<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                             _____________________

                                  FORM 10-KSB

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

    For the Fiscal Year Ended: November 30, 2000

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

    For the transition period from ___________ to __________

                        Commission File Number: 0-21367

                            DATA TRANSLATION, INC.
            (Exact name of registrant as specified in its charter)

            Delaware                                04-3332230
(State or other jurisdiction of      (I.R.S. Employer Identification Number)
 incorporation or organization)


                                100 Locke Drive
                      Marlboro, Massachusetts 01752-1192
         (Address of principal executive offices, including zip code)

                                (508) 481-3700
             (Registrant's telephone number, including area code)

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

          Securities registered pursuant to Section 12(g) of the Act:
                         Common Stock, $0.01 par value

                               (Title of class)

Check whether the issuer: (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 _________
              -------

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B in this form, 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-KSB or any amendment to
this Form 10-KSB [_].

The issuer's revenues for its most recent fiscal year were: $15,924,000.

The aggregate market value of the Company's voting and non-voting common equity
stock held by non-affiliates of the registrant was approximately $6,648,553 as
of January 31, 2001. The number of shares of Common Stock, $0.01 par value,
outstanding as of January 31, 2001 was 2,256,075.
<PAGE>

                      DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held on April 12, 2001 are incorporated by reference into
Part III.
<PAGE>

                                    PART 1


Item 1.   Business

Introduction

     Data Translation, Inc., formerly known as Data Translation II, Inc., (the
"Company") was incorporated in September 1996 as a wholly owned subsidiary of
Media 100 Inc. formerly known as Data Translation, Inc., ("Parent"). On
November 29, 1996, Parent contributed to the Company substantially all of the
assets and liabilities of Parent's data acquisition and imaging, commercial
products and networking distribution groups (the "Contributed Businesses"). In
November 1996, Parent sold a substantial portion of the assets of the networking
distribution business and during 1998 the Company discontinued the remainder of
such business. The Company continues to operate the data acquisition and imaging
and commercial products groups. On December 2, 1996 (the "Distribution Date"),
Parent distributed to its stockholders in the form of a dividend all of the
outstanding shares of capital stock of the Company (the "Distribution").
References to the "Company" below refer to the Contributed Businesses as
operated by the Company after the Distribution, or as operated by Parent prior
to the Distribution, as the context requires.

     The Company is a leader in the design, development and manufacture of high
performance data acquisition and imaging products. For more than two decades,
the Company's products have provided engineers and scientists with accurate and
timely data for measurement, analysis and process control in a wide range of
industrial, scientific and medical applications. The Company's principal
products in this area are data acquisition and imaging hardware, which are used
in personal computers ("PCs") to receive analog signals, convert them to digital
form and process the digital data. The Company's strategy is to identify and
capitalize on growth opportunities in the data acquisition, imaging and machine
vision markets.

     An outgrowth of the Company's core technology of analog to digital
conversion is its commercial products line which includes a low-cost, high-
performance video capture and encoding system for Microsoft(R) Windows(R) 95/98-
based PCs called Broadway(TM). Broadway captures analog video, digitizes it,
compresses it into an editable MPEG-1 format, and writes it to disk in real
time. The Company's Broadway product has many applications, including
incorporation of video into web pages on the world wide web (the "Web"),
multimedia presentations, Webstreaming, CD-ROM titles and computer-based
training.


Data Acquisition and Imaging

  Market

     The market for the Company's data acquisition and imaging products, which
are the Company's core products, is composed primarily of technical users, such
as engineers and scientists, interested in incorporating the Company's products
in their final products. These products are designed for the scientific research
and analysis, test and measurement and industrial machine vision inspection
markets. End users include original equipment manufacturers, industrial
manufacturers, research laboratories, universities, hospitals and government
agencies. Users require highly accurate, real-time measurement and control of
analog signals, such as temperature, pressure, sound and video.

     The data acquisition and imaging markets are highly fragmented and have
been adversely affected in recent years by reduced prices for PCs and
peripherals.

  Business Strategy

     In the data acquisition and imaging area, the Company is focused on
providing system solutions built around development of its Peripheral Component
Interconnect ("PCI") and Universal Serial Bus ("USB") based products. These
developments are being driven by rapid adoption of PCI and USB slots by personal
computer manufacturers.

                                       1

<PAGE>

Products and Services

     The Company's data acquisition and imaging products are designed to
facilitate (i) the high-speed capture of analog signals representing physical
events, such as temperature, pressure, sound and video, (ii) the conversion of
such signals into digital form and (iii) the use of such digital signals in PCs
for processing. These capabilities permit customers to use PCs for data
acquisition, to identify, measure, analyze and control physical phenomena, and
for imaging, to analyze or enhance video images.

     The Company's data acquisition and imaging systems consist of plug-in cards
and Microsoft(R) Windows(R)-based software which provide an integrated, high
performance systems solution to the general scientific and measurement
marketplace.

     The Company sells over 100 data acquisition and imaging products, which
range in retail price from $200 to $3,000. Domestically, the Company sells such
products to end users, value-added resellers ("VARs"), system integrators and
original equipment manufacturers ("OEMs"). Internationally, the Company sells
through its wholly-owned subsidiaries, as well as through resellers and
independent distributors. Such prices do not reflect distributor discounts for
international sales, which range from approximately 20% to 35% on hardware
products and up to approximately 50% on software applications.

     Data acquisition products provide capabilities ranging from simple
measurement to advanced digital signal processing functions. While researchers,
system integrators and OEMs have been the predominant data acquisition users in
the past, new data acquisition markets have emerged in the industrial and
medical areas, such as industrial inspection, medical diagnostic/therapeutic
applications, high-performance control, vibration analysis, acoustics and test
and measurement applications. Customers incorporate the Company's data
acquisition boards into PCs to measure real-world parameters, including
temperature, pressure, acceleration and sound; to analyze this data; and to use
the results to control real-world events and processes.

     The Company's imaging products may be used in a number of applications. In
machine vision applications, images can be captured and processed immediately,
in real time, for fast, accurate inspection of manufactured parts. In scientific
imaging applications, images can be captured from video cameras for analysis, or
images can be captured from cameras mounted on microscopes to identify and count
cells. In medical applications, images can be captured from different diagnostic
devices, such as CAT scanners or ultrasound imaging devices, for enhancement,
analysis and display.

  Customers and Sales

     The Company sells its data acquisition and imaging products to end users,
VARs, system integrators and OEMs for use primarily in the scientific, medical
and industrial markets. End users include manufacturers, research laboratories,
universities, hospitals and government agencies.

     The Company sells its data acquisition and imaging products through a
comprehensive, widely distributed annual catalog, an in-house telesales force,
OEM-focused direct sales, indirect channels (VARs, distributors and system
integrators), and extensive advertising and promotional campaigns. The Company
has a full-time sales and administrative staff of 10 employees in the United
States to support sales. Two subsidiaries and various distributors throughout
Europe, Asia and the Pacific Rim support international sales.

  Competition

     The Company competes in the data acquisition market principally with
National Instruments Corporation, Measurement Computing Corporation and IOtech
Incorporated. In the imaging market the Company competes with Matrox Electronic
Systems and Coreco, Inc. The aforementioned competitors may have substantially
greater financial, technical and marketing resources than the Company. The
Company also competes with a number of smaller companies in each of these
markets. The Company's data acquisition and imaging products compete based upon
their ability to supply extensive hardware and software components with
competitive performance and price.

                                       3
<PAGE>

Commercial Products

  Market

     The convergence of voice, video and data, the advancements in personal
computing, and the growth of the Internet have changed the way in which the
world communicates. As computing processor power and telecom/digital/cable modem
technologies evolve, so too does the PC user's ability to harness these venues
for creating and delivering video content. As PC costs continue to reach new
lows with substantial increases in computing power, the majority of PC users
will have access to an affordable tool for video creation. The Company believes
the most lucrative market segments for PC video are Web page creators/hosts,
business users for use in presentations, training, sales and marketing and CD-
ROM/Digital Video Disk ("DVD") title producers developing entertainment, gaming
and education content.

  Product and Technology

     Broadway is a high-performance video capture and encoding system for
Windows(R) based PCs. Broadway is a complete streaming and video editing
solution, and its videos may also be integrated with third party video editing
software packages to edit and produce Web streaming video based on Real Networks
technology, as well as, VHS quality digital video clips with CD-quality stereo
sound. Using Broadway, a computer user can capture video from most analog
sources, edit the digitized version created by Broadway, fully compress it to
MPEG-1 and then distribute it on the Web or in hard media form. Users can also
incorporate the finished video into multimedia applications, such as Web home
pages, multimedia presentations and CD-ROMs. Broadway is composed of a PCI
integrated circuit board and a graphical user interface compatible with
Microsoft(R) Windows(R). The Company's standard Broadway package is shipped
complete with Ulead Systems, Inc.'s MediaStudio Pro(TM) video editing software.
Broadway is also designed to be integrated with a variety of other video editing
packages, including Adobe Premiere(R).

     Broadway uses a robust implementation of the MPEG-1 standard that uses a
combination of hardware and software to fully compress video clips into the
MPEG-1 format. Users of the latest Pentium III processors can compress into
MPEG-1 format in real-time. PCs with slower processors utilize hardware
compression to achieve real-time compression. Advances in processor speed may
make use of various software techniques to achieve faster compression and
enhanced editing capability.

     Using the MPEG-1 standard allows Broadway to produce compressed videos,
which may be played back at 30 frames per second, the standard, full-motion
video speed. Additionally, many users choose to share video content via the
Internet. These clips may be streamed, utilizing RealNetworks technology and
played back at their destination via a RealNetworks player. Since many users
have installed this player on their PC, this ability to communicate with video
is rapidly gaining adherents.


  Customers and Sales

     The Company's sales and marketing strategy is to move down the technical
sophistication curve and up the volume curve by targeting as primary customers
audio/video professionals, business presentation and education developers, home
hobbyists and family/home users.

     Worldwide, the Company's commercial products are sold directly on-line, as
well as, through a two-tier distribution network. Users can order directly from
the Company's Web site for rapid delivery. The Company maintains direct
relationships with international mass-market distributors as well as resellers
and VARs. The distributors sell the commercial products to retail outlets as
well as smaller computer resellers and VARs. This allows the Company's products
to be available through virtually any method used by its customers to purchase
their products. The Company currently offers a 30-day money back guarantee on
its commercial products.

     The Company currently provides end users with 90 days of free technical
support with the purchase of any product. Broadway includes extensive on-line
technical support via the Company's Web site, as well as

                                       4
<PAGE>

documentation which provides a video tutorial to the non-video user and an
intuitive installation guide.

  Competition

     The Company has a number of competitors. Some competitors sell products,
which like Broadway, employ MPEG encoding, while others sell products based on
different platforms and video standards. The Company's Broadway product competes
principally on the basis of ease of installation and use, brand name awareness,
and price.

     The Company's principal competition for the Broadway product includes other
products with MPEG encoding such as Pinnacle System's DC30, Matrox's Rainbow
Runner, Videonics' Python and Dazzle Multimedia's Snazzy and Dazzle products.
These companies may have substantially greater financial, technical and
marketing resources than the Company. In addition, there are a number of other
competitors whose products are based on platforms and video standards other than
those used by the Company.



Research and Development

     The Company intends to continue to invest in research and development for
new products and for enhancements to existing products. The Company is currently
targeting spending on research and development at an annual rate of
approximately 20% of net sales. For the fiscal year ended November 30, 2000, the
Company invested approximately $3,031,000, or 19.0% of net sales, in product
development compared to $2,569,000, or 18.0% of net sales in the prior fiscal
year.

