procured a
     commercially available engine which it is adapting for the YRON.
     Gyrodyne Company has developed a new all-composite rotor blade, a
     prototype of which was produced in July 1998.  Quality control tests
     and evaluations are scheduled for the fall of 1998.  The rotorcycle
     will be marketed to high-end business customers and recreational
     enthusiasts.

     As stated in previous reports, the long term prospects for the development
     of the Callery-Judge Grove are excellent.  Several factors are
     currently adversely affecting the present development efforts.  There
     are jurisdictional disputes between various county and city agencies
     resolution of which hinges on the definition of the area surrounding
     the Grove as to whether it is rural or suburban.  The issue is
     important because there are different parameters for rural and
     suburban developments.  Although it may result in a protracted study
     period, it seems likely that a countywide study encompassing two
     additional large groves in the area will be necessary for the
     promulgation of a master development plan.  Within that framework,
     each grove's individual development plan will be evaluated.

     Unaudited figures for the eleven months ended May 31, 1998 for the
     Grove indicate a loss on a consolidated basis in excess of three
     million dollars.  Although the loss exceeded expectations, the
     numbers mask several positive trends. The financials reflect the net
     results of sharply increased citrus production and dramatically lower
     grapefruit prices.  Fruit quality was also higher than last year.
     New culture care methods instituted last year have reduced tree
     mortality, increased the number of productive trees per acre and
     increased the yield per tree.

     The Grove has redirected its marketing efforts towards the gift fruit
     and institutional sales segments and has abandoned direct retail
     distribution.  Better management controls have yielded a substantial
     improvement in the packing house operation which had a profit in
     excess of one million dollars for the eleven months.  The collapse of
     the Asian market also negatively impacted grapefruit earnings.
     Prospects for FY1999 are still clouded by weak pricing, turmoil in
     Asia and a glut of fruit.


     The Company continues to maintain its interest in the Grove as a long
     term investment. The timing of the Grove's development, return to
     operating profitability and continued dilution are under active
     review by both Management and the Board of Directors.

     The Company's interest in petroleum is based solely on the Ackerly
     property in Texas.  Given the softness in the petroleum market, the
     Company plans to maintain its position in Ackerly.

     REVENUES

     Slightly higher rental rates contributed to increased real estate
     revenue of $104,000.  Coupled with aerospace sales, total revenue for
     the fiscal year ended April 30, 1998 increased $110,000 to $2,236,000
     from the previous year's $2,126,000.
     .
     OPERATING COSTS

     The year-to-year cost of operating rental property remained
     essentially flat.  A mild winter, few unanticipated repairs and low
     tenant turnover contributed to the stability.  FY1999 rental revenue
     may decrease reflecting a new rental agreement with a major tenant
     that is based on a net net lease.  Expenses should show a
     corresponding decrease as well.  The Company's development of a new
     composite rotor blade and administrative work associated with the
     Dornier TDPTA contributed to higher aerospace expenses.  It is
     anticipated that Aerospace expenses will continue at an elevated
     level throughout the blade test and evaluation period.  In addition,
     technical support for Dornier's project will continue in FY1999.

     GENERAL AND ADMINISTRATIVE EXPENSES

     On a consolidated basis for the year ended April 30, 1998, General
     and Administrative expense were $1,210,577 versus $1,271,616 for the
     year ended April 30, 1997.  It should be noted that pension expense
     is now included in General and Administrative expense on the
     Company's Consolidated Statement of Operations.  FY1997 has been
     adjusted to reflect this change.

     For analysis purposes, the Company divides General and Administrative
     Expenses into four expense pools: 1) REMUNERATION: which includes all
     compensation expenses related to executive and support staff; 2)
     CORPORATE GOVERNANCE: which includes all expenses related to the
     Board of Directors and its subcommittees, maintenance of stockholder
     records, NASDAQ listing requirements, and long range strategic
     planning; 3) OVERHEAD: corporate overhead expenses for accounting
     services, depreciation, maintenance, utility charges, insurance,
     etc., and 4) SPECIAL PROJECTS: expenses related to the Master Plan
     for the Flowerfield property, acquisitions, financing charges and
     consulting expenses for project advisement.

<TABLE>
<CAPTION>
                                      G&A SEGMENTS

G&A Expenses                                     FY98                        FY97
<S>                                            <C>                          <C>
REMUNERATION                                      $748,634                    $596,384
CORPORATE GOVERNANCE                              $232,384                    $258,445
OVERHEAD                                          $229,559                    $172,787
SPECIAL PROJECTS*                                       $0                    $244,000
Total                                           $1,210,577                  $1,271,616
</TABLE>


REMUNERATION: On a cash basis Remuneration rose approximately $19,000
reflecting salary increases.  Noncash expenses during FY98 included stock
options exercised and stock awards granted.  The total exceeded  FY97
expenses by approximately $100,000.  In addition, Pension expense for the
current year was $123,000 compared to $82,000 for the prior year, an
increase of $41,000.  No contributions to the plan by the Company were
required during fiscal years 1998 or 1997.

CORPORATE GOVERNANCE:  During FY1998, Corporate Governance decreased in
accordance with the Black-Scholes formula utilized to calculate the future
value of options to participants.  The Company took a charge of $11,400
for the current year versus a charge of $67,500 in FY1997.  This was
partially offset by increased directors fees of $22,000 related to an
increase in committee meetings over the previous year.  With the exception
of travel expense, reimbursement which is paid in cash, all other expenses
related to the Board of Directors, although charged to earnings, are being
paid in Company stock according to the adopted "1996 Non-Employee
Directors' Compensation Plan" thus closely aligning the directors with
shareholder interests.

OVERHEAD:  Corporate overhead rose primarily reflecting expenses related
to the write off of bad debts, $37,500, and an increase in the bad debt
provision, $6,000.  Legal action against tenants resulted in judgments in
the amount of $29,500.  The Company has obtained some tenant assets as a
result of these judgments. Any revenue generated from these efforts will
be recorded as income when collected.

*SPECIAL PROJECTS: In line with expectations, expenses rose for legal,
real estate development and architectural consultants.  The Company began
capitalizing Master Plan related expenses during the fiscal year.
$285,000 of these expenses were capitalized in FY1998.

OTHER INCOME AND (EXPENSE)

Lower net oil income was the primary factor resulting in the year-to-year
decline in "Other Income and Expense."  The price of oil dropped nearly $7.00 a
barrel from June 97 to June 98.

RESULTS FROM OPERATIONS

After giving effect to the exercise of stock options, results from operations
after taxes were a loss of ($0.26) per share for the period ended April 30,
1998, versus a loss of ($0.37) per share for the prior year.  The pretax loss
of $426,479 generated an income tax benefit of $155,404 and resulted in a net
loss of $271,075 compared to a loss of $376,862 in FY 1997.

