UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10K

(MARK ONE)

   [X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 [FEE REQUIRED]

                   For the Fiscal Year Ended December 31, 1999

                                       OR

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

                   For the Fiscal Year Ended December 31, 1999

                           Commission File No. 0-13576

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

                 Delaware                                  04-2789167
----------------------------------------------    ------------------------------
         (State of Incorporation)                   (I.R.S. EMPLOYER I.D. NO.)

          34929 Curtis Boulevard
               Eastlake, Ohio                                44095
----------------------------------------------    ------------------------------
   (Address of Principal Executive Offices)                (Zip Code)

Telephone: (440) 953-5170

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share

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 the registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ].

Aggregate market value, as of December 21, 2000 of Common Stock held by
non-affiliates of the registrant: $182,443.

The number of shares outstanding of the registrant's only class of Common Stock
as of December 21, 2000 was 80,746,722.

                                                       PART OF DOCUMENT
DOCUMENTS INCORPORATED BY REFERENCE:                 IN WHICH INCORPORATED
                                               ---------------------------------

A list of all exhibits to this Form 10-K is on Page 48.

<PAGE>

PART I

Item 1 Business

Until November 1997, Encore Computer Corporation ("Encore" or the "Company") was
engaged in manufacturing, distributing and supporting (i) scalable real-time
computer systems and (ii) data storage products for very large computer systems.
In November 1997 the Company sold its storage products business and in January
1999 the Company completed the sale of its real time computer systems business
effective December 31, 1998. Since January 1999, the Company's only assets have
been cash claims and receivables relating to the sales of its storage products
and real-time computer systems businesses.

In 1989, Encore acquired the assets and assumed the liabilities of the Gould
Electronics Inc.'s ("Gould") Computer Systems Division, which was significantly
larger than Encore. Since 1989, Gould (which is a wholly owned subsidiary of
Japan Energy Corporation) had been the principal source of the Company's
financing. From 1989 through November 1997, the Company borrowed a total of $418
million from Gould and its affiliates. Encore had invested most of this in
research and development. However, despite its efforts, Encore was unable to
penetrate the marketplace for storage products and sales of its real-time
computer systems declined significantly. By mid-1997 Gould had made it clear
that it would not provide further financing to Encore, other than working
capital to keep the storage products business operating for a short period until
a pending sale could be completed.

Sale of the Storage Products Business

On November 24, 1997, the Company sold substantially all the assets associated
with its storage products business to Sun Microsystems, Inc. ("Sun"). The Asset
Purchase Agreement under which the transaction took place contemplated that Sun
would pay $185 million for the storage products business, of which $150 million
would be paid in cash at the closing and $35 million would be paid on July 1,
1998, subject to Sun's right to make offsets against the second payment. In
fact, because of certain closing adjustments, Sun paid Encore $151,168,227 at
the closing.

In connection with the sale of Encore's storage business to Sun, Gould also
entered into an agreement with Sun under which Gould guaranteed most of Encore's
obligations under the Asset Purchase Agreement between Encore and Sun, agreed to
provide whatever funds were necessary to ensure that Encore would not become
insolvent within one year after the closing of the sale to Sun, and indemnified
Sun against any losses Sun might incur if the sale of Encore's storage products
business to Sun were challenged in an insolvency proceeding relating to Encore
commenced within two years after the closing.

Shortly before July 1, 1998, Sun asserted claims against Encore totaling
$9,692,000. Because of that, on July 1, 1998, Sun paid only $25,308,000 of the
$35,000,000 which was due on that date. On July 16, 1999, Sun and Encore entered
a Settlement Agreement and Mutual Release pursuant to which Sun paid $2,500,000
to Gould (to which the balance of the receivable from Sun had been assigned) as
a settlement for the receivable and Sun released these claims. In connection
with the Settlement Agreement and Mutual Release, Sun did not release Gould's
other indemnification obligations related to Encore's obligations and various
indemnification clauses included in the Asset Purchase Agreement.

On November 24, 1997, Gould held (i) notes, secured by all of Encore's assets,
under which Encore owed Gould $93.55 million for money Encore had borrowed from
Gould plus unpaid interest, and (ii) convertible preferred stock of Encore with
a liquidation preference totaling $411 million, which Encore had issued to Gould
between 1991 and 1996 in exchange for cancellation of indebtedness for money
Encore had borrowed from Gould and interest on those borrowings.

                                       -2-
<PAGE>

In addition, Gould held approximately 48.44% of Encore's common stock, which
Gould had obtained as part of the consideration for the sale of its Computer
Systems Division to Encore in 1989 or through conversion of convertible
preferred stock. In connection with the sale of Encore's storage products
business to Sun, Encore and Gould agreed that Encore would repay the secured
notes and unpaid interest thereon and redeem all the convertible preferred stock
which Gould held for $60 million, of which $25 million was to be paid at the
closing of the Sun transaction, and the balance was to be satisfied with the
second payment due from Sun. In addition, Gould agreed that if it received the
entire $35 million by July 31, 1998, Gould would waive its right to receive
additional shares of preferred stock with a liquidation preference of
approximately $43 million which were due to it as past-due dividends on the
convertible preferred stock which was being redeemed. Finally, Gould agreed that
if Encore were liquidated before November 24, 1999, Gould would waive any right
it had as a holder of Encore's common stock with regard to the first $30 million
of liquidating distributions made to Encore's common stockholders.

Because Sun withheld $9,692,000 of the payment due on July 1, 1998, Encore
remained obligated to Gould in that amount and had to either pay that amount to
Gould out of its own funds by July 31, 1998 or issue to Gould the over-due
dividend shares of convertible preferred stock, which had a liquidation
preference of $42,678,400. However, in order to give Encore more time to attempt
to resolve Sun's claims, Gould agreed that if Encore issued those dividend
shares to it, Gould would give Encore the option to repurchase the dividend
shares on or before July 31, 1999 for an amount equal to the balance of the
$9,692,000 which remained unpaid ($7,192,000 after the payment of $2,500,000
received on July 16, 1999) plus interest at 8.5% per annum from August 1, 1998.
Encore then issued the dividend shares to Gould. On July 31, 1999, Gould
extended Encore's option to repurchase the dividend shares to October 30, 1999;
Gould subsequently extended Encore's option to December 15, 1999, when it
expired.

On December 30, 1999, Encore paid Gould the $7,192,000 balance due as a result
of the redemption of convertible preferred stock from Gould, and Gould, among
other things, agreed (i) to convert the dividend shares into common stock and
(ii) that if Encore were liquidated before November 24, 2000, Gould would waive
any right it had as a holder of Encore's common stock with regard to the first
$30 million of liquidating distributions made to Encore's common stockholders.
Additionally, Gould agreed to indemnify Encore for obligations it may incur to
indemnify its current and future directors to extent of the repayment of the
$7,192,000 obligation. On January 20, 2000, Gould converted its convertible
preferred stock into 13,295,815 shares of common stock.

Sale of the Real-Time Business

On June 4, 1998, the Company and Gores Technology Group ("Gores") entered into a
definitive agreement for the Company to sell its real-time business to Gores for
$3 million in cash.

At the same time the Company entered into the agreement to sell its real-time
computer systems business to Gores, the Company entered into a management
agreement under which Gores took over management of the real-time computer
systems business, retaining any positive cash flow and bearing any negative cash
flow, but receiving a management fee of $100,000 per month, which was to be
refunded to Encore upon closing of the sale of the real-time computer systems
business to Gores. Encore provided a $2 million line of credit to Gores to fund
its operation of the real-time computer systems business until the closing.

The sale of the real-time computer systems business to Gores was approved by the
Company's stockholders on September 11, 1998, and the transaction was completed
on January 6, 1999. At the closing of the sale, the Company received $2,750,000
(with the additional $250,000 set off against the purchase price to resolve an
alleged breach of indemnity claim) and the parties agreed

                                       -3-
<PAGE>

to resolve shortly after the closing disputed items relating to the sale,
including the amounts due to Encore under the management agreement and the line
of credit, and certain other indemnity claims by Gores. On August 10, 2000, the
Company reached an agreement in principle to resolve these items. In connection
with the agreement, Encore and Gores agreed to reduce the principal balance of
the receivable by (1) $96,000 relating to an uncollectible note receivable
purchased by Gores in the acquisition of the real-time business and (2) $150,000
for expenses incurred in the negotiation of this settlement. As a result, the
receivable balance due to Encore was $2,979,000.

In order to reduce this balance, Gores agreed to make payments on Encore's
behalf relating to the closing of certain foreign offices. Such payments
included lease termination fees and payment of taxes. During fiscal 1999, Gores
paid $35,000 relating to the termination of Encore's Belgium office lease.
Subsequent to December 31, 1999, Gores paid approximately $1,845,000 relating to
lease termination costs and a tax settlement. After these payments, the
receivable balance amounted to $1,098,000. Gores agreed to make cash payments to
Encore for the remainder of the balance. In August and October, 2000, Encore
received payments of $250,000 toward the receivable balance, resulting in a
receivable balance of $598,000. Management believes that this receivable is
fully collectible.

It had been contemplated that after the real-time computer systems business was
sold to Gores, Encore would be liquidated. However, because of a provision of
the agreements relating to Encore's sale of its storage products business to
Sun, Encore's stockholders could not vote on the liquidation of Encore at the
meeting on September 11, 1998 at which they approved the sale of the real-time
computer systems business. The Company's Board of Directors expects to
reconsider when the Company should be liquidated when various disputed items are
determined, including whether the Company will have any indemnification
obligations with regard to a pending lawsuit by stockholders of the Company with
regard to the Sun transaction and related redemption of convertible preferred
stock from Gould (which was tentatively settled in late 2000).

The Board of Directors terminated the employment of the Company's President on
September 30, 1998 and the employment of the Company's Chief Executive Officer
on November 24, 1998, in view of the fact that the Company no longer had any
active business. The Company's staff was reduced to its General Counsel (who
took the position of President), its Chief Financial Officer, its Vice President
of Human Resources (who continued to be involved in employee compensation
matters arising out of the sales of the storage products and the real-time
computer systems businesses) and a few clerical and administrative employees.
The Company also moved its offices to substantially smaller space, which it
occupied under a short-term lease. Those offices were closed on or about June
30, 1999, and the remaining employees terminated. The Company's further
activities are conducted in space provided by Gould in Eastlake, Ohio.

The assets of the Company available for distribution to shareholders on
liquidation of Encore would be (i) the Company's assets, less its liabilities,
at December 31, 1999, plus or minus (ii) any sum by which the amount received
from Gores is greater or less than the carrying value on the Company's December
31, 1999 balance sheet, plus or minus (iii) any amounts by which the costs of
liquidation and costs related to contingent liabilities, including pending
litigation, are less or greater than the reserves reflected on the December 31,
1999 balance sheet, minus (iv) expenses incurred after December 31, 1999 which
have not been contemplated in the accruals.

                                       -4-
<PAGE>

Item 2 Properties

The Company does not own any facilities. At December 31, 1999, the Company was
in the process of terminating its leases on idle foreign offices.

On June 19, 2000, the Company terminated its lease at its idle London facility
and has no further lease obligations for facilities.

                                       -5-
<PAGE>

Item 3 Legal Proceedings

Shortly before the Sun transaction was closed, shareholders of the Company
brought a lawsuit in the Delaware Chancery Court against Gould and the Company's
then directors, C. David Ferguson, Robert Fedor, Rowland Thomas and Kenneth
Fisher. Three similar shareholder suits were also filed and all four suits have
been consolidated as Civil Action #16044, In Re Encore Computer Corporation
Shareholders Litigation. The shareholders filed an amended complaint adding
directors Michael Veysey and Thomas Rich as defendants and eliminating the
Company as a defendant. The defendants moved to dismiss the amended complaint
and that motion was granted on June 16, 2000. Two of the Plaintiffs filed a
notice of appeal to the Delaware Supreme Court. Although the Company is not a
party to the litigation, the Company is obligated to indemnify its officers and
directors against liability for matters such as those which are the subject of
the litigation. Late in 2000, the plaintiffs tentatively agreed to settle the
suit on a basis that would not require settlement payments by directors and
officers that would be subject to indemnification by the company. Such
settlement is subject to documentation and court approval.

Item 4 Submissions of Matters to a Vote of Security Holders

None

                                       -6-
<PAGE>

PART II

Item 5 Market for Registrant's Common Equity and Related Stockholder Matters The
Company's common stock is traded on the OTC Bulletin Board under the symbol
ENCC.

The high and low closing sale prices of Encore's common stock are shown for
fiscal years 1999 and 1998 in the table below:

                        Fiscal 1999                         Fiscal 1998
              --------------------------------  -------------------------------
                  High            Low               High            Low
              --------------------------------  -------------------------------
1st Quarter               .05         .015625              .625          .1875
2nd Quarter               .04         .015625            .34375          .1875
3rd Quarter               .04         .015625           .203125        .015625
4th Quarter               .04             .01             .0625        .015625

BankBoston, N.A. is the stock transfer agent and registrar of the Company's
common stock, and maintains shareholder records. The agent will respond to
questions on change of ownership, lost stock certificates, consolidation of
accounts and change of address. Shareholder correspondence on these matters
should be addressed to:

BankBoston, N.A.
c/o Boston EquiServe, L.P.
P.O. Box 8040
Mail Stop 45-02-64
Boston, Massachusetts 02266-8040.

As of December 21, 2000, there were approximately 2,344 holders of record of the
Company's common stock. The Company has never paid, and will not pay in the
future, cash dividends on its common stock.