     The Company employed, as of November 30, 2000, approximately 22 full-time
engineers whose primary duties relate to product development. Outside firms and
consultants are selectively engaged to develop or assist with development of
products when favorable opportunities exist.

     In the data acquisition and imaging area, the Company's focus on hardware
development includes the integration of application specific integrated circuits
("ASICs") into circuit boards, which may reduce cost and advance the development
of new computer bus technologies (e.g., PCI). The Company's software development
in data acquisition and imaging centers on supporting Windows(R) 95/98 and
Windows NT(TM).


Manufacturing

     The Company manufactures all of its products at a leased facility in
Marlboro, Massachusetts. The Company believes its control of manufacturing
significantly contributes to hardware design improvements, and allows for more
rapid turn-around of product development to the marketplace. The Company
periodically assesses its production efficiencies against the benefits of
outsourcing certain hardware production. The Company has been ISO 9001 certified
since 1994.

     The Company's fully integrated assembly and test operations have sufficient
capacity to meet the Company's current needs for assembled printed circuit
boards. In addition, the Company designs circuit boards and modules using
advanced computer-aided-design technology. The Company's manufacturing
capabilities include the assembly of fine pitch, surface mounted electronic
devices utilizing state of the art pick and place robotics for high density,
multi-layered, single or double sided boards. A majority of the Company's
shipments incorporate surface-mount components. Initial testing is performed to
assure that products are free from process-related defects after assembly.
Following initial testing, a complete functional test is performed twice on each
board, with an environmental stress screen between tests to eliminate defects
and assure long-term reliability of products. The Company uses automated test
equipment to assure product quality, improve throughput and increase production
yields.

     Components used in circuit board assembly are generally available from
several distributors and manufacturers. Suppliers are selected based on their
ability to provide defect-free products quickly at low cost. The Company
continuously measures the performance of key suppliers. Special programs are
used to speed availability of material

                                       5
<PAGE>

and protect the Company from unplanned shifts in product demand. These programs
include ship-to-stock, and point-of-use bonding, a program in which suppliers
hold material on-site at the Company and as the material is used, title
transfers to the Company and payment is made. Certain components used by the
Company do not have ready substitutes or have been subject to industry-wide
shortages. There can be no assurance that the Company's inventories would be
adequate to meet the Company's production needs during any interruption of
supply. The Company's inability to develop alternative supply sources, if
required, or a reduction or stoppage in supply, could adversely affect its
operations until new sources of supply became available.


Proprietary Rights

     The Company holds ten United States patents, expiring from March 2001
through March 2015, and has one pending patent application in the United States,
none of which the Company believes is material to its business or operations.
Pursuant to an agreement with Parent, the Company also has cross-licenses to
technology under Parent's current patents and patent applications, together with
technology resulting from patent applications, which Parent applied for through
December 2, 1998.

     The Company believes that its success depends primarily upon the
proprietary know-how, innovative skills, technical competence and marketing
abilities of its employees.


Backlog

     Most of the Company's customers order products on an as-needed basis,
relying, in the case of most products, on the Company's five-day delivery
capability. As a result, the Company believes that its backlog at any point in
time is not indicative of its future sales and is not material to operations.


Employees

     As of November 30, 2000, the Company employed approximately 96 persons
worldwide. None of the employees is represented by a labor union. The Company
believes it has good relations with its employees.

     Competition for employees with the skills required by the Company is
intense in the geographic areas in which the Company's operations are located.
The Company believes that its future success will depend on its continued
ability to attract and retain qualified employees, especially in research and
development.


Executive Officers of the Company

Name                        Age    Position with the Company
----                        ---    -------------------------

Alfred A. Molinari, Jr.....  59    Chairman and Chief Executive Officer
Jeffrey M. Cronin..........  36    Vice President, Operations
Annette C. Crossen.........  41    Vice President, Sales
Michael A. DiPoto..........  33    Vice President, Finance, CFO and Treasurer
Clifford G. Wilson.........  47    Vice President, Engineering

     Mr. Molinari has been the Chief Executive Officer and Chairman of the
Company since December 1996. Mr. Molinari is the founder of Parent and served as
the Chief Executive Officer and a director of Parent from its inception in 1973
until November 1996.

     Mr. Cronin was appointed Vice President, Operations in February 1999. Prior
to that Mr. Cronin served as Director of Operations and Manufacturing of the
Company from December 1996 to February 1999 and as Director of Manufacturing of
Parent from March 1992 to December 1996.

                                       6
<PAGE>

     Mrs. Crossen was appointed Vice President of Sales in July 1999. Prior to
that Mrs. Crossen served as the Domestic Sales Manager of the Company from
August 1997 to June 1999. Prior to joining the Company Mrs. Crossen served as
Principal Business Manager of SIMiN Business Systems from June 1996 to July
1997. Mrs. Crossen also served as the Sales Operations Manager of Parent from
February 1994 to May of 1996.

     Mr. DiPoto was appointed Vice President of Finance, Chief Financial and
Treasurer in July 1999. Prior to that Mr. DiPoto served as the Chief Accounting
Officer of the Company from March 1999 to June 1999. Prior to joining the
Company Mr. DiPoto served as Corporate Controller of NuMega Technologies, Inc.
from January 1996 to March 1999.  Prior to that Mr. DiPoto served as Accounting
Manager and Controller of Acuity Imaging, Inc. from January 1994 to December
1995.

     Mr. Wilson joined the Company in June 1999 as Vice President of
Engineering. Prior to joining the Company, Mr. Wilson was employed by Imagraph
Corporation as the Vice President of Engineering from 1996 to March 1999. In
addition, Mr. Wilson served as Director of Software Product Development for
Eastman Kodak Company from 1987 - 1996.


Item 2.   Properties

     The Company maintains its principal executive, engineering, manufacturing
and sales operations in a 100,000 square foot facility located in Marlboro,
Massachusetts. The building is leased from a related party trust under an
agreement expiring in 2009. The Company sublets a portion of the building to
certain tenants. The minimum annual net basic rent for the building is
approximately $1,300,000, which is allocated between the Company and its tenants
pursuant to certain sub-lease agreements.

     The Company's United Kingdom sales operations are conducted in a 1,000
square foot office facility in Basingstoke, Hants, England that is leased under
a five-year renewable lease, expiring in 2004, by Data Translation Ltd. The
minimum quarterly basic rent is approximately $11,000 per quarter.

     The Company's German sales operations are conducted in a 2,420 square foot
office facility in Bietigheim-Bissingen, Germany that is leased under a five-
year renewable lease, expiring in 2005, by Data Translation GmbH. The minimum
annual basic rent is approximately $35,000 per year.



Item 3.  Legal Proceedings

     From time to time, the Company is involved in disputes and/or litigation
with respect to its products and operations in its normal course of business.
The Company does not believe that the ultimate impact of the resolution of such
matters will have a material adverse effect on the Company's financial condition
or results of operations.


Item 4.  Submission of Matters to a Vote of Security Holders

     There were no matters submitted to a vote of stockholders during the fourth
quarter of fiscal 2000.

                                       7
<PAGE>

PART II

Item 5.   Market for the Registrant's Common Equity and Related Stockholder
          Matters

     The common stock of the Company is traded in the over-the-counter market
and is reported on the Nasdaq SmallCap Market System under the symbol "DATX".
The Company's stock began trading on December 16, 1996 subsequent to the stock
dividend issued in connection with the Distribution. The high and low sale
prices of the Company's Common Stock on the over-the-counter market since the
Distribution Date through January 31, 2001 as reported on the Nasdaq SmallCap
Market System were $9.91 and $.53, respectively. The table below sets forth the
high and low quarterly sales prices of the Common Stock during the two most
recent fiscal years:

<TABLE>
<CAPTION>
                                         2000                    2000                     1999                    1999
                                         High                     Low                     High                     Low
                     -------------------------------------------------------------------------------------------------
<S>                  <C>               <C>                     <C>                      <C>                     <C>
First quarter                          $9.906                  $6.000                   $2.000                  $1.125
Second quarter                          9.375                   3.625                    4.000                   1.500
Third quarter                           6.875                   3.062                    5.500                   2.937
Fourth quarter                          3.500                   1.750                    6.625                   4.500
</TABLE>

     The Company has never paid a cash dividend on its Common Stock, and the
Board of Directors does not anticipate paying cash dividends in the foreseeable
future. As of January 31, 2001, there were approximately 300 stockholders of
record of the Company's common stock.


Item 6.   Selected Financial Data

     The following data has been derived from the Company's consolidated
financial statements that have been audited by Arthur Andersen LLP, independent
public accountants, as of and for the fiscal years in the five-year period ended
November 30, 2000. The data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements and the notes thereto and other financial
information included elsewhere in this Form 10-K.

     For the period presented prior to the Distribution Date, the selected
historical financial data relates to the Contributed Businesses as they were
operated as part of Parent. They also include an allocation of certain general
corporate expenses of Parent which were not directly related to these
businesses. The financial information included herein for periods prior to the
Distribution Date may not, however, reflect the results of operations or
financial position that would have been obtained had the Company been a
separate, independent company. The consolidated financial data for all periods
subsequent to the Distribution Date reflect the results of operations, financial
position, changes in stockholders' investment and cash flows of the independent
company.

                                       8
<PAGE>

<TABLE>
<CAPTION>

                                                                               Fiscal Years Ended November 30,
                                                                     ----------------------------------------------------
                                                                         2000       1999      1998       1997       1996
                                                                      -------    -------   -------    -------    -------
                                                                            (In thousands, except per share amounts)
<S>                                                                  <C>        <C>       <C>        <C>        <C>
Consolidated Statements of Operations Data:
Net sales........................................................     $15,924    $16,254   $16,781    $20,452    $21,201
Cost of sales....................................................       7,590      7,048     8,070      9,932      8,181
                                                                      -------    -------   -------    -------    -------
  Gross profit...................................................       8,334      9,206     8,711     10,520     13,020
Research and development expenses................................       3,031      2,569     2,444      3,808      3,736
Selling and marketing expenses...................................       5,113      4,100     5,621     10,481      9,696
General and administrative expenses..............................       2,017      1,943     2,001      2,426      2,032
                                                                      -------    -------   -------    -------    -------
  Income (loss) from operations..................................      (1,827)       594    (1,355)    (6,195)    (2,444)
Interest income..................................................         114        100       149        269        560
Other income (expense)...........................................          --         --       (46)       (53)       (51)
                                                                      -------    -------   -------    -------    -------
  Income (loss) from continuing operations before provision
   (benefit) for income taxes....................................      (1,713)       694    (1,252)    (5,979)    (1,935)
Provision (benefit) for income taxes.............................          --         32        --         --       (658)
                                                                      -------    -------   -------    -------    -------
  Income (loss) from continuing operations.......................      (1,713)       662    (1,252)    (5,979)    (1,277)
Discontinued operations..........................................          --         --        --         --     (3,555)
                                                                      -------    -------   -------    -------    -------
  Net income (loss)..............................................     $(1,713)   $   662   $(1,252)   $(5,979)   $(4,832)
                                                                      =======    =======   =======    =======    =======
Basic net income (loss) from continuing operations per common
 and potential common share......................................     $ (0.78)   $   .31   $ (0.60)   $ (2.94)   $ (0.64)
                                                                      =======    =======   =======    =======    =======
Diluted net income (loss) from continuing operations per common
 and potential common share......................................     $ (0.78)   $   .30   $ (0.60)   $ (2.94)   $ (0.64)
                                                                      =======    =======   =======    =======    =======
Basic and diluted net income (loss) from discontinued operations
 per common and potential common share...........................     $    --    $    --   $    --    $    --    $ (1.78)
                                                                      =======    =======   =======    =======    =======
Basic weighted average number of common and potential common
 shares outstanding..............................................       2,205      2,123     2,083      2,033      1,998
                                                                      =======    =======   =======    =======    =======
Diluted weighted average number of common and potential common
 shares outstanding..............................................       2,205      2,241     2,083      2,033      1,998
                                                                      =======    =======   =======    =======    =======
</TABLE>

