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

|X| ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 for the fiscal year ended. APRIL 30, 2001.

|_| 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                                      11-1688021
         --------                                      ----------
(State or other jurisdiction                (I.R.S. Employer Identification No.)
of incorporation or organization)

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

Issuer's telephone number (631) 584-5400

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

Securities registered under Section 12(g) of the Exchange Act: COMMON STOCK
$1.00 PAR VALUE

                                                 Name of each exchange on
        Title of each class                          which registered
        -------------------                          ----------------
COMMON STOCK, PAR VALUE $1.00 PER SHARE              NASDAQ SMALL CAP

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 filing 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: $2,445,899
                                                            ----------

The aggregate market value of the 983,948 shares of voting stock held by
non-affiliates of the issuer on June 12, 2001 was $17,711,064. 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 June 12, 2001 was 1,118,311.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy statement to be filed pursuant to regulation
14A for the FY 2001 annual meeting of Shareholders of the Company are
incorporated by reference into Part III hereof.


1
<PAGE>

                              INDEX TO FORM 10-KSB
                                FISCAL YEAR 2001
<TABLE>
<CAPTION>

ITEM #                                                                                                     PAGE
------                                                                                                     ----
<S>                                                                                                         <C>
PART I
              1 -Business                                                                                    3
              2 -Properties                                                                                  4
              3 -Legal Proceedings                                                                           5
              4 -Submission of Matters to a Vote of Security Holders                                         5

PART II
              5 -Market for Registrant's Common Stock and Related Stockholders' Matters                      6
              6 -Management's Discussion and Analysis of Financial Position and Results of Operations        6
              7 -Financial Statements and Supplementary Data                                                 7
                  Independent Auditors' Reports                                                              8
                  Consolidated Balance Sheets                                                                9
                  Consolidated Statements of Operations                                                     10
                  Consolidated Statement of Stockholders' Equity                                            11
                  Consolidated Statements of Cash Flows                                                     12
                  Notes to Consolidated Financial Statements                                                13
              8 -Changes in and Disagreements on Accounting and Financial Data                              23

PART III
              9 -Directors and Executive Officers of Registrant                                             24
             10 -Compensation of Executive Officers and Directors                                           26
             11 -Security Ownership of Certain Beneficial Owners and Management                             27
             12 -Certain Relationships and Transactions                                                     29
             13 -Exhibits and Reports on Form 8K                                                            30
                  Signatures                                                                                31
</TABLE>


2
<PAGE>

                                     PART I

Item 1 Description of Business

(a)   Business Development

Incorporated in New York in 1946, Gyrodyne Company of America, Inc. (the
"Company") was, from its inception and for the next 25 years, engaged in design,
testing, development, and production of coaxial helicopters primarily for the US
Navy. 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.

Following a sharp reduction in the Company's helicopter manufacturing business
and its elimination by 1975, the Company began subdividing and renting out its
vacant manufacturing facilities which occupy only a small portion of the total
acreage. During fiscal 2000 the Company disposed of the last vestiges of the
aerospace division in an agreement with Aviodyne, Inc. of California.

In recent years the Company has concentrated its efforts on the development of
its real estate holdings in St. James. Today, the converted buildings consist of
approximately 202,000 square feet housing 73 tenants in space suitable for
office, engineering, manufacturing, and warehouse use.

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

References to the Company contained herein include its wholly owned
subsidiaries, except where the context otherwise requires.

(b)   Business of Issuer

The Company manages its real estate operation, which is its major source of
revenue, and is a passive investor as a limited partner in the Callery Judge
Grove in Palm Beach County, Florida. It has a total of 16 employees, 15 full
time and 1 part time, involved primarily in support of the real estate
operation.

Real Estate

Gyrodyne owns a 326 acre site, Flowerfield, primarily zoned for light industry,
approximately 50 miles east of New York City on the north shore of Long Island.
In the early 60s, on property immediately to the east of Flowerfield, 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 1,000 acres, SUNY is a major
research center complete with a tertiary care and veterans hospital. The Long
Island High Technology Incubator, located on the University campus, has spawned
numerous corporate graduates creating an ongoing need for research and
development rental space. Flowerfield's location also places it in hydrological
zone VIII, one of the most liberal with respect to effluent discharge rates.

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 hamlet of St. James, Township of Smithtown, and the contiguous
balance of approximately 182 acres is located in the hamlet of Stony Brook,
Township of Brookhaven. Of the total acreage, there are 24 acres in Smithtown
and 9 in Brookhaven that are zoned for residential use. The vacant industrially
zoned property in St. James is the largest undeveloped industrially zoned parcel
in the township of Smithtown. The location and size of the property adds to
planning flexibility thus permitting a wide range of development alternatives.

There are five main building groups with rental unit sizes ranging from 300 to
25,000 square feet. Given the location and size of rental units, the Flowerfield
Industrial Park attracts many smaller companies that are not dependent on
extensive material or product handling. As indicated above, companies emerging
from the Long Island High Technology Incubator have shown interest in locating
at Flowerfield due to its proximity to the University. The Port Jefferson Branch
of the Long Island Railroad runs through the property.

In June 1996 the Board of Directors adopted a preliminary Master Plan for
development of Flowerfield. Because of change of zone requirements,
implementation of any development plan should not be viewed as a short term
project. Various themes and uses have already resulted in several drafting
revisions and the obvious result of timing delays. Environmental studies have
been updated and numerous other studies including archeological, ecological, and
traffic have been conducted -- all with no significant adverse findings. The
Company believes that it does not incur material costs in connection with
compliance with environmental laws. During Fiscal Year 2000, the Company paid
approximately $3,200.00 for the removal of loose asbestos floor tiles, the
encapsulation of asbestos pipe, and the air monitoring and sample analysis of
asbestos.


3
<PAGE>

Development Plans are not final and Management and the Board of Directors have
opted to also explore various other scenarios to developing the land and have
previously announced considering the sale of the Company itself to achieve
recognition of shareholder value.

Citrus Grove

The original limited partner investment of $1.1 million, which was made in 1965,
has over the years yielded distributions of approximately $5.5 million and is
carried on the books of the Company at $1,585,104. The Company's initial
participation through its wholly owned subsidiary, Flowerfield Properties, Inc.,
represented a 20% interest in the Callery Judge Grove. Based on three subsequent
capital infusions in which the Company did not participate, our share is now
approximately 10.93%. Although Management has determined that development of the
Callery-Judge Grove is in the best interests of the Partnership, the requirement
to invest in achieving shareholder value from the Flowerfield property far
outweighs this alternative investment opportunity.

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 2001, and the Company does not anticipate receiving any
distributions from the Grove in the near future. The Company's last cash receipt
from the Grove was in calendar year 1991 and amounted to $294,000.

Aerospace

During the prior fiscal year, the defunct helicopter manufacturing division was
disposed of via an Asset Purchase Agreement with Aviodyne, Inc. of California.
Terms of the agreement called for the transfer of the proprietary interest,
parts inventory, and drawings to Aviodyne and their assumption of all technical
support requirements in Gyrodyne's Technology Transfer Agreement with Dornier
GmbH, Germany. A cash payment of $50,100 was received by the Company as part of
the Aviodyne agreement. The Company also retained its rights to a $1,240,000
payment in the event Dornier executed an option to acquire manufacturing rights
to Gyrodyne technology. During April 2001, that option was exercised and the
Company received net proceeds of approximately $1 million after related
expenses.

Item 2 Description of Property

(c)   Description of Real Estate and Operating Data

The Company owns a 326 acre tract of land 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
rental space and maintains its corporate office on site.