                                       -7-
<PAGE>

Item 6 Selected Financial Data

<TABLE>
<CAPTION>
                                                For the year ended December 31,
(in thousands except                            -------------------------------
  per share data)                    1999       1998         1997         1996         1995
                                    ------    --------     --------     --------     --------
<S>                                 <C>       <C>          <C>          <C>          <C>
Net sales                              N/A    $ 20,435     $ 29,486     $ 47,627     $ 49,328
Operating loss                         N/A      (7,474)     (76,528)     (67,218)     (77,796)
Gain on Sun Transaction                N/A      25,308      119,890           --           --
Net income (loss)                      N/A      16,658       34,164      (70,732)     (81,354)
Changes in net assets
   in liquidation (2)               $5,022         N/A          N/A          N/A          N/A
Basic income (loss)
   per common share (1)                N/A        0.24         0.11        (2.61)       (2.88)
Weighted average shares of
   common stock outstanding (1)        N/A      67,451       40,568       36,810       34,923
Working capital                        N/A         N/A      (21,617)     (67,295)       5,490
Total assets                         7,034      16,753       37,451       69,256       72,537
Long term debt                          --          --           --          476       40,812
Shareholders' equity
  (capital deficiency)                 N/A         N/A      (19,646)     (34,010)       2,514
Net assets in liquidation (2)        2,034      (2,988)         N/A          N/A          N/A
Net assets in liquidation
   per common share (2)                  0           0          N/A          N/A          N/A
</TABLE>

(1) During 1998, 1997, 1996, and 1995, preferred stock dividends amounted to
$533,000, $29,579,900, $25,413,000, and $19,061,600, respectively. All preferred
stock dividends were paid in additional shares of preferred stock or were
accumulated.

(2) The Company ceased operating activities as of December 31, 1998.
Additionally, management expects that liquidation of the Company will occur. As
a result, the Company has adopted the liquidation basis of accounting as of
December 31, 1998 and for all periods subsequent to December 31, 1998.

                                       -8-
<PAGE>

Item 7 Management's Discussion and Analysis of Financial Condition and Results
       of Operations

Overview and Liquidation

The Company conducted no business operations after December 31, 1998.

During fiscal 1997, Encore sold substantially all of its assets associated with
its storage products business to Sun. During fiscal 1998, the Company sold its
real-time computer systems business to Gores. After these transactions,
management contemplated that the Company would be liquidated. However, because
of a provision of the agreements relating to Encore's sale of its storage
products business to Sun, Encore's stockholders could not vote on the
liquidation of Encore at the meeting on September 11, 1998, at which they
approved the sale of the real-time computer systems business. The Company's
Board of Directors expects to reconsider when the Company should be liquidated
when various disputed items are determined, including whether the Company will
have any indemnification obligations with regard to a pending lawsuit by
stockholders of the Company with regard to the Sun transaction and related
redemption of convertible preferred stock from Gould.

The Board of Directors terminated the employment of the Company's President on
September 30, 1998 and the employment of the Company's Chief Executive Officer
on November 24, 1998 in view of the fact that the Company no longer had any
active business. The Company's staff was reduced to its General Counsel who took
the position of President, its Chief Financial Officer, its Vice President of
Human Resources (who continued to be involved in employee compensation matters
arising out of the sales of the storage products and the real-time computer
systems businesses) and a few clerical and administrative employees. In fiscal
1999, all remaining employees were terminated. The Company also moved its
offices to a substantially smaller space which it occupied under a short-term
lease. Those offices were closed on or about June 30, 1999, and the Company's
further activities are conducted in space provided by Gould in Eastlake, Ohio.
Management expects that liquidation of the Company will occur. As a result, the
Company adopted the liquidation basis of accounting as of December 31, 1998 and
for all periods subsequent to December 31, 1998.

The assets of the Company available for distribution to shareholders on
liquidation of Encore would be (i) the Company's assets, less its liabilities,
at December 31, 1999, plus or minus (ii) any sum by which the amount received
from Gores is greater or less than the carrying value on the Company's December
31, 1999 balance sheet, plus or minus (iii) any amounts by which the costs of
liquidation and costs related to contingent liabilities, including pending
litigation, are less or greater than the reserves reflected on the December 31,
1999 balance sheet, minus (iv) expenses incurred after December 31, 1999 which
have not been contemplated in the accruals.

Under the liquidation basis of accounting, assets are stated at their estimated
net realizable value and liabilities are stated at their estimated amounts.

Comparison of 1999 and 1998

The Company ceased operations when the Gores transaction was entered into on
December 31, 1998. Throughout 1999, the Company continued to settle liabilities.
During fiscal 1999, previously established accruals for termination and wind
down costs were adjusted based on revised estimates of the ultimate cost of such
activities. Such revisions included reduction for overaccruals of taxes and the
cost of closing foreign offices.

                                       -9-
<PAGE>

Comparison of 1998 and 1997

Net sales for 1998 were $20,435,000 compared to net sales for 1997 of
$29,486,000, a decrease of $9,051,000 or 31%. 1998 equipment sales decreased 42%
to $8,263,000 when compared to $14,163,000 in 1997. 1998 equipment sales were
entirely derived from real-time products while 1997 equipment sales included
$4,764,000 in storage product revenue. Therefore, 1998 real-time equipment sales
decreased by $1,136,000 or 12% from $9,399,000 in 1997. The decrease in
real-time equipment sales was primarily due to a lack of new product development
and reliance by the Company on modifications to existing products nearing the
end of their life-cycles. Real-time equipment sales as a percentage of total net
sales were 40% in 1998. In 1997 real-time equipment sales were 38% of reported
net sales less storage product equipment sales. International equipment sales
decreased 64% to $1,933,000 in 1998. In 1997 international storage product sales
were $440,000 while there were no international storage product sales in 1998.

Service revenues for 1998 were $12,172,000, a decrease of $3,151,000 or 21% from
service revenues of $15,323,000 in 1997. Continued declining service revenues
reflected the effect on the service business of: (i) the Company's prolonged
decline in equipment sales, (ii) the price competitiveness of the marketplace
and (iii) the completion of long running government programs and subsequent
deinstallation of systems. Service revenues as a percentage of net sales for
1998 and 1997 were 60% and 52%, respectively. International and domestic
real-time service sales were $7,102,000 and $5,070,000, respectively, for 1998,
down 24% and 15%, respectively, from 1997 international real-time service sales
of $9,357,000 and domestic real-time service sales of $5,966,000.

During 1998 one of the Company's customers accounted for approximately 16% of
its sales. During 1997, the Company had not been dependent upon any one customer
for a material part of its business with no single customer accounting for more
than 10% of its sales. However, sales to various U.S. government agencies
represented approximately 40% and 21% of net sales in 1998 and 1997,
respectively. For the real-time business, the respective percentages were 100%
and 84% of total government sales in 1998 and 1997.

Total cost of sales decreased in 1998 to $12,738,000 from $37,332,000 in 1997.
Cost of storage product net sales were $0 in 1998 compared to $18,708,000 in
1997. The decline in real-time net cost of sales in 1998 was $5,886,000 or 32%
from $18,624,000 in 1997. Cost of real-time equipment sales decreased from
$8,668,000 in 1997 to $4,492,000 in 1998, or 48%. Reduced equipment cost of
sales were attributed to the significant reduction in capacity as a result of
consolidating manufacturing in Ft. Lauderdale from the Company's Melbourne,
Florida manufacturing facility, which was highly underutilized and sold to Sun
in November 1997, as well as to lower product volumes. Real-time product gross
margins increased to 46% of product sales from 8% in 1997 as a result of these
reduced costs.

Cost of service sales decreased from $15,921,000 in 1997 to $8,246,000 in 1998.
In 1997, the Company invested $5,965,000 in various programs and infrastructure
to support the storage product. Real-time service cost of sales decreased
$1,710,000 or 17% from $9,956,000 in 1997. This decrease was a result of lower
service sales. Real-time gross margins decreased to 32% in 1998 when compared to
35% in 1997.

                                      -10-
<PAGE>

Research and development expenses in 1998 were $1,213,000 compared to
$23,953,000 in 1997. This decrease was a direct result of Sun hiring or
contracting 68% of the total existing research and development personnel at
November 24, 1997, the Board of Directors' decision not to pursue development of
clustering technology in the Windows NT environment and the subsequent
consolidation of technical resources into a shared organization responsible for
manufacturing support as well as pre/post sales support. Research and
development expenses as a percentage of net sales decreased from 81% in 1997 to
6% in 1998.

Sales, general and administrative expenses in 1998 were $8,489,000 compared to
$27,044,000 in 1997. Sun hired 65 storage product sales and marketing personnel
or 45% of the Company's existing sales and marketing employees at November 24,
1997. Subsequently, the Company downsized the real-time sales and marketing and
administrative functions to levels more in line with future sales expectations.
As a result, SG&A expenses as a percentage of net sales decreased from 92% in
1997 to 42% in 1998.

In the fourth quarter of 1997, in conjunction with the sale of the storage
products business to Sun (the "Sun Transaction") and subsequent reorganization,
the Company recorded a termination charge of $17,685,000 related to: (i)
severance and benefit pay of $6,323,000 as a result of a 542 person reduction in
workforce, including severance for employees contracted by Sun, as the Company
agreed to pay the difference between the completion bonus offered by Sun at the
end of their contract and the amount of severance they were entitled to had they
been terminated by the Company, (ii) $4,722,000 of retention payments pursuant
to agreements between the Company and each of approximately 49 employees, (iii)
$1,000,000 of incentive bonuses to certain key employees, (iv) $3,390,000
relating to the termination of European facility and automobile leases, and
$350,000 relating to a domestic equipment lease, (v) an estimated $500,000 for
leasehold improvements to be made at the Company's Fort Lauderdale facility
which was leased from Sun, (vi) $1,150,000 in estimated legal and other fees
associated with the Sun Transaction, and (vii) $250,000 accrued for legal fees
in connection with the shareholders suit. (See Item 3 Legal Proceedings.)
Termination charges relating to the Sun Transaction amounting to $1,656,000 were
reversed in the fourth quarter of 1998, as original estimates were revised.

In the first quarter of 1998, the Company recorded a termination charge of
$743,500 related to severance and benefit pay as a result of a 13 person
reduction in workforce associated with the Board of Directors' decision not to
pursue the NT opportunity.

In December 1998, in conjunction with the sale of the real-time business to
Gores (the "Gores Transaction") and anticipated liquidation, subject to
shareholder approval, the Company recorded a charge for estimated liquidation
costs of $5,531,000 related to: (i) severance and benefit pay of $1,211,000 as a
result of a 7 person reduction in workforce, (ii) $300,000 of retention payments
pursuant to agreements between the Company and each of approximately 16
employees, (iii) $1,824,000 in estimated costs for professional services related
to the Company's winddown, (iv) $500,000 of estimated international taxes which
may be required to be paid to remit cash in Europe to the United States, (v)
$481,000 in accrued interest through July 31, 1999 on the $9,692,000 due to
Gould, (vi) $516,000 of additional accounts receivable reserves and additional
accrued expenses, and (vii) $699,000 of miscellaneous costs related to shutdown
of various facilities including real estate and other taxes.

Interest expense decreased to $374,000 in 1998 from $6,218,000 in 1997 as a
result of the Company's payment to Gould in conjunction with the Sun
Transaction. The 1998 interest expense relates to interest payable to Gould
based on the $9,692,000 owed to Gould as a result of Sun's set-off in the second
payment.

                                      -11-
<PAGE>

Provision for income taxes decreased $2,216,000 in 1998 from 1997 as a result of
the reversal of an overestimate of the alternative minimum tax to be paid in
connection with the 1997 profit from the Sun Transaction, offset by taxes
payable by foreign subsidiaries.

Liquidity and Capital Resources

In fiscal 1999, the Company received $2,750,000 from the sale of its real-time
computer systems business. Additionally, the Company received $2,500,000 from
the Settlement Agreement and Mutual Release with Sun. Throughout 1999, the
Company used its existing cash resources to settle liabilities to further the
wind down of its affairs.

For the years ended December 31, 1998 and 1997, the Company reported net income
of $16,658,000 and $34,164,000, respectively. Included in net income in 1998 and
1997 were gains on the sale of assets to Sun amounting to $25,308,000 and
$119,890,000, respectively. In 1998, net cash used in operating activities was
$12,959,000 compared to $66,730,000 in 1997. Net income, adjusted for non cash
items, the loss on the Gores Transaction and the gain on the Sun Transaction was
$118,000 in 1998, as the Company recorded estimated liquidation costs of
$5,531,000, depreciation and amortization of $887,000 and the gain on the Sun
Transaction of $25,308,000. Net income adjusted for non-cash items in 1997
resulted in a loss of $58,812,000. Working capital deficit was decreased in 1998
primarily as a result of the payment of $25,308,000 to Gould. As of December 31,
1998, total capital deficiency was $2,988,000 versus $19,646,000 as of December
31, 1997

Net cash provided by investing activities resulted primarily from the receipt of
proceeds from the sale of the storage product business to Sun of $25,308,000 and
$151,168,000 in 1998 and 1997, respectively. Net cash used in financing
activities in 1998 and 1997 was $25,308,000 and $57,954,000, respectively,
resulting principally from a retirement of $25,000,000 of preferred stock during
1997 and net repayments of loan agreements of $25,308,000 in 1998 versus
$52,659,000 in 1997.