LIQUIDITY AND CAPITAL RESERVES

In 1995, the Company engaged McCarthy & Associates to develop, predicated on
budgeted forecasts, a financial plan suitable for presentation to financial
institutions.  The Company also commissioned Henderson & Bodwell, L.L.P.
consulting engineers to draw up a preliminary Master Plan for the development
of the Company's Flowerfield property.  In conjunction with these efforts, the
law firm of Cahn Wishod & Lamb was called upon to examine the ramifications of
alternate development scenarios.  As a result of these joint efforts, the Board
of Directors adopted a preliminary Master Plan in June 1996.  In the current
fiscal year, Gyrodyne engaged Cameron Engineering to develop an engineering
report and facility plan for sewage treatment and site evaluations.  In
addition, Freudenthal & Elkowitz Consulting Group was asked to review site
inspections and prepare an ecological inventory.  The firm of Hawkins, Webb and
Jaeger prepared multiple land surveys, and Weidersum Associates provided
architectural drawings for two building projects.

As noted earlier in this report, certain additional specialists must be engaged
to provide qualified studies and opinions in diverse areas such as marketing,
traffic pattern studies, environmental impacts and community interface.

The Company estimated in numerous prior reports that the cost of adopting a
presentation caliber Master Plan proposal would be at least $250,000.  This
plateau has been reached, and the Company is readying its modified Master Plan
for submittal.  The cost of this next phase will approach $1,000,000.  Costs
may escalate if the approval process becomes contentious.  In order to mitigate
the effect of these large expenses on cash reserves, the Company has negotiated
arrangements to compensate certain consultants, in part, with restricted
investment type common stock.

EFFECTS OF INFLATION

It is the Company's policy to have multi-year leases contain cost pass-through
provisions for increases in real estate taxes, fuel costs, building insurance,
cartage and security guard services, as applicable.  The balance of the
Company's operations, including rental rates, income from the Grove and
petroleum revenue are subject to free market forces.

YEAR 2000 IMPACT

The Company utilizes the latest version of commercially available software for
its accounting and systems applications which are Y2K compatible.  With respect
to facilities maintenance, there is no exposure to electromechanical system
failure attributable to a possible Y2K problem.

                              
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
     See following pages.

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
Gyrodyne Company of America, Inc.St. James,
New York

We have audited the accompanying consolidated balance sheet of Gyrodyne Company
of  America,  Inc.  and  Subsidiaries  as  of  April  30,  1998 and the related
consolidated statements of operations, stockholders' equity  and cash flows for
each  of the two years in the period then ended.  These consolidated  financial
statements   are   the   responsibility   of  the  Company's  management.   Our
responsibility  is  to  express  an  opinion on  these  consolidated  financial
statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally  accepted  auditing
standards.  Those standards require  that  we  plan  and  perform the audits 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, the consolidated financial statements referred to above present
fairly,  in  all  material  respects, the consolidated  financial  position  of
Gyrodyne Company of America, Inc. and Subsidiaries as of April 30, 1998 and the
results of their operations and  their  cash flows for each of the two years in
the  period  ended  April  30,  1998,  in conformity  with  generally  accepted
accounting principles.

HOLTZ RUBENSTEIN & CO., LLP

Melville, New York
June 26, 1998

GYRODYNE COMPANY OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
APRIL 30, 1998

<TABLE>
<CAPTION>
ASSETS
CURRENT ASSETS:
<S>                                                                     <C> 
Cash and cash equivalents                                                  $884,546
Accounts receivable, less allowance for doubtful accounts of $12,000         69,885
Prepaid expenses and other current assets                                    91,425
Deferred income taxes (Note 5)                                              173,000
                                                                         ----------
Total current assets                                                      1,218,856

INVESTMENT IN CITRUS GROVE PARTNERSHIP                                    1,585,104
PROPERTY, PLANT AND EQUIPMENT (Notes 2 and 9)                             2,749,615
PREPAID PENSION COSTS (Note 6)                                            1,546,858
OTHER ASSETS                                                                  9,373
                                                                         ----------
                                                                         $7,109,806
                                                                         ==========  
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable and accrued expenses                                      $357,865
Current portion of long term debt (Note 9)                                   46,471
                                                                         ----------
Total current liabilities                                                   404,336
                                                                         ----------
LONG TERM DEBT (Note 9)                                                     838,712
                                                                         ----------
DEFERRED INCOME TAXES (Note 5)                                              967,000
                                                                         ----------
COMMITMENTS (Notes 6 and 12)
STOCKHOLDERS' EQUITY: (Note 8)
Common stock, $1 par value; authorized 4,000,000 shares;
1,531,086 shares issued and outstanding                                   1,531,086
Additional paid-in capital                                                6,843,290
Deficit                                                                    (766,325)
                                                                         ----------
                                                                          7,608,051
Less cost of shares of common stock held in treasury                     (2,708,293)
                                                                         ----------
                                                                          4,899,758
                                                                         ----------
                                                                         $7,109,806
                                                                         ==========

</TABLE>

See notes to consolidated financial statements

GYRODYNE COMPANY OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                     Year Ended
                                                      APRIL 30,
                                                1998             1997
REVENUE:                                     ----------       ----------- 
<S>                                         <C>               <C> 
Rental income (Note 4)                       $2,125,161        $2,020,979
Aerospace income                                110,494           104,606
                                             ----------        ----------
                                              2,235,655         2,125,585

COSTS AND EXPENSES (Note 6):
Cost of maintaining rental property           1,325,670         1,388,322
Aerospace expense                               137,178            98,135
General and administrative                    1,210,577         1,271,616
                                             ----------        ----------
                                              2,673,425         2,758,073
                                             ----------        ----------

OPERATING LOSS                                 (437,770)         (632,488)
                                             ----------        ----------
OTHER INCOME AND (EXPENSES):
Gain on oil and gas investment (Note 3)          75,237           126,467
Interest income                                  31,290            36,153
Interest expense                                (95,236)         (103,290)
                                             ----------        ----------
                                                 11,291            59,330
                                             ----------        ----------
LOSS BEFORE INCOME TAXES                       (426,479)         (573,158)
INCOME TAX BENEFIT (Note 5)                    (155,404)         (196,296)
                                             ----------        ----------
NET LOSS                                      $(271,075)        $(376,862)
                                             ==========        ==========

NET LOSS PER COMMON SHARE (Note 8):
     Basic                                        $(.26)            $(.37)
                                                  ======            ======
     Diluted                                      $(.26)            $(.37)
                                                  ======            ======

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING:
     Basic                                    1,044,252         1,012,190
                                              =========         =========
     Diluted                                  1,048,801         1,012,190
                                              =========         =========

</TABLE>

See notes to consolidated financial statements

GYRODYNE COMPANY OF AMERICA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                            $ 1 Par Value
                             Common Stock                                                   Treasury Stock
                             ------------                 Additional                        --------------
                                               Par         Paid in                                                     Total
                               Shares          Value        Capital        (Deficit)      Shares         Cost          Equity
                               ------          -----        -------        ---------      ------         ----          ------
<S>                          <C>            <C>            <C>            <C>            <C>         <C>            <C>        
Balance at April 30, 1996     1,531,086     $1,531,086     $6,172,311     $ (47,588)     530,535     $(3,051,260)     $4,604,549
Issuance of stock
  for services                                                160,099                    (24,812)        142,685         302,784
Issuance of stock grants                                       16,975                     (3,080)         17,710          34,685
Exercise of stock options                                       4,827                     (1,166)          6,705          11,532
Directors stock options
  issued                                                       67,500                                     67,500
Net Loss                                                                   (376,862)                    (376,862)
                             ----------     ----------     ----------     ---------      -------     -----------      ----------
Balance at April 30, 1997    $1,531,086     $1,531,086     $6,421,712     $(424,450)     501,477     $(2,884,160)     $4,644,188
Issuance of stock for
  services                                                    170,142                    (13,633)         78,400         248,542
Issuance of stock grants                                       48,416                     (5,460)         31,400          79,816
Exercise of stock options                                      54,790       (70,800)     (11,491)         66,067          50,057
Issuance of directors stock                                    71,654                                                     71,654
  and other options issued
Tax benefit from exercise
  of stock options                                             76,576                                                     76,576
Net Loss                                                                   (271,075)                                    (271,075)
                             ----------     ----------     ----------     ---------      -------     -----------      ----------
Balance at April 30, 1998     1,531,086     $1,531,086     $6,843,290     $(766,325)     470,893     $(2,708,293)     $4,899,758
                             ==========     ==========     ==========     =========      =======     ===========      ==========