The land is carried on the Company's books at cost in the amount of $808,338
while the buildings and improvements are carried at a depreciated cost of
$1,341,961. At the current time, the property and buildings, 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 principal balance of the mortgage as of April 30, 2001 is
$742,392.

The average age of all the buildings is approximately 41 years and the
facilities continually undergo maintenance repair cycles for roofs, paved areas,
and building exteriors. The general condition of internal infrastructure, HVAC,
electrical, and plumbing is considered above average for facilities of this age.
The grounds feature extensive landscaping, are neatly groomed, and well
maintained.

The Company currently maintains a $10 million dollar liability umbrella policy
and has insured certain buildings and rent receipts predicated on an analysis of
risk, exposure, and loss history. It is Management's opinion that the premises
are adequately insured.


4
<PAGE>

Item 3 Legal Proceedings

In the normal course of business, the Company is a party to various legal
proceedings. After reviewing all actions and proceedings pending against or
involving the Company, Management considers that the aggregate loss, if any,
will not be material.

The Company is a party to litigation commenced on or about December 21, 1999, in
the Supreme Court of the State of New York, County of Suffolk, and entitled
Flowerfield Country Day Camp, Inc. v. Gyrodyne Company of America, Inc., Index
No. 99-28289. The complaint alleges three (3) separate causes of action against
the Company based upon breach of a certain lease (the "Lease") between the
Company and M&M Camp Corp. ("M&M").

In the complaint's first alleged cause of action, plaintiff (the "Day Camp")
claims that it is the assignee of M&M in connection with the Lease; that the
Lease obliged the Company to construct certain buildings and structures on the
demised premises to be used by plaintiff for the operation of a day camp; and
that the Lease required the Company to make application to appropriate
governmental authorities for the purpose of securing building or other permits
necessary to permit the construction of the buildings and other improvements
described in the Lease. The complaint further alleges that the Company failed to
make or to prosecute diligently the applications for the requisite government
approvals and has breached the Lease, and that an equitable decree requiring the
Company to perform all of the obligations required of it under the Lease should
be entered.

The complaint's second cause of action essentially reiterates the foregoing
allegations but adds the additional claim that, in reliance upon the Company's
obligations under the Lease, plaintiff incurred various expenses and
disbursements and has, by reason of the Company's alleged breach of the Lease,
been damaged in a sum estimated to be at least $25,000.00.

The complaint's third cause of action reiterates the allegations set forth in
the first cause of action and seeks monetary damages of at least $1,000,000.00.
The complaint's third cause of action also purports to set forth a claim for
"punitive and exemplary damages", as well as for attorney's fees.

Simultaneously with the filing of the summons and complaint, plaintiff also
filed with the Suffolk County Clerk a notice of pendency of action. The notice
of pendency was vacated by court order on February 7, 2001.

The Company has filed both an answer and an amended answer to plaintiff's
complaint in which the complaint's material allegations were all denied and
numerous affirmative defenses and a counterclaim were asserted. The counterclaim
sought a declaration that the Company had a contractual right to cancel the
Lease because government approvals had not been obtained by January 15, 2000,
the date after which, according to the Lease, either party could cancel the
Lease if approvals had not been obtained. A determination by the Town of
Smithtown Planning and Community Development Department, dated February 1, 2001,
denied the Company's application for site plan approval for the day camp site
and the Company gave formal notice of cancellation to the Day Camp on February
28, 2001.

By notice, dated August 9, 2001, the Company made a motion for judgment
dismissing those portions of the complaint which sought an equitable decree of
specific performance of the lease and which sought to recover punitive and
exemplary damages, as well as attorney's fees. The motion remains undecided.

The Company is defending this action vigorously, and management believes that
the Company has substantial defenses, both substantively and procedurally, and
that it is unlikely that the aggregate loss, if any, will be material.

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 Fiscal Year 2001.


5
<PAGE>

                                     PART II

Item 5 Market for Common Equity and Related Stockholder Matters

(a)   Market information

The Company's Common Stock, $1 Par Value (symbol: "GYRO") is traded in the
NASDAQ Small-Cap Market. Since June 10, 1948, the NASDAQ Small-Cap Market has
been the principal market in which the Company's stock is publicly traded. Set
forth below are the high and low sales prices for the Company's stock for each
full quarter within the two most recent fiscal years:

------------------------------------------------------------------------
                                           Sales Price      Sales Price
            Quarter Ended                       Low             High
------------------------------------------------------------------------
             Fiscal 2000
------------------------------------------------------------------------
July 31, 1999                                  $13.625          $22.375
------------------------------------------------------------------------
October 31, 1999                                $19.50           $20.25
------------------------------------------------------------------------
January 31, 2000                                $16.25          $20.625
------------------------------------------------------------------------
April 30, 2000                                  $17.25          $22.688
------------------------------------------------------------------------
             Fiscal 2001
------------------------------------------------------------------------
July 31, 2000                                  $15.125          $19.875
------------------------------------------------------------------------
October 31, 2000                               $10.625           $20.50
------------------------------------------------------------------------
January 31, 2001                                $15.50          $21.484
------------------------------------------------------------------------
April 30, 2001                                  $14.75           $18.89
------------------------------------------------------------------------

(b)   Approximate Number of Equity Security Holders, including shares held in
      Street name by brokers.

                                                        Number of Holders
    Title of Class                                     as of June 12, 2001
    ----------------------------------------------------------------------
    Common Stock, $1.00 Par Value                               1,450

(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

The Company continued to show improved earnings from its real estate operation
throughout fiscal 2000 and 2001. Increased rental revenues coupled with
decreased expenses associated with the rental property accounted for the
improvement.

For the twelve month period ending April 30, 2001, revenue from rental property
amounted to $2,445,899 as compared to the $2,326,705 posted in the prior year.
This 5 percent increase reflects efforts to bring existing and new leases in
line with our evaluation of market conditions and a higher occupancy rate. At
the same time, rental property expenses which have been the focus for
containment and efficient oversight, declined from $1,311,277 last year to
$1,223,337 for this 12 month reporting period. Salaries and benefits accounted
for $25,532 of the decrease, maintenance on buildings and grounds for $79,777,
equipment maintenance $14,078, and interest expense declined by $5,308. Overall,
these savings were partially offset by an increase of $25,017 in real estate
taxes and other nominal increases in various expense categories including
heating and air conditioning repairs and utilities.

Based on the foregoing, income from rental property reached $1,222,562 for the
current year as compared to $1,015,428 for the prior 12 month period
representing a $207,134 or 20 percent improvement. These record earnings for the
year take on even greater proportions when compared to the results from 2 and 3
years prior and reflect improvements of $301,920 (33 percent) and $472,469 (63
percent), respectively.

General and administrative expenses increased to $1,191,859 for fiscal 2001
compared to $1,149,998 the prior year. Legal and consulting expenses for the
year include $150,000 for the completion of ongoing 2001 projects and
approximately $94,000 for various matters related to our pursuit of maximizing
shareholder value. Insurance costs also escalated by approximately $15,000.
Partially offsetting these items were a decrease in salaries and benefits of
$115,400 and corporate governance of $47,176. The salary and benefit reduction
included a decrease of $87,933 in stock option compensation. Income from our
Company Pension Plan also declined by $18,528.


6
<PAGE>

Other income totaled $1,045,885 for the 12 months ending April 30, 2001 and
$474,284 for the prior year. Both reporting periods included nonrecurring
events. This year's results include a payment of $1,240,000 from Dornier GmbH in
connection with their executing an option to obtain the manufacturing rights to
Gyrodyne's helicopter technology. After related expenses, net proceeds from this
transaction amounted to $1,034,491. Fiscal 2001 also includes $33,841 in net
expenses related to the termination of three leases. For the prior year,
earnings of $408,310 from the sale and income from certain oil investments in
Texas and $21,038 from aerospace activities were reflected. Both periods
included interest income which amounted to $40,585 and $44,936 in fiscal 2001
and 2000, respectively.