On March 19, 1997, the Company and Gould agreed to cancel $40,000,000 of
indebtedness owed to Gould under their loan agreement (the "Credit Agreement")
in exchange for the issuance to Gould of 400,000 shares of the Company's Series
I Convertible Preferred Stock ("Series I") with a liquidation preference of
$40,000,000. In addition to the exchange of indebtedness for shares of Series I,
the Company and Gould also agreed to amend the Credit Agreement to (i) reduce
the maximum amount which could be borrowed by the Company from $80,000,000 to
$50,000,000 and (ii) provide that any borrowings in excess of $41,915,869 (the
principal amount outstanding on March 19, 1997 after giving effect to the
exchange of indebtedness for shares of Series I) may be made only at the
discretion of Gould. In a letter to the Company dated July 17, 1997, Gould
confirmed that it was not obligated to provide any additional financing to the
Company but that so long as Gould was convinced that the sale of the storage
product business to Sun would take place, it was likely that Gould would
continue to provide financing to the Company but only to the extent absolutely
necessary to enable the transaction to be consummated. On November 24, 1997, the
Company paid to Gould the entire $93,551,000 in principal and accrued interest
owed at that date.

Restricted cash of $1,298,000 and $14,083,000 at December 31, 1998 and December
31, 1997, respectively was held in an escrow account pursuant to an escrow
agreement dated November 24, 1997 between the Company and Sun. The escrow
arrangement was established to ensure that certain of the Company's liabilities
at the closing date of the Sun Transaction, would be paid when due. As the
Company paid these liabilities, escrow funds were released to the Company. These
funds were invested in a U.S. Bank money market fund and were made available to
the Company pursuant to the terms of the agreement.

                                      -12-
<PAGE>

At March 31, 1999, Sun released these restricted funds to the Company. The
majority of cash and cash equivalents at December 31, 1998 consisted of cash
available to the Company from the payments from the Sun Transaction and cash at
various international subsidiaries.

On January 6, 1999, upon the closing of the Gores Transaction, the Company
received the purchase price of $3 million in cash less $250,000 which was agreed
to be set-off against the purchase price pending the resolution of an alleged
breach of an indemnity claim.

At December 31, 1999, the Company had cash of and cash equivalents of $3,637,000
and was owed $2,944,000 by Gores. Its only need for funds was to pay additional
sums in connection with the termination of its businesses, which were estimated
at slightly more than $4,500,000 (net of other asset amounts), including
ongoing expenses.

Year 2000

The Company determined that year 2000 issues had no impact on the Company's
future financial statements in light of the Sun Transaction and the Gores
Transaction. The Company does not have an ongoing business.

Cautionary Statement Relating to Forward-Looking Statements

The foregoing Management's Discussion and Analysis of Financial Condition and
Results of Operations contains various "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, which represent the
Company's expectations and beliefs concerning future events. These statements by
their nature involve substantial risks and uncertainties and actual events or
results may differ as a result of these and other factors. The principal factors
that could cause the Company's actual results to differ materially from those in
the forward-looking statements include differences between amounts actually
collected by the Company and amounts due it or material differences between
actual liquidation costs and those which have been estimated. (See Exhibit 99
incorporated herein by reference to the Company's Form 10-Q for the period ended
June 30, 1996.)


                                      -13-
<PAGE>

Item 8 Financial Statements and Supplementary Data

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Shareholders and Directors
of Encore Computer Corporation

In our opinion, the accompanying consolidated financial statements present
fairly, in all material respects, the consolidated net assets in liquidation of
Encore Computer Corporation and subsidiaries (collectively the "Company") at
December 31, 1999 and 1998, the consolidated changes in net assets in
liquidation for the year ended December 31, 1999 and the consolidated results of
its operations and its cash flows for each of the two years in the period ended
December 31, 1998, in conformity with accounting principles generally accepted
in the United States of America applied on the basis described in Note A to the
financial statements. 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 of America 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 the opinion expressed above.

As described in Note A, management expects that liquidation will occur. As a
result, the Company changed its basis of accounting as of and for periods
subsequent to December 31, 1998 from a going concern basis to a liquidation
basis.

PRICEWATERHOUSECOOPERS LLP
Miami, Florida
October 13, 2000

                                      -14-
<PAGE>

ENCORE COMPUTER CORPORATION
CONSOLIDATED STATEMENT OF CHANGES
IN NET ASSETS IN LIQUIDATION
(In thousands)

                                                              Year Ended
                                                           December 31, 1999
                                                           -----------------
Net assets in liquidation at December 31, 1998                  ($2,988)

     Adjustment of net assets in liquidation:
          Settlement with Sun                                     2,500
          Refund of taxes                                           453
          Other adjustments of estimated amounts                  1,559

     Interest income                                                510
                                                                -------
Net assets in liquidation at December 31, 1999                   $2,034
                                                                =======

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

                                      -15-
<PAGE>

ENCORE COMPUTER CORPORATION
Consolidated Statements of Operations
--------------------------------------------------------------------------------
(in thousands except per share data)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                             Year Ended
                                                    ----------------------------
                                                    December 31,    December 31,
                                                        1998            1997
                                                    ----------------------------
<S>                                                   <C>             <C>
Net sales:
    Equipment                                         $  8,263        $ 14,163
    Service                                             12,172          15,323
                                                      --------        --------
      Total                                             20,435          29,486
                                                      --------        --------
Costs and expenses:
    Cost of equipment sales                              4,492          21,411
    Cost of service sales                                8,246          15,921
    Research and development                             1,213          23,953
    Sales, general and administrative                    8,489          27,044
    Termination charge (Note B)                            (62)         17,685
    Liquidation costs                                    5,531              --
                                                      --------        --------
      Total                                             27,909         106,014
                                                      --------        --------
Operating loss                                          (7,474)        (76,528)
    Interest expense, principally
      related parties                                     (374)         (6,218)
    Interest income                                        847             335
    Other expense, net                                    (140)         (1,412)
    Gain on Sun Transaction                             25,308         119,890
    Loss on Gores Transaction                           (1,822)             --
                                                      --------        --------
  Net income before income taxes                        16,345          36,067

(Benefit) Provision for income taxes                      (313)          1,903
                                                      --------        --------
  Net income                                          $ 16,658        $ 34,164
                                                      ========        ========
  Net income per common share:

    Net income attributable to common
      shareholders                                    $ 16,125        $  4,584
                                                      ========        ========
  Basic earnings per common share                     $   0.24        $   0.11
                                                      ========        ========
  Diluted earnings per common share                   $   0.21        $   0.11
                                                      ========        ========
Weighted average shares
    of common stock-basic                               67,451          40,568
                                                      ========        ========
Weighted average shares
    of common stock-diluted                             80,747          40,568
                                                      ========        ========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

The Company has adopted the liquidation basis of accounting as of December 31,
1998 and for all periods subsequent to December 31, 1998. Therefore, no
statements of operations for periods subsequent to December 31, 1998 are
presented.

                                      -16-
<PAGE>

ENCORE COMPUTER CORPORATION
Consolidated Statements of Net Assets in Liquidation
--------------------------------------------------------------------------------
(in thousands except share data)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                         December 31,    December 31,
                                                             1999            1998
                                                         ------------    ------------
<S>                                                      <C>             <C>
ASSETS
    Cash and cash equivalents                            $      3,637    $      9,290
    Restricted cash                                                             1,298
    Due from Gores                                              2,944           6,153
    Prepaid expenses and other current assets                     453              12
                                                         ------------    ------------
      Total assets                                       $      7,034    $     16,753
                                                         ============    ============
LIABILITIES AND NET ASSETS IN LIQUIDATION
    Accounts payable and accrued liabilities             $      5,000    $     10,049
    Due to Gould Electronics (Note B)                                           9,692
                                                         ------------    ------------
      Total current liabilities                                 5,000          19,741

Commitments and contingencies (Note H)

Net assets in liquidation                                       2,034          (2,988)
                                                         ------------    ------------
      Total liabilities and net assets in liquidation    $      7,034    $     16,753
                                                         ============    ============
Number of Preferred Shares outstanding                        432,114         432,114
                                                         ============    ============
Number of Common Shares outstanding                        67,450,907      67,450,907
                                                         ============    ============
Net assets in liquidation per Preferred Share            $       4.71    ($      6.91)
                                                         ============    ============
Net assets in liquidation per Common Share               $       0.00    $       0.00
                                                         ============    ============
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

                                      -17-
<PAGE>

ENCORE COMPUTER CORPORATION
Consolidated Statements of Cash Flows
--------------------------------------------------------------------------------
(in thousands)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                   Year Ended
                                                         ------------------------------
                                                         December 31,      December 31,
                                                            1998               1997
                                                         ------------------------------
<S>                                                       <C>               <C>
Cash flows from operating activities:
    Net income                                            $  16,658         $  34,164
    Adjustments to arrive at net cash used
      in operating activities:
      Depreciation and amortization                             887             6,631
      Non cash compensation                                      --                --
      Inventory obsolescence and writedown to lower
        of cost or market                                        --               684
      Equity in loss of joint venture                            --               355
      Bad debt provision (credit)                               468               149
      Termination charges                                       (62)           17,685
      Liquidation costs                                       5,531                --
      Gain on Sun Transaction                               (25,308)         (119,890)
      Loss on Gores Transaction                               1,822                --
      Foreign exchange (gain) loss                              (13)              937
      Loss on disposal of property and equipment-Other          135               473
    Net changes in operating assets and liabilities:
      Accounts receivable                                      (347)            8,106
      Inventories                                              (318)            9,093
      Prepaid expenses and other current assets                 411               444
      Other assets                                              292                24
      Accounts payable and accrued liabilities              (13,115)          (23,946)
      Other liabilities                                          --            (1,639)
                                                          ---------         ---------
       Net cash used in operating activities                (12,959)          (66,730)
                                                          ---------         ---------
Cash flows from investing activities:
    Additions to property and equipment                        (403)           (1,525)
    Proceeds from Sun Transaction                            25,308           151,168
    Advanced to Gores                                        (4,622)               --
    Proceeds from sale of property and equipment-Other           --                42
                                                          ---------         ---------
      Net cash provided (used) in investing activities       20,283           149,685
                                                          ---------         ---------
Cash flows from financing activities:
    Net (payments) borrowings  under loan
      agreements                                            (25,308)          (32,659)
    Principal payments of long term debt                         --              (658)
    Dividends paid on Preferred Stock                            --                --
    Retirement of Preferred Stock                                --           (25,000)
    Issuance of Common Stock                                     --               363
                                                          ---------         ---------
      Net cash used in financing activities:                (25,308)          (57,954)
                                                          ---------         ---------
Effect of exchange rate changes on cash                         (55)             (310)
                                                          ---------         ---------
(Decrease) increase in cash and cash equivalents            (18,039)           24,691
Restricted cash                                              12,785           (14,083)
                                                          ---------         ---------
                                                             (5,254)           10,608
Cash and cash equivalents, beginning                         14,544             3,936
                                                          ---------         ---------
Cash and cash equivalents, ending                         $   9,290         $  14,544
                                                          =========         =========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

The Company has adopted the liquidation basis of accounting as of December 31,
1998 and for all periods subsequent to December 31, 1998. Therefore, no
statements of cash flows for periods subsequent to December 31, 1998 are
presented.

                                      -18-
<PAGE>

ENCORE COMPUTER CORPORATION
Consolidated Statements of Cash Flows
--------------------------------------------------------------------------------

Supplemental disclosure of cash flow information (in thousands):

                                                         1998       1997
                                                       -------    -------
    Cash paid during the year for interest             $    32    $17,807

    Cash paid during the year for income taxes         $   500    $ 2,099

Non-cash investing and financing activities:

    Indebtedness exchanged for preferred stock         $    --    $40,000

    Due to Gould Electronics in connection
      with the sale of asset to Sun                    $    --    $35,000

The accompanying notes are an integral part of the consolidated financial
statements.

The Company has adopted the liquidation basis of accounting as of December 31,
1998 and for all periods subsequent to December 31, 1998. Therefore, no
statements of cash flows for periods subsequent to December 31, 1998 are
presented.

                                      -19-
<PAGE>

ENCORE COMPUTER CORPORATION
Consolidated Statements of Shareholders' Equity (Capital Deficiency)
--------------------------------------------------------------------------------
(in thousands except share data)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                              Preferred Stock
                                                 ---------------------------------------------------------------------------
                                                        Series A                   Series B                 Series D
                                                 -----------------------   -----------------------   -----------------------
                                                                 Par                       Par                       Par
                                                   Shares       Value        Shares       Value        Shares       Value
                                                 ----------   ----------   ----------   ----------   ----------   ----------
<S>                                              <C>          <C>          <C>          <C>          <C>          <C>
Balance January 1, 1997                              73,641            1      728,722            7    1,115,074           11

Common stock options exercised,
    $.69 to $1.56 per share

Shares issued through employee stock purchase
    plan at an average price of $0.74 per share

Issuance of Series I Convertible
    Preferred Stock

Retirement of Preferred Stock relating
    to the Sun Transaction                                                                           (1,115,074)          11

Conversion of Series A and B Preferred
    Stock to Common Stock                           (73,641)          (1)    (728,722)          (7)

Net income
                                                 ----------   ----------   ----------   ----------   ----------   ----------
Balance December 31, 1997                                --           --           --           --           --           --

Shares issued through employee stock purchase
    plan at an average price of $0.23 per share

Issuance of Preferred Stock Series B, D, E, F,
    G, H and I accumulated dividends                                           64,905            1      104,190            1

Dividends issued to Preferred  Stockholders
    in shares of Series B, D, E, F, G, H and I                                    811           --        1,301           --

Net income
                                                 ----------   ----------   ----------   ----------   ----------   ----------
Balance December 31, 1998                                --   $       --       65,716   $        1      105,491   $        1
                                                 ==========   ==========   ==========   ==========   ==========   ==========
<CAPTION>
                                                                              Preferred Stock
                                                 ---------------------------------------------------------------------------
                                                        Series E                  Series F                   Series G
                                                 -----------------------   -----------------------   -----------------------
                                                                 Par                       Par                       Par
                                                   Shares       Value        Shares       Value        Shares       Value
                                                 ----------   ----------   ----------   ----------   ----------   ----------
<S>                                              <C>          <C>          <C>          <C>          <C>          <C>
Balance January 1, 1997                           1,139,782           11      533,333            5      572,289            6

Common stock options exercised,
    $.69 to $1.56 per share

Shares issued through employee stock purchase
    plan at an average price of $0.74 per share

Issuance of Series I Convertible
    Preferred Stock

Retirement of Preferred Stock relating
    to the Sun Transaction                       (1,139,782)          11     (533,333)          (5)    (572,289)          (6)

Conversion of Series A and B Preferred
    Stock to Common Stock

Net income
                                                 ----------   ----------   ----------   ----------   ----------   ----------
Balance December 31, 1997                                --           --           --           --           --           --

Shares issued through employee stock purchase
    plan at an average price of $0.23 per share

Issuance of Preferred Stock Series B, D, E, F,
    G, H and I accumulated dividends                106,501            1       49,832           --       53,474            1

Dividends issued to Preferred  Stockholders
    in shares of Series B, D, E, F, G, H and I        1,331           --          622           --          668           --

Net income
                                                 ----------   ----------   ----------   ----------   ----------   ----------
Balance December 31, 1998                           107,832   $        1       50,454   $       --       54,142   $        1
                                                 ==========   ==========   ==========   ==========   ==========   ==========
</TABLE>

The accompanying notes are an intergral part of the consolidated financial
statements.