                                                        November 30,
                                                        -----------
                                              2000          1999          1998
                                              ----          ----          ----
                                                      (In thousands)
Consolidated Balance Sheet Data:
Cash, cash equivalents and marketable
 securities.............................    $2,855        $4,098        $2,780
Working capital.........................     3,611         4,988         4,102
Total assets............................     7,918         9,049         7,576
Total liabilities.......................     3,345         2,799         2,024
Total stockholders' investment..........     4,573         6,250         5,552


                                       9
<PAGE>

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

Forward Looking Statements

     Certain statements in Management's Discussion and Analysis of Financial
Condition and Results of Operations contain "forward-looking" information (as
defined in the Private Securities Litigation Reform Act of 1995). The words
"believe", "expect", "anticipate", "intend", "estimate", "assume" and other
similar expressions which are predictions of or indicate future events and
trends and which do not relate to historical matters identify forward-looking
statements. Reliance should not be placed on forward-looking statements because
they involve known and unknown risks, uncertainties and other factors, which are
in some cases beyond the control of the Company and may cause the actual
results, performance or achievements of the Company to differ materially from
anticipated future results, performance or achievements expressed or implied by
such forward-looking statements.

     For further discussion identifying important factors that could cause
actual results to differ materially from those anticipated in forward-looking
statements, see "Certain Factors that May Affect Future Results" herein.

Background

     Data Translation, Inc., formerly known as Data Translation II, Inc., (the
"Company") was incorporated in September 1996 as a wholly owned subsidiary of
Media 100 Inc. formerly known as Data Translation, Inc., ("Parent"). On November
29, 1996, Parent contributed to the Company substantially all of the assets and
liabilities of Parent's data acquisition and imaging, commercial products and
networking distribution groups (the "Contributed Businesses"). On November 11,
1996, Parent sold a substantial portion of the assets of the networking
distribution business, and during 1998 the Company discontinued the remainder of
such business. The Company will continue to operate the data acquisition and
imaging and commercial products groups. On December 2, 1996 (the "Distribution
Date"), Parent distributed to its stockholders in the form of a dividend all of
the outstanding shares of capital stock of the Company (the "Distribution").

     Following the Distribution, the Company became a stand-alone entity with
objectives and strategies separate from those of Parent. The Company is focused
on providing products in the data acquisition, imaging, machine vision and PC
video editing industries.

Comparison of Fiscal Year Ended November 30, 2000 to Fiscal Year Ended November
30, 1999

     Net sales for the fiscal year ended November 30, 2000 were $15,924,000
compared to $16,254,000 for the same period in the prior year, which represents
a decrease of approximately 2.0% or $330,000. Sales from the Company's data
acquisition and imaging products decreased approximately $224,000, or 1.6% from
the prior fiscal year. The Company believes that sales continue to be adversely
impacted by various market conditions including a perceived shift in the data
acquisition and imaging markets toward new, lower priced hardware and software
products (particularly in PC prices), competitive pricing pressures, a decline
in the financial markets of certain regions abroad and declining sales from the
Company's legacy products. Sales from the Company's commercial product,
Broadway, decreased approximately $107,000, or 5.3%, from the comparable period
in fiscal 1999, which the Company believes is due primarily to a reduction in
marketing programs, a decrease in the sales staff and increased competition
within the video capture and encoding marketplace.

     Gross profit for the period ended November 30, 2000 was 52.3%, compared to
56.6% in the comparable period of the prior year. The decrease in gross profit
from the comparable prior year period was the result of higher manufacturing
overhead expenses as well as a less favorable product mix.

     The Company's loss from operations for fiscal 2000 was $1,827,000, compared
to income from operations of $594,000 in the comparable period of the prior
year. An increase in operating expenses as well as lower gross profits
contributed to the decrease in income from operations. Operating expenses for
fiscal 2000 were $10,161,000 representing 63.8% of sales, compared to
$8,612,000, representing 53.0% of sales, in the prior year. Fiscal year


                                      10
<PAGE>

2000 operating expenses include a significant investment in engineering,
advertising, promotion and sales channel development for the Company's fiscal
2000 product releases. Research and development expenses in fiscal year 2000
were $3,031,000, representing 19.0% of sales, compared to $2,569,000,
representing 15.8% of sales, in the prior year period. The increase is primarily
attributable to an increased development effort in the Company's data
acquisition and imaging product lines. Sales and marketing expenses in fiscal
year 2000 were $5,113,000 representing 32.1% of sales, compared to $4,100,000,
representing 25.2% of sales, in the prior year period. The increase in sales and
marketing expenses is primarily a result of the investment in advertising,
promotion and sales channel development for the Company's fiscal 2000 product
releases. General and administrative expenses in fiscal year 2000 were
$2,017,000, representing 12.7% of sales, compared to $1,943,000, representing
12.0% of sales, for the comparable period in fiscal 1999.

     Interest income for the fiscal year ended November 30, 2000 was $114,000,
compared to interest income of $100,000, for the same period in fiscal 1999. The
primary source of interest income is from the investment of cash generated from
operations.

     Net loss for the fiscal year ended November 30, 2000 was $1,713,000, or
$0.78 per diluted share, compared to a net income of $662,000, or $0.30 per
diluted share, for the same period in fiscal 1999.

Comparison of Fiscal Year Ended November 30, 1999 to Fiscal Year Ended November
30, 1998

     Net sales for the fiscal year ended November 30, 1999 were $16,254,000
compared to $16,781,000 for the same period in the prior year, which represents
a decrease of approximately 3.1% or $527,000. Sales from the Company's data
acquisition and imaging products decreased approximately $119,000, or 0.8% from
the prior fiscal year. The Company believes that sales continue to be adversely
impacted by various market conditions including a perceived shift in the data
acquisition and imaging markets toward new, lower priced hardware and software
products (particularly in the PC market), competitive pricing pressures and a
decline in the financial markets of certain regions abroad. Sales from the
Company's commercial product, Broadway, decreased approximately $408,000, or
16.7%, from the comparable period in fiscal 1998, which the Company believes is
due primarily to a decrease in the size of the Company's sales force and a
consolidation of the Company's marketing programs.

     Gross profit for the fiscal year ended November 30, 1999 was 56.6%,
compared to 51.9% in the comparable period of the prior year. The increase in
gross profit from the comparable prior year period was the result of lower
manufacturing overhead expenses as well as a more favorable product mix.

     The Company's income from operations for fiscal 1999 was $594,000, compared
to a loss from operations of $1,355,000 in the comparable period of the prior
year. A decrease in operating expenses as well as higher gross profits
contributed to the increase in income from operations. Operating expenses for
fiscal 1999 were $8,612,000 representing 53.0% of sales, compared to
$10,066,000, representing 60.0% of sales, in the prior year. Prior year
operating expenses include a significant investment in advertising, promotion
and sales channel development for the Company's Broadway product. Research and
development expenses for fiscal 1999 were $2,569,000, representing 15.8% of
sales, compared to $2,444,000, representing 14.6% of sales, in the prior year
period. The increase is primarily attributable to an increased development
effort in the Company's data acquisition and imaging product lines. Sales and
marketing expenses for fiscal 1999 were $4,100,000, representing 25.2% of sales,
compared to $5,621,000, representing 33.5% of sales, in the prior year period.
The decrease in sales and marketing expenses is primarily a result of a decrease
in the size of the Company's sales force and a consolidation of the Company's
marketing programs. General and administrative expenses for fiscal 1999 were
$1,943,000, representing 12.0% of sales, compared to $2,001,000, representing
11.9% of sales, for the comparable period in fiscal 1998.

     Interest income for the fiscal year ended November 30, 1999 was $100,000,
compared to interest income of $149,000, for the same period in fiscal 1998. The
primary source of interest income is from the investment of cash generated from
operations.

     Net income for the fiscal year ended November 30, 1999 was $662,000, or
$0.30 per diluted share, compared to a net loss of $1,252,000, or $0.60 per
diluted share, for the same period in fiscal 1998.

                                      11
<PAGE>

Liquidity and Capital Resources

     As of November 30, 2000, the Company had cash and cash equivalents totaling
$2,741,000, as compared to cash and cash equivalents of $3,989,000 as of
November 30, 1999.

     During fiscal 2000, the Company used $904,000 in operating activities,
resulting from a net loss, increases in inventory and prepaid expenses and a
decrease in accrued expenses, partially offset by an increase in accounts
payable and a decrease in accounts receivable.

     The Company used $379,000 in investing activities during fiscal 2000,
mainly as a result of acquisitions of property, equipment and other long-term
assets.

     The Company generated cash from financing activities of $71,000 during
fiscal 2000 related to the exercise of stock options and the issuance of stock
under the employee stock purchase plan, partially offset by the repurchase of
41,465 shares of the Company's Common Stock.

     The Company believes that its existing cash, cash equivalents and short-
term investment balances and cash flows expected to be generated from future
operations will be sufficient to meet its capital requirements for at least the
next 12 months, although the Company may be required, or could elect, to seek
additional funding prior to that time. The Company's future capital requirements
will depend on many factors, including the rate of revenue growth, the timing
and extent of spending to support product development efforts and expansion of
sales and marketing, the timing of introductions of new products and
enhancements to existing products, and market acceptance of the Company's
products. There can be no assurances that additional funding, if required, will
be available on acceptable terms or at all.


Results of Operations

  The following table shows certain statements of operations data as a
percentage of net sales.

<TABLE>
<CAPTION>
                                                                         Fiscal Year Ended
                                                                         -----------------
                                                                            November 30,
                                                                            ------------
                                                                     2000          1999         1998
                                                                   ------         -----        -----
<S>                                                                <C>            <C>          <C>
Net sales......................................................     100.0%        100.0%       100.0%
Gross margin...................................................      52.3          56.6         51.9
Research and development expenses..............................      19.0          15.8         14.6
Selling and marketing expenses.................................      32.1          25.2         33.5
General and administrative expenses............................      12.7          12.0         11.9
                                                                   ------         -----        -----
Income (loss) from operations..................................     (11.5)          3.7         (8.1)
Interest income (expense) and other, net.......................       0.7           0.6          0.6
                                                                   ------         -----        -----
Income (loss) from operations before
 benefit from income taxes.....................................     (10.8)          4.3         (7.5)
Provision (benefit) from income taxes..........................       0.0           0.2          0.0
                                                                   ------         -----        -----
Net income (loss)  ............................................     (10.8)%         4.1%         (7.5)%
                                                                   ======         =====        =====
</TABLE>

                                      12

<PAGE>

Certain Factors That May Affect Future Results

     Except for the historical information contained herein, the matters
discussed in this Annual Report on Form 10-KSB are forward-looking statements,
and are based on current expectations, and involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company, or industry results, to be materially different
from those expressed in such forward-looking statements. The risks and
uncertainties associated with such statements include the following:


Significant fluctuations and unpredictability of operating results

          Our quarterly operating results may vary significantly for a number of
reasons, including new product announcements and introductions by us or our
competitors, changes in pricing, and the volume and timing of orders received
during each quarter. Historically a significant percentage of our net sales have
resulted from orders received from universities, research laboratories and
government agencies. These sales are historically slower during our third
quarter as a result of seasonal vacation schedules and university shutdowns. We
have also in the past experienced delays in the development of new products and
enhancements, and such delays may occur in the future. These factors make the
forecasting of revenue inherently uncertain. Additionally, a significant portion
of our operating expenses is relatively fixed, and operating expense levels are
based primarily on internal expectations of future revenue. As a consequence,
quarterly operating expense levels cannot be reduced rapidly in the event that
quarterly revenue levels fail to meet internal expectations. Therefore, if
quarterly revenue levels fail to meet internal expectations, our operating
results would be adversely affected.