Income before tax amounted to $1,074,473 for the 12 months ending April 30, 2001
compared to a pretax loss of $14,085 for the prior year. Net income totaled
$695,763 compared to a net loss of $2,085 for April 30, 2001 and 2000,
respectively.

Earnings per share amounted to $.62 for fiscal 2001 compared to $.00 in 2000.

As of April 30, 2001, the Company had cash and cash equivalents of $2,688,838
and working capital of $1,969,651 and anticipates having the capacity to fund
normal operating and administrative expenses and its regular debt service
requirements. With regard to inflationary effects on its business results, the
Company maintains a policy that multi-year leases contain cost pass-through
provisions for increases in real estate taxes, fuel costs, insurance, cartage
and security services, as applicable. Rental revenues and income from the
Callery-Judge Grove investment are subject to fluctuations in market conditions
and the general economy.

Subsequent to our fiscal year end and on July 12, 2001, K Capital Partners, LLC,
whose holdings of Gyrodyne common stock amount to 142,550 shares (12.75%) filed
an amended Form 13D. In their filing, they announced their intention to acquire
all of the outstanding equity of Gyrodyne Company of America, Inc. They outline
in their proposal that "... current shareholders would have the option to
receive either $19.00 per share in cash or a zero coupon bond with a face value
of $32.00 per share with a balloon maturity four years from issuance. The
issuance of the zero coupon bonds would be conditioned upon a sufficient number
of shareholders electing that option so that bonds representing at least $5.0
million aggregate principle would be issued."

The Company announced on July 16, 2001 that Chatsworth Securities, LLC, a
Greenwich, Connecticut investment banking firm had been engaged to contact K
Capital to explore and clarify various aspects of the proposal.

Item 7 Financial Statements and Supplementary Data

Financial Statements

      (1)   Independent Auditors' Reports
      (2)   Consolidated Balance Sheets as of April 30, 2001 and April 30, 2000
      (3)   Consolidated Statements of Operations for the years ended April 30,
            2001 and April 30, 2000
      (4)   Consolidated Statement of Stockholder's Equity for the years ended
            April 30, 2001 and April 30, 2000
      (5)   Consolidated Statements of Cash Flows for the years ended April 30,
            2001 and April 30, 2000
      (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, XII and
                  XIII.

See following pages.


7
<PAGE>

                          Independent Auditors' Report

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

We have audited the accompanying consolidated balance sheets of Gyrodyne Company
of America, Inc. and Subsidiaries as of April 30, 2001 and 2000 and the related
consolidated statements of operations, stockholders' equity and cash flows for
the years 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 auditing standards generally accepted
in the United States of America. 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, 2001 and 2000
and the results of their operations and their cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States of America.


                                                     HOLTZ RUBENSTEIN & CO., LLP

Melville, New York
June 21, 2001


8
<PAGE>


               GYRODYNE COMPANY OF AMERICA, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                    April 30,
                                                                    ---------
         ASSETS                                                2001           2000
         ------                                           --------------------------
<S>                                                       <C>            <C>
REAL ESTATE (Note 6):
   Rental property:
      Land                                                $     4,746    $     4,746
      Building and improvements                             4,653,919      4,611,320
      Machinery and equipment                                 254,390        338,495
                                                          --------------------------
                                                            4,913,055      4,954,561
   Less accumulated depreciation                            3,500,473      3,474,111
                                                          --------------------------
                                                            1,412,582      1,480,450
------------------------------------------------------------------------------------
   Land held for development:
      Land                                                    803,592        803,592
      Land development costs                                1,215,546      1,239,724
                                                          --------------------------
                                                            2,019,138      2,043,316
------------------------------------------------------------------------------------

        Total real estate, net                              3,431,720      3,523,766

CASH AND CASH EQUIVALENTS (Note 6)                          2,688,838      1,420,924
RENT RECEIVABLE, net of allowance for doubtful
   accounts of $50,000 and $23,500, respectively               20,930         80,228
PREPAID EXPENSES AND OTHER ASSETS                             136,655        115,145
INVESTMENT IN CITRUS GROVE PARTNERSHIP                      1,585,104      1,585,104
PREPAID PENSION COSTS (Note 3)                              1,703,155      1,666,331
                                                          --------------------------

                                                          $ 9,566,402    $ 8,391,498
----------------------------------------------------------==========================
LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:
   Accounts payable and accrued expenses                  $   523,152    $   391,273
   Tenant security deposits payable                           246,516        228,059
   Loans payable (Note 6)                                     742,392        796,888
   Deferred income taxes (Note 2)                           1,234,000        849,000
                                                          --------------------------
        Total liabilities                                   2,746,060      2,265,220
                                                          --------------------------

COMMITMENTS (Notes 3 and 9)

STOCKHOLDERS' EQUITY: (Note 5)
   Common stock, $1 Par Value; authorized 4,000,000
      shares; 1,531,086 shares issued and outstanding       1,531,086      1,531,086
   Additional paid-in capital                               7,539,475      7,545,360
   Retained earnings (deficit)                                123,856       (571,907)
                                                          --------------------------
                                                            9,194,417      8,504,539
   Less cost of shares of common stock held in treasury    (2,374,075)    (2,378,261)
                                                          --------------------------
        Total stockholders' equity                          6,820,342      6,126,278
                                                          --------------------------

                                                          $ 9,566,402    $ 8,391,498
----------------------------------------------------------==========================
</TABLE>

                 See notes to consolidated financial statements


9
<PAGE>

               GYRODYNE COMPANY OF AMERICA, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                           Years Ended
                                                            April 30,
                                                            ---------
                                                       2001             2000
                                                   ----------------------------
REVENUE FROM RENTAL PROPERTY
   (Notes 9 and 13)                                $ 2,445,899      $ 2,326,705
                                                   ----------------------------
RENTAL PROPERTY EXPENSE:
   Real estate taxes                                   403,841          378,824
   Operating and maintenance                           651,947          760,158
   Interest expense                                     65,955           71,263
   Depreciation                                        101,594          101,032
                                                   ----------------------------
                                                     1,223,337        1,311,277
-------------------------------------------------------------------------------

INCOME FROM RENTAL PROPERTY                          1,222,562        1,015,428
                                                   ----------------------------

GENERAL AND ADMINISTRATIVE (Note 3)                  1,191,859        1,149,998
TERMINATION COSTS (Note 11)                              2,115          353,799
                                                   ----------------------------
                                                     1,193,974        1,503,797
-------------------------------------------------------------------------------

INCOME (LOSS) FROM OPERATIONS                           28,588         (488,369)
                                                   ----------------------------

OTHER INCOME (EXPENSE):
   Aerospace income, net (Note 4)                    1,034,491           21,038
   Lease termination expense, net                      (33,841)              --
   Gain on sale of equipment                             4,650               --
   Income from oil investment, net                          --           48,310
   Gain on sale of oil investment                           --          360,000
   Interest income                                      40,585           44,936
                                                   ----------------------------

                                                     1,045,885          474,284
-------------------------------------------------------------------------------

INCOME (LOSS) BEFORE INCOME TAXES                    1,074,473          (14,085)

PROVISION (BENEFIT) FOR INCOME TAXES (Note 2)          378,710          (12,000)
                                                   ----------------------------