                                      -20-
<PAGE>
<TABLE>
<CAPTION>
                                                 -----------------------------------------------------
                                                         Series H                    Series I
                                                 -------------------------   -------------------------
                                                                   Par                         Par
                                                    Shares        Value         Shares        Value
                                                 -----------   -----------   -----------   -----------
<S>                                              <C>           <C>           <C>           <C>
Balance January 1, 1997                              350,000             4            --            --

Common stock options exercised,
    $.69 to $1.56 per share

Shares issued through employee stock purchase
    plan at an average price of $0.74 per share

Issuance of Series I Convertible
    Preferred Stock                                                              400,000             4

Retirement of Preferred Stock relating
    to the Sun Transaction                          (350,000)           (4)     (400,000)           (4)

Conversion of Series A and B Preferred
    Stock to Common Stock

Net income
                                                 -----------   -----------   -----------   -----------
Balance December 31, 1997                                 --            --            --            --

Shares issued through employee stock purchase
    plan at an average price of $0.23 per share

Issuance of Preferred Stock Series B, D, E, F,
    G, H and I accumulated dividends                  32,702            --        15,180            --

Dividends issued to Preferred  Stockholders
    in shares of Series B, D, E, F, G, H and I           408            --           189            --

Net income
                                                 -----------   -----------   -----------   -----------
Balance December 31, 1998                             33,110   $        --        15,369   $        --
                                                 ===========   ===========   ===========   ===========
<CAPTION>
                                                       Common Stock
                                                 -------------------------
                                                                                                       Shareholders'
                                                                             Additional                   Equity
                                                                   Par         Paid-in    Accumulated    (Capital
                                                   Shares         Value        Capital      Deficit     Deficiency)
                                                 -----------   -----------   -----------  -----------   -----------
<S>                                              <C>           <C>           <C>          <C>           <C>
Balance January 1, 1997                           37,270,457           373       447,068     (481,496)      (34,010)

Common stock options exercised,
    $.69 to $1.56 per share                           51,372                          59                         59

Shares issued through employee stock purchase
    plan at an average price of $0.74 per share      339,165             3           301                        304

Issuance of Series I Convertible
    Preferred Stock                                                               39,833                     39,837

Retirement of Preferred Stock relating
    to the Sun Transaction                                                       (59,959)                   (60,000)

Conversion of Series A and B Preferred
    Stock to Common Stock                         29,786,315           298          (290)                         0

Net income                                                                                     34,164        34,164
                                                 -----------   -----------   -----------  -----------   -----------
Balance December 31, 1997                         67,447,309           674       427,012     (447,332)      (19,646)

Shares issued through employee stock purchase
    plan at an average price of $0.23 per share        3,598             1            --                          1

Issuance of Preferred Stock Series B, D, E, F,
    G, H and I accumulated dividends                                                  (4)                        --

Dividends issued to Preferred  Stockholders
    in shares of Series B, D, E, F, G, H and I                                        (1)                        (1)

Net income                                                                                     16,658        16,658
                                                 -----------   -----------   -----------  -----------   -----------
Balance December 31, 1998                         67,450,907   $       675   $   427,007  $  (430,674)  $    (2,988)
                                                 ===========   ===========   ===========  ===========   ===========
</TABLE>

                                      -21-
<PAGE>

Notes to Consolidated Financial Statements

A. Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

Encore Computer Corporation ("Encore" or the "Company"), founded in 1983,
designed, manufactured, distributed and supported scalable real-time data
systems and advanced clustering technologies. Headquartered in Fort Lauderdale,
Florida, the Company had sales offices and distributors in the United States,
Canada, Europe, and the Far East.

Intention of Liquidation

During fiscal 1997, Encore Computer Corporation ("Encore" or the "Company") sold
substantially all of its assets to Sun Microsystems, Inc. ("Sun"). Furthermore,
during fiscal 1998, the Company sold its real-time computer systems business to
Gores Technology Group. After these transactions, management contemplated that
the Company would be liquidated. However, because of a provision of the
agreements relating to Encore's sale of its storage products business to Sun,
Encore's stockholders could not vote on the liquidation of Encore at the meeting
on September 11, 1998, at which they approved the sale of the real-time computer
systems business. The Board of Directors terminated the employment of the
Company's President on September 30, 1998 and the employment of the Company's
Chief Executive Officer on November 24, 1998 in view of the fact that the
Company no longer had any active business. The Company's staff was reduced to
its General Counsel who took the position of President, its Chief Financial
Officer, its Vice President of Human Resources (who continued to be involved in
employee compensation matters arising out of the sales of the storage products
and the real-time computer systems businesses) and a few clerical and
administrative employees. The Company also moved its offices to a substantially
smaller space which it occupied under a short-term lease. Those offices were
closed on or about June 30, 1999, and the Company's further activities are
conducted in space provided by Gould Electronics Inc. ("Gould") in Eastlake,
Ohio. Management expects that liquidation of the Company will occur. As a
result, the Company has adopted the liquidation basis of accounting as of
December 31, 1998 and for all periods subsequent to December 31, 1998.

The assets of the Company available for distribution to shareholders on
liquidation of Encore would be (i) the Company's assets, less its liabilities,
at December 31, 1999, plus or minus (ii) any sum by which the amount received
from Gores is greater or less than the carrying value on the Company's December
31, 1999 statement of net assets in liquidation, plus or minus (iii) any amount
by which severance and other costs related to the sale of the Company's
businesses are less or greater than the accruals for them on the December 31,
1999 statement of net assets in liquidation, plus or minus (iv) any amounts by
which the costs of liquidation and costs related to contingent liabilities,
including pending litigation, are less or greater than the reserves reflected on
the December 31, 1999 statement of net assets in liquidation, minus (v) expenses
incurred after December 31, 1999 which have not been contemplated in the
accruals.

Under the liquidation basis of accounting, assets are stated at their estimated
net realizable value and liabilities are stated at their estimated amounts.

                                      -22-
<PAGE>

The valuation of assets and liabilities necessarily requires many estimates and
assumptions, and there are substantial uncertainties in liquidating the Company.
The valuations presented in the accompanying Statement of Net Assets in
Liquidation represent estimates based on present facts and circumstances, of the
estimated realizable values of assets, estimated liabilities and estimated costs
associated with carrying out the liquidation of the Company. The actual values
and costs could be higher or lower than the amounts recorded as of December 31,
1999.

Accounts payable and accrued liabilities as of December 31, 1999 include
estimates of costs to be incurred in carrying out the liquidation of the
Company. These costs include a reserve for future non-cancelable lease payments
and other estimated liabilities. The actual costs could vary significantly from
the related provisions due to uncertainty related to the length of time required
to liquidate the Company and complexities and contingencies.

The Company provides employees with salary continuation in the event of an
employee's involuntary termination. The Company records the estimated cost of
post-employment benefits at the date of the event giving rise to the liability
to pay those benefits. The salary continuation costs amounting to approximately
$1,629,000 are included in the 1998 consolidated statement of operations. There
were no salary continuation costs in fiscal 1999.

Principles of Consolidation

The accompanying financial statements include the accounts of Encore and its
wholly owned subsidiaries. All material intercompany transactions have been
eliminated. The Company's 50% investment in a Japanese joint venture operation
which was liquidated in 1997 was accounted for under the equity method. The
Company had a commitment to make additional capital contributions to the joint
venture, accordingly, the Company recognized losses in excess of its investment
to the extent of this capital commitment.

Cash and Cash Equivalents

Cash equivalents consist of highly liquid investments with maturities at the
date of purchase of three months or less.

Restricted Cash

Restricted cash was held in an escrow account pursuant to an escrow agreement
dated November 24, 1997 between the Company and Sun. The escrow agreement was
established to ensure that certain of the Company's liabilities at the closing
date of the Sun Transaction, would be paid when due. As the Company paid these
liabilities, escrow funds were released to the Company. As of March 31, 1999,
all funds were released by Sun to the Company.

Revenue Recognition

Revenue related to equipment and software sales was recognized upon shipment.
With respect to the Company's storage product line, during the product
introductory period, revenue was recognized upon customer acceptance. The
Company expected acceptance to occur within thirty days of shipment. Service
revenue was recognized over the term of the related maintenance agreements which
approximated the timing of services performed.

Inventories

Inventories were stated at the lower of cost or market. Cost was determined by
the first-in, first-out method. Loaned equipment which consisted primarily of
finished computer systems that were loaned to customers for test and evaluation
was classified as inventory only if the equipment was intended for resale and
anticipated to be in service for a period of less than 12 months prior to sale.
Loaned equipment in service for more than 12 months was classified as property
and equipment.

                                      -23-
<PAGE>

Property and Equipment

Property and equipment was stated at cost. Property and equipment included
customer service inventory which consisted principally of spare parts utilized
to support repairs at customer installations and was generally not available for
resale. Additions, renewals and improvements were capitalized, and repair and
maintenance costs were expensed. Upon an asset retirement or disposition, the
cost and related accumulated depreciation were removed from the accounts and any
resulting gain or loss was reflected in the results of operations. Depreciation
was provided on a straight line basis over the estimated lives of the assets,
generally three years for loaned equipment, five years for equipment and
customer service inventory, ten years for furniture and fixtures, and 25 to 30
years for buildings. Leasehold improvements were amortized over their expected
useful lives or the lease term, whichever was shorter.

Stock-Based Compensation

The Company applied APB Opinion No. 25 and related Interpretations in accounting
for its stock option and stock purchase plans. Accordingly, no compensation cost
was recognized for these plans with the exception of extension of the expiration
date of certain individual stock option grants. Pro forma disclosure of the fair
value impact on earnings and earnings per share as required in FAS 123,
"Accounting for Stock-Based Compensation" is presented in Note J of the Notes to
Consolidated Financial Statements.

Income Taxes

The Company utilized the liability method of accounting for deferred income
taxes. Under this method, deferred tax assets and liabilities were determined
based on the difference between the financial statement and tax bases of assets
and liabilities using enacted tax rates in effect for the year in which the
differences were expected to reverse. Deferred tax assets were reduced by a
valuation allowance when, in the opinion of management, it was more likely than
not that some or all of the deferred tax assets would not be realized.

Earnings Per Share

Basic earnings per common share calculations are determined by dividing earnings
available to common shareholders by the weighted average number of shares of
common stock outstanding during the year. Diluted earnings per common share
calculations are determined by dividing earnings available to common
shareholders by the weighted average number of shares of common stock and
dilutive common stock equivalents outstanding.

Preferred stock dividends amounted to $533,000 and $29,579,900 for 1998 and
1997, respectively. All preferred stock dividends have been paid in additional
shares of the appropriate class of preferred stock.

Foreign Currency Translation and Transactions

Management determined that the functional currency of each of the Company's
subsidiaries was the United States dollar. Consequently, assets and liabilities
of foreign operations were translated into U.S. dollars at period end exchange
rates, except that inventory and property and equipment were translated at
historical exchange rates. Income and expenses were translated at the average
rates prevailing during the year, except that cost of sales and depreciation
were translated at historical exchange rates. All gains and losses arising from
changes in exchange rates were included in operating results in the period
incurred.

                                      -24-
<PAGE>

Warranties

The Company provided a standard product warranty on its real-time computer
systems for parts and labor which generally extended ninety days from the date
of installation, but on certain products for up to one year. Gores assumed all
warranty obligations relating to the Company's installed real-time product base.
On its storage product line, the standard product warranty for parts and labor
generally extended two, and in some cases, three years from the date of
installation. Sun assumed all warranty obligations relating to the Company's
installed storage product base. The estimated cost of providing warranty on
products sold was included in cost of sales at the time revenue was recognized.
These estimates were based upon historical data for mature products and
engineering estimates for new products. Actual warranty costs were reviewed on a
quarterly basis and subsequent estimates adjusted appropriately. Management does
not expect any significant losses from product warranties in the future.

