<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC. 20549

                    -----------------------------------------
                                    FORM 10-K
                    -----------------------------------------

(Mark One)

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934
    For the fiscal year ended:  December 31, 2000
                                       or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934
    For the transition period from                  to                        .
                                   -----------------    -----------------------

                    -----------------------------------------
                         Commission File Number: 1-5513
                    -----------------------------------------

                               TRIDEX CORPORATION
             (Exact name of registrant as specified in its charter)

                CONNECTICUT                                    06-0682273
(State or other jurisdiction of incorporation or             (I.R.S. Employer
               organization)                                Identification No.)

                                 61 WILTON ROAD
                               WESTPORT, CT 06880
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (203) 226-1144

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

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

                               Title of each class
      --------------------------------------------------------------------
                         COMMON STOCK, WITHOUT PAR VALUE

-------------------------------------------------------------------------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes /X/    No / /

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

As of March 16, 2001 the aggregate market value of the registrant's issued and
outstanding voting stock held by non-affiliates of the registrant was
$1,357,029.

As of March 16, 2001 the registrant had outstanding 5,654,289 shares of common
stock, without par value.

                        Exhibit Index appears on page 17

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<S>                                                                                                                     <C>
PART I....................................................................................................................1

   ITEM 1.     BUSINESS...................................................................................................1
   ITEM 2.     PROPERTIES.................................................................................................3
   ITEM 3.     LEGAL PROCEEDINGS..........................................................................................3
   ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........................................................4

PART II...................................................................................................................5

   ITEM 5.     MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.....................................5
   ITEM 6.     SELECTED FINANCIAL DATA....................................................................................5
   ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND  RESULTS OF OPERATIONS.....................6
   ITEM 7A.    QUANTITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK................................................9
   ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA................................................................9
   ITEM 9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE......................10

PART III.................................................................................................................10

   ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT........................................................10
   ITEM 11.    EXECUTIVE COMPENSATION....................................................................................11
   ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............................................13
   ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTION.............................................................14
   ITEM 14.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K..........................................14
</TABLE>

<PAGE>

PART I

ITEM 1.  BUSINESS

GENERAL

Tridex Corporation ("Tridex" or the "Company"), through its wholly owned
operating subsidiary Progressive Software, Inc. ("Progressive"), is a leading
designer, developer and marketer of specialized point-of-sale ("POS"),
back-office and enterprise technology for the food service industry. All dollar
amounts within this report, unless otherwise indicated, exclude results of
discontinued operations.

(a)    GENERAL DEVELOPMENT OF BUSINESS

On April 17, 1998, the Company acquired all of the outstanding common stock of
Progressive for a total purchase price of $47,594,000, consisting of 714,000
shares of Tridex common stock, valued at $4,998,000, and the balance in cash.
Through the acquisition of Progressive, the Company had anticipated potential
synergies between Progressive and the Company's Ultimate Technology Corporation
("Ultimate") subsidiary, a leading developer, manufacturer and marketer of
hardware systems and components for the retail POS industry, that would enable
the Company to provide customers with customized hardware and software
solutions. Those synergies never materialized. In the absence of such synergies,
and in view of the Company's substantial debt burden, the Company determined
that it would be difficult to adequately support the cost of fully developing
and sustaining both software and hardware operations. Consequently, management
decided to concentrate its efforts on the software segment of its business
represented by Progressive. Accordingly, on February 18, 2000, Tridex sold
Ultimate to UTC Holding Company, Inc., an affiliate of Capital Formation Group
II, L.P., a private investment partnership, for a purchase price of
approximately $12,544,000 in cash. Tridex used the proceeds from the sale
primarily to pay down debt.

(b)    FINANCIAL INFORMATION ABOUT SEGMENTS

The Company operates in one segment.

(c)    NARRATIVE DESCRIPTION OF BUSINESS

       (i)    PRINCIPAL PRODUCTS AND SERVICES

              Progressive offers the following POS, back office, and enterprise
              technology solutions for the food service industry:

                   o IRIS Full Serve (Windows(R) NT(R)-based application)
                   o IRIS Quick Serve (Windows(R) NT(R)-based application)
                   o IRIS Connect (DOS-based application on a Windows(R) NT(R)
                     platform)
                   o SMART 2 (DOS-based application on a Windows(R) NT(R)
                     platform)

              Progressive's integrated restaurant information system, IRIS, is a
              32-bit Microsoft Windows(R) NT(R)-based system for quick service
              and table service operators that combines advanced POS
              capabilities and powerful back office resource planning services
              to manage every aspect of operations. This includes an intuitive
              touchscreen POS for order entry, drive-thru and kitchen display
              management, cost and general accounting, time and attendance,
              purchasing and inventory control, and demand forecasting. IRIS
              Connect is a centralized management system designed to provide
              consolidated information on an enterprise-wide basis.

              IRIS Full Serve, currently installed only in the United States and
              IRIS Quick Serve, currently installed in the United States,
              Australia, Japan, Taiwan and the United Kingdom, are both year
              2000 and Euro compliant and Unicode-enabled. Building on its
              legacy DOS product, Progressive also offers SMART 2 for customers
              who want to continue to use Progressive's DOS systems on a
              Windows(R) NT(R) platform. Progressive currently has more than
              15,000 licensed installations of its DOS and Windows(R) NT(R)
              products.

<PAGE>

              Progressive sells its software systems through direct and indirect
              sales forces and, when requested by customers, provides hardware
              and system integration services in connection with software sales.
              In addition, Progressive offers help desk, on-site technical and
              consulting support and project management services.

       (ii)   SOURCES AND AVAILABILITY OF LABOR

              As of December 31, 2000, Progressive employed 11 full time
              programmers. The ready availability of computer programmers is
              crucial to Progressive's product development efforts. To date,
              Progressive development programs have not been materially affected
              by a shortage of qualified programmers. There can be no assurance,
              however, that such a shortage will not occur in the future.

              The availability of raw materials is not a significant factor in
              the Company's business.

       (iii)  INTELLECTUAL PROPERTY

              Progressive owns proprietary rights in two principal software
              programs it developed, and has common law rights in related trade
              and service marks. It also has a pending trademark application
              relating to one of its proprietary programs. The Company regards
              its software designs and code incorporated into its products as
              proprietary and protects them by relying on a combination of
              copyright, trademark and trade secret laws and employee and third
              party nondisclosure agreements. It may be possible for
              unauthorized third parties to copy certain portions of the
              Company's products or to reverse engineer or otherwise obtain and
              use, to the Company's detriment, information that the Company
              regards as proprietary. Moreover, the laws of some foreign
              countries do not afford the same protection to the Company's
              proprietary rights as do United States laws. There can be no
              assurance that legal and contractual protections relied upon by
              the Company to protect its proprietary rights will be adequate or
              that the Company's competitors will not independently develop
              products that are substantially equivalent or technologically
              superior to the Company's products.

       (iv)   SEASONALITY AND PRACTICES RELATING TO WORKING CAPITAL ITEMS

              Sales of the Company's products are not subject to material
              seasonal variations. The Company's operations, as presently
              constituted, do not require inventories of raw materials or
              finished goods.

       (v)    CERTAIN CUSTOMERS

              The Company has certain customers, the loss of which, if not
              replaced by sales to other customers, could have an adverse effect
              on the Company. In the year ended December 31, 2000, three
              customers accounted for approximately 32%, 18% and 9%,
              respectively, of the Company's net sales. As customers complete
              the installation of new software systems, sales to these customers
              typically decline. Accordingly, the identity of Progressive's
              largest customers changes in the ordinary course of business.
              There can be no assurance that Progressive will not experience the
              loss of a customer which, in any given year or sequential years,
              accounted for a significant portion of Progressive's net sales, or
              that such loss will not have an adverse effect on the Company.

       (vi)   BACKLOG

              Substantially all of the Company's business results from orders
              that can be modified or canceled prior to shipment without
              penalty. Accordingly, the Company believes that backlog cannot be
              considered a meaningful indicator of future financial performance.

       (vii)  COMPETITION

              The Company faces aggressive competition in its markets. Many of
              the Company's current and potential competitors are large
              multi-national enterprises with extensive experience and resources
              in designing, manufacturing and marketing similar software
              products. Competitors in the POS marketplace include Eltrax
              (Squirrel POS), Panasonic, Restaurant Data Concepts, Inc.
              (Positouch), Infogenesis, Ibertech (Aloha POS), Hospitality
              Solutions International, GEAC, NCR (Compris POS), Radiant Systems,
              Par Technology and hardware providers such as IBM, NCR, and
              Javelin, who market their products in conjunction with independent

                                          2

<PAGE>
              software vendors. There are also smaller companies that license
              their POS-oriented software with PC-based systems in regional
              markets.

              In certain markets, the Company's competitors sometimes offer
              prices lower than those offered by Tridex in part, management
              believes, because of lower overhead attributable to higher volume
              production. Many of the Company's competitors, particularly those
              that are divisions of substantially larger companies, have greater
              financial and other resources than Tridex.

       (viii) RESEARCH AND DEVELOPMENT ACTIVITIES

              The Company spent approximately $4.3 million in 2000 and $4.7
              million in 1999 on engineering, design and product development.
              Research and development expenditures in 1999 included $725,000 of
              software development costs which were capitalized. There were no
              such costs capitalized in 2000. During 1999 and 2000, the Company
              provided certain custom software development to RetailDNA, LLC
              ("RetailDNA" f/k/a Digital Restaurant Solutions, LLC), a privately
              held company involved in the development of specialty software
              products for the restaurant industry. The Company received
              6,750,000 shares in RetailDNA as compensation. The Company has
              estimated the value of these shares at $850,000 and has reduced
              development expenses during 1999 and 2000 by $500,000 and $350,000
              respectively. (See Note 1 to the Company's 2000 consolidated
              financial statements).

       (ix)   EMPLOYEES

              As of March 16, 2001, the Company employed approximately 61 full
              time and 2 part time employees, 59 of whom were employed by
              Progressive.

(d)    FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
       SALES

       Sales for the Company's wholly owned United Kingdom sales and
       distribution subsidiary, Retail Resource Solutions Limited, ("RRS") for
       the years ended December 31, 2000 and 1999 were $70,787 and $1.7 million,
       respectively.

ITEM 2.  PROPERTIES

The Company's operations are currently conducted at the facilities described
below:

<TABLE>
<CAPTION>
                                                                                      Owned or
Location                     Operations Conducted            Size - Approx. Sq. Ft.    Leased      Lease Expiration Date
----------------------------------------------------------------------------------------------------------------------------
<S>                       <C>                              <C>                     <C>            <C>
Westport, Connecticut        Principal executive offices              5,000            Leased         July 31, 2001
                             (Tridex)                          (net of sublease)

Charlotte, North Carolina    Product Development & Sales             30,600            Leased         September 14, 2005
                             (Progressive)
</TABLE>

Effective November 1, 1999, 50% of the Westport office was subleased through
July 31, 2001. In addition, the Company sold a non-operating facility of 23,000
square feet located in Bloomfield, Connecticut on January 24, 2000 for a
purchase price of $133,000. The Company believes that its existing leased
facilities generally are in good condition, adequately maintained and suitable
for their present and contemplated uses.


ITEM 3.  LEGAL PROCEEDINGS

In April 1998, the Company acquired all of the common stock of Progressive
Software, Inc. from Paul J. Smith ("Smith"), for a total purchase price of
$47,594,000 consisting of 714,000 shares of the Company's common stock, valued
at $4,998,000, and the balance in cash. As a part of the transaction, the
parties entered into an Escrow Agreement with respect to possible future
liabilities related to sales taxes in various jurisdictions where Progressive
had done business. Additionally, the Company entered into a three-year lease
(the "Lease") with a partnership in which Smith is a principal to occupy the
primary office facility used by Progressive. Subsequent to the acquisition, the
Company filed for arbitration against Smith

                                       3
<PAGE>

seeking a reduction in the purchase price paid by the Company. In January
1999, Smith filed a complaint seeking damages up to $5,000,000 for the
refusal by the Company to register the shares of Company common stock
received by him as a part of the purchase price.

On October 31, 2000, the Company and Smith entered into a Settlement Agreement
pursuant to which all of the claims pending between the parties were resolved.
Pursuant to the Settlement Agreement, Smith returned to the Company the 714,000
shares of the Company's common stock issued to him, originally valued at $7 per
share, as well as $1,226,000 in cash. The Settlement Agreement further provided
that effective October 1, 2000, no further rent would be due under the Lease,
that the Lease would terminate on December 31, 2000 and that the Company had no
further obligation pursuant to the Escrow Agreement. Effective upon Smith's
returning the 714,000 shares of common stock, the Company's outstanding shares
of common stock decreased to 5,654,289. This settlement is reflected in the
Company's financial statements in the quarter ending December 31, 2000 as other
income in the amount of $1,440,200, of which amount $214,200 has been attributed
to the value of the stock received.

Allu Realty ("Allu"), a Massachusetts business trust owned by the Company, is
the former owner of land located at 100 Foley Street, Somerville, Massachusetts
(the "Site"). Allu sold the Site to 100 Foley Street Incorporated ("Foley"), an
unrelated entity.

In 1984, Allu and the Company disclosed to the Massachusetts Department of the
Attorney General the existence of chromium, oil and grease at the Site. As a
result, the Environmental Protection Division of the Department of the Attorney
General and the Massachusetts Department of Environmental Protection conducted
an investigation of the Site. In 1993, the Company entered into an agreement
with Foley pursuant to which the Company and Foley agreed to pay 75% and 25%,
respectively, of the costs incurred after January 1, 1992 in connection with the
investigation and remediation of the Site (the "Site Participation Agreement").
The Site Participation Agreement also provided that, to the extent there are
available proceeds from the sale of the Site, the Company would be reimbursed
approximately $200,000 of the $250,000 it expended in connection with the Site
prior to January 1, 1992. As of December 31, 1999, the Company had spent
approximately $766,000 in connection with the Site. In 1997, Foley sold the Site
to an affiliate of Stop & Shop, Inc. ("Stop & Shop"). As part of the sale
transaction, Foley was required to place approximately $875,000 in escrow (the
"Stop & Shop Escrow") to cover the costs of remediation, which was completed in
1999. In 1997, Foley brought suit in the United States District Court, District
of Massachusetts, against the Company claiming that the Company failed to
contribute its shares of the remediation costs pursuant to the Site
Participation Agreement. Foley asserted that Allu and the Company remain liable
for payment of certain costs associated with the remediation of the Site after
its sale to Stop & Shop and claimed that it is entitled to reimbursement from
the Company of a portion of the Stop & Shop Escrow. The Company filed a
counterclaim, and sought reimbursement of funds previously expended in
accordance with the Site Participation Agreement. Mediation between the parties
was not successful and in July 2000, after a trial, a jury made certain factual
findings upholding the parties' obligations under the Site Participation
Agreement, including the Company's obligation to pay 75% of the remediation
costs and the obligation of Foley to reimburse the Company out of sale proceeds.
On October 16, 2000, the United States District Court for Massachusetts entered
judgment against the Company in the amount of approximately $791,000, of which
approximately $156,000 represented legal fees awarded to the opposing party and
approximately $108,000 represented interest. The Company has filed various
post-trial motions seeking to vacate the judgment or to have it modified. If
these motions are unsuccessful, the Company intends to appeal the decision of
the Court. As of December 31, 2000, the Company had accrued $791,000 the amount
of the judgment. Subsequently, Foley attached $791,000 in cash being held for
the account of the Company by a third party. The Company has moved to discharge
the attachment which motion has not yet been heard by the Court. The Company is
unable to forecast when this litigation will finally be resolved or the amount
of its ultimate exposure with respect thereto.