NET INCOME (LOSS)                                  $   695,763      $    (2,085)
                                                   ============================

NET INCOME PER COMMON SHARE (Note 5):
   Basic                                           $       .62      $        --
                                                   ============================
   Diluted                                         $       .62      $        --
                                                   ============================

WEIGHTED AVERAGE NUMBER OF COMMON
   SHARES OUTSTANDING:
      Basic                                          1,117,802        1,104,914
                                                   ============================
      Diluted                                        1,127,422        1,104,914
                                                   ============================

                 See notes to consolidated financial statements


10
<PAGE>

               GYRODYNE COMPANY OF AMERICA, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                       $1 Par Value
                                       Common Stock
                                 ----------------------    Additional     Retained        Treasury Stock
                                                Par          Paid in      Earnings     ----------------------       Total
                                 Shares        Value         Capital      (Deficit)    Shares         Cost          Equity
                                 -------------------------------------------------------------------------------------------

<S>                              <C>         <C>          <C>            <C>           <C>        <C>            <C>
Balance at May 1, 1999           1,531,086   $1,531,086   $ 7,220,732    $(569,822)    439,766    $(2,529,305)   $ 5,652,691

Issuance of stock for services          --           --       134,008           --     (10,092)        58,041        192,049
Issuance of stock grants                --           --       121,059           --      (9,056)        52,083        173,142
Exercise of stock options               --           --        56,076           --      (7,115)        40,920         96,996
Tax benefit from exercise
   of stock options                     --           --        13,485           --          --             --         13,485
Net loss                                --           --            --       (2,085)         --             --         (2,085)
                                 -------------------------------------------------------------------------------------------

Balance at April 30, 2000        1,531,086    1,531,086     7,545,360     (571,907)    413,503     (2,378,261)     6,126,278

Issuance of stock for services          --           --         8,315           --        (728)         4,186         12,501
Tax expense from exercise
   of stock options                     --           --       (14,200)          --          --             --        (14,200)
Net income                              --           --            --      695,763          --             --        695,763
                                 -------------------------------------------------------------------------------------------
Balance at April 30, 2001        1,531,086   $1,531,086   $ 7,539,475    $ 123,856     412,775    $(2,374,075)   $ 6,820,342
                                 ===========================================================================================
</TABLE>

                 See notes to consolidated financial statements


11
<PAGE>

               GYRODYNE COMPANY OF AMERICA, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                       Years Ended
                                                                        April 30,
                                                                        ---------
                                                                    2001           2000
                                                               ---------------------------
<S>                                                            <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss)                                           $   695,763     $    (2,085)
                                                               ---------------------------
   Adjustments to reconcile net income (loss) to
      net cash provided by operating activities:
        Depreciation and amortization                              109,669         108,400
        Bad debt expense                                            26,452          30,000
        Deferred income tax provision (benefit)                    370,800         (40,515)
        Non-cash compensation                                       12,501         302,883
        Pension income                                             (36,824)        (55,354)
        Gain on sale of equipment                                   (4,650)             --
        Changes in operating assets and liabilities:
        (Increase) decrease in assets:
           Land development costs                                   24,178        (156,082)
           Accounts receivable                                      32,847         (47,171)
           Prepaid expenses and other assets                        (2,085)          2,758
        Increase (decrease) in liabilities:
           Accounts payable and accrued expenses                   131,879          30,236
           Tenant security deposits                                 18,457          18,902
                                                               ---------------------------
        Total adjustments                                          683,224         194,057
                                                               ---------------------------
        Net cash provided by operating activities                1,378,987         191,972
                                                               ---------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Acquisition of property, plant and equipment                    (63,427)       (142,976)
   Proceeds from sale of equipment                                   6,850              --
                                                               ---------------------------
        Net cash used in investment activities                     (56,577)       (142,976)


CASH FLOWS FROM FINANCING ACTIVITIES:
   Repayment of loans payable                                      (54,496)        (54,223)
   Proceeds from exercise of stock options                              --          96,996
                                                               ---------------------------
        Net cash (used in) provided by financing activities        (54,496)         42,773


Net increase in cash and cash equivalents                        1,267,914          91,769

Cash and cash equivalents at beginning of year                   1,420,924       1,329,155
                                                               ---------------------------

Cash and cash equivalents at end of year                       $ 2,688,838     $ 1,420,924
                                                               ===========================
</TABLE>

                 See notes to consolidated financial statements


12
<PAGE>

               GYRODYNE COMPANY OF AMERICA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       YEARS ENDED APRIL 30, 2001 AND 2000


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 is also in the process of developing its real estate
holdings for mixed use including residential, industrial and commercial.

            During the year ended April 30, 2000, the Company disposed of its
remaining aerospace business and oil investment. As such, management considers
the operations to be one reportable segment.

      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.    Real estate

            Real estate assets are stated at cost, less accumulated depreciation
and amortization. If there is an event or a change in circumstances that
indicates that the basis of the Company's property may not be recoverable, the
Company will assess any impairment in value by making a comparison of (i) the
current and projected operating cash flows (un-discounted and without interest
charges) of the property over its remaining useful life and (ii) the net
carrying amount of the property. If the current and projected operating cash
flows (un-discounted and without interest charges) are less than the carrying
value of its property, the carrying value would be written down to an amount to
reflect the fair value of the property.

      d.    Depreciation and amortization

            Depreciation and amortization are provided on the straight-line
method over the estimated useful lives of the assets, as follows:

            Buildings and improvements                    10 to 30 years
            Machinery and equipment                        3 to 20 years

            Expenditures for maintenance and repairs are charged to operations
as incurred. Significant renovations are capitalized.

      e.    Revenue recognition

Minimum revenues from rental property are recognized on a straight-line basis
over the terms of the related leases.


13
<PAGE>

1.    Summary of Significant Accounting Policies: (Cont'd)


      f.    Investments

            The Company accounts for its investment in a 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.

      g.    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.

      h.    Net income per common share and per common and common equivalent
            share

            The Company has adopted the provisions of Statement of Financial
Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128"). It requires
dual presentation of basic and diluted earnings per share on the face of the
consolidated statement of operations for all entities with complex capital
structures and requires a reconciliation of the numerator and denominator of the
basic earnings per share computation to the numerator and denominator of the
diluted EPS computation. For the year ended April 30, 2000, the effect on income
per share resulting from the assumed exercise of stock options was
anti-dilutive. The reconciliation for the year ended April 30, 2001 is as
follows:

                                                      Year Ended
                                                     April 30, 2001
                                                     --------------
                                         Income         Shares        Per Share
                                     -------------------------------------------

Basic EPS                            $     695,763      1,117,802        $  .62
Effect of dilutive securities -
  common stock options                          --          9,620            --
                                     -------------------------------------------

     Diluted EPS                     $     695,763      1,127,422        $  .62
                                     ===========================================

      i.    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.

      j.    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."

      k.    Use of estimates

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


14
<PAGE>

1.    Summary of Significant Accounting Policies: (Cont'd)


      l.    New accounting pronouncements

            In 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities," which was
subsequently amended by SFAS No. 137 "Accounting for Derivative Financial
Instruments and Hedging Activities - Deferral of the Effective Date of SFAS No.
133". SFAS No. 133 established accounting and reporting standards requiring that
every derivative instrument, including certain derivative instruments embedded
in other contracts, be recorded in the balance sheet as either an asset or
liability measured at its fair value. The statement also requires that changes
in the derivative's fair value be recognized in earnings unless specific hedge
accounting criteria are met. SFAS No. 133, as amended by SFAS No. 137 and SFAS
No. 138, was effective for all fiscal quarters beginning after June 15, 2000 and
therefore was effective for the Company's fiscal year 2001. This pronouncement
did not have a significant impact on the Company's financial condition or
results of operations.