B. Asset Purchase Agreement with Sun Microsystems

On November 24, 1997, the Company sold substantially all the assets associated
with its storage products business to Sun Microsystems, Inc. ("Sun"). The Asset
Purchase Agreement under which the transaction took place contemplated that Sun
would pay $185 million for the storage products business, of which $150 million
would be paid in cash at the closing and $35 million would be paid on July 1,
1998, subject to Sun's right to make offsets against the second payment. In
fact, because of certain closing adjustments, Sun paid Encore $151,168,227 at
the closing.

In connection with the sale of Encore's storage product business to Sun, Gould
also entered into an agreement with Sun under which Gould guaranteed most of
Encore's obligations under the Asset Purchase Agreement between Encore and Sun,
agreed to provide whatever funds were necessary to ensure that Encore would not
become insolvent within one year after the closing of the transaction with Sun,
and indemnified Sun against any losses Sun might incur if the sale of Encore's
storage products business to Sun were challenged in an insolvency proceeding
relating to Encore commenced within two years after the closing.

Shortly before July 1, 1998, Sun asserted claims against Encore totaling
$9,692,000. Because of that, on July 1, 1998, Sun paid only $25,308,000 of the
$35,000,000 which was due on that date. On July 16, 1999, Sun and Encore entered
a Settlement Agreement and Mutual Release pursuant to which Sun paid $2,500,000
to Gould as a settlement for the receivable and Sun released these claims. In
connection with the Settlement Agreement and Mutual Release, Sun did not release
Gould's other indemnification obligations related to Encore's obligations and
various indemnification clauses included in the Asset Purchase Agreement.

On November 24, 1997, Gould held (i) notes, secured by all of Encore's assets,
under which Encore owed Gould $93.55 million for money Encore had borrowed from
Gould plus unpaid interest, and (ii) convertible preferred stock of Encore with
a liquidation preference totaling $411 million, which Encore had issued to Gould
between 1991 and 1996 in exchange for cancellation of indebtedness for money
Encore had borrowed from Gould and interest on those borrowings. In addition,
Gould held approximately 48.44% of Encore's common stock, which Gould had
obtained as part of the consideration for the sale of its Computer Systems
Division to Encore in 1989 or through conversion of convertible preferred stock.
In connection with the sale of Encore's storage products business to Sun, Encore
and Gould agreed that Encore would redeem all the convertible preferred stock
which Gould held for $60 million, of which $25 million was to be paid at the
closing of the Sun transaction, and the balance was to be satisfied with the
second payment due from Sun. In addition, Gould agreed that if it received the
entire $35 million by July 31, 1998, Gould would waive its right to receive
additional shares of preferred stock with a liquidation preference of
approximately $43 million which were due to it as past-due dividends on the
convertible preferred stock which was being redeemed.

                                      -25-
<PAGE>

Finally, Gould agreed that if Encore were liquidated before November 24, 1999,
Gould would waive any right it had as a holder of Encore's common stock with
regard to the first $30 million of liquidating distributions made to Encore's
common stockholders.

Because Sun withheld $9,692,000 of the payment due on July 1, 1998, Encore
remained obligated to Gould in that amount and had to either pay that amount to
Gould out of its own funds by July 31, 1998 or issue to Gould the over-due
dividend shares of convertible preferred stock, which had a liquidation
preference of $42,678,400. However, in order to give Encore more time to attempt
to resolve Sun's claims, Gould agreed that if Encore issued those dividend
shares to it, Gould would give Encore the option to repurchase the dividend
shares on or before July 31, 1999 for an amount equal to the balance of the
$9,692,000 which remained unpaid ($7,192,000 after the payment of $2,500,000
received on July 16, 1999) plus interest at 8.5% per annum from August 1, 1998.
Encore then issued the dividend shares to Gould. On July 31, 1999, Gould
extended Encore's option to repurchase the dividend shares to October 30, 1999;
Gould subsequently extended Encore's option to December 15, 1999, when it
expired.

On December 30, 1999, the Company paid $7,192,000 to Gould to settle its
obligation for the amounts withheld by Sun, and Gould, among other things,
agreed to convert the dividend shares into common stock and agreed that if
Encore were liquidated before November 24, 2000, Gould would waive any right it
had as a holder of Encore's common stock with regard to the first $30 million of
liquidating distributions made to Encore's common stockholders. Additionally,
Gould agreed to indemnify Encore for obligations it may incur to indemnify its
current and future directors to extent of the repayment of the $7,192,000
obligation. On January 20, 2000, Gould converted its convertible preferred stock
to 13,295,815 shares of common stock.

C. Sale to Gores Technology Group

When the Company completed the sale of its storage products business, the Board
of Directors decided that, at least until the Board's January 1998 meeting, the
Company should (a) explore the possibility of attempting to develop and market
clustering software related to Windows NT(R) and (b) explore the feasibility of
the Company's continuing, and attempting to expand, its real-time computer
systems business. In January 1998, the Board of Directors (i) decided the
Company should discontinue its efforts to develop clustering software relating
to Windows NT and (ii) authorized the Company to retain an investment banker to
try to find a purchaser for the real-time computer systems business.

On March 2, 1998, the Company signed a non-binding letter of intent to sell its
real-time computer systems business to Gores Technology Group ("Gores") for
approximately $5.5 million, based on an estimated December 31, 1997 balance
sheet for that business. On June 4, 1998, the Company and Gores entered into a
definitive agreement for the Company to sell the real-time business to Gores for
$3 million in cash. The reduction in price from that contemplated in the letter
of intent reflected operating results during the first quarter of 1998 and
differences between the estimated December 31, 1997 balance sheet and the actual
balance sheet at March 29, 1998.

At the same time the Company entered into the agreement to sell its real-time
computer systems business to Gores, the Company entered into a management
agreement under which Gores took over management of the real-time computer
systems business, retaining any positive cash flow and bearing any negative cash
flow, but receiving a management fee of $100,000 per month, which was to be
refunded to Encore upon closing of the sale of the real-time computer systems
business to Gores. Encore provided a $2 million line of credit to Gores to fund
its operation of the real-time computer systems business until the closing.

                                      -26-
<PAGE>

The sale of the real-time computer systems business to Gores was approved by the
Company's stockholders on September 11, 1998, and the transaction was completed
on January 6, 1999. At the closing of the sale, the Company received $2,750,000
(with the additional $250,000 set off against the purchase price to resolve an
alleged breach of indemnity claim) and the parties agreed to resolve shortly
after the closing disputed items relating to the sale, including the amounts due
to Encore under the management agreement and the line of credit, and certain
other indemnity claims by Gores. On August 10, 2000, the Company reached an
agreement in principle to resolve such items. In connection with the agreement,
Encore and Gores agreed to reduce the principal balance of the receivable by (1)
$96,000 relating to an uncollectible note receivable purchased by Gores in the
acquisition of the real-time business and (2) $150,000 for expenses incurred in
the negotiation of this settlement. As a result, the receivable balance due to
Encore was $2,979,000.

In order to reduce this balance, Gores agreed to make payments on Encore's
behalf relating to the closing of certain foreign offices. Such payments include
lease termination fees and payment of taxes. During fiscal 1999, Gores paid
$35,000 relating to the termination of Encore's Belgium office lease. As a
result, the outstanding balance of the receivable was $2,944,000 as of December
31, 1999.

Subsequent to December 31, 1999, Gores paid approximately $1,845,000 relating to
lease termination costs and a tax settlement. After these payments, the
receivable balance amounted to $1,098,000. Gores agreed to make cash payments
for the remainder of the receivable balance. In August and October, 2000, Encore
received payments of $250,000 toward the receivable balance, resulting in a
receivable balance of $598,000. Management believes that this receivable is
fully collectible.


                                      -27-
<PAGE>

D. Property and Equipment

Depreciation expense in 1998 and 1997 amounted to $736,000 and $6,175,000,
respectively. Fixed assets with a net book value of approximately $27,148,000
and $595,000 were sold to Sun Microsystems and Gores Technology Group,
respectively. There are no fixed assets as of December 31, 1999.

                                      -28-
<PAGE>

E. Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consist of the following (in
thousands):

                                          December 31,        December 31,
                                              1999                1998
                                            -------             -------
      Accrued expenses                        $  --             $   706
      Accrued salaries and benefits              --                 299
      Accrued restructuring costs             3,750               3,612
      Accrued liquidation costs               1,250               4,609
      Accrued interest-related parties           --                 823
                                            -------             -------
                                            $ 5,000             $10,049
                                            =======             =======

Accrued interest of $343,000 was payable to Gould at December 31, 1998 and
$480,000 was accrued as of December 31, 1998 for the period January 1, 1999
through July 31, 1999. No amounts were paid and no amounts are payable (see Note
B).

F. Income Taxes

The Company utilized the liability method of accounting for deferred income
taxes and recorded a provision of $1,903,000, for the year ended 1997. There was
no taxable income for the years ended December 31, 1999 and 1998.

The significant components of the deferred tax assets and liabilities as of
December 31, 1999 and 1998 were as follows (in thousands):

                                                December 31,    December 31,
                                                    1999            1998
                                                 ---------       ---------
      Deferred tax assets:
          Net operating losses                   $ 143,477       $ 139,250
          Research and experimental credits          2,272           2,272

          Accrued vacation                              --              84

          Accrued restructuring                      1,900           2,296
          Gain on asset sale                            --           3,683
                                                 ---------       ---------
                                                   147,649         147,585

      Valuation allowance                         (147,649)       (147,585)
                                                 ---------       ---------
          Net                                    $      --       $      --
                                                 =========       =========

For income tax purposes the Company had a change in ownership, as defined by
Internal Revenue Code Section 382, in connection with the Gould debt exchange on
January 28, 1991. The change in ownership resulted in an annual limitation of
approximately $2,000,000 on the amount of net operating losses incurred prior to
January 28, 1991 that can be utilized to offset the Company's future taxable
income. At December 31, 1997, the Company utilized approximately $14,000,000 of
the available pre change net operating losses.

                                      -29-
<PAGE>

At December 31, 1999, the Company has available approximately $50,000,000 of pre
change net operating losses. Of this amount approximately $16,000,000 will be
allowable in future years after application of the Section 382 limitation. In
addition, pre change tax credit carryforwards, principally research and
development credits, of approximately $1,750,000, AMT credits of $522,000 and
post change net operating losses of $279,000,000 will be available to offset
future taxable income. These net operating losses and tax credit carryforwards
expire in the years 1999 through 2018. For financial reporting purposes, the
full amount of the deferred tax assets was offset by a valuation allowance due
to uncertainties associated with the eventual realization of such benefits.

G. Commitments and Contingencies

Leases

At December 31, 1999, the Company had accrued termination charges of $3,350,000
related to international facility leases. These termination costs are included
in accounts payable and accrued expenses in the accompanying consolidated
statement of net assets in liquidation.

Joint Venture Capital Commitment

The Company had committed to invest up to a total of $3,250,000 for a Japanese
joint venture, of which $1,640,000 had been accrued in recognition of losses
reported through its dissolution on December 5, 1997. The $1,640,000 less
$181,000 owed to Encore by the joint venture was remitted to Japan Energy
Corporation in January 1998.

Litigation

Shortly before the Sun Transaction was closed, shareholders of the Company
brought a derivative suit in the Delaware Chancery Court against Gould and the
Company's then directors, C. David Ferguson, Robert Fedor, Rowland Thomas and
Kenneth Fisher. Three similar shareholder suits were also filed and all four
suits have been consolidated as Civil Action #16044, In Re Encore Computer
Corporation Shareholders Litigation. The shareholders filed an amended complaint
adding directors Michael Veysey and Thomas Rich as defendants and eliminating
the Company as other than a nominal defendant. The defendants moved for summary
judgement and that motion was granted on June 16, 2000. Two of the Plaintiffs
filed a notice of appeal to the Delaware Supreme Court. Although the Company is
not a party to the litigation, the Company has indemnified its officers and
directors against liability for matters such as those which are the subject of
the litigation. Nonetheless, the Company does not believe the shareholder suit
will have a significant financial impact on the Company.

Intellectual Property License

In connection with its recapitalization in January 1991, the Company licensed
substantially all of its intellectual property to Gould on a royalty free basis.
However, under the terms of the agreement, and in combination with certain
extensions granted by Gould, Encore retained the exclusive use of the
intellectual property through December 31, 1995. Those extensions expired and
effective January 1, 1996, both Gould and Encore had the right to use the Encore
intellectual property. The Company maintained the right to terminate the Gould
license if all Gould borrowings were repaid and the commitments under any Gould
credit agreements were terminated and one of the following four conditions was
met; (i) the 6% Cumulative Series B Convertible Preferred Stock ("Series B") was
converted into common stock or Series A Convertible Participating Preferred
Stock, or (ii) the Series B was redeemed; or (iii) the Company paid Gould the
fair value of the license, or (iv) the Company paid Gould a fixed dollar amount
equal to $46,540,000 plus 9% per annum interest compounded annually for the
period after January 28, 1996, through the date of payment.

                                      -30-
<PAGE>

In conjunction with the Sun Transaction, Sun and Encore entered into a
Technology License Agreement pursuant to which Sun granted to Encore a
non-exclusive, non-transferable, royalty free, worldwide license in the
intellectual property sold to Sun as part of the storage products business to
create and distribute real-time products based on the intellectual property for
use by Encore in its real-time business, subject to certain limitations, but not
for any other purpose. Encore also agreed not to use the intellectual property
in any storage products or to compete with Sun's storage products business, and
to grant to Sun a non-exclusive, royalty-free, paid up, non-terminable,
worldwide license in any derivative works created by Encore derived from the
intellectual property, so long as Sun does not use this grant back license to
create or distribute real-time products.