</TABLE>

See notes to consolidated financial statements


GYRODYNE COMPANY OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                  Years Ended
                                                                    APRIL 30,
                                                             -----------------------
                                                             1998               1997
                                                             ----               ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                      <C>               <C>   
Net loss                                                 $ (271,075)        $ (376,862)
                                                         ----------         ----------
Adjustments to reconcile net loss to net
 cash provided by operating activities:
Depreciation and amortization                               108,571            106,738
Deferred income tax benefit                                (157,424)          (203,114)
Non-cash compensation                                       400,012            404,969
Pension expense                                             123,081             82,080
Changes in operating assets and liabilities:
 (Increase) decrease in assets:
Accounts receivable                                          21,187            368,434
Prepaid expenses and other                                  (40,733)           167,311
Other assets                                                  7,058            198,858
Increase (decrease) in liabilities:
Accounts payable and accrued expenses                       106,775            (95,584)
                                                         ----------         ----------
Total adjustments                                           568,527          1,029,692
                                                         ----------         ----------
Net cash provided by operating activities                   297,452            652,830
                                                         ----------         ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in short term government securities                    -              189,716
Acquisition of property, plant and equipment               (302,233)          (584,544)
                                                         ----------         ----------
Net cash used in investment activities                     (302,233)          (394,828)
                                                         ----------         ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt                                 (69,740)           (73,752)
Proceeds from exercise of stock options                      50,057             11,532
                                                         ----------         ----------
Net cash used in financing activities                       (19,683)           (62,220)
                                                         ----------         ----------

Net (decrease) increase in cash and cash equivalents        (24,464)           195,782

Cash and cash equivalents at beginning of year              909,010            713,228
                                                         ----------         ----------

Cash and cash equivalents at end of year                   $884,546           $909,010
                                                         ==========         ==========


</TABLE>

See notes to consolidated financial statements


GYRODYNE COMPANY OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TWO YEARS ENDED APRIL 30, 1998

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

  a.  ORGANIZATION AND NATURE OF OPERATIONS

Gyrodyne Company of America, Inc. and Subsidiaries (the "Company") is primarily
a  lessor of industrial and commercial real  estate  to  unrelated  diversified
entities located in Long Island, New York.  The Company also has investments in
a citrus  grove  partnership and in oil and gas properties.  Prior to 1975, the
Company's primary  business was the design, testing, development and production
of coaxial helicopters.   Although  the  Company cannot be considered an active
airframe manufacturer, it is involved in certain  licensing agreements that, if
exercised,  would  enable  the  licensees  to  produce  the   Gyrodyne  coaxial
helicopter.

  b.  PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of
Gyrodyne Company of America, Inc.  ("GCA")  and  its wholly-owned subsidiaries.
All intercompany balances and transactions have been eliminated.

  c.  INVESTMENTS

The Company accounts for its investment in the citrus grove under the cost
method.  Under this method any distributions by the citrus grove will be income
in the year  of  distribution  and  capital  contributions  by the Company will
increase the value of the investment.

  d.  DEPRECIATION AND AMORTIZATION

Property,   plant  and  equipment  is  depreciated  using  straight  line   and
accelerated methods over the estimated useful lives of the related assets.

  e.  STATEMENT OF CASH FLOWS

For purposes  of  the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to be
cash equivalents.

  f.  NET INCOME (LOSS) PER COMMON SHARE

In the third quarter of fiscal 1998, the Company adopted Statement of Financial
Accounting Standards  ("SFAS")  No.  128, "Earnings Per Share".  Basic earnings
per common share is computed by dividing  the net income (loss) by the weighted
average  number  of  shares  of  common stock outstanding  during  the  period.
Dilutive earnings per share give effect to stock options and warrants which are
considered to be dilutive common stock  equivalents.  Treasury shares have been
excluded from the weighted average number  of  shares.   Net  income (loss) per
share has been retroactively restated to reflect SFAS No. 128 for  all  periods
presented.

  g.  INCOME TAXES

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.

  h.  IMPAIRMENT OF LONG-LIVED ASSETS

In  accordance  with  Statement  of  Financial  Accounting  Standard  No.  121,
*Accounting  for  the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of,* an impairment loss is recognized whenever events or changes
in circumstances indicate  that  the  carrying  amount  of  an asset may not be
recoverable.

  i.  STOCK-BASED COMPENSATION

The  Company  applies  APB  Opinion  No.  25  and  related  interpretations  in
accounting  for stock-based compensation to employees.  Stock  compensation  to
non-employees  is  accounted  for at fair value in accordance with Statement of
Financial   Accounting   Standard  No.   123,   *Accounting   for   Stock-Based
Compensation.*

  j.  USE OF ESTIMATES

The preparation of financial  statements  in conformity with generally accepted
accounting principles requires management to  make  estimates  and  assumptions
that  effect  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.  RECLASSIFICATIONS

Certain  reclassifications have been made to the financial statements  for  the
year ended April 30, 1997 to conform with the classifications used in 1998.

l.  NEW ACCOUNTING PRONOUNCEMENTS

Recent accounting  pronouncements  issued by the Financial Accounting Standards
Board which the Company is not required to adopt at this time include Statement
of Financial Accounting Standards No.  130,  "Reporting  Comprehensive  Income"
("SFAS  130"),  Statement of Financial Accounting Standard No. 131, "Disclosure
About Segments of  an  Enterprise"  ("SFAS  131")  and  Statement  of Financial
Accounting   Standard   No.   132,   "Disclosure   About   Pensions  and  Other
Postretirement Benefits" ("SFAS 132").  The Company intends  to comply with the
disclosure requirements of SFAS 130, SFAS 131 and SFAS 132 and  does not expect
these  pronouncements  to have a material effect on the Consolidated  Financial
Statements.

2.  PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment as of April 30, 1998 consists of the following:

<TABLE>
<CAPTION>

                                 Estimated                      Allowance for          Net
                                   Lives            Cost        Depreciation           Asset
<S>                             <C>             <C>             <C>                 <C>
Land                                 -          $  808,338      $     -             $  808,338
Land development                     -             457,924            -                457,924
Buildings and improvements      20-33 yrs.       4,470,267       3,119,109           1,351,158
Machinery and equipment
 and furniture and fixtures      3-10 yrs.         511,462         379,267             132,195
                                                ----------      ----------          ----------
                                                $6,247,991      $3,498,376          $2,749,615
                                                ==========      ==========          ==========

</TABLE>


Substantially all buildings and improvements are held for lease. Certain leases
serve as collateral for the Company's outstanding bank debt.