            In December 1999, the Securities and Exchange Commission ("SEC")
issued Staff Accounting Bulletin ("SAB") No. 101, Revenue Recognition in
Financial Statements, ("SAB 101") which provides guidance related to revenue
recognition based on interpretations and practices followed by the SEC. SAB 101
requires companies to report any changes in revenue recognition as a cumulative
change in accounting principle at the time of implementation in accordance with
Accounting Principles Board Opinion No. 20, Accounting Changes. The Company was
required to implement SAB 101 no later than the third quarter of fiscal 2001 in
accordance with SAB No. 101B "Delaying Implementation of SAB 101," which was
issued in June 2000. The implementation of SAB 101 did not have a material
effect on the Company's financial position or results of operations.

      m.    Reclassifications

            Certain reclassifications have been made to the consolidated
financial statements for the year ended April 30, 2000 to conform with the
classification used in 2001.


2.    Income Taxes:

      The Company files a consolidated U.S. federal income tax return that
includes all 100% owned subsidiaries. State tax returns are filed on a
consolidated or separate basis, depending on the applicable laws.

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

                                       Years Ended
                                        April 30,
                                        ---------
                                  2001             2000
                             ----------------------------
Current:
   Federal                   $      --           $     --
   State                         7,910             28,515
                             ----------------------------
                                 7,910             28,515
---------------------------------------------------------

Deferred:
   Federal                     268,930              3,462
   State                       101,870            (43,977)
                             ----------------------------
                               370,800            (40,515)
                             ----------------------------

                             $ 378,710           $(12,000)
                             ============================


15
<PAGE>

2.    Income Taxes: (Cont'd)


      The components of the net deferred tax liabilities are as follows:

                                                              April 30,
                                                              ---------
                                                          2001          2000
                                                    ---------------------------
 Deferred tax assets:
   Stock compensation                               $    53,000     $   130,000
   Accrued sick and vacation                             12,000          14,000
   Provision for bad debt                                26,000          10,000
   Tax loss carryforwards                               727,000         936,000
   Contribution carryover                                 5,000          23,000
                                                    ---------------------------
        Total deferred tax assets                       823,000       1,113,000
   Valuation allowance                                  (19,000)        (71,000)
                                                    ---------------------------
        Net deferred tax assets                         804,000       1,042,000
                                                    ---------------------------

Deferred tax liabilities:
   Prepaid pension costs                               (731,000)       (699,000)
   Unrealized gain on investment in Citrus Grove     (1,307,000)     (1,192,000)
                                                    ---------------------------
        Total deferred tax liabilities               (2,038,000)     (1,891,000)
                                                    ---------------------------

        Net deferred income taxes                   $(1,234,000)    $  (849,000)
                                                    ===========================

      The Company has federal net operating loss carryforwards of approximately
$1,775,000 which can be used to reduce future taxable income through 2020.

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

                                                              Years Ended
                                                               April 30,
                                                               ---------
                                                            2001        2000
                                                          --------------------

      U.S. Federal statutory income rate                    34.0%        34.0%
      State income tax, net of federal tax benefits          7.5          7.5
      Permanent differences                                   --         (3.1)
      Change in valuation allowance                         (4.8)        35.4
      Other differences, net                                (1.6)        11.4
                                                              --         ----

                                                            35.1%        85.2%
                                                          ======         ====

3.    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, 2001.


16
<PAGE>

3.    Retirement Plans: (Cont'd)

      Net periodic pension (income) expense consists of the following
components:

<TABLE>
<CAPTION>
                                                                             Years Ended
                                                                               April 30,
                                                                               ---------
                                                                          2001            2000
                                                                     ---------------------------

      <S>                                                            <C>             <C>
      Service cost                                                   $    78,244     $    49,449
      Interest costs                                                      90,514         121,242
      Expected return on assets                                         (162,034)       (186,676)
      Net amortization                                                   (43,548)        (39,369)
                                                                     -----------     -----------

      Pension (income) expense                                       $   (36,824)    $   (55,354)
                                                                     ===========     ===========
</TABLE>

      The Plan's funded status is as follows:
<TABLE>
<CAPTION>
                                                                               April 30,
                                                                               ---------
                                                                          2001            2000
                                                                     ---------------------------

      <S>                                                            <C>             <C>
      Change in projected benefit obligation:
         Projected benefit obligation, beginning of year             $ 1,593,493     $ 1,770,919
         Service cost                                                     78,244          49,449
         Interest cost                                                    90,514         121,242
         Actuarial loss (gain)                                            39,717        (145,809)
         Benefits paid                                                  (591,774)       (202,308)
                                                                     -----------     -----------

      Projected benefit obligation, end of year                      $ 1,210,194     $ 1,593,493
                                                                     ===========     ===========

      Change in plan assets:
         Fair value of plan assets, beginning of year                $ 2,527,209     $ 2,443,029
         Actual return on plan assets                                   (110,892)        295,198
         Actual benefits paid                                           (579,192)       (211,018)
                                                                     -----------     -----------

      Fair value of plan assets, end of year                         $ 1,837,125     $ 2,527,209
                                                                     ===========     ===========

      Reconciliation of funded status:
         Funded status                                               $   626,931     $   933,716
         Unrecognized net actuarial loss                                 805,982         523,315
         Unrecognized transition asset                                  (133,678)       (267,358)
         Unrecognized prior service cost                                 403,920         476,658
                                                                     -----------     -----------

      Prepaid pension cost                                           $ 1,703,155     $ 1,666,331
                                                                     ===========     ===========
</TABLE>

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

<TABLE>
<CAPTION>
                                                                              Years Ended
                                                                               April 30,
                                                                               ---------
                                                                          2001          2000
                                                                     ---------------------------

      <S>                                                                 <C>           <C>
      Discount rate                                                       8.0%          8.0%
      Rate of increase in compensation                                    5.0%          5.0%
      Expected long-term rate of return on plan assets                    8.0%          8.0%
</TABLE>

      Securities of the Company included in plan assets are as follows:

<TABLE>
<CAPTION>
                                                                               April 30,
                                                                               ---------
                                                                          2001            2000
                                                                     ---------------------------

      <S>                                                            <C>             <C>
      Number of shares                                                    78,346          78,346
      Market value                                                   $ 1,398,476     $ 1,459,194
</TABLE>


17
<PAGE>

4.    Technology Transfer Agreements:


      The Company entered into a Technology Transfer Agreement, as amended, with
Dornier Gmbh of Germany whereby the Company provided technological documentation
and assistance related to the Company's coaxial helicopters. During the year
ended April 30, 1999, the Company received $760,000 pursuant to the agreement.
Dornier had the option to request technical support and assistance from the
Company in order to more fully understand the technology purchased.

      During fiscal 2001, Dornier exercised the option, and the Company received
a payment of $1,240,000, which is included in the statement of operations as
"Aerospace Income", net of legal and royalty expenses. (See Note 9c).


5.    Stock Options Plans:

      Incentive Stock Option Plan

      The Company has a stock option plan (the "Plan") under which participants
may be granted either Incentive Stock Options ("ISOs"), Non-Qualified Stock
Options ("NQSOs") 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 2001
and August 2005.

      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.

      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 granted
an initial 2,500 options on the date of adoption of the plan. These options are
exercisable in three equal annual installments commencing on the first
anniversary date subsequent to the grant. Additionally, each non-employee
Director was granted 1,250 options on each January 1, 1997 through 2000,
respectively. These additional options are exercisable in full on the first
anniversary date subsequent to the date of grant.