Development and introduction of new products

          Our future success depends upon our ability to address the rapidly
changing needs of our customers by developing and introducing high-quality,
cost-effective products, product enhancements and services on a timely basis and
by keeping pace with technological developments and emerging industry standards.
We have new product launches and upgrades to our existing products planned for
fiscal year 2001. Our future revenue growth will be dependent on the success of
these new product launches as legacy product sales continue to erode. We have in
the past experienced delays in product development and such delays may occur in
the future. In addition, as we introduce new or enhanced products, we will have
to manage successfully the transition from older products in order to minimize
disruption in our customers' ordering patterns, avoid excessive levels of older
product inventories and ensure that enough supplies of new products can be
delivered to meet our customers' demands. Our ability to develop and
successfully introduce new products and product enhancements, which are broadly
accepted, will affect our revenues.

Dependence on a few key original equipment manufacturers (OEMs)

          We depend on a few key original equipment manufacturer customers
(OEMs). For example, in the year ended November 30, 2000, sales to our OEM
channel represented 20% of our total revenue. We anticipate that our operating
results will continue to depend on sales to the OEM channel. Therefore, the loss
of any of our OEMs or a significant reduction in sales to these OEMs could
substantially reduce our revenues.

Ability to manage distribution channel

          We rely primarily on a worldwide network of independent value-added
resellers (VARs) to distribute and sell our products to end-users. Our resellers
generally offer products of several different companies, including, in some
cases, products which are competitive with our products. In addition, many of
these VARs are small organizations with limited capital resources. There can be
no assurance that the our resellers will continue to purchase our products or
provide them with adequate levels of support, or that our efforts to expand its
VAR network will be successful. Any significant failure of the preceding factors
could have a material adverse effect on our business and operating results.

                                      13
<PAGE>

Reliance on international sales

     Sales of our products outside of North America represented approximately
45% of our net sales for the fiscal year ended November 30, 2000. International
sales and operations may be subject to risks such as the imposition of
government controls, export license requirements, restrictions on the export of
critical technology, less effective enforcement or proprietary rights, currency
exchange fluctuations, generally longer collection periods, political
instability, trade restrictions, changes in tariffs, difficulties in staffing
and managing international operations, potential insolvency of international
resellers and difficulty in collecting accounts receivable. Our international
sales are also subject to more seasonal fluctuation than domestic sales. In this
regard, the traditional summer vacation period, which occurs during our third
fiscal quarter, may result in a decrease in sales, particularly in Europe. There
can be no assurance that these factors will not have an adverse effect on our
future international operations and consequently, on our business and operating
results.

Dependence on single or limited source suppliers

     We are dependent on single or limited source suppliers for several key
components used in our products. The availability of many of these components is
dependent on our ability to provide suppliers with accurate forecasts of its
future requirements, and certain components used by us have been subject to
industry-wide shortages. We do not carry significant inventories of these
components and have no guaranteed supply arrangements with such suppliers. There
can be no assurance that our inventories would be adequate to meet the our
production needs during any interruption of supply. Our inability to develop
alternative supply sources, if required, or a reduction or stoppage in supply,
could delay product shipments until new sources of supply become available, and
any such delay could adversely affect our business and operating results in any
given period.

Dependence on key personnel

     Competition for employees with the skills required by us is intense in the
geographic areas in which our operations are located. We believe that our future
success will depend on its continued ability to attract and retain qualified
employees, especially in research and development. In addition, companies in our
industry whose employees accept positions with competitors frequently claim that
their competitors have engaged in unfair hiring practices. We cannot assure you
that we will not receive such claims in the future as we seek to hire qualified
personnel or that such claims will not result in material litigation. We could
incur substantial costs in defending ourselves against these claims, regardless
of their merits.

Year 2000 compliance

     The year 2000 computer problem refers to the potential for system and
processing failures of date-related data as a result of computer-controlled
systems using two digits rather than four to define the applicable year. For
example, computer programs that have time-sensitive software may recognize a
date represented as "00" as the year 1900 rather than the year 2000. This could
result in a system failure or miscalculations causing disruptions of operations,
including among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities.

     To date, we have not experienced any year 2000 issues with any of our
internal systems or our products, and we do not expect to experience any in the
future. To date, we have not experienced any year 2000 issues related to any of
our key third party suppliers and customers nor do we expect to experience any
in the future. Costs associated with remediating our internal systems were not
material.

                                      14
<PAGE>

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

     The Company's investing strategy, to manage interest rate exposure, is to
invest in short term highly liquid investments. Currently, the Company's short-
term investments are in highly rated government securities. At November 30,
2000, the fair value of the Company's short-term investments approximated their
market value.

     The Company faces exposure to movements in foreign currency exchange rates.
The Company does not use derivative financial instruments or other financial
instruments to hedge economic exposures or for trading. The Company's primary
exposures have been related to the operations of its European subsidiaries. In
2000, the net impact of foreign currency charges was not material.

                                      15

<PAGE>

                     DATA TRANSLATION, INC. AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                                Page
                                                                                                                ----
<S>                                                                                                           <C>
Report of Independent Public Accountants....................................................................    F-2
Consolidated Balance Sheets as of November 30, 2000 and 1999................................................    F-3
Consolidated Statements of Operations for the Fiscal Years Ended November 30, 2000, 1999 and 1998...........    F-4
Consolidated Statements of Stockholders' Investment for the Fiscal Years Ended November 30, 2000,
1999 and 1998...............................................................................................    F-5
 ............................................................................................................
Consolidated Statements of Cash Flows for the Fiscal Years Ended November 30, 2000, 1999 and 1998...........    F-6
Notes to Consolidated Financial Statements..................................................................    F-7
</TABLE>

                                      F-1
<PAGE>

Item 8. Financial Statements and Supplementary Data


REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Data Translation, Inc.:

     We have audited the accompanying consolidated balance sheets of Data
Translation, Inc. (a Delaware corporation) and subsidiaries as of November 30,
2000 and 1999 and the related consolidated statements of operations,
stockholders' investment and cash flows for each of the three years in the
period ended November 30, 2000. These financial statements are the
responsibility of the Data Translation, Inc. and subsidiaries' management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards 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. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Data Translation, Inc. and
subsidiaries as of November 30, 2000 and 1999 and the results of their
operations and their cash flows for each of the three years in the period ended
November 30, 2000, in conformity with accounting principles generally accepted
in the United States.


                                                  Arthur Andersen LLP

Boston, Massachusetts
December 21, 2000

                                      F-2
<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                      November 30,
                                                                                      ------------
                                                                                2000                1999
                                                                                ----                ----
<S>                                                                         <C>                 <C>
Current Assets:
  Cash and cash equivalents...........................................      $ 2,741,000         $ 3,989,000
  Marketable securities...............................................          114,000             109,000
  Accounts receivable, net (Note 10)..................................        1,980,000           2,035,000
  Inventories.........................................................        1,577,000           1,294,000
  Prepaid expenses....................................................          544,000             357,000
                                                                            -----------         -----------
     Total current assets.............................................        6,956,000           7,784,000

Property and equipment, net...........................................          890,000           1,243,000
Other assets, net.....................................................           72,000              22,000
                                                                            -----------         -----------
     Total assets.....................................................      $ 7,918,000         $ 9,049,000
                                                                            ===========         ===========

Current Liabilities:
  Accounts payable....................................................      $ 1,450,000         $   646,000
  Accrued expenses....................................................        1,895,000           2,150,000
                                                                            -----------         -----------
     Total current liabilities........................................        3,345,000           2,796,000

Deferred income taxes.................................................               --               3,000

Commitments and Contingencies (Note 6)

Stockholders' Investment:
  Preferred stock, $0.01 par value--
    Authorized: 5,000,000 shares, none issued or
    outstanding.......................................................               --                  --
  Common stock, $0.01 par value--
    Authorized: 30,000,000 shares, 2,281,921 and
    2,175,780 shares issued in 2000 and 1999,
            respectively; 2,225,456 and 2,160,780 shares
            outstanding in 2000 and 1999, respectively................           23,000              22,000
  Additional paid-in capital..........................................       13,145,000          12,891,000
        Treasury stock, common, at cost,
             56,465 and 15,000 shares in 2000 and 1999, respectively           (227,000)            (43,000)
        Accumulated deficit...........................................       (8,282,000)         (6,569,000)
  Cumulative translation adjustment...................................          (86,000)            (51,000)
                                                                            -----------         -----------
     Total stockholders' investment...................................        4,573,000           6,250,000
                                                                            -----------         -----------
     Total liabilities and stockholders' investment...................      $ 7,918,000         $ 9,049,000
                                                                            ===========         ===========
</TABLE>

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

                                      F-3
<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                     Fiscal Years Ended November 30,
                                                                 -------------------------------------
                                                               2000                 1999               1998
                                                           -----------          -----------        -----------
<S>                                                        <C>                  <C>                <C>
Net sales.............................................     $15,924,000          $16,254,000        $16,781,000
Cost of sales.........................................       7,590,000            7,048,000          8,070,000
                                                           -----------          -----------        -----------
             Gross profit.............................       8,334,000            9,206,000          8,711,000
Research and development expenses.....................       3,031,000            2,569,000          2,444,000
Selling and marketing expenses........................       5,113,000            4,100,000          5,621,000
General and administrative expenses...................       2,017,000            1,943,000          2,001,000
                                                           -----------          -----------        -----------
             (Loss) income from operations............      (1,827,000)             594,000         (1,355,000)
Interest income.......................................         114,000              100,000            149,000
Other expense, net....................................              --                   --            (46,000)
                                                           -----------          -----------        -----------
             (Loss) income before provision for income
              taxes...................................      (1,713,000)             694,000         (1,252,000)
Provision for income taxes............................              --               32,000                 --
                                                           -----------          -----------        -----------
             Net (loss) income........................     $(1,713,000)         $   662,000        $(1,252,000)
                                                           ===========          ===========        ===========
Basic net (loss) income per common share..............     $     (0.78)         $      0.31        $      (.60)
                                                           ===========          ===========        ===========
Diluted net (loss) income per common and potential
   common share.......................................     $     (0.78)         $      0.30        $      (.60)
                                                           ===========          ===========        ===========

Basic weighted average number of common shares
   outstanding........................................       2,205,000            2,123,000          2,083,000
                                                           ===========          ===========        ===========
Diluted weighted average number of common and
   potential common shares outstanding................       2,205,000            2,232,000          2,083,000
                                                           ===========          ===========        ===========
</TABLE>






The accompanying notes are an integeral part of these consolidated financial
                                  statements