H. Earnings Per Share

The following table reconciles for the years ended 1998 and 1997, net income
(loss) and weighted average shares outstanding used to calculate basic and
diluted earnings (loss) per share (in thousands except per share data):

Basic                                                        1998        1997
-----                                                      --------    --------
Net income (loss)                                          $ 16,658    $ 34,164

Series B, D, E, F, and G Preferred Stock Dividends               --          --

Series B, D, E, F, G, H, and I Preferred Stock Dividends       (533)    (29,580)
                                                           --------    --------
Net income (loss) attributable to common shareholders      $ 16,125    $  4,584
                                                           ========    ========
Weighted average common shares outstanding                   67,451      40,568
                                                           ========    ========
Basic income (loss) per common share                           0.24        0.11
                                                           ========    ========

                                      -31-
<PAGE>

      Diluted                                          1998         1997
      -------                                         -------      -------
      Net income (loss)                               $16,658      $34,164

      Weighted average common shares outstanding       67,451       40,568

      Series A assumed converted                           --           --
      Series B assumed converted                        2,022           --
      Series D assumed converted                        3,246           --
      Series E assumed converted                        3,318           --
      Series F assumed converted                        1,552           --
      Series G assumed converted                        1,666           --
      Series H assumed converted                        1,019           --
      Series I assumed converted                          473           --

      Exercise of options reduced by the number
        of shares purchased with proceeds                  --           --
                                                      -------      -------
      Weighted average shares outstanding              80,747       40,568
                                                      =======      =======
      Diluted income (loss) per common share:            0.21         0.11
                                                      =======      =======

Basic and diluted income (loss) per common share are the same in 1997 because
the effect of the common stock equivalents would be anti-dilutive.

I. Capital Stock

On March 19, 1997, Gould agreed to cancel $40,000,000 of indebtedness owed to it
by the Company for 400,000 newly-issued shares of Series I Convertible Preferred
Stock ("Series I"). The canceled debt had represented a portion of the
indebtedness owed by the company to Gould under the Credit Agreement. Because of
the related party nature of this transaction, the difference between the
carrying amount of the indebtedness exchanged and the par value of the
securities issued and other consideration granted has been credited to
additional paid-in capital. The financial effect of this transaction is
summarized as follows (in thousands):

                                                                   December 31,
                                                                       1997
                                                                     --------
Reduction of debt                                                    $ 40,000
Less:
      Par value of shares issued                                           (4)
      Reversal of accrued interest on previous recapitalizations          283
      Accrued interest on remaining Gould indebtedness
        for the remaining term of the agreements                         (446)
                                                                     --------
      Increase in additional paid-in capital                         $ 39,833
                                                                     ========

                                      -32-
<PAGE>

Impact of Foreign Ownership

On November 24, 1997, in conjunction with the Sun Transaction, Gould converted
their Series A and Series B Preferred Stock to Common Stock and all other series
of Preferred Stock were retired. As a result, JEC beneficially owns 48.4% of the
Company's common stock. Gould also holds four of the six seats on the Company's
Board of Directors. In light of limitations on the ability of certain U.S.
government agencies to transact business with foreign owned or controlled
companies, Encore and JEC, the parent company of Gould, have proactively worked
to comply with all U.S. requirements. The United States Defense Investigative
Service has accepted the changes in the Company's ownership and control in
conjunction with the Sun and Gores Transactions.

Stock Compensation Plan

At December 31, 1998, the Company had a Long Term Performance Plan (the
"Performance Plan") which was approved by the shareholders of the Company on
June 27, 1995 and replaced all previous stock option plans. Shares of common
stock are reserved for issuance to officers, directors, employees and certain
consultants. The Company applies APB Opinion No. 25 and related Interpretations
in accounting for its plan. Accordingly, no compensation cost has been
recognized for its fixed stock option plan and its stock purchase plan. Had
compensation cost for the Company's stock based compensation plan been
determined based on the fair value at the grant dates for awards under the plans
consistent with the method of FASB Statement 123, the Company's net income
(loss) and income (loss) per share would have been reduced to the pro forma
amounts indicated below:

                                                    (1) 1998          1997
                                                   ----------      ----------
      Net income (loss)           As reported      $   16,658      $   34,164
                                  Pro forma        $   16,438      $   33,424

      Income (loss) per share     As reported      $     0.24      $     0.11
                                  Pro forma        $     0.24      $     0.09

The fair value of each option grant was estimated on the date of grant using the
Black-Scholes option-pricing model with the following assumptions for 1997 and
1998, respectively: risk-free interest rates of 6.25 and 5.625 percent; dividend
yield of 0 percent; expected life of 4 years; and volatility of 127.7 and 234.6
percent.

                                      -33-
<PAGE>

A summary of the status of the Company's stock options as of December 31, 1999,
1998 and 1997, and changes during the years ending on those dates is presented
below:

<TABLE>
<CAPTION>
                                             1999                    1998                    1997
                                    --------------------     -------------------    ---------------------
                                                Weighted               Weighted                  Weighted
                                                 Average                Average                   Average
                                     Shares     Exercise     Shares    Exercise     Shares       Exercise
                                     (000)        Price       (000)      Price       (000)         Price
                                    --------------------     -------------------    ---------------------
<S>                                 <C>         <C>          <C>         <C>        <C>           <C>
Outstanding at beginning
    of year                           4,918      $  1.56       9,020     $  1.62      9,582       $  1.62
Granted
  Price = Fair Value                     --                       --                    360       $  1.60
  Price > Fair Value                     --           --          --         --          --            --
  Price < Fair Value                     --                       --                    100       $  0.39
Exercised                                --                       --                    (59)      $  1.00
Forfeited                             2,989      $  0.94      (4,102)    $  2.09       (963)      $  2.09
                                    -------                  -------                -------
Outstanding at end of year            1,929      $  2.09       4,918     $  1.56      9,020       $  1.56
                                    =======                  =======                =======
Options exercisable at year end       1,929                    4,894                  8,280
                                    =======                  =======                =======
Weighted-average fair value of
options granted during the year          --                       --                $   1.0
                                    =======                  =======                =======
</TABLE>

The following table summarizes information about stock options outstanding at
December 31, 1998:

<TABLE>
<CAPTION>
                OPTIONS OUTSTANDING                             OPTIONS EXERCISABLE
---------------------------------------------------------    --------------------------
                                    Weighted
                                     Average     Weighted                     Weighted
                      Number        Remaining    Average         Number       Average
   Range of       Outstanding as   Contractual   Exercise    Exercisable as   Exercise
Exercise Prices     of 12/31/99       Life        Price       of 12/31/99       Price
---------------   --------------   -----------   --------    --------------   ---------
<S>                 <C>               <C>        <C>           <C>            <C>
$0.63-$0.81           300,000          .12       $ 0.7969        300,000      $  0.7969
$1.56-$2.88         1,343,719         2.39       $ 2.0003      1,319,611      $  2.0003
$3.56-$3.97           285,525         4.33       $ 3.8716        285,525      $  3.8716
                    ---------                                  ---------
$.625-$3.97         1,929,244         2.32       $ 2.09        1,905,136      $  2.09
                    =========                                  =========
</TABLE>

                                      -34-
<PAGE>

Employee Stock Purchase Plan

Under the 1991 Employee Stock Purchase Plan (the "Purchase Plan"), the Company
was authorized to issue up to 8,000,000 shares of common stock to its full-time
employees. As of December 31, 1999, 4,614,432 shares had been purchased. Under
the terms of the Purchase Plan, employees could choose each year to have up to
10 percent of their annual base earnings withheld to purchase the Company's
common stock. The purchase price per share of common stock in any offering under
the Purchase Plan was the lower of; (i) 85% of the closing price per share of
common stock on the commencement of the offering, or (ii) 85% of the closing
price of a share of common stock on the termination of the offering. Each
offering is for a period of approximately six months. The percentage of
employees participating in the plan were 1% and 21% in 1998 and 1997,
respectively. Under the Purchase Plan, the Company issued 3,598 shares at a
price of $.23 in 1998 and 339,165 shares at an average price of $.74 in 1997.
Pro forma compensation cost is recognized for the fair value of the employees'
purchase rights, which was estimated using the Black-Scholes model with the
following assumptions for 1998 and 1997, respectively: dividend yield of 0
percent; expected life of six months; expected volatility of 234.6% and 127.7%;
and risk-free interest rate of 5.6% and 5.0%. For 1998 and 1997, the pro forma
compensation costs under the Purchase Plan were $0 and $152,000, respectively.
The employee stock purchase plan was discontinued on May 22, 1998.

J. Segment Information

Prior to January 1999, the Company operated in a single industry segment which
includes developing, manufacturing, marketing, installing and servicing business
information processing systems, principally in the United States, Europe, the
Far East, and Canada. During 1998 one of the Company's customers accounted for
approximately 16% of its sales. During 1997, the Company was not dependent upon
any one customer for a material part of its business with no single customer
accounting for more than 10% of its sales. However, in fiscal 1998 and 1997,
approximately 40% and 21%, respectively, of its sales were derived either
directly or indirectly from various United States government agencies.

                                      -35-
<PAGE>

The Company maintained operations in Europe and Canada principally through
consolidated subsidiaries. Far East operations are through distributors
throughout the region and until December 5, 1997, a joint venture in Japan.
Information about the Company's operations for 1997 and 1998 is presented below
(in thousands). Inter-geographic net sales, operating income and assets have
been eliminated to arrive at the consolidated amounts.

<TABLE>
<CAPTION>
                     Net Sales       Inter-                      Operating
                    to Unrelated   Geographic       Total          Income      Identifiable
                      Entities      Net Sales      Net Sales       (Loss)         Assets
                      -------------------------------------------------------------------
<S>                   <C>           <C>            <C>            <C>            <C>
1997:
United States         $ 14,832      $ (1,193)      $ 13,639       $(67,332)      $ 27,909
Europe                  14,219            --         14,219        (10,381)         9,563
Other                      435            --            435           (484)           173
                      --------      --------       --------       --------       --------
Geographic Total        29,486        (1,193)        28,293        (78,197)        37,645
Inter-Geographic            --         1,193          1,193          1,669           (194)
                      --------      --------       --------       --------       --------
Total                 $ 29,486      $     --       $ 29,486       $(76,528)      $ 37,451
                      ========      ========       ========       ========       ========
1998:
United States         $ 11,400      $    776       $ 12,176       $ (7,810)      $ 13,659
Europe                   8,850            --          8,850            354          3,089
Other                      185            --            185           (126)             5
                      --------      --------       --------       --------       --------
Geographic Total        20,435           776         21,211         (7,582)        16,753
Inter-Geographic            --          (776)          (776)           108             --
                      --------      --------       --------       --------       --------
Total                 $ 20,435      $     --       $ 20,435       $ (7,474)      $ 16,753
                      ========      ========       ========       ========       ========
</TABLE>

Inter-geographic net sales were recorded principally at 60% of list price;
however, inter-geographic net sales of the Company's storage processor product
line were recorded at 85% of end selling price. Identifiable assets were all
assets, including corporate assets, identified with operations in each region.

K. Financial Instruments

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of
credit risk are limited to cash. The Company maintains its cash in bank deposit
accounts which, at times, may exceed federally insured limits. The Company has
not experienced any losses in such accounts.

The Company granted credit terms in the normal course of business to its
customers which were consistent with industry practices. Generally, the
Company's customers were United States government agencies or substantial
international corporations often included among the Fortune 500. Additionally,
as part of its ongoing control procedures, the Company monitored the credit
worthiness of its major customers and established individual customer credit
limits accordingly. The Company performed in-depth credit evaluations for all
new customers and required letters of credit if deemed necessary. Doubtful
accounts were adequately reserved when identified and bad debts realized by the
Company in prior years have not been excessive.

                                      -36-
<PAGE>

L.  Subsequent Events

In January 2000, Gould converted its convertible preferred shares into
13,295,815 shares of common stock. After such conversion, no preferred shares
were outstanding.

On June 19, 2000, the Company paid approximately $3,100,000 to terminate its
lease at its idle London, England facility.

On August 10, 2000, the Company reached an agreement in principle to resolve the
disputed items relating to the Gores transaction, including the amounts due to
Encore under the management agreement and the line of credit, and certain other
indemnity claims by Gores.

                                      -37-
<PAGE>

Item 9 Changes in and Disagreements with Accountants on Accounting and Financial
       Disclosure.

Not Applicable.

Item 10 Directors and Executive Officers of the Company

The names of the Company's Board of Directors and certain information about them
are set forth below:

Kenneth G. Fisher, age 69

Mr. Fisher was a founder of the Company and has served as a Director, Chairman
and Chief Executive Officer of the Company since the Company's inception in May
1983. He was the Company's President from its inception until December 1985 and
also served in that capacity from December 1987 to January 1991. In November of
1998, Mr. Fisher was terminated as Chief Executive Officer of the Company. From
January 1982 until May 1983, Mr. Fisher was engaged in private venture
transactions. From 1975 to 1981, Mr. Fisher was President and Chief Executive
Officer of Computervision (formerly Prime Computer, Inc.). Before joining
Computervision, Mr. Fisher was Vice President of Central Operations for
Honeywell Information Systems. Inc.

Rowland H. Thomas, age 64

Mr. Thomas has been a member of the Board of Directors since December 1987 and
Chief Operating Officer since June 1989. He also served as President of the
Company from January 1991 until September 1998. From June 1989 to January 1991,
Mr. Thomas served as Executive Vice President of the Company. In January 1988,
he was named President and Chief Executive Officer of Netlink Inc. Prior to
joining Netlink, Mr. Thomas was Senior Executive Vice President of National Data
Corporation ("NDC"), a transaction processing company, a position he held from
June 1985 to January 1988. From May 1983 through June 1985, Mr. Thomas was
Executive Vice President and Senior Vice President at NDC.