18
<PAGE>

5.    Stock Options Plans: (Cont'd)

      Non-Employee Director Stock Option Plan: (cont'd)

      A summary of the Company's various fixed stock option plans as of April
30, 2001 and 2000, and changes during the years then ended is presented below:

<TABLE>
<CAPTION>
                                                          Years Ended April 30,
                                                          ---------------------
                                                     2001                     2000
                                             ----------------------------------------------
                                                          Weighted                 Weighted
                                                          Average                  Average
                                                          Exercise                 Exercise
      Fixed Stock Options                    Shares       Price       Shares        Price
      -------------------------------------------------------------------------------------
      <S>                                    <C>         <C>          <C>         <C>
      Outstanding, beginning of year          84,977     $   16.74     84,579     $   14.94
      Granted                                 30,250         15.30     26,000         20.09
      Exercised                                   --            --     (7,115)        13.63
      Canceled                                (5,250)        15.63    (18,487)        14.42
                                             -------                  -------
      Outstanding, end of year               109,977     $   16.39     84,977     $   16.74
                                             =======                  =======

      Options exercisable at year end         92,727     $   16.65     67,977     $   15.93
                                             =======                  =======

      Weighted average fair value of
         options granted during the year                 $    6.55                $    3.93
                                                         =========                =========
</TABLE>

      The following table summarizes information about stock options outstanding
at April 30, 2001:

<TABLE>
<CAPTION>
                                         Options Outstanding                          Options Exercisable
                                         --------------------------------------------------------------------------------
                                               Weighted
                                                Average             Weighted                                 Weighted
                                               Remaining            Average                                  Average
          Range of             Number         Contractual           Exercise             Number              Exercise
       Exercise Price         Outstanding         Life               Price            Outstanding             Price
      -------------------------------------------------------------------------------------------------------------------

      <S>                       <C>               <C>                 <C>                <C>                 <C>
      $11.80 - $14.81           35,000            3.18                $12.73             30,750               $12.67
      $15.65 - $17.26           37,977            3.27                $16.14             24,977               $16.39

      $19.98 - $21.01           37,000            3.94                $20.13             37,000               $20.13


      Shares reserved for future issuance at April 30, 2001 are comprised of the
            following:

      Shares issuable upon exercise of stock options under the Company's
            Non-Employee Director Stock Option Plan                                                           67,000

      Shares issuable under the Company's Non-Employee Director Stock
            Compensation Plan                                                                                 20,720

      Shares issuable upon exercise of stock options under the Company's stock
            incentive plan                                                                                   214,033

        Shares issuable under the Company's stock grant incentive plan                                         3,150
                                                                                                             -------

                                                                                                             304,903
                                                                                                             =======
</TABLE>


19
<PAGE>

5.    Stock Options Plans: (Cont'd)

      In accordance with APB Opinion No. 25, no compensation expense has been
recognized for the employee stock option plans. Had the Company recorded
compensation expense for the employee stock options based on the fair value at
the grant date for awards in the years ended April 30, 2001 and 2000 consistent
with the provisions of SFAS No. 123, the Company's net income (loss) and net
income (loss) per share would have been adjusted to the following pro forma
amounts:

<TABLE>
<CAPTION>
                                                                           2001                2000
                                                                     -----------------------------------

      <S>                                                            <C>                   <C>
      Net income (loss), as reported                                 $     695,763         $      (2,085)
      Net income (loss), pro forma                                         611,628               (46,670)
      Basic income (loss) per share, as reported                               .62                    --

      Basic income (loss) per share, pro forma                                 .55                  (.04)
      Diluted income (loss) per share, as reported                             .62                    --

      Diluted income (loss) per share, pro forma                               .54                  (.04)
</TABLE>

      For the purposes of the pro forma presentation, the fair value of each
option grant is estimated on the date of grant using the Black-Scholes
option-pricing model. The following range of weighted-average assumptions were
used for grants during the fiscal years ended April 30, 2001 and 2000.

<TABLE>
<CAPTION>
                                                                                Years Ended
                                                                                 April 30,
                                                                                 ---------
                                                                           2001                2000
                                                                     -----------------------------------

      <S>                                                                  <C>             <C>
      Dividend yield                                                          0.0%                  0.0%
      Volatility                                                             39.0%         40.0% - 45.0%
      Risk-Free interest rate                                                5.75%                  5.5%
      Expected life                                                        5 Years                1 Year
</TABLE>

      Incentive Compensation Plan:

      The Company has an incentive compensation plan for all full-time employees
and members of the Board in order to promote shareholder value. The benefits of
the incentive compensation plan are realized only upon a change in control of
the Company. Change in control is defined as the accumulation by any person,
entity or group of 30% or more of the combined voting power of the Company's
voting stock or the occurrence of certain other specified events. In the event
of a change in control, the Company's plan provides for a cash payment equal to
the difference between the plan's "establishment date" price of $15.39 per share
and the per share price of the Company's common stock on the closing date,
equivalent to 100,000 shares of company common stock. The payment amount would
be distributed to eligible participants based upon their respective weighted
percentages (ranging from .5% to 18%).

6.    Loans Payable:

<TABLE>
<CAPTION>
                                                                                 April 30,
                                                                                 ---------
                                                                           2001                2000
                                                                     -----------------------------------

      <S>                                                            <C>                   <C>
      Term loan, bank (a)                                            $     742,392         $     792,152
      Installment loans, other                                                  --                 4,736
                                                                     -----------------------------------

                                                                     $     742,392         $     796,888
                                                                     ===================================
</TABLE>


20
<PAGE>

6.    Loans Payable: (Cont'd)


(a) The loan requires 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. The Bank requires compensating balances
totaling 20% of the ending monthly balance of the loan to be held in interest
bearing and non-interest bearing deposit accounts.

      Annual maturities of debt is as follows:

               Years ending
                 April 30,                                        Amount
                 -----------------------------------------------------------

                 2002                                          $      54,196
                 2003                                                 59,025
                 2004                                                 64,149
                 2005                                                 70,002
             Thereafter                                              495,020
                                                               -------------

                                                               $     742,392
                                                               =============

7.    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 Citrus industry due to its investments therein.
Management does not believe significant credit risk exists at April 30, 2001.


8.    Supplemental Disclosures of Cash Flow Information:

                                                           Years Ended
                                                            April 30,
                                                            ---------
                                                 2001                    2000
                                           -------------------------------------
      Cash paid during the year for:
        Interest                           $    65,955              $     71,263
                                            ====================================
        Income taxes                       $    15,417              $      4,202
                                            ====================================


21
<PAGE>

9.    Commitments:


      a.    Lease commitments

      The future minimum revenues from rental property under the terms of all
noncancelable tenant leases, assuming no new or renegotiated leases are executed
for such premises, for future years are approximately as follows:

           Years ending
             April 30,
             --------
                2002                                        $      1,731,000
                2003                                                 939,000
                2004                                                 701,000
                2005                                                 654,000
                2006                                                 619,000
            Thereafter                                            11,879,000

      b.    Employment agreements

      The Company has entered into one-year renewable employment agreements with
two officers, which provide for annual salaries aggregating $312,500. The
agreements provide for a one-time compensation payment of one-half of the
current annual compensation in the event of a change in corporate control, as
defined.

      c.    Royalty agreement

      The Company is entitled to a 3% royalty on any revenues generated by
Aviodyne, Inc. as a result of the assets purchased from the Company. For the
years ended April 30, 2001 and 2000 no royalty payments had been earned.