                                      F-4

<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

              CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT

<TABLE>
<CAPTION>
                            Common Stock                  Treasury Stock
                    ---------------------------------  --------------------
                                          Additional                                        Cumulative      Total      Comprehensive
                     Number    $0.01 Par    Paid-in     Number               Accumulated    Translation  Stockholders'    Income
                    of Shares    Value      Capital    of Shares    Amount     Deficit       Adjustment    Investment     (Loss)
                    ----------------------------------------------------------------------------------------------------------------

<S>                 <C>        <C>        <C>          <C>        <C>        <C>            <C>          <C>           <C>
Balance, November
30, 1997             2,048,765   $20,000  $12,691,000        --   $      --    $(5,979,000)   $ (3,000)   $ 6,729,000           --
  Proceeds from
  stock plans......     48,155     1,000       73,000        --          --             --          --         74,000           --
  Translation
  adjustment.......         --        --           --        --          --             --       1,000          1,000        1,000
  Net loss.........         --        --           --        --          --     (1,252,000)         --     (1,252,000)  (1,252,000)
                    ----------------------------------------------------------------------------------------------------------------
Total
Comprehensive Loss                                                                                                     $(1,251,000)
                                                                                                                       ===========

Balance, November
30, 1998             2,096,920    21,000   12,764,000        --          --     (7,231,000)     (2,000)     5,552,000           --
  Proceeds from
  stock plans......     78,860     1,000      127,000        --          --             --          --        128,000           --
  Purchase of
  treasury stock...         --        --           --     15,000     (43,000)           --           --       (43,000)          --
  Translation
  adjustment.......         --        --           --         --          --            --       (49,000)     (49,000)     (49,000)
  Net income.......         --        --           --         --          --       662,000            --      662,000      662,000
                    --------------------------------------------------------------------------------------------------------------
Total
Comprehensive Income                                                                                                   $   613,000
                                                                                                                       ===========

Balance, November
30, 1999             2,175,780    22,000   12,891,000     15,000     (43,000)   (6,569,000)      (51,000)   6,250,000           --
  Proceeds from
  stock plans......    106,141     1,000      254,000         --          --            --            --      255,000           --
  Purchase of
  treasury stock...         --        --           --     41,465    (184,000)           --            --     (184,000)          --
  Translation
  adjustment.......         --        --           --         --          --            --       (35,000)     (35,000)     (35,000)
  Net loss.........         --        --           --         --          --    (1,713,000)           --   (1,713,000)  (1,713,000)
                    --------------------------------------------------------------------------------------------------------------
Total
Comprehensive Loss                                                                                                     $(1,748,000)
                                                                                                                       ===========
Balance, November
30, 2000             2,281,921   $23,000  $13,145,000     56,465   $(227,000)  $(8,282,000)     $(86,000) $ 4,573,000
                    =================================================================================================
</TABLE>

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

                                      F-5
<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                        Fiscal Years Ended November 30,
                                                               ----------------------------------------------
                                                                 2000                 1999                1998
                                                            -----------            ----------          -----------
<S>                                                         <C>                   <C>                <C>
Cash Flows from Operating Activities:
 Net (loss) income.......................................   $(1,713,000)          $  662,000         $(1,252,000)
 Adjustments to reconcile net (loss) income to net
 cash (used in) provided by operating activities
   Depreciation and amortization.........................       677,000              879,000           1,049,000
   Loss on disposal of equipment.........................           ---                6,000                 ---
   Reserve for doubtful accounts.........................        12,000             (108,000)              8,000
   Changes in current assets and liabilities:
     Accounts receivable.................................        43,000             (164,000)            983,000
     Inventories.........................................      (283,000)             (92,000)            205,000
     Prepaid expenses....................................      (187,000)              21,000              52,000
     Net liabilities of discontinued
      operations.........................................            --                  ---          (1,424,000)
     Accounts payable....................................       804,000              390,000              82,000
     Due to related party................................            --                  ---            (546,000)
     Accrued expenses....................................      (254,000)             387,000              82,000
     Deferred income taxes...............................        (3,000)                 ---                 ---
                                                            -----------           ----------         -----------
     Net cash (used in) provided by operating
      activities.........................................      (904,000)           1,981,000            (761,000)
                                                            -----------           ----------        ------------
Cash Flows from Investing Activities:
 Purchases of property and equipment.....................      (324,000)            (679,000)           (407,000)
 Purchase of marketable securities.......................      (114,000)            (109,000)                 --
 Maturity of marketable securities.......................       109,000                   --                  --
 Increase in other assets................................       (50,000)             (18,000)            (50,000)
                                                            -----------           ----------         -----------
     Net cash used in investing activities...............      (379,000)            (806,000)           (457,000)
                                                            -----------           ----------         -----------
Cash Flows from Financing Activities:
  Purchase of treasury stock.............................      (184,000)             (43,000)                 --
  Proceeds from stock plans..............................       255,000              128,000              74,000
                                                            -----------           ----------         -----------
     Net cash provided by financing
       activities........................................        71,000               85,000              74,000
Exchange Rate Effects....................................       (36,000)             (51,000)              2,000
                                                            -----------           ----------         -----------
Net (decrease) increase in cash and cash
 equivalents.............................................    (1,248,000)           1,209,000          (1,142,000)
Cash and cash equivalents, beginning of year.............     3,989,000            2,780,000           3,922,000
                                                            -----------           ----------         -----------
Cash and cash equivalents, end of year...................   $ 2,741,000           $3,989,000         $ 2,780,000
                                                            ===========           ==========         ===========
Supplemental Disclosure of Cash Flow Information:
    Cash paid for income taxes...........................   $        --           $       --         $        --
                                                            ===========           ==========         ===========
    Cash paid for interest...............................   $        --           $       --         $        --
                                                            ===========           ==========         ===========
</TABLE>


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

                                      F-6


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

<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLDATED FINANCIAL STATEMENTS



1.   Background and Basis of Presentation

  Data Translation, Inc. formerly known as Data Translation II, Inc. (the
"Company") was incorporated in September 1996 as a wholly owned subsidiary of
Media 100 Inc. formerly known as  Data Translation, Inc. ("Parent"). The Company
designs, develops and manufactures high performance data acquisition and imaging
products for use with personal computers. The Company's principal products are
digital signal processing boards and software, which receive analog signals,
convert them to digital form and process the digital data.

  On November 29, 1996, Parent contributed to the Company substantially all of
the assets and liabilities of Parent's data acquisition and imaging, commercial
products and networking distribution groups (the "Contributed Businesses"). On
November 11, 1996, Parent sold a substantial portion of the assets of the
networking distribution business, and the Company completed the winding-up of
the remainder of such business during 1998. On December 2, 1996 (the
"Distribution Date"), Parent distributed to its stockholders in the form of a
dividend all of the outstanding shares of capital stock of the Company (the
"Distribution"). The Company continues to operate the data acquisition and
imaging and commercial products groups.

2.   Summary of Significant Accounting Policies

 (a) Principles of Consolidation

  The accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. All material intercompany accounts
and transactions have been eliminated in consolidation.

 (b) Use of Estimates

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

 (c) Cash and Cash Equivalents

  Cash equivalents are carried at cost, which approximates market value, and
have original maturities of less than 90 days. Cash equivalents include money
market accounts, U.S. Treasury bills and repurchase agreements with overnight
maturities.

  The Company accounts for marketable securities in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 115, Accounting for Certain
Investments in Debt and Equity Securities.  Under this standard, the Company is
required to classify all investments in debt and equity securities into one or
more of the following three categories: held-to-maturity, available-for-sale or
trading.  The Company's marketable securities as of December 31, 2000 mature in
February 2001 and are classified as held-to-maturity as the Company has the
positive intent and ability to hold to maturity.  Marketable securities are
reported at amortized cost.  The Company's cash equivalents and marketable
securities are invested in highly rated government securities.





                                      F-7
<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

             NOTES TO CONSOLDATED FINANCIAL STATEMENTS-(Continued)


 (d) Inventories

  Inventories are stated at the lower of first-in, first-out ("FIFO") cost or
market and consist of the following:

<TABLE>
<CAPTION>

                                                                                               November 30,
                                                                                         ------------------------
                                                                                            2000          1999
                                                                                         ----------    ----------
   <S>                                                                                  <C>           <C>
   Raw materials  ..................................................................     $1,006,000    $  899,000
   Work-in-process  ................................................................        213,000        89,000
   Finished goods  .................................................................        358,000       306,000
                                                                                         ----------    ----------
                                                                                         $1,577,000    $1,294,000
                                                                                         ==========    ==========
</TABLE>

  Work-in-process and finished goods inventories include material, labor and
manufacturing overhead. Management performs periodic reviews of inventory and
disposes of items not required by their manufacturing plan and reduces the
carrying cost of inventory items to the lower of cost or market (with market
value generally defined as the lower of replacement cost or net realizable
value).

 (e) Depreciation and Amortization

  The Company provides for depreciation and amortization, using the straight-
line method, by charges to operations in amounts that allocate the cost of the
equipment and leasehold improvements over their following estimated useful
lives:

<TABLE>
<CAPTION>
  Description                                                                                        Useful Lives
  -----------                                                                                        ------------
  <S>                                                                                              <C>
  Machinery and equipment  .......................................................................   3 to 7 years
  Furniture and fixtures  ........................................................................      7 years
  Vehicles  ......................................................................................      3 years
</TABLE>

  Leasehold improvements are amortized over the shorter of their economic life
of 3 to 7 years or the life of the lease.


 (f) Property and Equipment

  Property and equipment are stated at cost, less accumulated depreciation and
amortization, and consist of the following:

<TABLE>
<CAPTION>

                                                                                               November 30,
                                                                                         -------------------------
                                                                                           2000           1999
                                                                                         -----------    -----------
  <S>                                                                                 <C>            <C>
  Machinery and equipment  .........................................................    $15,932,000    $15,671,000
  Furniture and fixtures  ..........................................................      2,079,000      2,076,000
  Vehicles  ........................................................................        117,000        117,000
  Leasehold improvements  ..........................................................      2,484,000      2,424,000
                                                                                        -----------    -----------
                                                                                         20,612,000     20,288,000
   Less--Accumulated depreciation and amortization  .................................    19,722,000     19,045,000
                                                                                        -----------    -----------
                                                                                        $   890,000    $ 1,243,000
                                                                                        ===========    ===========
</TABLE>

(g) Other Assets

  Other assets includes long-term deposits and or investment in preferred stock
of a company. The investment is carried at cost as of December 31, 2000.




                                      F-8
<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

             NOTES TO CONSOLDATED FINANCIAL STATEMENTS-(Continued)


 (h) Foreign Currency

  The Company translates the assets and liabilities of its foreign subsidiaries
at the rates of exchange in effect at year-end. Revenues and expenses are
translated using exchange rates in effect during the year. Gains and losses from
foreign currency translation are credited or charged to "Cumulative translation
adjustment" included in stockholders' investment in the accompanying
consolidated balance sheets. Foreign currency transaction gains and losses are
included in general and administrative expenses in the accompanying consolidated
statements of operations. Foreign currency transaction gains and losses were not
significant for the years ended November 30, 2000, 1999 or 1998.


 (i) Revenue Recognition

  The Company recognizes revenue from sales to end users, resellers and
distributors upon shipment, provided persuasive evidence of an arrangement
exists, the sales price is fixed or determinable and collection of the related
receivable is probable.  Warranty costs are estimated and recorded by the
Company at the time of revenue recognition.

  In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements.
This bulletin established additional guidelines for revenue recognition.  The
Company's revenue recognition policy complies with this pronouncement.