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

During the fourth quarter of fiscal 2000, no matters were submitted to a vote of
security holders.

                                       4
<PAGE>

PART II

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

The Company's common stock trades on the Over-the-Counter Bulletin Board under
the symbol "TRDX.OB." As of March 16, 2001 there were 1,109 holders of record of
the common stock. The following table lists the high and low sales prices of the
common stock reported during the years ended December 31, 2000 and 1999.

<TABLE>
<CAPTION>
                                                                 Year Ended December 31,
                            ---------------------------------------------------------------------------------------------------
                                                  2000                                              1999
                            ---------------------------------------------------------------------------------------------------
                                     High                      Low                     High                      Low
                            ---------------------------------------------------------------------------------------------------
<S>                           <C>                    <C>                         <C>                      <C>
January - March               $     2.8125             $    1.3750               $    3.5000              $    1.8750
April - June                        2.1250                   .05312                   3.0000                   2.000
July - September                     .8750                    .3438                   3.8750                   1.6250
October - December                   .4375                    .1094                   2.2500                   1.2500
</TABLE>

No dividends or other distributions on the common stock have been declared in
the past two years. The Company does not anticipate declaring dividends in the
foreseeable future. The Company's credit agreement with its senior lender
prohibits the payment of cash dividends.

The Company does not meet the net tangible asset or price per share requirements
for listing on the Nasdaq Stock Market(R) ("Nasdaq"). Accordingly, during 2000,
the Company's common stock was delisted from Nasdaq. As a result of delisting,
current information regarding bid and asked prices for the common stock may
become less readily available to brokers, dealers, and/or their customers which
may reduce the liquidity of the market for the common stock which, in turn,
could result in decreased demand for the common stock, a decrease in the stock
price, and an increase in the spread between the bid and asked prices for the
common stock.

ITEM 6.  SELECTED FINANCIAL DATA

On February 18, 2000 the Company completed the sale of Ultimate. The Selected
Financial Data are derived from the Company's consolidated financial
statements, which have been adjusted from historical financial statements to
present the results of operations of Ultimate as a discontinued operation for
all periods presented.

<TABLE>
<CAPTION>
                                                            Years Ended December 31,
                                   ----------------------------------------------------------------------------
                                        2000           1999           1998            1997           1996
                                   ----------------------------------------------------------------------------
                                                  (Dollars in thousands, except share amounts)
<S>                                <C>             <C>             <C>            <C>             <C>
Statement of Operations Data:
     Net sales from
      continuing operations        $ 16,950        $  31,256       $  17,896      $    936        $    859

                                   =============================================================================
     Income (loss) from
      continuing operations        $(22,025)       $ (16,271)      $ (14,943)     $   (902)       $  4,487
                                   ============================================================================
     Income (loss) from
      continuing operations
       per common - basic          $  (3.53)       $   (2.56)      $   (2.46)     $  (0.18)       $   1.15
                                   ============================================================================
     Cash dividends per
      common share                 $      0        $       0       $       0      $      0        $      0
                                   ============================================================================
</TABLE>

<TABLE>
<CAPTION>
                                                                As of December 31,
                                   ----------------------------------------------------------------------------
                                        2000           1999           1998            1997           1996
                                   ----------------------------------------------------------------------------
                                                             (Dollars in thousands)
<S>                                <C>             <C>             <C>            <C>             <C>
Balance Sheet Data:
     Total assets                  $  12,214        $ 36,896       $  50,081       $ 25,655       $ 31,051
     Current portion of
     long-term debt                $  14,100        $ 20,691       $   1,650       $      0       $    740
     Long-term debt                $       0        $      0       $  19,341       $      0       $      0
</TABLE>

                                       5
<PAGE>

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

THE STATEMENTS CONTAINED HEREIN NOT BASED ON HISTORIC FACTS ARE FORWARD-LOOKING
STATEMENTS, WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
THAT INVOLVE RISKS AND UNCERTAINTIES. PAST PERFORMANCE IS NOT NECESSARILY A
STRONG OR RELIABLE INDICATOR OF FUTURE PERFORMANCE. ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM PAST RESULTS, ESTIMATES, PROJECTIONS, OR FORWARD LOOKING
STATEMENTS MADE BY, OR ON BEHALF OF, THE COMPANY, INCLUDING, BUT NOT LIMITED TO,
THE COMPANY'S EXPECTATIONS REGARDING NET SALES, GROSS PROFIT, OPERATING INCOME
AND FINANCIAL CONDITION.

(a)    RESULTS OF OPERATIONS

       (i)    YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED
              DECEMBER 31, 1999

              Consolidated net sales for 2000 decreased $14.3 million (46%) to
              $17.0 million from $31.3 million in the comparable 1999 period.
              Management believes that the decrease results from several causes.
              Beginning in the second quarter, the Company outsourced the
              hardware components for a major customer's expansion and, as a
              result, did not recognize hardware revenue on these shipments. The
              value of these outsourced hardware components was approximately
              $2.9 million during the period. Prior to this arrangement, the
              Company supplied these components directly. There were no
              comparable transactions during the same period in 1999. Also, the
              Company experienced a delay in shipments caused by protracted
              negotiations of a new credit arrangement between the Company's
              lenders and a major vendor as more fully described in the
              Company's Quarterly Report on Form 10-Q for the period ended March
              31, 2000. Management also believes that the decrease in hardware,
              software and service sales is an industry-wide trend inasmuch as
              revenues of many of the Company's competitors were also adversely
              affected, when compared to prior periods.

              As a result of a reduction in revenues, consolidated gross profit
              decreased $3.2 million (35%) to $6.0 million from $9.2 million in
              the prior year. Consolidated gross profit margin increased to 35%
              of sales from 29% last year. Before giving effect to the
              outsourcing arrangement referred to above, the gross profit margin
              for 2000 was 30%.

              Consolidated engineering, design and product development costs
              increased $428,000 to $3.9 million from $3.5 million last year.
              The increase was principally the result of efforts directed toward
              final enhancements of the new version of the Company's IRIS
              software product that was released in early July. Expenses during
              2000 and 1999 were reduced by approximately $350,000 and $500,000,
              respectively, representing the value assigned to the shares of
              RetailDNA for development services provided. Expenses in 1999 are
              exclusive of $725,000 of development costs that were capitalized.

              Consolidated selling, administrative and general expenses
              decreased $2.0 million (26%) to $5.8 million from $7.8 million a
              year ago. The overall decrease results from substantial reductions
              in staff and related expenses both at corporate headquarters and
              at Progressive.

              Consolidated depreciation and amortization for the current period
              was $3.5 million, substantially unchanged from last year.

              A $12.3 million impairment charge was recorded by the Company in
              2000. The Company periodically reviews goodwill, intangibles and
              other long-term assets to assess recoverability based upon
              expectations of non-discounted cash flows from operations. As
              noted in the Company's Quarterly Report on Form 10-Q for the
              period ended September 30, 2000, the operating results of
              Progressive during fiscal 2000 have been below previous
              expectations. As a result, in August 2000, management instituted a
              reduction-in-force at Progressive, revised its operating forecasts
              and initiated an evaluation of the carrying value of long-lived
              assets. The evaluation commenced with estimates of the future cash
              flows, on an undiscounted basis, expected to result from the
              assets and their eventual disposition. Based on this evaluation,
              management concluded that an impairment of the acquired assets had
              occurred and recorded a write down of such assets to fair value.
              The fair values of the long-lived assets were estimated using the
              present value of expected future cash flows expected from such
              assets, discounted at a rate of return of 18%. Considerable
              management judgment was involved in estimating fair value and,
              therefore, operating results could vary significantly from
              management's estimates. In accordance

                                       6
<PAGE>

              with the provisions of the Statement of Financial Accounting
              Standards No. 121, "Accounting for the Impairment of Long-Lived
              Assets and for Long-Lived Assets to be Disposed Of", the Company,
              recorded an impairment charge of $12,300,000, consisting of
              $9,847,000 of goodwill, $2,159,000 of purchased technology and
              internally developed software costs and $294,000 of plant and
              equipment.

              Consolidated continuing operating losses for the period were $19.5
              million compared to losses of $5.7 million in the comparable
              period last year. Increased losses in the current period were
              primarily the result of the $12.3 million impairment charge
              recorded in the quarter ended September 30, 2000 as discussed
              above, decreased sales and gross profits and increased costs of
              depreciation, engineering, design and product development,
              partially offset by reduced selling, administrative, and general
              expenses.

              Net interest expense for the current period was $2.9 million
              compared to $3.4 million a year ago. The decrease is the result a
              reduction in the amount of outstanding bank debt through the use
              of a portion of the proceeds from the Ultimate sale, as described
              in Note 2 to the Company's financial statements, partially offset
              by increases in prevailing interest rates during the current
              period compared with rates in effect in 1999. Interest expense is
              net of interest income of $126,000 in 2000 and $104,000 in 1999.

              Other expense consists principally of an additional provision of
              $582,000 related to the 100 Foley Street litigation as described
              in Item 3. In addition, the Company recognized a loss on disposal
              of plant and equipment of $294,000. In 1999, the Company reported
              other income of $50,000 representing a gain of $180,000 on the
              sale of the assets of an operating division offset by provisions
              for costs also associated with the 100 Foley Street matter and
              non-operating property held for sale. Also during 2000, the
              Company recognized other income of $1.4 million relating to the
              Smith settlement. See Note 7 to the Company's consolidated
              financial statements.

              Provision for income taxes reflects state tax provisions. The
              provision recorded in the prior year reflects the increase in
              valuation allowance. The loss during 2000 was $17.2 million or
              $2.75 per share, compared to $14.8 million, or a loss of $2.32 per
              share, for 1999.

              Net earnings related to discontinued operations, including gain on
              the sale of Ultimate in February 2000, was $5.6 million, or $0.89
              per share.

       (ii)   YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED
              DECEMBER 31, 1998

              Consolidated net sales for the year ended December 31, 1999
              increased $13.4 million (75%) to $31.3 from $17.9 million for the
              prior year. The increase reflects a full year of sales of
              Progressive, which was acquired on April 17, 1998 as well as an
              increase in volume at Progressive.

              Consolidated gross profit increased $3.3 million (57%) to $9.2
              from $5.8 million in the prior year, as a result of the full year
              contribution of Progressive and an increase in overall volume
              associated with Progressive. Consolidated gross profit margin
              decreased to 29.3% of sales from 32.6% of sales in the prior year
              as a result of the change in product mix at Progressive.

              Consolidated engineering, design and product development costs
              (net of capitalized software development costs) increased $1.6
              million (83%) to $3.5 million in 1999 from $1.9 million in the
              prior year. The increase is primarily due to the inclusion of the
              full year of such costs for Progressive and to expenditures for
              Progressive's software development initiatives, including IRIS
              related costs. As a percentage of revenue, total engineering,
              design and product development costs decreased to 15% in 1999
              compared to 20% for 1998. Consolidated engineering, design and
              product development costs are reported net of capitalized software
              development costs of $725,000 in 1999 ($1.7 million in 1998) and
              $500,000 in 1999 representing the estimated value of equity in
              Retail DNA received in return for having provided certain custom
              software development.

              Consolidated selling, administrative and general expenses for the
              current year increased $1.6 million (27%) to $7.8 million from
              $6.2 million in the prior year. The increase in selling,
              administrative and general expenses is primarily the result of the
              inclusion of a full year of such costs for Progressive partially
              offset by $500,000 for the reversal of an accrual resulting from a
              previously recorded pension obligation. Prior year's expenses
              reflect the inclusion of a non-recurring charge of approximately
              $310,000 associated with the due diligence review for a
              transaction that was not completed. Operating expenses in 1998
              include the $17.6 million write-off of in-process software
              technology acquired as part of the purchase of Progressive.

                                       7
<PAGE>

              Depreciation and amortization for the current year increased $1.2
              million to $3.6 million from $2.4 million in the prior year. The
              increase in amortization is primarily the result of a full year of
              amortizing goodwill, intangibles and existing and core
              technologies acquired with Progressive.

              Consolidated operating loss for the current year was a loss of
              $5.7 million compared to a loss of $4.6 million in the prior year
              (exclusive of the $17.6 million write-off of in-process software
              technology). The loss in the current year was primarily the result
              of the increase in selling, administrative and general expenses
              and engineering, design and development costs associated with new
              products.

              Net interest expense for the current year was $3.4 million
              compared to $1.7 million in the prior year. Interest expense
              increased primarily due to the debt incurred to acquire
              Progressive being outstanding for a full year versus eight months
              in the prior year and to additional net borrowings in 1999.
              Interest expense is net of interest income of $104,000 in 1999 and
              $348,000 in the prior year.

              Other non-operating income of $50,000 includes a gain of $180,000
              on the sale of the Company's Ribbons Division and a provision of
              $105,000 for costs associated with additional remediation at the
              100 Foley Street Site. See "Item 3 - Legal Proceedings" Other
              non-operating expenses in the prior year's period include a
              provision for costs of real estate held for sale.

              Provision for income taxes in the current year primarily reflects
              the increase in valuation allowances on certain deferred tax
              assets for which a tax benefit will not likely be realized.
              Management has concluded that realization of deferred tax assets
              related to net operating loss carryforwards and deductible
              in-process research and development through future taxable
              earnings or alternative tax strategies in no linger more likely
              than not, and accordingly has increased the valuation allowance.
              The benefit recorded in the prior year reflects the recognition of
              deferred taxes of approximately $5,814,000 related to the
              write-off of in-process software technology.

              Income from discontinued operations, net of income taxes, in 1999
              and 1998 represents the earnings of Ultimate.

              Net loss for the current year was $14.8 million (or $2.32 per
              share) as compared to net loss of $14.1 million (or $2.33 per
              share) for the prior year. The average number of common shares
              outstanding increased to 6,368,000 shares from 6,077,000 shares in
              the prior year.