Robert J. Fedor, age 59

Dr. Fedor has been a member of the Board of Directors since July 1992. He is
presently Senior Vice President Corporate Development Gould, a position he has
held since July 1992. From December 1989 to July 1992 he was Vice President,
Corporate Business Development at Gould. Prior to assuming that position, Dr.
Fedor was General Manager of Gould's U.S. and Far East Foil Business since 1985.
Since joining Gould in 1964, he has served in various senior marketing and
research positions. Dr. Fedor holds a Ph.D. in Metallurgical Engineering from
Case Western Reserve University.

C. David Ferguson, age 59

Mr. Ferguson has been a member of the Board of Directors since April 1989. He is
presently the President and Chief Executive Officer and a director of Gould, a
position he has held since October 1988. Prior to such time, he served as
Executive Vice President, Materials and Components, at Gould's Foil Division
from 1986 until October 1988. He transferred to the Foil Division in 1967 from
the Gould Engine Parts Division where he began his career in 1963.

                                      -38-
<PAGE>

Thomas N. Rich, age 48

Mr. Rich has been a member of the Board of Directors since November 1997 and was
named Treasurer of Encore in March 1999. He is also presently Vice
President-Finance and Corporate Controller at Gould, a position he has held at
Gould since July 1994. From December 1991 until July 1994, he was Vice
President-Corporate Controller at Gould. Prior to assuming that position, Mr.
Rich was Vice President-Financial Controller since joining Gould in July 1990.
From 1973 through June 1990, Mr. Rich was employed at Ernst & Young, an
international professional services firm. He holds a B.A. degree in Accounting
from Duke University.

Michael C. Veysey, age 56

Mr. Veysey has been a member of the Board of Directors since November 1997. He
is presently Senior Vice President, General Counsel and Secretary at Gould, a
position he has held since July 1992. He also serves as President of Encore
since March 1999. From January 1989 to July 1992, he was Vice President, General
Counsel and Secretary at Gould. Prior to assuming that position, Mr. Veysey had
various positions in Gould's Law Department since 1980. Mr. Veysey holds a J.D.
degree from Boston College Law School.

Item 11  Executive Compensation

Total compensation paid or accrued for services rendered during the three most
recent fiscal years for the Chief Executive Officer and the two other most
highly compensated executive officers of the Company for the year ended December
31, 1999 was as follows:

<TABLE>
<CAPTION>
                                                                        Long Term
                                                                      Compensation
                                                                     Awards: Number
                                                Other        Other      of Shares      All Other
      Name and                                  Annual       Annual    Underlying    Compensation
 Principal Positions       Year     Salary      Bonus     Compensation   Options          (2)
-----------------------    ----    --------    --------    ----------    -------       ---------
<S>                        <C>     <C>         <C>         <C>                <C>       <C>
Mary M. Macomber (1)       1999    $ 66,435    $           $       --         --        $154,746
President  and             1998    $120,947    $105,196    $       --         --        $     --
Chief Executive Officer    1997    $117,517    $193,321    $       --                   $     --

William J. Ruede (1)       1999    $ 70,545    $           $       --         --        $127,074
Vice President/Human       1998    $128,435    $111,474    $       --         --        $     --
Resources                  1997    $125,121    $ 82,661    $       --                   $     --

Linda J. Matthews (1)      1999    $ 52,128    $           $       --         --        $114,638
Vice President of          1998    $ 94,902    $ 57,995    $       --         --        $     --
Finance                    1997    $ 85,679    $ 30,875    $       --         --        $     --
</TABLE>

         (1) Terminated as of June 30, 1999.
         (2) Includes severance, vacation, and retention payments.

The following table sets forth the number of shares of Common Stock and
equivalents of the Company, including shares which may be acquired within sixty
days after March 31, 1999 by exercise of outstanding stock option, which are
beneficially owned by executive officers of the Company named in the Summary
Compensation Table and all directors and executive officers as a group as of
March 31, 1999 along with the percentage of all outstanding shares of Common
Stock and equivalents owned by each officer and director on such date.

                                      -39-
<PAGE>

                             Common Stock and              Percentage of Common
                               Equivalents                Stock and Equivalents
                            Beneficially Owned               Outstanding (1)

Mary M. Macomber                 63,400            (2)           0.08%
President and
Chief Executive Officer

William J. Ruede                107,900            (3)           0.13%
Vice President/Human
Resources

Linda J. Matthews                 5,575            (4)           0.01%
Vice President of
Finance

Total directors and           5,275,569            (5)           6.51%
executive officers as a
group (5 people)

(1) For purposes of computing the percentage of Common Stock and equivalents
outstanding, the 13,295,815 shares of Common Stock issuable upon conversion of
the Series B, D, E, F, G, H, and I Convertible Preferred Stock have been
included as well as the 242,602 shares issuable upon exercise of options
exercisable within 60 days after March 31, 1999.

(2) Includes 63,400 shares which may be acquired within 60 days after March 31,
1999 by exercise of stock options.

(3) Includes 107,900 shares which may be acquired within 60 days after March 31,
1999 by exercise of stock options.

(4) Includes 5,575 shares which may be acquired within 60 days after March 31,
1999 by exercise of stock options.

(5) Includes 176,875 shares which may be acquired within 60 days after March 31,
1999 by exercise of stock options.

There were no option grants to those executive officers named in the Summary
Compensation Table during fiscal 1999 or 1998.

                                      -40-
<PAGE>

The following table provides information on option exercises in 1999 by the
named executive officers and the value of such officers' unexercised options as
of December 31, 1999.

Aggregated Option Exercises in the year ended December 31, 1999 and Option
Values as of December 31, 1999

<TABLE>
<CAPTION>
                                                                            Value of
                                                   Number of Shares        Unexercised
                                                      Underlying          In-the-Money
                                                  Unexercised Options      Options at
                      Number of                       at 12/31/99            12/31/99
                   Shares Acquired    Value          Exercisable/          Exercisable/
                     on Exercise     Realized        Unexercisable         Unexercisable
<S>                       <C>            <C>            <C>                     <C>
Mary M. Macomber          -              -              63,400/                 -/
                                                        10,350                  -

William J. Ruede          -              -              107,900/                -/
                                                         10,350                 -

Linda J. Matthews         -              -               5,575/                 -/
                                                           125                  -
</TABLE>

REPORT ON EXECUTIVE COMPENSATION

         In June 1998, in connection with an agreement to sell its last
remaining business, the Company entered into an agreement under which the
purchaser managed that business pending completion of the sale. The sale took
place on January 6, 1999. During 1998 the Company had terminated the employment
of all its employees, other than three officers (one of whom took the title of
president and the other two of whom were vice presidents) and a few clerical or
administrative employees. The three officers resigned in June 1999, when the
Company's remaining activities were moved to Gould's offices in Ohio, where they
were conducted by Gould employees.

         During the first half of 1999, the Company paid the three officers
salaries commensurate with what they were paid before the Company sold its
operating business. In addition, they received retention bonuses of $36,000 as
to the president, and $38,000 and $28,000 as to the two vice presidents. The
Board of Directors felt this was appropriate, in order to keep the three
officers available during the period their services were required in connection
with the winding down of the Company.

         Since June 1999, all the Company's officers have been employees of
Gould, who served without compensantion from the Company.


                                      -41-
<PAGE>


DIRECTORS' COMPENSATION

The Board of Directors has fixed the compensation of non-officer directors at
$2,500 per regular board meeting attended. No compensation is paid for special
meetings held by telephone conference. Everyone who was a director during 1999
waived payment of fees for attendance at board meetings.

                                      -42-
<PAGE>

Item 12 Security Ownership of Certain Beneficial Owners and Management

PRINCIPAL STOCKHOLDERS

The following table sets forth, to the knowledge of the Company, the beneficial
owners of 5% or more of the Company's outstanding Common Stock and equivalents
as of December 21, 2000:

                                      Shares              Percentage of
Name and Address of                Beneficially            Common Stock
Beneficial Owner                      Owned                Outstanding

Gould Electronics Inc.              45,968,984                56.93%
34929 Curtis Blvd.
Eastlake, OH 44095

Japan Energy Corporation            45,968,984                56.93%
10-1, Toranmon 2-chome,
Minato-ko, Tokyo, JAPAN

Kenneth G. Fisher (1)                5,057,708                 6.26%
7786 Wiles Road
Coral Springs, FL 33067

         (1)      Includes 53,764 shares owned by Mr. Fisher's wife.

Item 13  Certain Relationships and Related Transactions

Since 1989, Gould (which is a wholly owned subsidiary of Japan Energy
Corporation) had been the principal source of the Company's financing. From 1989
through November 1997, the Company borrowed a total of $418 million from Gould
and its affiliates. Encore had invested most of this in research and
development. However, despite its efforts, Encore was unable to penetrate the
marketplace for storage products and sales of its real-time computer systems
declined significantly. By mid-1997 Gould had made it clear that it would not
provide further financing to Encore, other than working capital to keep the
storage products business operating for a short period until a pending sale
could be completed.

On November 24, 1997, Gould held (i) notes, secured by all of Encore's assets,
under which Encore owed Gould $93.55 million for money Encore had borrowed from
Gould plus unpaid interest, and (ii) convertible preferred stock of Encore with
a liquidation preference totaling $411 million, which Encore had issued to Gould
between 1991 and 1996 in exchange for cancellation of indebtedness for money
Encore had borrowed from Gould and interest on those borrowings. In addition,
Gould held approximately 48.44% of Encore's common stock, which Gould had
obtained as part of the consideration for the sale of its Computer Systems
Division to Encore in 1989 or through conversion of convertible preferred stock.
In connection with the sale of Encore's storage products business to Sun, Encore
and Gould agreed that Encore would repay the secured notes and

                                      -43-
<PAGE>

unpaid interest thereon and redeem all the convertible preferred stock which
Gould held for $60 million, of which $25 million was to be paid at the closing
of the Sun transaction, and the balance was to be satisfied with the second
payment due from Sun. In addition, Gould agreed that if it received the entire
$35 million by July 31, 1998, Gould would waive its right to receive additional
shares of preferred stock with a liquidation preference of approximately $43
million which were due to it as past-due dividends on the convertible preferred
stock which was being redeemed. Finally, Gould agreed that if Encore were
liquidated before November 24, 1999, Gould would waive any right it had as a
holder of Encore's common stock with regard to the first $30 million of
liquidating distributions made to Encore's common stockholders.

In connection with the sale of Encore's storage products business to Sun, Gould
also entered into an agreement with Sun under which Gould guaranteed most of
Encore's obligations under the Asset Purchase Agreement between Encore and Sun,
agreed to provide whatever funds were necessary to ensure that Encore would not
become insolvent within one year after the closing of the sale to Sun, and
indemnified Sun against any losses Sun might incur if the sale of Encore's
storage products business to Sun were challenged in an insolvency proceeding
relating to Encore commenced within two years after the closing.

Because Sun withheld $9,692,000 of the payment due on July 1, 1998, Encore
remained obligated to Gould in that amount and had to either pay that amount to
Gould out of its own funds by July 31, 1998 or issue to Gould the over-due
dividend shares of convertible preferred stock, which had a liquidation
preference of $42,678,400. However, in order to give Encore more time to attempt
to resolve Sun's claims, Gould agreed that if Encore issued those dividend
shares to it, Gould would give Encore the option to repurchase the dividend
shares on or before July 31, 1999 for an amount equal to the balance of the
$9,692,000 which remained unpaid ($7,192,000 after the payment of $2,500,000
received on July 16, 1999) plus interest at 8.5% per annum from August 1, 1998.
Encore then issued the dividend shares to Gould. On July 31, 1999, Gould
extended Encore's option to repurchase the dividend shares to October 30, 1999;
Gould subsequently extended Encore's option to December 15, 1999, when it
expired.

On December 30, 1999, the Company paid $7,192,000 to Gould to settle its
obligation for the amounts withheld by Sun, and Gould, among other things,
agreed to convert the dividend shares into common stock and agreed that if
Encore were liquidated before November 24, 2000, Gould would waive any right it
had as a holder of Encore's common stock with regard to the first $30 million of
liquidating distributions made to Encore's common stockholders.

Subsequent to June 30, 1999, all of the Company's activities (consisting only of
administration of final winding down steps) were moved to Gould's offices in
Eastlake, Ohio, where they have been conducted without charge by Gould
employees.


                                      -44-
<PAGE>

PART IV

Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) 1. and (a) 2. Index to Financial Statements and Financial Statement
                  Schedules

Form 10-K                                                            Page Number
---------                                                            -----------

Report of independent certified public accountants relating to
consolidated financial statements                                        14

Consolidated Statement of Changes in Net Assets in
Liquidation for the year ended December 31, 1999                         15

Consolidated statements of operations for the years
ended December 31, 1998 and 1997                                         16

Consolidated statements of net assets in liquidation at
December 31, 1999 and 1998                                               17

Consolidated statements of cash flows for the years ended
December 31, 1998 and 1997                                            18-19

Consolidated statements of shareholders' equity (capital
deficiency) for the years ended December 31, 1998 and 1997            20-21

Notes to consolidated financial statements                            22-37

All schedules have been omitted since the required information is not present or
is not present in amounts sufficient to require submission of the schedule, or
because the information required is included in the consolidated financial
statements and notes thereto.

                                      -45-
<PAGE>

(a) 3. Index to Exhibits

The exhibits listed on the accompanying index to exhibits immediately following
the signature page are incorporated herein by reference.