3.  INVESTMENT IN OIL AND GAS PROPERTIES:

The  results of operations  from  the  Company's  investment  in  oil  and  gas
properties are summarized as follows:

                                            Years Ended
                                              APRIL 30,
                                        ---------------------
                                        1998             1997
                                        ----             ----

<TABLE>
<CAPTION>
<S>                                  <C>              <C> 
Sales of oil and gas                  $187,711         $242,752
Oil and gas production expenses        112,474          116,285
                                      --------         --------
Gain from operations                   $75,237         $126,467
                                      ========         ========

</TABLE>

4.  MAJOR CUSTOMERS:

For the year ended April 30, 1998 rental income from three tenants represented
22%, 14% and 10% of total rental income.

For the year ended April 30, 1997 rental income from three tenants represented
21%, 13% and 10% of total rental income.

5.  INCOME TAXES:

The Company  files  a consolidated U.S. federal income tax return that includes
all  80%  or  more owned  subsidiaries.  State  tax  returns  are  filed  on  a
consolidated, or separate basis depending on the applicable laws.

The (benefit) provision for income taxes is comprised of the following:

                                            Years Ended
                                              APRIL 30,
                                        -------------------
                                        1998           1997
                                        ----           ----
Current:                             $     -         $    -
  Federal                                2,020          6,818
                                     ---------       --------
  State                                  2,020          6,818
                                     ---------       --------

Deferred:                             (120,910)      (158,500)
  Federal                              (36,514)       (44,614)
                                     ---------       --------
  State                               (157,424)      (203,114)
                                     ---------       --------
                                     $(155,404)     $(196,296)
                                     ==========     ==========
                                      
The components of the net deferred tax liability at April 30, 1998 are as
follows:

Deferred tax assets:
Stock compensation                                 $  141,000
Accrued sick and vacation                              26,000
Provision for bad debt                                  7,000
Tax loss carry forwards                               763,000
Contribution carryover                                 24,000
Tax credit carry forwards                              13,000
                                                      --------
Total deferred tax assets                             974,000
Valuation allowance                                   (73,000)
                                                      --------
Net deferred tax assets                                901,000
                                                      --------

Deferred tax liabilities:
Prepaid pension costs                                 (747,000)
Unrealized gain on investment in Citrus Grove         (948,000)
                                                    ----------
Total deferred tax liabilities                      (1,695,000)
                                                    ----------
Net deferred income taxes                           $ (794,000)
                                                    ==========



The Company has  net  operating  loss carry forwards of approximately $1,916,000
which can be used to reduce future taxable income through 2013.

A reconciliation of the federal statutory  rate  to the Company's effective tax
rate is as follows:

                                                     Years Ended
                                                       APRIL 30,
                                                   -----------------
                                                   1998         1997
                                                   ----         ----
U.S. Federal statutory income rate                 34.0%        34.0%
State income tax, net of federal tax benefits       7.5          7.5
Permanent differences                              (0.6)           -
Change in valuation allowance                      (4.3)        (4.0)
Other differences, net                              (.2)        (3.5)
                                                   ----         ----
                                                   36.4%        34.0%
                                                   ====         ====


6.  RETIREMENT PLANS:

The  Company  has  a  noncontributory  defined benefit  pension  plan  covering
substantially all of its employees.  The  benefits  are based on annual average
earnings  for  the  highest  sixty  (60)  months  (whether or  not  continuous)
immediately preceding the Participant's termination  date. Annual contributions
to the plan are at least equal to the minimum amount,  if  any, required by the
Employee Retirement Income Security Act of 1974 but no greater than the maximum
amount that can be deducted for federal income tax purposes.  Contributions are
intended  to provide not only for benefits attributed to service  to  date  but
also those  expected  to be earned in the future.  Due to the overfunded status
of the plan, no contributions  have  been made for each of the two years in the
period ended April 30, 1998.

Net periodic pension expense consists of the following components:

                                            Years Ended
                                              APRIL 30,
                                          -----------------
                                          1998         1997
                                          ----         ----
Service cost                            $123,858     $107,068
Interest costs                           195,524      195,867
Expected return on assets               (222,219)    (199,263)
Net amortization                          25,918      (21,592)
                                        --------     --------
Pension expense                         $123,081     $ 82,080
                                        ========     ========

The Plan's funded status is as follows:
<TABLE>
<CAPTION>
                                                               APRIL 30,
                                                        ---------------------
                                                        1998             1997
                                                        ----             ----
Actuarial present value of benefit obligations:
Accumulated benefit obligation:
<S>                                                  <C>               <C> 
-Vested                                              $(1,836,747)      $(1,882,798)
-Non-vested                                              (12,312)           (8,959)
                                                     -----------       -----------
-Total                                               $(1,849,059)      $(1,891,757)
                                                     ===========       ===========

Projected benefit obligation                         $(2,083,828)      $(2,355,323)
Assets at fair value                                   3,201,875         2,889,049
Unrecognized net (asset) obligation                     (534,718)         (668,398)
Unrecognized prior service cost                          622,134           694,872
Unrecognized net loss                                    341,395         1,109,739
                                                     -----------       -----------
Prepaid pension cost                                 $ 1,546,858       $ 1,669,939
                                                     ===========       ===========

</TABLE>

Assumption used in accounting for the Company's defined benefit pension plan
are as follows:

Discount rate                                           8.0%
Rate of increase in compensation                        8.0%
Expected long-term rate of return on plan assets        8.0%


7.  TECHNOLOGY TRANSFER AGREEMENTS:

The  Company was a party to an agreement with Dornier GmbH of  Germany  whereby
the Company  was  to provide technological documentation and assistance related
to the Company's coaxial helicopters which would result in a $2,000,000 payment
for manufacturing rights.  The  Company  has  reached  a new agreement with the
licensee  to  restructure  the  accord  by  modifying  certain  agreements  and
extending the contract terms.  The two million dollar license  fee  remains  in
the new agreement.

In  May  1987,  the  Company  entered into an agreement with Israel Aircraft of
Israel whereby the Company provided  technological documentation and assistance
related to helicopters. The agreement  contained  an  option  to  purchase  the
technology  which  expired  on  November  6,  1997.   However  the  Company  is
negotiating  an  extension  of  the  Agreement.  In  the  event  the  option is
exercised, the Company will receive a $1,000,000 fee and future royalties based
on sales using the technology.

8.  STOCK OPTIONS PLANS:

The  Company  has  an  incentive  stock  option  plan  (the "Plan") under which
participants   may  be  granted  either  Incentive  Stock  Options   ("ISO's"),
Non-Qualified Stock  Options  ("NQSO's")  or  Stock Grants.  The purpose of the
Plan is to promote the overall financial objectives  of  the  Company  and  its
shareholders by motivating those persons selected to participate in the Plan to
achieve  long-term growth in shareholder equity in the Company and by retaining
the association  of  those  individuals  who are instrumental in achieving this
growth.  Such options or grants become exercisable  at  various intervals based
upon  vesting  schedules  as  determined  by the Compensation  Committee.   The
options expire between August 1999 and August 2002.