       (iii)  LIQUIDITY AND CAPITAL RESOURCES

              The Company's negative working capital (current assets less
              current liabilities) at December 31, 2000 was $20.3 million
              compared with negative working capital of $18.7 million at
              December 31, 1999. At December 31, 2000, the Company had no
              material commitments for capital expenditures. The Company's
              December 31, 2000 negative working capital resulted primarily from
              net losses and the maturity on December 31, 2000 of the Company's
              existing debt.

              In April 1998, the Company entered into a Credit Agreement with
              Fleet National Bank that provided a $12.0 million Senior Term Loan
              (the "Term Loan") with a maturity of March 31, 2003 and an $8.0
              million Working Capital Facility. At the same time, the Company
              sold Senior Subordinated Notes due April 17, 2005 (the "Notes") in
              the principal amount of $11.0 million to Massachusetts Mutual Life
              Insurance Company and affiliates. The proceeds of the Term Loan
              and the Notes were used in the acquisition of Progressive. In
              February 2000, the Company used a portion of the proceeds from the
              sale of Ultimate to retire $8.0 million principal amount of the
              Term Loan and paydown of $3.0 million of the Working Capital
              Facility.

              As reported previously, the Company, at various times, has been in
              violation of the covenants of both the Term Loan and the Notes
              resulting in several modifications of the terms of each including
              an acceleration of the maturities of both to December 31, 2000.
              Currently, the Company does not have the capability to repay or
              replace either the Term Loan or the Notes. As a result, both
              credit facilities are due upon demand and that fact raises
              substantial doubt about the Company's ability to continue as a
              going concern The outstanding amount of both are reflected as
              current liabilities in the Company's financial statements.

                                       8
<PAGE>

              The Company has been advised that, in December 2000, Fleet
              National Bank sold its interest in the Term Loan and Working
              Capital Facility to ARK CLO 2000-1, Limited. Inasmuch as the
              Company, at present, still lacks the capability to repay or
              replace these credit facilities, it intends to seek accommodation
              with its lenders that will allow it to continue operating while
              seeking either modification to, or replacement of, the facilities.
              However, there can be no assurance that the Company will be
              successful in such efforts or as to what form such modification or
              replacement might be.

(b)    IMPACT OF INFLATION

       Tridex believes that its business has not been affected to a significant
       degree by inflationary trends.

ITEM 7A. QUANTITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

         Not applicable.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<TABLE>
<CAPTION>
                                                                                                                PAGE
                                                                                                               NUMBER
             <S>                                                                                               <C>
             Report of Independent Accountants                                                                  F-1

             Tridex Corporation and Subsidiaries consolidated financial statements:                             F-2

                  Consolidated balance sheets as of December 31, 2000 and 1999.                                 F-2

                  Consolidated  statements of operations for the years ended  December 31, 2000,  1999
                  and 1998.                                                                                     F-3

                  Consolidated  statements  of  shareholders'  (deficit)  equity  for the years  ended
                  December 31, 2000,  1999 and 1998.                                                            F-4

                  Consolidated  statements of cash flows for the years ended  December 31, 2000,  1999
                  and 1998 .                                                                                    F-5

                  Notes to consolidated financial statements.                                                   F-6
</TABLE>

             Financial Statement Schedules - All schedules are omitted since the
             required information is either (a) not present or not present in
             amounts sufficient to require submission of the schedule or (b)
             included in the financial statements or notes thereto.

                                       9
<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS

         To the Board of Directors and Shareholders
         of Tridex Corporation

         In our opinion, the accompanying consolidated balance sheets and the
         related consolidated statements of operations, shareholders' (deficit)
         equity and cash flows present fairly, in all material respects, the
         financial position of Tridex Corporation and its subsidiaries at
         December 31, 2000 and 1999, and the results of their operations and
         their cash flows for each of the three years in the period ended
         December 31, 2000, in conformity with accounting principles generally
         accepted in the United States. These financial statements are the
         responsibility of the Company's management; our responsibility is to
         express an opinion on these financial statements based on our audits.
         We conducted our audits of these statements in accordance with auditing
         standards generally accepted in the United States, which require that
         we plan and perform the audit to obtain reasonable assurance about
         whether the financial statements are free of material misstatement. An
         audit includes examining, on a test basis, evidence supporting the
         amounts and disclosures in the financial statements, assessing the
         accounting principles used and significant estimates made by
         management, and evaluating the overall financial statement
         presentation. We believe that our audits provide a reasonable basis for
         our opinion.

         The accompanying consolidated financial statements have been prepared
         assuming Tridex Corporation will continue as a going concern. The
         Company is not in compliance with various terms of its debt agreements
         and all the debt is currently due. As more fully described in Note 1,
         these conditions raise substantial doubt about the Company's ability to
         continue as a going concern. The financial statements do not include
         any adjustments to reflect the possible future effects on the
         recoverability and classification of assets or the amounts and
         classification of liabilities that may result from the outcome of this
         uncertainty.

         PricewaterhouseCoopers LLP
         Hartford, Connecticut

         April 9, 2001

                                      F-1
<PAGE>

                       TRIDEX CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                                            December 31,
                                                                      ---------------------------------------------------------
                                                                                 2000                         1999
                                                                      ---------------------------------------------------------
<S>                                                                   <C>                                    <C>
ASSETS
Current assets:
   Cash and cash equivalents                                                  $    397                       $     367
   Restricted cash (Note 1)                                                      1,440                               0
   Receivables (Note 3)                                                          1,967                           5,352
   Inventories                                                                     393                           1,945
   Investment in  discontinued operations (Note 2)                                   0                           5,881
   Other current assets                                                            387                             353
                                                                      ---------------------------------------------------------
     Total current assets                                                        4,584                          13,898
                                                                      ---------------------------------------------------------

Plant and equipment:
   Machinery, furniture and equipment                                            1,131                           2,275
   Leasehold improvements                                                          254                             388
                                                                      ---------------------------------------------------------
                                                                                 1,385                           2,663
   Less accumulated depreciation                                                  (690)                         (1,046)
                                                                      ---------------------------------------------------------
                                                                                   695                           1,617
                                                                      ---------------------------------------------------------

Goodwill, net of accumulated amortization
   of $0 in 2000 and $2,183 in 1999 (Note 2)                                         0                          10,822
Purchased and capitalized software costs, net of
   accumulated amortization of
   $431 in 2000 and $3,400 in 1999 (Note 2)                                      5,587                           9,856
Investments and other assets                                                     1,348                             703
                                                                      ---------------------------------------------------------
                                                                           $    12,214                       $  36,896
                                                                      =========================================================

LIABILITIES AND SHAREHOLDERS' (DEFICIT)  EQUITY
Current liabilities:
   Bank loan payable (Note 5)                                                 $  3,017                       $   5,740
   Current portion of long-term debt (Note 5)                                   14,100                          20,691
   Accounts payable                                                              2,990                           3,592
   Accrued liabilities                                                           4,469                           2,411
   Deferred revenue                                                                347                             199
                                                                       --------------------------------------------------------
     Total current liabilities                                                  24,923                          32,633
                                                                       --------------------------------------------------------
Commitments and contingencies (Note 7)

Shareholders' (deficit) equity (Notes 1 and 8):
   Preferred stock, $1 par value; authorized 2,000,000 shares;
     Issued none                                                                     0                               0
   Common stock, no par value, stated value $.25; authorized
     10,000,000 shares; issued 5,812,187 and 6,526,187 shares,
      respectively                                                               1,455                           1,634
   Additional paid-in capital                                                   33,893                          33,928
   Accumulated deficit                                                         (46,742)                        (29,584)
   Receivable from sale of stock                                                  (350)                           (750)
   Common stock held in treasury, at cost, 157,898 shares                         (965)                           (965)
                                                                       --------------------------------------------------------
     Total shareholders' (deficit) equity                                      (12,709)                          4,263
                                                                       --------------------------------------------------------
                                                                               $12,214                       $  36,896
                                                                       ========================================================
</TABLE>

                 See notes to consolidated financial statements.

                                      F-2
<PAGE>

                       TRIDEX CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  (Dollars in thousands, except share amounts)

<TABLE>
<CAPTION>
                                                                                  Year Ended December 31,
                                                             ------------------------------------------------------------------
                                                                       2000                  1999                   1998
                                                             ------------------------------------------------------------------
<S>                                                          <C>                           <C>                    <C>
Net sales:
   Hardware                                                          $ 11,478               $ 25,429              $ 15,850
   Software and service                                                 5,472                  5,827                 2,046
                                                             ------------------------------------------------------------------
                                                                       16,950                 31,256                17,896
Operating costs and expenses:
   Cost of hardware sales                                               9,708                 20,202                10,778
   Cost of software and services sales                                  1,291                  1,889                 1,291
   Engineering, design and product development costs                    3,887                  3,459                 1,887
   Selling, administrative and general expenses                         5,761                  7,793                 6,150
   Depreciation and amortization                                        3,520                  3,581                 2,402
   Purchased  in-process software technology (Note 2)                       0                      0                17,600
   Impairment charge (Note 1)                                          12,300                      0                     0
                                                             ------------------------------------------------------------------
                                                                       36,467                 36,924                40,108
                                                             ------------------------------------------------------------------
Operating loss                                                        (19,517)                (5,668)              (22,212)

Other charges (income):
   Interest expense, net                                                2,896                  3,377                 1,735
   Settlement (Note 7)                                                 (1,440)                     0                     0
   Other, net                                                             893                    (50)                   22
                                                             ------------------------------------------------------------------
                                                                        2,349                  3,327                 1,757
                                                             ------------------------------------------------------------------

Loss from continuing operations before income taxes                   (21,866)                (8,995)              (23,969)
Provision (benefit) for income taxes                                      159                  7,276                (9,026)
                                                             ------------------------------------------------------------------
Net loss from continuing operations                                   (22,025)               (16,271)              (14,943)
Discontinued operations (Note 2):
   Income (loss) from discontinued operations, net of
     income taxes of $0, $1,232 and $851                                  (26)                 1,506                   797
   Gain on sale of discontinued operations                              5,588                      0                     0
                                                             ------------------------------------------------------------------
Net loss before extraordinary item                                    (16,463)               (14,765)              (14,146)
Extraordinary loss due to debt modification (Note 5)                     (695)                     0                     0
                                                             ------------------------------------------------------------------
Net loss                                                             $(17,158)              $(14,765)             $(14,146)
                                                             ------------------------------------------------------------------
Loss per share - basic and diluted:
     Loss from continuing operations                                 $  (3.53)              $  (2.56)             $  (2.46)
     Income from discontinued operations                                 0.89                   0.24                  0.13
     Extraordinary loss                                                 (0.11)                     0                     0
                                                             ------------------------------------------------------------------
     Net loss                                                        $  (2.75)              $  (2.32)             $  (2.33)
                                                             ==================================================================
Weighted average shares outstanding:
     Basic and diluted                                              6,249,000              6,368,000             6,077,000
                                                             ==================================================================
</TABLE>

                 See notes to consolidated financial statements.

                                      F-3
<PAGE>

                       TRIDEX CORPORATION AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF SHAREHOLDERS' (DEFICIT) EQUITY

                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                               Common Stock Held      Additional                  Receivable
                                      Common Stock                In Treasury           Paid-In     Accumulated   From Sale
                                   Shares        Amount       Shares       Amount       Capital       Deficit       Of Stock
                                -------------- ----------- ------------- ------------ ------------ -------------- -------------
<S>                              <C>            <C>        <C>          <C>          <C>           <C>             <C>
Balance, December 31, 1997       5,497,808        $1,377     146,398       $(942)       $25,273        $(673)         $(816)

Exercise of stock options           28,665             7                                     74                          15

Issuance of acquisition
   shares                          714,000           179                                  4,819

Sale of shares                     285,714            71                                  1,929

Forfeiture of stock incentive
   compensation shares                                        11,500         (23)

Tax benefit related to
   employee stock sales                                                                       5

Warrants issued                                                                           1,228

Net loss                                                                                             (14,146)
                                -----------------------------------------------------------------------------------------------
Balance, December 31, 1998       6,526,187         1,634     157,898        (965)        33,328      (14,819)          (801)

Warrants issued                                                                             600

Collection of receivable                                                                                                 51

Net loss                                                                                             (14,765)
                                -----------------------------------------------------------------------------------------------
Balance, December 31, 1999       6,526,187         1,634     157,898        (965)        33,928      (29,584)          (750)

Settlement (Note 7)               (714,000)         (179)                                   (35)

Collection of receivable                                                                                                400

Net loss                                                                                             (17,158)
                                -----------------------------------------------------------------------------------------------
Balance, December 31, 2000       5,812,187        $1,455     157,898    $   (965)     $  33,893    $ (46,742)    $     (350)
                                ===============================================================================================
</TABLE>

                                      F-4
<PAGE>

                       TRIDEX CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                                       Year Ended December 31,
                                                                        -------------------------------------------------------
                                                                              2000               1999              1998
                                                                        -------------------------------------------------------
<S>                                                                          <C>                 <C>               <C>
Cash flows from operating activities:
   Net loss                                                                   $ (17,158)         $ (14,765)        $ (14,146)
     Adjustments to reconcile net income to net cash provided by
       (used in) operating activities:
         Depreciation and amortization                                            3,536              3,931             2,402
         Debt discount amortization                                                 714                300               119
         Extraordinary loss                                                         695                  0                 0
         Charge for purchased in-process software technology                          0                  0            17,600
         Deferred income taxes                                                        0              8,848            (8,384)
         Provision for doubtful accounts                                           (214)               766               290
         Loss (gain) on disposal of assets                                          294               (155)
         Gain on sale of discontinued operations                                 (5,588)                 0                 0
         Loss (gain) from discontinued operations                                    26             (1,506)             (797)
         Non-cash portion of settlement (Note 7)                                   (214)                 0                 0
         Impairment charge (Note 1)                                              12,300                  0                 0
         Changes in operating assets and liabilities:
           Receivables                                                            3,599             (2,353)              245
           Inventory                                                              1,552              1,411               502
           Other assets                                                            (695)              (220)             (205)
           Accounts payable, accrued liabilities, and deferred
             revenue                                                              1,604                306             1,416
                                                                        -------------------------------------------------------
              Net cash provided by (used in) operating activities                   451             (3,437)             (958)
                                                                        -------------------------------------------------------
Cash flows from investing activities:
   Purchases of plant and equipment                                                (101)              (132)             (555)
   Capitalized software development costs                                             0               (725)           (1,731)
   Net cash paid for acquisition                                                      0                  0           (42,596)
   Proceeds from sale of assets                                                       0                302                 0
   Proceeds from sale of discontinued operations                                 11,443                  0               855
                                                                        -------------------------------------------------------
     Net cash provided by (used in) provided by investing activities             11,342               (555)          (44,027)
                                                                        -------------------------------------------------------
Cash flows from financing activities:
   Net change in borrowings under line of credit                                 (2,723)               984             4,756
   Borrowings of long-term debt                                                       0                  0            23,000
   Principal payments on long-term borrowings                                    (8,000)                 0              (900)
   Net decrease in short term investments                                             0                  0             4,403
   Proceeds from issuance of shares and exercise of stock options and
     warrants                                                                         0                 51             2,101
   Net transactions with discontinued operations                                      0              3,306              (196)
   Collection of stock sale receivable                                              400                  0                 0
   Restricted cash (Note 7)                                                      (1,440)                 0                 0
                                                                        -------------------------------------------------------
     Net cash (used in) provided by financing activities                        (11,763)             4,341            33,164
                                                                        -------------------------------------------------------
Increase (decrease) in cash and cash equivalents                                     30                349           (11,821)
Cash and cash equivalents at beginning of year                                      367                 18            11,839
                                                                        -------------------------------------------------------
Cash and cash equivalents at end of year                                      $     397          $     367         $      18
                                                                        =======================================================
Supplemental cash flow information
   Interest paid                                                              $     997          $   1,974         $   1,649
Supplemental non-cash investing and financing activities:                             0                  0                 0
   Warrants issued concurrent with debt                                       $       0          $     600         $   1,228
   Stock issued (returned) for acquisition                                    $    (214)         $       0         $   4,998
</TABLE>

                 See notes to consolidated financial statements.