      In addition, Aviodyne is responsible for any additional technical support
required by Dornier Gmbh under the technology transfer agreement (see Note 4) in
exchange for 10% of any proceeds received under the technology transfer
agreement. For the year ended April 30, 2001, the Company accrued $124,000 in
connection with this arrangement.

10.   Fair Value of Financial Instruments:

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

      The carrying amount of cash, 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, 2001, based upon an independent third party appraisal
report, is approximately $5,535,000 based on the Company's ownership percentage.

      The book value of the Company's loans payable approximates its fair value.


22
<PAGE>

11.   Termination Costs:

      The Company has incurred approximately $2,000 and $354,000, for the years
ended April 30, 2001 and 2000, respectively, of legal, consulting and other
related expenses in connection with the termination of the former CEO and
President. These costs are included in "Termination Costs" in the statement of
operations. The Company anticipates no additional costs in this matter.

12.   Related Party Transactions:

      Services

      A director provided legal services to the Company for which he was
compensated approximately $135,000 and $185,000 for the years ended April 30,
2001 and 2000, respectively.

13.   Major Customers:

      For the year ended April 30, 2001 rental income from three tenants
represented 20%, 12% and 11% of total rental income.

      For the year ended April 30, 2000 rental income from three tenants
represented 18%, 14% and 12% of total rental income.

Item 8 Changes in and Disagreements on Accounting and Financial Data

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.


23
<PAGE>

                                    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 names, 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 2001 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>
Stephen V. Maroney                                                       59           1996               2001
President, CEO, Treasurer, and Director of the Company

Peter Pitsiokos                                                          41             --
Executive Vice President, Secretary & General Counsel of the Company

Frank D'Alessandro                                                       55             --
Controller of the Company

Paul L. Lamb                                                             55           1997               2003
Partner of Lamb & Barnosky, LLP
Chairman of the Board of Directors of the Company

Robert H. Beyer                                                          68           1977               2002
Consultant
Director of the Company

Philip F. Palmedo                                                        67           1996               2001
Chairman of International Resources Group
Director of the Company

John H. Marburger III                                                    60           1996               2003
Director of Brookhaven National Laboratory
Director of the Company

Robert F. Friemann                                                       53           1998               2001
CPA and Partner of Albrecht, Viggiano, Zureck & Company, P.C.
Director of the Company
</TABLE>


24
<PAGE>

(b)   Business Experience

Stephen V. Maroney, age 59, was initially engaged by the Company as an outside
consultant in June 1996 and elected to the Board of Directors in July of that
same year. Mr. Maroney is the former President of Extebank, a Long Island based
commercial bank with a presence in Nassau and Suffolk Counties and New York
City. Prior to that appointment, he served as Extebank's Chief Financial
Officer. Mr. Maroney was appointed to the position of President, CEO and
Treasurer by the Gyrodyne Board of Directors on March 14, 1999. His career on
Long Island spans a period of over 35 years and includes involvement in numerous
civic, charitable and professional organizations.

Peter Pitsiokos, age 41, joined the Company in November 1992, is the Executive
Vice President, and serves as the Company's Secretary and General Counsel. 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.

Frank D'Alessandro, age 55, 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.

Paul L. Lamb, age 55, has been a Director since 1997 and became Chairman of the
Board on March 14, 1999. He is a founding partner in the law firm of Lamb &
Barnosky, LLP; 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.

Robert Beyer, age 68, has been a Director of the company since November 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.

John H. Marburger III, age 60, was appointed to the Board of Directors in July
1996. Mr. Marburger was the former President of the State University of New York
at Stony Brook (USB). During his stewardship of the University, USB established
itself as a class A research center generating a substantial portion of its
operating funds from federal research 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 67, was appointed to the Board of Directors in July
1996. 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.

Robert F. Friemann, age 53, was appointed to the Board of Directors in October
1998. He is currently a CPA and Partner of Albrecht, Viggiano, Zureck & Company,
P.C. Mr. Friemann has over 30 years of professional experience, most of which
are with the firm. He provides auditing and accounting expertise to the
construction, manufacturing and distribution industries and various
not-for-profit organizations. Mr. Friemann is a member of the American Institute
of Certified Public Accountants and the New York State Society of Certified
Public Accountants. In addition, he has been an instructor for the New York
State Society and is the author of numerous articles on issues including
taxation, accounting and auditing.


25
<PAGE>

(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 2001. A review of current year filings
indicates that no 10% holder of Gyrodyne Common Stock $1 Par Value failed to
file timely reports.

Item 10 Compensation of Executive Officers and Directors

(a)   Executive Compensation

During the fiscal years ended April 30, 2001 and April 30, 2000, two Directors
or Officers and during the fiscal year ended April 30, 1999, one Director or
Officer received remuneration in excess of $100,000 in such capacity.

                           SUMMARY COMPENSATION TABLE
                               Annual Compensation
<TABLE>
<CAPTION>
                                                                                       Long term Compensation
                                                                                ------------------------------------
                                                      Annual Compensation               Awards              Pay outs
                                                   ------------------------------------------------------------------------------
                                                                                               Securities
                                                              Other Annual     Restricted      Underlying     LTIP
           Name and                    Salary      Bonus      Compensation       Stock        Options/LSARs   Payout      All Other
      Principal Position     Year        ($)        ($)           ($)           Award ($)           (#)        ($)      Compensation
------------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>      <C>           <C>       <C>                <C>           <C>             <C>          <C>
Stephen V. Maroney
President & CEO               2001     181,058       0             0              0             10,500          0            0
Stephen V. Maroney
President & CEO               2000     176,269       0          4,875 (A)         0              7,500          0            0
Stephen V. Maroney
President & CEO               1999      20,856       0             0              0                  0          0            0
Director of R.E. Dev.                   76,135       0         59,500 (A)         0              1,250          0            0
Peter Pitsiokos
Exec.V.P. and Secretary       2001     127,242       0         20,647 (B)         0              8,000          0            0
Peter Pitsiokos
Exec.V.P. and Secretary       2000     130,020       0         72,764 (B)         0              3,500          0            0
</TABLE>

(A) Mr. Maroney received shares for his services as Company Director with a fair
market value of $4,875 in FY 00 and $14,500 in FY99. Pursuant to his Consulting
Agreement with the Company in FY99, Mr. Maroney also received stock payments in
lieu of cash with a fair market value of $45,000. 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.

(B) Mr. Pitsiokos received 525 shares in FY 00 from stock awards granted in FY
98 with a value of $8,334. In addition, for the year ended 2000, he received
4,093 shares from the exercise of stock appreciation rights granted in FY 95,
25% of which was amortized this fiscal year with a value of $20,647 and 75% of
which was amortized last fiscal year with a value of $61,942.

Option/SAR Grants in Last Fiscal Year

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------

                     Number of            % of Total
                     Securities           Options/SARs
                     Underlying           Granted to
                     Options/SARs         Employees in        Exercise or Base       Expiration
      Name           Granted (#)          Fiscal Year         Price ($/Sh)             Date
------------------------------------------------------------------------------------------------
<S>                  <C>                    <C>                  <C>                  <C>
Stephen V. Maroney   10,500                 34.7%                $15.647              8/2/05
Peter Pitsiokos       5,000                 16.5%                $15.647              8/2/05
Peter Pitsiokos       3,000                  9.9%                $13.194              8/26/05
</TABLE>


26
<PAGE>

              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, 2001               April 30, 2001 ($)
               Name               Exercise         Realized          Exercisable/Unexercisable      Exercisable/Unexercisable
               ----               --------         --------          -------------------------      -------------------------
<S>                                   <C>              <C>                  <C>                           <C>
Stephen V. Maroney                    --               --                   22,000/5,250                  $39,786/$11,566
President and CEO
Peter Pitsiokos                       --               --                   11,500/2,500                  $21,258/$5,508
Exec. V.P. and Secretary
</TABLE>


(b)   Compensation of Directors

In calendar year 2000, 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. Their compensation was paid in stock for January and February, 2000
and in cash for the remainder of the year. For the calendar year 2000, shares of
stock were issued in January of 2001. As of January 1, 2001, each Director will
receive a fee of $12,000 a year to be paid in cash. 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) Effective December 7, 2000, the Company entered into one year renewable
employment contracts with Stephen V. Maroney as President, Chief Executive
Officer, and Treasurer and Peter Pitsiokos as Executive Vice President,
Secretary, and General Counsel. Their annual salaries were established at
$190,000 and $122,500, respectively. The contracts provide for a severance
payment equivalent to six months salary in the event of a change in control.