The ISOs may be granted to employees and consultants  of the Company at a price
not less than the fair market value on the date of grant.  All such options are
authorized and approved by the Board of Directors, based  on recommendations of
the Compensation Committee.

ISOs  may  be  granted  along with Stock Appreciation Rights which  permit  the
holder to tender the option to the Company in exchange for stock, at no cost to
the optionee, that represents  the  difference between the option price and the
fair market value on date of exercise.   NQSOs may be issued with Limited Stock
Appreciation Rights which are exercisable,  for  cash, in the event of a change
of control.  In addition, an incentive kicker may be provided for Stock Grants,
ISOs and NQSOs, which increases the number of grants  or  options  based on the
market  price  of  the  shares  at  exercise versus the option price.  A reload
feature may also be attached which permits  the  optionee  to tender previously
purchased stock, in lieu of cash, for the purchase of the options  and  receive
additional options equal to the number of shares tendered.

Information as to the stock options and stock grants is summarized as follows:

<TABLE>
<CAPTION> 
                                                          Stock          Stock
Stock Options and Grants:                                 Options        Grants       Total
                                                          -------        ------       -----
<S>                                                      <C>            <C>          <C> 
Available at April 30, 1996                               44,662          6,935       51,597
Stock grants exercised                                      -            (3,080)      (3,080)
Stock options exercised at $9.89 per share                (1,166)           -         (1,166)
                                                          ------          -----       ------
Available at April 30, 1997                               43,496          3,855       47,351
Stock grants awarded                                         -            7,455        7,455
Stock options issued at $9.89 to $19.61 per share         45,657            -         45,657
Stock grants exercised                                       -           (5,460)      (5,460)
Stock options exercised at $9.89 per share               (16,491)           -        (16,491)
                                                          ------          -----       ------
Available at April 30, 1998                               72,662          5,850       78,512
                                                          ======          =====       ======
Exercisable at April 30, 1998                             22,526            -         22,526
                                                          ======          =====       ======

</TABLE>

NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

The  Company  adopted  a  non-qualified  stock option plan for all non-employee
Directors of the Company in October 1996.  Each non-employee Director was given
initial option grants when the plan was adopted, which are exercisable in three
equal annual installments commencing on the  first  anniversary  of  the grant.
Each  non-employee  Director  will  also  be  given 1,250 option grants (annual
option  grants)  which will be granted on January  1  for  calendar  year  1997
through 2000. Each option is exercisable on the anniversary of the grant.

<TABLE>
<CAPTION>

                                                    Number             Option
                                                   of Shares           Prices
                                                   ---------           ------
<S>                                                <C>            <C> 
Total options outstanding at April 30, 1996            -                  -

Initial stock option grants                         17,500             $11.82
Annual stock option grants                           8,750             $11.80
                                                    ------
Total options outstanding at April 30, 1997         26,250

Initial stock option grants                          5,000         $11.82 - $21.01
Annual stock option grants                          12,500             $19.98
Total options exercised                             (3,750)        $11.80 - $11.82
                                                    ------
Total options outstanding at April 30, 1998         40,000         $11.80 - $21.01
                                                    ======

</TABLE>

Shares reserved for  future  issuance  at  April  30, 1998 are comprised of the
following:

<TABLE>
<CAPTION>
<S>                                                                <C>
Shares issuable upon exercise of stock options under the
 Company's Non-Employee Director Stock Option Plan                   71,250
Shares issuable under the Company's Non-Employee
 Director Stock Compensation Plan                                    34,873
Shares issuable upon excise of stock options under
 the Company's stock incentive plan                                 227,412
Shares issuable under the Company's stock grant incentive plan        9,100
                                                                    -------
                                                                    342,635
                                                                    =======

</TABLE>

In  accordance  with  APB  Opinion  No. 25, no compensation  expense  has  been
recognized for the stock option plans.   Had  the Company recorded compensation
expense for the stock options based on the fair  value  at  the  grant date for
awards in the years ended April 30, 1998 consistent with the provisions of SFAS
No. 123, the Company's net loss and net loss per share would have  increased to
the following pro forma amounts:

<TABLE>
<CAPTION>

                                            1998             1997

<S>                                      <C>              <C>  
Net loss, as reported                    $(271,075)       $(376,862)
Net loss, pro forma                       (296,670)        (376,862)
Basic loss per share, as reported             (.26)            (.37)
Basic loss per share, pro forma               (.28)            (.37)
Diluted loss per share, as reported           (.26)            (.37)
Diluted loss per share, pro forma             (.28)            (.37)

</TABLE>

The fair value of each option grant is estimated on the date of grant using the
Black Scholes option pricing model with the following range of weighted-average
assumptions used for grants in years ended April 30, 1998; expected  volatility
of  18.6%;  risk-free  interest rate averaging 5.0%; and expected lives of  1.5
years.

9.  LONG-TERM DEBT:

<TABLE>
<CAPTION>

<S>                                  <C>
Term loan, bank (a)                   $879,634
Installment loans, other                 5,549
                                      --------
                                       885,183
Less current portion                    46,471
                                      --------
                                      $838,712
                                      ======== 
</TABLE>

(a)In March 1998, the Company  exercised  an option to modify the interest rate
of  its  existing bank loan.  The modified terms  require  monthly  installment
payments of  $9,643,  including  interest  at 8.45% per annum through September
2005 when the remaining unpaid principal of  approximately $470,000 is payable.
The loan provides for an adjustment to the fixed  interest  rate on every fifth
anniversary based upon the U.S. Treasury note rate.  The loan is secured by the
assignment of rents and a first collateral mortgage on certain real estate. At 
April 30, 1998 the Company was in technical default of one its financial 
convenants on the loan. The Company has obtained a waiver of this covenant 
from the bank. 

Annual maturities of long-term debt is as follows:

      Fiscal Years
         Ending
        April 30,            Amount
      ------------          --------
          1999              $ 46,471
          2000                47,129
          2001                49,761
          2002                54,195
          2003                59,025
       Thereafter            628,602
                            --------
                            $885,183
                            ========  
10.  CONCENTRATION OF CREDIT RISK:

Financial  instruments which potentially subject the Company to  concentrations
of credit risk  consist  principally of cash and cash equivalents and long-term
investments. The Company places its temporary cash investments with high credit
quality financial institutions  and,  by  policy,  limits  the amount of credit
exposure  in  any  one financial institution.  The Company is affected  by  the
economics of the Oil  and the Citrus industries due to its investments therein.
Management does not believe significant credit risk exists at April 30, 1998.

11.  SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

                                               Years Ended
                                                APRIL 30,
                                            ------------------
                                            1998          1997
                                            ----          ----
Cash paid during the year for:
 Interest                                 $95,236       $103,290
                                          =======       ========
Income taxes                              $   -           $2,694
                                          =======       ========

12.  COMMITMENTS:

The Company has an employment  agreement  with an officer which expires in July
2002.  The aggregate commitment for future salary, excluding bonuses, under the
agreement  is  approximately $528,000.  The Agreement  provides  for  increases
based  upon  annual   cost-of-living  increases  plus  certain  benefits.   The
Agreement also provides  for the payment of salary and benefits for a period of
five years in the event of a change in corporate control, as defined.