                                      F-5
<PAGE>

1.     BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

       BUSINESS: Tridex Corporation (the "Company"), through its wholly owned
       subsidiary, Progressive Software, Inc. ("Progressive"), is a leading
       designer, developer, and marketer of specialized point-of-sale, back
       office and enterprise technology for the food service industry. As
       described in Note 2, the Company disposed of its Ultimate Technology
       Corporation subsidiary ("Ultimate") a leading developer, manufacturer and
       marketer of high quality hardware systems and components for the
       point-of-sale industry in February 2000.

       The Company has experienced net losses from continuing operations of
       approximately $22.0 million and $16.3 million in each of the years ended
       December 31, 2000 and 1999, respectively. In addition, all of the
       Company's debt matured on December 31, 2000 and no agreements with
       respect to extension or terms under which any extensions may be offered
       has been reached with the holders of the matured debt. These matters, and
       their effect on the Company's liquidity, raise substantial doubt about
       the Company's ability to continue as a going concern. The consolidated
       financial statements do not include any adjustments to reflect the
       possible future effects on the recoverability and classification of
       assets or the amounts and classification of liabilities that might result
       from this uncertainty.

       As noted above, the Company sold Ultimate on February 18, 2000. The sale
       generated approximately $11.8 million in cash proceeds after transaction
       expenses. The Company used $11.0 million of the proceeds to pay down
       outstanding debt from Fleet National Bank. During 2000, the Company
       reduced overhead costs at its Westport headquarters facility and
       instituted a substantial reduction-in-force at Progressive.

       PRINCIPLES OF CONSOLIDATION: The accompanying consolidated financial
       statements include the accounts of the Company after elimination of all
       material intercompany accounts and transactions. See Note 2 for treatment
       of discontinued operations.

       CASH AND CASH EQUIVALENTS: Cash equivalents consist primarily of
       certificates of deposit with original maturities of less than ninety days
       at date of acquisition and are carried at cost, which approximates market
       value.

       RESTRICTED CASH: Restricted cash represents the proceeds received under
       the terms of the Smith settlement, as discussed in Note 7. The debtholder
       requires the value of the proceeds to be applied against its outstanding
       debt. The proceeds have also been attached by the plaintiff in the Foley
       matter (see Note 7).

       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. Significant estimates have been
       made in allowances for doubtful accounts, inventory valuation,
       depreciable lives of long-lived assets, investments and accrued
       liabilities. Actual results could differ from those estimates.

       FOREIGN CURRENCY: The financial position and results of operations of the
       Company's foreign subsidiary are measured using local currency as the
       functional currency. Assets and liabilities of the subsidiary have been
       translated at current exchange rates, and related revenues and expenses
       have been translated at weighted average exchange rates.

       INVENTORIES: Inventories are stated at the lower of cost (principally
       first-in, first-out) or market and consist principally of finished goods
       inventory.

       PLANT AND EQUIPMENT AND DEPRECIATION: Plant and equipment and leasehold
       improvements are stated at cost. Depreciation is provided for primarily
       by the straight-line method over the estimated useful lives. The
       estimated useful life of machinery, furniture and equipment is five to
       ten years. Leasehold improvements are amortized over the shorter of the
       term of the lease or the useful life of the asset. The Company
       periodically reviews the carrying value of its plant and equipment assets
       whenever events or changes in circumstances indicate that the carrying
       amount may not be recoverable, in accordance with Statement of Financial
       Accounting Standards No. 121, "Accounting for the Impairment of
       Long-Lived Assets and for Long-Lived Assets to be Disposed Of". As
       discussed below, the Company completed an impairment evaluation which
       resulted in the write-down of $294,000 of plant and equipment assets.

                                      F-6
<PAGE>

       INTANGIBLE ASSETS AND IMPAIRMENT CHARGE:

                GOODWILL: Goodwill was zero at December 31, 2000 and $10.8
                million at December 31, 1999. Goodwill originated from the
                acquisition of Progressive in 1998 and was amortized on the
                straight-line method over ten years prior to the impairment
                charge discussed below.

                The Company periodically reviews goodwill, intangibles and other
                long-term assets to assess recoverability based upon
                expectations of non-discounted cash flows from operations. The
                operating results of Progressive during fiscal 2000 were below
                management's and as a result, in August 2000, management
                instituted a reduction-in-force at Progressive, revised its
                operating forecasts and initiated an evaluation of the carrying
                value of long-lived assets. The evaluation commenced with
                estimates of the future cash flows, on an undiscounted basis,
                expected to result from the assets and their eventual
                disposition. Based on this evaluation, management concluded that
                an impairment of the acquired assets had occurred and recorded a
                write down of such assets to fair value. The fair values of the
                long-lived assets were estimated using the present value of
                expected future cash flows expected from such assets, discounted
                at a rate of return of 18%. Considerable management judgment was
                involved in estimating fair value and, therefore, operating
                results could vary significantly from management's estimates. In
                accordance with the provisions of the Statement of Financial
                Accounting Standards No. 121, "Accounting for the Impairment of
                Long-Lived Assets and for Long-Lived Assets to be Disposed Of",
                the Company recorded an impairment charge of $12,300,000,
                consisting of $9,847,000 of goodwill, $2,159,000 of purchased
                technology and internally developed software costs and $294,000
                of plant and equipment. Following the impairment charge, the
                carrying value of goodwill is zero.

                PURCHASED TECHNOLOGY AND CAPITALIZED SOFTWARE COSTS: The Company
                capitalizes software development costs in accordance with
                Statement of Financial Accounting Standards Number 86
                "Accounting for the Costs of Computer Software to Be Sold
                Leased, or Otherwise Marketed" (SFAS 86). The capitalization of
                software development costs begins when the technological
                feasibility of a product has been established by development of
                a working model and ends when the product is available for
                general release to customers. The establishment of technological
                feasibility and the ongoing assessment of recoverability of
                capitalized software development costs require considerable
                judgment by management with respect to certain external factors,
                including, but not limited to, anticipated future revenues,
                estimated economic life and changes in software and hardware
                technologies. Annual amortization charged to cost of sales are
                computed on an individual product basis and are the greater of:
                (a) the ratio of current gross revenues for a product to the
                total current and anticipated future gross revenues for the
                product, or (b) the straight-line method over the estimated
                economic life of the product, which is generally estimated to be
                5 years. The Company also capitalizes purchased technology as
                discussed in Note 2. As noted above, the Company completed an
                impairment evaluation which resulted in the write-down of
                $2,159,000 of purchased technology and capitalized software.

                As of December 31, 2000 and 1999, capitalized software
                development costs, net of accumulated amortization, were
                $1,204,000 and $2,106,000 respectively. Amortization expense
                excluding the write-down related to the capitalized software
                development costs was $453,000, $350,000 and $0 for the years
                ended December 31, 2000, 1999 and 1998, respectively. As of
                December 31, 2000 and 1999, purchased technology associated with
                the acquisition of Progressive were $4,383,000 and $7,750,000,
                net of accumulated amortization, respectively. Amortization
                expense, excluding the write down, related to the purchased
                technology was $1,673,000, $1,838,000 and $1,212,000 for the
                years ended December 31, 2000, 1999 and 1998, respectively.

       RESEARCH AND DEVELOPMENT: All research and development expenditures are
       charged to expense in the period incurred.

       OTHER LONG-TERM ASSETS: Included in other long-term assets at December
       31, 2000 and 1999 is a note receivable from a corporate officer of
       $125,000, which bears interest at the prime rate. Also included at
       December 31, 2000 and 1999 is $850,000 and $500,000, respectively,
       representing the value assigned by the Company to 6,750,000 and 2,500,000
       membership interests in RetailDNA LLC, a privately held company involved
       in the development of specialty software products for the restaurant
       industry. The Company received such interests in return for having
       provided certain custom software development. The Company accounted for
       the exchange in accordance with APB #29, "Accounting for Nonmonetary
       Transactions". Accordingly, $350,000 and $500,000 were netted against
       engineering, design and product development expense in 2000 and 1999,
       respectively.

       RECEIVABLE FROM SALE OF STOCK: In connection with the exercise of options
       in 1997, the Company offered loans to all employees whose total exercise
       price of options under the Tridex Corporation 1989 Long Term Incentive
       Plan (the "1989 Plan") exceeded $50,000. At December 31, 2000 one such
       loan was outstanding in the amount of $350,000. The loan is a full
       recourse loan which expired in June 2000, bears interest at the rate of
       7.577% and is secured by a

                                      F-7
<PAGE>

       pledge of the shares acquired by the employee through the exercise of the
       options. The Company has taken no action to modify the terms of the loan
       or demand payment or repatriation of the shares acquired by the employee.

       REVENUE RECOGNITION: Revenue is generated from sales of hardware systems
       and components and from licensing software systems under noncancelable
       license agreements through direct and indirect channels. The Company also
       generates revenues from custom software design, customer support,
       maintenance and training services.

       Revenue on software sales is recognized in accordance with Statement of
       Position SOP 97-2, "Software Revenue Recognition" (SOP 97-2). Under SOP
       97-2, software license revenues through the Company's direct sales
       channels are recognized when a noncancelable license agreement has been
       executed, fees are fixed and determinable, the software has been
       delivered, accepted by the customer if acceptance is required by the
       contract and other than perfunctory, and collection is considered
       probable. Software license revenues through the Company's indirect sales
       channel are recognized as such fees are reported to the Company.

       Customer support and maintenance revenues are recognized ratably over the
       contractual period associated with them, generally one year. Revenues
       from other services are recognized as services are performed. The Company
       may enter into contracts which provide hardware, software license, and
       service elements. As such service elements are not essential to
       functionality of the software, in accordance with SOP 97-2, the hardware
       and license fees are generally recognized upon delivery of the respective
       elements and the service revenues are recognized when performed.
       Deferred revenue is comprised of payments received in advance.

       CONCENTRATION OF CREDIT RISK: During the year ended December 31, 2000,
       sales to the Company's three largest customers accounted for
       approximately 32%, 18% and 9%, respectively, of the Company's net sales.
       During the year ended December 31, 1999, sales to the three largest
       customers accounted for approximately 35%, 13% and 13%, respectively, of
       the Company's net sales. During the year ended December 31, 1998, sales
       to the Company's two largest customers accounted for approximately 25%
       and 15%, respectively, of the Company's net sales.

       STOCK BASED COMPENSATION: The Company applies APB Opinion 25 and related
       interpretations in accounting for its stock option plan. Under APB 25,
       compensation expense is recognized to the extent that the fair market
       value of the underlying stock on the date of grant exceeds the exercise
       price of the employee stock option. Additional disclosures required under
       Financial Accounting Standards Board Statement No. 123 "Accounting for
       Stock-Based Compensation" (SFAS 123), are included in Note 8.

       RECENT ACCOUNTING PRONOUNCEMENTS: In March 2000, the Financial Accounting
       Standards Board issued Interpretation No. 44, "Accounting for Certain
       Transactions Involving Stock Compensation - an Interpretation of APB
       Opinion No. 25". The interpretation clarifies the application of APB
       Opinion No. 25 in specified events, as defined. The adoption of this
       interpretation has not had a material effect on the accompanying
       financial statements.

       In December 1999, the Securities and Exchange Commission issued Staff
       Accounting Bulletin ("SAB") No. 101, "Revenue Recognition". This
       bulletin, as amended by SAB 101A and SAB 101B, summarizes views of the
       Staff on the measurement and timing of revenue recognition in financial
       statements of public companies. We believe that our current revenue
       recognition policy complies with the guidelines in the bulletin.

       In June 1998, the Financial Accounting Standards Board issued Statement
       of Financial Accounting Standard ("SFAS") No. 133, Accounting for
       Derivative Instruments and Hedging Activities. Tridex is required to
       adopt SFAS No. 133, as amended by SFAS No. 137 and SFAS No. 138, in
       fiscal 2001. SFAS No. 133 establishes methods of accounting for
       derivative financial instruments and hedging activities related to those
       instruments as well as other hedging activities. The Company has not
       entered into any derivative financial instruments or hedging activities.
       As a result, management believes adoption of SFAS No. 133 will not have a
       material impact on the financial statements.

       FAIR VALUE OF FINANCIAL INSTRUMENTS: The carrying amounts of the
       Company's cash and cash equivalents, accounts receivable, accounts
       payable, accrued liabilities and debt are carried at cost which
       approximates their fair value.

       INCOME TAXES: Income tax expense is based on estimated taxes payable or
       refundable on a tax return basis for the current year and changes in the
       amount of deferred tax assets and liabilities during the year. Deferred
       income taxes are provided for revenue and expenses that are recognized in
       different periods for income tax and financial statement purposes. The
       Company accounts for income taxes in accordance with FAS 109 "Accounting
       for Income Taxes," which mandates the liability method for computing
       deferred income taxes. The objective of the liability method is to

                                      F-8
<PAGE>

       recognize the amount of current and deferred taxes payable or refundable
       at the financial statement date resulting from all events that have been
       recognized in the financial statement based upon the provisions of
       enacted tax laws. See Note 9 for a further discussion.