(b) Reports on Form 8-K

For purposes of complying with the amendments to the rules governing Form S-8
under the Securities Act of 1933, the undersigned registrant hereby undertakes
as follows, which undertaking shall be incorporated by reference into the
Registrant's Registration Statements on Form S-8 Nos. 33-34171 and 33-33907.

Insofar as indemnification of liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by the appropriate
jurisdiction, litigate the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

                                      -46-
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned as the chief accounting officer and an officer of the registrant
thereunto duly authorized.

ENCORE COMPUTER CORPORATION
(Registrant)


         By: /s/ MICHAEL C. VEYSEY              By: /s/ THOMAS N. RICH
            ---------------------------            ---------------------------
             Michael C. Veysey                      Thomas N. Rich
             President                              Treasurer

February 22, 2001

Pursuant to the requirements of the Securities Exchange 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.

        Signature                       Title                     Date
        ---------                       -----                     ----

/s/ MICHAEL C. VEYSEY
----------------------------
Michael C. Veysey                      President             February 22, 2001

/s/ THOMAS N. RICH
----------------------------
Thomas N. Rich                         Treasurer             February 22, 2001

/s/ C. DAVID FERGUSON
----------------------------
C. David Ferguson                      Director              February 22, 2001

/s/ ROBERT J. FEDOR
----------------------------
Robert J. Fedor                        Director              February 22, 2001

/s/ KENNETH G. FISHER
----------------------------
Kenneth G. Fisher                      Director              February 22, 2001

/s/ ROWLAND H. THOMAS, JR.
----------------------------
Rowland H. Thomas, Jr.                 Director              February 22, 2001

                                      -47-
<PAGE>

(a) 3. Index to Exhibits.

The exhibit numbers in the following index correspond to the numbers assigned to
such exhibits in the Exhibit Table of Item 601 of Regulation S-K.

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

    2.1     Asset Purchase Agreement dated as of July 17,1997 among the
            registrant, Encore Computer U.S., Inc., Encore Computer
            International, Inc., Sun Microsystems, Inc. and Sun Microsystems
            International, B.V. (without exhibits), and the Modification
            Agreement thereto dated as of November 24, 1997 (incorporated herein
            by reference to the Company's Form 8-K dated December 9, 1997).

    2.2     Technology License Agreement entered into between the registrant and
            Sun (incorporated herein by reference to the Company's Form 8-K
            dated December 9, 1997).

    2.3     The respective Inducement Agreements entered into by Gould and its
            affiliates with Sun, and the Gould Modification Agreement among such
            parties (incorporated herein by reference to the Company's Form 8-K
            dated December 9, 1997).

    2.3a    June 1998 Agreement with Gould Electronics Inc. regarding Accrued
            Dividend Shares

    2.4     Asset Purchase Agreement among the Company, certain of the Company's
            subsidiaries, Gould Electronics Inc. and the Buyer dated as of June
            1, 1998 (incorporated herein by reference to the Company's Proxy
            Statement dated August 11, 1998).

    2.5     Amendment Number One to Asset Purchase Agreement dated October 27,
            1998 among the registrant, Encore Computer U.S., Inc., Encore
            Computer International, Inc., Gould Electronics Inc. and Encore
            Acquisition Corp. (incorporated herein by reference to the Company
            Form 8-K dated January 19, 1999).

    2.6     Amendment Number Two to Asset Purchase Agreement dated as of
            December 31, 1998 among the registrant, Encore Computer U.S., Inc.,
            Encore Computer International, Inc., Gould Electronics Inc. and
            Encore Acquisition Corp. (incorporated herein by reference to the
            Company Form 8-K dated January 19, 1999).

    2.7     Reconciliation Agreement dated as of December 31, 1998 among the
            registrant, Encore Computer U.S., Inc., Encore Computer
            International, Inc., Gould Electronics Inc. and Encore Acquisition
            Corp. (incorporated herein by reference to the Company Form 8-K
            dated January 19, 1999).

    3.1     Certificate of Incorporation of the Company, as amended
            (incorporated herein by reference to the Company's Form 10-K for the
            year ended December 31, 1990)

                                      -48-
<PAGE>

    3.1a    Amendment to the Certificate of Incorporation filed with the
            Delaware Secretary of State on March 26, 1992 (incorporated herein
            by reference to Exhibit 3.1a to the Company's Form 10-K for the year
            ended December 31, 1991).

    3.2     By-laws of the Company, as amended (incorporated herein by reference
            to Exhibit 3.2 to the Company's Form l0-K for the year ended
            December 31, 1989).

    3.3     Amendment to the Certificate of Incorporation dated September 30,
            1993 increasing the number of authorized common shares from
            120,000,000 to 150,000,000 (incorporated herein by reference to
            Exhibit 3.3 to the Company's Form l0-K for the year ended December
            31, 1993).

    3.4     Amendment to the Certificate of Incorporation dated August 8, 1995
            increasing the number of authorized common shares from 150,000,000
            to 200,000,000.

    3.5     Certificate of Designations, Powers Rights and Preferences of Series
            G Convertible Preferred Stock of Encore Computer Corporation
            (incorporated herein by reference to Exhibit 3.1 to the Company's
            Form l0-Q for the period ended October 1, 1995).

    3.6     Certificate of Designations, Powers Rights and Preferences of Series
            H Convertible Preferred Stock of Encore Computer Corporation
            (incorporated herein by reference to Exhibit 3.1 to the Company's
            Form 10Q for the period ended June 30, 1996).

    3.7     Certificate of Designations, Powers Rights and Preferences of Series
            I Convertible Preferred Stock of Encore Computer Corporation.

    3.8     Certificate of Designations, Powers Rights and Preferences of Series
            J Convertible Preferred Stock of Encore Computer Corporation.

    4.1     Articles NINTH and TENTH of the Certificate of Incorporation of the
            Company, as amended, and Certificates of Stock Designation relating,
            respectively, to the Company's Series A Convertible Participating
            Preferred Stock, Series B Convertible Preferred Stock and Series C
            Redeemable Preferred Stock (see Exhibit 3.1). Incorporated herein by
            reference to the Company's Form 10-K for the year ended December
            31, 1990.

    4.2     Article 1 of the By-laws of the Company, as amended (incorporated
            herein by reference to Exhibit 3.2 to the Company's Form 10-K for
            the year ended December 31, 1989).

    4.3     Certificate of Stock Designation relating to the Company's Series D
            Convertible Preferred Stock (incorporated herein by reference to
            Exhibit 4.3 to the Company's Form 10-K for the year ended December
            31, 1992).

                                      -49-
<PAGE>

    4.4     Certificate of Stock Designation relating to the Company's Series E
            Convertible Preferred Stock (incorporated herein by reference to
            Exhibit 4.4 to the Company's Form l0-K for the year ended December
            31, 1993).

    4.5     Certificate of Stock Designation relating to the Company's Series F
            Convertible Preferred Stock

    10.1    The Company's 1983 Incentive Stock Option Plan, as amended
            (incorporated herein by reference to the Company's Form S-8/Form S-3
            Registration Statement No. 33-34171).

    10.2    The Company's 1985 Non-Qualified Stock Option Plan, as amended
            (incorporated herein by reference to the Company's Form S-8/Form S-3
            Registration Statement No. 33-34171).

    10.3    The Company's 1990 Employee Stock Purchase Plan as amended
            (incorporated herein by reference to the Company's Form S-8/Form S-3
            Registration Statement No. 33-72458).

    10.4    Form of Indemnification Agreement between the Company and its
            executive officers (incorporated herein by reference to Exhibit 10.4
            to the Company's Form 10-K for the year ended December 31, 1989).

    10.5    Master Purchase Agreement dated as of February 3, 1994 between the
            Company and Gould Electronics Inc. (incorporated herein by reference
            to Exhibit 10.7b to the Company's Form l0-K for the year ended
            December 31, 1993).

    10.6    Intellectual Property License Agreement dated as of January 28,
            1991, among the Company, Encore Computer U.S., Inc. ("Encore U.S.")
            and Gould Inc. (incorporated herein by reference to Exhibit 10.9 of
            the Company's Form 10-K for the year ended December 31, 1990).


    10.7a   The Amended and Restated Revolving Loan Agreement dated March 31,
            1992 between Encore Computer Corporation and Gould Inc.
            (incorporated herein by reference to the Company's Form 10-K Exhibit
            10.13c for the year ended December 31, 1991).

    10.7b   The Second Amended and Restated Revolving Loan Note dated March 31,
            1992 between Encore Computer Corporation and Gould Inc.
            (incorporated herein by reference to the Company's Form 10-K Exhibit
            10.13d for the year ended December 31, 1991).

    10.7c   The Renewal Term Notes dated March 31, 1992 between Encore Computer
            Corporation and Gould Inc. (incorporated herein by reference to the
            Company's Form 10-K Exhibit 10.13e for the year ended December 31,
            1991).

                                      -50-
<PAGE>

    10.7d   Amendment Agreement to the Revolving Loan Agreement among the
            Company and Gould Inc. and the Term Loan Agreement among the Company
            and Gould Inc. dated April 12, 1993 (incorporated herein by
            reference to Exhibit 10.9d to the Company's Form 10-K for the year
            ended December 31, 1992).

    10.7e   Amended Loan Agreement and related letter agreement dated April 11,
            1994 between the Company and Gould Electronics Inc. (incorporated
            herein by reference to Exhibit 10.13g to the Company's Form l0-K for
            the year ended December 31, 1993).

    10.8    Amended and Restated General Security Agreement dated as of January
            28, 1991, among the Company, Encore U.S. and Gould Inc.
            (incorporated herein by reference to the Company's Form 10-K Exhibit
            10.14 for the year ended December 31, 1990).

    10.9    Support Services Provider Agreement dated December 9, 1993 between
            Encore Computer Corporation and Halifax Corporation to subcontract
            certain customer service field maintenance activities to Halifax
            Corporation (incorporated herein by reference to Exhibit 10.17 to
            the Company's Form l0-K for the year ended December 31, 1993).

    10.10   Amendment No. 1 to Nonqualified Stock Option Agreement between
            Encore Computer Corporation and T. Mark. Morley dated November 10,
            1993 (incorporated herein by reference to Exhibit 10.18 to the
            Company's Form l0-K for the year ended December 31, 1993).

    10.11   Description of the Company's Corporate Executive Compensation Plan
            (incorporated herein by reference to Exhibit 10.19 to the Company's
            Form l0-K for the year ended December 31, 1993).

    10.13   The Uncommitted Loan Agreement and certain exhibits thereto dated as
            of December 21, 1994 between Encore Computer Corporation and Gould
            Electronics Inc. (incorporated herein by reference to Exhibit 10.13
            to the Company's Form l0-K for the year ended December 31, 1994).

    10.14   The Amended and Restated Credit Agreement dated as of March 17, 1995
            between Encore Computer Corporation and Gould Electronics Inc.
            (incorporated herein by reference to Exhibit 10.14 to the Company's
            Form l0-K for the year ended December 31, 1994).

    10.15   Master Purchase Agreement dated as of March 17, 1995 between the
            Company and Gould Electronics Inc. relating to the purchase of
            Series F Convertible Preferred Stock, Cancellation of Indebtedness
            and Related Documentation (incorporated herein by reference to
            Exhibit 10.15 to the Company's Form l0-K for the year ended December
            31, 1994).

                                      -51-
<PAGE>

    10.16   The Second Amended and Restated Credit Agreement dated as of August
            17, 1995 between Encore Computer Corporation and Gould Electronics
            Inc. (incorporated herein by reference to Exhibit 10.1 to the
            Company's Form l0-Q for the period ended October 1, 1995).

    10.17   Certificate. Reference made to the Master Purchase Agreement dated
            as of August 17, 1995 between the Company and Gould Electronics Inc.
            relating to the purchase of Series G Convertible Preferred Stock,
            Cancellation of Indebtedness and Related Documents (incorporated
            herein by reference to Exhibit 10.2 to the Company's Form l0-Q for
            the period ended October 1, 1995).

    10.18   The Company's 1985 Non-Qualified Stock Option Plan and 1995 Long
            Term Performance Plan, as amended (incorporated herein by reference
            to the Company's Form S-8/Form S-3 Registrations Statement No.
            33-72741).

    10.19   The Third Amended and Restated Credit Agreement dated as of April
            16, 1996 between Encore Computer Corporation and Gould Electronics
            Inc. (incorporated herein by reference to Exhibit 10.1 to the
            Company's Form l0-Q for the period ended June 30, 1996).

    10.20   Certificate. Reference made to the Master Purchase Agreement dated
            as of August 17, 1995 between the Company and Gould Electronics Inc.
            relating to the purchase of Series H Convertible Preferred Stock,
            Cancellation of Indebtedness and Related Documents (incorporated
            herein by reference to Exhibit 10.2 to the Company's Form l0-Q for
            the period ended June 30, 1996).

    10.21   Certificate. Reference made to the Master Purchase Agreement dated
            as of March 19, 1997 between the Company and Gould Electronics Inc.
            relating to the purchase of Series I Convertible Preferred Stock,
            Cancellation of Indebtedness and Related Documents (incorporated
            herein by reference to the Company's Form l0-K for the period ended
            December 31, 1997).

    22.0    Subsidiaries of the Company (incorporated herein by reference to the
            Company's Form 10-K for the period ended December 31, 1998)

    *23.1   Consent of Independent Certified Public Accountants.

    *27     Financial Data Schedule

    99      Cautionary Statement for the Purposes of the "Safe Harbor"
            Provisions of the Private Securities Litigation Reform Act of 1995
            (incorporated herein by reference to Exhibit 99 to the Company's
            Form l0-Q for the period ended June 30, 1996).

    #       Management contract or compensatory plan or arrangement

    *       Filed herewith.

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