The aggregate minimum commitment under this agreement is as follows:

       Fiscal Years
          Ending
         APRIL 30,          Amount
       ------------        --------
          1999             $124,000
          2000              124,000
          2001              124,000
          2002              124,000
          2003               32,000

In addition, upon termination of the officer for other than disablement or
incapacitation, the agreement provides for the Company to pay the difference
between the vested portion of accrued pension benefits to the officer as of
the date of termination and the expected accrued pension benefits through
the end of the officer's employment term.  As of April 30, 1998 this
difference approximates $239,000.

13.  FAIR VALUE OF FINANCIAL INSTRUMENTS:

The methods and assumptions  used  to  estimate the fair value of the following
classes of financial instruments were:

CURRENT ASSETS AND CURRENT LIABILITIES:   The  carrying amount of cash, current
receivables  and payables and certain other short  term  financial  instruments
approximate their fair value.

The estimated  fair  value  of  the  Company's  investment  in the Citrus Grove
Partnership at April 30, 1998, based upon an independent third  party appraisal
report,   is   approximately  $6,400,000  based  on   the  Company's  ownership
percentage.

The book value of  the Company's long term debt, including the current portion,
approximates its fair value.

14.  SUBSEQUENT EVENTS:

Subsequent to year end,  the  Company  entered into two land leases.  The first
lease, for approximately 15 acres, extends for 11 years beginning on January 1,
1999, with an initial annual rent payment  of  $125,000.  The second lease, for
approximately  25  acres,  is  for  99  years beginning  with  commencement  of
construction, with an initial annual rent  payment  of  approximately $500,000.
Both leases provide for annual incremental increases.

Item  8  Changes  in  and  Disagreements with Accountants on Accounting  and
Financial Disclosure

In connection with the audits  for  the  three most recent years, there have
been no disagreements with Holtz Rubenstein  &  Co.,  LLP,  on any matter of
accounting  principles  or  practices,  financial statement disclosures,  or
auditing scope or procedure.


PART III

ITEM 9  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT.

  (a)  The following table lists the name, ages and positions of all executive
officers and directors and all persons nominated or chosen to become such.
Each director has been elected to the term indicated.  Directors whose term of
office ends in 1998 shall serve until the next Annual Meeting of Stockholders
or until their successors are elected and qualified.

<TABLE>
<CAPTION>

Name & Principal Occupation or Employment                       Age       First Became a        Current Board
                                                                          Director              Term Expires
<S>                                                           <C>        <C>                   <C>
Dimitri P. Papadakos                                            53         1968 to 1976             1999
President, Treasurer, CEO and Director of the Company                         1992

Peter Pitsiokos                                                 38             ---
Vice President, Secretary & General Counsel of the Company

Josef Markowski                                                 46             ---
Vice President, Operations of the Company

Frank D'Alessandro                                              52             ---
Controller of the Company

Joseph L. Dorn                                                  83            1992                  1998
Former Secretary / Treasurer of the Company
Director of the Company

Robert H. Beyer                                                 65            1977                  1999
Sr. Inertial Guidance Engineer, Naval Air Systems Command
Director of the Company

Nicholas Goudes                                                 77            1992                  2000
Real Estate Investor
Director of the Company

Peter P. Papadakos                                              35            1993                  1999
Secretary / Treasurer and Director, Sa-Tu Corporation
Director of the Company

Stephen V. Maroney                                              56            1996                  1998
Consultant to the Company and Former President of Extebank
Director of the Company

John H. Marburger III                                           57            1996                  2000
Director of Brookhaven National Laboratory
Director of the Company

Philip F. Palmedo                                               64            1996                  1998
Chairman of International Resources Group
Director of the Company

Paul L. Lamb                                                    52            1997                  2000
Partner of Cahn, Wishod and Lamb, LLP
Director of the Company

</TABLE>


   (b) Business Experience

   Dimitri P. Papadakos, age 53, was appointed to the Board of Directors on
   April 25, 1992.  He was elected CEO and President on May 30, 1992.  He is
   also President and Director of all the Company's subsidiaries. He was
   employed by Gyrodyne from 1972-1976 and served as Vice President of
   Flowerfield Properties, Inc.  In 1981, he rejoined Gyrodyne Company as
   Director of Real Estate Operations. In 1983, he became Assistant Secretary
   of the Gyrodyne Company and in 1988 became Vice President. In April 1992 he
   was appointed to the Board of Directors of the Company and on May 30, 1992
   was elected CEO and President.  Mr. Papadakos holds graduate degrees in both
   business and communications from New York Institute of Technology.

   Peter Pitsiokos, age 38, was elected to serve as Vice President on November
   28, 1992, and  had served as Assistant Secretary and General Counsel since
   joining Gyrodyne Company of America, Inc. He has since become Secretary of
   the Company.  Mr. Pitsiokos was formerly the Executive Assistant District
   Attorney in Suffolk County, New York.  He also served as the Assistant
   Director of Economic Development and the Director of Water Resources in the
   Town of Brookhaven.  He holds a Law degree from Villanova University and  a
   BA degree from the State University of New York at Stony Brook.

   Josef Markowski, age 46 has been Vice President of Operations since October
   26, 1995. Prior to joining the Company he was President of Logical Device
   Software (LDS), a company he started in 1988. LDS produced and marketed
   software programs for accounting and production control, and in addition
   wrote custom applications for a variety of fields.  Mr. Markowski has
   substantial experience in manufacturing and holds a degree in Technical
   Electronics from the State University of New York at Farmingdale.

   Frank D'Alessandro, age 52, joined the Company in March, 1997 as its
   Controller.  Prior to joining the Company, he was Controller of Cornucopia
   Pet Foods Inc., a distributor of all natural pet foods.  Previous to that he
   spent many years in various financial positions.  Mr. D'Alessandro holds an
   MBA degree in Finance as well as a BBA in Accounting, both from Hofstra
   University.

   Joseph L. Dorn, age 83, Joined the Company in 1951 as Comptroller and in
   1965 was elected Secretary and Assistant Treasurer.  In April 1992 he was
   appointed to the Board of Directors of the Company and on May 30, 1992 he
   became Treasurer.  Prior to joining Gyrodyne, Mr. Dorn worked for the
   Securities and Exchange Commission and the United States Navy Cost Office.
   Mr. Dorn is a Certified Public Accountant of the State of New York and is a
   graduate of Georgetown University.  He retired from the Company in 1995.

   Robert Beyer, age 65, has been a Director of the company since November 28,
   1977. He is also a Director of the Company's subsidiaries. He retired from
   the United States Naval Reserve in 1993 with the rank of Captain.  He
   retired from his position as Senior Inertial Systems Engineer with the Naval
   Air Systems Command in 1998. He has an electrical engineering degree from
   New York University and a graduate degree in International Business from
   Sophia University in Tokyo, Japan.  Mr. Beyer was employed by Gyrodyne from
   1962-1973.  He was stationed  in Japan as a Technical Representative for the
   Company's remotely piloted helicopters from 1963 to 1970.

   Nicholas T. Goudes, age 77, was appointed to the Board of Directors on
   November 28, 1992.  He was previously employed by Gyrodyne from 1950 to 1955
   and served as a member of the finance committee.  Between 1953 & 1957 he was
   a Director and Vice President of Flowerfield Realty, Inc. and Helicopter
   Securities, Inc.  A Director and Secretary/Treasurer of Piedmont
   Enterprises, a recreational and food service company, Mr. Goudes has
   extensive experience in management and real estate operations.  From 1987 to
   1991 Mr. Goudes served as a Director of North Carolina State University
   Foundation.