       EARNINGS (LOSS) PER COMMON SHARE: Basic earnings (loss) per common share
       is based on the weighted average number of common shares outstanding
       during the period. Diluted earnings per common share assumes the exercise
       of options and warrants and the conversion of dilutive securities, when
       the result is dilutive. For the years ending December 31, 2000, 1999 and
       1998, the effects of potential dilutive common shares outstanding have
       been excluded as they would be anti-dilutive in the loss per share
       calculation and accordingly, the basic and diluted per share amounts were
       the same.

2.       ACQUISITIONS AND DISPOSITIONS:

       In the quarter ended December 31, 1999, management committed to sell
       Ultimate to UTC Holding Company, Inc., an affiliate of CFG Management II,
       L.P. and completed the sale on February 18, 2000 for approximately
       $12,544,000 in cash. The gain on the sale was $5,588,000. As described in
       Note 5, the Company used $8,000,000 of the sale proceeds to repay a
       portion of the Fleet Term Loan and $3,000,000 to repay a portion of the
       Working Capital Facility.

       The Consolidated Financial Statements have been reclassified to present
       the results of operations of Ultimate as discontinued operations. Summary
       results of Ultimate for each of the last three years until its sale are
       summarized below.

<TABLE>
<CAPTION>
                                                                          Year Ended December 31,
                                                 ----------------------------------------------------------------------------
                                                          2000                      1999                      1998
                                                 ----------------------------------------------------------------------------
                                                                  (Dollars in thousands, except share amounts)
        <S>                                              <C>                     <C>                       <C>
        Net sales                                        $   2,683               $  29,490                 $  25,608
       Operating income (loss)                                 (26)                  2,738                     1,671
       Net income (loss)                                       (26)                  2,084                       879
       Earnings (loss) per share basic                       (0.01)                   0.33                      0.14
</TABLE>

       On April 17, 1998, the Company purchased all of the issued and
       outstanding shares of privately held Progressive, a software and systems
       provider for the restaurant and specialty retail industries. The purchase
       price of Progressive was $47,594,000 including acquisition costs. The
       acquisition of Progressive was accounted for by the purchase method.
       Accordingly, the results of operations of Progressive have been included
       in the accompanying consolidated financial statements from the date of
       acquisition.

       A valuation of all intangible assets of Progressive was performed by an
       independent appraisal firm in conformity with the Uniform Standards of
       Professional Appraisal Practice of the Appraisal Foundation. The
       intangible assets included in-process software technology projects, among
       other assets, which were related to research and development that had not
       reached technological feasibility and for which there was no alternative
       future use.

       The amount of the purchase price allocated to in-process research and
       development was determined by estimating that the stage of completion at
       the date of acquisition was 89%, estimating cash flows resulting from the
       expected revenues generated from the project, and discounting the net
       cash flows back to their present value using a discount rate of 23%,
       which represents an appropriate risk premium to the Company's weighted
       average cost of capital. In process technology under development at the
       date of acquisition that had not established technological feasibility
       and for which no alternative use was identified were written off in
       accordance with generally accepted accounting principles. If this project
       is not successfully developed, the Company may not realize the value
       assigned to the in-process research and development projects. The
       goodwill and other intangibles and purchased existing and core technology
       are being amortized over five to ten years. The allocation of the
       purchase price was as follows:

                                      F-9
<PAGE>

<TABLE>
       <S>                                            <C>
       Tangible net assets                            $         6,475
       Purchased in process software technology                17,600
       Purchased existing and core technology                  10,800
       Goodwill and other intangibles                          12,719
                                                      -----------------------
                                                      $        47,594
                                                      =======================
</TABLE>

       The following unaudited pro forma data reflect the acquisition of
       Progressive as if the acquisition had occurred at the beginning of 1998,
       but exclude the one-time charge for in-process software technology,
       discussed above. The pro forma financial information is not necessarily
       indicative of the combined results that would have occurred had the
       acquisition taken place at the beginning of the period, nor is it
       necessarily indicative of the results that may occur in the future.

<TABLE>
<CAPTION>
                                                                           Year Ended
                                                                        December 31, 1998
                                                             ----------------------------------------
                                                                     (Dollars in Thousands,
                                                                      Except share amounts)
       <S>                                                           <C>
       Net sales                                                     $        24,362
       Operating loss                                                         (6,139)
       Loss from continuing operations                                       (13,939)
       Loss from continuing operations, per share - basic                      (0.78)
</TABLE>

3.     RECEIVABLES:
       Receivables are net of the allowance for doubtful accounts. The
       reconciliation of the allowance for doubtful accounts is as follows:

<TABLE>
<CAPTION>
                                                              Year Ended December 31,
                                                 --------------------------------------------------
                                                           2000                     1999
                                                 --------------------------------------------------
                                                              (Dollars in thousands)
       <S>                                              <C>                       <C>
       Balance at beginning of year                     $     975                  $     290
          Provision for doubtful accounts                    (214)                       766
          Accounts written off, net                          (611)                       (81)
                                                 --------------------------------------------------
       Balance at end of year                           $     150                  $     975
                                                 ==================================================
</TABLE>

4.       ACCRUED LIABILITIES:

         The components of accrued liabilities are:

<TABLE>
<CAPTION>
                                                              Year Ended December 31,
                                                 --------------------------------------------------
                                                           2000                     1999
                                                 --------------------------------------------------
                                                              (Dollars in thousands)
<S>                                                     <C>                       <C>
         Interest                                       $   2,656                 $   1,413
         Legal and environmental matters                      807                       479
         Compensation                                         181                        97
         Other                                                825                       422
                                                 --------------------------------------------------
                                                        $   4,469                 $   2,411
                                                 ==================================================
</TABLE>

                                      F-10
<PAGE>

5.     BANK CREDIT AGREEMENT AND SUBORDINATED DEBT:

       The components of debt are:

<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                       ---------------------------------------------------------------------
                                                                     2000                               1999
                                                       ---------------------------------------------------------------------
                                                                              (Dollars in thousands)
<S>                                                    <C>                                            <C>
       Term loan payable                               $       3,100                                  $         11,100
       Senior subordinated notes, net of discount             11,000                                             9,591
                                                       ---------------------------------------------------------------------
                                                              14,100                                            20,691
       Current portion                                        14,100                                            20,691
                                                       ---------------------------------------------------------------------
       Long term portion                               $           0                                  $              0
                                                       =====================================================================
</TABLE>

       In April 1998, the Company entered into a Credit Agreement with Fleet
       National Bank which provided a $12.0 million Senior Term Loan (the "Term
       Loan") with a maturity of March 31, 2003 and an $8.0 million Working
       Capital Facility ("WCF"). At the same time, the Company sold Senior
       Subordinated Notes due April 17, 2005 (the "Notes") in the principal
       amount of $11.0 million to Massachusetts Mutual Life Insurance Company
       and affiliates. The proceeds of the Senior Term Loan and the Senior
       Subordinated Notes were used in the acquisition of Progressive. The Term
       Loan and WCF are secured by a first priority security interest in
       substantially all of the Company's assets. The Credit Agreement, as
       amended, permits the Company to borrow up to $6,000,000 under the WCF,
       subject to the eligible borrowing base limitations, establishes interest
       rate margins of 2.5% on prime rate-based loans and 4.75% on LIBOR-based
       loans and requires minimum monthly maintenance fees of $3,000. If loans
       under the WCF exceed borrowing base capacity, the Company will incur an
       additional interest rate margin of 2.0%. In February 2000, the Company
       used a portion of the proceeds from the sale of Ultimate to retire $8.0
       million principal amount of the Senior Term Loan. At December 31, 2000
       the interest rates were 11.5%, 11.4% and 12.0% on the Term Loan, WCF and
       Notes, respectively.

       The Company issued to the MassMutual Investors on May 27, 1998 warrants
       to purchase 350,931 shares of the Company's common stock at $7.00 per
       share. The estimated fair market value of the warrants of $1,228,000 was
       recorded as a discount to the principal amount of the outstanding Notes
       and was being amortized to interest expense over the term of the Notes
       using the interest rate method. In consideration for a March 26, 1999
       amendment to the Notes and in exchange for the warrant issued in 1998,
       the Company issued new stock purchase warrants to the MassMutual
       Investors to purchase 800,000 shares of common stock at $2.03 per share.
       The incremental estimated fair value of the new warrants over the
       estimated fair value of the old warrants, $600,000, was recorded as
       additional debt discount.

       On February 18, 2000, MassMutual and its affiliates agreed to certain
       modifications of the Notes, including the acceleration of their maturity
       to December 31, 2000. That acceleration of the maturity of the Notes
       constituted a substantial debt modification, which under EITF 96-19
       "Debtor's Accounting for a Modification or Exchange of Debt Instruments",
       requires the Notes to be adjusted to their fair value as of the date of
       the February 18, 2000 amendment. The Company calculated the present value
       of the principal and interest due December 31, 2000 using the remaining
       maturity period of the Notes and an estimated fair value interest rate at
       the modification date. As a result of this modification, the Company
       recognized a debt extinguishment loss of $695,000 which was recorded as
       an extraordinary item in the quarter ending March 31, 2000.

       As reported previously, the Company, at various times, has been in
       violation of the covenants of both the Term Loan and the Notes, resulting
       in several modifications of the terms of each, including an acceleration
       of the maturities of both loans to December, 31, 2000. The Company does
       not have the capability to repay or replace either the Term Loan or the
       Notes. As a result, both credit facilities are due upon demand and that
       fact raises substantial doubt about the Company's ability to continue as
       a going concern. The Term Loan, WCF and Notes are reflected as current
       liabilities in the Company's financial statements.

                                      F-11
<PAGE>

       The Company has been advised that, in December 2000, Fleet National Bank
       sold its interest in the Term Loan and WCF to ARK CLO 2000-1, Limited.
       Inasmuch as the Company, at present, still lacks the capability to repay
       or replace its existing credit facilities, it intends to seek
       accommodation with its lenders which will allow it to continue operating
       while seeking either a modification to, or replacement of, the
       facilities. However, there can be no assurance that the Company will be
       successful in such efforts or as to what form such modification or
       replacement might be.

6.     PENSION PLAN:

       During the quarter ended September 30, 1999, the Company's obligations
       under a non-qualified unfunded pension arrangement for Alvin Lukash, a
       shareholder and former corporate officer and Director Emeritus, ceased
       due to the death of Mr. Lukash. The unfunded accumulated benefit
       obligation at the time of his death, approximately $500,000, was reversed
       and recorded as a reduction of pension expense.

7.     COMMITMENTS AND CONTINGENCIES:

       (a)    LEASE OBLIGATIONS:

       At December 31, 2000, the Company was lessee on long term operating
       leases for real property. The terms of certain leases provide for
       escalating rent payments in later years of the lease as well as payment
       of minimum rent and real estate taxes. Rent expense amounted to
       approximately $362,000 in 2000, $441,000 in 1999 and $434,000 in 1998.
       Minimum aggregate rental payments required under operating leases that
       have initial or remaining non-cancelable lease terms in excess of one
       year as of December 31, 2000 are as follows: approximately $420,000 in
       2001, approximately $432,000 in 2002, approximately $520,000 in 2003,
       approximately $536,000 in 2004 and approximately $391,000 in 2005.

       (b)    LEGAL PROCEEDINGS:

       In April, 1998, the Company acquired all of the common stock of
       Progressive Software, Inc. from Paul J. Smith ("Smith"), for a total
       purchase price of $47,594,000 consisting of 714,000 shares of the
       Company's common stock, valued at $4,998,000, and the balance in cash. As
       a part of the transaction, the parties entered into an Escrow Agreement
       with respect to possible future liabilities related to sales taxes in
       various jurisdictions where Progressive had done business. Additionally,
       the Company entered into a three year lease (the "Lease") with a
       partnership in which Smith is a principal to occupy the primary office
       facility used by Progressive. Subsequent to the acquisition, the Company
       filed for arbitration against Smith seeking a reduction in the purchase
       price paid by the Company. In January, 1999, Smith filed a complaint
       seeking damages up to $5,000,000 for the refusal by the Company to
       register the shares of common stock received by him as a part of the
       purchase price.

       On October 31, 2000, the Company and Smith entered into a Settlement
       Agreement under which all of the claims pending between the parties were
       settled. Pursuant to the Settlement Agreement, Smith returned to the
       Company the 714,000 shares of the Company's common stock issued to him,
       originally valued at $7.00 per share, as well as $1,226,000 in cash. The
       Settlement Agreement further provided that effective October 1, 2000, no
       further rent would be due under the Lease, that the Lease would terminate
       on December 31, 2000 and that the Company had no further obligation
       pursuant to the Escrow Agreement. Effective upon Smith's returning the
       714,000 shares of common stock, the Company's outstanding shares of
       common stock decreased to 5,654,289. The settlement has been reflected in
       the Company's financial statements in the quarter ending December 31,
       2000 as other income in the amount of $1,440,200, of which $214,200 has
       been attributed to the value of the stock received. (See Note 1
       "Restricted Cash")

       Allu Realty ("Allu"), a Massachusetts business trust owned by the
       Company, is the former owner of

                                      F-12
<PAGE>

       land located at 100 Foley Street, Somerville, Massachusetts (the "Site").
       Allu sold the property to 100 Foley Street Incorporated ("Foley"), an
       unrelated entity.

       In 1984, Allu and the Company disclosed to the Massachusetts Department
       of the Attorney General the existence of chromium, oil and grease at the
       Site. As a result, the Environmental Protection Division of the
       Department of the Attorney General and the Massachusetts Department of
       Environmental Protection conducted an investigation of the Site. In 1993,
       the Company entered into an agreement with Foley pursuant to which the
       Company and Foley agreed to pay 75% and 25%, respectively, of the costs
       incurred after January 1, 1992 in connection with the investigation and
       remediation of the Site (the "Site Participation Agreement"). The Site
       Participation Agreement also provided that, to the extent there are
       available proceeds from the sale of the Site, the Company would be
       reimbursed approximately $200,000 of the $250,000 it expended in
       connection with the Site prior to January 1, 1992. As of December 31,
       2000, the Company had spent approximately $766,000 in connection with the
       Site.

       In 1997, Foley sold the Site to an affiliate of Stop & Shop, Inc. ("Stop
       & Shop"). As part of the sale transaction, Foley was required to place
       approximately $875,000 in escrow (the "Stop & Shop Escrow") to cover the
       costs of remediation, which was completed in 1999. In 1997, Foley brought
       suit in the United States District Court, District of Massachusetts,
       against the Company claiming that the Company failed to contribute its
       shares of the remediation costs pursuant to the Site Participation
       Agreement. Foley asserted that Allu and the Company remain liable for
       payment of certain costs associated with the remediation of the Site
       after its sale to Stop & Shop, and claimed that it is entitled to
       reimbursement from the Company of a portion of the Stop & Shop Escrow.
       The Company filed a counterclaim, and sought reimbursement of funds
       previously expended in accordance with the Site Participation Agreement.
       Mediation between the parties was not successful and in July 2000, after
       trial of the case, the jury made certain factual findings upholding the
       parties' obligations under the Site Participation Agreement, including
       the Company's obligation to pay 75% of the remediation costs and the
       obligation of Foley to reimburse the Company out of sale proceeds.