 (j) Research and Development Costs

  The Company charges research and development costs to operations as incurred.
However, in accordance with SFAS No. 86, Accounting for the Costs of Computer
Software to Be Sold, Leased, or Otherwise Marketed, the Company capitalizes
certain computer software development costs upon establishing technological
feasibility. All such costs capitalized by the Company were fully amortized as
of November 30, 1999 and no costs qualified for capitalization in 2000.  These
costs are amortized on a straight-line basis over the lesser of two years or the
economic life of the product. Amortization expense, included in cost of sales in
the accompanying consolidated statements of operations, was $0, $121,000 and
$120,000 in 2000, 1999 and 1998, respectively.

 (k) Concentration of Credit Risk

  SFAS No. 105, Disclosure of Information About Financial Instruments with Off-
Balance Sheet Risk and Financial Instruments with Concentrations of Credit Risk,
requires disclosure of any significant off-balance sheet and credit risk
concentrations. The Company has no significant off-balance sheet risk or
concentration of credit risk such as foreign exchange contracts, option
contracts or other foreign hedging arrangements. Financial instruments that
subject the Company to credit risk consist primarily of trade accounts
receivable. As of November 30, 2000 and 1999, no individual customers accounted
for greater than 10% of accounts receivable.  For the years ended November 30,
2000, 1999 and 1998,  no individual customers accounted for greater than 10% of
revenues.


 (l) Disclosure About Fair Value of Financial Instruments

  SFAS No. 107, Disclosure About Fair Market Value of Financial Instruments,
requires disclosure of estimated fair values for certain financial instruments.
The Company's financial instruments include cash, marketable securities,
accounts receivable and accounts payable. The carrying amounts of these
financial instruments approximate their fair value due to their short-term
nature.


 (m) Stock-based Compensation

  The Company accounts for its stock-based compensation under Accounting
Principle Board Opinion (APB) No. 25, Accounting for Stock Issued to Employees,
and complies with the disclosure provisions of SFAS No. 123,



                                      F-9
<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

             NOTES TO CONSOLDATED FINANCIAL STATEMENTS-(Continued)


Accounting for Stock-Based Compensation. SFAS No. 123 establishes a fair-value-
based method of accounting for stock-based compensation plans.

 (n) Long-Lived Assets

  The Company follows the provisions of SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of, and
reviews its long-lived assets for impairment as events and circumstances
indicate that the carrying amount of an asset may not be recoverable.
Management believes that as of November 30, 2000 and 1999, none of the Company's
long-lived assets was impaired.


 (o) Comprehensive Income (Loss)

  SFAS No. 130, Reporting Comprehensive Income, requires disclosure of all
components of comprehensive income (loss) on an annual and interim basis.
Comprehensive income (loss) is defined as the change in equity of a business
enterprise during a period from transactions and other events and circumstances
from nonowner sources. Comprehensive income (loss) consists of the net income
(loss) plus translation adjustment resulting from the consolidation of the
Company's foreign operations (see Note 2 (h)) and is disclosed in the
accompanying consolidated statements of stockholders' investment.

 (p) Disclosures about Segments of an Enterprise

  The Company adopted SFAS No. 131, Disclosures About Segments of an Enterprise
and Related Information, in the fiscal year ended November 30, 1999.  SFAS No.
131 establishes standards for reporting information regarding operating segments
in annual financial statements and requires selected information for those
segments to be presented in interim financial reports issued to stockholders.
SFAS No. 131 also establishes standards for related disclosures about products
and services and geographic areas.  Operating segments are identified as
components of an enterprise about which separate financial information is
available for evaluation by the chief decision maker, or decision making group,
in making decisions how to allocate resources and assess performance. The
Company's chief operating decision-maker, as defined under SFAS No. 131, is the
chief executive officer (see Note 8).

 (q) New Accounting Standards

  In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities,  as amended by SFAS No. 137 and SFAS No.
138, which establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities.  SFAS No. 133 requires that an entity
recognize all derivatives as either assets or liabilities in the balance sheet
and measure those instruments at fair value.  SFAS No. 133 is effective for all
fiscal quarters of fiscal year 2001.  SFAS No. 133 is not expected to have a
material impact on the Company's financial statements or results of operations.

  In March 2000, the FASB issued Interpretation No. 44, Accounting for Certain
Transactions Involving Stock Compensation-An Interpretation of Accounting
Principles Board (APB) Opinion No. 25 (FIN 44).  FIN 44 clarifies the
application of APB Opinion No. 25, Accounting for Stock Issued to Employees, in
certain situations, as defined.  FIN 44 is effective July 1, 2000 but is
retroactive for certain events occurring after December 15, 1998, the adoption
of the interpretation.  The adoption of FIN 44 affected the accounting for stock
options repriced during the fiscal year 1999 (see Note 4(e)).







                                     F-10
<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

             NOTES TO CONSOLDATED FINANCIAL STATEMENTS-(Continued)


3. Net Income (Loss) Per Common Share

  The Company applies SFAS No. 128, Earnings Per Share.  This statement
established standards for computing and presenting earnings per share and
applies to entities with publicly traded common stock or potential common stock.
Basic earnings per share was determined by dividing net income (loss) by the
weighted average common shares outstanding during the period.  Diluted earnings
per share was determined by dividing net income (loss) by diluted weighted
average shares outstanding. Diluted weighted average shares reflects the
dilutive effect, if any, of potential common stock.  Potential common stock
includes options to purchase common stock to the extent their effect is
dilutive.  Basic net loss per share is the same as diluted net loss per share
when a net loss has been incurred, such as the  years ended November 30, 2000
and 1998, as the effects of the potential common stock are antidilutive.

A reconciliation of basic and diluted weighted average shares outstanding is as
follows:

<TABLE>
<CAPTION>
                                                             Years Ended November 30,
                                                             -----------------------
                                                   2000               1999               1998
                                                   ----               ----               ----
<S>                                           <C>                 <C>               <C>
Basic weighted average shares
 outstanding..................                  2,205,000          2,123,000          2,083,000

Weighted average common
     equivalent                                        --            109,000                 --
      shares..................                  ---------          ---------          ---------
Diluted weighted average
     shares                                     2,205,000          2,232,000          2,083,000
      outstanding................               =========          =========          =========
</TABLE>

Diluted weighted average shares outstanding do not include approximately
146,759, 14,100, and 125,777 shares of potential common stock, calculated using
the treasury stock method, for the years ended November 30, 2000, 1999 and 1998,
respectively, as their effect would be antidilutive.

4.   Stockholders' Investment

  (a) Stock Purchase Rights Plan

  On April 14, 1999, the Board of Directors of the Company declared a special
dividend distribution  (a right) for each outstanding share of common stock of
the Company outstanding as of April 30, 1999.  The rights will become
exercisable only if a person or group (i) acquires 15% or more of the Company's
common stock, or (ii) announces a tender offer that would result in ownership of
15% or more of the common stock.  Each right would entitle a stockholder to buy
one one-hundredth of a share of preferred stock.  Once a person or group has
acquired 15% or more of the outstanding common stock of the Company, each right
may entitle its holder (other than the 15% person or group) to purchase $21.00
worth of newly issued shares of common stock of the Company (or of any company
that acquires Data Translation) at a price equal to 50% of their current market
price.  The rights are redeemable at the option of the Board of Directors up
until 10 days after public announcement that any person or group has acquired
15% or more of Data Translation's common stock.  The redemption price is $0.001
per right.  The rights will expire on April 30, 2009, unless redeemed prior to
that date.  Distribution of the rights is not taxable to stockholders.





                                     F-11
<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

             NOTES TO CONSOLDATED FINANCIAL STATEMENTS-(Continued)


  (b) Stock Option Plans

  Replacement Stock Option Plan

  Effective December 2, 1996, the Company's Board of Directors adopted the
Company's Replacement Stock Option Plan (the "Replacement Plan"). The
Replacement Plan provided for the issuance of options to purchase shares of the
Company's common stock (the "Replacement Options") to holders of options to
purchase shares of Parent Stock that were granted under Parent Plans and which
were outstanding on the Distribution Date (the "Parent Options") as part of an
adjustment to the Parent Options. The Company has authorized the issuance of up
to 275,000 shares of the Company's common stock under the Replacement Plan, of
which options for 264,794 shares of common stock were granted as of November 30,
2000. No additional options may be granted under the Replacement Plan.

  The number of Replacement Options granted was equal to the number of Parent
options divided by four and rounded down to the nearest whole share. The
exercise price of Replacement Options was equal to the exercise price of Parent
options multiplied by 0.285714 and rounded up to the nearest full cent.

  It was intended that Replacement Options issued to employees of the Company
("Transferred Employees") in respect of Parent Options that qualified as
incentive stock options (ISO's) shall continue to qualify as ISO's pursuant to
Section 424(a) of the Code. Replacement Options that do not qualify as ISO's
will be nonqualified stock options.

  1996 Stock Option Plan

  In December 1996, the Company adopted the 1996 Stock Option Plan (the "1996
Plan") for its key employees, directors and others, which permits the grant of
stock options as approved by the Company's Board of Directors (the Board). Under
the 1996 Plan, 1,500,000 shares of common stock have been reserved for issuance.
At the discretion of the Board, options granted pursuant to the 1996 Plan may be
ISO's as defined by the Code provided that the exercise price of the stock
option is not less than 100% of the fair market value of the Company's common
stock. The Board will determine the exercise price of stock options granted and
when the options will vest and expire, but in no event will the option period
exceed 10 years. As of November 30, 2000, 671,806 shares of common stock were
available for future issuance under the 1996 Plan.












                                     F-12
<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

             NOTES TO CONSOLDATED FINANCIAL STATEMENTS-(Continued)


The stock option activity under the Replacement Plan and the 1996 Plan for the
three years ended November 30, 2000  is as follows:

<TABLE>
<CAPTION>
                                                                       Number of         Exercise Price       Weighted Avg
                                                                        Shares               Range          Exercise Price
                                                                        ------               -----          --------------
          <S>                                                         <C>             <C>                <C>
          Outstanding, November 30, 1997......................             375,254      0.52  -  $ 5.08              $3.21
            Granted..................................                      137,200       1.31  -   2.41               2.11
            Exercised..................................                     (9,830)      0.81  -   3.00               0.82
            Expired/canceled.........................                     (107,894)      0.52  -   5.08               2.69
                                                               ------------------------------------------------------------
          Outstanding, November 30, 1998......................             394,730       0.61  -   5.08               3.03
            Granted..................................                      396,450       1.50  -   5.53               3.11
            Exercised..................................                    (53,228)      0.61  -   4.11               2.03
            Expired/canceled.........................                     (238,040)      0.97  -   5.08               2.51
                                                               ------------------------------------------------------------
          Outstanding, November 30, 1999......................             499,912       1.44  -   5.53               3.24
            Granted..................................                      598,650       2.94  -   8.88               6.21
            Exercised..................................                    (86,572)      1.44  -   5.08               2.25
            Expired/canceled.........................                     (183,796)      1.44  -   8.88               6.15
                                                               ------------------------------------------------------------
          Outstanding, November 30, 2000......................             828,194      1.50  -  $ 8.88              $5.81
                                                               ============================================================
          Exercisable, November 30, 1998............                        76,263    $ 1.29  -  $ 4.65              $3.03
                                                               ============================================================
          Exercisable, November 30, 1999............                        54,388    $ 1.44  -  $ 5.53              $2.68
                                                               ============================================================
          Exercisable, November 30, 2000............                       204,042    $ 1.50  -  $ 8.88              $4.53
                                                               ============================================================
</TABLE>


  (c) Employee Stock Purchase Plan

  In December 1996, the Company established an Employee Stock Purchase Plan (the
"ESPP") which permits the eligible employees of the Company and its subsidiaries
to purchase shares of the Company's common stock, at 85% of the Company's
closing market price on either the first day or last day of the applicable six-
month period, whichever is lower. Employees may participate in the ESPP through
regular monthly payroll deductions of up to 10% of their pre-tax gross salary.
Subject to adjustment for stock splits, stock dividends and similar events, a
maximum of 150,000 shares of common stock may be issued under the ESPP. Through
November 30, 2000, 96,528 shares of common stock have been purchased under the
ESPP.