   Peter P. Papadakos, age 35, was appointed to the Board of Directors on
   October 30, 1993, increasing the board to six members. Mr. Papadakos is the
   son of the late Chairman and founder of Gyrodyne Company of America, Inc. He
   currently resides in Reno, Nevada and is Secetary/Treasurer and Board member
   of the Sa-Tu Corporation of Nevada. He was previously employed by Gyrodyne
   Company of America from August 1986 thru July 1987 in the aerospace
   division. Mr. Peter Papadakos holds a Bachelor of Science degree from the
   University of Nevada at Reno.

   Stephen V. Maroney, age 56, was appointed to the Board of Directors on July
   13, 1996. Mr. Maroney is the former President and Chief Operating Officer of
   Extebank, a billion dollar Long Island bank.  Mr. Maroney's extensive
   community contacts and familiarity with Long Island real estate led to his
   engagement as a consultant by Gyrodyne.  Mr. Maroney provides the Company
   with financial and operational support services and now spearheads the
   Company's introduction of its Master Plan.

   John H. Marburger III, age 57, was appointed to the Board of Directors on
   July 13, 1996.  Mr. Marburger was the former President of the State
   University of New York at Stony Brook (SUNY).  During his stewardship of the
   University, SUNY established itself as a class A research center  generating
   a substantial portion of its operating funds from grants.  In addition, Mr.
   Marburger's business community outreach programs resulted in the creation of
   a high-tech business incubator and numerous collaborative programs.  He is
   currently the Director of the Brookhaven National Laboratory as well as the
   President of Brookhaven Science Associates.  He has a Ph.D. in Applied
   Physics from Stanford University.

   Philip F. Palmedo, age 64, was appointed to the Board of Directors on July
   13, 1996, increasing the board to 9 members.  Mr. Palmedo is Chairman of
   International Resources Group and former President of the Long Island
   Research Institute. He has shepherded numerous fledgling businesses into the
   financial and technological markets completing several financing and joint
   venture technology agreements.  He has M.S. and Ph.D. degrees from M.I.T.

   Paul L. Lamb, age 52, has been a Director since 1997.  He is a founding
   partner in the law firm of Cahn, Wishod and Lamb; a past President of the
   Suffolk County Bar Association; and a Dean of the Suffolk Academy of Law.
   He holds a B.A. from Tulane University, a J.D. from the University of
   Kentucky and an LL.M. from the University of London, England.

   (c) Compliance with Section 16(a) of the Exchange Act
   A review of all Forms 3 & 4 filed with the Registrant indicates that there
   were no late filings of any required Forms 3 or Forms 4 with the Securities
   and Exchange Commission for fiscal year 1998.  A review of current year
   filings indicates that no 10% holder of Gyrodyne Common Stock $1 P.V. failed
   to file timely reports.

ITEM 10 EXECUTIVE COMPENSATION

   (a) Executive Compensation
   During the fiscal year ended April 30, 1998 two Directors or Officers
   received remuneration in excess of $100,000 in such capacity.

<TABLE>
<CAPTION>

                                           SUMMARY COMPENSATION TABLE
                                               Annual Compensation
                                                                              Long term Compensation      Pay  
                                           Annual Compensation                      Awards                outs
                                    ----------------------------------     ----------------------------  ------    -----------
    Name and                           Salary    Bonus     Other Annual     Restricted    Securities      LTIP     All Other
Principal Position           Year       ($)      ($)       Compensation       stock       Underlying      Payout   Compensation
                                                               ($)            award ($)   Options/LSARs     ($)
---------------------       -----    --------    -----     ------------     -----------   -----------     ------   ------------
<S>                         <C>      <C>         <C>       <C>               <C>           <C>             <C>          <C>
Dimitri P. Papadakos         1998     123,312      0         60,239(A)          0            23,350          0            0
President & CEO              1997     118,379      0           (A)              0               0            0            0

Stephen V. Maroney           1998      80,000      0         60,500(B)          0             4,250          0            0
Dir.of Real Estate Devlp     1997      72,308      0         43,255(B)          0             3,750          0            0

</TABLE>


   (A)  The Registrant has concluded that aggregate amounts of personal
   benefits to any of the current executives does not exceed the lesser of
   $50,000 or 10% of compensation and bonuses reported above for the named
   executive officers, and that the information set forth in tabular form above
   is not rendered materially misleading by virtues of the omission of such
   personal benefits.  The 1998 "Other Annual Compensation" represents the
   difference between the fair market value and the option price on the date
   of grant for 7,157 shares exercised.

   (B)  Pursuant to his Consulting Agreement with the Company, Mr. Maroney
   received stock payments in lieu of cash with a fair market value of $45,000
   in FY98 and $34,500 in FY97.  Mr. Maroney also received shares for his
   services as Company Director with a fair market value of $15,500 in FY98 and
   $8,755 in FY97.


                                OPTIONS/LSAR GRANTS IN FISCAL YEAR

<TABLE>
<CAPTION>
                                    Number of         % of Total
                                   Options/LSARs      Options/LSAR      Exercise      Expiration
           NAME                       Granted           Granted          Price           Date
-----------------------------      -------------      ------------      --------      ---------- 
<S>                                 <C>                <C>              <C>           <C>
Dimitri P. Papadakos, (CEO)           14,600              42%           $17.256        7/19/02
Stephen V. Maroney - Director          3,000               9%           $17.256        7/19/02

</TABLE>


                          AGGREGATED OPTION/LSAR EXERCISED IN LAST FISCAL YEAR
                                    AND FY-END OPTION/LSAR VALUES

<TABLE>
<CAPTION>
                                                                    Number of Securities            Value of Unexercised
                                                                   Underlying Unexercised              In-the-Money
                                    Shares                           Options/LSAR's at               Options/LSAR's at
                                  Acquired on       Value             April 30, 1998                 April 30, 1998 ($)
           NAME                    Exercise        Realized       Exercisable/Unexercisable      Exercisable/Unexercisable
--------------------------        -----------     ---------       -------------------------      -------------------------
<S>                               <C>             <C>                  <C>                           <C>
Dimitri P. Papadakos (CEO)          7,157          $60,239              9,375/28,350                  $70,781/$93,748
Stephen V. Maroney - Director         -                -                3,750/4,250                   $32,575/$10,388

</TABLE>

   (b) Compensation of Directors

   In calendar year 1997, each Director was entitled to receive a fee of $7,500
   a year, $1,000 per Board meeting attended and $500 for each Committee
   meeting attended.  All compensation was paid in stock. For the calendar year
   1997, 5,458 shares of stock were issued in January 1998. Reimbursement for
   travel and Company business related expenses will continue to be  paid in
   cash..  The Company continued its policy which states that Directors who are
   also employees of the Company do not receive any additional compensation for
   their services as Directors.