       On October 16, 2000, the United States District Court for Massachusetts
       entered judgment against the Company in the amount of approximately
       $791,000, of which approximately $156,000 represented legal fees awarded
       to the opposing party and approximately $108,000 represented interest.
       The Company has filed various post-trial motions seeking to vacate the
       judgment or to have it modified. If these motions are unsuccessful, the
       Company intends to appeal the decision of the Court. Subsequently, Foley
       attached $791,000 in cash being held for the account of the Company by a
       third party. The Company has moved to discharge the attachment, which
       motion has not yet been heard. As of December 31, 2000, the Company had
       accrued $791,000 with respect to its potential liability under this
       judgment. The Company is unable to forecast when this litigation will
       finally be resolved or the amount of its ultimate exposure with respect
       thereto.

  8.   STOCK OPTIONS AND WARRANTS:

       The Company presently maintains three stock option plans for employees
       and non-employee directors as follows:

       1998 NON-EXECUTIVE LONG TERM INCENTIVE PLAN

       The 1998 Long Term Incentive Plan (the "1998 Non-Executive Plan") was
       approved by the shareholders of the Company at the Annual Meeting held on
       May 27, 1998. The 1998 Non-Executive Plan permits stock-based incentive
       compensation in the form of: (a) stock options, (b) stock appreciation
       rights, (c) restricted stock, (d) deferred stock, (e) stock purchase
       rights and (f) other stock-based compensation. Pursuant to the 1998
       Non-Executive Plan, up to 600,000 shares of common stock may be
       distributed to key non-executive employees of the Company. Options
       granted are at prices equal to 100% of the fair market value of the
       common stock at the date of grant. Under APB 25, when the exercise price
       of employee stock options equals the fair market value of the underlying
       stock on the date of grant, no compensation expense is

                                      F-13
<PAGE>

       recognized. Options granted are exercisable at the discretion of the
       Stock Option Committee, but in no event shall the period be for more than
       ten years. Ninety days after an employee's termination, the outstanding
       options are canceled. At December 31, 2000, the Company had reserved
       600,000 shares of common stock for issuance upon the exercise of options
       granted under the 1998 Non-Executive Plan. At December 31, 2000, options
       for 179,500 shares were outstanding under the 1998 Non-Executive Plan at
       exercise prices ranging from $0.75 to $7.00 per share. These options, of
       which 48,821 were exercisable, have a weighted average exercise price of
       $5.41 per share and a weighted average remaining contractual life of 8.7
       years.

       1997 LONG TERM INCENTIVE PLAN

       The 1997 Long Term Incentive Plan (the "1997 Plan") was approved by the
       shareholders of the Company at the Annual Meeting held on May 14, 1997
       and amended at the Annual Meeting on May 27, 1998 to increase the number
       of authorized shares. The 1997 Plan permits stock-based incentive
       compensation in the form of: (a) stock options, (b) stock appreciation
       rights, (c) restricted stock, (d) deferred stock, (e) stock purchase
       rights and (f) other stock-based compensation. Pursuant to the 1997 Plan,
       as amended, up to 1,000,000 shares of common stock may be distributed to
       officers and key employees of the Company. Options granted are at prices
       equal to 100% of the fair market value of the common stock at the date of
       grant. Under APB 25 when the exercise price of employee stock options
       equals the fair market value of the underlying stock on the date of
       grant, no compensation expense is recognized. Options granted are
       exercisable at the discretion of the Stock Option Committee of the Board,
       but in no event shall the period be for more than ten years. Ninety days
       after an employee's termination, the outstanding options are canceled. At
       December 31, 2000, the Company had reserved 971,335 shares of common
       stock for issuance upon the exercise of options granted under the 1997
       Plan. At December 31, 2000, options for 452,666 shares were outstanding
       under the 1997 Plan at exercise prices ranging from $0.81 to $7.50 per
       share. These options, of which 92,667 were exercisable, have a weighted
       average exercise price of $3.02 per share and a weighted average
       remaining contractual life of 7.8 years.

       NON-EMPLOYEE DIRECTORS PLAN

       The Non-Employee Directors' Stock Plan (the "Directors' Plan") was
       approved by the Shareholders of the Company at the Annual Meeting held on
       May 14, 1997. The Directors' Plan permits the issuance to non-employee
       directors of the Company of options for up to 100,000 shares of the
       Company's common stock. Options issued under the Directors' Plan do not
       qualify as incentive options under Section 422 of the Internal Revenue
       Code. Options to purchase 10,000 shares of the Company's common stock
       were granted to each non-employee director upon the effective date of the
       Directors' Plan. Persons subsequently elected as non-employee directors
       will be granted options to purchase 10,000 shares on the date of their
       election. Thereafter, on the date of the Company's Annual Meeting of
       Shareholders, each non-employee director will be granted an option to
       purchase 3,000 shares of common stock. Options become exercisable in
       three equal annual installments and may be exercised within ten years of
       the date of the grant. At December 31, 2000, the Company had reserved
       100,000 shares of common stock for issuance upon the exercise of options
       granted under the Directors' Plan. At December 31, 2000, options for
       57,000 shares were outstanding under the Directors Plan at exercise
       prices ranging from $0.53 to $6.75 per share. These options, of which
       38,996 were exercisable, have a weighted average exercise price of $3.41
       per share and a weighted average remaining contractual life of 7.3 years.

       WARRANTS

       As of December 31, 2000 the Company had outstanding stock purchase
       warrants for 800,000 shares of common stock issued to the MassMutual
       Investors in conjunction with the issuance of the Notes discussed in Note
       5. These warrants are exercisable at $2.03 per share through April 17,
       2008.

                                      F-14
<PAGE>

       The following summarizes the combined activity of all stock option plans
       and outstanding warrants during the three-year period ended December 31,
       2000:

<TABLE>
<CAPTION>
                                                                           Weighted-                             Weighted-
                                                          Stock             Average          Options and          Average
                                                       Options and          Exercise           Warrants           Exercise
                                                         Warrants            Price           Exercisable           Price
                                                   ---------------------------------------------------------------------------
<S>                                                      <C>               <C>                <C>                 <C>
       Balance, December 31, 1997                        450,000           $     2.97                0            $     0

       Granted                                           860,431                 6.43
       Exercised                                         (28,665)                2.81
       Canceled                                         (143,836)                4.63
                                                   ---------------------------------------------------------------------------
       Balance, December 31, 1998                      1,137,930                 4.65          117,981               3.00

       Granted                                         1,009,000                 2.08
       Canceled                                         (570,936)                6.33
                                                   ---------------------------------------------------------------------------

       Balance, December 31, 1999                      1,575,994                 2.92        1,089,762               2.53

       Granted                                           445,000                 1.06
       Canceled                                         (531,828)                3.87
                                                   ---------------------------------------------------------------------------
       Balance December 31, 2000                       1,489,166           $     2.02          980,484            $  2.35
                                                   ===========================================================================
</TABLE>

       The following summarizes additional information about stock options and
       warrants outstanding at December 31, 2000:

<TABLE>
<CAPTION>
                                                Options and Warrants Outstanding              Options and Warrants Exercisable
                                      --------------------------------------------------    ----------------------------------
                                            Number         Weighted-        Weighted-             Number          Weighted-
                   Range of             Outstanding at      Average          Average          Exercisable at       Average
                   Exercise              December 31,       Exercise        Remaining          December 31,       Exercise
                    Prices                   2000            Price             Life                2000             Price
       ---------------------------------------------------------------------------------    ----------------------------------
       <S>         <C>                  <C>               <C>               <C>               <C>              <C>
       $    0.53       $    0.75               19,000     $     0.65             9.39                   -      $        -
       $    0.81       $    1.00              392,500     $     0.96             9.41                   -      $        -
       $    1.56       $    2.13              829,500     $     2.02             7.36             806,834      $     2.03
       $    2.38       $    3.31              179,666     $     2.86             5.03             133,328      $     2.97
       $    3.39       $    4.13               15,500     $     3.96             6.90               3,678      $     4.13
       $    6.75       $    7.00               53,000     $     6.96             7.31              36,644      $     6.96
                                      --------------------------------------------------    ----------------------------------
                                            1,489,166     $     2.02             7.64             980,484      $     2.35
                                      ==================================================    ==================================
</TABLE>

       Had compensation expense been recognized based on the fair value of the
       options at their grant dates, as prescribed in Financial Accounting
       Standard No. 123, the Company's net loss and loss per share would have
       been:

<PAGE>

<TABLE>
<CAPTION>

                                                                       Year Ended December 31,
                                            ------------------------------------------------------------------------------
                                                      2000                       1999                      1998
                                            ------------------------------------------------------------------------------
                                                           (Dollars in thousands except per share amounts)
       <S>                                         <C>                        <C>                         <C>
       Net loss:
         As reported                               $ (17,158)                 $  (14,765)                 $(14,146)
         Pro forma under FAS 123                   $ (17,463)                 $  (15,373)                 $(14,513)

       Pro forma loss per share, basic
         and diluted:
         As reported                               $   (2.75)                 $    (2.32)                 $  (2.33)
         Pro forma under FAS 123                   $   (2.80)                 $    (2.41)                 $  (2.41)
</TABLE>

                                      F-15
<PAGE>

       The fair value of each option grant is estimated on the date of grant
       using the Black-Scholes option pricing model with the following
       assumptions:

<TABLE>
<CAPTION>
                                                      2000                       1999                      1998
                                            ------------------------------------------------------------------------------
<S>                                                <C>                       <C>                       <C>
       Dividend yield                                  0%                         0%                        0%
       Risk-free interest rates                    5.3% - 6.7%               4.9% - 5.8%               4.1% - 5.6%
       Expected volatility                          53% - 65%                 42% - 44%                 37% - 44%
       Expected option term                          3 years                   3 years                   3 years
</TABLE>

9.       INCOME TAXES:

         The components of the income tax provision (benefit) are as follows:

<TABLE>
<CAPTION>
                                                                       Year Ended December 31,
                                            ------------------------------------------------------------------------------
                                                      2000                       1999                      1998
                                            ------------------------------------------------------------------------------
                                                                       (Dollars in thousands)
       <S>                                  <C>                              <C>                       <C>
       Current:
          Federal                           $             0                  $    (329)                $      69
          State                                         159                        301                       (17)
                                            ------------------------------------------------------------------------------
                                                        159                        (28)                       52
                                            ------------------------------------------------------------------------------
       Deferred:
          Federal                                       521                      7,856                    (7,498)
          State                                          49                        680                      (729)
                                            ------------------------------------------------------------------------------
                                                        570                      8,536                    (8,227)
                                            ------------------------------------------------------------------------------
       Provision (benefit) for income
         taxes                              $           729                  $   8,508                 $  (8,175)
                                            ------------------------------------------------------------------------------
</TABLE>

       Income tax provision (benefit) is included in the statement of operations
as follows:

<TABLE>
<CAPTION>
                                                                       Year Ended December 31,
                                            ------------------------------------------------------------------------------
                                                      2000                       1999                      1998
                                            ------------------------------------------------------------------------------
                                                                       (Dollars in thousands)
       <S>                                  <C>                              <C>                       <C>
       Continuing operations                $           159                  $   7,276                 $  (9,026)
       Discontinued operations                          570                      1,232                       851
                                            ------------------------------------------------------------------------------
       Provision (benefit) for income
         taxes                              $           729                  $   8,508                 $  (8,175)
                                            ------------------------------------------------------------------------------
</TABLE>

                                      F-16
<PAGE>

       Deferred income taxes arise from temporary differences between the tax
       basis of assets and liabilities and their reported amounts in the
       financial statements. The Company's gross deferred tax assets and
       liabilities were comprised of the following:

<TABLE>
<CAPTION>
                                                                      December 31, 2000           December 31, 1999
                                                                  -------------------------------------------------------
                                                                                  (Dollars in thousands)
       <S>                                                             <C>                    <C>
       Deferred tax assets:
                In-process research and development                    $     5,553            $        6,005
                Intangibles                                                  4,832                       174
                Future deductible liabilities and reserves                     594                     1,037
                Net operating loss carryforwards                             7,674                     3,866
                Federal minimum tax credit carryforwards                       247                       210
                Federal business and other tax credit
                  carryforwards                                                437                       375
                Valuation allowance                                        (19,285)                  (11,460)
                                                                  --------------------------------------------------
                         Net deferred tax assets                                52                       207

       Deferred tax liabilities:
                Depreciation                                                   (52)                     (207)
                                                                  --------------------------------------------------
                         Net deferred asset/liability                  $         0            $            0
                                                                  ==================================================
</TABLE>

       The valuation allowance increased by $7,825,000 due to the current year's
       net loss. Management has concluded that realization of all deferred tax
       assets is no longer more likely than not, and accordingly has recorded a
       full valuation allowance. Management's conclusion is based on the
       Company's cumulative losses.

       At December 31, 2000, the Company had federal net operating loss
       carryforwards of $19,071,000 that expire beginning in 2018 and state net
       operating loss carryforwards of $24,991,000 that expire principally in
       2001 through 2005. The Company also had federal minimum tax credit
       carryforwards of $247,000 which may be carried forward indefinitely as a
       credit against regular federal tax liability in future years and other
       tax credit carryforwards of $437,000 consisting primarily of research and
       development tax credits that expire beginning in 2010.