Item 11 Security Ownership of Certain Beneficial Owners and Management

(a) The following table sets forth as of June 12, 2001 those persons or entities
known by the Company to be Beneficial Owners of more than 5% of the Company's
Common Stock $1 Par Value, its only equity security.

<TABLE>
<CAPTION>

                                                  Type of                 Number of           Percent of
                 Name and Address                Ownership              shares Owned            Class
                 ----------------                ---------              ------------            -----
      <S>                                       <C>                        <C>                   <C>
      K Capital Partners, LLC
      441 Stuart Street, 6th Floor
      Boston, Massachusetts 02116               Beneficial                 142,550               12.75

      Catherine Papadakos
      Village on the Green
      2481-C Oakleaf Lane
      Clearwater, Florida 33763-1237            Beneficial                  80,789                7.22

      Gyrodyne Company of America, Inc.
      St. James, NY  11780  (A)                 Beneficial                  78,346                7.01

      Private Capital Management, Inc.
      8889 Pelican Bay Blvd., Suite 500
      Naples, Florida 34108                     Beneficial                  61,361                5.50
</TABLE>


27
<PAGE>

      (A) As Gyrodyne has the authority to direct HSBC Holdings, 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 HSBC Holdings as
      Trustee for the Gyrodyne Pension Fund.

(b) In addition, the following table as of June 12, 2001 includes the
outstanding voting securities beneficially owned by the executive officers and
directors, and the number of shares owned by directors and executive officers as
a group.

<TABLE>
<CAPTION>
                                                                            Shares of stock
                                                                             Beneficially                 Pct. of Common
                       Name & Principal Occupation or Employment                 Owned                     Stock Owned
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>             <C>            <C>
Stephen V. Maroney                                                              13,512                         1.21
President, CEO, Treasurer and Director of the Company

Peter Pitsiokos                                                                  9,756          (C)            (A)
Executive Vice President, Secretary & General Counsel of the Company

Paul L. Lamb                                                                     9,537          (D)            (A)
Partner of Lamb & Barnosky, LLP
Chairman of the Board of Directors of the Company

Robert H. Beyer                                                                  6,876          (B)            (A)
Consultant
Director of the Company

John H. Marburger III                                                            3,662                         (A)
Director of Brookhaven National Laboratory
Director of the Company

Philip F.Palmedo                                                                 7,597                         (A)
Chairman of International Resources Group
Director of the Company

Robert F. Friemann                                                               2,992                         (A)
CPA and Partner of Albrecht, Viggiano, Zureck & Company, P.C.
Director of the Company

All Directors and Executive
Officers as a Group (7 persons)                                                 53,932                         4.82
</TABLE>

(A) Less than 1%.
(B) Does not include his wife's ownership of 1,638 shares in which he denies any
beneficial interest.
(C) Does not include wife's and minor children's ownership of 447 shares in
which he denies any beneficial interest.
(D) Includes 7,498 shares held by Lamb & Barnosky, LLP Profit Sharing Trust. Mr.
Lamb is a trustee of the Profit Sharing Trust.


28
<PAGE>

Item 12 Certain Relationships and Related Transactions

(a)   Transactions with Management and Others

Their were no transactions with any officer, director, or beneficial owner of
more than 5% of the Company's common stock, or any relative or spouse of the
foregoing persons, that had a direct or indirect interest in any transaction
involving the Company or its subsidiaries which exceeded $60,000 in the past two
years.

(b)   Certain Relationships and Transactions

The Company has engaged the firm of Lamb & Barnosky, LLP as outside legal
counsel for a number of years. Director Lamb is a partner in the firm to which
Gyrodyne paid legal fees of $135,158 and $184,395 in FY 2001 and FY 2000,
respectively.

(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.


29
<PAGE>

Item 13 Exhibits and Reports on Form 8-K

(a)   Exhibits

Exhibit No.   Description of Exhibit
-----------   ----------------------

4.1           Restated Certificate of Incorporation of Gyrodyne Company of
              America, Inc. dated December 7, 1996*

4.2           Restated By-laws of Gyrodyne Company of America, Inc.*

4.3           1993 Stock Incentive Plan

4.4           1996 Non-Employee Directors' Stock Option Plan

21            List of Subsidiaries

99.1          Lease dated as of May 1, 1999 between the Company as Landlord and
              Carco Group, Inc. as Tenant, expiring August 31, 2002**

99.2          Lease dated November 11, 1996, between the Company as Landlord and
              Flowerfield Celebrations, Inc., expiring May 1, 2031.**

99.3          Lease dated October 7, 1997, between the Company as Landlord and
              Carin Perez and Luis Perez (Kiddie Academy) as Tenant, expiring
              August 31, 2006.**

99.4          1999 Incentive Compensation Plan, a Cash Bonus Plan

99.5          Amended and Restated Agreement of Limited
              Partnership of Callery-Judge Grove, A New York
              Limited Partnership dated as of May 8, 1995

99.6          Summons and Complaint, Flowerfield Country Day Camp, Inc. v.
              Gyrodyne Company of America, Inc., Supreme Court of the
              State of New York, County of Suffolk, Index No. 99-28389.***

Although several of the above-referenced Exhibits have been filed manually in
the past, copies are being filed with this Form 10KSB in order for them to be
accessible electronically.

* These governing documents have been superceded by Restated Certificate of
Incorporation filed with the New York Secretary of State, August 10, 2001 and
Amended and Restated By-Laws dated August 6, 2001. They are incorporated herein
by reference to the Company's Form 8-K filed on August 13, 2001.

** The leases included in these exhibits are all of the leases that extend
beyond 5 years and/or constitute more than 10% of the rent roll.

*** See description in Item 3, Legal Proceedings.

(a)   Reports on Form 8-K

During the last quarter of the fiscal year ended April 30, 2001, the period
covered by this Report, Gyrodyne did not file any reports on Form 8-K.


30
<PAGE>

                                   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/ Stephen V. Maroney
        ------------------------------------------------------------------------
        Stephen V. Maroney, President, Treasurer, Director and Principal
          Executive Officer
        Date:  August 16, 2001


        SGD/ Frank D'Alessandro
        ------------------------------------------------------------------------
        Frank D'Alessandro, Controller
        Date:  August 16, 2001

                              ********************

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:  August 16, 2001


        SGD/ Philip F. Palmedo
        ------------------------------------------------------------------------
        Philip F. Palmedo, Director,
        Date:  August 16, 2001


        SGD/ Stephen V. Maroney
        ------------------------------------------------------------------------
        Stephen V. Maroney, Director
        Date:  August 16, 2001


        SGD/Robert F. Friemann
        ------------------------------------------------------------------------
        Robert F. Friemann, Director
        Date:  August 16, 2001


31