  (d) Stock-based Compensation

   The Company has computed the pro forma disclosures required under SFAS No.
123 for all stock compensation plan grants during the years ended November 30,
2000, 1999 and 1998 using the Black-Scholes option pricing model prescribed by
SFAS No. 123.  The assumptions used in 2000, 1999 and 1998 are as follows:
dividend yield of 0% for all years; expected volatility of 77%, 96% and 95%,
risk-free interest rates of 5.42% - 6.69%, 4.48% - 5.92% and 5.52% - 5.86% and
expected lives of five, five and six years, respectively. The weighted average
grant date fair value of options granted during 2000, 1999 and 1998 was $6.21,
$3.11 and $1.87, respectively. The weighted average remaining contractual life
of outstanding options at November 30, 2000 was 4.5 years.





                                     F-13
<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   Had compensation cost for these plans been determined consistent with SFAS
No. 123, the Company's net income (loss) and net income (loss) per share would
have been decreased (increased) to the following pro forma amounts:

<TABLE>
<CAPTION>
                                                                                Years Ended November 30,
                                                                                -----------------------
                                                                 2000                    1999               1998
                                                                 ----                    ----               ----
<S>                                                          <C>                        <C>               <C>
Net (loss) income:
 As reported...........................................      $(1,713,000)               $662,000          $(1,252,000)
 Pro forma..............................................     $(2,557,000)               $292,000          $(1,411,000)
Basic net (loss) income per common and
 potential common shares outstanding:
 As reported...........................................      $     (0.78)               $   0.31          $     (0.60)
 Pro forma..............................................     $     (1.16)               $   0.14          $     (0.68)
Diluted net (loss) income per common and
 potential common shares outstanding:
 As reported...........................................      $     (0.78)               $   0.30          $     (0.60)
 Pro forma..............................................     $     (1.16)               $   0.13          $     (0.68)
</TABLE>


   The resulting pro forma compensation expense may not be representative of the
amount to be expected in future years, as the pro forma expense may vary based
on the number of options granted. The Black-Scholes option pricing model was
developed for use in estimating the fair value of traded options that have no
vesting restrictions and are fully transferable. In addition, option pricing
models require the input of highly subjective assumptions, including expected
stock price volatility. Because the Company's employee stock options have
characteristics significantly different from those of traded options and because
changes in the subjective input assumptions can materially affect the fair value
estimate, in management's opinion, the existing models do not necessarily
provide a reliable single measure of the fair value of its employee stock
options.

   (e) Stock Buyback Plan

   On June 22, 2000, the Company announced that its Board had approved the
purchase of up to $250,000 of its shares of common stock over the remainder of
the calendar year.  Purchases were made at prevailing prices as market
conditions and cash availability permitted.  Through November 30, 2000, the
Company had repurchased 41,465 and 15,000 shares of its common stock under the
2000 and 1999 Plans, respectively for an aggregate purchase price of $227,000,
which is classified as treasury stock in the accompanying consolidated
statements of stockholders investment.

   (f) Stock Option Repricing

   On December 16, 1998, the Company's Board authorized the repricing of
employee options to purchase 100,000 shares of common stock from an exercise
price of $3.00 per share to an exercise price of $1.50 per share, which
represented the fair market value of the Company's common stock on the date of
repricing.  These options are subject to variable plan accounting, as defined in
FIN 44 (see Note 2(p)).  There were no charges required during 2000 related to
fluctuations in the Company's stock price and all vested options were exercised
prior to July 1, 2000. As of November 30, 2000, 50,000 options, which are not
fully vested, are still subject to variable plan accounting.

                                      F-14
<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


5.   Employee Savings Plan

  In December 1996, the Company established the Employee Savings Plan (the
Savings Plan). The Employee Savings Plan provides for annual Company
contributions of up to 15% of the first 6% of total salary per participant.
These contributions vest immediately. Contributions to the Savings Plan charged
to operations in 2000, 1999 and 1998 were $30,000, $26,000 and $56,000,
respectively.

  The Company does not provide postretirement benefits to any employees as
defined under SFAS No. 106, Employers Accounting for Postretirement Benefits
Other Than Pensions.


6.   Commitments and Contingencies

 (a) Lease Commitments

  The Company has operating lease agreements expiring December 1, 2009 for a
building and property owned by a related party trust. The agreements require the
Company to pay aggregate minimum annual rental payments plus other expenses of
the lessor on a net basis. Total rental expense charged to operations on these
leases included in the accompanying consolidated statements of operations, net
of sub-lease and rent allocations, was approximately $243,000, $254,000 and
$335,000 for the years ended November 30, 2000, 1999 and 1998, respectively.

  In addition, the Company leases sales facilities and equipment under leases
expiring through 2001. Rent expense, net of sub-lease and rent allocations to
Parent, under these agreements totaled $189,000, $152,000 and $146,000 in the
years ended November 30, 2000, 1999 and 1998, respectively. Future minimum lease
payments, net of sub-lease payments to be received, under all operating leases
are as follows:

   Fiscal Years Ending November 30,                                   Amount
   --------------------------------                                  ----------
   2001...........................................................   $  505,000
   2002...........................................................      629,000
   2003...........................................................    1,067,000
   2004...........................................................    1,131,000
   2005...........................................................    1,131,000
   Thereafter.....................................................    5,200,000
                                                                     ----------
   Total minimum lease payments...................................   $9,663,000
                                                                     ==========

 (b) Contingencies

  From time to time, the Company is involved in disputes and/or litigation
encountered in its normal course of business. The Company does not believe that
the ultimate impact of the resolution of such matters will have a material
adverse effect on the Company's financial condition or results of operations.

                                      F-15
<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


7.   Income Taxes

     The Company accounts for income taxes in accordance with SFAS No. 109,
Accounting for Income Taxes, whereby a deferred tax asset or liability is
recognized for the expected future tax consequences of temporary differences
between the financial statement and the tax bases of the assets and liabilities.

     The components of the income tax provision are approximately as follows:

                                                         Fiscal Years Ended
                                                            November 30,
                                                       2000     1999     1998
                                                       ----     ----     ----
  Federal:
     Current.....................................    $    --  $32,000  $    --
                                                     =======  =======  =======

     The difference between the combined federal and state statutory tax rate of
40% and the effective tax rate during 1999 is due to the Company's use of
federal and state net operating loss carryforwards.  At November 30, 2000, the
Company had approximately $8,598,000 of federal and state net operating loss
carryforwards available to offset future taxable income, which expire in varying
amounts beginning in 2020.  Due to the uncertainty surrounding the timing of
realizing the benefits of its favorable tax attributes in future income tax
returns the Company has placed a full valuation allowance against its otherwise
recognizable deferred tax assets at November 30, 2000.


The approximate income tax effect of each type of temporary difference and
carryforward is as follows:


                                                             November 30,
                                                             ------------
                                                         2000           1999
                                                      -----------   -----------
   Net operating loss carryforwards.................  $ 3,463,000   $ 2,145,000
   Depreciation.....................................      193,000       188,000
   Nondeductible accruals...........................      541,000       650,000
   Less--valuation allowance........................   (4,197,000)   (2,986,000)
                                                      -------------------------
         Net deferred tax asset (liability).........  $        --   $    (3,000)
                                                      ===========   ===========


                                      F-16
<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


8.   Segment and Geographic Information

     (a)  Segment Reporting

The Company's reportable segments are Core and Broadway. The Core segment is
composed of the imaging and data acquisition business that consists of plug-in
cards and Microsoft(R) Windows(R)-based software that provide an integrated,
high performance system solution to the general scientific and measurement
marketplace. The Broadway segment is composed of a plug-in video capture card;
Broadway, which is a high-performance video capture and encoding system for
Microsoft(R) Windows(R) 98 and Microsoft(R) Windows(R) NT personal computers.
The accounting policies of the segments are the same as those described in the
summary of significant accounting policies. The Company evaluates performance
based on revenues and operating margin. Revenues are attributed to geographic
areas based on where the customer is located. Segment information for the years
ended November 30, 2000, 1999 and 1998 is as follows:

<TABLE>
<CAPTION>
                                                              Core         Broadway         Total
                                                              ----         --------         -----
<S>                                                       <C>             <C>            <C>
Fiscal 2000
Revenues from unaffiliated customers....................  $13,998,000     $1,926,000     $15,924,000
Cost of revenue.........................................    6,638,000        952,000       7,590,000
Research and development................................    2,830,000        201,000       3,031,000
                                                          -----------     ----------     -----------
Operating margin (1)....................................  $ 4,530,000     $  773,000     $ 5,303,000
                                                          ===========     ==========     ===========
Fiscal 1999
Revenues from unaffiliated customers....................  $14,221,000     $2,033,000     $16,254,000
Cost of revenue.........................................    5,991,000      1,057,000       7,048,000
Research and development................................    2,312,000        257,000       2,569,000
                                                          -----------     ----------     -----------
Operating margin (1)....................................  $ 5,918,000     $  719,000     $ 6,637,000
                                                          ===========     ==========     ===========
Fiscal 1998
Revenues from unaffiliated customers....................  $14,340,000     $2,441,000     $16,781,000
Cost of revenue.........................................    6,749,000      1,321,000       8,070,000
Research and development................................    1,768,000        676,000       2,444,000
                                                          -----------     ----------     -----------
Operating margin (1)....................................  $ 5,823,000     $  444,000     $ 6,267,000
                                                          ===========     ==========     ===========
</TABLE>

     (1)  The operating margins reported reflect only the expenses of the line
          of business and do not represent the actual margins for each operating
          segment since they do not contain an allocation for selling and
          marketing, general and administrative, development and other corporate
          expenses incurred in support of the line of business.