       Differences between the U.S. statutory federal income tax rate and the
       Company's effective income tax rate from continuing operations are
       analyzed below:

<TABLE>
<CAPTION>
                                                                               Year Ended December 31,
                                                          ------------------------------------------------------------------
                                                                  2000                   1999                  1998
                                                          ------------------------------------------------------------------
<S>                                                              <C>                   <C>                   <C>
       Federal statutory tax rate                                (34.0%)               (34.0%)               (34.0%)
       State income taxes, net of
         federal income taxes                                     (4.1%)                (3.2%)                (3.4%)
       Valuation allowance                                        39.2%                118.2%                  -
       Other                                                      (0.4%)                (0.1%)                (0.2%)
                                                          ------------------------------------------------------------------
       Effective tax rate                                          0.7%                 80.9%                (37.6%)
                                                          ==================================================================
</TABLE>

                                      F-17

<PAGE>


10.   QUARTERLY FINANCIAL DATA (UNAUDITED)

      The Company's quarterly results of operations for the years ended December
      31, 2000 and 1999 (unaudited) are as follows:

                                         (In thousands except share data)

<TABLE>
<CAPTION>
                                     -------------------------------------------------------------------------------------
                                     First Quarter        Second Quarter        Third Quarter         Fourth Quarter
                                     -------------------------------------------------------------------------------------
       <S>                           <C>                  <S>                    <C>                 <C>
       2000:

       Total sales                   $     3,952          $    4,116             $   4,405           $    4,477
       Total expenses                      6,756               5,525                18,171                6,015
       Other charges (income)                937                 832                 1,018                 (438)
       Loss from continuing
       operations                         (3,741)             (2,241)              (14,819)              (1,065)
       Net income (loss)             $     1,126          $   (2,311)            $ (14,819)          $   (1,154)
       Loss per share from
       continuing operations -
       basic and diluted             $     (0.58)         $    (0.36)            $   (2.33)          $    (0.26)
       Net income (loss) per share
       - basic and diluted                  0.18               (0.36)                (2.33)               (0.24)

       1999:

       Total sales                   $     6,311          $    9,875             $   7,920           $    7,150
       Total expenses                      7,354              10,743                 9,602                9,225
       Other charges (income)                722                 783                   898                  924
       Loss from continuing
       operations                         (1,049)               (982)               (1,742)             (12,498)
       Net loss                      $      (726)         $     (324)            $  (1,399)          $  (12,316)
       Loss per share from
       continuing operations -
       basic and diluted             $     (0.16)         $    (0.15)            $   (0.27)          $    (1.97)
       Net loss per share - basic
       and diluted                         (0.11)              (0.05)                (0.22)               (1.94)
</TABLE>

                                      F-18
<PAGE>

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

       None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

(a)    DIRECTORS.

       SETH M. LUKASH, 55, has been a senior executive officer of the Company
       since 1977 and has been a Director since 1979. He has served as Chairman
       of the Board of Directors of the Company since November 1988, Chief
       Executive Officer since August 1987 and President and Chief Operating
       Officer since June 1989. [Mr. Lukash has been a director of Tanaka
       Capital Management since 1996 and has been a director or F.A.S.T.
       (Food Automation Service Techniques, Inc.) since 1995.]

       PAUL J. DUNPHY, 81, has been a Director of the Company since 1989. Mr.
       Dunphy has been a management consultant from 1988 until the present. Mr.
       Dunphy was Chairman of the Board, Chief Executive Officer and President
       of Towle Manufacturing Company from 1985 through 1988 and was Executive
       Vice President of Anchor Hocking, a glass and metal manufacturer, from
       1970 through 1984. Mr. Dunphy is a Director of Midwest Fabricating Co.
       and Four Johns Corporation. He is also a member of the Board of Trustees
       of Mt. Ida College, the President's Advisory Council of Bentley College
       and the Executive Advisory Board for Ohio University.

       GRAHAM Y. TANAKA, 53, has been a Director of the Company since 1988. Mr.
       Tanaka has been President of Tanaka Capital Management, Inc., an
       investment management firm, since 1986. From 1980 to 1986, Mr. Tanaka
       served as Chairman of Milbank, Tanaka & Associates. He is also President
       of The Tanaka Funds, Inc. Mr. Tanaka is a director of TransAct
       Technologies Incorporated ("TransAct"), a manufacturer of
       transaction-based printers that was a subsidiary of the Company through
       March 31, 1997. Mr. Tanaka is also a member of the Board of Directors of
       the Japanese American National Museum.

       THOMAS R. SCHWARZ, 64, has been a Director of the Company since 1995. Mr.
       Schwarz was Chairman of Grossman's Inc., a retailer of building
       materials, from 1990 to 1994, when he retired. Mr. Schwarz was President,
       Chief Operating Officer and a director of Dunkin' Donuts Incorporated, a
       food service company, from 1980 to 1990. He is the Chairman of the Board
       of Directors of TransAct and a director of Lebhar-Friedman Publishing
       Company, Yorkshire Restaurants and Foilmark, Inc., a manufacturer of hot
       stamping equipment and supplies. He is a Trustee of the Tanaka Growth
       Fund. Mr. Schwarz was a board member of The Timberland Company, an
       overseer of WGBH Educational Foundation, Inc. (New England Public
       Broadcasting), the David Littman Foundation, The Walnut Hill School and
       co-chairman of the Inner City Scholarship Fund.

(b)    EXECUTIVE OFFICERS.

<TABLE>
<CAPTION>
              Name                        Age     Position
              -------------------------  -------  --------------------------------------------------------------------------
              <S>                          <C>    <C>
              Seth M. Lukash               55     Chairman of the Board of Directors, President, Chief Executive Officer,
                                                  Chief Operating Officer and Director

              William A. Beebe             65     Chief Financial Officer
</TABLE>

              Seth M. Lukash has been a senior executive officer of the Company
              since 1977 and has been a Director since 1979. He has served as
              Chairman of the Board of Directors of the Company since November
              1988, Chief Executive Officer since August 1987, and President and
              Chief Operating Officer since June 1989. Mr. Lukash previously
              served as President of the Company from September 1983 to August
              1988 and as Chief Operating Officer from September 1983 to August
              1987.

                                       10
<PAGE>

              William A. Beebe joined the Company in June 2000 as Chief
              Financial Officer. Since his retirement in 1997 from the position
              of chief financial officer of Project Pros, Inc., Mr. Beebe has
              served in various consulting capacities. Previously, for more than
              30 years, he held executive and consulting positions, principally
              that of chief financial officer in a number of companies in the
              food service, software, electronic manufacturing and distribution
              industries.

(c)    COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

       Section 16(a) of the Securities Exchange Act of 1934 requires the
       Company's Directors and Executive Officers and persons who beneficially
       own more than 10% of a registered class of the Company's equity
       securities ("10% Owners") to file with the Securities and Exchange
       Commission ("SEC") reports of ownership and reports of changes in
       ownership of common stock and other equity securities of the Company.
       Directors, Executive Officers and 10% Owners are required by SEC
       regulation to furnish the Company with copies of all Section 16(a)
       reports they file.

       To the Company's knowledge, based solely on review of the copies of such
       reports furnished to the Company, or written representations that no
       other reports were required for those persons, the Company believes that,
       during the fiscal year ended December 31, 2000, the Company's Directors,
       Executive Officers and persons who beneficially own more than 10% of the
       Company's equity securities filed all reports required under Section
       16(a) of the Securities Exchange Act of 1934, other than a Form 3 which
       was required to be filed by William A. Beebe upon his election as Chief
       Financial Officer of the Company.

ITEM 11. EXECUTIVE COMPENSATION

       SUMMARY COMPENSATION TABLE

       The following table sets forth the compensation earned by the Company's
Chief Executive Officer and the four most highly compensated Executive Officers
who earned more than $100,000 in salary and bonus in 2000 for each of the last
three fiscal years.

         The following table sets forth the compensation earned by the Company's
Chief Executive Officer and the four most highly compensated Executive Officers
who earned more than $100,000 in salary and bonus in 1999 for each of the last
three fiscal years.

<TABLE>
<CAPTION>
                                                                             LONG TERM
                                                                            COMPENSATION
                                           ANNUAL COMPENSATION (A)              ($)
                                   --------------------------------------  -------------
                                                                             SECURITIES       ALL OTHER
                  NAME AND           FISCAL        SALARY         BONUS      UNDERLYING      COMPENSATION
            PRINCIPAL POSITION         YEAR          ($)          (B)($)     OPTIONS(#)        (C)($)
            ------------------     ----------    -----------   -----------   ----------     ------------
         <S>                          <C>         <C>            <C>          <C>              <C>
         Seth M. Lukash               2000        $ 281,169            -            -          $  5,868
         Chairman of the Board,       1999        $ 282,000            -            -          $  5,000
         President, Chief             1998        $ 276,000            -            -          $  4,170
         Executive Officer and
         Chief Operating Officer

         John Forester (d)            2000        $ 182,340            -            -          $  2,900
         Vice President               1999        $  38,942       20,000            -          $    779
                                      1998                -            -            -                 -

         Thomas Mounts (e)            2000        $ 155,000            -            -          $  3,100
                                      1999                        35,000            -          $    807
                                      1998                             -            -
</TABLE>

------------------------------------
(a)  Neither the Chief Executive Officer nor any of the other named Executive
     Officers received perquisites or other personal benefits in an amount that
     exceeded 10% of their salary plus bonus during 2000.
(b)  There were no bonuses paid to the named Executive Officers in 1998, 1999 or
     2000.
(c)  All amounts reported in this column consist entirely of Company
     contributions under the Company's 401(k) Plan.

                                       11
<PAGE>

(d)  Mr. Forester resigned as vice president of Progressive Software, Inc., a
     wholly owned subsidiary of the Company, on March 2, 2001. Upon his
     resignation, all of Mr. Forester's outstanding options terminated
     immediately.
(e)  Mr. Mounts resigned as President of Progressive Software, Inc., a wholly
     owned subsidiary of the Company, on January 2, 2001. Upon his resignation,
     all of Mr. Mounts's outstanding options terminated immediately.

OPTION GRANTS IN 2000

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
                                  Individual Grants                                      Potential realizable value at
                                                                                         assumed annual rates of stock
                                                                                         price appreciation for option
                                                                                                    term (b)
-------------------------------------------------------------------------------------------------------------------------
                                           Percent of
                              Number of       total
                             securities     options/
                             underlying       SARs
                              options/     granted to
                                SARs        employees      Exercise or
                              Granted      in fiscal       base price     Expiration
     Name                       (#)          year           ($/Sh)           date             5%                10%
-------------------------------------------------------------------------------------------------------------------------
<S>                           <C>           <C>            <C>            <C>                <C>              <C>
Seth M. Lukash(a)                   -            -               -                  -            -                 -
Chief Executive Officer
-------------------------------------------------------------------------------------------------------------------------
William A. Beebe               40,000         25.8%          $0.81       May 24, 2011       $23,015          $60,041
Chief Financial Officer
</TABLE>

-------------------------
(a)    Mr. Lukash did not receive an option grant in 2000.
(b)    The potential realizable dollar value reflected herein is the product of
       (i) the difference between (A) the product of the per-share market price
       at the time of the grant and the sum of 1 plus the adjusted stock price
       appreciation rate (the assumed rate of appreciation compounded annually
       over the term of the option) and (B) the per-share exercise price of the
       option; and (ii) the number of securities underlying the grant at fiscal
       year-end.

AGGREGATE OPTION EXERCISES IN 2000 AND VALUES AT DECEMBER 31, 2000

No options to purchase the Company's common stock were exercised during the
fiscal year ended December 31, 2000.

<TABLE>
<CAPTION>
                                   Number of Securities Underlying                          Value of Unexercised
                                         Unexercised Options At                                 In-the-Money
                                          December 31, 2000                                    Options ($)(a)
                                ---------------------------------------             -------------------------------------
       NAME                      EXERCISABLE             UNEXERCISABLE              EXERCISABLE             UNEXERCISABLE
<S>                            <C>                     <C>                       <C>                      <C>

Seth M. Lukash                      80,000                      -
</TABLE>

-------------------------------
(a)    The closing price for the Company's common stock as reported by the
       Nasdaq Stock Market on December 29, 2000 was $0.125. Consequently, none
       of the options were in-the-money as of December 31, 2000.

EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS.

SETH M. LUKASH

Pursuant to the terms of an Employment Agreement dated December 2, 1996 between
Seth M. Lukash and the Company, Mr. Lukash serves as Chairman and Chief
Executive Officer for a term of two years, which term renews automatically on a
monthly basis. Under the terms of the agreement, if Mr. Lukash's employment is
terminated other than for cause, Mr. Lukash shall be entitled to continue to
receive his then current annual base salary, his annual target bonus for the
year of termination, group insurance, and other benefits for a period of two
years payable in monthly installments. If Mr. Lukash's employment is terminated,
other than for cause, within one year of a change in control of the Company, Mr.
Lukash shall be entitled to

                                       12
<PAGE>

receive, for a period of three years, his then current annual base salary and
annual target bonus, payable in monthly installments, and continuation of all
benefits. In addition, the Company shall cause immediate vesting of all options
and rights under the Company's stock plans.

CHRISTOPHER SEBES

Pursuant to the terms of an Employment Agreement dated December 26, 2000 between
Christopher Sebes and Progressive Software, Inc., Mr. Sebes serves as Executive
Vice President for a term of one year, which term renews automatically on a
monthly basis. Under the terms of the agreement, if Mr. Sebes is terminated
other than for cause, Mr. Sebes shall be entitled to continue to receive his
then current annual base salary and continuation of benefits for a period of six
months payable in monthly installments. In addition, in the event Mr. Sebes is
terminated in connection with a change in control, the Company shall cause
immediate vesting of all options and rights under the Company's stock plans.

WILLIAM A. BEEBE

Pursuant to the terms of an Employment Agreement dated June 1, 2000 between
William A. Beebe and the Company, Mr. Beebe serves as Vice President and Chief
Financial Officer for a term of one year, which term renews automatically on a
monthly basis. Under the terms of the agreement, if Mr. Beebe is terminated
other than for cause, Mr. Beebe shall be entitled to continue to receive his
then current annual base salary and continuation of benefits for a period of one
year payable in monthly installments. In addition, in the event Mr. Beebe is
terminated in connection with a change in control, the Company shall cause
immediate vesting of all options and rights under the Company's stock plans.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

As of the close of business on March 16, 2001 there were 5,654,289 shares of
common stock issued and outstanding.