   (c) Employment Contracts

   (c-1)  On July 15, 1993 effective as of June 28, 1993, the Board of
   Directors by their compensation committee entered into a restrictive five
   year employment contract with Dimitri P. Papadakos as President and CEO, at
   a salary of $110,000 per year subject to a minimum annual cost-of-living
   increase commencing July 1, 1994 based on the Consumer Price Index in effect
   for the month of May preceding the July 1 in question for all Urban
   Consumers for the New York, New York and Northeastern New Jersey Region (all
   items) published by the Bureau of Labor Statistics, United States Department
   of Labor.  He will be eligible for all benefits offered to other executive
   employees.  The company is providing a $1,000,000 24-hour worldwide travel
   accident policy and a $250,000 group travel accident policy with his estate
   as beneficiary.  The company will also provide the employee with an
   automobile and will cover all operating costs associated therewith.  The
   contract also contains a provision not to compete during the term of the
   contract or for a period of two years following termination.  In case of
   employee's death or total incapacitation during the contract period, the
   contract provides for compensation to continue for the unexpired term of the
   employment period or any renewal period. In case of termination as a result
   of change in control, merger, change in make-up of Board of Directors or
   discharge of employee by company for any reason other than death or
   incapacitation, his salary and all other ancillary benefits to which the
   employee is entitled, shall be paid for a period of five full years to the
   employee or in case of death, to his estate. During Fiscal Year 1998 Mr.
   Papadakos received an annual increase of $5,200 bringing his annual salary
   to $124,212.


ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

   (a) The following table sets forth as of June 6, 1998 those persons or 
       entities known by the Company to be Beneficial Owners of more than 5% 
       of the Company's Common Stock $1 P.V., its only equity security.

<TABLE>
<CAPTION>
                                         TYPE OF           NUMBER OF     PERCENT OF
         NAME AND ADDRESS               OWNERSHIP        SHARES OWNED    CLASS
---------------------------         -------------     ---------------    ----------
<S>                                 <C>               <C>                <C>
Gyrodyne Company of America,
Inc.                                   Beneficial            78,346           7.38
St. James, NY  11780(aa)

Polk Bros. Foundation
420 No. Wabash Ave
Chicago, IL 60611                      Beneficial            62,648           5.90

Estate of Peter J. Papadakos
c/o Chase Manhattan Bank,
NA(TTEE)
1211 Ave of the Americas               Beneficial           362,668          34.15
New York, NY  10036
</TABLE>


     (aa) As Gyrodyne has the authority to direct the Chase Manhattan Bank & 
         Trust Co., the Trustee of the Gyrodyne Pension Plan, to vote the 
         securities of the Company held by the Pension Fund, Gyrodyne Company 
         of America,Inc. has been listed above as the beneficial owner of the 
         78,346 shares held by the Chase Manhattan Bank and Trust Co. as 
         Trustee for the Gyrodyne Pension Fund.

   (b) In addition, the following table as of June 6, 1998includes the 
       outstanding voting securities beneficially owned by the executive 
       officers and the directors, and the number  of shares owned by 
       directors and executive officers as a group.

<TABLE>
<CAPTION>
      Name & Principal Occupation or          Shares of                    Pct. of
                Employment                      stock                   Common Stock
                                            Beneficially                    Owned
                                                Owned
--------------------------------------     -------------   -------   ---------------- 
<S>                                        <C>             <C>        <C>
Dimitri P. Papadakos                           26,890          (A)          2.50
President, Treasurer, CEO and Director
of the Company

Peter Pitsiokos                                 4,613          (D)           (B)
Vice President, Secretary & General
Counsel of the Company

Josef Markowski                                   203                        (B)
Vice President, Operations

Joseph L. Dorn                                 10,594                        (B)
Director of the Company

Robert H. Beyer                                 4,462          (C)           (B)
Director of the Company

Nicholas Goudes                                 6,564                        (B)
Owner and Operator of Sharon View
Country Club
Director of the Company

Peter P. Papadakos                              9,530          (E)           (B)
Secretary/Treasurer Sa-Tu Corporation
Director of the Company

Stephen V. Maroney                              9,043                        (B)
Consultant to the Company and Former
President of Extebank
Director of the Company

John H. Marburger III                           1,695                        (B)
Director of Brookhaven National
Laboratory
Director of the Company

Philip F.Palmedo                                5,427                        (B)
Chairman of International Resources
Group
Director of the Company

Paul L. Lamb                                    1,063                        (B)
Partner of Cahn, Wishod and Lamb
Director of the Company

All Directors and Executive
Officers as a Group (11 persons)               80,084                       7.54
</TABLE>


(A)  Does not include his wife's and adult children's ownership of 
     12,291 Shares in which he denies beneficial interest.
(B)  Less than 1%.
(C)  Does not include his wife's ownership of 1,638 shares in which he denies 
     any beneficial interest.
(D)  Does not include wife's and minor children's ownership of 447 shares in 
     which he denies any beneficial interest.
(E)  Does not include wife's ownership of 14 shares in which he denies any 
     beneficial interest.


ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

   (a) Transactions with Management and Others 
       No officer or director or security holder named in answer to Item 12 
       or any relative or spouse of the foregoing persons had any direct or 
       indirect interest in any transaction involving the Company or its 
       subsidiaries which exceeded $60,000.

   (b) Certain Business Relationships 
       There were no material business relationships between the Company 
       and its subsidiaries and the directors, their spouses, relatives, or 
       affiliated business interests.

   (c) Indebtedness of Management 
       No loans were made to any officer, director, or any member of their 
       immediate families during the fiscal year just ended, nor were any 
       amounts due and owing the Company or its subsidiaries from those 
       parties at fiscal year end.

ITEM 13 EXHIBITS, FINANCIAL STATEMENT
SCHEDULES, AND REPORTS ON FORM 8-K

(a) Financial Statements
    (1) Independent Auditors' Reports
    (2) Consolidated Balance Sheet April 30,1998
    (3) Consolidated Statements of Operations for the Two Years
        Ended April 30, 1998 and April 30,1997
    (4) Consolidated Statement of Stockholder's Equity for the
        Two Years Ended April 30, 1998 and April 30, 1997
    (5) Consolidated Statements of Cash Flows for the Two
       Years Ended April 30, 1998 and April 30, 1997
    (6) Notes to Consolidated Financial Statements
    (7) Schedules
        (a) The information required by the following schedules 
            has been included in the financial statements, is not 
            applicable, or not required.
            Schedule I, II, III, IV, V,VI, VII, VIII, IX, X, XI, X11 and XIII.
        (b) Reports on Form 8-K
            None
        (c) Exhibits
            None

    


              SIGNATURES

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

  GYRODYNE COMPANY OF AMERICA, INC.

SGD/ Dimitri P. Papadakos
---------------------------------
Dimitri P. Papadakos, President, 
Treasurer, Director and Principal Executive Officer
Date: July 28, 1998

SGD/ Frank D'Alessandro
------------------------------
Frank D'Alessandro, Controller
Date:  July 28, 1998


         ********************
     Pursuant to the requirements of the
     Securities Exchange Act of 1934,
     this report has been signed below by
     the following on behalf of the
     Registrant and in the capacities and
     on the dates indicated.


SGD/ John H. Marburger III
-------------------------------
John H. Marburger III, Director
Date: July 28, 1998

SGD/ Philip F. Palmedo
----------------------------
Philip F. Palmedo, Director,
Date:  July 28, 1998

SGD/ Stephen V. Maroney
----------------------------
Stephen V. Maroney, Director
Date:  July 28, 1998