     Profit (Loss) Reconciliation:

<TABLE>
<CAPTION>
                                                                  Fiscal Years Ended November 30,
                                                           ---------------------------------------------------
                                                              2000                1999                1998
                                                           -----------         -----------         -----------
<S>                                                        <C>                 <C>                 <C>
Total operating margin for reportable segments...........  $ 5,303,000         $ 6,637,000         $ 6,267,000
Selling and marketing expenses...........................   (5,113,000)         (4,100,000)         (5,621,000)
General and administrative expenses......................   (2,017,000)         (1,943,000)         (2,001,000)
Interest income..........................................      114,000             100,000             149,000
Other expense, net.......................................           --                  --             (46,000)
                                                           -----------         -----------         -----------
     (Loss) Income before provision for income
       taxes.............................................  $(1,713,000)        $   694,000         $(1,252,000)
                                                           ===========         ===========         ===========
</TABLE>


                                      F-17
<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   (b) Geographic Information

<TABLE>
<CAPTION>
                                                      United States   United Kingdom    Germany    Eliminations   Consolidated
                                                      --------------  --------------  -----------  -------------  -------------
<S>                                                   <C>             <C>             <C>          <C>            <C>
Fiscal 2000
Sales to unaffiliated customers(1)...................   $12,277,000      $1,342,000    $2,305,000   $        --    $15,924,000
Sales or transfers between geographic areas..........     1,818,000              --            --    (1,818,000)            --
                                                        -----------      ----------    ----------   -----------    -----------
Total net sales......................................   $14,095,000      $1,342,000    $2,305,000   $(1,818,000)   $15,924,000
                                                        ===========      ==========    ==========   ===========    ===========
(Loss) income from continuing operations before
    provision for income taxes.......................   $(1,628,000)     $ (104,000)   $   27,000   $    (8,000)   $(1,713,000)
                                                        ===========      ==========    ==========   ===========    ===========
Long-lived assets....................................   $   819,000      $   62,000    $   23,000   $   (14,000)   $   890,000
                                                        ===========      ==========    ==========   ===========    ===========
Fiscal 1999
Sales to unaffiliated customers(1)...................   $12,136,000      $1,529,000    $2,589,000   $        --    $16,254,000
Sales or transfers between geographic areas..........     1,835,000              --            --    (1,835,000)            --
                                                        -----------      ----------    ----------   -----------    -----------
Total net sales......................................   $13,971,000      $1,529,000    $2,589,000   $(1,835,000)   $16,254,000
                                                        ===========      ==========    ==========   ===========    ===========
Income (loss) from continuing operations before
    provision for income taxes.......................   $   673,000      $   68,000    $   68,000   $  (115,000)   $   694,000
                                                        ===========      ==========    ==========   ===========    ===========
Long-lived assets....................................   $ 1,163,000      $   76,000    $   17,000   $   (13,000)   $ 1,243,000
                                                        ===========      ==========    ==========   ===========    ===========
Fiscal 1998
Sales to unaffiliated customers(1)...................   $13,054,000      $1,533,000    $2,194,000   $        --    $16,781,000
Sales or transfers between geographic areas..........     1,755,000              --            --    (1,755,000)            --
                                                        -----------      ----------    ----------   -----------    -----------
Total net sales......................................   $14,809,000      $1,533,000    $2,194,000   $(1,755,000)   $16,781,000
                                                        ===========      ==========    ==========   ===========    ===========
(Loss) income from continuing operations before
    provision for income taxes.......................   $(1,229,000)     $   12,000    $   32,000   $   (67,000)   $(1,252,000)
                                                        ===========      ==========    ==========   ===========    ===========
Long-lived assets....................................   $ 1,255,000      $   68,000    $   18,000   $   (13,000)   $ 1,328,000
                                                        ===========      ==========    ==========   ===========    ===========
</TABLE>

(1) Foreign sales from the United States to unaffiliated customers for the years
    ended November 30, 2000, 1999 and 1998 were approximately $3,522,000,
    $3,309,000 and $2,655,000, respectively.

9.  Accrued Expenses

     Accrued expenses consist of the following:

                                                              November 30,
                                                       -------------------------
                                                             2000           1999
                                                       ----------     ----------
    Payroll and related taxes.......................   $  585,000     $  648,000
    Fringe benefits.................................      356,000        384,000
    Marketing.......................................       72,000        128,000
    Other...........................................      882,000        990,000
                                                       ----------     ----------
                                                       $1,895,000     $2,150,000
                                                       ==========     ==========

10. Valuation and Qualifying Accounts

    The following table sets forth activity in the Company's accounts receivable
reserve account:

<TABLE>
<CAPTION>
                                                                      Beginning    Cost and                  End of
                                                                      ----------  -----------              ----------
                                                                       of Year      Expense    Deductions    Period
                                                                      ----------  -----------  ----------  ----------
<S>                                                                   <C>         <C>          <C>         <C>
    For the Year Ended November 30, 1998.............................   $389,000      $60,000    $ 52,000    $397,000
    For the Year Ended November 30, 1999.............................   $397,000      $36,000    $144,000    $289,000
    For the Year Ended November 30, 2000.............................   $289,000      $12,000    $ 24,000    $277,000
</TABLE>

                                      F-18
<PAGE>

11.   Selected Quarterly Information (Unaudited)

For the Fiscal Quarters Ended:

<TABLE>
<CAPTION>
                                               February 28,    May 31,   August 31,   November 30,
                                               ------------   --------  -----------  -------------
<S>                                            <C>            <C>       <C>          <C>
2000                                                 (In thousands, except per share data)
----
Net sales                                            $3,902    $3,959       $3,968         $4,095
Gross profit                                          2,204     2,081        2,045          2,005
Loss from operations                                     (1)     (417)        (596)          (813)
Net income (loss)                                        24      (384)        (567)          (785)
Basic net income (loss) per share                    $ 0.01    $(0.17)      $(0.26)        $(0.35)
Diluted net income (loss) per share                  $ 0.01    $(0.17)      $(0.26)        $(0.35)

1999
----

Net sales                                            $3,857    $4,079       $4,061         $4,257
Gross profit                                          2,186     2,347        2,307          2,366
Loss from operations                                     74       132          153            235
Net income                                              102       156          177            227
Basic net income per share                           $ 0.05    $ 0.07       $ 0.08         $ 0.11
Diluted net income per share                         $ 0.05    $ 0.07       $ 0.08         $ 0.10

1998
----

Net sales                                            $4,556    $4,435       $3,919         $3,871
Gross profit                                          2,326     2,422        1,929          2,034
Loss from operations                                   (299)     (233)        (797)           (26)
Net (loss) income                                      (274)     (225)        (763)            10
Basic net (loss) income per share                    $(0.13)   $(0.11)      $(0.36)        $ 0.00
Diluted net (loss) income per share                  $(0.13)   $(0.11)      $(0.36)        $ 0.00
</TABLE>

                                      F-19
<PAGE>

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

   None.
                                   PART III


Item 9.  Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act

     Directors. The information appearing under the caption "Nomination and
Election of Directors" in the Company's Proxy Statement for its Annual Meeting
of Stockholders to be held on April 12, 2000 (the "Proxy Statement") is
incorporated herein by reference.

     Executive Officers. Information in response to this Item appears under the
caption "Executive Officers of the Company" in Item 1 of this Form 10-KSB.

     Section 16(a) Beneficial Ownership Reporting Compliance.  The information
appearing under the caption "Nomination and Election of Directors" in the Proxy
Statement is incorporated herein by reference.

Item 10. Executive Compensation

     The information required by this Item appears under the caption "Executive
Compensation" in the Proxy Statement and is incorporated herein by reference.

Item 11. Security Ownership of Certain Beneficial Owners and Management

     The information required by this Item appears under the caption "Security
Ownership of Certain Beneficial Owners and Management" in the Proxy Statement
and is incorporated herein by reference.

Item 12. Certain Relationships and Related Transactions

     The information required by this Item appears under the caption "Certain
Relationships and Related Transactions" in the Proxy Statement and is
incorporated herein by reference.
<PAGE>

Item 14. Financial Statements and Exhibits.

  (a)   Financial Statements. The Index to Consolidated Financial Statements
        appears at page [17] of this Form 10-KSB.

        Schedules. Schedules for which provision is made in the applicable
        regulations of the Securities and Exchange Commission have been omitted
        because the information is disclosed in the financial statements or
        because such schedules are not required or are not applicable. See Index
        to Consolidated Financial Statements.

        Exhibits. Exhibits 10.6 through 10.8 constitute all of the management
        contracts and compensation plans and arrangements of the Company
        required to be filed as Exhibits to this Form 10-KSB.

   3.1   Certificate of Incorporation of Registrant/1/
   3.2   By-laws of Registrant/1/
   4.1   Specimen Stock Certificate of Common Stock (See also Exhibits 3.1 and
         3.2)/1/
  10.1   Distribution Agreement dated as of November 19, 1996 with Media 100
         Inc./2/
  10.2   Intellectual Property Agreement dated as of December 2, 1996 with Media
         100 Inc./3/
  10.3   Corporate Services Agreement dated as of December 2, 1996 with Media
         100 Inc./4/
  10.4   Use and Occupancy Agreement dated as of December 2, 1996 with Media 100
         Inc./5/
  10.5   Lease dated December 1, 1979, as amended, for Locke Drive with Nason
         Hill Trust/1/
  10.6   1996 Stock Option Plan/6/
  10.7   Employee Stock Purchase Plan/7/
  10.8   Replacement Stock Option Plan/8/
  10.9*  Software Bundling Master License Agreement/1/
  10.10* Distribution Agreement dated June 26, 1996 by and between Data
         Translation, Inc. and DS Datenverarbeitung und Sensortechnik GmbH/1/
  21     List of Subsidiaries of the Registrant
  23.1   Consent of Arthur Andersen LLP

* Certain portions have been omitted and filed separately with the Securities
  and Exchange Commission.

       /1/ Incorporated herein by reference to the Company's Registration
           Statement on Form 10 (No. 000-21367) filed with the Securities and
           Exchange Commission on November 26, 1996
       /2/ Incorporated herein by reference to Exhibit 10.8.1 to the 1996 Annual
           Report on Form 10-K of Media 100 Inc. (File No. 0- 14779) filed with
           the Securities and Exchange Commission on February 28, 1997
       /3/ Incorporated herein by reference to Exhibit 10.8.2 to the 1996 Annual
           Report on Form 10-K of Media 100 Inc. (File No. 0- 14779) filed with
           the Securities and Exchange Commission on February 28, 1997
       /4/ Incorporated herein by reference to Exhibit 10.8.3 to the 1996 Annual
           Report on Form 10-K of Media 100 Inc. (File No. 0- 14779) filed with
           the Securities and Exchange Commission on February 28, 1997
       /5/ Incorporated herein by reference to Exhibit 10.8.4 to the 1996 Annual
           Report on Form 10-K of Media 100 Inc. (File No. 0- 14779) filed with
           the Securities and Exchange Commission on February 28, 1997
       /6/ Incorporated herein by reference to the Company's Registration
           Statement on Form S-8 (No. 333-16855) filed with the Securities and
           Exchange Commission on November 26, 1996
       /7/ Incorporated herein by reference to the Company's Registration
           Statement on Form S-8 (No. 333-16857) filed with the Securities and
           Exchange Commission on November 26, 1996
       /8/ Incorporated herein by reference to the Company's Registration
           Statement on Form S-8 (No. 333-16859) filed with the Securities and
           Exchange Commission on November 26, 1996
<PAGE>

                                  SIGNATURES

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


                                      Data Translation, Inc.


                                      /s/ Alfred A. Molinari, Jr.
                                      By:_
                                      Alfred A. Molinari, Jr.,
                                      Chief Executive Officer

Date: February 28, 2001

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

                Signature                    Title                   Date
                ---------                    -----                   ----
     /s/ Alfred A. Molinari, Jr.    Chief Executive Officer    February 28, 2001
----------------------------------
          Alfred A. Molinari, Jr.     and Chairman

     /s/ Michael  A. DiPoto         Vice President, Finance    February 28, 2001
----------------------------------
          Michael A. DiPoto           and CFO

     /s/ Dr. David Cyganski         Director                   February 28, 2001
----------------------------------
          Dr. David Cyganski

     /s/ D'Anne Hurd                Director                   February 28, 2001
----------------------------------
          D'Anne Hurd

     /s/ Ellen Harpin               Director                   February 28, 2001
----------------------------------
          Ellen Harpin
<PAGE>

                                 EXHIBIT INDEX

Exhibit
--------
 Number                                           Document Description
--------  ----------------------------------------------------------------------
21        List of Subsidiaries of the Registrant
23.1      Consent of Arthur Andersen LLP