The following table sets forth information as to the beneficial ownership of the
Company's common stock as of March 16, 2001 for each person who is known by the
Company to own beneficially more than five percent of the Company's issued and
outstanding common stock, each person who is a Director or an individual named
in the Summary Compensation Table, and all Directors and Executive Officers of
the Company as a group. The persons named in such table have furnished the
information set forth opposite their respective names:

<TABLE>
<CAPTION>
                                                                    AMOUNT AND NATURE OF         PERCENT OF
NAME OF BENEFICIAL OWNER                                           BENEFICIAL OWNERSHIP(A)        CLASS(B)
---------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>                  <C>
MANAGEMENT BENEFICIAL OWNERS
Seth M. Lukash........................ ....................               630,271  (c)        10.99%

Graham Y. Tanaka...........................................               141,716  (d)         2.50%

Paul J. Dunphy.............................................                56,500  (e)         1.00%

Thomas R. Schwarz..........................................                21,500  (e)           *

William A. Beebe...........................................                13,333  (f)           *

OTHER BENEFICIAL OWNERS

Massachusetts Mutual Life Insurance Company & Related Parties           1,085,714  (g)        16.82%
   1295 State Street, Springfield, MA  01111
Dimensional Fund Advisors, Inc. ...........................               318,100  (h)         5.63%
   1299 Ocean Avenue, Santa Monica, CA  90401
Jack Silver................................................               616,282  (i)        10.90%
   660 Madison Ave., 15th floor, New York, NY 10021
All Directors and Executive Officers as a group (5 persons)               863,320  (j)        14.91%
</TABLE>

------------------------------------

                                       13
<PAGE>

(a)  Except as otherwise indicated, each of the persons named in the table has
     sole voting power and sole investment power with respect to the shares set
     forth opposite his name. The information contained in this table was
     derived from the Company's records or from a Schedule 13D or 13G filed with
     the Securities and Exchange Commission.
(b)  An asterisk denotes beneficial ownership of less than 1%.
(c)  Includes 80,000 shares exercisable under the Company's 1997 Long Term
     Incentive Plan (the "1997 Plan"). Mr. Lukash's address is care of the
     Company at 61 Wilton Road, Westport, CT 06880.
(d)  Includes 2,000 shares held of record by Mr. Tanaka's sons, and 14,000
     shares issuable upon exercise of options granted under the Company's
     Non-employee Directors' Stock Plan (the "Directors' Plan") which are
     currently exercisable or become exercisable within 60 days.
(e)  Includes 14,000 shares issuable upon exercise of options granted under the
     Director's Plan which are currently exercisable or become exercisable
     within 60 days.
(f)  Includes 13,333 shares issuable upon exercise of options granted under the
     Director's Plan which are currently exercisable or become exercisable
     within 60 days.
(g)  Represents shares beneficially owned by Massachusetts Mutual Life Insurance
     Company, MassMutual Corporate Investors, MassMutual Participation Investors
     and MassMutual Corporate Value Partners Limited (the "MassMutual
     Investors") and includes warrants to purchase 800,000 shares of common
     stock at $2.03125.
(h)  Dimensional Fund Advisors, Inc. ("Dimensional"), a registered investment
     advisor, is deemed to have beneficial ownership of 318,100 shares of common
     stock as of December 31, 1999, all of which shares are held in portfolios
     of DFA Investment Dimensions Group, Inc., a registered open-end investment
     company, or in series of the DFA Investment Trust Company, a Delaware
     business trust, or the DFA Group Trust and DFA Participation Group Trust,
     investment vehicles for qualified employee benefit plans, all of which
     Dimensional Fund Advisors Inc. serves as investment manager. Dimensional
     disclaims beneficial ownership of all such shares.
(i)  Mr. Jack Silver has full voting and dispositive power over the following
     four entities, which entities purchased shares of common stock of the
     issuer on behalf of the reporting person: (i) Sherleigh Associates Defined
     Benefit Pension Plan in the amount of 65,200 shares; (ii) Sherleigh
     Associates, Inc., Profit Sharing Plan in the amount of 316,550 shares;
     (iii) the Jack & Sherleigh Silver Foundation in the amount of 125,000; and
     (iv) Sherleigh Associates, Inc. in the amount of 20,000. The balance of the
     shares in the amount of 89,532 are registered in the name of Mr. Silver.
(j)  Includes 135,333 shares exercisable under Company Stock Plans which are
     currently exercisable or become exercisable within 60 days.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTION

Prior to 1997, the Company made a personal loan to Seth M. Lukash, Chairman of
the Board, President, Chief Executive Officer, Chief Financial Officer, Chief
Operating Officer and a Director of the Company. During 1999, the highest
outstanding balance of the loan to Seth M. Lukash was $125,000. The loan is
evidenced by a demand note and bears interest at an annual rate equal to the
rate charged by the Company's senior lender on its line of credit. The Company's
Board of Directors has agreed to defer payment of the principal balance of the
loan. Interest on the loan is paid monthly. As of March 16, 2001, the principal
amount outstanding under the loan was $125,000.

On March 14, 1997, the Company accepted a note in the amount of $801,375.00 from
Seth M. Lukash in payment of the exercise price of options and warrants. The
note is a full recourse note, bearing interest payable quarterly at 7.577% and
secured by a pledge of shares acquired through the exercise of the options and
warrants. The highest amount outstanding under the note during 1999 was
$801,375.00. As of March 16, 2001, the principal balance of this note was
$350,000.

PART IV

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

(a) THE FOLLOWING FINANCIAL STATEMENTS AND EXHIBITS ARE FILED AS PART OF THIS
REPORT:

         (i)      FINANCIAL STATEMENTS
                  See Item 8 on page __.
        (ii)      FINANCIAL STATEMENT SCHEDULES
                  See Item 8 on page __.
       (iii)      LIST OF EXHIBITS.
                  See Exhibit Index on page __.

(b)    REPORTS ON FORM 8-K.

       The Company did not file any Current Reports on Form 8-K during the last
       quarter of the period covered by this report.

                                       14
<PAGE>

                                   SIGNATURES

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

                              TRIDEX CORPORATION

                              By: /s/ Seth M. Lukash
                                  ---------------------------------------------
                                  Seth M. Lukash
                                  Chairman of the Board, President,
                                  Chief Executive Officer,
                                  Chief Operating Officer and Director
                                  Date: April 13, 2001

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

<TABLE>
<CAPTION>
SIGNATURE                                                   TITLE                                       DATE
<S>                                         <C>                                                  <C>
   /s/ Seth M. Lukash                       Chairman of the Board, President, Chief              April 13, 2001
------------------------------------        Executive Officer, Chief Operating Officer
Seth M. Lukash                              Director
(Principal Executive Officer)


   /s/ William A. Beebe
------------------------------------        Chief Financial Officer                              April 13, 2001
William A. Beebe
Chief Financial Officer
(Principal Financial Officer)



------------------------------------        Director
Graham Y. Tanaka


   /s/ Paul J. Dunphy                       Director                                             April 13, 2001
------------------------------------
Paul J. Dunphy


   /s/ Thomas R. Schwarz                    Director                                             April 13, 2001
------------------------------------
Thomas R. Schwarz
</TABLE>


                                        15

<PAGE>

                                  Exhibit Index

    3.1    Certificate of Incorporation of Tridex, as amended, filed on June 28,
           1985 as Exhibit 3.1 to the Company's Annual Report on Form 10-K for
           the fiscal year ended March 30, 1985, is hereby incorporated herein
           by reference.
    3.2    Certificate of Amendment of Incorporation of Tridex, dated October 1,
           1987, filed on July 18, 1988 as Exhibit 3.2 to the Company's Annual
           Report on Form 10-K for the fiscal year ended April 2, 1988 is hereby
           incorporated herein by reference.
    3.3    Certificate of Amendment of Incorporation of Tridex, dated August 15,
           1988, filed on June 29, 1989 as Exhibit 3.3 to the Company's Annual
           Report on Form 10-K for the fiscal year ended April 1, 1989 is hereby
           incorporated herein by reference.
    3.4    Certificate of Amendment of Incorporation of Tridex, dated March
           31,1989 filed on June 29, 1989 as Exhibit 3.4 to the Company's Annual
           Report on Form 10-K for the fiscal year ended April 1, 1989 is hereby
           incorporated herein by reference.
    3.5    Bylaws of Tridex, as amended and restated as of January 22, 1996,
           filed on March 26, 1996 as Exhibit 3.5 to the Company's Transition
           Report on Form 10-K for the transition year ended December 31, 1995
           is hereby incorporated herein by reference.
    4.1    Description of the Company's common stock set forth in the Company's
           Registration Statement on Form 8-A filed July 14, 1986, is hereby
           incorporated herein by reference.
    4.2    Tridex Corporation 1997 Long Term Incentive Plan (as amended and
           restated), filed as Exhibit A to the Company's Proxy Statement for
           the Annual Meeting of Shareholders filed April 17, 1997 is hereby
           incorporated herein by reference. *
    4.3    Tridex Corporation Non-Employee Directors' Stock Plan filed as
           Exhibit B to the Company's Proxy Statement for the Annual Meeting of
           Shareholders filed April 17, 1997 is hereby incorporated herein by
           reference. *
    4.4    Tridex Corporation 1998 Non-Executive Long Term Incentive Plan filed
           as Exhibit A to the Company's Proxy Statement for the Annual Meeting
           of Shareholders filed May 8, 1998 is hereby incorporated herein by
           reference. *
    4.6    Securities Purchase Agreements dated as of April 17, 1998, by and
           among Massachusetts Mutual Life Insurance Company and certain of its
           affiliates and Tridex filed as Exhibit 4.2 to the Company's Current
           Report on Form 8-K filed April 30, 1998 is hereby incorporated herein
           by reference.
    4.7    Form of 19% senior subordinated notes due April 17, 2005 filed as
           Exhibit 4.3 to the Company's Current Report on Form 8-K filed April
           30, 1998 is hereby incorporated herein by reference.
    4.8    Form of Letter of Waiver and Limited Amendment dated November 12,
           1998 by and among Massachusetts Mutual Life Insurance Company and
           certain of its affiliates and Tridex filed as Exhibit 4.1 to the
           Company's Quarterly Report on Form 10-Q for the quarter ended
           September 30, 1998 is hereby incorporated herein by reference.
    4.9    Second Amendment to Securities Purchase Agreements dated March 26,
           1999 by and among Massachusetts Mutual Life Insurance Company and
           certain of its affiliates and Tridex filed as Exhibit 4.9 to the
           Company's Annual Report on Form 10-K for the year ended December 31,
           1998 is hereby incorporated herein by reference.
    4.10   Third Amendment to Securities Purchase Agreements dated as of June
           30, 1999 by and among Massachusetts Mutual Life Insurance Company and
           certain of its affiliates and Tridex filed as Exhibit 4.10 to the
           Company's Current Report on Form 8-K filed on July 16, 1999 is hereby
           incorporated herein by reference.
    4.11   Fourth Amendment to Securities Purchase Agreements dated as of
           September 30, 1999 by and among Massachusetts Mutual Life Insurance
           Company and certain of its affiliates and Tridex filed as Exhibit 4.1
           to the Company's Quarterly Report on Form 10-Q for the quarter ended
           September 30, 1999 is hereby incorporated herein by reference.
    4.12   Fifth Amendment to Securities Purchase Agreements dated as of
           February 18, 2000 by and among Massachusetts Mutual Life Insurance
           Company and certain of its affiliates and Tridex filed as Exhibit 4.1
           to the Company's Current Report on Form 8-K filed March 6, 2000 is
           hereby incorporated herein by reference.

                                       16

<PAGE>

   10.1    Credit Agreement dated as of April 17, 1998, by and between Fleet
           National Bank, Tridex, Progressive Software, Inc., Ultimate
           Technology Corporation, and Tridex NC, Inc., with index of Schedules
           and Exhibits thereto filed as Exhibit 10.1 to the Company's Current
           Report on Form 8-K filed April 30, 1998 is hereby incorporated herein
           by reference.
   10.2    Term Note in the amount of $12,000,000, due March 31, 2003, payable
           by Tridex and its affiliates to Fleet National Bank ("Fleet") filed
           as Exhibit 10.2 to the Company's Current Report on Form 8-K filed
           April 30, 1998 is hereby incorporated herein by reference.
   10.3    Working Capital Note in the amount of $8,000,000 due June 30, 1999,
           payable by Tridex and its affiliates to Fleet National Bank filed as
           Exhibit 10.3 to the Company's Current Report on Form 8-K filed April
           30, 1998 is hereby incorporated herein by reference.
   10.4    Amendment No. 1 to Credit Agreement dated as of November 1, 1998, to
           Credit Agreement dated as of April 17, 1998, by and between Fleet,
           Tridex, Progressive Software, Inc. and Ultimate Technology
           Corporation filed as Exhibit 10.1 to the Company's Quarterly Report
           on Form 10-Q for the quarter ended September 30, 1998 is hereby
           incorporated herein by reference.
   10.5    Amendment No. 2 to Credit Agreement dated as of March 30, 1999, to
           Credit Agreement dated as of April 17, 1998, by and between Fleet,
           Tridex, Progressive Software, Inc. and Ultimate Technology
           Corporation filed as Exhibit 10.20 to the Company's Annual Report on
           Form 10-K for the year ended December 31, 1998 is hereby incorporated
           herein by reference.
   10.6    Amendment No. 3 to Credit Agreement dated as of June 30, 1999, to
           Credit Agreement dated as of April 17, 1998, by and between Fleet,
           Tridex, Progressive Software, Inc. and Ultimate Technology
           Corporation filed as Exhibit 10.21 to the Company's Current Report on
           Form 8-K filed on July 16, 1999 is hereby incorporated herein by
           reference.
   10.7    Amendment No. 4 to Credit Agreement dated as of September 30, 1999 to
           Credit Agreement dated as of April 17, 1998, by and between Fleet,
           Tridex, Progressive Software, Inc. and Ultimate Technology
           Corporation filed as Exhibit 10.1 to the Company's Quarterly Report
           on Form 10-Q for the quarter ended September 30, 1999 is hereby
           incorporated herein by reference.
   10.8    Amendment No. 5 to Credit Agreement dated as of February 18, 2000, to
           Credit Agreement dated as of April 17, 1998, by and between Fleet,
           Tridex, Progressive Software, Inc. and Ultimate Technology
           Corporation filed as Exhibit 10.2 to the Company's Current Report on
           Form 8-K filed March 6, 2000 is hereby incorporated herein by
           reference.
   10.9    Stock Purchase Agreement dated as of February 8, 2000, between Tridex
           Corporation, Ultimate Technology Corporation and CFG Capital
           Management II, L.P. filed as Exhibit 10.1 to the company's Current
           Report on Form 8-K filed March 6, 2000 is hereby incorporated herein
           by reference.
   10.10   Tax Sharing Agreement dated as of July 31, 1996 between Tridex and
           TransAct Technologies Incorporated filed as Exhibit 10.8 to the
           Company's Quarterly Report on Form 10-Q for the quarter ended
           September 28, 1996 is hereby incorporated herein by reference.
   10.11   Employment Agreement dated December 2, 1996 between Tridex and Seth
           M. Lukash filed on March 31, 1997 as Exhibit 10.10 to the Company's
           Annual Report on Form 10-K for the year ended December 31, 1996, is
           hereby incorporated herein by reference. *
   10.12   Employment Agreement dated June 1, 2000 between Tridex and William A.
           Beebe.*
   10.13   Employment Agreement dated August 7, 1996 between Tridex and George
           T. Crandall filed on March 31, 1997 as Exhibit 10.11 to the Company's
           Annual Report on Form 10-K for the year ended December 31, 1996, is
           hereby incorporated herein by reference. *
   10.14   Employment Agreement dated December 26, 2000 between Progressive and
           Christopher Sebes.
   11.1    Statement re:  computation of per share earnings.
   21.1    List of Subsidiaries of Tridex.
   23.1    Consent of Independent Accountants
   27.1    Financial Data Schedule.
* Management contract or compensatory plan or arrangement.

                                       17